9911796707
TMI Blog2023 (11) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... tter, price of the scrip though went substantially high after shares were purchased, doesn't automatically mean that the transaction of the assessee in the said scrip is not genuine. The same cannot be, therefore, said to be doubtful mainly on surmises, conjunctures and on presumption basis without any supportive documents in the hands of the Revenue. There was no role to play by the assessee in inflation of sale price as alleged or at all with the connivance with the brokers and the price at which shares were sold were neither genuine price. There was no material and/or evidence brought on record by the Revenue in order to establish that the company has indulged in providing accommodation entries and the prices were rigged and the mother of the assessee or the assessee was involved in rigging of the price of shares. The case of the Revenue has been dealt with on entirely unsubstantiated suspicions is wholly unjustified and bad in law. As scrip was subscribed by the mother of the assessee way back in F.Y. 2009-10 which was acquired by the assessee as gift from her. It appears that the holding period is more than 55 months in case of the assessee before us too which facts cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, Smt. Meenaben Ashokbhai Shah, the same was acquired by her in F.Y. 200910 by making investment through account payee cheques in the preferential warrants of the said company. 5. On 09.06.2009, the mother of the appellant applied for 5000 warrant of convertible (equity shares) of M/s. Kappac Pharma Ltd. against payment of Rs. 54,80,000/- as an application money. On 27.08.2009, she paid Rs. 6,60,000/- as the first call money by way of drawing cheque on HDFC Bank, Ambawadi Branch, Ahmedabad and then paid Rs. 7,10,000/- by way of cheque drawn on HDFC Bank, Ambawadi Branch, Ahmedabad on 20.10.2010. She was given preferential 5 lakh shares of M/s. Kappac Pharma Ltd. on 25.11.2010. On 25.11.2010, she received physical share certificate being No. 0015350 and the same were under lock-in-up to November 19, 2011. The physical share certificate was surrendered for demat account by her to the broker M/s. India Infoline Ltd.and got credited in her demat account on 13.05.2013. 6. Thereafter, on 25.03.2014 out of natural love and affection, she gifted 1,60,000 shares of the said M/s. Kappac Pharma Ltd. to her daughter, the appellant before us, under a deed of gift duly notarized. Conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till remain suspended. The following chart shows the price of the scrip which was not real price but it was rigged one so as the alleged investors can be benefited by offloading their position at the high time. From the above it could be seen that the shares which was priced@ Rs. 10/- to Rs. 13.50 in 2009 were sold in the year 2013-14 @ Rs. 680 and above. 3. It is noticed that your mother Smt. Meenaben Ashokbhai Shah has received preferential warrants of Kappc Pharma @ Rs. 13.70 per warrant which were converted in to shares thereafter on 20-11-2010 out of which 160000 shares were gifted to you. On perusal of financial position it is evident that the said company was indulging in providing accommodation entries and the price was artificially rigged for of funds. The beneficiaries have shown to have sold the shares at such high price so that they can claim LTCG which is exempt from tax. 4. You are, therefore, required to show cause as to why the sale consideration of Rs 2.16.59,185 in the form of Long Term Capital Gain should not be treated as your undisclosed income of the year under consideration 5. Your reply should reach this office on or before 27-12-2016 No attendance/n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors of the companies recorded by the department have been provided to the assessee with the show-cause for her rebuttal. Hence your honour is kindly requested to provide the copy of such enquires, list of brokers and directors whose statements have been recorded, copies of such statements and their cross examination before taking any adverse inference in the case of the assessee while relying on the said enquiries/statements. From the plain reading of this Para, it seems that your honour has made the general statement as if the same would applied to all the persons who have carried out the transactions in the shares of Kappac Pharma Ltd irrespective of facts of the each case and examining it independently like the case of the assessee. It is also not known from the observations given in this Para that whether statements of directors of Kappac Pharma Ltd and broker through whom the assessee has sold shares were recorded by the department as well as whether they have revealed the name of the assessee as one of the beneficiaries for which allegation has been made in this Para of the show-cause notice or not. Hence without bringing on record such facts from the materiel/ evidences ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the prices of the scrip are flown with the winds and the sentiments irrespective of the fundamentals of the scrip and therefore the price of the scrip has been gone substantially high after shares were purchased does not automatically mean that the transaction of the assessee in the said scrip is not genuine. Merely increase in the price of shares was higher does not mean that the transactions entered into by the assessee is not genuine and therefore to treat the said transactions as doubtful is merely on surmises, conjectures and personal presumption not supported by any cogent material evidences. In fact, no material/evidences have been brought on record by your honour to arrive at the conclusion that there was involvement of the assessee to inflate the sale price in alleged connivance with the brokers and the price at which the shares were sold were not genuine price. The assessee submits that in the stock exchange it is not a case that only the market price of the scrip which has been sold by the assessee has gone substantially high but there is numerous scrip whose prices has gone high/low depending on market sentiments Irrespective of its fundamentals. Hence merely price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and mere suspicion and therefore required to be withdrawn. Facts of the case: 1. That the assessee has received 160000/- shares as gift from his mother Meena A. Shah on 25/03/14 which has been credited in her demat A/c with Indo Thai Securities Ltd. 2. That the mother Meena A. Shah of the assessee has made an application in 5,00,000 Convertible Preferential warrants of Kappac Pharma Ltd @Rs.13.70 per warrants in F.Y. 2009/2010 to be converted into equity shares of Rs. 10 each of the said company after 1 from the date of allotment of warrants. That she has made the payment of Rs. 65,80,000/- towards such warrants through her SB A/c with HDFC Bank and Bank of India. 3. The said 5,00,000 preferential warrants were converted in to equivalent number of Equity Shares (i.e. 5,00,000) of Rs. 10/- each at a premium of Rs. 3.70/- per share in the month of November 2010 and out of such 5,00,000 equity shares, she has gifted 160000 shares to the assessee during the year under consideration. 4. That the assessee has sold 32000 shares of Kappac Pharma Ltd at an aggregate consideration of Rs. 2,20,97,585/- and after claiming proportionate cost of the said shares at Rs. 4,38,400/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is reproduced herein below for ready reference purpose: "2(424) ["short-term capital asset" means a capital asset held by an assessee for not more than (thirty-six) months immediately preceding the date of its transfer-:] [Provided that in the case of a security (other than a unit) listed in a recognized stock exchange in India) (or a unit of the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963) or (a unit of an equity oriented fund]] (or a zero coupon bond), the provisions of this clause shall have effect as if for the words "thirty-six months", the words "twelve months" had been substituted:1 [Provided further that in case of a share of a company (not being a share listed in a recognized stock exchange) or a unit of a Mutual Fund specified under clause (230) of section 10, which is transferred during the period beginning on the 1st day of April, 2014 and ending on the 10th day of July, 2014, the provisions of this clause shall have effect as if for the words "thirty- six months", the words "twelve months" had been substituted.) 10(38) any income arising from the transfer of a long-term capital asset, being an equity share in a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated. The assessee hereby requests your honour to throw some light on the same with conclusive evidences establishing the allegation. In the considered opinion and facts of the case, the entire case has been built by your honour entirely on unsubstantiated suspicions which is wholly unjustified and bad in law. That apart, your honour has also not appreciated the fact that share market is driven by various sentiments and there are so many factors and reasons for increase in the value of the shares though notwithstanding to and in sharp contrast to the financial standing of the companies. It may not be out of place to emphasize here that the assessee has nowhere connected or remotely related with the management of the investee company and there is no evidence that the assessee has rigged or manipulated the share prices of Kappac Pharma Ltd. 2. That the assessee is relying upon following decisions including binding decisions of jurisdictional court of law i.e. Hon'ble Gujarat High Court and Hon'ble ITAT, Ahmedabad Bench, wherein interalia, on identical & circumstances of the case, it has been held that no addition is warranted in the hands of assessee while considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Held, yes [Para 5] [In favour of assessee) Vasantraj Birawat v. ACIT [2015] 61 taxmann.com 295 (Mumbai - Trib.) Where no incriminating material was found during search which could indicate that long-term capital gains arising out of sale of shares was bogus and assessment was completed without considering details of purchase of shares produced by assessee, assessment was void. Estimation of income (Share dealings) - Assessment years 2004-05 to 2006-07- Investigation Wing of Department had furnished statement recorded of a person named that he had issued bogus purchase bills for purchase of shares in IFSL Ltd- Assessee had also purchased shares of IFSL Ltd through a sub-broker and declared income arising on sale of shares under head Capital gains Revenue carried out search and seizure operations in residential premises of assessee group - No evidence was found during course of search in order to doubt veracity of long-term capital gains declared by assessee However, based on statement given by 'N', Assessing Officer assessed entre amount of sale proceeds of shares as assessee's income from other sources on ground that transactions relating to shares were bogus and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee) CIT v. Smt. Sumitra Devi taxmann.com 37 (Rajasthan) Section 68, r.w.s. 45, of the Income-tax Act, 1961 - Cash credits (Share Transactions) - Assessment year 2006-07-Assessing Officer treated transaction of shares by assessee as bogus and accordingly profit on sale of shares declared by assessee was brought to tax as unexplained cash credit under section 68- Whether since Assessing Officer had failed to show that material documents placed on record by assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat statement etc. were false, fabricated or fictitious, transaction of purchase and sale of shares could not be treated as non-genuine Held, yes [Paras 7 & 8] [In favour of assessee] ITO v. Smt. Aarti Mittal [2014] 41 taxmann.com 118 (Hyderabad - Trib.) Where assessee having purchased shares in physical form, converted them in D- form and thereupon sale of those shares was carried out through recognized stock exchange after paying securities transaction tax, said transactions were to be regarded as genuine in nature and, therefore, assessee's claim for exemption uis 10(38) was to be allowed Section 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase and sale of these shares were found in books of account of assessee and sale of shares was found genuine when Assessing Officer made enquiries from stock exchange directly, addition on account of undisclosed income and denial of exemption under section 10(38) could not be sustained Held, yes [Para 17] [In favour of assessee) DCIT v. Smt. Hansa Choudhary [2012] 23 taxmann.com 302 (Jodhpur- Trib.) Section 68 of the Income-tax Act, 1961- Cash credit Assessment years 2002- 03 and 2004-05- Where purchase of shares in question was not in dispute and on record showed that said shares were sold through a broker and consideration for transfer was received through cheque, sale consideration could not be treated as assessee's own undisclosed funds [In favour of assessee) The assessee claimed to have earned capital gain on sale of shares. The Assessing Officer relying upon statement of a broker who was involved in issuing accomodation entries, treated sale proceeds of shares as assessee's own undisclosed funds and made addition to income of assessee. Held that that it was clearly seen that assessee purchased shares in earlier year. They were shown in the balance sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as at the first appellate stage and also before the Tribunal, the focus of the department was on the of the transactions entered into by the group a whole and, therefore, there was substantial merit in the view of the Commissioner (appeals) that it was this fact which had resulted into such action of the Assessing Officer. Voluminous documentary evidences had been filed by the assessee to prove its claim which supported the genuineness of the transaction. Thus on appreciation of the documentary evidences submitted by the assessee, the genuineness of the transactions appeared to have been established. As regards the aspect of off market transaction, it was noted that neither these were illegal nor prohibited and only some of the compliances had to be made by the brokers. As regards the aspect of such compliances, it was not the case that all the off market transactions had not been reported by the concerned brokers to the stock exchange as per the rules and even otherwise, any failure on the part of the brokers in doing such compliance could not make the contract between the assessee and the broker illegal or void as the broker might face the consequences for his default unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of the above proposition of law. FOR PROVIDING OPPORTUNITY OF CROSS EXAMINATION Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II [2015]62 taxmann.com 3 (SC)/[2015] 52 GST 355 (SC) The assessee raised a plea that it was not allowed to cross-examine the dealers statements were relied upon by the Adjudicating Authority in passing the order. However, the Tribunal rejected the plea on the basis that "The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static". On appeal by the assessee to the Supreme Court HELD allowing the appeal: 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 Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1- Cash credit (Share application money) - Assessment year 2004-05-Assessing Officer made addition under section 68 on account of amount received for share capital, its premium and amount paid as commission for arranging it on basis of statement made by third parties who were related to purchasing companies stating that these companies were engaged in providing accommodation entries in lieu of commission However, said party statement was made behind back of assessee and no opportunity of being heard or cross-examining third parties was provided to assessee Assessing Officer could not bring any material to disapprove genuineness of confirmation and affidavits filed by assessee Further, all transaction were through account payee cheques, all these companies had PAN numbers and were regularly assessed to tax Investor companies were registered under Companies Act and Form No. 2 for allotment was also filed - Whether appellate authorities could not be said to have erred in deleting addition-Held, yes Kishinchand Chellaram v. CIT [1980] 125 ITR 713 (SC) "Though the proceedings before the income-tax authorities are not governed by the strict rules of evidence, before the income-tax au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him the said certificate. In our view, that was neither proper nor sufficient. The proper course for the Tribunal in such a case was to insist upon the company adducing legal evidence in support of its claim instead of taking the figure of depreciation from the P & L account which was not worked out in accordance with the Income tax Act but under section 205 of the Companies Act, and saying that the company had failed to prove that it was a mistaken figure. In our view, the question as to the correct amount of depreciation must go back to the Tribunal for a fresh decision. The Tribunal give opportunity to the company to prove its claim for depreciation by reasonable proof and to the unions to test such evidence by cross examination or otherwise". Conclusion: The facts regarding transactions carried out by the assessee in the shares Kappac Pharma Ltd thus summarized in the following manner: * The acquisition and sale of shares of Kappac Pharma Ltd is supported by valid gift deed and contract notes issued by the Brokers. * That the shares of Kappac Pharma Ltd have been held by mother of the assessee for more than 55 months prior to the date of sale. * That the delivery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions were devoid of any commercial nature and fell in realm of not being bonafide and therefore the same was not found to be allowable by the Ld. AO. Further that the referring SEBI came to a finding that the prices of those shares were determined artificially by manipulations and does not have any iota of doubt that the same is not a product of market factors or commercial principles. Apart from that the assessee has not been able to prove the unusual rise and fall of share prices to be natural and that too on the basis of market forces. It was found that such share transactions were closed circuit transactions and clearly structured one. The Ld. AO was of the view on the basis of the investigation done by the Investigation Wing, Kolkata that the transactions entered into by the assessee involved series of preconceived steps, the performance of each of which is depending on the others being carried out. The nature of such share transactions lacked commercial contents and artificially structured transactions entered into between the parties only to evade taxes and thus finally claimed under Section 10(38) of the Act made by the assessee in regard to long term capital gain of Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hah & Other entities in the course of present appellate proceedings through his authorized representative. 2.2 The Ld.CIT(A) has reproduced selective portion of appellant's written submission dated 07.03.2023, at para 5.2. The Ld.CIT(A) while recording his decision at para 2.3 has dealt with only one ground on merits of the case and leaving aside rest of the pleas raised by the appellant, the related legal grounds are dismissed in a casual manner vide para 6.14 of the appellate order. 2.3 Since the specific pleas of the appellant raised before the Ld. CIT(A) being in violation of settled principle of natural justice and allowing cross examination of S/Shri Prateek Ramesh Chandra Shah & Other entities, in the course of appellate proceedings before the Ld. CIT(A), which go to the root of the matter. Since the grounds of appeal are already reproduced at para-4 on page-2-3 of the appellate order, hence the same is not repeated here. 2.4 However, the appellant would like to place on record the second relevant plea taken before the CIT(A), as below: THE APPELLANT SPECIFICALLY REQUEST A PROPER JUSTICE, BY RAISING THIS FOR SPECIFIC PLEA OF ALLOWING CROSS-EXAMINATION OF S/SHRI P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O., as a matter of right. (4) Without prejudice to what is stated as above, it is submitted that various courts have been taking a consistent view that an appellant should not suffer for mistake or failure on the part of the counsel/agent, particularly when the appellant is dependent upon him for his expert A few of them may be cited as under: (i) Mahaveer Prasad Jain v. CIT 172 ITR 331 (M.P.) From middle of page 332 "If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. The problem that agitates us is whether it is proper that the party should suffer for inaction, deliberate omission or misdemean or of his agent. The answer obviously in the negative. May be that the Ld. Advocate absented himself deliberately or intentionally. We have no material for ascertaining that aspect of the matter. We say nothing more on that aspect of the matter. However, we cannot be a party to an innocent party suffering injustice merely because his chosen Advocate defaulted, therefore, we allow this appeal. (ii) T. Ashok Pai v. CIT 292 ITR 11 (SC) Facts: The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book "On the Interpretation of Statutes", 11th Edn., at p. 375, describes the rule: "Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy." As quoted in Nath Gorai (supra)" In the light of the aforesaid ratio laid down by the Hon'ble Court, the appellant respectfully craves to consider the bonafide claim of the appellant for cross- examining said S/Shri Prateek Ramesh Chandra Shah & Other entities as a matter of right, not withstanding with the fact that such right might have waived by the then A.R. who represented the appellant, to protect the interest of the appellant. (6) Without prejudice further it is submitted that apart from the aforesaid public right, another legality issue involved in the matter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the Assessing Officer for making fresh assessment. But the Appellate Commissioner continues to have the powers under Section 250 to inquire further, or to direct the Assessing Officer to inquire and report the result to him. After receiving the Assessing Officers" enquiry report, the authority can rely on it or gather additional facts or evidence." (8) Having regards to the above and in the fitness of things, therefore, the appellant puts his humble demand that by exercising the powers so vested with your Honour, the A.O. may kindly be directed to supply the appellant with a copy of statement so relied and used against the appellant and also the appellant should be allowed to cross-examine S/Shri Prateek Rameshchandra Shah & Other entities through his authorized representative. (9) For the appropriate reasons, the order under appeal, is a result of complete misreading of cogent documentary evidences placed on record by the appellant, which renders the impugned assessment order perverse devoid of very merit. 2.5 However, despite such specific pleas made before him, the Ld.CIT(A) has wholly ignored/overlooked the same and merely agreeing with the A.O. has affirmed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that during the course of assessment proceedings the appellant has submitted number of supporting/cogent material evidences, under various submissions so made before the A.O. inter alia: A. Documents submitted under letter dated 17.11.2016: (i). Copy of bank statement from Bank of India, along with bank passbook of Panchvati Branch, Ahmedabad (P.B.P. No. 33 to 36) (ii). Demat Account activation statement with Indo Thai Securities Ltd. (P.B.P. No. 53) (iii). Copy of ledger account for the period from 01.04.2013 to 31st March 2014 of broker Indo Thai Securities Ltd., along with confirmation. (P.B.P. No. 51 & 52) (iv). Copy of gift deed for shares of Kappac Pharma Ltd. received from her mother Smt. Meenaben A. Shah. (P.B.P. No. 32) (v). Copy of ledger of M/s. Kappac Pharma Ltd. (P.B.P. No. 47) (vi). Demat slip for transfer of share from the Demat account of mother to the account of the appellant. (P.B.P. No. 48) (vii). Contact notes/bills of broker in respect of sale of shares of Kappac Pharma Ltd. (P.B.P. No. 49 & 50) B. Documents submitted under letter dated 18.12.2016 (P.B.P. No. 54 to 82) (i). Copy of account of preferential warrants of Kappac Phar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, if your honor is in permission of any material/evidence regarding the outcome of such regulatory action from SEBI which lead your honor to reach the conclusion that appellant has take accommodation entries to route her unaccounted money the same may please be specifically provided to the appellant for rebuttal and any adverse view taken without providing the said material / evidence for rebuttal is bad in the eye of law and against the principle of natural justice and equity. Para 3: That the appellant has no objection as regards 1,60,000 shares of Kappac Pharma Ltd. received by her as gift from her mother Mina Shah as the same is based on the facts of the case. The subsequent observation the said para is general in nature and no material/evidence has been brought on record to establish/prove that the said company is indulged in providing accommodation entries and the price was rigged and also the involvement of the appellant and his mother Mina Shah in rigging of the price of the shares. Merely financial of the company is not matched with the price of the shares quoted on stock exchange does not mean that the said company is indulged in providing accommodation entry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity of material details/supporting evidences, the appellant has established that the transaction of shares of the referred company has been quite genuine beyond doubt and thus, onus casted on the appellant has been fully discharged. However, without appreciating the facts of the case in proper prospective, the A.O. proceeded to disbelieve the explanation of the appellant in a quite pre- determined manner. 3.5 As may be perused from the impugned assessment order that vide para 4.1 to para 4.10of the order, the A.O., In the guise of 'giving a back ground of Investigation carried out by the investigation wing, Kolkata', has purportedly re-produced selective portions from the alleged report of DI (Inv.), running into 4 pages. However, there is not a whisper as to the investigation/inquiries independently conducted by the A.O. and being influenced by the report of the DI (Inv), in the beginning of para-4.1 of the order, he has opined that the explanation of the appellant is found to be not tenable. AND vide para 5 he has, once again, heavily relying on the alleged enquiry report of the Investigation Wing of the Department, stating that the Revenue cannot take or accept such m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, on one hand the A.O. has accepted the cost of acquisition in the hands of the appellant as well as sale value of shares as such: whereas on the other hand he has disbelieved the surplus being resulted into long term capital gain, net result. It is a classic illustration of blowing hot and cold at the same time by the A.O., without valid reasons. 4.1 It is submitted that although it appears to be a detailed and speaking appellate order so passed by the Ld. CIT(A), running into 64 pages, it is not so, briefly stated as under: para Contents/ particulars Page Nos. 4 Grounds of appeal reproduced 1 to 4 5.1 Observation of the A. O. reproduced 5 to 9 5.2 Selective portion of appellant's submission reproduced 9 to 27 6 Under the heading 'Decision', selective portion of report of investigation wing, copy/pasted 28 to 29 6.13 Selective portion of decision in the case of Swati Bajaj 30 to 63 6.14 It's a three liner finding upholding addition made by A.O. u/s. 68 & appellant's ground dismissed 63 (bottom) 4.2 From the aforesaid facts, it may kindly be appreciated that the Ld. CIT(A) without appreciating the facts and material support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ltd. are carried out through the reputed broker and essentially through banking channel with STT paid transaction. The entity from whom the appellant has acquired shares and to whom shares are sold have confirmed the transactions as per material placed on record. Fourthly, the fact that transactions have been carried out in open market out of broker account M/s. Indo Thai Security Ltd. and the sale consideration is transferred to bank account of the appellant with Bank of India, Panchvati Branch. These facts have not been disputed by the A.O. Thus, A.O.'s observation is devoid of any merit, factually incorrect and perverse. (b) Para 5.1 (b): Reasoning of the A.O. That the finding of D.I.(Inv.) Kolkata proved that entry operators have worked out an arrangement in which shares price were rigged and sold at low price to arrive at short term capital loss. Appellant's submission in rebuttal The reasoning is factually incorrect, in absence of any cogent material/ evidence having brought on record to prove that the resorted to price rigging and there is no evidence that cash has been routed from various accounts by the so called entry providers to accommodate the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence. Therefore, the allegation that the appellant has failed to discharge his onus is wholly unfair. (e) Para 5.1 (c) (c): Reasoning of the A.O. That the net worth of the penny stock company is negligible and business activity of the company is negligible, the set prices have been artificially rigged high/low. Appellant's submission in rebuttal It is submitted that firstly the A.O. has not brought any material on record to allege that the referred company's net worth is negligible nor he has made any analysis on record about the alleged negligible it is business activity of that company. It is known fact that in share market majority of small and ordinary persons, like the appellant, are investing in shares of the scrip they do not make analysis of fundamentals of the company, its promoter and/or his business turn over etc; but they are investing on the basis of market information. In the process of such investment activity, it may happen that the some scrip gives handsome return, in some cases heavy losses and some scrips remains idle for years resulting into Nil return on investment. Hence, high/low price of the scrip not supportive of its fundamental and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares on sale have been given to broker through demat account. The appellant has duly paid STT and other government levies on sale of shares which is evident from the contract notes received from brokers. Hence, the allegation of the A.O., of appellant's involvement in series of preconceived steps, is mere presumption/assumption without any material having brought on record. The action of the A.O. is based on mere suspicion, own presumption, general in nature and self serving conclusion being drawn on the basis of so called report of the D.I. (Inv). Kolkata which is not permissible under the law. 5.8 Lastly vide para-5.3 the A.O. has heavily relied upon the alleged findings of the search/survey, enquires conducted in the case of brokers/ operators and has arrived at a conclusion that the transaction entered by the appellant, the long term capital gain of Rs. 2,16,59,185/- in purchase and sale of shares of M/s. Kappac Pharma Ltd. claimed as exempt u/s 10(38) of the Act cannot be allowed added back towards appellant's taxable income u/s 68 of the Act. 5.8.1 At the cost of repetition, it is submitted that in the exactly identical set of facts and circumstances, when the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conclusion that the claim of the appellant of Rs. 2,16,59,185/-, for long term capital gain is disallowable and added back u/s 68 of the Act. 5.9 Besides, it is stated that the assessing officer has not disputed the fact that 1,60,000 of M/s. Kappac Pharma Ltd. were gifted to the appellant under a duly notarized gift deed dated 20.03.2014 by her mother Smt. Meenaben Ashokkumar Shah and the same have been transferred to appellant's demat account with M/s. Indo Thai Securities Ltd. on 25.03.2014. 5.9.1 As may be perused from the flow chart in respect of shares of Kapac Pharma Ltd. enclosed for ready as per Exbhit-1, Smt. Meenaben Shah mother of the appellant had applied for 5,00,000 preferential warrants convertible into equity shares on 09.06.2009 against payment of Rs. 54,80,000/- as an application money. She paid call money of Rs. 6,60,000/- on 28.08.2009 and on 20.10.2010 and warrants got converted into 5,00,000 equity shares and physical share certificates No. 0015350 have been issued for 5,00,000 shares which were under lock in up to 19.11.2011 and she surrendered physical certificates for demat to her broker M/s. India Infoline Ltd. and same was credited to her dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed LTCG on sale of shares of Devika Proteins Ltd. The A.O. treated the transaction as bogus and made addition of sale proceeds of shares u/s. 68 of the Act. Being aggrieved, the assessee carried appeal before CIT(A) who held that the shares were in nature of old investment, they could not be treated as penny stock by any stretch of imagination. The revenue carried the matter before ITAT who dismissed the appeal of the revenue. Relevant portion of the judgment is reproduced as under: "4. The Income Tax Appellate Tribunal further examined the question in appeal preferred by the revenue and confirmed the view of the appellate authority noticing that the shares were purchased in the year 2001 and they were sold after long time in the year 2010-11. 5. The genuineness of investment in the shares by the assessee was substantiated by him by producing copy of transaction statement for the period from 1.6.2001 to 1.10.2010. The investment was made in the year 2000-01. The shares were retained for more than ten years and were sold after such longtime. These circumstances suggested that the investment was not bogus or investment made in penny stock. The shares were purchased in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the Ld. CIT(A) has misdirected himself in placing reliance on the order and ratio of Kolkata High Court's decision in the case of Swati Bajaj. 4.7.1 With due respect to the Hon'ble High Court, the appellant submits that the facts as compared to the case on hand are distinct, in as much as in the case of Swati Bajaj, the crux of the issues was as to whether not providing of the investigation report to the assessee violated the principles of natural justice and giving of cross-examination and whether it was necessary. That apart, peculiar facts involved in that case wherein 89 different appeals of different assessees were disposed off by Tribunal in a single consolidated order without taking cognizance of specific facts involved in each case. The HC has not disturbed the settled position of law that circumstantial evidences can be looked into only when direct evidences are not available. (Para-69) In the present case, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. 4.7.2 Further peculiar facts vis-à-vis case Swati Bajaj (Supra) A perusal of factual matrix of the case of the appellant, it may kindly be appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder namely SEBI. (f) The appellant was under no obligation for manipulation: It is submitted that in the aforesaid circumstances, the appellant was under no obligation to prove that there was no manipulation "at the other hand", since the appellant has only earned capital gain which has been disclosed in the return of income so filed for the year under consideration, and that the capital gains earned by her on penny stock was not tainted. (g) The A.O. has relied on the order of SEBI about the surveillance measures taken to suspend the scrip of Kappac Pharma Ltd. which took place in 2015. However, the same is after 6 years from the year of purchase of the share and gifted by appellant's mother and even one year after sale of such shares in the hands of the appellant. It is therefore submitted that period during which the investment made by her mother and its subsequent sales by the appellant, the company Kappach Pharma Ltd. was a regular listed company at the recognized stock exchange of India. Having regard to the aforesaid facts, it may kindly be appreciated that the facts of the case on hand are quite distinct and distinguishable with the facts of the case of Swati B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has to prove the identity of the party through whom sale consideration is received, creditworthiness and genuineness of the transaction. In this context, it is respectfully submitted that the appellant has received the sale consideration through a recognized broker M/s. Indo Thai Securities Ltd. being a member with BSE/NRD/NSE, bearing DPID12050900 whose contract notes and contra accounts are produced during the course of assessment proceedings. Thus, the identity is undoubtedly proved. Similarly, creditworthiness is also proved by placing contra account of the broker on record. Thirdly, with regard to genuineness of the transaction, it is submitted that the entire sale consideration has been received through proper banking channel, by producing copies of bank statements evidencing transaction of sale of shares including purchases as well. Thus, by adducing more than adequate evidences on record, the appellant has discharged not only primary onus but in entirety, cast upon the appellant within the meaning of provisions of section 68 of the Act. The case of the appellant is covered by the decision of Hon'ble Gujarat High Court in the case of Rohini Builders reported in [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his order in a pre-conceived manner, without brining any cogent material on record. Neither the A.O. has supplied copies of statement of alleged entities whose names are referred to in his show-cause notice dated 23.12.2016 nor he has brought any material on record as to what action is taken by the department in their cases. The A.O. has simply relied upon intimation received from the internal agency and has concluded that the appellant was beneficiary of entry and has disallowed and added back total amount of Rs. 2,16,59,185/-. 5.4 Assuming without conceding or admitting even if the addition is rightly made u/s 68 of the Act, not only the initial burden but the whole burden is discharged by appellant by furnishing necessary details. In such an eventuality, the source of such credit in the bank account of the appellant is not the alleged entry provider but M/s. Shah Investors Home Ltd. Thus, the source of such entry is genuinely confirmed and established beyond doubt. No cogent and reliable material is brought on record to prove and established the complete nexus between the parties concerned to prove the same. The appellant says and states that he does not know the alleged mas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah on 25.03.2014 which have been credited in for demat account with Indo Thai Securities Ltd. The shares having been acquired under a valid gift, the cost thereof in the hands of previous owner has been accepted by A.O. in view of provisions of section 49(1) of the Act. (ii) The statement of third parties are said to have been taken by DI(Inv.) which are not made part of record, who have said anything having any relation with the appellant. The appellant is not at all named in the show-cause statement as evidenced from the selective portion extracted by the A.O. in the body of assessment order. (iii) Even the so-called details/papers stated in the order are self-serving and have no evidentiary value in the eyes of law. (iv) The A.O. has failed to corroborate or prove the contents of papers/statements being relied upon without providing copies thereof and/or affording any opportunity to the appellant to cross-examined them. (v) The company whose shares have been received as gift from her mother and sold by the appellant during the year under consideration is existing company and duly listed on BSE. (vi) No notices u/s 133(6) of the Act are issued by the A.O. to cross verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged connivance with the brokers and the price the shares were sold is not genuine price. The appellant submits that in the stock exchange, it is not a case that only the market price of the scrip of M/s. Kappac Pharma Ltd. sold by the appellant has gone substantially high but there is numerous scrip whose prices has gone high/low depending on market sentiments irrespective of its fundamentals. Hence, merely price of shares were gone high cannot prove that the transaction entered into by appellant are not genuine and more particularly when the holding period for shares was more than 55 months from the date of original investments made by appellant's mother Smt. Meenaben Shah. 6. Having regard to the aforesaid peculiar facts and circumstances of the case on hand, there is absolutely no justification in making addition of Rs. 2,16,59,186/- in the hands of the appellant. The orders of the authorities below are therefore liable to be quashed and addition so made and being sustained by the Ld. CIT(A) be deleted in the interest of justice and equity." 12. It is the case of the assessee that a copy of the enquiries, list of brokers and Directors whose statements were recorded during i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below relied upon various judgments: FOR CAPITAL GAIN ON SALE OF SHARES CIT v. Himani M. Vakil [2014] 41 taxmann.com 425 (Gujarat) CIT v. Maheshchandra G. Vakil [2013 40 taxmann.com 326 (Gujarat) CIT v. Jitendra Dalpatbhai Shah [2014] 41 taxmann.com 523 (Gujarat) Meenadevi N. Gupta v. ACIT Circle -5, Surat [2013] 35 taxmann.com 211 (Ahd) Vasantraj Birawat v. ACIT [2015] 61 taxmann.com 295 (Mumbai - Trib.) Smt. Smita P. Patil v. ACIT [2015]55 taxmann.com 346 (Pune - Trib.) CIT vs. Shyam R. Pawar [2015]54 taxmann.com 108 (Bombay HC) CIT v. Smt. Sumitra Devi taxmann.com 37 (Rajasthan) ITO v. Smt. Aarti Mittal [2014] 41 taxmann.com 118 (Hyderabad - Trib.) Ramesh Kumar Jain (HUF) v. DCIT [2013] 36 taxmann.com 524 (Jodhpur-Trib) DCIT v. Smt. Hansa Choudhary [2012] 23 taxmann.com 302 (Jodhpur- Trib.) Astt. CIT v. Kamal Kumar S. Agarwal (Indl.) [2010] 133 TTJ 818 (Nag.) Jafferali K. Rattonsey v. DCIT[2012] 23 taxmann.com 21 (Mum.) FOR PROVIDING OPPORTUNITY OF CROSS EXAMINATION Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II [2015]62 taxmann.com 3 (SC)/[2015] 52 GST 355 (SC) R.W. Promotions (P.) Ltd. v. ACIT [2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares for more than 12 months, respective assessee(s) sold their holding of Kappac Pharma Ltd. through a registered broker namely Kotal Securities Ltd on the recognized stock exchange namely Bombay Stock Exchange Ltd and Long term Capital Gain calculated in each case have been shown in the income tax returns as exempt income u/s 10(38) of the Act. 23. During the assessment proceedings the assessing officer on the basis of report of the investigation carried out by the Investigation Wing of Income Tax Department at various brokers in other parts of the country, lack of information from the purchaser of equity shares sold by one of the assessee namely Prakash Javia HUF and raising doubt on the abnormal increase of the share price of Kappac Pharma Ltd. which in no way could termed as a fair market value looking to the financial position, gross sales and income shown by the listed company KPL and based on all these observations concluded that the alleged transactions of sale of equity shares of KPL are bogus, Kappac Pharma Ltd. is a penny stock company, and the assessee has adopted a colorable devise to convert unaccounted money into accounted money by arranging bogus LTCG. 24. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly transferred in the name of respective assessee(s). 26. We, further note that as far as conditions provided in section 10(38) of the Act are concerned the same are duly fulfilled in the instant case Section 10(38) of the Act reads as follows: "any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust where - a) The transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and b) Such a transaction is chargeable to securities transaction tax under that Chapter............." xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 27. From perusal of above section we observe that following conditions are to be satisfied to claim income exempt u/s 10(38) - a. Asset transferred should be a long term capital asset b. Asset transferred should be either equity share or units of equity oriented fund or units of a business trust c. Transaction of sale of such equity share or units of equity oriented fund or units of a business trust is entered into on or after 01st October 2014 d. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DMAT Account. In the instant case, no flaw or any inconsistency has been found by the Revenue authorities with all these transaction of purchase and sale. 31. Further the aspect that whether Kappac Pharma Ltd is a 'penny stock' company or not has been dealt in detail by I.T.A.T., Kolkata Bench in the case of Yogendra Dalmia (supra) wherein the Tribunal after considering another decision of Bangalore Tribunal in the case Canara Bank vs. JCIT held the transaction from sale of equity shares of Kappac Pharma Limited as genuine and also allowed the claim of assessee of LTCG from the sale of equity shares of Kappac Pharma Ltd. and also deleted the alleged commission expenditure added by Ld. AO for arranging the bogus LTCG. The relevant extract of decision of Coordinate Bench Kolkata in the case of Yougendra Dalmia (supra) is reproduced below: Para 6 - "Next comes assessee's latter appeal ITA No. 775/Kol/2018 seeking to reverse both the lower authorities action treating his sale proceeds amounting to Rs. 1,81,009/- derived from sale of shares in M/s GCM Securities Pvt. Ltd and Kappac Pharma Ltd. has to be in the nature of unexplained cash credits. Both the lower authorities have furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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] 33. We, therefore, in the totality of facts and in view of the ratios laid down by Hon'ble Courts and decision of Coordinate Benches squarely applicable on the instant issue raised before us, are of the considered view the alleged transaction of purchase and sale of equity shares of Kappac Pharma Ltd. are not bogus as the respective assessee(s) have duly charged there onus to prove the genuineness of purchase and sale of equity shares of listed company KPL (listed in Bombay Stock Exchange) by placing necessary documents to prove that the purchase are directly from the shareholder and sold through a registered broker and nothing adverse has been found by the revenue authorities and KPL is not held to be a penny stock company. 34. Further, with regard to the alleged addition we find that the it is purely based on the report of the investigation wing carried out in the case of other persons finding no mention or the involveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vakil [2013] 40 taxmann.com 326 (Gujarat) (iv) Meenadevi N. Gupta V/S, ACIT [2013] 35 taxmann.com 211 (Ahmedabad - Trib.) (v) CIT V/s. Odeon Builders (P.) Ltd. [2019] 110 taxmann.com 64 (SC), (vi) Chandra Prakash Jhunjhunwala in ITA No. 2351/Kol/2017 dated 09- 08-2019 (vii) Shashi Bala Bajaj - ITAT Kolkata in ITA No. 1547/Kol/2018 dated 16- 11-2018 (viii) PCIT V/s. Prem Pal Gandhi 401 ITR 253 (P&H) (ix) PCIT V/s. Dhawani Mahendra Shah - Tax Appeal No. 674/2017 dated 12-092017 Gujarat High Court (x) PCIT V/s. Bharati Somchand Shah - Tax Appeal No. 1023/2017 dated 22-01-2018 Gujarat High Court (xi) Shantaben Parasmal Jain V/s. DCIT ITAT Ahmedabad in ITA No. 726/Ahd/2017 dated 15-10-2018 10. The Jurisdictional High Court of Gujarat in the case of Himani M. Vakil (cited supra) held as follows: "Assessee filed her return declaring certain amount as short term capital gain arising from sale of shares - Assessing Officer taking a view that share transactions were bogus, added amount of capital gain to assessee's taxable income as unexplained cash credit - Tribunal, however, concluded that genuineness of transactions was duly proved by contract notes for sale and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harma are still forming part of closing stock of the assessee company as on 31.03.2019. Thus, we have no hesitation in deleting the disallowance made by the A.O. which was correctly deleted by the Ld. CIT(A). Thus the grounds raised by the Revenue is without any basis and the same is liable to be rejected." 19. We find that the Co-ordinate Bench while upholding the order passed by the Ld. CIT(A) in deleting addition made under Section 10(38) of the Act in respect of sale of scrip of M/s. Kappac Pharma Ltd. relied upon the judgment passed by the Jurisdictional High Court in the case of Maheshchandra G. Vakil (supra). 20. It appears that the holding period is more than 55 months in case of the assessee before us too which facts cannot be brushed aside and therefore, the judgment passed by the Jurisdictional High Court in the case of PCIT vs. Jagat Pravinbhai Sarabhai Tax Appeal No. 332 of 2022 seems to be applicable. 21. So far as the judgment relied upon in the case of PCIT vs. Swati Bajaj, reported in [2022] 446 ITR 56 (HC. CAL.) by the Ld. CIT(A) while confirming addition, we find that the assessee made a contradiction statement distinguishing the fact made out by Revenue appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered office address at 22, Pragnya Society, above Dena Bank, Kandiwali (E), Mumbai-400101. 6. The documents in form of contract notes of purchase and sale of shares, Demat, Bank Statement were placed on record The documents in form of copy of Gift deed of shares of KPL in favour of the appellant, ledger account of broker M/s. Indo Thai Securities Ltd., demat slip of transfer of shares from demat account of mother to the demat account of the appellant, contract notes/bills of broker in respect of shares of KPL, Bank Statement were placed on record under appellant's letters dated 17.11.2016 and 18.12.2016 (Kindly refer PBP-3). 7. The company Surabhi chemicals and Investment Ltd. matched all the features of the companies proving bogus LTCG In the case of appellant, nothing is brought on record to prove that M/s. Kappac Pharma Ltd. is providing bogus LTCG to the appellant. 8. Investigation Report specifically named that Surabhi Chemicals and Investment Ltd is a penny scrip company. Only few observation has been made by the A.O. at para 4.1 to 4.6 of the assessment order, without making the alleged investigation report of DI Wing, Kolkata as part of record. In absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in manipulating the shares is proved, the appellant could not be held responsible for the wrong done by the brokers for persons and thus granted relief to the appellant holding that where transactions are well documented and payments are routed through banking channels, the transactions of sale and purchase of shares cannot be doubted. (Kindly refer para-18 of decision dated 01.09.2023 in the case of M/s. Seema Holdings P. Ltd. V. ITO in ITA No. 67/GTY/2023 (ITAT Gauhati). 14. The documents in form of copy of Gift deed of shares of KPL in favour of the appellant, ledger account of broker M/s. Indo Thai Securities Ltd., demat slip of transfer of shares from demat account of mother to the demat account of the appellant, contract notes/bills of broker in respect of shares of KPL, Bank Statement were placed on record under appellant's letters dated 17.11.2016 And 18.12.2016 (Kindly refer PBP-3). There is no iota of negative features like "purchase/sale through off market", "purchase/sale in cash", "short holding of shares", "holding in demat account just few days immediately before sale" (Kindly refer para-6 of the decision dated 28.04.2023 in the case of JCIT vs. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. The Hon'ble Apex Court has observed that utmost regard must be held by the adjudicating authorities and the appellate authorities to the requirement of judicial discipline. Moreover, where there are two conflicting decisions of various High Courts, Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC) has held that construction that is favourable to the appellant should be adopted. Hence, by following this principle, the decision of Hon'ble Calcutta High Court and other need not be followed in the peculiar facts and circumstances of the case. (Kindly refer para-5.14 of decision dated 03.02.2023 in the case of Shri Yogesh P. Thakkar vs. DCIT In ITA No. 1605/Mum/2021 & others (ITAT Mumbai). (Kindly refer PBP-436 to 489) 17 The purchases were made off the stock market/private placements and there were orders of SEBI suspending the scrip and/or wherein concerned traders were Found guilty of price manipulation. Further, there were statements recorded from the brokers who had indulged in price manipulation and hence, adverse view was taken. The appellant had received 1,60,000 shares by way of Gift from her mother under a duly not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s prima facie discharged burden. However, in the case of the appellant, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. In the appellant's case, she has made a specific request for copy of investigation report and copies of persons/entities and/or others whose statements are being relied by the A.O. at relevant time for no fault of appellant. The appellant cannot be made to suffer for no fault on her part. Therefore, the Judgment of Hon'ble Calcutta High Court is not applicable in the case on hand. The appellant is based in Gujarat. All the courts/Tribunals within the jurisdiction of Hon'ble Gujarat High Court are bound by decision of Hon'ble Gujarat High Court. Hon'ble Calcutta High Court has not held that the report of Investigation Wing can be conclusive for making additions in any assessment proceedings and it has not at all held that the evidences submitted by the appellant need to be ignored. At par-65 on page-103 or the order of Hon'ble Calcutta High Court, it is observed that "nothing prevented the assessee from mentioning that unless and until the report is furnished and the statements are provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when direct evidences are not available. (Para-69) In the present case, direct irrefutable evidences are made available before the A.O. which are not rebutted by the A.O. (ii) At page-142 of the judgment in the second last paragraph in that case, it is observed that where a witness has given directly incriminating statement and addition in the assessment is based solely and and mainly on the basis of such statement, in that eventuality, it is incumbent on the A.O. to allow cross-examination. In the case of the appellant, the appellant has requested before the Assessing Officer to provide material documents and the appellant has not been named by any of the persons whose statements are being relied by the A.O. (iii) In the referred case, there was a reference to search and there was reference to 84 BSE listed penny stock companies along with 32 share broking entities who have accepted that they were actively involved in bogus LTCG along with cash trail of Rs. 500 crore (Kindly refer to para-3 of the judgment). Therefore, there was a direct evidence indicating that transaction in question was in the nature of accommodation entry and cash trail. In the case of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act nor survey action has been carried out in the case of the appellant. (b) Name of the appellant not featuring in the report: With a due respect to the Hon'ble Court, it is submitted that in the report of investigation wing, appellant has not been named who were involved in the scam. Hence, the burden on the appellant is to prove genuineness of the transactions, which she had discharged by producing direct documentary evidences in her case. (c) Appellant's broker was not subjected to search: It is submitted that nowhere in the investigation report the name of the appellant's broker namely M/s. Indo Thai Securities Ltd. figures whose cases were covered u/s. 132/133A of the Act. (d) The appellant was not party to/or responsible for unreasonable rise in prices of scrip. Although, the appellant who has earned and offered LTCG on penny stock was certainly not a party for such unreasonable rise nor there is any evidence to that effect. The persons responsible for manipulations of such unreasonable rise in prices were the company whose shares were being traded and the operators involved therein. Therefore, the burden is not on the appellant to prove the steep r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the relevant parties or independent source of evidence. Even the statement recorded by the Investigation has not been got confirmed or corroborated by the person during the assessment proceedings. The A.O has neither conducted any inquiry nor has brought any clinching evidences to disprove the evidences produced by the appellant. On the other hand, the case of the appellant is Icon much better footing as may be verified from the factual matrix of the case. The appellant has adduced more than adequate quantities of evidences, material which are sufficient to prove identities of the parties through whom the appellant has transacted. Eventually, the appellant has fully discharged the onus casted upon him u/s. 68 of the Act. Therefore, there is no reason to disbelieve and/or doubt so far as the share transactions are concerned. The A.O could not have formed bios opinion on the basis of report from the internal agency. The A.O cannot treat a genuine transaction of sale of share as accommodation entry, without conducting independent inquiries, especially, the appellant has discharged her primary onus. 2. Comparative chart as to how the facts of the case of Rehana Anwar Shaikh vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the documentary evidences furnished by the assessee to prove the purchase and sales of shares. The A.O. has not found fault with any of the documentary evidences furnished by the appellant to prove the purchase and sales of shares. 11 The Hon'ble Tribunal observed that the A.O. has not brought on record any material to show that the assessee was part of group which involved in manipulation of prices. Hence, there is no room to suspect purchase and sales of shares undertaken by the in assessee, relying upon the decision rendered by Hon'ble Bombay High Court in the case of Shyam Pawar. The A.O. has not brought on record any material to show that the appellant was part of group which involved in manipulation of prices. Hence, there is no room to suspect purchase and sales of shares undertaken by the appellant. The ratio laid down by Hon'ble HC squarely applies to the case of the appellant. 12 The Hon'ble Tribunal concluded that the A.O. has not established that the assessee was involved in price rigging and further the AO did not find fault with any of the documents furnished by the assessee. the A.O. has not established that the appellant was involved in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entals to justify such a steep price rise. The appellant has not invested in scrip of the company KPL but the shares have been received by way of valid Gift deed from her mother. 4 The Hon'ble Tribunal noticed that the department has brought nothing on record to prove that the assessee was involved in price rigging of the instant share or that any form of cash had flown back to the assessee. so as to create the instant gains as bogus LTCG. In the case of the appellant, the department has brought nothing on record to prove that the appellant was involved in price rigging of the instant share or that any form of cash had flown back to the appellant so as to create the instant gains as bogus LTCG. 5 The Hon'ble Tribunal observed that the assessee was not provided any opportunity of cross-examination which is absolutely necessary when such substantial addition is made to the income of the assessee by placing reliance on statement of third parties, relying upon Apex Court's decision in the case of Andaman Timber Industries. In the case of the appellant, despite specific request made before the A.O. under appellant's submission dated 26.12.2016 (as reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Meenaben Shah on 22.11.2010 and were placed in demat account with India Infoline Ltd., by the company. Out of which 1,60,000 shares were gifted to the appellant in her demat account with M/s. Indo Thai Securities Ltd. In the case of donor assessment for the year under consideration has been made u/s. 143(3) of the Act on 23.12.2016 by accepting the transaction of gift of 1,60,000 shares in the favour of the appellant. 2 The assessee's purchased transaction was done off market in physical form by paying cash and not through banking channel. There is no question of purchase transaction, since the scrips in the hands of the appellant has been by way of gift from her mother Smt. Meenaben Shah, as stated above and the donor was original subscriber of the shares since 22.11.2010. 3 Thereafter, same have been converted into electronic mode. The shares were received by way of gift and through demat slip for transfer to in her demat account under electronic mode. 4 The appellant sold 4000 shares @Rs.720 per share. The appellant sold shares @Rs.686.97 per share. 5 The shares were held for approximately 19 months. The holding period of shares was more than 55 months fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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