TMI Blog2017 (8) TMI 1501X X X X Extracts X X X X X X X X Extracts X X X X ..... n 26.03.2010 a search and seizure operation u/s 132(1) was conducted at the premises of the assessee. On the same date, search was also conducted at the other group of companies as well as at the residential premises of the managing director of the appellant company. The places covered under the search was New Delhi, Gwalior, Raipur, Indore and Banmore and from all the aforesaid premises a cash of ₹ 5,62,635/- was found and out of the aforesaid a sum of ₹ 5,00,000/-, was seized however aforesaid cash was found duly recorded in the books as such no addition was made in respect thereof. Apart from the aforesaid, no other material which can be held to be incriminating material was referred to which was found from any of the premises despite the search undertaken by the revenue which formed the basis for making additions in these years. In two years i.e. 2006-07 and 2007-08 additions made in the assessments orders u/s 143(3) were repeated in orders passed u/s 153A. In the present case assessee is maintaining regular books of accounts, no other material was found which suggest that assessee is in a habitual concealment of income or books of accounts of the assessee are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales were effected through stock exchange, STT has been paid which is clearly depicted in the contract notes, and details provided and were confirmed by the brokers as well as depository. CBDT in their circulars quoted above have expressed that date mentioned in the contract note should be taken as the date of purchase of the shares and date of transfer in the demat account is not relevant for the determination of the holding period for the computation of the capital gain. We, therefore, hold that date mentioned in the contract note of purchase be taken to determine the holding period of the shares in order to compute the LTCG. Merely because shares purchased by assessee were transferred to his demat account on a later date, date of transfer to demat account could not be taken as date of purchase. DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income u/s 68 in Commissioner of Income-tax-13 v. Shyam R. Pawar [2014 (12) TMI 977 - BOMBAY HIGH COURT]. Where assessee having purchased shares in physical form, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard together and are being disposed off by this consolidated order. 02 The grounds on the basis of which assessee has challenged the first appellate order are reproduced hereunder: a) In ITA No. 3176/Del/2014 for the AY 2006-07, assessee has raised following grounds of appeal: 1. That the learned Commissioner of Income Tax (Appeals) XXXII, New Delhi has grossly erred both in law and on facts in dismissing the appeal filed by assessee against the order of assessment dated 29.12.2008 u/s 143(3) of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there is no concept of abatement of a pending appeal under second proviso to section 153A of the Act and as such erroneous legal misconception of the assessee could not be a valid ground to hold that appellant does not want to purse the appeal and therefore the order made is legally invalid and vitiated. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition of ₹ 36,72,01649/- representing the long term capital gain declared by the appellant and held to be taxed as short term capital gain. 3. That the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntenable. 4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of internet of ₹ 10,304/- under section 234B of the Act and ₹ 34,378/- under section 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant. It is therefore prayed that, it be held that, the dismissal of the appeal by the learned Commissioner of Income Tax (Appeals) was not in accordance with law and furthermore disallowance made by learned Assessing officer and, sustained by the learned Commissioner of Income Tax (Appeals) along with interest levied may kindly be deleted and appeal of the appellant company be allowed. c) In ITA No. 1342/Del/2013 for the AY 2005-06, assessee has raised following grounds of appeal :- 1. On the facts and in the circumstances of the case the ld. CIT(A) erred in dismissing Appellant s ground No. 1 against passing of order by the Assessing Officer u/s 153A/143(3) of the Act in the case when there was no undisclosed income or any incriminating documents found in the search. 2. The Ld. CIT(A) erred in dismissing Appellant s ground No. 2 against Assessing Officer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred on fcats and in law to dismiss Appellant s ground that the assessment order having been passed in violation of the principal of natural justice and without giving adequate time and opportunity to the appellant to represent its case and to file its replies and clarification, is bad in the eyes of law and liable to be quashed. 3. The ld. CIT (A) erred on facts in law in confirming addition of ₹ 3.06.421/- u/s. 14A of the Act read with Rule 8D of the IT Rules; 4. The ld. CIT (A) erred on facts and in law to dismiss Appellant s ground against the charging of interest u/s 234A and 234B of the Act. 5. That the appellant craves leave to add, alter, amend and/or rescind any of the ground of appeal. 03 In respect of the aforesaid five appeals, assessee has filed five paper books containing the notices issued, reply and written submissions of the assessee filed before the AO/CIT (Appeals), documents/evidences filed before the AO/CIT(Appeals), remand reports etc. Additionally, assessee has also filed a common written synopsis in respect of aforesaid five appeals and a judgment paper book of the relevant judgments on which it has placed reliance on plethora of decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try and exit from demat account is taken as the time period for which shares were actually held by the assessee company. On similar basis short term capital gain declared by the assessee was taxed as speculative income and therefore income was computed at ₹ 37,36,26,040/-. 07 Against the order of assessment dated 29.12.2008, assessee filed appeal before the ld. CIT (Appeals) within the due date of filing of the appeal. Pending the appeal before the ld. CIT (Appeals), assessee sent letter to the stock broker M/s PK Aggarwal Co requiring him to clarify certain issues as required by the AO and in reply the stock broker in its letter dated 31.08.2009 confirmed that shares were purchased off market and the shares were delivered in physical form after the purchase, and as assessee required the shares in its demat account as such, after dematerialization, such shares were transferred in the demat account of the assessee. Due to aforesaid reasons of fresh evidence obtained after the assessment, assessee on 12.01.2010 filed written submissions along with an application under Rule 46A providing the additional evidences in the form of certificate from the broker regarding purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,421/- u/s 14A of the I. T. Act r.w.r. 8D of the Income Tax Rules. Against this order, assessee filed appeal before ld. CIT (Appeals) within the period of limitation. Search u/s 132(1) of the Act : 12 A search u/s 132(1) of the Act was conducted at the premises of the assessee on 26.03.2010, and on account of the aforesaid search, proceedings u/s 153A of the Act was undertaken for the aforesaid assessment years and assessment orders u/s. 153A of the Act were framed on 30.12.2011, wherein again additions made in the orders of assessment made u/s 143(3) of the Act was repeated. Against the aforesaid orders passed u/s. 153A of the Act, assessee filed appeal before the ld. CIT (Appeals). However, when the assessee received notice of hearing for the appeals from the ld. CIT (Appeals) dated 25.04.2012, assessee withdrew its appeal on the assumption that such appeals have been abated on account of search and hence ld. CIT (Appeals) dismissed the appeal of the assessee on 14.05.2012 for the assessment years 2006-07 and 2007-08 filed against the order of assessment passed u/s 143(3) of the Act without adjudicating the grounds of appeal raised before him and without taking into accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,36,26,036/- by making following additions /disallowances : i. Income from short term capital gain ₹ 36,72,01,649/- ii. Speculation income ₹ 50,36,977/- 4. Against the additions made in the aforesaid order of the assessment, assessee duly filed an appeal before the learned CIT (Appeals) within the period of limitation on 28.01.2009. 5. It is submitted that during the course of the appellate proceedings, appellant on 12.01.2010 also filed an application u/r. 46 of the Income Tax Rules along with additional evidences and also filed its written submissions in support of the grounds of appeal raised before the learned CIT (Appeals), which clearly shows that appellant was seriously pursuing its appeal against the order of assessment passed u/s. 143(3) of the Act. 6. It is however submitted that subsequently, on 26.03.2010 a search and seizure operation u/s 132(1) of the Act was conducted at the premises of the appellant and in pursuance to the aforesaid search, an assessment u/s 153A of the Act was made on 30.12.2011 at an income of ₹ 37,42,08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid appeal in respect of assessment made u/s 153A of the Act, when assessee consulted his friend Shri. S.C. Jain, Chartered Accountant, assessee was advised that appeal filed against the regular assessment would not abate, and it is only the assessment pending on the date of search would abate and hence, immediately thereafter present appeal bearing ITA No. 3176/D/2014 was filed and that is how the delay of 676 days occurred. 10. Thus, since the circumstances stated above constitute sufficient cause, the appellant prays that delay in filing of appeal be condoned u/s. 253(5) of the Act. The submission of the appellant is that technical considerations cannot and should not act as bar to the cause of substantial justice. It is further submitted that Hon ble Apex Court in its judgment in the case of Improvement Trust vs. Ujagar Singh reported in (2010) 6 SCC 786 has held that, unless mala fides are writ large, delay should be condoned. Matters should be disposed of on merits and not technicalities. In fact, the Apex Court in the case of Mrs. Katiji Others reported in 167 ITR 471 has held that when substantial justice and technical considerations are pitted against each oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore prayed that the delay may please be condoned and appeal may please be admitted and heard on merits. 14 That the assessee has also filed an affidavit of Shri. S. C. Jain, Chartered Account, who advised it for filing of the appeal before the Tribunal. 15 The Learned CIT [DR], on the other hand, submitted that assessee himself has withdrew its appeal before the ld. CIT (Appeals) on the ground that the appeal has been abated in view of the search u/s 132(1) of the Act, and there is an inordinate delay of 676 days in filing of the appeal, as such, delay in filing of the appeal should not be condoned. 16 We are of the opinion that it is not of much material how inordinate delay is, the requirement is as to whether the assessee has been able to explain the delay. In view of this approach when we examine the reasons leading to the delay in filing the appeals before the Tribunal, we came to the conclusion that the assessee has been able to explain the delay and delay in filing of the appeal deserves to be condoned and the appeals should be admitted as delay in filing of the appeal was wholly on account of sufficient cause and delay has not occasioned on account of delibera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported by the affidavit of the assessee. Hon Supreme court in Collector of Land Acquisitions Vs MST Katiji Ors 167 ITR 141 has held that :- And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. --------------------------------------------------------------------------- 1. Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. Page No : 0473 3. Every day's delay must be explained does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore it as time-barred, is therefore, set aside. Delay is condoned. And the matter is remitted to the High Court. The High Court will now Page No : 0474 dispose of the appeal on merits after affording reasonable opportunity of hearing to both the sides. [Extracted from ITR online True pages] In the aforesaid circumstances, we are of the considered opinion that delay in filing of the appeals has occasioned only on account of the sufficient cause and the action of the assessee cannot be imputed with negligence, inaction or lack of bona fides, as assessee was seriously contesting additions made in the orders of assessment passed u/s 143(3) of the Act in the appeal proceedings u/s 153A of the Act such additions were already challenged before us, which additions were mere repetition of the additions made in the orders passed u/s 143(3) of the Act, as such delay cannot be attributed to any deliberate act of the assessee, and hence the delay in filing of the appeals in ITA No. 3176/Del/2014 3177/Del/2014 is condoned and we preferred to dispose off these appeals on merits. 17 Now coming to the issues involved in the present batch of five appeals. The issues involved as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch was also conducted at various other group companies and at the residential premises of the managing director of the assessee company. On account of the search conducted at the premises of the assessee, no incriminating material was neither found nor referred to by the ld. Assessing Officer in the order of assessment passed u/s 153A of the Act in relation to the additions made by him during these years. In fact, in all these years, assessments were already made u/s 143(3) of the Act. In AY 2006-07 2007-08, identical additions were repeated by the Assessing Officer in the assessments made u/s 153A of the Act. In AY 2005-06, return was accepted after examination of the investment for which return was taken for scrutiny as per CBDT guidelines. In assessment years 2005-06 and 2006-07, the Assessing Officer though not referred to any incriminating material found as a result of search, but relied upon the statement of Shri IC Jindal, Managing Director of the assessee company recorded u/s 132(4) of the Act for making the additions. In the appeal before the ld. CIT (Appeals), assessee challenged the additions on the ground that additions made without any incriminating material is unsu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while making the addition, no document what so ever has been referred which has been found from the premises of the appellant, except the retracted statement of Shri. Ishwar Chand Jindal and statement of Shri. Aseem Kumar Gupta (without providing an opportunity of cross examination). It is submitted that neither the statement of Shri. Ishwar Chand Jindal nor the statement of Shri. Aseem Kumar Gupta can be held to be incriminating material found as a result of search for the reasons stated hereunder: 6.3 In fact, along with the search on the assessee, search was also conducted on 26.03.2010 at the residential premises of Shri. Ishwar Chand Jindal, MD of the appellant company. The search commenced around 8.00AM in the morning of 26.03.2010, and in the evening of 26.03.2010 from 8.40 PM, investigation wing continued to record the statement of Shri. Jindal placed at pages 118 135 of PB 2 which recording of the statement continued till whole night, and whole night he was pressurized to surrender and in the early morning when Shri. Jindal was fully exhausted and was not in the proper state of mind, he was confronted with Shri. Aseem Kumar Gupta, who in his statement has alleged as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also requested to not to deposit the cheques in respect of alleged surrender. The Director of the assessee on the same date also met with ACIT (Inv) and stating the aforesaid facts, requested to return the cheques, which cheques were though not returned, however, because of the aforesaid retraction, the cheques given by the assessee in respect of the tax liability on account of surrendered sum was never deposited. 6.6 It is relevant to state hereitself that the allegation of Shri. Aseem Kumar Gupta that he has given ₹ 2 crores from M/s Moderate Credit Corporation Ltd. and ₹ 80 Lacs from M/s Ravnet Solutions Pvt. Ltd. in lieu of cash to M/s Magnum Steel Ltd. is factually incorrect as M/s Magnum Steel Ltd has not received any sum from M/s Moderate Credit Corporation Ltd. and further only a sum of ₹ 71 lakhs has been received from M/s Ravnet Solutions Pvt. Ltd. as share application money and no amount of cash has been paid to any person, and share capital received by such company is genuine. 6.7 That when the proceedings u/s 153A of the Act was initiated by issuance of notice u/s 153A of the Act dated 20.04.2011, appellant filed a reply dated 15.09.2011 (see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y giving opportunity to cross examining them before drawing any adverse view on the basis of forced surrender made by me as well as forced statement taken from Shri Aseem Gupta as neither any money transacted between Shri Somnath my employee and Shri Aseem Gupta nor any dealings of shares were made through Shri Aseem Gupta. In fact, Aseem Gupta already denied having any relationship with P.K. Aggarwal Co. during the course of statement recorded during search. The shares were purchased and sold only through broker P.K. Aggarwal Co., Kolkata 6.8 .. 6.9 Again during the course of the assessment proceedings, in response to the show cause notice dated 15.12.2011, appellant filed its reply on 19.12.2011 (see page 151-159 of PB-1), and at page 157, it was again reiterated that statement made during the course of search was not voluntary and such statement was obtained under pressure. It was also stated that statement of Shri. Aseem Gupta is also incorrect. It is further submitted that before the learned CIT(A), appellant filed its written submission wherein again it was stated that statement made by the Shri. Jindal has immediately been retracted. Aforesaid submission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed statement. So far as case on hand is concerned, the glaring fact required to be noted is that the statement of the assessee was recorded under section 132(4) of the Act at mid night. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. ------ ----- 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle. 6.14 Further in respect of the Mr. Assem Kumar Gupta, it is submitted that his statement on the first place is factually incorrect and secondly his statement was also recorded in the forced circumstances and thirdly despite the specific requested he has not been confronted for the cross examination. In fact, in his statement he has alleged that Shri. Som Nath on behalf of the assessee has given cash to him, and same has specifically been denied by the assessee vide its reply dated 15.10.2011 and infact assessee has requested the learned AO to record the statement of Shri. Som Nath, which statement has not been recorded by the learned AO. Further, in the statement he has alleged that he has arranged alleged accommodation entry of capital gain through Santosh Shah, however before dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before Income Tax Departments. Similarly, while statement during the course of search seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further in respect of pending assessment proceedings also, assessing officer should be rely upon the evidences/material gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. 6.16 In fact, CBDT in instruction no. F.No. 286/98/2013-IT (Inv.II) dated 18.12.2014 has again stated as under :- Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during search/surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such action defeat the very purpose of search/survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, statement recorded on 29.12.1999 from the son of the assessee under Section 132(4) of the Act is not corroborated by any material document. Admittedly, Revenue has also not confronted the assessee, with the said statement of his son. If that be the case, it can be safely concluded that, there was no material documentary evidence, to substantiate and corroborate the statement of Mr. Natarajan, son of the assessee. If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterised as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement. Same view has been taken in the following judicial pronouncements: a) CIT vs. M.P. Scrap Traders [2015] 372 ITR 507 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal basis as there was no incriminating material qua each of those AYs . 6.20 In view of the aforesaid, it is submitted that since while making the additions in the orders of assessment for the AY 2005-06, 2006-07 and 2007-08, no incriminating material which can be said to be found from the premises of the appellant has even been referred to as such, addition made is outside the scope of section 153A of the Act as such, additions made are liable to be deleted. 20 Learned CIT [DR], on the other hand, placed reliance on the orders of the ld AO and CIT (A) and reiterated vehemently the content of these orders. The learned CIT [DR] has also filed synopsis of arguments which are on jurisdictional ground as well as on merits of the case are as under :- 1. JURISDICTIONAL GROUND i) Before the Hon'ble ITAT, the Ld. AR has filed copy of letter dated 15.09.2011 claimed to have filed before the assessing officer in support of retraction. This letter is after almost 1 year and 6 months from the date of search i.e. on 26.03.2010 when statement was recorded u/s 132(4). Further reference of this letter is not mentioned either in the assessment order or in CIT (A)'s or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o on records such as books of account containing entry of share application money and LTCG. c) Books of account found during search containing incriminating entry of share capital and LTCG constitute incriminating material found as a result of search. d) Therefore, the reliance of Ld. AR on various judicial authority such as Kabul Chawla and other cases will not apply to the facts of the case. e) I rely on decision Anil Bhatia of Hon*ble High Court of Delhi 352 ITR 493 (Del) that if incrementing document is found for any assessment year, then AO has authority to assess total income reference pare 19, 20, 21 22 of the order. MERITS a) SHARE CAPITAL: i) AO has relied on the statement u/s 132(4) of the IT Act of MD of the company namely Sh. I. C. Jindal statement of Sh. Aseem Gupta who i has accepted to provide entry for share capital. ii) A.O. has issued notice 133(6) of I.T. Act to share applicants which were either returned back or non complied. Assessee has not been able to produce directors of the share applicant company. iii) The share applicant companies are controlled by Sh. Aseem Gupta, an entry operator who is confirming to his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is retracted on 15.09.2011, because the retraction was filed after one and half years after the date of recording of statement and reference of retraction made before DGIT on 29.03.2010 is not borne out from record. It was argued by him that even if retraction was made, it was not shown that how the pressure and coercion was applied. He also referred that one Shri. Aseem Gupta has accepted that in lieu of cash, M/s Moderate Credit Corporation Ltd and M/s Ravnet Solutions Pvt. Ltd. have made investment in the assessee company and books of account of assessee itself constitute incriminating material. However, no other material or document was referred to by him which was found as a result of search constituting incriminating material in order to make additions in all these years. The learned CIT [DR] also cited the judgment of Bhagirath Aggarwal vs. CIT reported in 351 ITR 143 and PCIT vs. Avinash Kumar Setia 81 Taxmann.com 486. 22 The learned AR filed rejoinder highlighting that it is incorrect that retraction was one and half year late as the retraction was made immediately on the very next working date i.e. 29.03.2010 (because 28.03.2010 was Sunday) before the DGIT and ADIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the receipt of the notice u/s 153 A of the Act and before filing of any return in response to the aforesaid notice and was merely a reiteration of the aforesaid retraction which was already made immediately after the search. It is submitted this was the first occasion to bring on record the retraction of the assessee before the assessing officer who initiated the assessment proceedings by issuing notice u/s 153A of the Act. It is thus submitted that retraction was made on the first working date after the search before the investigation authorities and on the first available opportunity before the assessing officer that too before filing of the return of income u/s 153 A of the Act. 2.3 It is submitted that the assessment proceedings starts after filing of the return of income and the retraction was filed before the filing of the return of income in response to the notice u/s 153A of the Act, It is therefore submitted that merely because the order sheet was not properly maintained by the learned AO by brining it on record, no fault can be imputed on the assessee. In this connection, it is necessary to bring on record page 47 of the PB-2, obtained during the inspection where le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted at late morning on the next date, clearly establish that statement was not recorded when Shri. 1C Jindal was not in fit state of mind as he was physically and mentally exhausted and was in half sleep. Further whole night department kept pressuring to Shri. 1C. Jindal to surrender and he succumb to the pressure. This fact was also brought during the assessment proceeding vide letter dated 15.09.2011 and 19.12.2011 (in para 4 at page 157 of PB-1). Further in so far as the statement of Shri. Aseem Kumar Gupta is concerned, it is submitted that his statement is contrary to the admitted facts and despite request of the assessee vide its letter dated 15.09.2011, he was not confronted for cross examination of the assessee. Further the alleged statement recorded in the assessment proceedings of Shri. Aseem Kumar Gupta is concerned, same was never made available to the assessee, as such, in view of the settled legal position of the Apex Court, such statement/evidence cannot be relied and must be excluded. 2.8 It is incorrect that in the letter dated 15.09.2011, referred by the learned CIT DR no reference was made on cash given by the employee. It is submitted that while making th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances, the contention of the revenue that the retraction-is not bonafide is wholly misconceived and legally unsustainable. At this stage, reliance is placed on the judgment of the Hon'ble High Court of Gujarat in the case of Kailashben Manharlal Chokshi vs. CIT reported in [2010] 328 ITR 411 (Gujarat), 3. It is submitted that at si no. (a) to (e) thrust upon to treat the statement recorded as incriminating evidences and also referred to the money trail as well to treat books of account as incriminating material as such, it has been contended that Judgment of Kabul Chawla is not applicable. It is submitted that the learned CIT DR has failed to notice that despite the search made at several places in various group companies, a meager cash of ₹ 5,00,0007- was seized from the factory premises at Gwalior. It is submitted that in the statement, allegation has been made of the transactions of 2004-05, 2005-06 i.e. five years before the date of search which was completely denied by the assessee in the retraction letter. In case, of money trail noticed by the AO and also by the CIT DR, there has to be some cash transaction between the assessee and investor and there is no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, it is submitted as under: 5.1 It is submitted in para (a)(i) to (a)(iii), the learned CIT DR merely repeated on the statement recorded of Shri. 1C Jindal and statement of Shri. Aseem Gupta. It is submitted that as already submitted earlier, the statement of Shri. 1C Jindal was under forced circumstances which was immediately retracted and nothing was accepted even in the statement during the course of search, and income surrendered was immediately retracted on the first available opportunity. Further, as has already been submitted, AO did not bring any corroborative evidence and CBDT in its instruction no. F.No. 286/98/2013-IT (Inv.II) dated 18.12.2014 and Instruction No. F no. 286/2/2003- IT (Inv) dated 10.03.2003) has emphasized upon the need to focus on gathering evidences during search/survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 5.2 It is submitted that decisions cited by the learned CIT DR in para (a)(iv) at page 3 are inapplicable as in the case of the assessee, assessee has discharged its burden, however AO has not made any efforts to bring any adverse material in support of the finding. Further, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that copy of the order dated 11.08.2008 is hereby is enclosed giving complete description of the restrictions imposed on M/s P.K. Agarwal Co.. it would be seen that in para 2, investigation was made by the SEBI in respect of six companies, and none of the companies in which assessee invested was referred to. In this para, interim order of SEBI dated 29.09.2005 (also referred by the AO), restriction was imposed on the 11 stock brokers, in which name of M/s P.K. Agarwal Co was not mentioned at all. It is incorrect observation made by the AO in the assessment order, which has been casually been referred by the CIT DR. without examining the report, as mentioned above. Further in para 3 of the aforesaid order dated 11.08.2008, a restriction was imposed on 30.11.2005 on P K Agarwal Co. that too in respect of scrips of M/s Nageswar Investment Ltd. as may be seen from the chart provided in para 4 where at si. No 14, name of the P K Agarwal Co. was referred to. It is incorrect that any restriction was imposed on P K Agarwal Co. on 29.09.2005 for the sale and purchase or to deal in securities by SEBI. In fact the AO has misread the order and recorded such a finding without exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions relied upon. 24 From the facts emanating from record and submissions of the parties, it is seen that in the present case, for all these three assessment years, assessments were already made u/s 143(3) of the Act when Assessing Officer had examined investment and transactions made by the assessee and duly disclosed in the return of income. In fact, in assessment year 2005-06, as per CBDT guidelines the assessment was taken under CASS on the basis of AIR information specifically to examine the investments of share capital. In this year, seven companies made investments and shares were allotted to them. Apart from this, the assessee also declared long term capital gain from the sale of listed securities on which STT was paid and same was claimed as exempt u/s 10(38) of the Act. After examination, the assessment was completed, no addition was made, and returned income was accepted. In assessment years 2006-07 and 2007-08, assessments were again made u/s 143(3) of the Act and the Assessing Officer made the additions, which were exactly the same as was made in the order passed under section 153A of the Act. 25 We find that on 26.03.2010 a search and seizure operation u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver tax on such undisclosed income. The intention of the legislature is clearly mandated by mentioning initiation of search under section 132 in section 153A so that no assessee should be left un-assessed for such undisclosed income or property, which otherwise would not have assessed being not disclosed by him. 27 It is necessary to state here that legislature has introduced the second proviso to section 153A, which specifically provide that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of search u/s 132 would abate. This if read with first proviso and section 153A(1) of the Act, only pending assessments shall abate but not otherwise. Section 153A(1)(a) empowers the Assessing Officer to obtain returns and assess or reassess such income / property which is undisclosed and found during the search but second proviso clearly indicates that out of those six assessment years, only those shall abate which are pending on the date of initiation of the search. 28 We have occasions to deal with these issues several times and in view of the Hon ble Delhi High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 29 Accordingly, in respect of pending assessments the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. The completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 30 Above view has further been explained by the Honourable Delhi High court in Pr. CIT V Meeta Gutgutia 82 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d details of various transactions include purchase/sales/manufacturing trading of Gutkha, Supari made in cash outside Books of accounts and these are actually unaccounted transactions made by our two firms namely M/s. Asom Trading and M/s. Balaji Perfumes. 67. By contrast, there is no such statement in the present case which can be said to constitute an admission by the Assessee of a failure to record any transaction in the accounts of the Assessee for the AYs in question. On the contrary, the Assessee herein stated that, he is regularly maintaining the books of accounts. The disclosure made in the sum of ₹ 1.10 crores was only for the year of search and not for the earlier years. As already noticed, the books of accounts maintained by the Assessee in the present case have been accepted by the AO. In response to question No. 16 posed to Mr. Pawan Gadia, he stated that there was no possibility of manipulation of the accounts. In Smt. Dayawanti Gupta (supra), by contrast, there was a chart prepared confirming that there had been a year-wise non-recording of transactions. In Smt. Dayawanti Gupta (supra), on the basis of material recovered during search, the additions which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case is also distinguishable on the identical facts for the reason that in the present case assessee is maintaining regular books of accounts, no other material was found which suggest that assessee is in a habitual concealment of income or books of accounts of the assessee are not fund to be reliable. No other incriminating material except the retracted statement is made the basis of the addition. Hence reliance placed by revenue on the decision of the Ms Dyawanti (supra) is rejected because of distinguishing features. Hence the case of the assessee falls squarely within the principles laid down by Hon Delhi High court in series of decisions, lead case being of Kabul Chawla( Supra). 32 In view of the aforesaid decision, it is necessary for the Assessing Officer to examine the undisclosed income or property of the assessee found during the search in order to disturb the completed assessment but not otherwise. The completed assessments of the assessee for all these assessment years in appeal when made u/s 143(3) of the Act, the Assessing Officer had opportunity to examine each and every aspect. The revenue is empowered under various provisions of the I. T. Act, to reo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer framed assessment also u/s 143(3) of the Act by making a disallowance of ₹ 3,06,421/- u/s 14A of the Act r/w Rule 8D. in the assessment u/s 153A AO has merely repeated the disallowance without referring to any incriminating material unearthed during the search. 37 In making assessment u/s 153A of the Act, the AO has to bring an incriminating material, which is contrary to declaration made by the assessee. The reliance in making assessment for the AY 2005- 06 and 2006-07 was made on the surrender made in the statement recorded during the search u/s 132(4) of the Act and the statement of one Shri. Aseem Gupta but no discussion has been made of the proceedings after the statement on the encashment of cheques taken towards tax payment referred to in that statement. The Ld DR vehemently objected that deposition of cheques is the sole discretion of the ld AO and revenue can only deposit cheques against the tax demanded which event has happened later on. We do not see any reason why these cheques which have been part of the statement were not encashed when they have been taken., When they have been taken those cheques could have been deposited on account of advance tax also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ravnet Solutions Pvt. Ltd. in lieu of cash to the assessee. He further stated that he has received ₹ 20 crores in cash for arranging capital gain. He stated cash was received by him from Shri Somnath, employee of the assessee company. It was stated by him that cash was paid to Shri. Santosh Shah who arranged capital gain through stock broker M/s P.K. Aggarwal Co. On cross examination by Shri. Jindal, he confirmed that he had not received any cash from him. He also confirmed that he had never introduced M/s P.K. Aggarwal Co. and Shri. Santosh Shah to the assessee. And at the end, Shri. I.C. Jindal surrendered Rupees fifty one crores in the hands of four companies and paid cheques in respect of tax demand arising on account of surrender. 40 As submitted, Shri IC Jindal retracted this statement on 29.03.2010 before the DGIT (Inv) and ADIT (Inv) as 28th March, 2010 was Sunday. The assessee further submitted a detailed letter on 15/09/2010 of which certified copy is produced before us, where in such claim is made. 41 The argument of the learned CIT DR of finding no evidence on record cannot be accepted in view of the assessee submitting a copy of letter before us which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of crossexamination. Therefore, it was not for the Adjudicating Authority to presuppose as to what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the broker Shri. P.K. Aggarwal Co. in the statement, nobody was ever examined by the revenue despite time and again Shri P.K. Aggarwal confirming the transactions. The revenue cannot make allegation unless prove them by brining tangible material on record. The statement, which was recorded in mid night, cannot be said to be voluntary as recording of statement in the midnight itself shows that the statement was recorded when the person was not in a fit state of mind and would be fully exhausted. From the questions raised and answered, whole night it is evident that the statement was made under forceful circumstances and hence cannot be treated as voluntary. In fact in the identical circumstances, the Hon ble High Court of Gujarat in the case of Kailashben Manharlal Chokshi vs. CIT reported in [2010] 328 ITR 411 (Gujarat) has been pleased to hold that the statement recorded at odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. In this case also, assessee has immediately retracted the statement and furnished complete documentary evidences in support of the transactions. 45 The CBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed to be taken to be bona fide. The circumstances under which the retraction was made has also not been explained. The court finds that the above retraction, without any explanation whatsoever, and without mentioning the offer of surrender of ₹ 1.25 crores made earlier on December 18, 2008 is not a retraction at all in the eyes of law. The above decision of this court, therefore, does not come to the assistance of the assessee. 12. Learned counsel for the assessee next relied upon the decision of this court dated October 4, 2010 in I. T. A. No. 1111 of 2010 (CIT v. Dhingra Metal Works [2010] 328 ITR 384 (Delhi)). Here again, during the course of the survey conducted on September 14, 2004, the respondent-assessee surrendered an amount of ₹ 99.5 lakhs and offered it to tax. Within a period of slightly over two months thereafter, on November 29, 2004, he gave a letter stating that the statement was incorrect and that no discrepancy had to be reconciled as it was only a mistake. 13. Again, the distinguishing feature is that the retraction was within a short period of two months. This singular fact is sufficient to distinguish the said case from the case on hand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of section 153A of the Act and the additions in all these three assessments framed u/s. 153A of the Act i.e. ITA No. 1342/Del/2013, 1343/Del/2013 2004/Del/2013, do not stand and directed to be deleted. In result, appeals are allowed. B. Second issue pertains to the Addition made u/s 68 of the Act in respect of the share capital received by the assessee from seven corporate entities : 50 This issue is involved only in ITA No. 1342/Del/2013 for the assessment year 2005-06. After examining the facts of the case, we find that assessment in this case was originally framed u/s 143(3) of the Act specifically after examining the investment and Assessing Officer did not find any error and completed the assessment after accepting the investments. These investments have been declared in the books of accounts and the contention of the assessee is that it has filed all the details such as the confirmation, Company master data as proof of address, PAN, Auditor s Report along with Balance sheet, ITR, MOA/AOA, share application form etc, and the AO did not find any material adverse to the evidences furnished by assessee. It was also submitted that notices issued were served to the shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee from where shares were subsequently sold through stock exchange and STT was paid. The Calcutta Stock exchange to whom notice was sent u/s 133(6) through email, was also replied and furnished the details confirming that the price of the shares purchased off market is also matching with the price traded on the stock exchange. Further, in response to the enquiry, depository M/s IKM Investor Services Ltd also filed the necessary details which confirm the details filed by the assessee. It was also submitted that the finding of the AO that contract notes submitted at the time of original assessment were different with the contract notes submitted in the assessment proceedings passed u/s 153A of the Act as in the earlier contract notes there was no mention of STT, whereas STT has been paid in the contract submitted subsequently, is factually incorrect as at the time of Purchase, STT was not applicable as such on the purchase STT has not been paid, as such in the contract note of purchase there is no mention of STT. It was submitted that shares were sold through stock exchange and in respect of sale of shares STT was duly paid which was reflected in the contract notes. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) Details of sales of shares made during the year Page 285 Page 67-69 vii) Date of sale of shares 06.01.2005 to 17.03.2005 06.07.2005 to 29.11.2005 viii) Contract notes and sale Bill 318-377 118-284 ix) Gross amount of sale Consideration ₹ 7,02,90,273/- ₹ 38,54,73,308/- x) STT paid on the sale of such shares as reflected in the contract notes ₹ 52,772/- ₹ 3,84,277/- xi) Service Tax paid on the sale of such shares as reflected in the contract notes ₹ 7,319/- ₹ 41,224/- xii) Net Sale Consideration ₹ 7,02,30,182/- ₹ 38,50,47,806/- xiii) Long Term Capital Gain which has been claimed as exempt u/s 10(38) of the Act ₹ 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1623; Statement showing complete details of shares purchased in earlier year and during the year under assessment and sold during the year. Detailed statement showing payment of cost of shares purchased from both the brokers. Copies of broker account for the FY 2004-05 and 2005-06. Copy of capital gain account Copy of ledger account of investment in shares. Copy of the relevant bank statement showing the payment made for purchase of shares. 4) Reply dated 27.11.2008 (Pg. 34 of PB- 2): Copy of the bank statement. 5) Reply dated 01.12.2008 (Pg. 35-38 of PB-2) 6) Reply dated 18.12.2008 (Pg. 39-45 of PB-2). 9.4 It is relevant to state here that in the course of the regular assessment for the assessment year 2006-07, learned AO to verify the sale and purchase of the shares has made following enquiries :- S.No. Nature of enquiry Outcome Enquiries made by the AO in the original assessment proceedings: i. 05.11.2008 (Pg 18-20 of PB-2): Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t: i. 02.12.2011 (Pg 136-137 of PB- 2): An email was sent to the Calcutta Stock exchange, to verify whether the transactions were done through stock exchange, whether STT was paid, name of the stock brokers involved and whether there was any irregularity. 09.12.2012 (Pg 138-214 of PB-2): Reply was received from the stock exchange, confirming that STT was paid on the executed transaction. Further to the aforesaid no adverse comment was given. 9.5 In fact, learned AO during the remand proceedings for the AY 2006-07 also sent following remand reports: A. 11.02.2010 (Pg 65-66 of PB-2) : In the remand report, it has been admitted that shares have been purchased off market, as such, confirmation from the broker in respect of purchase of the shares is important. In respect of payment of purchase consideration, it has also been admitted that payment have been made, when learned AO in his remand report has stated that In the matter of payments the assessee has furnished the account of these brokers in its books and has claimed that the running account show that payments have duly been made, however the account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted at this stage itself that the in the case of the appellant learned AO has made addition under section 68 of the Act by holding that alleged long term capital gain s unexplained cash credit in the books of the assessee. It is submitted that in view of the remand reports of the learned AO, which remand reports have been submitted after extensive enquiries, and last remand report dated 29.09.2010 was even submitted after the search on the appellant, it has been admitted that sale and purchase of the shares by the appellant is genuine and only dispute is with regard to the holding period of the shares. In such circumstances, once in the own admission of the revenue, once the sale of the shares is genuine, as such, addition made u/s 68 of the Act is liable to be deleted hereitself as credit appearing in the books of the assessee cannot be held to be unexplained. 9.9 Without prejudice to the aforesaid, it is further submitted that shares purchased by the assessee in AY 2004-05 and AY 2005-06 has duly been reflected in its books of account and books of account of the assessee is duly audited and in the regular books of account maintained by the assessee, no discrepancy has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he PB 2 and analysis has been made in Annexure C enclosed with synopsis. Shares were sold through stock exchange at a price quoted on the stock exchange. Sales consideration has duly been received by the assessee in its bank account. On the sale of the shares STT has been paid. Once the shares are listed on the stock exchange and sale of such shares are made through stock exchange at a price quoted on the stock exchange, the contention of the revenue is wholly irrelevant. 2. The price rise in such shares is not supported by any logic. The aforesaid finding is pure suspicion and nothing more. An assessee cannot control the price of the shares which are traded through stock exchange. 3. M/s P.K. Agarwal has been penalized by the stock exchange. Firstly no such material was provided to the assessee. Even if he has been debarred from assessing the market, but for the period in which transaction of the assessee was undertaken, there was no such direction. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the remand proceedings, when each of the stock broker has confirmed the factum of the purchase by the assessee on the date stated in the contract notes. Further he has also ignored the Circular: No. 704, dated 28-4-1995 issued by CBDT wherein it has been held that date mentioned in the contract note should be taken as the date of purchase of the shares and date of transfer in the demat account is not relevant for the determination of the holding period for the computation of the capital gain. 9.14 It is further submitted that aforesaid sale of the shares were through a broker M/s P.K. Aggarwal Co., who is registered with Calcutta Stock Exchange. Further the shares which were sold were also traded in stock exchange and, in respect of which STT has also been paid. As such, neither the purchase of the shares nor the sale of the shares can be doubted. At this stage, reliance is placed on the following judicial pronouncements: a) High Court of Gujarat in case of Commissioner of Income-tax-I Vs. Maheshchandra G. Vakil [2013]40 taxmann.com 326 (Gujarat) held that Where assessee proved genuineness of share transactions by contract notes for sale and purchase, bank statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utomatically make the entire transaction as sham and bogus when other documents as stated supra prove the contrary. 2.9.5. We find that the similar issue had been adjudicated by the co-ordinate bench of this tribunal in the case of DCIT vs Sunita Khemka in ITA Nos. 714 to 718/Kol/2011 dated 28.10.2015 and in the case of ITO vs Rajkumar Agarwal in ITA No. 1330 (Kol) of 2007 dated 10.8.2007 wherein it was held that when purchase and sale of shares were supported by proper contract notes , deliveries of shares were received through demat accounts maintained with various agencies, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sale price of these shares is unusually high. The revenue had not brought any material on record to support its finding that there has been collusion / connivance between the broker and the assessee for the introduction of its unaccounted money. 2.9.6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough Demat account and consequently the transaction cannot be doubted as sham or bogus transaction. 9.15 It is submitted that despite the aforesaid evidences, the learned Assessing Officer on the basis of the statement of the appellant and also adverse action taken by the SEBI against the stock broker held that appellant had obtained accommodation entry from M/s P.K. Aggarwal CO. and has introduced money in the garb of the capital gain. It is submitted that merely because the share broker was indulged in malpractices, would not ipso facto lead to a conclusion that sale and purchase of shares through such stock broker is not genuine. It is submitted that M/s P.K. Aggarwal CO. has not stated that sale and purchase of the shares on behalf of the appellant company is not genuine nor the share broker has ever stated that he has provided any accommodation entry to the appellant company. It is further submitted that before drawing the adverse conclusion, the learned Assessing Officer has placed reliance on the action taken by the SEBI against the share broker. It is further submitted that it is not in dispute the such share broker is registered with the stock exchange and was tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls ltd. v CIT The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that statement had no relevancy whatsoever to the case of the mill in question. Both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. iv) 37 ITR 288 (SC) Lal Chand Bhagat Ambica Ram v CIT 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 the Court is entitled to interfere. 10 Lastly it is submitted in the instant cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oinder submitted that the Shri. Aseem Gupta has made statement which is factually incorrect. It was submitted that Shri. IC Jindal specifically requested as the statement was recorded u/s 132(4) in the mid night and whole night he was not allowed to sleep and he was fully exhausted and was not in the fit state of mind when the statement of Shri. Aseem Gupta was recorded in his presence, as such, assessee vide its letter dated 15.09.2011 duly requested to record the statement of Shri. Aseem Gupta in his presence which was never done. In respect of action taken by SEBI against the stock broker, it was submitted that same is wholly irrelevant because there was no restriction brought to his notice on the broker for sale and purchase or deal in shares when the transaction of the assessee took place. It was submitted that all the transaction of the assessee took place till 29.11.2005, and till that date there was no restriction on the stock broker. The learned AR also filed a copy of the order of the SEBI and submitted that restriction was imposed on the broker on 30.11.2005 that too in respect of scripts of Nageswar Investment Ltd. but not in any of the scripts sold by the assessee. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as sent u/s 133(6) through email, has also replied and furnished the details which information indicates that the price of the shares purchased off line is matching with the price traded on the stock exchange. Further, in response to the enquiry, depository M/s IKM Investor Services Ltd also filed the necessary details which confirm the details filed by the assessee. The AO also made enquiry u/s 133(6) through email from Calcutta Stock Exchange at the time of completing assessment u/s 153A of the Act, though not quoted in the order of assessment and found that in reply no adverse comments was made by Calcutta Stock Exchange. Even finding of the AO while passing the order u/s 153A of the Act is incorrect that contract notes submitted at the time of original assessment were different than later filed. The contract note of purchases made were of much earlier date when STT was not applicable as same was applicable w.e.f. 01.10.2004 and all the purchases were made prior to that date. STT has been paid in the contract for the sales made stock exchange. 59 After examining all the documents, confirmation by the stock brokers and necessary replies filed by the related parties, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act are much after the date of sale of shares by the assessee except order dated 29.09.2005 of the SEBI restricting P K Agarwal Co. not to buy sale or deal in securities in any manner. The learned AR has filed order dated 11.08.2008 by which the restrictions have been vacated of the earlier orders. In this order, restrictions on P K Agarwal Co. have been made but only from 30.11.2005 in respect of scripts of Nageswar Investment Ltd. 63 Hon Calcutta High court in case of Pr CIT V Rungta Properties Limited 83 Taxmann.com 106( Cal) has dealt with identical situation where broker was suspended and it held as under :- 11. On the last point, the Tribunal held that the Assessing Officer had not brought on records any material to show that the transactions in shares of the company involved were false or fictitious. It is finding of the assessing officer that the scripts of this company was executed by a broker through cross deals and the broker was suspended for some time. It is assessee's contention on the other that even though there are allegations against the broker, but for that reason alone the assessee cannot be held liable. On this point the Tribunal held - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sale consideration received by the assessee was returned back in cash. It is also not the case of the Revenue that the shares in question are still lying with the assessee, nor it is the case of the Revenue that the amounts received by the assessee on sale of the shares is more than what is declared by the assessee. 14. The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon'ble Supreme Court in the case of Andaman Timber Industries [Civil Appeal No. 4228 of 2006] was seized with the following action of the Tribunal:- 6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, order dated 17.03.2005 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. 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 We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. 16. On the strength of the aforementioned decision of the Hon'ble Supreme Court, the assessment order has to be quashed. 17. For the sake of the completeness of the adjudication, even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term capital gains and the assessee was entitled to exemption u/s. 54EC of the Act. The Assessing Officer, however, disputed this claim. As per information available to him from the Income Tax Investigation Wing, these shares were transferred to Demat account of Bubna Stock Broking Services Ltd. to the Demat account of the assessee on 05.03.2004, and back to Demat account of Bubna Stock Broking Services Ltd. on 23.04.2004. Accordingly, in the opinion of the Assessing Officer, the holding period of shares by the assessee was less than twelve months, and gain on ale of such shares was required to be treated as short-term capital gains. In effect, according to the Assessing Officer, the assessee was not eligible for exemption u/s. 54EC. It was in this backdrop that an addition of ₹ 10,23,540/- was made to the returned income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(Appeals). Learned CIT(Appeals) noted that the assessee did not have any demat account at the point of time when shares were purchased and it was duly on 05.03.2004 that the assessee opened a de-mat account, which explains that the date of purchases by the assessee cannot be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge to the capital gains being treated as long-term capital gains is indeed devoid of legally sustainable basis. Once Assessing Officer does not challenge genuineness of a transaction, it cannot be open to him to alter the date of purchases, as claimed by the assessee, and once this date remains unchallenged, there is no basis for hearing the capital gains as a short-term capital gain. There is not even a whisper of an allegation about genuineness of the transaction even though it is a case of, what is commonly known as, penny stock and the value of the shares has gone up almost 40 times within one year. On these facts, the Assessing Officer does not question or probe genuineness of transaction and yet claims that these gains should be treated as short-term capital gains. We leave it at that. 66 Further Honourable Bombay High court where DMAT account and contract note showed details of share transaction, and Assessing Officer had not proved said transaction as bogus, capital gain earned on said transaction could not be treated as unaccounted income under section 68 [2015] 54 taxmann.com 108 (Bombay) Commissioner of Income-tax-13 v. Shyam R. Pawar has held that :- 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act was upheld. 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 concluding that findings of fact concurrently rendered by the Assessing Officer and the Commissioner are perverse. The Tribunal proceeded on the footing that onus was on the Department to nail the Assessee through a proper evidence and that there was some cash transaction through these suspected brokers, on whom there was an investigation conducted by the Department. Once the onus on the Department was discharged, according to Mr.Sureshkumr, by the Revenue-Department, then, such a finding by the Tribunal raises a substantial question of law. The Appeal, therefore, be admitted. 4. Mr.Gopal, learned Counsel appearing on behalf of the Assessee in each of these Appeals, invites our attention to the finding of the Tribunal. He submits that if this was nothing but an accommodation of cash or conversion of unaccounted money into accounted one, then, the evidence should have been complete. Change of circumstances ought to have, after the result of the investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. There are 1,30,000 shares of Bolton Properties Ltd. purchased by the Assessee during the month of January 2003 and he continued to hold them till 31 March 2003. The present case related to 20,000 shares of Mantra Online Ltd for the total consideration of ₹ 25,93,150/-. These shares were sold and how they were sold, on what dates and for what consideration and the sums received by cheques have been referred extensively by the Tribunal in para 10. A copy of the DMAT account, placed at pages 36 37 of the Appeal Paper Book before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceeds realized on sale of shares was treated as Long Term Capital Gain. Since the sale transactions took place through authorized stock exchange and securities transaction tax was paid, the assessee claimed the entire sale proceeds arising out of the transaction as long term capital gain exempt from tax u/s. 10(38) of the IT act. The AO did not believe the transaction as genuine on the basis of certain observations and treated the entire sale proceeds as 'Income from Other Sources' and Added it to the total income. 3. The basis of disbelieving the transactions of purchase and sale as non-genuine, as it appears from the assessment order are as follows: (i) The AO observed that the purchase and the sale in the shares of above listed companies are bogus. (ii) The AO conducted enquiry through Calcutta Stock Exchange (CSE) regarding the purchases of the impugned sales and on the basis of the report of the CSE the AO came to a conclusion that no purchase took place through the floors of CSE. Having received a confirmation from CSE the AO came to a conclusion that the purchases are non-genuine. (iii) Since on the basis of the report of CSE the purchases were treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the said is a list of online transaction whereas the purchase made by the purchaser is a physical transaction or off market purchase'. Though no adverse condition against the assessee can be drawn, when all other contemparaneous evidence is available and filed by the assessee. 4.2 The assessee has also submitted that the broker through whom the shares purchases were carried out was neither suspended nor debarred as on the date of the above said purchase. In fact, the online trading transaction details furnished by the CSE and relied upon by the AO itself shows that Sri. N.M. Lohia, the broker had carried out transaction in July and August, 2003. 4.3 The assessee has informed and has also furnished evidence that the said shares have been physically presented to M/s. Karvy Co. for the purpose of D-MAT and that the said agency which is a reputed and independent agency has issued D-MAT certificates to the assessee. It clearly shows that the assessee was the owner of the shares in the year 2004 itself by which time the D-MAT process was completed. It is submitted that a fact which is apparent from third party records, about the ownership of the shares of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that these shares were purchased off market and delivery was affected by hand physically. Thereafter, the appellant followed, due procedure step by step till the shares were demated. After purchase of shares physically, these shares were lodged with the respective Companies for making necessary changes in the names of the purchasers. After the company affected necessary changes in the purchaser's name, the shares were delivered back to the appellants and then sent to Depository Participant (DP) for demat with a request form. The DP, then verified the purchases with the company whose shares were purchased. It was only after such verifications were completed with respective companies and the DP was satisfied about the accuracy with regard to the holder that the DP credited the amounts to the Demat Account. Shares were then ready for trading in electronic platform of stock exchanges. Thus, the moment these shares were demated after following the due procedure, all the previous steps starting from purchase culminating in demat, form stood validated as otherwise demat could not have been possible. 7. As regards sale of demated shares, the sales were made in electronic pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2004. This is in the nature of contemporary evidence. (d) Nothing cogent and concrete have been mentioned in the assessment order to indicate as to how the appellant was in league with the brokers in the transaction of specific scrips. Even in course of recording the statements of these brokers, no question was put to elicit any answer. (e) Even otherwise the findings of authorities, under any other statute, have got no bearing to the Income tax proceedings. Income Tax officer has to conduct his own enquiries while completing the assessment and reach his own finding. This is what law enjoins upon him as a quasi judicial authority under a statute. 9. Further, the learned A.R. submitted before the CIT(A) that action initiated/taken by any another authority Administering a statute cannot be used against the assessee to which he was not party. The so called order of SEBI, which was not made available to the assessee's, may have impact on the persons who are parties to the proceeding but certainly not on the assessees. It is an established position of law, as stated by the Hon'ble Supreme Court in Chhatrasinhji Kesarisinhji Thakore v. CIT [1966] 59 ITR 562, that the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sustained in the eye of law. In this regard the assessee's placed reliance on the following judgments of the Apex Court. It is a settled principle that mere conjecture, surmise or assumption of facts as distinct from inference from proved circumstances do not amount to evidence within the meaning of Section 143(3) for the purposes of being utilized in the assessment. This is a case in which there is no evidence against the assessee's except some vague, confusing enquiries the Assessing officer has sought to draw conclusion against the assessee's. It was held by Apex Court that the Income tax officer is not entitled to make a pure guess and make an assessment without reference to any evidence and material at all. There must be something more than suspicion to support the assessment. (Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). The same principle is also reiterated in the case of Umacharan Shaw Bros. v. CIT [1959] 37 ITR 271 (SC). It was held that a suspicion however, strong may not take the place of proof. The conclusions which are based on surmises and conjectures, cannot take the place of proof. Therefore the assessment made by the AO which is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (Delhi) of 2004 dt. 31-12-2007] Shripal Singh Gulati v. ITO [I.T. Appeal No. 285 (Agra.) of 2004 dt. 30-4-2008] Kamal Kumar S Agrawal case (supra) 12. The CIT(A), on careful consideration of various contentions of the assessees before him, on an overall appreciation of facts and circumstances of these cases, the CIT(A) was of the considered view that when there is no dispute with regard to off market transactions, in view of the observations of the Tribunal in various decisions, reliance placed by the AO on the replies received from CSE are of no probative value to draw an adverse conclusion against the assessees. The CIT(A) concluded that in all these cases involving similar facts, in the absence of any positive evidence, and merely on the basis of mere suspicion the transactions cannot be held to be not genuine. 13. Aggrieved, department is in appeal before us. The learned Counsel for the assessee reiterated the submissions before the CIT(A). 14. The learned D.R. besides relying upon the Order of the A.O. submitted before the Tribunal as follows : (a) It has been verified from the website of SEBI (www.sebi.gov.in) that certain brokers of Calcutta Stock Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the adjudicating Officer of SEBI in its order dated 22-02-2010 in the case of M/s. Sangotri Constructions Ltd. (in short SCL ). Similarly, M/s. N.M. Lohia, stock broker was penalized on 4 other occasions as per the list enclosed by jacking up the prices of scrips traded by him including PSL Financial Services Ltd., Sangotri Constructions Ltd., Richfield Financial Services Ltd., Stenly Credit Capital Ltd., Excellon Agencies Ltd. The adjudication order of the SEBI are enclosed for kind perusal of the Hon'ble Tribunal. (d) In this connection, it is humbly submitted that the share transactions of M/s. N.M. Lohia and Co-represented by its proprietor Sri Nethmal Lohia has been indicated severely by the Adjudicating Officer by levying penalties. (e) Similarly, the other broker, which the present group has purportedly dealt with is Sri Rajendra Prasad Shah, through whom shares of M/s. Sangotri Constructions Ltd. M/s. Scintilla Commercial and Credit Ltd. and M/s. Offshore Finvest Ltd. were purported to have been acquired by the assessee's. Certificate of Registration of Sri Rajendra Prasad Shah, Member, Calcutta Stock Exchange was suspended for 2 months and also fined on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract notes issued by M/s. NM Lohia , Co, which bears Trade No. and Trade Time of Calcutta Stock Exchange (page No. 21 and 22 of assessee's paper book). (k) When the share is transacted through off market, there cannot be any Trade No. of the Calcutta Stock Exchange since the purchase is not routed through the stock exchange. Thus, it is proved that the assessee's contention of off market purchase is against the evidence available on record. Further, the said transactions in the F.Y.2003-04 do not appear in the transaction list quoted in the assessment order (Page No.l5 of the paper book). This shows that the assessee has simply shown bogus purchases depicting with a imaginary Trade No. Similarly, all other purchases of the individuals of the group where the assessee claimed it to be off market purchase but the broker note depicts the Trade No. of Calcutta Stock Exchange. (l) The assesses of this group have allegedly purchased the shares of M/s. Navketan Merchants Ltd. This company is a stock broking firm in OTCEI (Over The Counter Exchange of India). Due to unethical practices, M/s. Navketan Merchants Ltd was expelled w.e.f. 22.12.2003 and ceased to be member of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brokers during the relevant period of time when the alleged purchase and sale of share took place. The other orders were referred to by the Assessing Officer in the assessment order referring to the website of ww.sebi.gov.in which was containing such adjudicating orders. 16. The learned counsel for the assessees, on the other hand, strongly opposing the above cotenntiosn of teh Learned Departmental Representative, supported the orders of the CIT(A), and submitted that the assessing officer, without bringing any positive evidence on record, could not have concluded that the transactions in question are not genuine. He submitted that since prescribed procedure has been followed from the stage of purchase till the ultimate stage of shares being D-MATTED, there is hardly any room to doubt or suspect that the transactions in purchase are not genuine. In order to hold so, it is submitted by the learned counsel, that the assessing officer is required to bring in cogent evidence to prove that the purchases were not genuine. No such cogent evidence has been brought on record except mere surmise and suspicion that the purchase transactions are bogus. Referring to the second objection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequent conclusion that the transactions entered through these brokers are not genuine, learned counsel submitted that the transactions of the assessees in dispute cannot be treated as sham merely for some discrepancies or adverse report by the SEBI. Learned counsel further submitted that the AO has not brought out any material to establish the final outcome of the enquiry initiated by SEBI and specific shares purchased by the assessees in the course of course of making investment. Therefore, it is not possible to take any adverse view on the basis of mere suspicion that SEBI had initiated some action and found the brokers violating the rules of SEBI. 19. As regards the next allegation that purchases and sales of shares were made with reference to penny stocks which were purchased at a nominal price and sold at a very high price, it is submitted by the learned counsel for the assessee that all the sale transactions were made through stock exchanges, and as such there is hardly any scopes for price manipulation. More over, it is submitted that these are the transactions on which STT was paid. As a common knowledge no prudent share holder would stand static when the market is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of truth. It was pointed out that in the whole case the AO has raised suspicions without any concrete proof. For this purpose the learned counsel relied on the decision of Dhakeswari Cotton Mills v. CIT [1954] 26 ITR 775 (SC). Based on the principles enunciated by the Apex Court in the case of Dhakeswari Cotton Mills Ltd. (supra) and Umacharan Shaw Bros v. CIT [1959] 37 ITR 271, it is submitted that a suspicion however strong may not take the place of proof. The conclusions which are based on surmises and conjectures cannot take the place of proof therefore the assessment made by the AO which is predominately influenced by suspicion is liable to be set aside. These principles enunciated by the Apex Court have been followed by various Tribunals. In this regard the notable cases are DN Kamani (HUF) v. Dy.CIT [1999] 70 ITD 77 (TM), Pooja Bhat v. Asstt. CIT [2000] 73 ITD 205 (Mum.) and Mrs. Aishwarya K. Rai v. Dy. CIT [2007] 104 ITD 166 (Mum.) (TM). 22. In support of his contentions, the learned counsel for the assessees also placed reliance on the following decisions- i. Smt. Memo Devi v. Asstt. CIT [I.T. Appeal No. 396 (Agra.) of dated 14-3-2008] ii. Smt. Neelam Chawla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to bring in cogent evidence to prove that the purchases were not genuine. No such cogent evidence has been brought on record, but merely proceeded to arrive at his conclusions basing on mere surmise and suspicion that the purchase transactions are bogus. Even though enquiry with CSE revealed that no purchase has taken place through CSE, since the transactions were in physical form and done through off market, the question of the same being routed through the floor of a recognized stock exchange does not arise. Further, on an overall appreciation of facts and when there is no dispute with regard to off market transactions, the CIT(A) was correct in observing that reliance placed by the AO on the replies received from CSE are of no probative value to draw an adverse conclusion against the assessee. In consonance with the fundamental principle that there cannot be a sale without a purchase, if the purchase of shares by the assessees is disbelieved, there cannot be consequent sale of the said shares by the assessee. Therefore, the fact of the purchases cannot be doubted, since the same ultimately resulted in conversion of shares into electronic form and credit of the same in the D- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hardly any scopes for price manipulation. It is all the more so, since the assessee has paid STT. Even with regard to the observation of the assessing officer that the assessee before purchasing the shares the assessees did not take into account the financial standing of the companies, the CIT(A) was correct is observing that the share market is generally sentiment driven and the assessees cannot remain static. Even the absence of experience of the assessees in transaction of the shares except dealing in these penny stocks, does not clinch the issue against the assessee. This may at the most lead to a suspicion but the same cannot be treated as conclusive to draw any adverse inference against the assessees to the effect that the transactions are not genuine. Similarly, even the opening of D-MAT accounts at Calcutta, a remote place may give rise to a suspicion, but the same cannot lead to any adverse inference against the assessee. In course of hearing, the assessee's had produced its books, there is no finding in the assessment order that payments were not made to the brokers similarly there is no observation in the order that the sales were arranged between the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, 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 person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. 11. At this juncture, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the shares. If within a period of one year, the share price has risen from ₹ 5 to 55 and from 9 to 160 and one person was ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the shares have been purchased and after retaining them for a certain period those shares have actually been sold by the assessee. In the present case, facts have revealed that the shares of Sarang Chemicals were duly demated and thereupon the sales were made through banking transactions. The Demat account maintained with ICICI bank has revealed the shares numbers, etc. From the side of the assessee, it is vehemently contested that there was a reason of denial of transaction by those share-brokers because they have not intimated the transaction to the SEBI and that one of them has also made the purchase transaction in cash which was against the SEBI guidelines. Apartment from these evidences, our attention has also been drawn on a certificate issued by share transfer agent that the transfer of those shares in the name of the assessee was duly approved. The assessee has expressed to hold those shares in dematerialized form therefore the assessee was asked to fill up the dematerialization request form . This information is very vital and proves the fact that the assessee had in fact purchased the shares of Sarang Chemicals Ltd. It is also difficult to ignore an another f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully following the decision of the Jharkhand High Court in the case of Arun Kumar Agarwal(HUF) (supra), besides other decisions of the Tribunal referred to above, we find no infirmity in the impugned orders of the CIT(A). The same are accordingly confirmed and the grounds of the Revenue in these appeals are rejected. 68 Further identical question of share purchase and sales was also considered by Hon Delhi High court ITA Nos. 43/2016 44/2016 PR. COMMISSIONER OF INCOME TAX 5 JATIN INVESTMENT PVT. LTD. Dated 18/1/2017 where the findings of the CIT (A) and ITAT were upheld that unless the revenue establishes that the money has gone for profits on shares from the coffers of the unaccounted income of the assessee, in view of exhaustive evidences produced by the assessee, which were not further probed and proved false. 69 The assessee has supported the transactions with overwhelming documentary evidences which were not proved to be false as well as prices at which transaction took places was also not held by ld AO to be false or inflated and ld AO himself taxing it as short term capital gain or speculation income, We are of the opinion that in the absence of any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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