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2023 (5) TMI 728 - ITAT MUMBAIBogus LTCG on shares - Addition u/s 68 - unexplained 'nature and source' of the receipt - whether the assessee has discharged its initial onus cast upon him or not? - AO relied upon the report of the investigation wing from Calcutta to make the addition - HELD THAT:- Each transaction needs to be tested on its own facts and circumstances. If it passes through the three tests as laid down u/s 68 of the Act, script, company and all other criteria are immaterial. It is also the facts that SEBI has exonerated the assessee for violation. It may so happen that SEBI might not have got any evidence, which is violation of that law, but LD AO might have got information, which is relevant for making addition u/s 68 - Needless to say, that SEBI Act, SCRA Act and PFUTP Regulations have different aspects to be tested. Findings of those may help the assessee in discharging his onus, but those matters does not sail the case of the assessee, if LD AO has material. Therefore, the prime important piece of evidence is inquiry by LD AO and his findings with evidences. In this case, SEBI has given a clear-cut answer that assessee and other who are named as exit providers are not at all involved any kind of price rigging of shares of this company. This was available with lower authorities When all these details have been produced by the assessee before the learned assessing officer, the assessee has discharged his initial onus under section 68 of the act. After that it is the duty of the learned assessing officer to throw back the onus back on assessee by making a concrete enquiry with respect to the evidence submitted by the assessee and if any adverse information is collected by him, to confront the assessee with that information. The case before us is that AO has relied upon the report of the investigation wing from Calcutta to make the addition. AO was also of the view that securities and board of India has carried out any enquiry against the assessee and those exist providers holding that they are involved in the price rigging of the shares of the company. Thus, the regulator who monitors, whether there is any irregularity committed by the assessee in transaction of shares has exonerated and categorically held that assessee is not at all involved any of the transactions which can be held to be fraudulent. Further price rise, market data etc have been held by the regulator in Dhanukas' case [2021 (6) TMI 1144 - SECURITIES APPELLATE TRIBUNAL MUMBAI] as mere conjectures and surmises. For making an addition holding that transaction are bogus, the LD AO should have made inquiries on the documents submitted by the Assessee. Most important is the inquiry based on date and Time stamp of the transactions at stock exchanges. Buy and sale timing based on date and time stamp of trade would have led to exit providers and where the securities have travelled after sale, who provided the funds to the buyers, how the broker of buyer of shares are involved in these transactions. Synchronized trade of sale is generally not possible unless the brokers of the buyer and sellers in collusion. There is not even a single inquiry by the LD AO. We are not at all impressed by the arguments of the assessee about the cross examination etc as we do not find that LD AO has made addition only on the basis of statements of third parties. When also it is the claim of the assessee that his name nowhere figures, in those statements, assessee does not have any reason to ask for their cross-examination. Thus, in view of categorical finding of the regulator SEBI exonerating the assessee, absence of any inquiry by the LD AO are the only reason for our decision in holding that the lower authorities have made the addition based on conjectures and surmises. Thus, we do not have any hesitation in deleting the addition made for both the years - Decided in favour of assessee.
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