TMI Blog2019 (1) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... ber And Shri, M. Balaganesh, Accountant Member For the Assessee : Shri Manish Tiwari, FCA For the Revenue : Shri Pradip Majumdar, Addl. CIT-Sr-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- This batch of three cases pertains to two assessees Shri Subrata Banerjee and M/s Tribute Trading Finance Ltd.. The former assessee s appeal ITA No.2275/Kol/2018 for assessment year has arisen from the CIT(A)-15 Kolkata s order dated 04.10.2018 passed in case No 278/CIT(A)- 4/16-17/Cir.51(1)/Kol affirming the Assessing Officer s action treating his Long Term Capital Gains (LTCG) of ₹ 3,26,63,032/- from sale proceed of shares held in M/s NCL Research Financial Services Ltd. to be income from undisclosed sources followed by commission disallowance to the tune of ₹6,53,260/- made in the course of assessment framed on 29.12.2016. The Revenue s two appeal(s) ITA No.1495-1496/Kol/2017 is latter M/s Tribute Trading Finance Ltd s cases are directed against CIT(A), please very appeal No. 423-544/CIT(A)-2/16-17 the CIT(A)-2 Kolkata s separate orders both dated 21.04.2017, in case reversing the Assessing Officer s action treating Short Term Capital Loss(es) of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed since the provisions of Section 69C of LT. Act, 1961 is intended for addition on the basis of actual expenses. 2.3 That on the facts and in the circumstances of the case, Ld. A.O. is wrong and unjustified in making ad-hoc disallowance of ₹ 5,00,000/- out of Trip Expenses and Repairs Maintenance expenses without finding any defect on verification of sample Bills. 2.4 That the appellant craves leave to add, alter, adduce or amend any ground or grounds on or before the date of hearing of the appeal. 3. ASSERTION OF THE ASSESSING OFFICER: During the course of assessment it is noticed that the assessee has claimed Long Term Capital Gains of ₹ 3,26,63,032/-. In view of the above, the assessee was asked to submit particulars of transactions in shares. On scrutiny of details it revealed that the entire Long Term Capital Gains claim of ₹ 3,26,63,032/- has been made out of sale of shares of M/s NCL, Research and Financial Services Ltd. From the details filed by the assessee it is noticed that the assessee purchased 29,000 units of shares of M/s. NCL Research and Financial Services Ltd. for a total consideration of ₹ 79,75,000/ . Subsequently, these s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (P) Ltd. (1999) 236 ITR 590, .the Hon'ble Jurisdictional Calcutta High Court held that the Tribunal mainly based its findings on the ground that the consideration was received through cheque and was duly credited in the bank account of the assessee. The Tribunal did not appreciate properly the fact that the transaction was between the company and its chairman and there was no substantial credit of the parties in the bank, at the time when the cheques were issue by the assessee as well as by its chairman all upon the same bank. It has been submitted that all transactions themselves make the transaction genuine. The transaction in the instant case is between the assessee company and the chairman. The onus lies heavily on the assessee to prove that the transaction is genuine which was not discharged by the assessee in the instant case, cheques were issued simultaneously by the parties in favour of each other for purchase and repurchase on the same day without both the parties having sufficient funds in the bank. That itself goes to show that the transaction was not genuine. This aspect, however, could not be explained by the assessee. Regarding sale of shares of three companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls with unexplained expenditure speaks for addition where the A.C. is in possession of document in support of actual expenditure. It is submitted that Section 69C cannot be applied for hypothetical figure. Hence, addition is not valid. 3. Disallowance out of Trip expenses Repair Maintenance ₹ 5,00.000/- P L A/c was debited by ₹ 10,47,18,665/- as Trip expenses and ₹ 4,36,63,996/- as repair maintenance expenses. The query raised on this point was explained. It was stated that around 80 tankers are engaged in transportation of LPG to cater supply to customers of IDC having pumps at Uttar Pradesh, Bihar, Jharkhand and throughout West Bengal Therefore, bills are supported to be high, AD. also examined bills/vouchers on sample basis without finding any defect. Adhoc disallowance of ₹ 5,00,000/- has been made on pure suspicion and conjecture as evident from his finding that there is a chance of leakage of revenue and to plug possible loss of revenue such disallowance is made. In the background of above facts, we make detailed submission on various grounds as under:- Ground Nos. 1(a) to 1(c) These grounds have been preferred against AO.'s actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of fund for acquiring the shares from the company. 4. The Appellant Assessee sold 29,000 shares of NCL through a registered share broker namely Kotak Securities Ltd. on different dates during the Financial Year 2013-14. The sale transactions suffered Securities Transaction Tax as is reflected in respective Contract Notes issued by the abovementioned share broker. The delivery of shares of NCL sold is reflected in the Demat Statement of the Assessee. The net consideration of ₹ 4,06,38,032/- was received by Appellant Assessee on different dates through proper banking channels and the same was credited in assessee's savings bank account. The aforesaid 29,000 shares of NCL were sold on line at BSE at market rates prevailing on the respective dates of sale, as evidenced by the quotations given by the Bombay Stock Exchange. The following documents were produced by the assessee before the Assessing Officer in support of the aforesaid transactions of sale of shares of NCL (i) Contract Notes for sale of shares of NCL. (ii) Ledger/Demat Statement issued by Depository Participant viz. Kotak Securities Ltd. showing delivery of shares of NCL on sale of shares. (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... role in deciding the genuineness or otherwise of the transactions of sale of shares of NCL. In fact the Assessing Officer had not dealt with the specific facts of the case. Merely making certain observations on the basis of baseless assumptions and drawing an adverse inference thereon, without any evidence on record, is bad in law. Reliance in this connection is placed on the celebrated decision of the Hon'ble Supreme Court in Lalchand Bhagat Amblca Ram vs. err [1959) 37 ITR 288 (SC) wherein the Hon'ble Apex Court had relied on its earlier judgement rendered in the case of Omar Salay Mohamed Sait [1959] 37 ITR 151 (SC) and had held that: It is, therefore, clear that the Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a View of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and this court is entitled to interfere. It is most respectfully submitted that not allowing opportunity of cross-exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 shares of KFAL of the face value of ₹ 1/- each the Ld. AO. also noted that another company named Panchsul Marketing Ltd. (PML) also merged with the said KAFL. However, in the present case we are not concerned with the merger of PML with KAFL. The assessee sold these 240000 shares through M/s. Ashika Stock Broking Ltd., a registered share broker of BSE. The said shares were sold through the online medium of stock exchange on different dates falling within the previous year 2013-14 corresponding to the assessment year 2014- 15. The aforesaid transactions resulted in Long term Capital gains and the assessee claimed exemption u/s 10(38) of the Act. The aforesaid transactions for purchase and sale of shares resulted in Long Term Capital Gains of ₹ 3,26,63,032/- which the assessee claimed to be exempt' under section 10(38) of the Act. During the course of assessment proceedings the assessee submitted following details documents and evidences in relation to such transactions of purchase and sale of shares. (i) Demat Account statement showing credit of 29000 shares of NCL (ii) Balance Sheet as on 31.03.2011, 31.03.2012 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the assessment order that Ld. A.O. has heavily relied upon the report of Directorate of Investigation, Kolkata while carrying out investigation to unearth the racket of generating bogus entries of Long Term Capital Gains (LTCG) which is exempt from tax and the modus operandi adopted by the operators to make the beneficiary by shares of pre-determined Penny Stock controlled by them. After discussing the investigation report in a general view A.O. concluded as under: - (i) Individuals who have taken bogus entries of L TCG amounted to several Crores from 2010 to 2014. (ii) The result of enquiry was also shared with SEBI who after investigating cases found the allegation to be correct. The balance cases are still 'under investigation by SEBI. (iii) Almost all the 25 top groups have accepted having taken entries on receipt of commission and have voluntarily surrendered and offered for taxation. (iv) The particular script Le. NCL Research and Financial Services Ltd. finds mention in the list of bogus Long term / short term capital loss as per information and data provided by Income Tax Investigation Wing, Kolkata The ld. AR also br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15.11.2017 2.) Sri Dolarrai Hemani Vs. ITO, Wd-34(3), Kolkata, ITA No. 19/Kol/2014 dated 02.12.2016 3.) Gautam Kr. Pincha Vs. ITO, Wd-34(4), Kolkata, ITA No. 569/Kol/2017 dated 15.11.2017 4.) ITO, Wd-32(3), Kotkata Vs. Kumari Tanvi Kejriwal, ITA No. 1849/KoV2017 dated 20.12.2017 5) Prakash Chand Bhutoria Vs. ITO, Wd-3S(1), Kolkata, IT A No. 2394/KoV2017 dated 27.06.2018 Navneet Agarwal Legal Heir of Late Kiran Agarwal Vs. ITO, Wd-35(3), Kolkata, ITA No. 2281/KoV2017 dated 20.07.2018 Ground No. 2 This ground refers to addition of ₹ 6,S3,260/~ for unexplained expenditure within the meaning of section 69C of Income Tax Act, 1961. The addition is not sustainable in law as explained below: - 1. The provisions of section 69C is reproduced for the sake of convenience as under: - Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not in the opinion of the Assessing Officer satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. It would be relevant to refer to the following case laws:- Cash Credit (Sec.68) (i) Kale Khan Mohammad Hamif vs. CIT 50 ITR 1 (SC) :- Whether the burden of proving the source of the cash credits is on the assessee? It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax it is for him to show either the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the ITO is entitled to treat it as taxable income. (ii) Sumati Dayal vs CIT 214 ITR 801 (SC) :- As laid down by this Court, apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities. In this case, it is observed that suddenly within one year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare premium and such receipt of bogus share application money even though through banking channel can be held to be assessee's undisclosed income received in the garb of unjustified share application money. In the present case I find that there is no justification whatsoever that the shares of an unknown company of ₹ 51- can be sold within two years time of ₹ 485/- without there being any reason on record. This unexplained spurt in the value of unknown company shares is beyond preponderance of probability. It has been held by Hon'ble Apex Court in the case of Durga Prasad More and Sumati Dayal that the test of human probabilities have also to be applied by the authorities below. In the case of Sumati Dayal 214 ITR 801. it was held that during the year 1970-71 (pertaining to the assessment year 1971-72) between April 6, 1970, and March 20, 1971 the appellant claims to have won in horse race a total amount of ₹ 3, 11, 831/- on 13 occasions out of which ten winnings were from jackpots and three were from treble events. Similarly in the year 1971-72, the appellant won races on two occasions and both times the winning were from a jackpot. These receipts were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue against the assessee. The above judgment of the Honble ITAT squarely covers the case of the appellant The Hon'ble High Court of Mumbai in the above case Income Tax Appeal No. 18/2017 in the case of Sanjay Blmalchand Jain L/H Shanti Devi Bimalchand Join vs The Pr. CIT Nagpur Another has held as under;- By referring to the aforesaid facts, which are narrated in the earlier part of this order, the authorities found that the assessee had made investment in two unknown companies of which the details were not known to her. It was held that the transaction of sale and purchase of shares of two penny stock companies, the merger of the two companies with another company viz Khoobsurat Limited did not qualify an investment and rather it was an investment made by the assessee was not to derive income but to earn profit. Both the brokers i.e. the broker through whom the assessee purchased the shares and the broker through whom the shares were sold were located at Ko. d the assessee did not have an inkling as to what was going on in the whole transaction except paying a sum of ₹ 65,000/- in cash for the purchase of shares of the two penny stock companies. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llotment advice alongwith share application from in M/s NCL Research Financial Services, copy of ledger accounts of M/s Kotak Securities Ltd. in its books, reconciliation of sale value as per broker contract notes, demat account statement, LTCG details bank statement stands perused. The assessee vehemently contends during the course of hearing that he had successfully proved both before the Assessing Officer as well as CIT(A) to have in fact actually derived LTCG from sale of shares held in M/s NCL Research Financial Services. The Revenue s case on the other hand is that both the lower authorities have rightly treated assessee s capital gains a income from undisclosed sources after examining all relevant particulars of the scrip in issue as well artificial rigging in its prices throughout the relevant holding period. It strongly emphasises that assessee had declared impugned LTCG in collusion with various entry operators engaged in raising prices of the relevant scrip s prices. Its case therefore is that the impugned exorbitant price-rise of the above scrip is a stage managed show not liable to be accepted as genuine as per hon'ble apex court s decisions in Sumati Day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on general observations has concluded that the assessee has claimed bogus long term capital gain. He made an addition of the entire sale proceeds of the share as income and rejected the claim of exemption made u/s 10(38) of the Act. The evidence produced by the assessee in support of the genuineness of the transaction was rejected. 3. The assessee carried the matter in appeal and the ld. CIT(A), Kolkata, had upheld the addition. The ld. CIT(A) has in his order relied upon circumstantial evidence and human probabilities to uphold the findings of the AO. He also relied on the so called rules of suspicious transaction . No direct material was found to controvert the evidence filed by the assessee, in support of the genuineness of the transactions. In other words, the overwhelming evidence filed by the assessee remains unchallenged and uncontroverted. The entire conclusions drawn by the revenue authorities, assessee based on a common report of the Director of Investigation, Kolkata, which was general in nature and not specific to any assessee. The assessee was not confronted with any statement or material alleged to be the basis of the report of the Investigation Wing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows:- 5. We are given our thoughtful consideration to rival contention. We first of all find that this tribunal s co-ordinate bench s order in Neeraj Gupta vs. ITO in ITA No.863/Kol/2018 rejects Revenue s identical arguments regarding the said assessee s LTCG derived from sale of shares held in M/s NCL Research Finance Services Ltd. as follows:- 2. The sole issue that arises for my adjudication is whether the Assessing Officer was right in rejecting the claim of the assessee that he had earned Long Term Capital Gains on purchase and sale of the shares of M/s UNNO Industries Limited and M/s NCL Research Financial Services Ltd. The AO based on a general report and modus operandi adopted generally in these cases and on general observations has concluded that the assessee has claimed bogus long term capital gain. He made an addition of the entire sale proceeds of the shares as income and rejected the claim of exemption made u/s 10(38) of the Act. The evidence produced by the assessee in support of the genuineness of the transactions was rejected. 3.The assessee carried the matter in appeal and the ld. CIT(A), had upheld the addition. The ld. CIT(A) has in his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative filed detailed written submissions and relied on the judgment of the Hon'ble Supreme Court in the case of Securities and Exchange Board of India vs Rakhi Trading Private Ltd in Civil Appeal No.1969 of 2011 with Civil Appeal Nos. 3174-3177 of 2001 and Civil Appeal No.3180 of 2011. The ld. Counsel for the assessee submits that there is no surviving order of SEBI against the assessee or the company, the script of which was purchased and sold by the assessee. When there is no surviving adverse order of SEBI, against the claim of the assessee, the judgment of the Hon'ble Supreme Court cannot be applied to the facts of this case. 7. In view of the above discussion the addition in question is deleted and the appeal of the assessee is allowed. It also emerges that this tribunal s yet another co-ordinate bench s decision in Navneet Agarwal vs. ITO in ITA No.2281/Kol/2017 decided on 20.07.2018 has rejected Revenue s similar arguments going by suspicious circumstances than based on evidence as follows:- 13. The issue for consideration before us is whether, in such cases, the legal evidence produced by the assessee has to guide our decision in the matter or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one cannot reject this submission based on surmises and conjectures. As the report of investigation wing suggests, there are more than 60,000 beneficiaries of LTCG. Each case has to be assessed based on legal principles of legal import laid down by the Courts of law. 15.In our view, just the modus operandi, generalisation, preponderance of human probabilities cannot be the only basis for rejecting the claim of the assessee. Unless specific evidence is brought on record to controvert the validity and correctness of the documentary evidences produced, the same cannot be rejected by the assessee. The Hon'ble Supreme Court in the case of Omar Salav Mohamed Sait reported in (1959) 37 ITR 151 (S C) had held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of CIT(Central), Kolkata vs. Daulat Ram Rawatmull reported in 87 ITR 349, the Hon'ble Supreme Court held that, the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences, which would directly prove the fact of bogusness or establish circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the script for the purpose of collusive transaction. The Assessing Officer was duty bound to make inquiry from all concerned parties relating to the transaction and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. We, however, find that the Assessing Officer has not brought on record any evidence to prove that the transactions entered by the assessee which are otherwise supported by proper third party documents are collusive transactions. 17. The Hon ble Supreme Court way back in the case of Lalchand Bhagat Ambica Ram vs. CIT [1959] 37 ITR 288 (SC) held that assessment could not be based on background of suspicion and in absence of any evidence to support the same. The Hon ble Court held: Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd any material to prove that the transaction of the assessee was a collusive transaction could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee despite the matter being investigated by various wings of the Income Tax Department hence in our view under these circumstances nothing can be implicated against the assessee. 18. We now consider the various propositions of law laid down by the Courts of law. That cross-examination is one part of the principles of natural justice has been laid down in the following judgments: a) AyaaubkhanNoorkhan Pathan vs. The State of Maharashtra and Ors. 23. A Constitution Bench of this Court in State of M.P .v. Chintaman Sadashiva Vaishampayan AIR 1961 SC1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural justice demand that the maker of the report should be examined, save and except in cases where the facts are admitted or the witnesses are not available for cross-examination or similar situation. The High Court in its impugned judgment proceeded to consider the issue on a technical plea, namely, no prejudice has been caused to the Appellant by such non-examination. If the basic principles of law have not been complied with or there has been a gross violation of the principles of natural justice, the High Court should have exercised its jurisdiction of judicial review. 30. The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of effective crossexamination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice. b) Andaman Timber Industries vs. Commissioner of C. Ex., Kolkata-II wherein it was held that: 4. We have heard Mr. Kavin Gulati, learned senior counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Civil Appeal No. 2216 of 2000, order dated 17-3-2005[2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 7. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice. 19. On similar facts where the revenue has alleged that the assessee has declared bogus LTCG, it was held as follows: a) The CALCUTTAHIGH COURT in the case of BLB CABLES CONDUCTORS[ITA No. 78 of2017] dated19.06.2018. The High Court held vide Para 4.1: we find that all the transactions through the broker were duly recorded in the books of the assessee. The broker has also declared in its books of accounts and offered for taxation. In our view to hold a transaction as bogus, there has to be some concrete evidence where the transactions cannot be proved with the supportive evidence. Here in the case the transactions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... high, the shares were traded on the National Stock Exchange and the payments and receipts were routed through the bank. There was no evidence to indicate for instance that this was a closely held company and that the trading on the National Stock Exchange was manipulated in any manner. The Court also held the following vide Page 3 Para 5 the following: Question (iv) has been dealt with in detail by the CIT (Appeals) and the Tribunal. Firstly, the documents on which the Assessing Officer relied upon in the appeal were not put to the assessee during the assessment proceedings. The CIT (Appeals) nevertheless considered them in detail and found that there was no co-relation between the amounts sought to be added and the entries in those documents. This was on an appreciation of facts. There is nothing to indicate that the same was perverse or irrational. Accordingly, no question of law arises. d) The BENCH D OF KOLKATAITAT in the case of GAUTAM PINCHA[ITA No.569/Kol/2017]order dated 15.11.2017 held as under vide Page 12 Para 8.1: In the light of the documents stated i.e. (I to xiv) in Para 6(supra) we find that there is absolutely no adverse material to impli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts which are supported with material evidences furnished by the assessee which are on record and could only rely on the orders of the AO/CIT(A). We note that the allegations that the assesse/brokers got involved in price rigging/manipulation of shares must therefore consequently fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. Neither these evidences were found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee exempted u/s 10(38) of the Act on the basis of suspicion, surmises and conjectures. It is to be kept in mind that suspicion how so ever strong, cannot partake the character of legal evidence. It further held as follows: We note that the ld. AR cited plethora of the case l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases payment has been made by account payee cheque, delivery of shares were taken, contract of sale was also complete as per the Contract Act, therefore, the assessee is not concerned with any way of the broker. Nowhere the AO has alleged that the transaction by the assessee with these particular broker or share was bogus, merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. We found that M/s Basant Periwal and Co. never stated any of the authority that transactions in M/s Ramkrishna Fincap Pvt. Ltd. On the floor of the stock exchange are ingenuine or mere accommodation entries. The CIT (A) after relying on the various decision of the coordinate bench, wherein on similar facts and circumstances, issue was decided in favour of the assessee, came to the conclusion that transaction entered by the assessee was genuine. Detailed finding recorded by CIT (A) at para 3 to 5 has not been controverted by the department by bringing any positive material on record. Accordingly, we do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case we are bound to consider and rely on the evidence produced by the assessee in support of its claim and base our decision on such evidence and not on suspicion or preponderance of probabilities. No material was brought on record by the AO to controvert the evidence furnished by the assessee. Under these circumstances, we accept the evidence filed by the assessee and allow the claim that the income in question is a bona fide Long Term Capital Gain arising from the sale of shares and hence exempt from income tax. 21.Under the circumstances and in view of the above discussion, we uphold the contentions of the assessee and delete the addition in question. 6. We afforded sufficient opportunity to the Revenue for indicating any material on record indicating the assessee s nexus with the alleged share price rigging or her name having specifically mentioned in any search statement. There is no such material forthcoming from the case file. We therefore adopt the above detailed reasoning mutatis mutandis to delete the impugned addition of unexplained LTCG. 4. We adopt the above detailed reasoning mutatis mutandis to delete the impugned addition of ₹3,26,63,032/- ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The documents, evidences filed by the appellant were not found to be bogus or false, There was no irregularity or discrepancy pointed out by the AO in respect of details filed by the appellant during the relevant claim that the share loss is a genuine loss. The AR further has submitted that in the assessment order; besides relying upon the general report of the investigation wing, Kolkata. the AO has not brought on record any cogent, relevant evidences and facts which can prove that in reality there was no purchase sale of shares by the appellant or the loss incurred by the appellant was a bogus loss, The AR has further submitted that the appellants being a registered NBFC, its main income is only from share trading and interest income, Purchase and sale of shares is the regular business activity of the appellant It is not that the appellant has only dealt in shares of these two companies, The appellant has traded in number of scripts which has resulted in profits as well as losses also, So, it's a regular business activity of the appellant company, The appellant filed complete details of entire share transaction including those mentioned herein above before the AO, Such deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the operator with the appellant company should be held to be invalid. No investigation has been carried out by the AO or by the investigation wing to bring on record any material to disbelieve the claim of the appellant. The AO or the investigation wing has made academic discussion regarding the probability of the appellant having entered into transactions in collusion with operator of scripts with a view to claim loss in share trading business and thereby reducing the taxable income and tax liability. In fact there is no evidence that the prices of the scripts have been deflated by the appellate to take advantage to avoid tax. The AO has not doubted the purchase or sale price prevailing at the material point of time. It is a settled law by now that no addition or disallowance should be made or sustained on conjectures, speculation and suspicion, how high or strong they may be, because suspicion and surmises without any evidence cannot take the place of proof. I find that the AO did not discharge the burden which had shifted on him and had just mechanically adhered to disallow the loss on the basis of general report of the investigation wing, claimed by the appellant without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss might have been suffered. If the loss was suffered. then appropriate deduction has to be made and there is no reason why the Assessing Officer should have refused to do so. The transactions were carried out at the prevailing price. Therefore, the question of generating loss could not have arisen. The suspicion entertained by the Assessing Officer was misplaced or in any event not substantiated. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were already paid. They were complied with. All the transactions were through bank. There is no iota of evidence over the above transactions as it were through d-mat format. The assessee, however, clarified that he had carried out all the transactions of purchase and sale of those shares through registered share brokers and that they had issued the contract notes which had been duly submitted. It was also pointed out that the consideration for purchase and sale of those shares have been paid or received through banking channels and copies of bank statements have also been submitted. It further appeared that on purchase of these shares the delivery was t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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