9911796707
TMI Blog2021 (8) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee has filed its return of income on 31.08.2014 declaring net income of Rs. 4,12,396/-. 4. The assessee claimed long-term capital gain exempt under Section 10(38) of the Act at Rs. 23,03,300/- on purchase/sale of shares which is the subject matter before us. The assessee purchased 5000 equity shares of Turbotech Engineering Ltd. from one broker namely Shah Space Manager Pvt. Ltd. at a consideration of Rs. 15,000/- on 22.11.2011. Such share was dematerialized and credited in Demat account of the assessee with the broker namely M/s. Anand Rathi Share & Stock Brokers Ltd. These shares were finally sold through the said M/s. Anand Rathi Share & Stock Brokers Ltd. on 18.04.2013, 25.04.2013 and 02.05.2013. The entire sale proceed in respect of the sale of shares were received by the assessee in his bank account. The case was selected under scrutiny and notice under Section 143(2) was issued. During the course of assessment proceeding, the copy of P&L Account, Sale & purchase bills of share, purchase bills in the form of debit note as issued by the seller, Capital account, Trading account, Balance sheet were duly filed by the assessee. The claim of the assessee has been reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale of these equity shares of M/s Turbotech Engineering Ltd. Though the Ld. AO relied upon an investigation report which was admittedly carried out in case of another person and the assessee hereinbeforeus is no way connected with such Investigation Wing of Kolkata neither any opportunity of cross-examination has been rendered to the assessee. He has relied upon the judgment of Hon'ble Apex Court in the case of Andaman Timber Industries vs. CCE reported in, 281 CTR 241 (SC) in this regard. No documentary proof has been provided by the Revenue to show that cash was given by the appellant for obtaining cheques on account of sale of shares and therefore, in the absence of any evidence contrary to the exempt long-term capital gain as claimed under Section 10(38) by the assessee cannot be termed as bogus. In support of his argument he relied upon a synopsis rendering into 49 pages along with following judgments:- S.No. Reference of the case Law Citation 1 Smt. Simi Verma vs. ITO ITA No. 3387/Del/2018 2. Smt. Sunita Khemka vs. ACIT (2018) 53 CCH 0415 Del. Trib. 3. Shikha Dhawan vs. ITO ITA No. 3035/Del/2018 4. Swati Luthra ITA No. 6480/Del/2017 5. Lalit Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se cannot be relied in other cases until and unless the material as gathered and to be used against the assessee is not provided to the assessee and an opportunity of cross examination is not allowed to the assessee. Hence, material as collected by the Investigation Wing of Kolkata was general in nature and cannot be used in the specific case of the appellant, moreso when the name of the appellant was never included in their statements. Even if name of the appellant appeared in their statements, it could not have been used against the appellant until and unless the appellant was allowed an opportunity to cross examine the person whose statement was recorded during the course of survey/searches. Hence, the material as received by the assessing officer behind the back of the appellant cannot be used against the appellant. In this regard, we have been enlightened by the ratio laid down in the judgment passed by the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. CCE 281 CTR 241(SC) where it was held that the denial of opportunity to the assessee to cross-examine the witness whose statements were made the sole basis of assessment is a serious flaw rendering the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No . 2216 of 2000, order dated 17.03.2015 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. 8. 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." 11. So far as the merit of the matter is concerned we find that the identical issue has already been considered in the Co-ordinate Bench in the case of Radheyshyam Khandelwal & Ors. in ITA No. 07/Ind/2019, 08/Ind/2019, 29/Ind/2019, 30/Ind/2019 & 113/Ind/2019. In that particular case the transaction of the assessee being the purchase of shares of M/s. Turbotech Engineering Ltd. holding it for more than one year and the sale of such share through a registered share broker namely M/s. Anand Rathi & Stock Brokers Ltd. in a recognised Stock Exchange and the payment of security transaction t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. DR also relied upon the judgment in the matter of Suman Poddar vs. ITO, reported in [2019] 112 taxmann.com 329 (Delhi). In fact, the said judgment was subsequently considered by the Honb'le Delhi High Court in the matter of PCIT vs. Smt. Krishna Devi reported in, ITA No. 125 of 2020 dated 15.01.2021 (Delhi) and since there was no evidence produced by the Ld. AO to show that there was an agreement between assessee and any other party which are alleged to be involved in providing accommodation entry, the appeal of the revenue was dismissed by the Hon'ble Court with the following observations: "11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been made through banking channel, and the shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of any independent enquiry made by the Ld. A.O as already observed by us respectfully relying upon the judgment passed by Hon'ble Delhi Bench in the case of Swati Luthra Vs ITO, Ward 51(5), Delhi (Supra) on the identical facts keeping in view of the orders passed by SEBI, we do not hesitate to observe that holding the said M/s Turbo Tech Engineering Ltd as a penny stock company by the authorities below without any corroborative evidence is uncalled for and unjustified. Such action is erroneous arbitrary whimsical and suffers from the principle of surmise and conjecture. Thus, the disallowance of the claim made by the assessee towards the Long Term Capital Gain to the tune of Rs. 23,25,000/- in our humble opinion is bad in law and liable to be quashed. We order accordingly. Consequentially the addition of 3% of brokerage to the tune of Rs. 69,750/-is also of no basis. The said addition made by the Learned AO is only on the basis of presumption. Thus, the said addition on the alleged payment of commission @3% is also without any merit and thus deleted. Assessee's appeal is, therefore, allowed." Thus, considering the entire facts of the matter, the judgment passed by the diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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