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TMI Blog2019 (7) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... e will first take up the appeal in the case of Swati Luthra in ITA No. 6480/Del/2017 and the finding given therein will apply mutatis mutandis in other appeals also. 3. In the grounds of appeal, the assessee has challenged the disallowance of exemption claimed on account of long term capital gains from sale of shares of companies, M/s Turbo Tech Engineering Ltd. of Rs. 20,55,146/-; and M/s Esteem Bio Organic Food Processing Ltd. (Rs. 23,00,616/- (public limited companies listed on recognized stock exchange) and similar disallowances with respect to same scrips have been made in the cases of Shruti Luthra, Namrata Sehgal Luthra and Asha Luthra. Though the assessee had raised various grounds before us, the only effective issue involved in this appeal is as to whether the ld. CIT (A) was justified in confirming the addition made as alleged unexplained cash credit u/s 68 read with section 115BBE of the I.T. Act, 1961 by treating Long Term Capital Gain (LTCG) derived from sale of shares of companies M/s Turbo Tech Engineering Ltd. (Rs. 20,55,146/-) and M/s Esteem Bio Organic Food Processing Ltd. (Rs. 23,00,616/-) on the facts and in circumstances of the case. 4. The brief facts are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Long Term Capital Gain declared Rs. 20,35,146/- Rs. 27,47,036/- Rs. 17,68,463/- Rs. 18,02, 780/- DOCUMENTARY EVIDENCES SUBMITTED BEFORE AO AND CIT(A): Share Purchase Documents Pg 15 to 17 of PB Since the issues involved in all the appeals are identical and documents submitted are also same, thus, Ms. Swati Luthra's (ITA No. 6480/Del/2017) case may be taken as lead case and the issue may be decided accordingly. Share Certificate Pg 18 of PB Share Transfer Form Pg 19 to 21 of PB Contract Note issued by DP Pg 24 to 27 of PB Assessee's bank statement Pg 28 to 29 of PB DP statement Pg 30 to 32 of PB Details of long term capital gain claimed as exempt under section 10(38) on account of sale of scrip of M/s Esteem Bio Organic Food Processing Ltd. Particulars Swati Luthra Shruti Luthra Namrata Sehgal Luthra Asha Luthra Date of Investment 20.02.2013 20.02.2013 20.02.2013 - No. of Shares purchased 6000 6000 6000 - Purchase price per share Rs. 25 per share Rs. 25 per share Rs. 25 per share - Total purchase consideration Rs. 1,50,000/- Rs. 1,50,000/- Rs. 1,50,000/- - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the LTCG so declared of a sum of Rs. 41,85,762/- was nothing but unexplained Cash Credit under section 68 of the Act to be taxed @ 30% under section 115BBE of the Income Tax Act, 1961 in the hands of the assessee. 6. In the first appeal, the Ld. Commissioner of Income Tax (Appeals) confirmed the order of the AO by observing that the documents submitted as evidence to prove the genuineness of the transaction are make believe documents to cover up the true nature of the transactions, as it is revealed that the purchase and sale of shares are arranged transactions to create bogus profit in the garb of LTCG by well-organized network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or a commission. 7. Before us, Ld. Counsel for the assessee, Mr. Salil Aggarwal submitted that the assessee has filed before the AO and CIT(A) various documentary evidences in order to substantiate the genuineness of the LTCG so declared during the impugned assessment year and no defect, error or any flaw in these evidences has been pointed by the AO as well the Commissioner of Income Tax (Appeals) and thus, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of assessment and were never confronted by ld AO during the course of assessment proceedings. Further, in the first appeal filed by assessee against the said order of assessment, the said issue of cross examination was raised before ld. CIT (A) which was never provided to the assessee. Thus, it was submitted that as the statements of alleged entry operators have never been confronted to the assessee and they have also not been produced for cross examination, even though specific request for the same was made by assessee before ld CIT (A), the assessment so made and addition so sustained is vitiated in law and addition so made is liable to be deleted as such. Reliance was placed on following judgments in support of the aforesaid proposition: (i) KishinchandChellaram vs. CIT. [1980] 125 ITR 713 (SC) (ii) CIT vs Ashwani Gupta. 322 ITR 396 (Del) (iii) Andaman Timber Industries vs CCE (SC) reported in 127 DTR 241. 9. Ld. Counsel further relied on various case laws on the proposition that once the shares are sold through stock exchange and sufficient documentary evidences have been produced in order to support the genuineness of the LTCG claimed as exempt under section 10(38), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 872/Del/2018 dated 21.01.2019. Copy of order of Hon'ble ITAT Delhi in the case of Sanjeev Jain vs ITO in ITA No. 3381/Del/2017 dated 15.01.2019. Copy of order of Hon'ble ITAT Delhi in the case of Smt. Jyoti Gupta vs ITO in ITA No. 3510/Del/2018 dated 06.11.2018. Copy of order of Hon'ble ITAT Delhi in the case of Vidhi Malhotra vs ITO in ITA No. 93/Del/2018 dated 20.12.2018. Copy of order of Hon'ble ITAT Delhi in the case of Smt. Simi Verma vs ITO in ITA No. 3387/Del/2018 dated 06.11.2018. Copy of order of Hon'ble ITAT Delhi in the case of Smt. Shikha Dhawan vs ITO in ITA No. 3035/Del/2018 dated 27.06.2018. Copy of order of Hon'ble ITAT Delhi in the case of Sh. Amitabh Bansal vs ITO in ITA No. 7802/Del/2018 dated 11.02.2019. Copy of order of Hon'ble ITAT Kolkata in the case of Ms. Swati Mall vs ITO in ITA No. 2423/ Kol/2017 dated 07.12.2018. 10. On the other hand, the DR relied on the orders of the lower authorities and filed a written note dated 14.05.2019, which contained list of case laws to be relied by Revenue, wherein, reliance was placed on judgment of Hon'ble High Court of Delhi in the case of Udit Kalra vs ITO in ITA No. 220/2019. 11. In rejoinder, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer but from it cannot be concluded that transactions were sham. It is a matter of common knowledge that prices of shares in the share market depends upon innumerable factors and perception of the investor and not alone on the financial performance of the company. Further, we also find from record that Ld. AO also didn't confront copies of statements recorded by Investigation Wing, Kolkata of Sh, Nikhil Jain, Sh. Sanjay Vora, Sh. Rakesh Somani, Sh. Anil Kumar Khemka and Sh. Bidyoot Sarkar to the appellant during assessment proceedings and merely extracted copies of their statement in the assessment order only. The Ld. AO has not confronted any material to the assessee nor provided any adequate opportunity to the assessee to defend her case. Since the statements were not confronted to the assessee, she was deprived of her right to cross examine the witnesses. Also whatever they have stated in their statement is no gospel truth and cannot be applied blindly to all the persons who have brought the scrips in the entire country. Thus, under these circumstances, atleast some inquiry should have done from these persons, whether they have provided any entry to the assessee, if the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, 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 Notice We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 14. That the ld DR during the course of hearing placed heavy reliance on judgment of Hon'ble High Court of Delhi in the case of Udit Kalra vs ITO in ITA No. 220/2019. Relevant extracts of said judgment are extracted as below: "The assessee is aggrieved by the concurrent findings of the tax authorities - includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock exchange, whereas, in the instant case, the interim order of SEBI in the cases of M/s Esteem Bio and M/s Turbotech have been cooled down by subsequent order of SEBI placed by assessees in its paper book. Thus, the case of Udit Kalra vs ITO relied by ld. DR is clearly distinguishable on facts and is not applicable to the facts of assessee. Thus, we hold that the case of assessee is factually and materially distinguishable from the facts of the case of Udit Kalra vs ITO so relied by ld DR. 16. We further find that Ld. AO has also mentioned about some order of SEBI. This order also was never confronted to the appellant during assessment proceedings. Moreover, the said order seems to be passed in year 2015, whereas the appellant had purchased the shares in year 2011 and 2013 and sold them in year 2014. It was evident from this document only that no action has been taken by the SEBI against the company during the period when the appellant holds the shares. Thus, even otherwise, we find that the order of SEBI so relied by ld. AO and CIT (A) is not applicable for the transactions under consideration. In any case as stated above, the SEBI in its subsequent decision has absolved m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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