TMI Blog2022 (11) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by us earlier, this issue at hand is squarely covered by the binding judgments of the Hon ble jurisdictional High Court, in favour of the assessee, and, therefore following the judicial discipline, the order of the Ld. CIT(A) does not require any interference since we have the benefit of guidance on this subject by the Hon‟ble jurisdictional High Court, which is binding upon us. As decided by Ripu Sudan Kundra [ 2021 (11) TMI 77 - ITAT MUMBAI] additions made by the AO was purely based only on suspicion, surmises and conjectures without there being any tangible evidence on record against the assessee and, therefore deleted the same. No infirmity in the order of the Ld. CIT(A) deleting the additions made u/s 68 of the Act and the consequent addition of unexplained commission expenditure made u/s 69 of the Act and uphold to the same. AO has noted that the primary sources of income of the assessee were salary, rental income, other sources and capital gains. The AO has however not been able to bring on record any material or evidence unearthed during search which would reveal as to from which income-earning activity did the assessee derive such unaccounted monies to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.07.2014 and the time limit for issuance of notice u/s 143(2) had not expired as on the date of search. Accordingly, AY 2014-15 was an abated assessment year. With regard to AY 2015-16, it was pointed out that the return of income for this year was filed only after the date of search. Therefore, except AYs 2012-13 2013-14, the other AYs 2014-15 2015-16 were abated assessments. 3. The additions/disallowances made in all these AYs were on account of (a) addition on account of receipt of sale consideration of sale of listed shares u/s 68 of the Act, and (b) addition of unaccounted commission u/s 69C of the Act. The Ld. AR pointed out that, the assessment orders passed by the AO for all the AYs 2012-13 to 2015-16 were verbatim same wherein the AO had, inter alia, discussed the transactions conducted by the assessee in seven (7) listed shares, in which the assessee had derived capital gains (both long term and short term). The AO, thereafter, added the proceeds received on the respective sale of such shares as unexplained cash credit u/s 68 of the Act in the respective year in which the transactions in such shares took place, across all these AYs 2012-13 to 2015-16. Consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e validity of the additions made in the unabated AYs 2012-13 2013-14, we consider it fit to adjudicate them first. It is noted that, the assessee was deriving salary, rental income and income from other sources. Apart from the foregoing, the assessee, being an active investor in shares securities, had also earned capital gains. It was brought to our notice that, in the course of search conducted u/s 132 of the Act on 09-04-2015, the assessee was not present and therefore the brother of the assessee, Shri Surendra Jiwrajka, had his statement recorded u/s 132(4) of the Act whose relevant extracts has been extensively reproduced at Pages 68 to 72 of the order. Taking us through his statement, the Ld. AR showed to us that, Shri Surendra Jiwrajka was confronted with the interim order passed by the SEBI in 2014 in the case of the assessee relating to his transactions in the shares of M/s Radford Global Ltd. The Investigating Officer had stated that, the assessee was found by the SEBI to be involved in managing manipulating the prices of this particular scrip due to which the demat account of the assessee had also been frozen since he had traded in these shares. Referring to this SE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to this I confirm that all the financial matters of Shri Dilip B Jiwrajka are looked after by me only. Q.3 Please provide the details of all the LTCG that has been earned by Shri Dilip Jiwrajka by way of sale of shares/securities since 01.04.2008? Ans: Sir, I am submitting the list of all LTCG earned by Shri Dilip Jiwrajka since 01.04.2008 as Annexure A. These details pertain to the period till AY 2014-15. The return for AY 2015-16 has not been filed and the details for the same are under compilation. Q.4 During the course of search proceedings on 10.04.2015 and 11.04.2015, you had given a statement on oath u/s 132(4) of the I T Act, 1961 on behalf of Shri Dilip Jiwrajka. I am showing you the statement. Kindly go through the same and confirm. Ans. Sir, I have gone through the statement given by me during the course of search proceedings on 10.04.2015 and 11.04.2015 on behalf of Shri Dilip Jiwrajka and I confirm the contents of the statement. Q.5 Who advices Shri Dilip Jiwrajka regarding the investments to be made in the share market? Ans: Sir, all the investments that have been made by Shri Dilip Jiwrajka in shares/securities have been advised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ford Global Limited during AY 2014-15 and will pay the taxes which would be applicable as per the provisions of I T Act, 1961. I also reiterate that no penal or any such action should be initiated against Shri Dilip Jiwrajka for this offer. Q.17 From the details submitted by you it is seen that Shri Dilip Jiwrajka has claimed exemption u/s 10(38) for the LTCG of Rs. 4,36,08,645/- by way of sale of shares of Shree Shaleen textiles Limited during AY 2014-15. Kindly Confirm Ans. Yes Sir, I confirm that Shri Dilip Jiwrajka has claimed exempt income as LTCG u/s 10(38) on the sale of shares of Shree Shaleen Textiles Limited during AY 2014-15. Q.26 During the course of recording of statement u/s 132(4) on 11/04/2015, it was bought to your notice that the transactions in the shares of M/s Shree Shaleen Textiles Limited are bogus and managed transactions and these shares have been utilized to provide entry of bogus LTCG. In light of the above you are required to explain as to why the transactions in the shares of Shree Shaleen Textiles Limited made by Shri Dilip Jiwrajka should not be treated as penny share transactions. Please explain why the Long Term Capital Gain, claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res Asianlak Capital and Finance Limited (Global Infratech and Finance Limited) are bogus and managed transactions and these shares have been utilized to provide entry of bogus LTCG. In light of the above you are required to explain as to why the transactions in the shares of Asianlak Capital and Finance Limited (Global Infratech and Finance Limited) made by Shri Dilip Jiwrajka should not be treated as penny share transactions. Please explain why the Long Term Capital Gain, claimed to have been earned by Shri Dilip Jiwrajka on sale of shares of Asianlak Capital and Finance Limited (Global Infratech and Finance Limited), should not treated as income from other sources and why the exemption u/s 10(38) should not be disallowed? Ans: Sir, the transactions in the shares of Asianlak Capital and Finance Limited (Global Infratech and Finance Limited) have been made on Bombay Stock Exchange. Since it has come to light that some manipulations were done in. the transaction of equity shares of Asianlak Capital and Finance Limited (Global Infratech and Finance Limited), therefore, to avoid protracted litigation with the department, I offer, on behalf of Shri Dilip Jiwrajka, to withdraw his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these investments have been made by Shri Dilip Jiwrajka on my advice and these shares have been sold by Shri Dilip Jiwrajka on the stock exchange. I do not wish to comment anything else. Q.58 From the perusal of the working of the long term capital gain in the case of Shri Dilip Jiwrajka for AY 2012-13, it is noted that in AY 2012-13, in KGN Industries Ltd, long term capital gain of Rs.1,66,10,816/- had been shown As per your replies to the above questions you do not know the details you do not know the details of the companies/directors or their products / profitability / dividend yield. In spite of this, you have advised Shri Dilip Jiwrajka to invest in these shares. No prudent businessman is likely to make an investment of such quantum in such a manner. In view of the above and on the basis of the facts gathered in the course of this search action, the only conclusion that can be drawn is that the entire sequence of events has been made up to obtain entry of bogus LTCG. Please explain as to why such an inference be not drawn in this case. What you have to say in this regard? Ans: Sir, these investments have been made by Shri Dilip Jiwrajka on my advice and these s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act and therefore it has to be understood in the manner as interpreted by the judicial authorities. According to Ld. CIT(A), if a search is conducted to investigate certain allegations which are found to be correct on analysis of the regular books of accounts seized in the course of search, then the AO is within his power to proceed u/s 153A of the Act. The Ld. CIT(A) observed that the AO had unearthed the modus operandi for certain dubious transactions and listed out unusual activities which was confirmed by the Director of investee company, entry operators etc. in their statements and therefore such statements/information constituted sufficient incriminating material to proceed against the assessee u/s 153A of the Act in the unabated AYs 2012-13 2013-14. Aggrieved by this finding of the Ld. CIT(A), the assessee has preferred cross objections before us. 8. We have heard both the parties. The facts of the case have been extensively discussed both by the AO and Ld. CIT(A) but at the cost of repetition, we deem it fit to recapitulate the same for better understanding of the issues under our adjudication. The assessee is an individual who is also an active investor in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A, forming part Chapter XIV of the Act contain special provisions for completing assessments in case of Search conducted u/s 132 or requisitions u/s 132A. These provisions can be invoked only in cases where the Income-tax Department has exercised its extra ordinary powers of conducting search and seizure operations after complying with stringent pre-conditions prescribed in Section 132 of the Act. There is no denial that once a search u/s 132 is conducted against a person then irrespective whether any incriminating material is found, the AO is required proceed against such person for completing the assessments u/s 153A of the Act for the specified six assessment years and is required to issue notices u/s 153A to assess the income of the assessee for six assessment years preceding the date of search. These six assessment years comprise of two (2) classes of assessments (a) un-abated assessment and (b) abated assessments. The assessment years which are not pending for assessment before the AO on the date of search would be treated as un-abated AY s by virtue of second proviso to sub-section (1) of section 153A of the Act; and the other assessment years which are pending on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x . Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Ld AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to complete assessment proceedings. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the Ld AO. Completed assessments can be interfered with by the Ld AO w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated. During the assessment proceedings for A.Y. 2005-06, the Assessing Officer added an amount of Rs.93.72 lakhs (declared as gifts) as being covered by Section 68 of the Act and an amount of Rs.43.67 lakhs (accumulated profits of the lendor) out of Rs.1.5 crores received as loan from one K.P. Developers Pvt. Ltd. as deemed dividend under Section 2(22)(e) of the Act. Undisputedly, respondent-assessee was a shareholder in M/s K.P. Developers (P) Ltd. The aforesaid additions are reflected in an assessment order dated 31 December 2008 passed under Section 143(3) r/w 153A of the Act determining the respondent-assessee's total income at Rs.1.47 crores. 4. In appeal, the CIT(A) held that the addition of an amount of Rs.43.67 lakhs as deemed dividend has to be deleted. This on the ground that there were no accumulated profits available with M/s K.P. Developers (P) Ltd. to distribute amongst it's shareholders. However, so far as the addition in respect of the unexplained gifts aggregating to Rs. 93.70 lakhs is concerned, the CIT(A) did not disturb the finding of the Assessing Officer. 5. On further appeal before the Tribunal, the assessee interalia challenged the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by the revenue that the decision of this Court in Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra) would apply to the present facts and also that there are no assessments pending on the time of the initiation of proceedings under Section 153A of the Act. The occasion to consider the issues raised on merits in the proposed questions becomes academic. 12. Identical view was expressed by the Hon ble jurisdictional Bombay High Court in the case of CIT Vs SKS Ispat Power Ltd (398 ITR 584) wherein it was held as follows: 5. We have considered the arguments canvassed by the learned counsel for the respective parties. On perusal of section 153A of the Act, it is manifest that it does not make any distinction between assessment conducted under section 143(1) and 143(3). This court had occasion to consider the scope of section 153A of the Act in the case of Gurinder Singh Bawa and in the case of Continental Warehousing Corpn. (Nhava Sheva) Ltd. (referred to supra). It has been observed that section 153A cannot be a tool to have a second inning of assessment either to the Revenue or the assessee. Even in the case of Gurinder Singh Bawa (referred to supra) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document should lead to conclusion that the entries made in the books of the assessee do not represent true and correct state of affairs. Rather the evidence unearthed or found in the course of search should establish that the real transaction of the assessee was something different than what was recorded in the regular books and therefore the entries in the books did not represent true and correct state of affairs i.e. the assessee has undisclosed income/expense outside the books or that the assessee is conducting income earning activity outside the books of accounts or all the revenue earning activities are not disclosed to the tax authorities in the books regular maintained or the returns filed with the authorities from time to time etc. The nature of the evidence or information gathered during the search should be of such nature that it should not merely raise doubt or suspicion but should be of such nature which would prima facie prove that real and true nature of transaction between the parties is something different from the one recorded in the books or documents maintained in ordinary course of business. In some instances, the information, document or evidence gathered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gating authorities from the SEBI and other Investigation Wings of the Department. The AO has noted at Para 4.3 of the impugned order that the SEBI had passed an interim order dated 19-12-2014 in the matters of the scrip, M/s Radford Global Ltd this scrip (not pertaining to AY 2012-13 AY 2013-14 ie un-abated assessment years we are dealing with legal issue) and the assessee was found guilty therein of manipulation and rigging of prices on this scrip on stock exchange. Based on these inputs, search action u/s 132 of the Act was conducted upon the assessee on 09-04-2015 to unearth the modus operandi of the assessee. As already noted by us earlier, the Investigating Officer at Q Nos. 6 16 had enquired about the genuineness of the transactions in the shares of M/s Radford Global Ltd, in light of the aforesaid SEBI interim order, to which the brother of the assessee had offered to tax the capital gains as income under the head Other Sources and accordingly offered to withdraw exemption claimed u/s 10(38) of the Act. Similarly, enquiries were made in relation to shares of M/s Global Infratech Finance Ltd and M/s Shree Shaleen Textiles Ltd and the assessee is noted to have admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs received from SEBI, it is noted that the relevant Questions Nos. 37 47 posed by the Investigating Officer were general in nature and there was no reference to any information gathered from SEBI or any other Department of Investigation Wing. In fact, it is noted by us, that like Dhenu Buildcon Ltd, similar questions at Q Nos. 48 58 were put to the assessee regarding his transactions in the shares of M/s KGN Industries Ltd to which similar replies were furnished by the assessee. Upon enquiry by the Bench, it was gathered that the AO had accepted the genuineness of the capital gains earned by the assessee in the shares of M/s KGN Industries Ltd. There is nothing brought on record by the AO or the Revenue as to what was the distinguishing incriminating information in the possession of the Department when based on same line of enquiry, they accepted the genuineness of the transactions in shares of M/s KGN Industries Ltd but disbelieved the genuineness of the transactions in the shares of Dhenu Buildcon Ltd. On the overall conspectus of the facts, as discussed in the foregoing, we thus hold that the fundamental reasoning given by the Ld. CIT(A) viz., existence of prior incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law. In view of the aforesaid legal position, the Hon ble High Court observed that the director of the assessee had admitted undisclosed income only in relation to the year in which search was conducted and no income was admitted in relation to any of the earlier six years. It further observed that no incriminating material was found from the assessee s premises which could justify the additions made u/s 68 of the Act. As regards the statement of Mr. T, the Hon ble High Court noted that that not only the assessee had denied not knowing the said person but even the Revenue never afforded the opportunity of his cross examination to the assessee. It was further observed that Mr. T had also subsequently retracted his statement. For the reasons aforesaid, the Hon ble High Court held that the statement of Mr. T could not be considered to be incriminating evidence justifying the inference against the assessee in relation to unabated assessment. 18. We may also place reliance on the decision of this Tribunal in the case of Loyalka Farms Pvt Ltd Vs DCIT in ITA(SS) No. 67/Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, on confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on' collection of evidence of income which leads to information on what has not been disclosed or is notlikely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders Yours faithfully, Sd/- (S. R. Mahapatra] Under Secretary (Inv. II) We find that there is absolutely no corroborative evidence found in the course of search by the search team or material evidence brought on record by the ld AO or by the ld CITA in order to give credence to the statement recorded during search. Hence we hold that no addition cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had derived capital gains (both long term and short term). The AO, thereafter, added the proceeds received on the respective sale of such shares as unexplained cash credit u/s 68 of the Act in the respective year in which the transactions in such shares took place, across all these AYs 2012-13 to 2015-16. Therefore, for the purpose of the present discussions, the case of AY 2014-15 is taken as the lead case and our findings and decision therein shall be uniformly followed in AY 2015-16 as well. For A.Y 2014-15, the Revenue has preferred the following grounds, which are as under:- i) On the facts and circumstances of the case, the ld. CIT(A) erred in deleting the addition u/s.68 of the Act without appreciating the evidences mentioned by the assessing officer. ii) On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition u/s.68 of the Act without appreciating the facts that the Securities Exchange Board of India (SEBI) passed an order in the case of Radford Global Ltd and M/s Global Infratech and Finance Ltd Services Ltd on 19.12.2014 whereby it was observed by SEBI that the shares of Radford Global Ltd and M/s Global Infratech and F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Consequently, the AO has also estimated and added unexplained expenditure by way of commission paid for such trades to the assessee s income u/s 69C of the Act. In order to appreciate these issues, it would first be necessary to cull out the background facts and the relevant findings of the AO leading to the impugned additions. It is noted that, in the course of search, the assessee was not present and therefore the brother of the assessee, Shri Surendra Jiwrajka, had his statement recorded u/s 132(4) of the Act (already reproduced earlier). In his answer to Q No. 2, he stated that, he was looking after all the financial matters of the assessee. It is noted that, he had also provided a list of all the capital gains earned by the assessee from the sale of investments since 01-04-2008. In the course of his statement, it was brought to the notice of Shri Surendra Jiwrajka that the shares of M/s Radford Global Ltd was found by the SEBI to be managed manipulated due to which the demat account of the assessee had also been frozen since he had traded in these shares. Referring to this SEBI action, the Investigating Officer had required Shri Surendra Jiwrajka to explain as to why the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prices of these shares with their corresponding financials and/or future prospects of these companies. He observed that the financials of these entities were very poor during the period when the preferential shares were allotted and their business profile did not suggest that these companies were engaged in any substantial activities, which could attract investors. The AO observed that the entire transaction was a colourable device concocted for the purposes of routing the unaccounted income of beneficiaries into their regular books of accounts. In support of his argument, the AO relied upon decision of Hon'ble SC in the case of CIT Vs Durga Prasad More (1971) 82 ITR 540 (SC) and Sumati Dayal Vs CIT (1995) 214 ITR 801 (SC). The AO further noted that funds, inter alia also raised from the assessee, was through preferential allotment which have not been used for any business expansion but have been further advanced as loans and investments. According to him, this act of preferential allotment was a pre-arranged and a managed process so as to allot preferential shares to the beneficiaries of bogus LTCG, which could later be sold by them for accommodating bogus LTCG/STCG in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. To demonstrate his contention, he took us through the facts set out by the AO in the assessment order regarding the financials and prospects of these companies. He submitted that the huge sums of long/short term capital gains claimed to have been earned by the assessee within a short period of time from sale of these shares was impossible, given the preponderance of human probability. He thus submitted that these transactions of the assessee were not genuine in as much as the assessee was unable to discharge his burden of explaining as to how there was a spike in the price of the shares within such a short duration he held those shares. According to him, if one looked at the surrounding circumstances it clearly led to only one possible conclusion that the assessee has manipulated the entire record and availed the bogus transactions of long-term capital gain to convert his unaccounted income to avoid tax through long-term capital gains. For this, he relied on the judgment of the Hon ble Supreme Court in the case of SEBI Vs Rakhi Trading Pvt Ltd (CA No. 1969 of 2011). The Ld. CIT, DR also took us through the statements of the persons/entry operators relied upon by the AO to j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EBI itself after carrying out 360 degree investigation and inquiry had cleared the assessee and the shares of the company in question, consequently the foundation (factual basis) prevailing at the time of recording the statement u/s 132(4) of the Act has been completely removed; and accordingly the statement of assessee s brother u/s 132(4) accepting the proposal of the investigation wing to withdraw the exemption claimed u/s 10 (38) of the Act loses its relevance. The Ld. AR thus contended that the grounds raised by the Revenue agitating the impugned addition based on the interim adverse orders rendered by the SEBI in 2014, which has since been ultimately vacated/reversed by the SEBI, deserves to be rejected. Further, in support of the findings of the Ld. CIT(A), the Ld. AR referred to several judgments rendered by this Tribunal and the jurisdictional High Court of Bombay, which shall be discussed in the later part of this order. And thus he doesn t want us to interfere with the order of Ld. CIT(A) for AY 2014-15 AY 2015-16. 29. We have considered the rival submissions and perused the material available on records. It is noted that the main plank urged by the Ld. CIT, DR and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m order was modified by SEBI and the entities including the assessee against whom directions were issued vide aforesaid interim orders/actions were found to be not in violation of provisions of SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities) Market Regulations, 2003. Accordingly, SEBI vide aforesaid order dated 20-09-2017, revoked the directions issued vide earlier interim orders in exercise of powers conferred under section 19 of SEBI Act, 1992 read with section 11, 11(4) and 11B thereof, with immediate effect. The Ld. CIT(A) is noted to have taken note of the aforesaid order of the SEBI, whose relevant portion is reproduced below: 5. Upon completion of investigation, the SEBI had passed order in the case of Radford Global Limited on 20.09.2017 vide order No. SEBI/WTM/MPB/EFD-1-DRA-III/30/2017. In this order it is concluded as under: 9. investigation did not find any adverse evidence/adverse findings in respect of violation of provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations) in respect of 82 entities (against whom directio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains earned in the shares of M/s. Radford Global Ltd in light of the interim SEBI s adverse order dated 19.12.2014. Similarly, the Investigating Officer had also suspected the gains derived in the shares of M/s. Shree Shaleen Textiles Ltd M/s. Global Infratech Finance Ltd (formerly Asianlak Capital Finance Ltd.). Faced adversely with the strenuous, complex situation when the Investigations Officer proposed to disallow the exemption to the LTCG u/s 10(38) of the Act, the assessee s brother on mistaken belief of fact [which was based on the adverse interim order of SEBI in 2014 which was subsequently on 20.09.2017 modified and assessee was exonerated] instead offered it to tax under the head Income from Other Sources . The Ld. AR has rightly explained that, since at that material time (i.e. 09.04.2015) the interim directions of the SEBI against the assessee were in force and even the demat account of the assessee had been frozen, in order to avoid further harassment and protracted litigation, the brother of the assessee in the course of the search was left with no option but to accede to withdraw the exemption u/s 10(38) of the Act,. It is further noted that the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded during the course of search, which is otherwise not backed by corroborative evidence. For this, we may gainfully refer to the Instruction F.No.286/2/2003-IT (Inv. II), dated 10-3-2003 issued by the CBDT to the Assessing Officers: Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of search and seizure and survey operations. Such confession, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstances, such confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income . Any action on the contrary shall be viewed adversely. Further, in respect of pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and future prospects and concluded that their financials did not inspire confidence to justify the upward trend of price movements on the stock exchange. To this, the Ld. AR first submitted that, the assessee had furnished contemporaneous evidences to substantiate its transactions in all these shares. For AY 2014-15, he invited our attention to the following facts relating to the transactions in the shares which were noted by the Ld. CIT(A). 6.3 I have considered the assessment order and the written submission made by the appellant, and perused the material on record and also the legal position on the issues at hand. From the details available on records, the undisputed factual matrix in this case is that the appellant has share transactions as under: Radford Global Limited: The appellant was allotted 2,50,000 shares of Radford Global Limited through preferential allotment on 16.02.2012. These shares were purchased at Rs.15/per share (Rs.10/- face value and a premium of Rs.5/-). The purchase price was paid by the appellant though banking channels. These shares were credited in the demat account on 31.03.2012 which was held with the SEBI registered broker. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2013 for a value of Rs.8,52,867/-. Entire holding was sold on 28.05.2014 for a total consideration of Rs.35,00,871/-. The appellant has earned STCG on sale of shares of Rander Corporation Ltd. 37. The Ld. AR contended that no objective enquiry was conducted by the AO in respect of the contemporaneous transactional documents and evidences furnished by the assessee. Rather, these evidences were mechanically rejected by the AO. It is noted by us that, the assessee had furnished the following documents in support of his transaction in these four (4) scrips in question viz., M/s Radford Global Ltd, M/s Global Infratech Finance Ltd, M/s Shree Shaleen Textiles Ltd M/s Rander Corporation Ltd : (i) Copy of Bank Statement; (ii) Copy of demat account statement; (iii) Confirmation of invoices issued upon preferential allotment of shares; (iv) Copy of the contract notes issued by share broker upon sale of shares; (v) Copy of the ledger accounts of the share broker; 38. We note that the aforesaid documents filed by the assessee before the lower authorities in order to substantiate the sale of listed shares has not been found to be false, fabricated and fict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies are operating in different segments and sectors which are not possible to be related and the price of the scrips cannot be correlated with one or two such factors. As a matter of fact these factors may run into hundreds and still it may not be possible to say that all have been accounted for. Weak financial should not be the only parameter to suspicious trading of a company on Stock Exchange and as per the statistics 30% of listed companies on BSE are loss-making at any time and then their trading ought to be treated with suspicion. 40. To buttress his contention further, the Ld. AR submitted that, even otherwise the AO s premise that, the financials of these companies did not inspire confidence and that it did not correlate with the price movements so as to justify the genuineness of the capital gains, was factually untenable. For instance, in the context of M/s. Global Infratech Finance Ltd, (formerly known as M/s. Asianlak Capital and Finance Ltd.), he pointed out that in the year of preferential allotment of shares, the turnover of the company had grown from Rs.8.90 lacs to Rs.191 lacs representing growth of 2046.07%. Correspondingly, the profit had increased from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eak price to enjoy higher capital gains, and since that s not the case as evident from the aforesaid relevant facts, according to Ld AR, the AO s alleged theory fails. Before us, the Ld. CIT, DR was neither able to cogently rebut these averments of the Ld. AR, nor able to factually disprove the aforesaid relevant facts brought to our notice to counter the theory propounded by the AO to doubt the transaction. In such a scenario, even this contention of the Ld. CIT, DR cannot be the ground to over-look the documents submitted by the assessee to substantiate the transactions in question. 43. As far as the statements of brokers/entry operators etc., that have been relied upon by the Ld. CIT, DR, are concerned, the Ld. AR showed us that, neither in the sworn statements of the so-called entry operators had anyone admitted of providing accommodation entries to the assessee, nor had anyone admitted to have received any cash from the assessee in lieu of cheques. The Ld. AR further pointed out to us that the so-called entry operators were not even shareholders or directors of these listed companies so as to have been able to exert influence over the companies. According to him, the unfort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the companies, in which any person could have traded/invested, had any connection with the averments made by Shri Kedia. Even otherwise, this statement also was not tested on the touch stone of cross examination, and so such third party statement could not have been acted upon to the disadvantage of the assessee, since it would be fragile for violation of the principles of natural justice. In this regard, we may gainfully refer to the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CCE reported in (2015) 281 CTR 241 (SC) wherein it has been held that, failure to give the assessee the opportunity to cross examine witness, whose statements are relied upon, results in breach of principles of Natural Justice. It is a serious flaw which renders the order a nullity. We also gainfully refer to the judgment of the Hon'ble Apex Court in the case of CIT Vs. Odeon Builders Pvt. ltd. (418 ITR 315) wherein also it was held that, the addition/disallowance made solely on third party information without subjecting it to further scrutiny and denying the opportunity of cross-examination of the third party renders the addition/ disallowance bad in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in as much as this watchdog had directly suspected the assessee of price rigging to reap LTCG, in their interim order passed in 2014. As noted earlier, upon completion of the investigation, SEBI has specifically exonerated the assessee of any wrong-doing or manipulation of shares prices of these companies on the BSE (Bombay Stock Exchange). Hence, on the peculiar facts of this case, since the direct evidences brought on record by the assessee shows that, unlike others, he was not a party or beneficiary of any price rigging or manipulation, the Revenue s reliance on the above referred third party statements, which as noted above, does not even pertain to the assessee, was clearly misplaced and so erroneous and is unsustainable in eyes of law. 46. Now coming to the judgments cited before us, it is noted that the Ld. CIT(A) had rightly relied upon the judgment of the Hon ble jurisdictional Bombay High Court in the case of Shyam R. Pawar (229 Taxman 256). In the decided case also, the assessee was purchasing and selling the shares through a broker in Mumbai. For the purchase of shares of (i) M/s. Bolton Properties Ltd., (ii) M/s Prime Capital and (iii) M/s. Mantra, he has transacte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re attributed to the promoters/directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the revenue. A copy of the DMAT account, placed before the Tribunal showed the credit of share transaction. The contract notes in Form-A with two brokers were available which gave details of the transactions. The contract note is a system generated and prescribed by the stock exchange. From this material, the Tribunal concluded that this was not mere accommodation of cash and enabling it to be converted into accounted or regular payment. The discrepancy pointed out by the Calcutta Stock Exchange regarding client code has been referred to. But the Tribunal concluded that same, by itself, is not enough to prove that the transactions in the impugned shares were bogus/sham. The details received from stock exchange have been relied upon for the purposes of faulting the revenue in failing to discharge the basic onus. If the Tribunal proceeds on this line and concluded that inquiry was not carried forward and with a view to discharge the initial or basic onus, then such conclusion of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had a surplus cash balance of Rs. 3,09,000 as on 1-4-1999. Thereafter, the assessee has further returned an agricultural income of Rs. 66,000 for the assessment year 2000-01. The amount invested in the purchase of shares in the year ending on 31-3-2000 was Rs. 2,57,020. Again the assessee had a cash balance thereof of Rs. 1,18,771. Therefore, it is, very clear that the investment made by the assessee in shares during the previous periods relevant to the assessment years 1999-2000 and 2000-01 was supported by cash generated out of agricultural income. The above agricultural income have been considered in the respective assessments. Therefore, the contention of the assessing authority that the assessee had no sufficient resourcefulness to make investments in the shares is unfounded. 10.3 Purchase and sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off-market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the CIT(A) that off-mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in respect of the share transactions. They have confirmed the transactions stated by the assessee that he had with them. These positive statements made before the assessing authority supported the case of the assessee. There is no force in the action of the assessing authority in relying on the negative statements of the other parties whose role during the relevant period was either irrelevant or insignificant. Therefore, in the facts and circumstances of the case, it is, our considered view that certain statements relied on by the assessing authority do not dilute the probative value of the statements given by other persons in favour of the assessee confirming the share transactions entered into by the assessee. 10.6 The above circumstances have made out a clear case in support of the book entries reflecting the purchase and sale of shares and ultimately supporting the money received on sale of shares and finally investing the same in the purchase of flat. The chain of transactions entered into by the assessee have been properly accounted, documented and supported by evidences. 10.7 Therefore, we find that the explanations of the assessee seems to have been rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by the department has out and out upheld the contention of the assessee that he had purchased and sold shares. We find that this solitary evidence collected in the course of survey is sufficient to endorse the bona fides of the share transactions made by the assessee. 10.9 Therefore, in short on the basis of the internal evidences available with the assessee and the fact that the sale proceeds were collected through bank accounts and coupled with the external evidence of survey and statement of parties, we have to hold that the sale proceeds of Rs. 1,41,08,484 has been explained. Therefore, the said addition is deleted. 11. As we have held that the sum of Rs. 1,41,08,484 has been explained by the assessee, the assessee is entitled for the benefit of section 54E against the purchase of flat at Colaba, in accordance with law. The assessing authority is, therefore, directed to grant the benefit of section 54E to the assessee. 48. On further appeal, it is noted that the Hon ble Bombay High Court in their order in ITA No. 456 of 2007 dated 07-09-2011 has affirmed the order of this Tribunal. 49. The Ld. CIT(A) has rightly relied on another judgment of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Sumati Dayal [1995] 214 ITR 801 is wholly misplaced. In that case, the assessee therein had claimed income from horse races and the finding of fact recorded was that the assessee therein had not participated in races, but purchased winning tickets after the race with the unaccounted money. In the present case, the documentary evidence clearly shows that the transactions were at the rate prevailing in the stock market and there was no question of introducing unaccounted money by the assessees. Thus, the decision relied upon by the counsel for the Revenue is wholly distinguishable on the facts. 16. For all the aforesaid reasons, we hold that the decision of the Tribunal is based on findings of fact. No substantial question of law arises from the order of the Tribunal. Accordingly, all these appeals are dismissed. No order as to costs. 50. As far as the reliance placed by the Ld. CIT, DR on the decision of SEBI Vs Rakhi Trading Pvt Ltd (supra) is concerned, it is noted that the said decision was rendered in the context of synchronized trading conducted by the said assessee in the F O Segment of the Stock Exchange and therefore the facts involved therein are clearly dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on conjecture made by the AO. The learned ITAT has 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 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. There is no 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. The Hon'ble Court has further held that 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. The Hon'ble Court has also held that the decision in the case of Suman Poddar was arrived at in light of the peculiar facts and circumstances demonstrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein eighty-nine different appeals of different assessee s were disposed off by the Tribunal in a single consolidated order without taking cognizance of the specific facts involved in each case (appeals preferred by different assessee s). The relevant observations made by the Hon ble High Court is as follows: 40. Before we examine the contentions, we are tempted to point out that the exercise done by the tribunal was a bit perfunctory. There is absolutely no discussion of the factual position in any of the 89 appeals, the exception is in paragraph 4 with regard to the certain facts of the assessees case (SwatiBajaj). We are not very appreciative of the manner in which the bunch of appeals have been disposed of. The cardinal principles which courts and tribunal have followed consistently is that each assessment year is an individual unit and unless and until it is shown that there are distinguishing feature in a particular assessment year, the decision taken for the earlier years are to be followed to ensure consistency. While doing so the Courts/Tribunals are required to examine the facts and render a finding as to why the decision in the earlier assessment years should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Nyalchand Kikavat Vs. DCIT (ITA No. 7921 7922/Mum/2019) dated 17.12.2021, the AO acting on the information shared by the Investigation Wing at Kolkata had held that the long term capital gain earned by the assessee in shares of M/s Unisys Software Holdings Ltd was not genuine and similarly assessed it as unexplained cash credit u/s 68 of the Act. On appeal this Tribunal observed that, except for general allegations, as narrated in the Investigation Wing Report, there was no evidence brought on record by the AO to prove assessee s involvement in jacking up the prices of the shares with a view to earn artificial gains. Taking note of the material evidences placed by the assessee, it was held that assessee had fulfilled all the requirements laid down to claim exemption u/s 10(38) of the Act. The relevant findings of this Tribunal were as follows: 4.4 Upon perusal of all the aforesaid documents, it is quite discernible that the assessee had furnished all the requisite documentary evidences to substantiate the transactions and discharged the primary onus as required under law to establish the genuineness of the gains so earned during the year. No defect has been pointed out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein these persons, without naming the assessee specifically, made an admission that the scrip of Unisys was a penny stock scrip. However, despite specific request of the assessee, the adverse material which form the very basis of addition, no opportunity to cross-examine these persons was ever provided to the assessee. The failure to do so would make the additions unsustainable as per settled legal position. Further, the adverse statements made by these persons are not backed by any cogent corroborative material on record to establish the assessee s involvement in price rigging of shares of Unisys No collusion between the assessee and alleged entry providers or operators or exit providers is shown to have existed. There is no admission or evidence-based finding that any cash got exchanged between the assessee and any of the bogus purchasers of the scrip. It is trite law that no additions could be made merely on the basis of suspicion, conjectures or surmise. The addition thus made purely on the basis of third-party statement recorded at the back of the assessee could not be sustained in the eyes of law unless the same are confronted to the assessee and the same are backed by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge and the money was received in settlement through banking channels. The assessee had delivered the shares from his demat account to the broker, who, in turn, paid sale consideration to the assessee. In such a case, there could be no doubt as to fulfillment of primary ingredients of Sec.68 viz. identity of the payer, their creditworthiness and the genuineness of the transactions. The source of credit received in the bank account could not be held to be unexplained unless it was established that assessee s own money was routed in his bank account in the garb of Capital gains. 4.10 Finally, keeping in the facts and circumstances of the case, we are inclined to hold that impugned additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give a colour of authenticity to the transaction and by creating a fa ade of legitimate transactions. Therefore, the total amount of ₹ 1,20,11,807 was added under section 68 of the Act as the assessee has deliberately and willfully concealed its unaccounted income.. 7. Considered the rival submissions and perused the material on record. We find that the issue for our adjudication relates to the disallowance under section 68 of the Act on account of unaccounted income. Exactly similar issue has been decided by the Co ordinate Bench of the Tribunal, Mumbai, in HUF of her husband s case in Shashikant B. Mhatre v/s ITO, being ITA no.694/Mum./2018, order dated 29th May 2019, a copy of which is placed on record, wherein the Co ordinate Bench of the Tribunal, on identical and on similar set of facts and circumstances, after considering the submissions of the parties has decided the issue in favour of the assessee and against the Revenue. Respectfully following the above decision, we allow the appeal filed by the assessee. 54.3 We also gainfully refer to the decision rendered in the case of Shri. Mukesh B Sharma Vs. ITO (ITA No. 6249/Mum/2018) dated 29.05.2019. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of approval letter from GIFL. d) Copy of allotment letter from GIFL for shares allotted to the assessee. e) Copy of share certificate issued by GIFL. f) Various events reported by GIFL to BSE. 6.1. The assessee submitted the following details with regard to sale of shares:- a) Copy of demat statement reflecting the sale of shares. b) Copies of Contract Notes issued by both the brokers for sale of shares. c) Copy of Holding Statement for financial years 2012-13 and 2013-14. d) Price chart of GIFL from the date of purchase of shares till the recent period. e) Copy of relevant extract of bank statement of the assessee reflecting the sale proceeds received from the broker and credited to the bank account. 6.2. We find that the assessee pleaded that in an online platform, there would be no nexus between the purchasers and the seller and the delivery of shares and payments would be made through their respective stock brokers. Hence the ld AO ought to have summoned the assessee s brokers to examine the authenticity of the sale of shares of GIFL and the amount received on sale of shares. We find that the ld AR also placed evidences on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing accommodation entries in the form of capital gains by transacting its own shares through the alleged bogus operators. We also find that the SEBI had passed on order dated 8.1.2018 in the case of GIFL, wherein it was found that the name of the assessee herein or the brokers through whom the assessee transacted were not even included in the said order as parties against whom any adverse inference / findings were found in respect of violation of provisions of SEBI. We find that SEBI had issued a show cause notice vide Reference SEBI/EAD- 12/SM/EE/693/25/2018 dated 8.1.2018 which are enclosed in pages 252 to 266 of the paper book. In pages 257 and 258 of the Paper Book, the list of parties to whom show cause notices were issued by SEBI is listed out. In the entire list, neither the name of the assessee nor his brokers were included. Later there another show cause notice vide Reference EFD/DRA3/OW/NB/6663/2018 dated 1.3.2018 was issued by Enforcement Department of SEBI mentioning the list of parties to whom show cause notices were issued. Even in this list, the name of the assessee or his broker was not included by SEBI. Hence it could be safely concluded that SEBI did not allege an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed purchasers of shares from the assessee when it was sold in the open market by the assessee. The assessee had pleaded that since the shares were sold in the open market in online platform, he is not aware of the name of the parties as to who had bought the same in the open market. The ld AO sought to issue summons to those alleged purchasers of shares u/s 131 of the Act, which remain uncomplied by those parties. Based on this, the ld AO had drawn an adverse inference against the assessee disregarding the entire documentary evidences on record and the prevailing market practices with regard to purchase and sale of shares in the open market in online platform. It is not in dispute that the assessee had received the sale proceeds of shares from the registered broker through the stock exchange only and not from the alleged purchasers of shares directly. Moreover, the ld AO states that the assessee had sold the shares at Rs 211.76 per share whereas the average sale price of the assessee was only Rs 89 per share. 6.8. We find that the ld DR made general submissions with regard to the investigations carried out by Kolkata Income Tax Department after identifying 84 scrips to be penn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It would be pertinent to address the case law relied upon by the ld DR before us on the decision of Hon ble Bombay High Court (Nagpur Bench) in the case of Sanjay Bimalchand Jain vs Pr.CIT (Nagpur) reported in (2018) 89 taxmann.com 196 (Bombay) dated 10.4.2017 on the impugned issue. From the facts of Sanjay Bimalchand Jain supra, we find that (i) in that case, the broker company through which the shares were sold did not respond to AO s letter regarding the names and address and bank account of the person who purchased the shares sold by the assessee ; (ii) Moreover, at the time of acquisition of shares of both the companies by the assessee, the payments were made in cash ; (iii) The address of both the companies were interestingly the same ; (iv) The authorized signatory of both the companies were also the same person ; (v) The purchase of shares of both the companies was done by that assessee through broker, GSSL and the address of the said broker was incidentally the address of the two companies. Based on these crucial facts, the Hon ble Bombay High Court rendered the decision in favour of the revenue. None of these factors were present in the facts of the assessee before us. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, we hold that the ld CITA was not justified in upholding the action of the ld AO in bringing the sale proceeds of shares of GIFL in the sum of Rs 7,88,77,854/- as unexplained income of the assessee treating the same as just an accommodation entry. Consequentially, the addition made towards commission on such accommodation entry at the rate of 5% in the sum of Rs 39,43,898/- is also hereby directed to be deleted. Accordingly, the grounds raised by the assessee are allowed . 54.4 We note that this Tribunal in the case of Ripu Sudan Kundra Vs. ITO (ITA No. 2792/Mum/2018) dated 05.10.2021, had examined the genuineness of the transactions conducted by the assessee in the listed shares, inter alia, including M/s Radford Global Limited and M/s Dhenu Build Infrastructure Ltd [now known as Hingir Rampur Ltd] (the assessee has also dealt in these scrips in the present case). Similar to the facts of present case, in this decided case also, the assessee therein had produced documents, viz., contract notes, share certificates, etc. to substantiate the genuineness of the transactions carried out through banking channels and that there was no direct contact between the buyer and the sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted by Investigation Directorates of Kolkata Ahmedabad on certain stock-brokers and entry providers and the statements recorded from them during the course of search. The analysis made by the Investigation Directorates on the financials/business profile of the impugned companies forms the base for rejecting the claim of loss. The lower authorities have referred to investigation carried out by the Directorates of Investigation on Radford Global to come to a conclusion that entities that have purchased shares of Radford Global are bogus/paper entities. Further, based on the findings in the Investigation Reports, the lower authorities have observed that a common pattern is seen in respect of all the impugned companies in that the financial health of all such impugned entities are poor, there is sudden rise of prices in their shares followed by a steep fall, statements recorded of key persons confirms manipulation in prices of stock to provide capital gains/loss to interested parties. Borrowing from the findings of the Investigation Reports, the lower authorities have held the claim as non-genuine, rejecting the submission of the assessee that the investments were made through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t notes, share certificates, corroborative evidence indicating purchase/ sale through registered broker as juxtaposed against the findings of the AO based on the general report from Investigation and the modus operandi adopted by unscrupulous entry providers. There is no denying that there is no assessee-specific material on record of the AO to pin-point that the assessee has entered into an unholy nexus with entry providers so as to stage manage accommodation entry of STCL. The statements relied on by the AO in the nature of admissions are bereft of corroborative material to implicate the assessee herein in such scam. At the same time the material furnished by assessee to substantiate its claim remains unchallenged and uncontroverted. The purchases were neither offmarket nor through preferential allotment. Besides, no copy of any report of information received was supplied to the assessee. The assessee was not confronted with any statement or material allegedly detrimental to the assessee arising or culled out of the Investigation report. Thus, the fact remains that the findings of the lower authorities are not based on evidence but on generalizations and probabilities. The AO cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired the assessee to prove the genuineness of the same. In reply assessee vide letter dated 11.12.2017 submitted that the long term capital gain generated was genuine stating the details of section 10(38) of the Act. Not convinced with the submissions of the assessee, the Assessing Officer added the sale proceeds of ₹.5,49,04,773/- u/s 68 of the Act, to the taxable income of the assessee. Assessment u/s 143(3) of the Act was completed on 28.12.2017 determining income at ₹.5,65,51,920/- by making addition of ₹.5,49,04,773/- u/s. 68 of the Act and ₹.16,47,143/- u/s. 69 of the Act towards the commission paid to entry provider. Aggrieved assessee preferred appeal before the Ld.CIT(A) and Ld.CIT(A) sustained the addition made by the Assessing Officer. Aggrieved assessee preferred appeal before us raising following grounds in its appeal: - .. 6. Considered the rival submissions and material placed on record, on identical facts in the case of Shri Amit Mafatlal Shah v. ACIT in ITA.No.5793/Mum/2019 dated 20.01.2020, the Coordinate Bench following various judicial pronouncements deleted the addition made by the Assessing Officer observing as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the Revenue filed against the Hon ble Bombay High Court order. Similarly, in the case of CIT vs. Mrs. Kesar A. Gada (supra) the ITAT deleted the addition by holding that the transaction of purchase and sale of shares made by the assessee were genuine and no addition under section 68 was called for by relying on the decision of Hon ble Bombay High Court in the case of CIT vs. Mukesh Ratilal Marolia (2005) 12 TMI 457 ITAT, Mumbai. The High Court also dismissed the appeal of the Revenue by holding that no substantial question of law arises for reconsideration. In the case of CIT vs. Sham R Pawar (supra) the Hon ble Bombay High Court has decided the issue against the Revenue by upholding the order of ITAT wherein the Tribunal has held that the assessee has declared the capital gain on sale of shares and mere observation of the AO that transactions were done through brokers at Kolkata and the performance of the concerned company was not satisfactory as it would not justify the increase in share prices and thus held the transaction as bogus as assessee converted his own unaccounted money into accounted income and thus made the addition under section 68 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account of M/s Alliance Intermediateries Network Pvt. Ltd. evidencing the sale of the shares of M/s Talent Infoways Ltd.; Copy of delivery instructions of shares to the depository for dematerialization of the shares; and Copy of the return of income alongwith the computation of income for A.Y. 2005-06, which revealed the speculation income of Rs. 15,975/-, and the fact of purchase of 10,200 shares of M/s Talent Infoways Ltd, alongwith the source of purchase. We find that the aforesaid substantial documentary evidence placed on record by the assessee, which as a matter of fact supported the entire chain of events of purchase and sale of 10,200 shares of M/s Talent Infoways Ltd. by the assessee, was however never rebutted by the A.O on the basis of any concrete and irrebutable evidence which could go to inescapably disprove the genuineness of the said documents which were brought on record by the assessee We find that the A.O had rather chosen to merely rely on the stand alone statement of Sh. Mukesh Choksi (supra) and taking the same as gospel truth, had therein drawn adverse inferences in the hands of the assessee by merely referring to the said statement of Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are allowed. 14. The issue raised in ground no.3 is against the confirmation of addition of Rs.6,87,257/- by CIT(A) as made by the AO towards arranging this purchase and sale of shares by applying 2% on the total value of transactions. The ground No.3 is consequential to ground no.1 2 which have been allowed in favour of the assessee (supra). Accordingly, the addition made under this ground of Rs.6,87,257/- is ordered to be deleted. Ground is allowed. 7. As the facts are exactly identical and the grounds raised by the assessee in this case are also similar. Respectfully following the above said decision of the Tribunal, we direct the Assessing Officer to delete the addition made u/s.68 and u/s. 69 of the Act. Accordingly, grounds raised by the assessee are allowed. 55. In view of the above therefore we do not find any infirmity in the order of the Ld. CIT(A) deleting the additions made u/s 68 of the Act and the consequent addition of unexplained commission expenditure made u/s 69 of the Act and uphold to the same. 56. Before parting, it is relevant to mention another important fact which came to our notice. For argument sake, even if all the above evidences ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded as unexplained commission expenditure u/s 69C of the Act. The facts relating to the transaction in shares of Rander Corporation Ltd has been taken note of at Para 36 above. As noted earlier, the assessee has furnished all contemporaneous evidences including purchase invoices, bank statements, sale contract notes, demat statements, broker s ledger etc. which he is required to maintain in ordinary course to substantiate the gains derived in this scrip. We have already taken note of the fact that, unlike the facts involved in AY 2014-15, there was no SEBI order against the assessee qua this scrip. The Investigation Officer also did not have any information against this scrip and for that reason, Shri Surendra Jiwrajka was not even questioned regarding the capital gains derived in the shares of M/s Rander Corporation Ltd in the course of the recording of his statement u/s 132(4) of the Act. Accordingly, the statement given u/s 132(4) of the Act did not have any relevance in the context of AY 2015-16. We have already analyzed the financials of M/s Rander Corporation Ltd at Para 41 above and noted that the AO s allegation that the increase in its share prices did not correlate wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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