TMI Blog2019 (8) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... spectfully following the order of the Tribunal of this bench in the case of Usha Singhania (supra), and taking note of the documents filed by assessee to prove the veracity of the transaction and I am inclined to allow the claim of the assessee and direct deletion of the addition of ₹ 11,78,596/-. Before I part I would like to deal with the case laws cited by the Ld. DR who had submitted 23 judicial pronouncements in his support. I note that the said judicial pronouncements are all distinguishable on facts as well as on law. - I.T.A. No. 2551/Kol/2018 - - - Dated:- 9-8-2019 - Shri A. T. Varkey, JM For the Appellant : Shri Subash Agarwal, Advocate For the Respondent : Shri Sankar Halder, JCIT, Sr. DR ORDER This is an appeal preferred by the assessee against the order of Ld. CIT(A) 6, Kolkata dated 02.11.2018 for Assessment Year 2015-16. 2. The main grievance of the assessee is against the action of the Ld. CIT(A) in confirming the action of AO by treating ₹ 11,78,596/- which the assessee claimed as Long Term Capital Gain on sale of shares of M/s. Kappac Pharma Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h needs to be deleted. 5. Per contra the ld. DR vehemently supported the order of the Ld. CIT(A) and drew our attention to page 2 to 4 of the assessment order and urged before us that the claim of assessee was bogus and, therefore, it was rightly disallowed by the authorities below and we should not interfere with the same and cited case law, which we will discuss infra. 6. Having heard both the parties and after carefully perusing the record, it is noted that the assessee had purchased 5000 numbers of shares of M/s. Kappac Pharma Ltd. (M/s. KPL) on 10.07.2012 at a total cost of ₹ 75,000/- from M/s. Sannidhya Tradelink Pvt. Ltd. [Copy of purchase bill is found placed in the paper book at page no.8.] We note that the payment was made through an account payee cheque and copy of the bank statement evidencing the payment made to M/s. Sannidhya Tradelink Pvt. Ltd. for such share purchase found placed is in the paper book at page no.10. Thereafter in this assessment year, the assessee sold the shares at a consideration of ₹ 12,53,750/- through M/s. Spartek Financiers Investment Pvt. Ltd. which is a registered broker of the Calcutta Stock Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus to prove that the apparent is not the real is on the party who claim it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences of a character, which would either directly prove the fact of bogus/fictitious or establish circumstances unerringly and reasonably raising an inference to that effect. Further, the A.O. in the assessment order relied upon the purported statements of various alleged operators on the basis of which the A.O. had drawn adverse inference in the instant case. It is noted that nowhere any of them has ever named the assessee/broker in the alleged manipulation. Further, the A.O. did not provide any opportunity to cross examine the said persons. It is a well-settled principle of law that no credence can be given to the statement/report of any person given behind the back of the assessee unless a copy of the same is furnished to the assessee and an opportunity to cross examine the third person is afforded to the assessee. In this regard, reliance placed upon the following judgments: (i) Andman Timber Industries vs. CCE [2015] 62 taxmann.com 3 (SC), (ii) P.S. Abdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein the Tribunal held as under: 5. After hearing both sides, I find that in a number of cases this bench of the Tribunal and Jurisdictional Calcutta High Court has consistently held that, decision in all such cases should be based on evidence and not on generalization, human probabilities, suspicion, conjectures and surmises. In all cases additions were deleted. Some of the cases were, detailed finding have been given on this issue, are listed below:- Sl.No ITA Nos. Name of the Assessee Date of order/Judgment 1. ITA No.714 to 718/Kol/2011 ITAT, Kolkata DICT vs. Sunita Khemka 28.10.2015 2 214 ITR 244 Calcutta High Court CIT vs. Carbo Industrial Holdings Ltd. - 3. 250 ITR 539 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer has not assessed this amount as Business Income . In any event, I am bound to follow the judgment of the Jurisdictional High Court in this matter. I find that the assessee has filed all necessary evidences in support of the transactions. Some of these evidences are (a) evidence of purchase of shares, (b) evidence of payment for purchase of shares made by way of account payee cheque, copy of bank statements, (c) copy of balance sheet disclosing investments, (d) copy of demat statement reflecting purchase, (e) evidence of sale of shares through the stock exchange, (f) copy of demat statement showing the sale of shares, (g) copy of bank statement reflecting sale receipts, (h) copy of brokers ledger, (i) copy of Contract Notes etc. 7. The proposition of law laid down in these case laws by the Jurisdictional High Court as well as by the ITAT Kolkata on these issues are in favour of the assessee. These are squarely applicable to the facts of the case. The ld. Departmental Representative, though not leaving his ground, could not controvert the claim of the ld. Counsel for the assessee that the issue in question is covered by the above cited decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently the assessment was completed u/s. 147 r.w.s. 143(3) of the Act after making an addition of ₹ 10,39,289/- on account of bogus share transactions and ₹ 20,786/- being commission paid to the broker for arranging accommodation entries in the form of share transactions. The AO had given a finding that the assessee had taken entries from Mahasagar Securities Pvt. Ltd. involved in the shares scam case for ₹ 10,39,289/- for bogus speculation profit during the financial year 2007 -08. It was further found by the AO that the assessee has paid cash of equivalent amount and received back by cheque and bogus contract notes and bills for the transactions not actually rooted through stock exchange. It is noted that the ITAT, Mumbai had relied upon and followed the judgment of Hon'ble Bombay High Court in Sanjay Bimalchand Jain v. PCIT, Order dated 10.04.2017 (Bom.), being judgment of Jurisdictional High Court. However, in this case, the AO observed that the assessee had taken entries and paid cash of equivalent amount and received back by cheque. And on the basis of such adverse inference, the Tribunal confirmed the addition made by the AO. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the apex court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89 (SC); Durga Prasad More v. CIT [1971] 182 ITR 540 (SC) and MC. Dowell Co. Ltd. v. CTO [1985] 154 ITR 148/22 Taxman 11 (SC), besides by the Tribunal in the case of Asstt. CIT v. Som Nath Maini [2006] 7 SOT 202 (Chd.), he assessed the impugned credit of ₹ 12.15 lacs as unexplained income u/s. 68 of the Act. The Tribunal confirmed the addition observing that the purchase of shares was off market purchase not reported in the stock exchange. Further, it was observed by the Tribunal that the purchase was through a back date contract note in cash and, there was no trail. Thus it is noted that Tribunal in this case confirmed the addition on a factual finding that the purchase was through a back dated contract note in cash and, there was no trail. This fact is not applicable in the present case. Further, it is noted that the abovementioned judgment of Tribunal, Mumbai Bench was considered/distinguished by the Mumbai ITAT in its following judgments while allowing similar issue in favour of the Assessee: a. DCIT vs. Anil Kainya [ ITA Nos.4077 4078/MUM/2013, Order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings/observations of the SIT, concluded that exemption under section 10(38) claimed by the assessee was not acceptable and the act of the assessee in purchasing the penny stock shares and sale of fee within the ambit of adventure in the nature of trade. Consequently, amount in question was liable to be taxed under the head 'business income'. The Tribunal confirmed the addition by observing that the department had brought sufficient material on record to demonstrate that unaccounted money was introduced in the books of account through long-term capital gain by adopting such method. It is noted that in the aforesaid case, the Tribunal confirmed the addition on a factua1 finding that the department had brought sufficient material on record to demonstrate that unaccounted money was introduced in the books of account through long-term capital gain by adopting such method. This fact is not applicable in the present case. Further, the abovementioned judgment has been considered/distinguished by this Tribunal, inter-alia, in the following cases while allowing similar issue in favour of the Assessee: a. Kaushalya Agarwal vs. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court had confirmed the addition made by Assessing Officer on the basis of finding of fact by the Tribunal that the assessee had failed to prove the genuineness of the transaction of sale and purchase of shares. The relevant observation is as under: ..... On appreciation of the evidence, the Tribunal held that the assessee had failed to prove the genuineness of the transaction of sale and purchase of shares. Once the transaction of purchase and sale was found to be bogus then the sale proceeds had to be added as income of the assessee under Section 68 of the Act because the money received on the basis of bogus transaction had been credited by the assessee in the books of account which remained unexplained. 9. In view of the findings of fact recorded by the authorities below which could not be demonstrated to be erroneous or perverse in any manner, no interference is called for. However, in the instant case of the Assessee company all relevant documents were furnished to support and prove beyond all doubts, purchases as well as sale of shares. Further this judgment has been considered and distinguished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of each of the cases were set aside in the specific facts and circumstances of each of the cases wherein all facts were not available on record and/or where in the words of the D/R the AO has botched up enquiry . However, in the case in hand there is no occasion for setting aside the matter in as much as the assessee had furnished all relevant documents, materials and/or evidence to support its transactions of purchase and as well as sale of shares and the AO had failed to point out any defect and/or lacuna in the said documents, materials and/or evidence. Further, this Tribunal in its orders had decided similar issue in favour of the assessee by relying on binding judicial pronouncements. Reference is also made to the recent judgment dated 1st July, 2019 rendered by the Tribunal in the case of Aparna Miwsra, supra wherein the Tribunal had relied upon the following jurisdictional Calcutta High Court judgments to decide similar issue in favour of the assessee. i) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] ii)CIT vs. Lakshmangarh Estate Trading Co. Limited [2013] 40 taxmann.com 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given below: ACIT vs. Madhuri Sunil Kotecha [ITAT, Pune, Order dt. 28.03.2018] Charu Agarwal, Meerut vs. ITO [ITAT, Delhi, Order dt. 10.09.2018] Dayaram Khandelwal vs. PCIT [MP High Court, Order dt. 01.03.2018] Sourabh Khandelwal vs. PCIT [MP High Court, Order dt. 01.03.2018] It is noted that in all of these cases relates to imposition of penalty under section 271(1)(c) of the Act in the facts where the Assessee had withdrawn/surrendered his/her claim of exempt L TCG u/s. 10(38) of the Act and paid taxes on the gains arising from sale of shares. All these judgments are irrelevant and has no application to the facts of the instant case before the Tribunal. 13. Coming to the case of SEBI v. Rakhi Trading P. Ltd [Civil Appeal No.1969 of 2011, Judgment dated 8th February, 2018 (of the Hon ble Supreme Court ) It is noted that the Hon'ble Supreme Court was concerned with a case where SEBI had initiated actions against few traders and brokers for violation of Regulations 3(a), (b) and (c) and 4 (1), (2)(a) and (b) of the Securities and Exchange Board of India (Prohibition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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