TMI Blog2022 (2) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer are coming out from the findings of learned CIT(A). In his findings the learned CIT(A) has also noted that the Assessing Officer had not carried out any independent verification and moreover, the broker through whom assessee entered into transactions was also not examined. Decided against revenue. - I.T.A. No. 153/Lkw/2020 - - - Dated:- 17-2-2022 - Shri T. S. Kapoor, Accountant Member For the Appellant :Shri Rakesh Garg, Advocate. For the Respondent : Shri Harish Gidwani, D.R. ORDER This is an appeal filed by the Revenue against the order of learned CIT(A) dated 30/11/2018. In this appeal, the assessee has taken the following grounds: 1. The Ld. Commissioner of Income Tax (Appeals)-1. Kanpur has erred in law and on facts in deleting the addition of Rs.44,44,174/- without going into the merits of the case and ignoring the findings recorded by the assessing officer in assessment order that the sale of shares in this case is not a natural phenomenon but an arrangement of dubious design of providing accommodation entry of Long Term Capital Gain To introduce unaccounted own money as exempt income in the form of LTCG on sale of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR further raised a preliminary objection to the filing of appeal and submitted that the said exceptions were inserted for the claims of the assessee u/s. 10(38) of the Act whereas in the present case, the additions have been made u/s. 69A of the Act and for addition u/s. 69A there is no exception contained in Circular No. 23/2019 and therefore also the appeal filed by the Revenue may be dismissed. 5. The ld. DR, on the other hand, submitted that though Assessing Officer has mentioned the addition u/s. 69A of the Act but the addition has been made after rejecting the claim of the assessee u/s. 10(38) of the Act and in this respect my attention was invited to the findings of Assessing Officer. It was submitted that when the claim of the assessee was rejected u/s. 10(38) of the Act the amount represented by the sale of shares has been rightly added u/s. 69A of the Act but the fact of matter remains that such addition was made due to rejection of claim of the assessee u/s. u/s. 10(38) of the Act and therefore it was prayed that the appeal of the Revenue may be heard on merits. 6. Heard the parties on the petition for condonation of delay and on the preliminary objections by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Lucknow Bench of the Tribunal in the case of Smt. Renu Agarwal in I.T.A. No.204/Lkw/2020 and Shri Raj Kumar Agarwal in I.T.A. No.205/Lkw/2020, order dated 17/01/2022 where under similar facts and circumstances, the appeals filed by the Revenue have been dismissed. 8. I have heard the rival parties and have gone through the material placed on record. I noted that the issue involved in the present appeal is duly covered in favour of the assessee in by the order of this Bench of the Tribunal in the case of Smt. Renu Agarwal in I.T.A. No.204/Lkw/2020 and Shri Raj Kumar Agarwal in I.T.A. No.205/Lkw/2020, order dated 17/01/2022 wherein as per para 8 to 13 of its order, the Tribunal has held as under: 8. I have heard the rival parties and have perused the material placed on record. I find that Assessing Officer has made the additions on the basis of an investigation conducted by DDIT whereby a racket involving thousands of crores of rupees was unearthed and wherein on the basis of statements recorded by investigation department of certain operators and stock brokers the Revenue had come to the conclusion that various persons were engaged in arranging long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterialized form, meaning thereby that the appellant became the physical owner of these shares. The assessee effected sales of these shares when the prices started appreciating in lots at various intervals as per the details submitted before AO and reproduced in the assessment order. AO found that there was an abnormal increase in the value of shares of the scrip that was actually innocuous. However, during the appellate proceedings it is seen that appellant submitted all the relevant facts and details and the evidences of sale/ purchase and bank accounts. Assessing Officer has made any enquiry from the share broker M/s Sajendra Mookim or Koikata Stock Exchange seeking specific information pertaining to these transactions undertaken by the appellant. Directorate of Income Tax (System) had uploaded the information pertaining to the trading run by the penny stocks and that the information pertaining to the assessee was available in the ITD module under the EPS facility in a tab labeled Penny Stocks . AO perused the information available on the system and utilized the same in finalizing the assessment. Therefore, AO on the basis of the detailed and comprehensive enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by appellant. Ignoring these facts, AO still made the addition. The AO has only quoted facts pertaining to various completely unrelated persons whose statements were recorded and on the basis of unfounded presumption, addition was made in the hands of the appellant. It is seen from records that name of the appellant is neither quoted by any of the beneficiaries who surrendered the income nor any material is found at any place where investigation was done by Kolkata, Investigation Wing, in which the name of the appellant, broker or the scrip was found to be mentioned. SEBI has prima facie not found involvement of the concerned company in any unfair trade practices and has allowed the trading of the same on public portal. Therefore, because of that fact the same script has been purchased and sold by many investors through various brokers across the country, leading to some bogus transaction, or the promoters of the Scrip company were in collusion for providing certain sham transactions, such transactions of the appellant cannot be held to be a sham transaction only by mere assumption unless any specific material is found against the appellant. AO made addition only on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that they are not genuine. It was held in Tribunal decision rendered in the case of Smt. Manju Bansal V Income Tax Officer - 1(1), Lucknow in ITA No.70/LKW/2011 dated 12/03/2015 after relying upon the case of Mohit Agarwal vs. ACIT in I.T.A. No.171/Lkw/2008 dated 28/11/2008 that when overwhelming documentary evidences are produced by the assessee, the burden shifts on the AO to explain away them. Only the investigation report cannot be relied upon by AO for making any addition. Hew the above mentioned evidences could be ignored? The AO has to give cogent reasons for rejecting them. These are important documents, some of them arising under the provisions of the Companies Act. No third party investigation was done by AO to prove that the evidence brought on record by appellant is forged. The brokers were never confronted with the evidences produced by the assessee. The apparent has to be treated as real unless proved otherwise. Long ago Hon'ble Supreme Court has laid this law while rendering the celebrated decision in the case CIT Vs. Daulat Ram Rawatmal [1964] 53 ITR 574 (SC). Lastly the Long Term capital Gain claimed by the assessee as exempt income u/s 10(38) of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the plea and we find that the CIT(Appeals) while deleting the addition has held as follows. 2.5. I have considered the facts of the case, assessment record, submission of AR and position of law, in my opinion, appellant deserves to succeed. At the time of making assessment, the AO on the basis that the appellant could not furnish any evidence to prove that the shares were actually transferred from his name and there was no actual sale of shares and the money allegedly received as sale consideration of shares was in fact appellant's own money which was routed through the help of some unscrupulous person and hence made an addition of Rs.19,51,038/- as income from undisclosed and unexplained sources u/s 68 of 7.7. Act. On the other hand during the course of assessment as well as appellate proceedings the AR's of the appellant filed written submission along with documents and vehemently opposed the AO's action inviting attention to the facts of the case, the main points which have not been properly considered by the AO or have been totally ignored which are as under:- i) The shares were applied and allotted directly from the company Focus Industrial Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ype of share transaction. The decision reported in 13 SOT 61 in the case of ITO vs. Smt. Kusum Lata wherein the Hon'ble Bench held that the share transaction was not bogus. The Hon'ble Bench confirmed the order of CIT (A) who held that assessee has filed the requisite evidence to establish the genuineness of share transaction and merely because share broker could not report the transaction to Stock Exchange, it could not be said that the share transaction was bogus. The Hon'ble Bench further held that the burden of proving a transaction is a/ways on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidences of a character which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. The Bench held that there was no evidence except speculation that this profit was not from the sale of shares. The AO had failed to establish his case and to discharge the requisite burden cast on him. xi) In this case as rightly pointed out by the AR's, there is no evidence on record as referred in assessment order, to prove that the proceeds recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shaw Bros. vs. CIT 37 ITR 271. (2.7) Thus in view of above facts and circumstances of the case it is well established by the appellant regarding genuineness of share transaction and he has sufficiently discharged the onus cast upon him. AO's action is not well founded in position of law in adding entire amount of sale of shares as income from undisclosed and unexplained sources u/s 68 of I.T. Act. Therefore, I am deleting the entire amount of Rs.19,51,038/-. However, the AO is directed to assess the long term capital gains of Rs. 17,54,237/- as shown by the appellant. The Tribunal has upheld the finding. It had held that the assess was in possession of the shares in question and had sold the said shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence since the same were seized by the Revenue Department, there is no fault with the assesses. From the aforesaid facts it is dear that the shares in question were a/lotted to the assessee in the public issue which were held in Demat a/c of Stock Holding Corporation of India Ltd. The shares were transferred to Abhipra Capital Ltd,. The sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the contract note dated 10.11.2003, sale bill dated 17.11.2003 of purchases and sale of shares by Contract Note dated 26.2.2005? 3. Whether the Tribunal rightly disallowed Rs. 11,77,000/- received from the sale of shares and being not liable to be exempted as long term capital gains, when the share were purchased in November, 2003 and sold in February, 2005 as per contract notes of purchase and sales of shares? Whether the Tribunal was justified in holding that purchase of 1,000 shares by assessee was unexplained, ignoring the fact that purchase of such shares was not doubted by the A.O. ? However, in view of the finding recorded by the assessing officer for addition to be made under section 68 of the Act without allowing any deduction in respect of cost of acquisition of the shares, it necessarily flows from such finding that the assessing officer did not believe the case of the assessee of purchase of the shares in question. Accordingly, the additional question does not arise in this case. The sole addition, which is subject matter of dispute in the instant appeal, relates to addition of Rs. 11,77,000/-/ which according to the assessee was long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at account of the assessee, for the first time in November 2004. It cannot be denied that the fact of purchase transaction being recorded late in the Demat passbook raises a doubt as to its genuineness and it is also true that this evidence is relevant to the decision on the point in issue in this case, yet, this was not the only evidence relevant to the issue. There exists other evidence, adduced by the assessee in this case, in shape of contract notes; bank transactions pertaining to payment for purchase and sale of share and other material relied upon by the CIT( Appeals). Such other relevant evidence ought to have been a/so looked at in entirety and thereafter conclusion as to genuineness of the transaction should have been drawn. It may have been open to the Tribunal to declare any piece of evidence relied by the CIT(Appeals) to be irrelevant or unreliable. That having not been done, it could not have side-stepped the evidence and/or the reasoning of the CIT(Appeals), especially, because the order of the Tribunal is one of reversal. A three Judge bench of the Supreme Court, in Udhavdas Kewslram Vs. CIT (1967) 66 ITR 462 (SC) held : The Tribunal was und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions /disallowances are made. Applying the principles laid down by the observations of the Punjab and Haryana High Court, I find that if the entire material pertaining to these transactions like DMAT statements, Contract Notes of purchase and sale of shares and source of funds to acquire the shares that had been placed by the assessee before the AO at the time when the assessment was being made and the AO, applied his mind to that material and did not express anything contrary about the evidence placed by appellant then in such circumstances it shows that the evidence placed by the appellant has been accepted by AO. AO then cannot go ahead and make an addition on part evidence available with him where there is no mention of the transactions done by appellant or by her broker. AO was specifically asked to file any specific material against the appellant vide this office letter no. CIT(A)- I/KNP/Penny Stock/2017-18/11 dated 04.03.2018 asking following information: The above noted appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2017 in ITA No. 443/Kol/2017 for AY 2013- 14 held in exactly similar facts and circumstances that no addition can be made in the hands of appellant. Hon'ble Allahabad High Court in the case of K.N. Agarwal Vs. CIT (1991) 189 ITR 769 (All), relevant extract of the said judgment are given hereunder:- Indeed, the orders of the Tribunal and the High Court are binding upon the Assessing Officer and since he acts in a quasi-judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal s order is the subject matter of revision in the High Court or that the High Court's decision Is under appeal before the Supreme Court. Permitting him to take such a view would introduce judicial indiscipline, which is not called for even in such cases. It would lead to a chaotic situation. True it is that the dilemma of the Revenue is also real and substantial in such cases, but such a situation cannot be provided for by judicial interpretation by courts, but only by an appropriate agency. Therefore respectfully, following the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer has not taken this exercise and has not brought on record any adverse evidence to prove that the capital gain disclosed by appellant is not genuine. Accordingly, the addition of Rs.5,41,223/- is deleted. Appeal is partly allowed. 9. The above findings recorded by ld. CIT(A) are quite exhaustive whereby he has discussed the basis on which the Assessing Officer had made the additions. While allowing relief to the assessee, the ld. CIT(A) has specifically held that there is no adverse comment in the form of general and specific statement by the Pr. Officer of stock exchange or by the company whose shares were involved in these transactions and he held that Assessing Officer only quoted facts pertaining to various completely unrelated persons whose statement were recorded and on the basis of unfounded presumptions. He further held that the name of the appellants were neither quoted by any of such persons nor any material relating to the assessee was found at any place where investigation was done by the investigation Wing. The ld. CIT(A) relying on various orders of Lucknow Benches and other Benches has allowed relief to the assessee by placing reliance on the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order under Section 143(3) of the Act at the total income of Rs. 1,09,12,060/-, making an addition of Rs. 96,75,939/- under Section 68 read with 115BBE of the Act on account of bogus LTCG on sale of penny stocks of a company named M/s Gold Line International Finvest Limited. The appeal before the CIT(A) was dismissed and additions were confirmed with the observation that the Respondent had introduced unaccounted money into the books without paying taxes. Further appeal filed by the Respondent before the learned ITAT was allowed in her favour, and the additions were deleted vide the Impugned Order, relevant portion whereof reads as under: 21. A perusal of the assessment order clearly shows that the Assessing officer was carried away by the report of the Investigation Wing Kolkata. It can be seen that the entire assessment has been framed by the Assessing Officer without conducting any enquiry from the relevant parties or independent source or evidence but has merely relied upon the statements recorded by the Investigation Wing as well as information received from the Investigation Wing. It is apparent from the Assessment Order that the Assessing Officer has not conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BI nor there anything on record to show that the two brokers of the appellants mentioned here in above were involved in the alleged scam. The Assessing Officer has not even considered examining the brokers of the appellants. It is a matter of the fact that SEBI looks into irregular movements in share prices on range and warn investor against any such unusual increase in shares prices. No such warnings were issued by the SEBI. 26. There is no dispute that the statements which were relied by the Assessing Officer were not recorded by the Assessing Officer in the assessment proceedings but they were pre-existing statements recorded by the Investigation Wing and the same cannot be the sole basis of assessment without conducting proper enquiry and examination during the assessment proceedings itself. In our humble opinion, neither the Assessing Officer conducted any enquiry nor has brought any clinching evidences to disprove the evidences produced by the assessee. The report of Investigation Wing is much later than the dates of purchase / sale of shares and the order of the SEBI is also much later than the date of transactions transacted and nowhere SEBI has declared the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investment made in such companies was an accommodation entry. Thus the Court should take the aspect of human probabilities into consideration that no prudent investor would invest in penny scrips. Considering the fact that the financials of these companies do not support the gains made by these companies in the stock exchange, as well as the fact that despite the notices issued by the AO, there was no evidence forthcoming to sustain the credibility of these companies, he argues that it can be safely concluded that the investments made by the present Respondents were not genuine. He submits that the AO made sufficient independent enquiry and analysis to test the veracity of the claims of the Respondent and after objective examination of the facts and documents, the conclusion arrived at by the AO in respect of the transaction in question, ought not to have been interfered with. In support of his submission, Mr. Hossain relies upon the judgment of this Court in Suman Poddar v. ITO, [2020] 423 ITR 480 (Delhi), and of the Supreme Court in Sumati Dayal v. CIT, (1995) Supp. (2) SCC 453. 9. Mr. Hossain further argues that the learned ITAT has erred in holding that the AO did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of the financials of the company to come to the conclusion that the transactions were accommodation entries, and thus, fictitious. The conclusion drawn by the AO, that there was an agreement to convert unaccounted money by taking fictitious LTCG in a pre-planned manner, is therefore entirely unsupported by any material on record. This finding is thus purely an assumption based on conjecture made by the AO. This flawed approach forms the reason for the learned ITAT to interfere with the 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 sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclusion that the lower tax authorities are not able to sustain the addition without any cogent material on record. We thus find no perversity in the Impugned Order. 14. In this view of the matter, no question of law, much less a substantial question of law arises for our consideration. 15. Accordingly, the present appeals are dismissed. 11. The above judgment of Hon'ble Delhi High Court has been followed by ITAT, Lucknow Benches in the following cases wherein under similar facts and circumstances the ITAT has decided the issue in favour of the assessees. i) Shri Achal Gupta Vs. ITO 3(1) Kanpur in ITA No. 501/Lkw/2019 dated 16-12-2020 for the A.Y. 2015- 16 decided by the Hon'ble ITAT Lucknow Bench 'A' Lucknow. ii) Smt. Sabreen vs. ITO -3(4), Kanpur in ITA No.498/Lkw/2019 vide order dated 20/07/2021. iii) Shri Surendra Kumar Gupta vs. Dy.CIT in ITA No.125/Lkw/2019, order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DMAT accounts, were purchased and sold through the registered stockbroker M/s Globe Capital Market Ltd through Bombay Stock Exchange in an open market transaction after paying STT, and money paid and received was through proper banking channels. During the course of assessment proceedings, appellant has filed all the contract bills issued by the broker. The assessee held these shares for more than a year in dematerialized form, meaning thereby that the appellant became the physical owner of these shares. The assessee effected sales of these shares when the prices started appreciating in lots at various intervals as per the details submitted before AO and reproduced in the assessment order. AO found that there was an abnormal increase in the value of shares of the scrip that was actually innocuous. However, during the appellate proceedings it is seen that appellant submitted all the relevant facts and details and the evidences of sale/ purchase and bank accounts. AO has not made any enquiry from the share broker M/s Globe Capital Market Ltd. or Bombay Stock Exchange Limited seeking specific information pertaining to these transactions undertaken by the appellant. Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to fall freely so that interested beneficiaries who had booked at high market price can avail bogus Short Term Capital Loss. On December 2013 script was trading at Rs. 938.72 which fallen to Rs. 140 in mid of March 2014 there by booking STCL. AO on the basis of the above unrelated details mentioned in the assessment order held that since the shares in which the appellant has done trading are of a penny stock company, which resulted in unreasonably high Long Term Capital gains, that were purchased by the assessee more than one year back from the open market on normal rates, these transactions are bogus. It is clear from the above facts and circumstances that there is no evidence at all against the appellant available on record for the AO to come to this conclusion. The appellant has sold shares through broker M/s Globe Capital Market Ltd against whom no action u/s 133A or S. 132 has been taken by the investigation wing of the department. Apparently as per data available on record there is no adverse evidence at all either in the form of any general or specific statement by the principal officer of either M/s Globe Capital Market Ltd or from M/s Nikki Global Finance aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this broker and transactions done by them were found to be bogus and appellant being one of the beneficiaries was named by the promoters of the scrip M/s Nikki Global. Here just because the appellant has traded in a scrip that was being used by few brokers for illegal purposes, won't make transactions undertaken by appellant as bogus, making it liable for any addition, in absence of anything specific or remotely general against the appellant. Here the integrity of the promoter or the broker or the manner in which the brokerage operations were conducted is not questioned by AO. There is no effort made by AO to know the factual position for the case of appellant, by examining anyone who admitted before investigation wing officers that they are manipulating the Long Term Capital Gain transactions. AO has not made any effort to verify the documents placed on record by the assessee in support of the claim. AO's observation and conclusion are merely based on the information available on ITD system and modus operandi narrated by investigation wing pertaining to the whole scam unearthed. It is clear and now well settled as it appears from the plethora of case laws relied upon by ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal relates to the Assessment Year 2004-05. The assessee-opposite party is an 'individual'. He filed return of income on 31.3.2005 declaring income of Rs. 34,97,761/-. The case was selected for scrutiny and the income from long term capital gain amounting to Rs. 17,54,237/- on sale of 19000 shares of Focus Industrial Resources through broker M/s. MKM Finsec, Delhi was investigated. It transpired that the shares were purchased on 8.7.2002 for Rs.1,90,000/- and sold on 14.8.2003 for Rs.19,54,948/-. The resultant gain was treated by the assessee as long term capital gains. The assessing officer examined him and was of the view that as the broker had not given details and furnished documents the transaction appeared to be fake, therefore, disallowed the plea of long term capital gains and added the differential amount of Rs.17,54,237/- as 'income from other sources'. The matter was carried in appeal before CIT(Appeals), who vide order dated 27th February, 2008 accepted the plea of the assessee and deleted the addition. The Revenue's appeal before the Tribunal has failed. We have heard Sri Shambhu Chopra, learned Senior Standing Counsel, appearing for the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y instruction of the depository account with Stock Holding Corporation of India Ltd. And were transferred to Abhipra Capita Ltd. In this case even the name of buyer and his ID No. in which the shares of the appellant were transferred were also filed. Thus the objection of the AO that the detail of purchase and sale of shares is not made available is not correct. viii) The sale consideration of these shares was received through account payee Demand Drafts duly ascertained by the AO independently to have been issued from the bank account of the broker. ix) During the course of assessment proceedings the following evidences were brought on record:- a) Copy of share broker bill. b) Copy of the Contract note. c) Copy of Demat account statement with Stock Holding Corporation of India Ltd. Which clearly shows that the shares were transferred from the name of appellant after its sale. d) Copy of ledger account of the appellant in the books of share broker. e) Copy of Bank Statement of appellant with Bank of India, Agra. x) Further during the course of assessment proceedings it is seen that notices u/s 133(6)/131 were issued to the share broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Demat account of the buyer, itself proves the genuineness of the purchase/sale transaction of shares having regard to the relevant provisions contained in the Depository Act. The transaction made through Demat account is in itself an evidence to prove the genuineness of share transaction. Merely because the sale of shares fetched a handsome price, which price is supported by official quotation issued by Magadh Stock Exchange, therefore, there cannot be any reason to doubt the genuineness of the sale transaction of the shares. It is settled position of law by the decisions reported in 26 ITR 776 (SC), 37 ITR 288(SC), 63 ITR 449(SC) and 1 SOT 90 (Mum) (supra) that suspicion how so ever strong cannot take place of the character of evidence. In this case it is seen that appellant brought on record all plausible evidences as is expected in these transaction, however, the AO has not brought any material on record to disprove the evidences as adduced by the appellant. The Hon'ble Supreme Court in the case of Sreelekha Banerjee and Others vs. CIT 49 ITR 112 has held Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has to act on legal grounds established by evidence. The assessee produced all evidences to explain the source of the amounts received by the assessee from the brokers. The AO was not justified in assessing the sale proceeds of shares as unexplained cash credit under section 68 of the Act. Hon'ble Allahabad High Court in the case of Ms. Amita Bansal vs. Commissioner Of Income (2018) 400 ITR 324 (All) on 30 March, 2017 INCOME TAX APPEAL No.326 of 2010, HELD: The appeal was admitted on the following questions of law: 1. Whether on the facts and circumstances of the case the ITAT was correct to hold that 11,000 shares of M/s Welcome Coir Industries Ltd. Purchased by the appellant on 10.11.2003 from broker M/s El bee Portfolio Pvt. Ltd vide contract Note dated 10.11.2003 and received in the Demat account and thereafter sold vide Contract Note dated 26.2.2005 of the broker M/s D.N. Kansal Securities Pvt. Ltd. And sale proceeds of share credited in the bank account of the appellant, still it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el. It is also an undisputed fact that 11,000 shares were sold in the previous year relevant to the Assessment Year 2005-06 which were of the company M/s Welcome Coir Industries Ltd. Entire sale proceeds were also received through banking channel. The CIT (Appeals) after detailed examination of the case of the assessee and evidence thus adduced by the assessee including the entries in the Demat account passbook; evidence of the broker firms through whom the transactions were made; contract note dated 10.11.2003 etc. allowed the appeal. In his view the disallowance of the said claim was not justified. The CIT (Appeals) had further found that merely because certain transactions performed by the brokers through whom the assessee had sold those shares were doubtful, it could not be said that the transactions performed by the assessee were, therefore, for that reason alone, doubtful or not genuine. In such cases individual transactions relating to the particular assessee (in whose case genuineness of the transaction is doubted) need be examined before adverse conclusion be drawn against such assessee. Upon appeal by the revenue the Tribunal has reversed the finding of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity on fact when it reverses a finding of fact by a lower appellate authority. In this regard, the Tribunal - the higher appellate authority has neither considered and weighed, in entirety, the evidence relied by the lower appellate authority nor it has dealt with the reasoning and findings of the lower appellate authority while passing the order of reversal. It is then difficult for this court to the uphold as correct the finding of fact recorded by the Tribunal. We are therefore of the view that the Tribunal's finding is not conclusive, and it has been arrived by following a faulty process. The Tribunal has not considered all relevant and other material evidence existing on record before disbelieving the claim of the assessee. The Tribunal has also not specifically dealt with the findings recorded by the CIT (Appeals). As three Judge bench of the Supreme Court, in Udhavdas Kewalram Vs. CIT (Supra) held that the AO had to act judicially, i.e. to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be sustained. The Supreme Court thus laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifically pertaining to the appellant that has been received from the D.I.T(investigation), Kolkata or gathered through any other sources may kindly be flagged in the assessment record and the same may kindly be sent to this office with all pages properly numbered, for disposal of the appeal. You may appreciate that since quantum of revenue involved in these appeals is substantial, therefore every available piece of documentary evidence specifically pertaining to the appellant becomes important. Therefore, same may kindly be identified and forwarded to this office so that judicious decision in this appeal can be taken. You are directed to send the assessment record with all pages duly numbered and all the specific evidence available on record pertaining to appellant, properly flagged within 15 days of receipt of this letter. In reply to this specific opportunity given, the Assessing Officer simply sent the assessment folder to this office for perusal without specifying any adverse evidence present on records against the appellant whatsoever of any kind in support of the suspicion relied upon by him. It is therefore clear that there is no adverse material on record agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material and evidences existing on record in proper way before disbelieving the claim of the appellant. The AO has also not specifically dealt with the evidence placed on record by the appellant during assessment proceedings. AO made assessment ignoring the fact that there is no evidence of either the appellant or the share broker present on record that binds them for being involved in any illegal or manipulative transactions leading to an unreasonable high long-term capital gain. I do not find that the AO has brought out any part of the report from the investigation wing in which the assesses has been investigated and or is found to be a part of any arrangement for the purpose of generating bogus long-term capital gains. Nothing has been brought on record to show that the persons investigated by wing, including entry operators or stock brokers, have named the assessee as being in collusion with- them. In absence of any finding specifically against the assessee in the investigation wing report, the appellant cannot be held to be guilty or linked to the wrong acts of any third persons investigated. In this case, in my view, the Assessing Officer at best could have considered ..... 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