TMI Blog2021 (7) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue : Shri Harshit Bari, Sr.DR ORDER PER MANISH BORAD, A.M The above captioned appeals filed at the instance of the assessee are directed against the orders of Ld. Commissioner of Income Tax(Appeals)-I (in short Ld. CIT], Indore dated 03.12.2018 25.01.2019 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the Act ) dated 22.12.2016, framed by ACIT-3(1) ACIT-4(1), Indore. Following grounds of appeal in ITANo.39/Ind/2019(Manorama Devi Sharma):- 1. That the order passed by Ld. CIT(A) is arbitrary, bad in law and on facts. 2. That the Ld. CIT(A) has erred in confirming the addition of ₹ 28,24,342/- under section 68, whereas section 68 is not applicable on the transaction entered into by the assessee, which is quite unjust, illegal and against the facts of the case. 3. That the ld. CIT(A) has erred in considering the script from which the assessee has earned Long Term Capital Gain as Penny Stock , a term nowhere define under the Income Tax Act as any other law for the time being in force, which is quite unjust, illegal and against the facts of the case. 4. That the ld. CIT(A) has erred in confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case. 2. That the Ld. CIT(A) has erred in confirming the addition made by Ld. AO by relying on the reports of some department authorities, which are not even mentioning the name of the appellant and not even confronted with the appellant which is quite unjust illegal against the facts of the case. 3. That the Ld. CIT(A) has erred in confirming the addition made by Ld. AO without appreciating the relevant documents which were produced before the ld. AO in support of genuine Long Term Capital Gain. 4. That the Ld. CIT(A) has erred in confirming the addition made by Ld. AO considering the same as Sham Transaction without any evidence against the appellant, which quite just illegal and against the facts of the case. 5. That the Ld. CIT(A) has erred in confirming the addition made by Ld. AO even when the transactions are done through proper banking channel and recognized stock exchange which quite just illegal and against the facts of the case. 6. Appellant craves to leave, add, amend, alter or modify of any ground before final date of hearing. 2. At the outset, Ld. Counsel for the assessee submitted that the common issue raised in the instant two app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough supported the finding of both the lower authorities but fairly accepted that the facts and issues raised in the instant appeals are the same as were dealt by the Hon ble Tribunal in the case of Shivnarayan Sharma ors (supra). However, Ld. Sr. DR placed reliance on the judgment of Hon ble High Court of Delhi in the case of Suman Poddar vs. ITO, vide ITANo.841/2019 dated 17.09.2019. 7. We have heard the rival contentions and perused the records placed before us and carefully gone through the submissions made by both sides. Common issue challenged in the instant two appeals is the denial of claim of exemption u/s 10(38) of the Act of the Long Term Capital Gain from sale of equity share of listed company namely M/s. Sunrise Asian Limited. 8. Ld. Counsel for the assessee has submitted that the issue raised in the instant appeals is covered by the decision of this Tribunal in the case of Shivnarayan Sharma Ors (supra) wherein also LTCG from sale of the equity shares of same company namely M/s. SAL was under challenge. The equity shares were originally purchased in the name of M/s.Conart Traders Ltd. but later this company was merged with Sunrise Asian Limited. For better ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unaccounted cash credit u/s 68 of the Act and accordingly he added ₹ 28,47,833/- and denied the benefit of exemption u/s 10(38) of the Act at ₹ 28,47,833/- and also made addition for estimated brokerage expenses of ₹ 89,935/- for arranging bogus LTCG. Income assessed at ₹ 45,17,920/- 8. Aggrieved assessee preferred appeal before Ld. CIT(A) against the addition made u/s 68 of the Act at ₹ 28,47,833/-and addition of brokerage expenses at ₹ 89,935/-. Again complete details of purchase and sales were filed along with the Demat account and bank statement. However, Ld. CIT(A) was not satisfied and he confirmed the view taken by Ld. A.O observing that the assessee is indulged in arranging bogus LTCG, the appellant had made investment through the derecognised broker and have earned excessive return within a short span of time which is extremely unfair. Placing reliance on the decisions Ld. CIT(A) held that the transactions of sale of equity shares giving rise to the alleged LTCG at ₹ 28,47,833/- are sham which could not stand the test of human probability. 9. On-going through the facts of the instant two appeals in light of the above stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain and has no bearing in judging the genuineness of the transaction undertaken by the assessee or for that matter, the price and realization on sale of shares so undertaken by the assessee through the stock exchange. Further, it has been held in the aforesaid case that the findings of investigation modus operandi in other cases narrated by the AO and also CIT(A) nowhere prove any connection with the assessee nor the assessee's involvement or connection or collusion with the brokers, exit providers, accommodation providers or companies or directions etc and for making the addition, it is necessary to bring on record evidence to establish ingenuity in transactions or any connection of the assessee or its transaction with any of the alleged parties. In the instant case, as we have discussed earlier, there is no finding which proves assessee's connection, involvement or collusion with so called accommodation entry providers. Further in the aforesaid case, the issue as to whether the legal evidence produced by the assessee has to guide our decision in the matter or the general observations based on statements, probabilities,' human behavior and discovery of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to implicate the assessee or to prove that the transactions are bogus I am of the view that the capital gains declared by the assessee cannot be doubted with. In that View of the matter the addition made towards expenses is not also sustainable. 25. In light of above discussions and in the entirety of facts and circumstances of the case and following the decisions of the Hon'ble jurisdictional High Court and of that of the Coordinate Benches in cases referred supra, we are of the considered view that the assessee has discharged the necessary onus cast on him in terms of claim of exemption of long term capital gains u/s 10(38) of the Act by establishing the genuineness of transaction of purchase and sale of shares and satisfying the requisite conditions specified therein and the gains so arising on sale of shares therefore has been rightly claimed as exempt u/s 10(38) of the Act. Accordingly, in the facts and circumstances of the case, we set-aside the order of the Id. CIT(Appeals) and the claim of the assessee u/s 10(38) is allowed. The matter is thus decided in favour of the assessee and against the Revenue. In the result, the ground of appeal so taken by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 request for cross examination was not possible at that stage. Cross examination of a person in whose basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 22. As regards the judgment of Hon ble Delhi High Court in the case of Suman Poddar V/s ITO (supra) delivered on 17.09.2019 relied by Ld. Departmental Representative, we find that Hon ble High Court of Delhi in its recent judgment dated 15.1.2021 in the case of PCIT V/s Krishna Devi Others ITA No.125/2020 dealing with the similar issue of claim of exemption u/s 10(38) of the Act for Long Term Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of infusion of Respondent s unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the findings of the lower tax authorities. The learned ITAT after considering the entire conspectus of case and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal v. CIT (supra) too turns on its own specific facts. The abovestated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed. 23. We therefore in the light of above judgments which are squarely applicable in the issues raised in the instant appeals are of the considered view that the claim of Long Term Capital Gain made by the respective assessee(s) deserves to be allowed as they have entered into the transactions of purchase and sales duly supported by the documents which have not found to be incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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