TMI Blog2021 (8) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI HIGH COURT] we with the above observation do not hesitate to allow the claim made by the appellant towards LTCG in the absence of contrary evidence produced by the Revenue on record. The appeal filed by the assessee is, thus, allowed. - ITA No.242/Ind/2019, ITA No.245/Ind/2019, ITA No.246/Ind/2019, ITA No.247/Ind/2019 - - - Dated:- 27-7-2021 - Hon ble Manish Borad, Accountant Member And Before Hon ble Madhumita Roy, Judicial Member For the Assessee : S/Shri S. N. Agrawal Pankaj Mogra, CAs For the Revenue : Shri Harshit Bari, Sr.DR ORDER PER MADHUMITA ROY, JM:- The bunch of appeals filed by the assessee(s) are directed against the separate orders of different dates passed by the Ld. CIT(A)-II, Indore u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as The Act ) confirming the addition made by the Ld. A.O upon disallowing exemption u/s 10(38) of the Act towards Long Term Capital Gain on sale of shares treating it as bogus. Since all the appeals relate to the same issue arising out of the identical set of facts, these are heard analogously and are being disposed by a common order for the sake of convenience. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in as claimed exempt under Section 10(38) of the Act:- S. No. Particulars Page No. 1. Copy of purchase note dt. 23.03.2012 issued by Vishal Vijay Shah regarding purchase of 200 shares of M/s. Lifeline Drugs Pharma Limited for ₹ 9,048/- 68 2. Copy of ledger account of the appellant in the books of Vishal Vijay Shah 69 3. Copy of bank statement of the appellant with State Bank of India wherein the amount paid towards purchase of shares is duly reflected 70 4 Physical copy of share certificate of M/s Lifeline Drugs Pharma Limited duly transferred i the name of the appellant as on 15.06.2012 71-72 5 Copy of letter dt. 21.06.2012 as issued by M/s. Purva Sharegistry (India) Pvt. Ltd. in respect of transfer of shares in the name of the appellant 72 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the genuineness of purchase and sale of these equity shares of M/s Lifeline Drugs Pharma Ltd. Though the Ld. AO relied upon an investigation report which was admittedly carried out in case of another person and the assessee hereinbefore us 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 longterm 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing specifically against the appellant has been made in the Investigation team report as appearing on record and this cannot be any ground for holding the appellant guilty or linked to the wrong facts of the persons investigated. 13. Apart from that 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 the 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what 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 17.03.2015 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. 14. So far as the merit of the matter is concerned we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim considering the fact that he is a genuine investor and is from past many years, as explained elsewhere. 25. Surprisingly, neither the assessee nor his brokers are named as illegitimate beneficiaries to bogus long term capital gain in any of the alleged statements of the operators/broker or reports/orders of the SEBI or the Investigation Wing. In our considered view, additions made by the Assessing Officer and confirmed by the ld. CIT(A) are heavily guided by surmises, conjectures and presumptions and, therefore, have no legs to stand on. 26. It would not be out of place to refer to the decision of the Hon'ble Supreme Court in the case of Adamine Construction Pvt Ltd 99 Taxmann 45 wherein the Hon'ble Supreme Court, while dismissing the appeal, made the following observations: What is evident is that the AO went by only the report received and did not make the necessary further enquiries - such as into the bank accounts or other particulars available with him but rather received the entire findings on the report, which cannot be considered as primary material. The assessee had discharged the onus initially cast upon it by providing the basic details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any enquiry from the relevant parties or independent source or evidence but has merely relied upon the statements recorded by the INV Wing as well as information received from the INV Wing. It is apparent from the assessment order that the Assessing Officer has not conducted any independent and separate enquiry in this case of the assessee. Even the statement recorded by the INV Wing has not been got confirmed or corroborated by the person during the assessment proceedings. The Assessing Officer ought to have conducted a separate and independent enquiry and any information received from the INV Wing is required to be corroborated and reasserted/reaffirmed during the assessment proceedings by examining the concerned persons who can affirm the statements already recorded by any other authority of the department. 23. There is no dispute that the statement which was relied upon by the Assessing Officer was not recorded by the Assessing Officer in the assessment proceedings but it was pre existing statement recorded by the INV Wing and the same cannot be the sole basis of assessment without conducting proper enquiry and examination during the assessment proceedings itself. In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,312/- and the same is also directed to be deleted. 29. In his written submissions, the ld. DR has referred to various judgments and heavily relied upon the decision of the Hon'ble High Court of Delhi in the case of Suman Poddar ITA No. 841/2019 and in the case of Udit Kalra ITA No. 220/2019 and several other decisions of the coordinate bench. 30. We have given thoughtful consideration to the orders of the authorities below and have carefully perused the judicial decisions relied upon by the ld. DR. We find that in all those cases, either the assessee entered into solitary transaction resulting into long term capital gain or prior to the solitary transaction, the assessee was neither engaged in the purchase and sale of shares nor subsequent to earning of long term capital gain, the assessee was found to be engaged in the purchase and sale of shares. These facts are clearly distinguishable from the facts of the case in hand. As mentioned elsewhere, the assessee is a habitual investor having portfolio of investment in shares in crores and is still holding investment in shares in several crores and is constantly engaged in investing in shares of various companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Swati Luthra (supra). Therefore, both factually and materially it is distinguishable from the instant case before us. It is relevant to mention that the orders passed by the SEBI are only of the year 2015 and not during that material point of time i.e. the period between 22.03.2012 and 11.03.2014 when the appellant was holding the shares of the company in question. 18. The 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). 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been decided in favour of the appellant in identical matter. However, without going into the further fact of the matter we would like to rely upon the judgment passed by the Co-ordinate Bench in the case of Radheyshyam Khandelwal Ors.(supra) where the identical issues has been decided in favour of the assessee with following observation:- 22. Thus, taking into consideration the entire aspect of the matter in the absence 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 ₹ 23,25,000/- in our humble opinion is bad in law and liable to be quas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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