TMI Blog2019 (10) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... separate department which has not been assigned assessment work and has been delegated the work of only making Investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter would be sent to the assessment wing to assess the income as per law. We find no such action executed by investigation wing against the assessee. In absence of any findings specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated. In this case, the AO at best could have considered the investigation report as a starting point of Investigation. The report only Informed the AO that some persons may have misused the scrip: for the purpose of collusive transactions. The AO was duty bound to make inquiry from all concerned parties relating to the transactions and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. However, the AO has not brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned income under section 68 of the Act. Consequently, also on second interconnected issue, the CIT(A) confirmed the action of the AO in making addition on the basis of presumption that the assessee has paid commission for alleged accommodation entries of long term capital gain and added the same under section 69C of the Act. For this, all these assessee s have raised identical grounds and the facts and circumstances in all the cases are also identical. Both, the learned counsel for the assessee s as well as leaned CIT DR fairly stated that facts on merits in all these appeals are same. Hence, only one appeal was argued and all will be adjudicate accordingly. The lead appeal on merits is ITA No. 3248/Mum/2019 for the AY 2015-16 and the grounds raised are the following ground Nos. 2 to 4: - 2. a. The AO/ CIT(A) erred in law and facts in treating the transaction of sale of shares of listed company as bogus and thereupon making an addition of ₹ 14,19,36,826/- under section 68 of the Act, being the sale proceeds of such transaction, treating the same as unexplained income. The reasons given are wrong, contrary to facts of the case and against the provision of law; b. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee filed his return i.e. original return of income on 28.08.2015 [wrongly mentioned by CIT(A) as 17.07.2014], whereas the correct date is written by the AO) for AY 2015-16 declaring the total income of ₹ 45,80,790/-. A search and seizure action under section 132 of the Act was carried out by the Income Tax Department on 03.12.2015 at the resident and office premises of the assessee and its group companies and other associates. Consequent to the search action under section 132 of the Act, a notice under section 153A of the Act was issued by the AO on 16.01.2017. In response to notice under section 153A of the Act, the assessee filed its return of income on 30.02.2017 declaring a total income of ₹ 47,38,420/-. The assessment was framed vide order dated 22.12.2017 under section 143(3) read with section 153A of the Act on a total income of ₹ 15,10,08,650/-. The AO made addition under section 68 of the Act amounting to ₹ 14,19,36,826/- on account of unexplained cash credit under section 68 of the Act being sale proceed of transactions of sale of shares as bogus. Consequently, the AO also made addition of ₹ 42,58,104/- under section 69C of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had 15 lacs equity shares of PAL in earlier years and after holding more than one year sold those shares during the year of consideration for a sum of ₹14,16,80,449/-. The assessee sold these shares on BSE network and paid STT, service tax, stamp duty, etc. The assessee claimed this LTCG as exempt under section 10(38) of the Act. During the course of assessment proceedings, the AO required the assessee to prove his claim of LTCG on sale of shares of PAL vide letter dated 20.11.2017. The assessee filed various details in support of his claim but AO rejected relying on report of investigation wing and held that receipt of sale proceeds from BSE broker or clearing system is unexplained cash credit and made addition under section 68 of the Act. The AO has concluded his finding and which are summarized as under: - i) The assessee has mainly traded in one script which is suspicious. ii) The assessee traded in single scrip and has made huge profits. iii) To prove genuineness, proof of physical transfer of shares, reasons to trade off-market when options to online market trading through demat account were available, trading pattern of market transactions for the last thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overned by market factors prevalent at relevant time in such trade, but same were product of design and mutual connivance on part of assessee and the operators. ii) The assesses resorted to a preconceived scheme to procure long-term capital gains by way of price difference in share transactions not supported by market factors. iii) Cumulative events in such transactions of shares revealed that same were devoid of any commercial nature and fell in realm of not being bona fide and, hence, impugned long term capital gain is not allowable. iv) The order of SEBI referred above has also given the similar finding that the prices of the shares were determined artificial by manipulations and cannot be a product of market factors and commercial principals. v) Failure of Assessee to discharge his onus: The assessee has not been 'able to prove the unusual rise and fall of share prices to be natural and based on the market forces. It is evident that such share transactions were closed circuit transactions and clearly structured one. vi) Ignorance of the assessee about shares and penny stock companies: Assessee has failed to show of having any knowledge about the shares traded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount received back as sales proceeds on sale of shares is required to added back towards his taxable income under section 68 of the Act. Aggrieved, against the order of the AO, assessee preferred the appeal before CIT(A). 6. The CIT(A) also confirmed the action of the AO by observing (the relevant paras are being reproduced) as under: - Details of the Penny Stock Transaction 12.0 During the year under consideration, the Appellant had claimed LTCG on the shares of PAL, as exempt u/s 10(38) of the Act. As per the details placed on record, the sale consideration of the shares of M/s Pine Animation Ltd. for the year under consideration is amounting to ₹ 14,19,36,826.50/- and the same had been added back by the AO, as unexplained cash credit u/s 68 of the Act. 12.1 The facts are that the Appellant had got allotted 1,50,000 preference shares of PAL at the rate of ₹ 10/- per share on 10.04.2013, vide allotment letter dated 10.04.2013 of the said company. The Appellant had stated that it had paid an amount of ₹ 15,00,000/- on 13.03.2013 from it's Axis Bank Account. This initial of shareholding of ₹ 1,50,000 preference shares of PAL of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had stated that all his affairs related to share markets were managed by his father, Shri Balkrishan Mittal. The Appellant had contended that they had got some information about some scrips, where there were reasonable chances of getting good return in short terms. But the source of information, basis of information, documentary evidence in support of such a claim had not been furnished by the Appellant. Thus, the Appellant had only made general and vague observations on the issue of allotment of preference shares. Hence, the make believe story of the Appellant can't be accepted in the absence of any documentary evidence. 26.5 These contentions of the Appellant had also been brush aside by SEBI in it's confirmatory order dated 2nd June 2016 and the relevant excerpt of the said order are reproduced hereunder, for ready reference: - 13. In the instant case, it is undisputed that trading in the scrip of Pine was suspended from November 09, 1998 till June 21, 2012 and during the financial year 2011-12, it had incurred a loss of ₹7,08,037 and thereafter earned a meagre profit of ₹15,60,007 during FY 2012-13. It does not appeal to reason that the Notices, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description Mar 15 Mar 14 Mar 13 Mar 12 Mar 11 Total Share Capital 27.70 27.70 27.70 3.00 3.00 Reserves -1.40 -1.91 -2.50 2.62 -2.55 Inventories 21.78 22.67 16.34 0.00 0.00 Loans and advances 8.69 9.58 11.25 0.06 0.06 Book value (Rs) 0,95 0.93 9.10 1.27 1.51 Profit Loss Account (Figures in ₹ Cr.) Description 12mths 12mths 12mths 12mths 12mths Operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minimum of ₹ 0.93 per share to a maximum of ₹ 9.10 per share. On the other hand, the appellant had sold the shares on BSE from ₹ 94.0 per share to ₹ 95.8 per share for the current year under consideration. The pre-arranged and pre-meditated nature of these transactions is apparent from the fact that the Book Value of the /share for the year under consideration was just ₹ 0.95 per share, as against the average ESE price of ₹ 95 per share. Thus, the BSE price of PAL is 100 times more than the Book Value of the share. All this clearly reveals that the share price of BSE had been highly manipulated upwards by the Operators and Exit Providers for the purpose of providing a golden exit to the beneficiaries, like the Appellant. Poor Track Record of PAL Scrip on BSE 28.0 The material on record reveals that the scrip was earlier listed on BSE from March 25, 1994 and trading was suspended in the scrip w.e.f. November 09, 1998. Thus, the dubious nature of the PAL scrip was quite evident from the several undisputed historical facts. A prudent investor will never invest in such a suspicious nature of scrip, which had been found to be involved in ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to rise further. 30.1 To buttress the above observations, the data relating to the sharp price rise in the PAL scrip was examined. On May 22. 2013, the price of the scrip was ₹ 47.2 per share. However, in just 19 trading days, between May 22, 2013 to June 19, 2013, the price of the scrip jumped to ₹ 100.6. The average volume during the period was 62 shares, with 405 shares traded on May 28, 2013 being the he entire price rise was stage managed by certain Scrip Operator Entities. It was noticed that such entities by executing 1 or 2 trade(s) per day of meagre quantity were able to increase the price of the scrip in a significant manner. 30.2 Thus, it is highly surprisingly that none of the preferential allottee had come forward to sell the shares, during the price rise period. The fact that no preferential allottee had offloaded its PAL shareholding, though the share price of PAL was rising rapidly, is in itself a strong circumstantial residence about the prearranged transaction of LTCG. All the beneficiaries waited for the price rise to achieve the nadir and also waited for the completion of the one year lock in period, which as per the understanding with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of LTCG by Beneficiaries 32.0 The offloading of the PAL scrip by the 'Beneficiaries' started from Dec 2013 continued till Jan 2013, as the mandatory holding of the shares for 1 year for preferential allotment was over by then. 32.1 On December 17, 2013 the price of the scrip was ₹ 92.1 and the 'Beneficiaries' started offloading the PAL shares during this period. This offloading activity by the 'Beneficiaries' continued for around a year and after that finally, the stock started falling down. Thus, on January 30, 2015, the price of the scrip fell to just ₹ 38.5. During the period starting from December 17, 2013 to January 30, 2015, the scrip was traded with an average volume of 2,74,922 shares per day and total volume of 7,36,79,112 shares were traded in 268 days. Thus, the volumes / during this period were extremely high and the Beneficiaries booked the LTCG during this period of time. 32.2 A graphical Presentation of the simultaneous high price high volume movement in the scrip of PAL during the period December 17, 2013 to January 30, 2015 is represented, as below: - (copy of above image is taken from CIT(A) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al allottees 5,23,08,076 21.18 Promoter related entities 50,78,455 54.76 Exit Provider Group 2,82,65,949 3,47,34,934 81.38% 47.14% Unrealistic return of 9362% reaped by the appellant 34.0 It had been noted that Preferential Shares of PAL had been allotted at a rate of ₹ 10 per share. The Appellant had got allotted 1,50,000 Preference Shares for an amount of ₹ 15,00,000/-, which after split of 1:10 were finally sold at an amount of ₹ 14,19,36,826.50. Thus, the Appellant had got astronomical return on the investment made in PAL, which is worked, as under: - (14,19,36,826.50 - ₹ 15,00000) * 100 = 9362.45% ₹ 15,00,000 34.1 It is clear that the Appellant along-with other 'Beneficiaries' had made a killing by getting a return of 9362.45% on the investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e three broad groupings: - Promoter related entities 35.1 Though, inter-se the percentage shareholding amongst the three grouping might have varied at various points of time, but as a whole these three groups only had held the entire shareholding of PAL. This is due to the fact that the entire cartel of LTCG Scam had never allowed the general public to trade in the shares of PAL. .. 36.5 On this particular aspect, it is made clear that the Revenue had never imputed the charge of price manipulation / volume manipulation on the Appellant. The charge on the Appellant is that it is one of the beneficiary of the bogus Long Term Capital Gain of the PAL scrip. The charge on the Appellant is that it had laundered it's unaccounted money through bogus Long Term Capital Gain in PAL scrip. Thus, the Appellant had failed to appreciate that the non-violation of provisions of SEBI Act, SCRA, PFUTP regulations, etc. doesn't absolve him from the charge of bringing his undisclosed income into books through bogus Long Term Capital Gain. 36.6 Further, on these contentions of the Appellant, it is stated that the appellant had not reproduced the Para 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided such transactions have suffered securities transaction tax under the said Chapter. If shares of listed companies purchased are sold on the exchange platform within one year paying STT then gain or loss is treated as short term capital gain taxable at concessional rate of tax as per the provisions of Income Tax Act and if these shares are sold on stock exchange after holding for exceeding one year paying STT then resultant gain or loss is treated as long term gain/ loss which is exempt from tax u/s 10(38) of the Act. 9. He referred that to the order of the AO and that of the CIT(A) and stated that both the authorities did not accept the above referred evidences filed by the assessee in support of his claim and by relying on the general study report of the investigating wing rejected the claim and held that the entire transactions undertaken by the assessee were merely an accommodation entries taken for the purpose of securing bogus long term capital gains and to claim exempt income and consequently assessed the sale proceed as an unexplained cash credit under section 68 of the Act. The AO has referred to the findings in the general study report of the Investigation Wing of K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traded in mainly in one script during the year which is suspicious Para 7.3: As discussed above, the assessee traded in single scrip and has made huge profits. Para 9: Further, a SEBI order has been passed in the case of Pine Animation Ltd order vide dated 08.05.2015 which directs that the trading in the securities of shall be suspended till further directions...........The shares are sold by the beneficiaries have been purchased by paper/ bogus entities (e)it providers) Para 11.3: ......to prove genuineness, proof of physical transfer of shares, reasons to trade off-market when options to online market trading through demat account were available, trading pattern of market transactions for the last three years, have not been submitted to this office Submissions on above: 11. The learned Counsel argued that the findings of the Investigation Department are general in nature and it is basically a study report and not known which cases are investigated. As understood from the assessment order the assessee's name or his transactions are not referred in such reports and the AO has not established any link between that report and assessee's transactions. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the assessment order invalid. In the present facts, the assessee at first was allotted shares through preferential issue by the Company. The allotment of shares by the Company was made after obtaining prior approval of BSE as per SEBI Issue of Capital and Disclosure Requirements Regulation, 2009. The sale of shares of PAL is through a reputed broker Geojit. All necessary supporting evidence have been submitted to establish the genuineness of the transactions. On investigation, the role of Geojit was not found to be suspicious or questionable. Therefore, reliance on the findings of the Investigation Wing in some other cases which bears no connection with the case of the assessee irrelevant. 14. It was contended further that there is no evidence that implicate the assessee to have entered into any arrangement with any operators /exit providers or involvement of unaccounted money. The assessee took strong objections to AO linking him or his transactions with so called alleged exit providers and accommodation entry providers without any evidence or involvement mentioned in such investigation reports and statements of such persons. The seamless process of transactions at BSE as ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee explained the process at Stock Exchange Network, which is filed in the shape of note as under: - As per Stock Exchange Regulations, shares or securities of any of the listed companies who has signed listing agreement with SE are dealt on the stock exchange platform through a registered broker only. The purchase and sale transactions on the stock exchange (SE) platform are with the stock exchange and settled through the clearing system and payment is received from brokers or paid to brokers online to or by the exchange clearing system. When any customer orders the broker to sell any script, the stock broker sells the shares on trading system through the exchange terminal and generate contract note. On sale, the shares are delivered from the customer's demat a/c to the stock broker's demat a/c who in turn transfers the shares to stock exchange pool a/c, who on settlement day delivers to the buyer's demat a/c. On the other side, the buyer pays the price as per contract note to his broker who pays to the SE who then transfers the amount to the seller's broker on settlement day. Thus, the seller and the buyer or their brokers does not have d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the assessee or his broker did not have any record or knowledge of the purchasers at the time of sale. However, during the course of investigation by SEBI, the information was supplied by BSE to the assessee in the form of a CD to offer his reply on the ex-parte order issued by SEBI on 08.05.2015. From the CD, the assessee came to know that his shares of PAL were bought by 50 buyers through multiple brokers. The delivery of shares is given to Geojit by the assessee from his demat account. Copy of demat statement is already filed in assessee paper book before us. The broker in turn transfers the shares to BSE Clearing account. The sale proceeds of sale of shares is settled by exchange settlement system and directly credited to broker's bank accounts by the BSE and the assessee received payment from Geojit i.e. directly into his designated hank account. Copy of bank statement is filed in assessee s paper book (APB). 19. Further, the assessee has no connection or nexus with the buyers as also the activities of the buyers. Even if the buyers are doubtful or of suspicious character that does not affect the transactions of sale of shares by the assessee through proper chann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect to their role in the manipulation to the scrip of PAL, I am of the considered view that the directions issued against them vide interim order dt 08.05.2015 which were confirmed vide Orders dt. June 02, 2026, July 05, 2016, August 22, 2016 and June 02, 2017 need not be continued. 11) In view of the foregoing, I in exercise of the powers conferred upon me under Section 19 of SEBI Act, 1992 read with section 11, 11(4) and 11B of the SEBI Act, hereby revoke the Confirmatory Orders dt.02.06.2026, 05.07.2016, 22.08.2016 and 02.06.2017 qua aforesaid the 114 entities with immediate effect. 21. Thus, the SEBI's final order dated 19.09.2017 clearly came to the conclusion that SEBI's investigation did not find any adverse evidence against the 114 entities including the assessee and given finding that the assessee has no connection/nexus with PAL or its promoters/directors or promoters related entities nor any role in price manipulation, volume manipulation in the script of PAL. No violation of provisions of SEBI Act, SCRA, PFUTP regulation s, etc. were observed in respect of 114 entities (including the assessee). The list of 114 entities referred in the SEBI Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst 1,50,000 shares allotted earlier. The assessee acquired the shares on the basis of guidance from his father and friends. The purchase and sale of shares was neither pre-planned nor under any arrangement with the company or any party related to it. The allotment of shares by PAL was made after obtaining prior approval of BSE as per SEBI Issue of Capital and Disclosure Requirements Regulation, 2009. We noted from the facts that as per the financials provided in the assessment order, it can be seen that the company had incurred a loss in FY 11-12 of ₹ 7 lakhs and has earned profit of 16 lakhs in FY 12-13. The fact that PAL was turned from loss making to profit earning itself demonstrates the fact that there was potential in PAL due to which the assessee purchased the shares. Further, the turnover, in the FY 2013-14 increased by 10 times as compared to the preceding previous FY and increase in the net profit after tax was almost around 4 times than that of the net profit recorded in the year of purchase. Moreover, the prices of the company were almost constant for a year. When the assessee thought that the prices had reached its peak, he slowly sold all the shares in a tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the fact that assessee's submissions and SEBIs final order were already on its record thereby contravening the principles of natural justice. 28. We also noted that as per provisions of section 68 of the Act, where any sum is found credited in the books in any previous year and assessee offers no explanation about the nature and source thereof or the explanation offered is not satisfactory to the AO, the sum credited may be charged to tax under Sec. 68 of the Act. The assessee is required to prove: (i) the identity of the creditor (ii) Source of the credit and (iii) genuineness of the transaction to the satisfaction of the AO. To prove the identity of the creditor, the nature of transactions, source of payments and the genuineness of the transactions of sale of shares of PAL, the assessee has submitted following documents/ evidences: - a) To prove the identity of creditor and nature of transaction the assessee submitted copy of Contract note on sale by Geojit on BSE platform. The contract notes shows the quantity, rate, time stamp, value, taxes and charges viz. STT, brokerage, SEBI and exchange turnover charges, service tax and stamp duty incurred on all the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious shares and the aggregate value of investments for 5 years have been as under: - AY ( as on date) Total investment in shares Amount (in Rs.) 31.03.2011 3,77,21,394 31.03.2012 3,33,40,018 31.03.2013 2,66,87,649 31.03.2014 2,91,24,876 31.03.2015 2,58,84,431 Copies of Balance Sheet of the assessee for the above mentioned years showing the investments made in shares were submitted to the AO vide submission dated 15.03.17 as well as before CIT(A) and even now before us. This adds to the bonafide of the assessee s transactions. In view of the above facts and circumstances of the case, we have to go through the expression of nature and source and has to understand the requirement of identification of the source and its genuineness. Sec. 68 of the Act places the burden of proof on the tax payer, to explain the nature of source of any credit but not the source of the source. Hence when an assessee gives evidences of identity of the payer, sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also relied on the decision of the Hon ble Bombay High Court, Nagpur Bench in the case of Sanjay Bimalchand Jain vs. Pr. CIT (2018) 89 taxmann.com 196 (Bom), wherein the decision on the impugned issue was discussed. Hon ble High Court has considered the facts of Sanjay Bimaichand Jain supra from where we find that (i) in that case, the broker company through which the shares were sold did not respond to AO's letter regarding the names and address and bank account of the person who purchased the shares sold by the assessee (ii) Moreover, at the time of acquisition of shares of both the companies by the assessee, the payments were made in cash (iii) The address of both the companies were interestingly the same (iv) The authorized signatory at both the companies were also the same person (v) The purchase of shares of both the companies was done by that assessee through broker, GSSL and the address of the said broker was incidentally the address of the two companies. Based on these crucial facts, the Hon'ble Bombay High Court rendered the decision in favour of the revenue. None of these factors were present in the facts of the assessee before us. Hence it could be safely co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has to confront the assessee with such material. The claim of the assessee cannot be rejected based on mere conjectures unverified by evidence under the pretentious garb of preponderance of human probabilities and theory of human behavior by the department. 33. It is well settled that evidence collected from third parties cannot be used against an assessee unless this evidence is put before him and he is given an opportunity to controvert the evidence. In this case, the AO relies only on a report as the basis for the addition. The evidence based on which the DDIT report is prepared is not brought on record by the AO nor is it put before the assessee. The submissions of the assessee that he is just an investor and as he received some tips and he chose to invest based on these market tips and had taken a calculated risk and had gained in the process and that he is not party to the scam etc., has to be controverted by the revenue with evidence when a person claims that he has done these transactions in a bona fide manner, one cannot reject this submission based on surmises and conjectures. As the report of investigation wing suggests, there are many beneficiaries of LTCG. Each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stigation wing is a separate department which has not been assigned assessment work and has been delegated the work of only making Investigation. The Act has vested widest powers on this wing. It is the duty of the investigation wing to conduct proper and detailed inquiry in any matter where there is allegation of tax evasion and after making proper inquiry and collecting proper evidences the matter would be sent to the assessment wing to assess the income as per law. We find no such action executed by investigation wing against the assessee. In absence of any findings specifically against the assessee in the investigation wing report, the assessee cannot be held to be guilty or linked to the wrong acts of the persons investigated. In this case, the AO at best could have considered the investigation report as a starting point of Investigation. The report only Informed the AO that some persons may have misused the scrip: for the purpose of collusive transactions. The AO was duty bound to make inquiry from all concerned parties relating to the transactions and then to collect evidences that the transaction entered into by the assessee was also a collusive transaction. However, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vitiated if the Tribunal took count of all these probabilities and without any rhyme or reason and merely by a rule of thumb, as it were, came to the conclusion that the possession of 150 high denomination notes of ₹ 1,000 each was satisfactorily explained by the appellant but not that of the balance of 141 high denomination notes of ₹ 1,000 each. 37. The observations of the Hon'ble Apex Court are equally applicable to the case of the assessee. The AO and CIT(A) both, having failed to bring on record any material to prove that the transactions of the assessee were collusive transactions could not have rejected the evidences submitted by the assessee. In fact, in this case nothing has been found against the assessee with aid of any direct evidences or material against the assessee despite the matter being investigated by various wings of the Income Tax Department and hence under these circumstances nothing can be implicated against the assessee. In view of the above, the findings / allegations of the AO and CIT(A) are baseless, without any evidence, contrary to the facts and circumstances of the case and provisions of the Act. Hence, we delete the addition ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The facts of the case have been given hereinabove; however, the relevant facts are being reiterated for the sake of convenience. The assessee filed the return of income for the instant year on 17.07.2013 which was processed under section 143(1) of the Act. The search and seizure action under section 132 of the Act was conducted 03.12.2015. The notice under section 153A was issued on 16.01.2017 and the return was filed in response thereto on 20.02.2017. Now, the assessee has raised issue that the additions as made by the AO in the assessment as framed under section 143(3) read with section 153A of the Act dated 22.12.2017 without referring to incriminating material found during the course of search are without legal jurisdiction and have to be deleted. 41. The CIT(A) dismissed the ground raised by the assessee on this legal issue by holding that material obtained by issuing notice under section 133(6) of the Act to Bombay Stock Exchange (BSE) and on the basis of information filed by the BSE sale transactions of shares of M/s BML M/s RGL were synchronised trades and prearranged for obtaining bogus LTCG. The learned CIT(A) further observed that BSE data and material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) by submitting that the evidences were gathered after issuing notice under section 133(6) of the Act that the assessee was carrying on a systematic activity in the shares of BML and RGL to secure bogus long term capital gain and the learned CIT(A) clearly held that such a material constituted incriminating material and rightly used in making the addition in the order passed under section 143(3) r.w.s 153 of the Act. The DR prayed before the bench to uphold the order of ld CIT(A) on this issue. 44. After hearing both the parties and perusing the facts on record, we observed that undisputably the assessment in the instant year has not abated on the date of search. We further find that the evidences were gathered after issuing notice under section 133(6) that assessee has carried out synchronized trades for obtaining bogus LTCG. In our opinion, the said information / data is collected after the date of search and does not constitute incriminating material found and seized during the course of search. Keeping in view the said facts and circumstances, we are of the considered view that addition to the income of the assessee can only be made on the basis of incriminating record foun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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