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2019 (8) TMI 1324 - AT - Income TaxBogus LTCG - exemption u/s 10(38) - penny stock transactions - successive layers of transactions - the AO found some cash deposits in the accounts of unrelated parties - HELD THAT:- No cogent material was brought on record which in any manner showed that either the survey team or the AO had identified the persons to whom the entities/concerns belonged and in whose accounts the cash was allegedly deposited - neither any of the proprietors of bank accounts where cash was deposited were personally examined by the AO nor any independent enquiries were made from them to verify the true & correct facts of the case. Merely because while tracing the successive layers of transactions, the AO found some cash deposits in the accounts of unrelated parties; in our considered view, on such fact alone the AO could not record a conclusive finding that the cash so deposited represented appellant’s undisclosed income which was routed through several accounts. Therefore, the so-called evidences in the form of cash trail of transactions did not conclusively prove the AO’s alleged findings that the proceeds realized by the appellant from sale of shares could be considered as appellant’s undisclosed income. This finding is further fortified from the fact that even through the aggregate of the additions made u/s 68 in these group of cases is ₹ 6,46,63,639/-, the alleged cash deposits as per the trail found was only ₹ 3,58,90,000/- which in itself shows that the said deposits were not sufficient to lead to conclusion that sale proceeds represented appellant’s undisclosed income introduced in the form of sale proceeds. We find the entire assessment substantially proceeded on the AO’s suspicion that the appellant had indulged in laundering her unaccounted income during the month of February 2014. All the payments received during the month of February 2014 against the sale of shares was received through banking channel from registered stock broker and even as per the AO’s own observation the source as well as source of source for receipt of sale consideration were found through proper banking channel. In fact the appellant’s transactions in the same shares conducted through the same broker, in months other than February 2014, has been accepted to be genuine by the AO and no adverse inference has been drawn. It is relevant to reiterate at this juncture that the AO has recorded a finding of fact accepting the explanation furnished by the appellant substantiating the genuineness of the appellant’s transactions involving purchase & sale of various listed shares and that the appellant was not involved in the alleged racket of penny stock transactions. We therefore do not find that the conclusions drawn by the AO making the impugned addition to be factually as well as legally sustainable.- Decided in favour of assessee
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