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TMI Blog2023 (4) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the above said case of Shyam R Pawar [2014 (12) TMI 977 - BOMBAY HIGH COURT] and Ziauddin A Siddique [2022 (3) TMI 1437 - BOMBAY HIGH COURT] are squarely applicable to the facts of the present case. Accordingly, we set the order passed by CIT(A) on the grounds raised on merits and direct the AO to delete the addition of long term capital gains. Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the same had lock in period of one year. In the meantime, on 28.09.2010, the shares were split by the company from Rs. 10/- per share to Re 1.00 per share. Accordingly, the assessee received 15,00,000/- equity shares of Re 1.00 each. Though the lock in period expired on 09.12.2010, the assessee did not sell the shares immediately thereafter. The assessee has sold only a part of share holding, i.e., 11,20,000 shares between 21.01.2011 to 10.03.2011 in online BSE platform through a broker named M/s Magnum Equity Broking ltd. 6. The Ld A.R then advanced his arguments on validity of reopening of the assessment. He invited our attention to the reasons for reopening of the assessment placed at page No. 9 of the paper book and submitted that the Assessing Officer has reopened the assessment, only on the basis of the information received through ITD systems and hence it is a case of borrowed satisfaction, which is not permissible under the Act. He further contended that the AO has not understood the facts also correctly while recording the reasons, which is evidenced by the fact that the AO has stated that the assessee has sold 4 lakhs shares for a sales consideration of Rs. 5.45 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing Officer has purchased only 47,019 shares. Hence, the Assessing Officer could not have placed reliance on this information also in order to reject the transactions of the assessee. 8. The Learned AR further submitted that the Assessing Officer has placed reliance on the statements given by certain persons connected with the company M/s. Sreenath Commercial and Finance Limited. However, the Assessing Officer did not give copies of those statements to the assessee and also did not provide opportunity to cross examine them, even though a specific request was made to the Assessing Officer in the letter dated 8.2.2017 filed before him. The Learned AR further submitted that the Assessing Officer has observed that a broker named J.M. Financial Services Pvt. Limited is involved in rigging of share price. However, the assessee has not sold the shares through the above said broker. He submitted that the assessee has sold shares through M/s. Magnum Equity Broking Limited. Hence, the said information received by the AO is also not relevant to the assessee. He further submitted that there is no allegation made against the assessee that she has participated in any price riggin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares through preferential allotment and the said shares had lock in period of one year. The assessee has held 15,00,000 shares in the above said company and the assessee has sold 11,20,000 shares during the year under consideration almost after one year after expiry of lock in period. We notice that the assessing officer has not found fault with any of the documents furnished by the assessee in support of purchase and sale of shares. There is also no allegation made that the assessee was part of ring which indulged in the alleged price rigging. The allegation of the AO is that the assessee has availed accommodation entries by way of long term capital gains. We notice that an identical case of allegations that the assessee has availed accommodation entries for bogus capital gains was examined by the Hon'ble jurisdictional Bombay High Court in the case of Shyam Power (supra). The decision rendered by Hon'ble Bombay High Court in the above said case is extracted below:- "3. Mr. Sureshkumar seriously complained that such finding rendered concurrently should not have been interfered with by the Tribunal. In further Appeal, the Tribunal proceeded not by analyzing this material and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutiny. It was also revealed during the course of inquiry by the Assessing Officer that the Calcutta Stock Exchange records showed that the shares were purchased for code numbers S003 and R121 of Sagar Trade Pvt Ltd. and Rockey Marketing Pvt. Ltd. respectively. Out of these two, only Rockey Marketing Pvt.Ltd. is listed in the appraisal report and it is stated to be involved in the modus-operandi. It is on this material that he holds that the transactions in sale and purchase of shares are doubtful and not genuine. In relation to Assessee's role in all this, all that the Commissioner observed is that the Assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the Company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the Assessee to the accounted income and the present Assessee utilized the scheme. 6. It is in that regard that we find that Mr. Gopal's contentions are well founded. The Tribunal concluded that there was somethi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f same transactions, dealings, same investigation and same charge or allegation of accommodation of unaccounted money being converted into accounted or regular as such. The relevant details pertaining to the shares were already on record. This question is also a fall out of the issue or question dealt with by the Tribunal and pertaining to the addition of Rs. 25,93,150/-. Barring the figure of loss that is stated to have been taken, no distinguishable feature can be or could be placed on record. For the same reasons, even this additional question cannot be termed as substantial question of law." 14. The Hon'ble Jurisdictional High Court has considered an identical issue in yet another case of PCIT vs. Ziauddin A Siddique (Income tax Appeal No. 2012 of 2017 dated 4th March, 2022) and relevant discussions made by Hon'ble Bombay High Court are extracted below:- "2. We have considered the impugned order with the assistance of learned counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd ("RFL") is done through stock exchange and through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions carried out through banking channels, through the medium of portfolio management whereby there is no contact between the buyer and the seller. The fact remains that there is direct evidence placed on record by the assessee to support the genuineness of the impugned transactions such as contract notes, share certificates, corroborative evidence indicating purchase/ sale through registered broker as juxtaposed against the findings of the AO based on the general report from Investigation and the modus operandi adopted by unscrupulous entry providers. There is no denying that there is no assessee-specific material on record of the AO to pin-point that the assessee has entered into an unholy nexus with entry providers so as to stage manage accommodation entry of STCL. The statements relied on by the AO in the nature of admissions are bereft of corroborative material to implicate the assessee herein in such scam. At the same time the material furnished by assessee to substantiate its claim remains unchallenged and uncontroverted. The purchases were neither off- market nor through preferential allotment. Besides, no copy of any report of information received was supplied to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO to prove that the assessee has indeed availed only accommodation entries. We noticed that the assessee has furnished all documents relating to purchase and sale of securities. The shares have entered and exited his demat account. The purchase and sale transactions have been routed through the bank accounts of the assessee. All these documentary evidences produced by the assessee have not been disproved. We also notice that the assessee has asked for opportunity of cross examination of the parties, whose statements were relied upon by the AO, but same was not provided. Hence the AO could not have placed reliance on those statements. On the conspectus of the matter, we are of the view that the decision rendered by the jurisdictional Hon'ble Bombay High Court in the above said case of Shyam R Pawar (supra) and Ziauddin A Siddique (supra) are squarely applicable to the facts of the present case. Accordingly, we set the order passed by Ld CIT(A) on the grounds raised on merits and direct the AO to delete the addition of long term capital gains. 17. The assessee has also raised a ground challenging the validity of reopening of assessment. Since we have deleted the addition on m ..... 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