TMI Blog2021 (8) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... eged by the Ld. A.O. It appears on record that assessee has not given the opportunity to cross-examine the person based on whose statement the addition have been made in the hands of the assessee. That it is a settled position of law that finding as recorded in one case 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. As relying on SMT. KRISHNA DEVI, HARDEV SAHAI GUPTA (GARG) , SMT. BINDU GARG [ 2021 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as genuine as the person M/s. Shah Space Manager Pvt. Ltd. is not a broker of any Stock Exchange. The 5000 shares which was purchased at ₹ 15,000/- on 22.11.2011 and sold through Broker Exclusive Securities at a rate of ₹ 455.17 and 476.78 per share on 18.04.2013. Since the price of per share from ₹ 3 on 22.11.2011 since rigged up to ₹ 476 on 02.05.2013 i.e. by 150 times, the genuineness of the purchase and sale of those shares of M/s. Turbotech Engineering has been doubted by the Ld. AO particularly since that purchase of shares were made through off market transaction. Ultimately relying upon the report of the Investigation Team in respect of bogus transaction of capital gain, the Ld. AO rejected the claim made by the assessee under Section 10(38) of the Act, upon holding the transaction for purchase and sale of scrip of Turbotech Engineering are accommodative and only made for claiming bogus exemption of long-term capital gain which was, in turn, confirmed by the Ld. CIT(A). Hence, the instant appeal before us. 5. At the time of hearing of the instant appeal the Ld. Counsel appearing for the assessee submitted before us that the details relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shikha Dhawan vs. ITO ITA No. 3035/Del/2018 4. Swati Luthra ITA No. 6480/Del/2017 5. Lalit Kumar Aggarwal ITA No. 3509/Del/2018 It was further submitted by the Ld. AR that the issue is squarely covered by the judgment passed by the Co-ordinate Bench in the case of Radheyshyam Khandelwal vs. ACIT Others in ITA No. 07 08/Ind/2019, 29 30/Ind/2019 113/Ind/2019 where the claim of long-term capital gain under Section 10(38) of the Act arising out of the sale of shares of M/s. Turbotech Engineering Ltd. were considered and allowed in favour of the assessee. He, therefore, prayed for deletion of addition made by the Revenue. 7. The Ld. DR vehemently argued in support of the order passed by the authorities below. He is further relied upon the judgment passed by the Hon ble Delhi High Court in the following matters:- 1. Udit Kalra vs. ITO ward-50(1) in ITA No. 220/2019 dated 08.03.2019 (Delhi HC) 2. Udit Kalra vs. ITO ITA No. 6717/Del/2017 dated 08.01.2019 3. Suman Poddar vs. ITO [2019] 112 taxmann.com 330 (SC) 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme 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 order a nullity in as much as it amounts to violation of principle of natural justice. The relevant observation in this regard as made by the Hon ble Supreme Court is reproduced hereinbelow:- 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 tax thereon were the facts under consideration. The entire transaction was duly supported by corroborative evidences which were filed before the authorities below as identical in the instant case. 12. Further that as we find from the records that Revenue has failed to point out any specific defect with regard to the documents supporting share transaction as submitted by the assessee. In the instant case the Ld. AO relied upon the report being F. No. 75A/2015/16/257.273 dated 27.04.2015 wherein certain BSE listed companies (Penny Stock) have been identified to be used for generating bogus LTCG including Turbotech Engineering Ltd. However, the suspension order passed by the SEBI was ultimately lifted by and under the adjudication order dated 25.11.2014 in the case of M/s. Turbotech Engineering Ltd. Needless to mention that no irregularity in the trading of such scrips neither any finding of involvement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unding 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 aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cannot be cited as a basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 different Judicial Forums as relied upon by the Ld. AR and the Ld. DR as well, the particular judgment passed by the Hon ble Delhi Bench dealing with the scrips of the same company namely M/s. Turbo Tech Engineering Ltd. on the identical set of facts deciding the issue in favour of the assessee, the judgment passed by the Hon ble Delhi High Court in the matter of PCIT vs. Smt. Krishna Devi, we with the above observation do not hesitate to allow the claim made by the appellant towards LTCG to the tune of ₹ 23,03,300/- in the absence of contrary evidence on record. The appeal filed by the assessee is, thus, allowed. ITA Nos. 249/Ind/2019 250/Ind/2019 (A.Y. 2014-15):- 16. These grounds of appeals are identical to that of the issues already been dealt with by us in ITA No.244/Ind/2019 for A.Y. 2014-15 and in the absence of any changed circumstances the same sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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