TMI Blog2022 (4) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... fore assessees for their cross examination. The issue of cross examination was also not considered properly by ld. CIT(A). Therefore there is a violation of principles of natural justice also. Various benches of the Tribunal under similar facts and circumstances has decided similar issues in favour of the assessees which has been relied on by the assessees. The Lucknow Bench of the Tribunal also under similar circumstances in various cases has decided similar issues in favour of the assessee in various cases - Decided in favour of assessee. - IT(SS) No.410/Lkw/2019, IT(SS) No.412/Lkw/2019 - - - Dated:- 5-4-2022 - SHRI A.D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER For the Appellant:- Shri Pradeep Kapoor, CA For the Respondent:- Smt. Sheela Chopra, CIT DR ORDER PER T.S. KAPOOR, A.M. These two appeals have been filed by the assessees against separate orders of ld. CIT(A) both dated 23.3.2019. The grounds of appeals taken by the assessees in both the appeals are similar and therefore these appeals were heard together and a consolidated order is being passed. For the sake of completeness the gronds of appeal in ITA No. 410/Lkw/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - is based on whims , surmises and conjectures and by relying on the case laws , which were distinguishable on facts and the same did not deserve to be sustained. 7. BECAUSE the learned CIT (A) has erred in law and on facts in holding that the Assessing Officer had tried his best to provide cross examination of concerned persons whereas virtually required efforts were not made by the AO in enforcing the presence of such persons for their cross examination and even no penal action and/ or any coercive measure as provided under the Act was initiated against such persons. 8. BECAUSE in the absence of opportunity of cross examination of the persons giving statement of culpable nature, as had been sought by the appellant, the assessment stood wholly vitiated and consequently the addition made deserved to be deleted as held by the Apex Court in umpteen number of cases. 9. BECAUSE various adverse observations and allegations made by the lower authorities are contrary to the facts, material evidences available on record. 10. BECAUSE in relation to the Grounds of Appeal, the appellant relies upon the averments made in the facts of the case. 11. BECAUSE the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed the appeals filed by the Revenue. It was submitted that Hon'ble Delhi High Court has categorically held that evidences filed by the assessee cannot be ignored and they rejected the theory of presumptions and relied on the evidences. It was further submitted that in the case law of Smt. Krishna Devi and others the script involved was though not that which is in the present cases but the script involved in that case was also listed by the Directorate of Investigation as penny stock. It was submitted that in fact 84 scripts were identified as penny stocks and the script involved in the present cases alongwith the script involved in the case of Krishna Devi Others was part of those 84 scripts. Therefore it was submitted that the case law of Hon'ble Delhi High Court is directly applicable to the assessees. The ld. AR further placed his reliance on a judgment of Hon'ble Gujarat High Court in the case of Pr. CIT v. Parasben Kasturichand Kochar (2021) 130 taxman.com 176 (Guj) wherein under similar facts and circumstances the Hon'ble Gujarat High Court had dismissed the appeal of Revenue. The ld.AR submitted that SLP filed by Revene in this case has also been dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of such sales issued by Prabhat Finance Services Ltd. (P.B. pgs.53-100). 4. Copy of D-MAT account of assessee with Prabhat Financal Services Ltd. (P.B. pgs.101-102). 5. Copy of bank statement wherein proceeds of such shares was credited P.B. Pgs. 229-240A. 7. The above documents clearly demonstrate that assessees had sold shares through recognized stock exchanges and through authorized stock brokers on which necessary security transaction tax and service tax has been paid. The transactions of sale are though real time screen based trading and payments for sale of shares has been received by the assessees through banking channels. 8. Though the above shares were sold through authorized stock brokers on recognized stock exchange but the same were not purchased through the brokers in the case of Mridula Agarwal. In that case, the assessee had purchased 35000 equity shares from Success Vayapar Ltd. on 16.4.2012 for Rs.700000, a copy of ledger account of Success Vayapar Ltd. is placed in P.B. pg. 22. The payment for the purchase of the above shares was made through Union Bank of India from the account of the assessee a copy of Bank account is placed in P.B. pgs.23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Lucknow Bench of the Tribunal also under similar circumstances in various cases has decided similar issues in favour of the assessee in various cases. In group appeals in ITA No. 544-552 and 555/Lkw/2019 wherein the Tribunal vide a consolidated order dated 3.6.2021 has allowed relief to the assessees in same script of Sulabh Engineers Services Ltd. The above appeals has been allowed by the Tribunal after following its own orders in ITA No. 475 681/Lkw/2019 in the case of Uma Shanker Dhandhania wherein vide order dated 16/02/2021 it held as under: 8. We have heard the rival parties and have gone through the material placed on record. We find that there is no dispute between the parties regarding the evidences which the assessee had produced before the authorities below for claiming that assessee indeed was allotted one lac shares @ Rs.20/- each and which were sold partly during AY 2014-15 and partly during AY 2015-16. There is also no dispute regarding contract notes issued by the brokers and proceeds paid by them through banking channels. The only dispute between the parties is that Assessing Officer on the basis of a report from investigation wing of the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and Services Ltd. and has allowed relief to the assessee by holding as under: 7. We have heard both the parties and perused the material available on record. We note that the assessee has submitted before us the statement showing purchases and sale of long term capital gain on sale of equity shares (PB-1). The assessee submitted allotment advice for 75,000 shares of M/s Sulabh Engineers and Services Ltd. (PB-2). The assessee submitted the bank detail for payment (vide PB-3 to 5). The assessee submitted before us NSDL statement showing preferential allotment of 75000 shares of M/s Sulabh Engineering and Services Ltd. We note that the assessee also submitted extract of resolution passed and screenshot of money control showing splitting of face value from Rs.10 to Rs. 1 of M/s Sulabh Engineering and Services Ltd. (PB-11 to 13). The assessee submitted the NSDL statement showing allotment of 7,50,000 shares of M/s Sulabh Engineers and Services Ltd. at fair value of Rs. 1 (PB-14 to 17). The balance sheet and profit loss account along with investment schedule showing 7,50,000 shares of M/s Sulabh Engineers and Services Ltd. for assessment year 2013-14 (PB-18 to 23) were also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablished by AO. The ld AO as well as ld CIT(A), were guided by the report of the Investigation Wing, which is general in nature and no specific findings for the assessee, and hence based on these facts the SMC Bench deleted the addition, observing the following. 13. The ld AR also brought to our notice that once the assessee has furnished all evidences in support of the genuineness of the transactions, the onus to disprove the same is on revenue. He referred to the judgement of Hon ble Supreme Court in the case of Krishnan and Agnihotri vs. The State of Madhya Pradesh [1977] 1 SCC 816 (SC). In this case the Hon ble Apex Court held that the burden of showing that a particular transaction is benami and the appellant owner is not the real owner always rests on the person asserting it to be so and the burden has to be strictly discharged by adducing evidence of a definite character which would directly prove the fact of benami or establish circumstances unerringly and reasonably raising inference of that fact. The Hon ble Apex Court further held that it is not enough to show circumstances which might create suspicion because the court cannot decide on the basis of suspicion. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares was capital gains or business profit. 16. It is clear from the above that the facts of the case of the assessee are similar with the facts in the cases wherein the coordinate bench of the Tribunal has deleted the addition and allowed the claim of LTCG on such sale of shares Therefore, respectfully following the same ratio, I am inclined to set aside the order of Ld. CIT(A) and direct the AO not to treat the long term capital as bogus and order to allow the claim of LTCG on sale of share of M/s. SESL and delete the consequential addition. 9. As the issue is squarely covered in favour of the assessee by the decision of the SMC bench of ITAT Kolkata, and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the SMC Bench in the case of Vasudha Jain (supra), we find no reason to interfere in the said order of the SMC Bench of this Tribunal and the same is hereby upheld. Therefore, we delete the addition of Rs.1,12,13,010/- and we also delete the consequential addition on account of unexplained expenditure towards commission at Rs.56,065/-. 10. In the result, appeal of the assessee is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e figures relating to the additions made under Section 68 read with Section 115BBE of the Act. Accordingly, the same are being decided by way of this common order. 5. It is not in dispute, as noted in the Impugned Order, that the factual background in all the three appeals is quite similar. However, for the sake of convenience, the facts in respect of ITA 125/2020 are being noted and discussed elaborately. Briefly stated, the Respondent-Assessee is an individual who has derived income from interest on loan, FDR, NSC and bank interest under the head of income from other sources in respect of A.Y. 2015- 16. She filed her return of income, declaring total income of Rs. 13,96,116/-. After claiming deduction of Rs. 1,60,000/- under Chapter VI-A, the total taxable income of Respondent was declared to be Rs. 12,36,120/-. The return was processed under Section 143(1) of the Act and thereafter the case was selected for scrutiny. During the scrutiny proceedings, the AO noticed that for the relevant year under consideration, the Respondent had claimed exempted income of Rs. 96,75,939/- as receipts from Long Term Capital Gain [hereinafter referred to as LTCG ] under Section 10(38) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Investigation Wing, Kolkata is dated 27.04.2015 whereas the impugned sales transactions took place in the month of March, 2014. The exparte ad interim order of SEBI is dated 29.06.2015 wherein at page 34 under para 50 (a) M/s. Esteem Bio Organic Food Processing Ltd was restrained from accessing the securities market and buying selling and dealing in securities either directly or indirectly in any manner till further directions. A list of 239 persons is also mentioned in SEBI order which are at pages 34 to 42 of the order the names of the appellants do not find any place in the said list. At pages 58 and 59 the names of pre IPO transferee in the scrip of M/s. Esteem Bio Organic Food Processing Ltd is given and in the said list also the names of the appellants do not find any place. At page 63 of the SEBI order-trading by trading in M/s. Esteem Bio Qrganic food Processing Ltd a further list of 25 persons is mentioned and once again the names of the appellants do not find place in this list also. 25. As mentioned elsewhere the brokers of the assessee namely ISG Securities Limited and SMC Global Securities Limited are stationed at New Delhi and their names also do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re an assessee is claiming bogus LTCG through penny stocks, and the appeals be heard on merits. 7. Mr. Zoheb Hossain, learned senior standing counsel for the revenue (Appellant herein), contends that the learned ITAT has completely erred in law in deleting the addition, and thus the Impugned Order suffers from perversity. He submits that there are certain germane factual errors, inasmuch as the learned ITAT has wrongly recorded that there was no independent enquiry conducted by the AO, when in fact the AO had issued notices to the companies in question under Section 133(6) of the Act. He points out that the observations recorded in para 25 of the Impugned Order are factually incorrect, and in conflict with para 4 of the order of the CIT(A) dated 24th December, 2018 which reads as follows: 4. Even the broker through whom the shares were dematerialized and sold i.e. SMC Global Securities Ltd. was also a part of the scam. This is a Delhi based broker whose regional office was also surveyed. The sub brokers were also surveyed and also statements recorded which confirmed the payment of cash commission by the beneficiaries for being part of the syndicate. 8. Mr. Hossain arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 preplanned 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 bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent s unaccounted money, but he did not dig dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk, the assessee has filed additional evidences which could not be filed because of mistake of counsel and illness of assessee therefore, we deem it appropriate to remit this issue back to the office of the Assessing Officer who, after affording reasonable opportunity of being heard to the assessee, will pass appropriate orders. In view of the above, ground No. 11 to 13 are allowed forstatistical purposes. 14. In view of above, appeal in ITA No. 681 is also partly allowed and partly allowed for statistical purposes. 11. While allowing relief to the assessee the Tribunal has relied on various other case laws including the judgment of Hon'ble Delhi High Court in the case of Smt. Krishna Devi and Others where Hon'ble High Court has elaborately dealt with the contentions of Revenue. 12. We further find that Hon'ble Gujarat High Court in the case of Principal Commissioner of Income Tax vs. Parasben Kasturichand Kochar (Supra) dated 17.09.2021 in ITA No.204 has dismissed an appeal filed by the Revenue wherein under similar facts and circumstances the Assessing Officer and ld. CIT(A) had made the additions for script Mohan Poly Fiber Ltd. and which was deleted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to such transactions were furnished before the Income-tax authorities and the Tribunal also took notice of the fact that some of the shares also remained in the account of the appellant. 4. We take notice of the fact that the assessee has a Demat Account maintained with the ICICI Securities Ltd. and has also furnished the details of such bank transactions with regard to the purchase of the shares. In the last, the Tribunal took notice of the fact that the statements recorded by the investigation wing of the Revenue with regard to the Tax entry provided were informed to the assessee despite giving him opportunity to meet such an allegation. In the overall view of the matter, we believe that the proposed question cannot be termed as a substantial question of law for the purpose of maintaining the appeal under section 260- A of the Act, 1961. 5. In the result, this appeal fails and is hereby dismissed. 12.1 We further find that the SLP filed by the Revenue has also been dismissed by Hon'ble Supreme Court vide order dated 02.08.2021. 13. In view of these facts and circumstances and in view of the judicial precedents we allow relief to the assessees on me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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