9911796707
TMI Blog2023 (4) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences. On perusal of the details so submitted by the ld. AR of the assessee, it is seen by me that the assessee has furnished various documentary evidences in support of purchase and subsequent sale of the shares leading to earning of LTCG by the assessee, as mentioned in brief just herein above and mentioned in detail in the submission of the ld. AR. The assessee has purchased 12500 shares for Rs. 1,87,500/- and made payment through banking channel which stood debited in the bank account of the assessee. These shares were dematerialized on 26.06.2013 [12000 shares] and 26.08.2013 [500 shares] and deposited in the DMAT account maintained by Alankit Assignment Ltd., the independent third party.Thus it is clear that 12500 shares were purchased by the assessee and same is quite evident not only from the books on accounts of the assessee but also D-MAT account of the assessee maintained by independent third party, duly recognized by the concerned authorities. As coming to the sale of share, it is seen that assessee has sold these shares through online transaction via recognized stock broker M/s KIFS Securities Ltd. Transaction of sale is supported by contract notes and as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as received through banking channels as well as shares were duly debited in DMat account and thereby sale of shares is established and not at all doubtful and therefore consequent LTCG is not at all non-genuine and thus the addition made u/s 68 deserves to be deleted. 1.3 That the above mentioned addition made by the A.O. after interalia observing that the financial transaction effected by the assessee were sham ones and confirmed by Ld CIT(A) without rebutting the documentary evidences of purchase, banking channel payment, D-Mat account and subsequent sale on on-line portal at market price and payment received through banking channels after due payment of STT and merely on presumptions and assumptions and relying on uncorroborated and general statement of some broker not related with assessee is most arbitrary, unjust and untenable in fact and in law and liable to be deleted. 1.4 That the addition of Rs. 31,70,080/- made by the AO and confirmed by Ld. CIT(A) by holding the Long Term Capital Gain on sale of shares as unexplained credit, after placing reliance on some information and statements of third parties recorded by some other officials, in some other case and behind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from other sources. Return of Income for the year was filed on 26.08.2015 declaring total income at Rs. 5,48,200/-. The case of assessee was selected for scrutiny by issue of notice u/s 143(2) of the Act. Details and information sought by AO were furnished and assessment was completed u/s 143(3) of the Act after making addition u/s 68 to the tune of Rs. 31,70,080/- by treating the long term capital gain [claimed exempt u/s 10(38)] as accommodation entry and thus bogus, and further addition of Rs. 63,402/- u/s 69C that assessee might have paid commission for obtaining such accommodation entry. The relevant para of AO at page 52 and 53 making total addition of Rs. 31,70,080 + Rs. 63,402=32,33,482/- is mentioned as under:- Page 52: The reply by the assessee laws considered carefully but not found tenable in view of the elaborate discussion made above. Hence, addition of Rs. 31,70,080/- is made to the income of the assessee treated as bogus long term capital gain......'' Page 53: Looking to the facts and circumstances of the case, it is held that the assessee has paid commission @ 2% of sale value of shares of M/s. Kapac Pharma Limited and paid a sum of Rs. 63,402/- (2% of 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2013 and onwards the various agencies of Government of India as well as Income Tax Department acted on this and busted the racket. Therefore, these issues need to be decided in the context and background not otherwise. It is the substance of the transaction which is more important than the Form of transaction i.e. simply showing that the assessee has earned exempt long term capital gain and there are umpteen number of facts which suggest that entire design or form the transaction is fishy or suspicious. The decision of SC in Sumati Dayal (supra) and Durga Prasad More (supra) does not lays down the principle of surmises and conjectures and rather it provides a golden principle which is applicable in certain situation, where the authorities have reasons to believe that the apparent is not real and in such case human behavior or preponderance of probability principle should be applied and present case is the fit case for application for said principle. Further, in view of decision of SC in NRA Iron & Steel (supra), onus u/s 68 cannot be discharged by merely submitting contract notes, bank statement etc. The assessee has to establish genuineness by giving proper reply and justifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter holding the same for more than twelve months. Accordingly, Long term capital gain of Rs. 29,71,725/- earned from the sale of such shares was declared in the return of income filed. As shares sold were of a listed public limited company i.e. M/s Kappac Pharma Ltd. and were sold through recognised stock exchange after holding for a period of more than one year and the STT was paid on sale, the profit earned being long term capital gains was claimed as exempt u/s 10(38) of the Act. These shares were purchased by the assessee after making payment through payees account cheque which stood debited in the bank account of the assessee (APB 35-36). These shares stood sold via transaction executed through Bombay stock exchange after payment of STT (Securities Transaction Tax) and other incidental charges. However, Ld. AO during the course of assessment proceedings, based on some information received from Investigation Wing of the Income Tax Department (obtained by them during searches/surveys conducted by them at various places throughout the country but none of them was related or connected in any way to the assessee), issued show cause notice dated 17.11.2017 proposing to make additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document evidences were not rebutted by ld. CIT(A) also. Ld. CIT(A) on his own theories and assumptions has denied the opportunity of cross examination and further tried to deviate his finding from the direct judgment of Hon'ble jurisdictional high court on this issue where the Hon'ble court has confirmed the order passed by the Hon'ble Jaipur bench of ITAT. In this regard, at the outset, it is submitted that neither information nor the statements relied upon by ld.AO for making addition were supplied to assessee despite of specific request made by assessee. In fact, request of assessee seeking cross examination of such parties whose statements were relied upon was also turned down in arbitrary manner, which is absolutely against the principle of natural justice (APB53). Ld. CIT(A) also ignored this vital issue and confirmed the addition made by ld.AO. With this background, following facts are submitted for your honours' kind perusal and the sake of convenience: The Transaction: As stated above, Assessee had purchased 12500 equity shares of M/s Kappac Pharma Ltd., a public limited company listed in BSE (APB-32) and the necessary payment was made by account payee cheque (APB-36) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was denied (even though assessee has neither purchased nor sold the shares of this company through broking firms of Sh.Jai Kishan Poddar or Sh. Anil Khemka). It would not be out of place to mention here that apart from the so called information received from Investigation Wing, Kolkatta containing statements of Shri Jai Kishan Poddar and Sh. Anil Khemka, there was no corroborative material available with the Ld. AO or referred to by him in the assessment order found as a result or gathered during the course of assessment proceedings in support of the impugned addition made by him except analysis of financial statements as taken from money control website and a SEBI report (generalized) where the SEBI had made enquiries in respect of unexpected fluctuations / gains in the price of shares of few companies. The Ld. CIT(A) also confirmed the addition on the findings of ld.AO by ignoring the fact and the legal position that such generalized analysis/report could not have been relied upon by ld. AO for treating the well documented transaction as bogus without bringing on record specific material against assessee. During the course of assessment proceedings, a specific request was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO has completely followed casual approach and has ignored the facts of the case, which is evident from the observations of ld. AO at page 25 para 3.5 that "It was found that the shares of the company were scarcely traded in the past but all of a sudden after the purchases by the assessee, the prices of the shares increased abnormally for almost one year without any reason whatsoever. As soon as the assessee sold last of its shares, the price and volume again became disproportionate to real financial position of the company." Your honours would appreciate that the prices of Kappac Pharma were at all time high between January to May 2014 (upto 708/- per share), whereas assessee has not sold shares during that period as he was expecting further increase in prices. It was only after prices of share started declining, assessee sold shares in November 2014 at Rs. 251/- and Rs. 255/-, i.e. at almost 1/3rd of the highest prices. Had there been any sort of pre planning, it would not have happened. Also, the very fact that assessee was holding 12500 shares bought for Rs. 1,87,500/- out of share capital of Rs. 3.03 crores of Kappac Pharma, assessee, by no stretch of imagination was in posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... honours' would appreciate that a judgement may render certain principles, however the same cannot be blatantly applied in any and every case unless facts involved are same. In the instant case of assessee, there was no search/survey action conducted in the premises of assessee and no specific information was collected, rather enquiries conducted in some other case were relied upon that too without supplying the copies of the same to the assessee, thus decision of Hon'ble Supreme Court is not applicable in the case of assessee. Ld. CIT(A) has also relied upon decision of Hon'ble Delhi Bench of ITAT in the case of Satish Kishore vs ITO in ITA No. 1704/Del/2019, which is again misplaced as in that case, shares were purchased for cash, whereas assessee has entered into transactions through banking channels, thus the case is distinguishable on facts. Ld. CIT(A) has also relied upon decision of Hon'ble Delhi high court in the case of Suman Poddar, which is again misplaced as in that case, price of the shares were increased abnormally in a short span of 5 months (491% profit) however, in our case the increase is merely 17 times that too in a period of 39-40 months which is quite norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on have been carried out, then nothing can be implicated against the assessee." The aforesaid judgement of Hon'ble Special Bench was followed by Hon'ble Kolkatta ITAT in the case of Mahendra Kumar Baid Vs. ACIT dated 18.08.2017. Hon'ble SC in the case of [Umacharan Shaw & Bros. v. CIT (1959) 37 ITR 271 (SC)] has held that "There was no material on which the Income-tax Officer could come to the conclusion that the firm was not genuine and further observed that the conclusion is the result of suspicion which cannot take the place of proof in these matters. In the present case too, the Assessing Officer had rejected the evidence produced and based his conclusion only on surmises; there was hardly any material for him to conclude that the amount in question was not a gift." In case of Dhakeswari Cotton Mills Ltd. Vs. CIT 26 ITR 775 Hon'ble Supreme Court held that there must be something more than bare suspicion to support the assessment u/s 23(3). At this juncture, attention of the Hon'ble Bench is invited to the recent judgement of Hon'ble jurisdictional High Court in the case of CIT vs Pooja Agrawal (Caselaws paper Book Pages 8-11), wherein it has been categorically held by H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ITO in ITA No. 312/JP/2021 has held that: "6.3. The issue of penny stock and consequent additions made has elaborately dealt with by ITAT Jaipur Bench in the case of Pramod Jain & Others (supra) and relying on the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Pooja Agarwal, 160 DTR 0198 (Raj.) deleted the addition by observing as under :- "In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any 30 ITA No. 312/JP/2021 Shri Manohar Lal Chugh, Jaipur. cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/ merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly we delete the addition made by the AO on this account." On further appeal by the department to the Hon'ble Rajasthan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made before the Ld. AO that such person be confronted and assessee may be allowed to cross-examine him so as to verify the veracity / truthfulness of the statements made by him (APB 51-58 para 3 at page 53). However, in spite of the dire necessity of cross-examination in the circumstances of the case, the assessee's request for cross-examination was turned down in an arbitrary manner, without specifying any justifiable reason. Ld. CIT(A) also affirmed such action of ld.AO in not affording opportunity of cross examination by placing reliance on some judicial pronouncements, which all are not at all relevant and ignored the binding judgement of the Hon'ble Apex court in the case of CCE Vs. Andaman Timber Industries, (copy at case law PB page 1-7) (324) ELT 641 wherein it has been held as under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the statements to the assessee, thus denying it opportunity of cross examination. In this regard, it is further submitted that: i. Impugned addition have been made solely on the basis of statements of third parties i.e. Shri Jai Kishan Poddar and Anil Khemka who are completely unknown and unrelated to the assessee. There is no corroborative evidence found either during the course of search or brought on record during the course of assessment proceedings. No other material has been referred to by the Ld. AO or by ld. CIT(A); ii. The said statements were not even recorded by Assessing Officer himself, but were recorded by some other authority. Thus, such statements could not have been simply used against assessee without at least examining such person by AO himself during the course of assessment proceedings. iii. Statements of Shri Jai Kishan Poddar and Sh. Anil Khemka were recorded behind the back of assessee by some other officer and opportunity of cross examination was not allowed to the assessee in spite of the specific requests made by assessee and request was turned down in arbitrary manner. iv. Even in the said statements, nothing adverse has been stated agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase bills, payment of consideration through bank, DEMAT account, allotment of amalgamated shares, sale of shares through stock exchange at prevailing price, payment of STT etc. Hon'ble Ahmedabad bench of ITAT also in the case of Smt. Sunita Jain vs ITO (Case law Paper Book Pages 134-143) quashed the assessment order by placing reliance on Apex Court judgement in the case of Andaman Timber (cited supra) as entire assessment was based upon the statements of Sh. Mukesh Choksi, which were neither supplied to assessee nor was opportunity of cross examination was provided. The Ld. AO as well ld. CIT(A) have placed reliance on some judicial pronouncements to hold that right to cross examine is not absolute, however such judgements have been passed in different set of facts and furthermore have been superseded by Hon'ble Apex Court judgement in the case of Andaman Timber Industries (supra) which now governs the field. Thus, in light of the above, it is submitted that the impugned assessment order is clearly bad in law and deserves to be set aside. The capital gain declared by assessee is completely genuine: It is submitted that the transactions of purchase and sale of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further submitted that assessee has been regularly investing in shares and in fact during the year under consideration is also holding scrips of other companies which is evident from the copy of statement of holding (APB 37). The assessee had been regularly investing in shares. In this regard, reliance is placed on decision of Hon'ble Jaipur bench of ITAT in the case of Hon'ble Jaipur bench of tribunal in the case of Sh. Pramod Jain vs. DCIT wherein it has been categorically held that Para No. 6 "The Assessing Officer has doubted the genuineness of the transactions however, once the holding of shares of the assessee at the time of the same were issued by M/s Oasis Cine Communication Ltd., is not in dispute then the holding of shares of M/s Gravity Barter Ltd. also cannot be dispute because of the fact that without holding of the same the shares of M/s Oasis Cine Communication Ltd. could not he issued to the assessee, Once, the shares were held by the assessee then, the question of genuineness of the transaction does not arise however, the purchase consideration can be doubted by the AO if the shares were claimed to have been purchased against consideration paid in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd any material to show that apart from the share application money paid through bank account the assessee has brought his own unaccounted money back as long term capital gain. The facts of assessee's case are identical to the case of Shri Pramod Jain (supra). The assessee has purchased shares, for which the payment of Rs. 1,87,500/- was made through banking channels for allotment of these shares, which stood debited in the bank account of the assessee on 04.04.2013. Assessee got them converted in D-mat and shares stood credited in the D-mat account of the assessee many months before the sale. From the above, it is evident that assessee has paid purchase consideration for shares through cheques which stood debited in bank account of assessee. This payment through banking channel cannot be doubted. In lieu of payment assessee got the shares and these stood credited in D-mat Account of assessee which is maintained by independent third party / agency of repute. Without actually owning the shares, these cannot be reflected in D-mat Account. Thus, purchase and owning of share is fully proved no material has been brought on record by ld. AO or ld. CIT(A) which can disprove the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 10. We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enquiry report which may has been brought on record by the efforts of the Assessing Officer and that enquiry report was prepared by the SEBI and from the observations made by the Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishable on other counts also for which a detailed note is appended alongwith this written submission for perusal and record. The reliance is also placed on the following decisions: Pr. CIT vs Jatin Investment Pvt. Ltd. (Delhi High Court) (Caselaws PB Pages12-16) S 68 Bogus Capital Gains: A transaction cannot be treated as fraudulent if the assessee has furnished documentary proof and proved the identity of the purchasers and no discrepancy is found. The AO has to exercise his powers u/s 131 & 133(6) to verify the genuineness of the claim and cannot proceed on surmises." CIT vs Mukesh Ratilal Marolia (Bombay High Court) (Caselaws PB Pages 17-28) S.10(38)/69: Fact that a small amount invested in "penny" stocks gave rise to huge capital gains in a short period does not mean that the transaction is "bogus" if the documentation and evidences cannot be faulted. Surya Prakash Toshniwal HUF vs ITO (ITAT Kolkata) (Caselaws PB Pages 85-93) Bogus capital gains from penny stocks: Long Term capital gains claimed exempt u/s 10(38) cannot be treated as bogus unexplained income if the paper work is in order. The fact that the company whose shares were sold has violated SEBI norms is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this regard, it is submitted that while holding the capital gain declared by assessee as bogus merely on the basis of statements of a third party, the Ld. AO has further presumed that a commission of the above mentioned amount @ 2% might have been paid by assessee as a consideration for arranging such accommodation entry. In fact, ld. CIT(A) has confirmed the addition stating the same is covered by ground of appeal relating to long term capital gain transaction. It is submitted that firstly, the transaction entered into by the assessee and the LTCG arising therefrom is completely genuine as has been submitted above in detail in grounds of appeal above. Thus, in view of the same there arises no question of any commission payment. Secondly, this addition also is solely based upon the statement of third party absolutely uncorroborated in much as there is no material available on record to show any such payment. No such material has been referred by the Ld. AO and merely on the basis of assumptions and presumptions; the impugned addition has been made. Therefore, when the capital gain has already been established as genuine which was treated as bogus by Ld. AO solely on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation Wing, Calcutta particularly the statement of one Shri Jai Kishan Poddar of some M/s Consortium Capital Pvt. Ltd. and of Shri Anil Kumar Khemka of M/s Dev Shyam Stock Broking Pvt. Ltd. wherein they have admitted to be engaged in providing accommodation entries in the guise of LTCG through their stock broking companies named above, has considered the transaction of sale of shares of M/s Kappac Pharma Ltd. made by assessee, as bogus. It is uncontroverted fact that assessee has furnished copy of bank statement showing payment so made for purchase of shares, copy of statement of holding of shares reflecting the impugned equity shares, copy of contract notes regarding sale of shares, copy of D-MAT account reflecting shares as sold, copy of bank passbook of the assessee reflecting sale consideration received, before the ld. AO. However, ld. AO has not controverted any of these evidences furnished before him in support of the long term capital gain so claimed exempted. The ld. AO has narrated the modus operandi of the various entry providers which is a general statement and also referred to the statement of one Shri Jai Kishan Poddar and another Shri Anil Kumar Khemka wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee maintained by independent third party clearly lead to infer that holding of the share and consequently also the purchase of these shares by assessee cannot be disputed. 2.5.1 Now coming to the sale of share, it is seen that assessee has sold these shares through online transaction via recognized stock broker M/s KIFS Securities Ltd. Transaction of sale is supported by contract notes and as per the contract notes, these shares were sold on three different dates namely 24.11.2014, 25.11.2014 and 10.12.2014. These contract notes are having time stamped, different trade numbers, order time and trade time etc. As the sale of shares have been made through online system on stock exchange, obviously same has been made at the prevailing market rate of the shares. Accordingly, the sale rate so shown by the assessee cannot be doubted. Moreover, security transaction tax has also been deducted and paid and the assessee has received the net sale consideration through banking channels. These evidences leave no doubt about the sale of shares made by the assessee at the prevailing market rate. Once the assessee has produced all the supporting evidences not only of sales but also of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore said evidences cannot be manipulated by assessee. Once the evidences produced by assessee is neither prepared by it nor is any scope of manipulation by him, then transaction of purchase and sale of shares and consequent capital gain shown by the assessee cannot be doubted. It is reiterated that all the various evidences were filed by the assessee before the ld. AO and are now also filed before us in paper book in support of long term capital gain shown on sale of shares, which are as under:- S.No. Particulars Paper book Page No. 1. Copy of contract notes dated 10.12.2014, 25.11.2014 and 24.11.2014 regarding shares sold 42-44 2. Copy of bank passbook of the assessee reflecting sale consideration received 45-48 3. Copy of D-MAT account reflecting shares sold 40-41 4. Copy of statement of holding of shares 37 5. Copy of request for D-MAT of shares 38-39 6. Copy of bank pass book reflecting payment for purchase of shares 35-36 7. Copy of debit note dated 16.01.2013 for purchase of shares 32-34 On the other hand, the AO has merely relied upon the statement of third person recorded behind the back of the assessee and without giving any opportunity t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Wing was available on online thus it cannot be said that relevant information was not supplied and therefore, the judgement of Andman Timber is not applicable to the facts of the case. In this regard ld. AR submitted that the assessment in the present case was completed much before the date when the report of Investigation Wing, Calcutta was available online and thus the judgment of Hon'ble Apex Court in the case of Odeon Builders still hold the water which says that the no addition could be made unless the material available with AO is not confronted to the assessee and opportunity of the cross examine the witness is not provided. In this regard the coordinate bench of ITAT, Jaipur 'A' bench in the case of ACIT Vs. Meverick Share Brokers Pvt. Ltd. in ITA Nos.27/JP/20dt. 26.9.2022 has dealt this issue and considered the contention of the revenue as well as the submission of the assessee wherein a detailed note distinguishing the judgement of Swati Bajaj of hon'ble Calcutta High court was filed and held the transaction of sale of shares as genuine. Such note as reproduced in Para 15 fo the said order is reproduced as under: 15. Since, ld. DR has cited the recent judgment in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded for cross-examination of the assessee. It was submitted before the Hon'ble Court that Tribunal did not examine the case on touchstone of human probability. However, Hon'ble High Court upheld the order of the Tribunal. It was considered that prejudice was caused to the assessee as he should have been allowed an opportunity of being heard and of rebutting the evidences against him. It was also impliedly held that direct evidences weigh more than circumstantial evidences and human probabilities. The relevant extract of order is as under: "..The Tribunal by impugned order has categorically held that the material information received by the Assessing Officer from the investigation wing alongwith certain statements recorded by DBIT Investigation, Calcutta could not be taken into consideration as that material was not disclosed nor an opportunity was accorded for cross-examination of the Assessee. This finding recorded by the Tribunal cannot be said to be perverse or suffering from any patent illegality. Learned counsel for the Revenue could not satisfy us with reference to any judgment on this aspect that even without disclosing any material to the Assessee and without allowing hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003, sale bill, bank account, demat account and official report and quotations of Calcutta Stock Exchange Association Ltd. on 23rd July, 2003. In our view, present appeal does not raise any question of law, much less any substantial question of law..." 5. Hon'ble Calcutta High Court has mainly decided the case against the assessees for the reason that factual position in any of the 89 appeals forming part of the bunch was not discussed by the Hon'ble ITAT (para 40, Page 80). In the instant case it is submitted that assessee's case was not part of any bunch of cases and, therefore, there cannot be any situation that facts were not properly discussed and appreciated by the appellate authority. 6. Hon'ble Calcutta High Court has not held that the report of Investigation Wing can be conclusive for making additions in any assessment proceedings. Hon'ble Calcutta High Court has simply held that such report of Investigation Wing can be a starting point for probing the matter further. Hon'ble Calcutta High Court has not at all held that the evidences submitted by the assessee need to be totally ignored. 7. In respect of right of Cross Examination, Hon'ble Calcutta High Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made unless such information is provided to the assessee and opportunity of cross examination is provided more so when assessee placed on record all the evidences. The relevant findings are as under: Headnote: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced by the assessee. If the revenue has failed to bring evidence on record that money changed hands and there was agreement to convert unaccounted money mere reliance on the report of investigation without further corroboration does not justify the conclusion that the assessee obtained an accommodation entry. Relevant extract is as under: "11. .........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 q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the Ld. A/R has also taken a legal plea that no cross examination of the person, whose statement was relied upon, was granted despite specific request made to the AO. The aspect of not granting cross examination has specifically been answered by the Hon'ble ITAT Jaipur in the case of Shri Pramod Jain & Others in ITA Nos. 368 to 372/JP/2017 dated 31.01.2018. The relevant extract on the issue at page 24 to 28 are as under: "As regard the non grant of opportunity to cross examine, the Hon'ble Supreme Court in case of Andaman Timber Industries vs. CCE (supra) while dealing with the issue has held in para 5 to 8 as under:- "5. We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnana, learned senior counsel who appeared for the revenue. 6. According to us, not allowing the assessee to cross-examine the witness 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 mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice." Therefore, the statement of witness cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. The Mumbai Special of the Tribunal in case of GTC Industries vs. ACIT (supra) had the occasion to consider the addition made by the AO on the basis of suspicion and surmises and observed in para 46 as under:- "46. ln situations like this case, one may fall into realm of 'preponderance of probability' where there are many probable factors, some in favour of the assessee and some may go against the assessee. But the probable factors have to be weighed on material facts so collected. Here in this case the material facts strongly indicate a probability that the wholesale buyers had collected the premium money for spending it on advertisement and other expense and it was their liability as per their mutual understanding with the assessee. Another very strong probable factor is that the entire scheme of 'twin branding' and collection of premium was so designed that assessee-company need not incur advertisement expenses and the responsibility for sales promotion an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, the transaction of purchase and sale of the shares in question cannot be held as bogus merely on the basis of Report of the Investigation Wing of the Department in some other cases where some persons were found indulged in providing accommodation entry, and further it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. 6.3. The issue of penny stock and consequent additions made has elaborately dealt with by ITAT Jaipur Bench in the case of Pramod Jain & Others (supra) and relying on the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Pooja Agarwal, 160 DTR 0198 (Raj.) deleted the addition by observing as under :- "In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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