D.C.I.T., CIRCLE- 1, DIBRUGARH vs. USHA BAMALWA, DIBRUGARH

Per Rajpal Yadav, Vice-President (KZ):- The present sixteen appeals are directed at the instance of Revenue against the order of ld. Commissioner of Income Tax (Appeals), Central, North East Region, Guwahati dated 10th February, 2023 except in the case of Bajrang Lal Bamalwa for A.Y. 2013-14. In this year, the appeal of the assessee has been decided by the ld. 1st Appellate Authority vide its order dated 23.03.2023. On receipt of notices in these Revenue’s appeals, the assessees have filed Cross Objections in all these appeals respectively.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 2. A perusal of the record would suggest that in some of the cases, Department has not filed copy of the assessment order and the Registry has issued defect memo. However, during the course of hearing, it was submitted before us that the assessments in verbatim has been reproduced by the ld. CIT(Appeals) in the impugned order of each appeal, which is running roughly in 565 pages. For example, in the case of Bajrang Lal Bamalwa for A.Y. 2012-13, ITA No. 51/GAU/2023, i.e. the first appeal on the Board. The assessment order is available from pages no. 6 to 21 of the impugned order of the ld. CIT(Appeals). Similarly it is available in all these impugned orders. Apart from the above, ld. Counsel for the assessee has placed on record the copy of the assessment order in the paper book filed by the assessees in each appeal, therefore, record for the purpose of deciding the appeals is construed as complete.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) ground that no incriminating documents related to the disallowance of bogus Long Term Capital Gain is available with department, when the entry operator and the directors of shell companies themselves have accepted under Oath that they are involved in providing accommodation entries during various departmental investigations which is incriminating in itself.

ITA Nos. 51 to 66/GAU/2023 ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (in ITA Nos. 51 to 66/GAU/2023) 6. Since all these assessees have made investments Since all these assessees have made investments Since all these assessees have made investments except one in single single scrip. On sale of such investment n sale of such investment claimed long-term capital gain (LTCG) as capital gain (LTCG) as exempt income, exempt income, therefore, we take up all these appeals together. therefore, we take up all these appeals together.

Copies of original returns filed u/s 139, Copies of original returns filed u/s 139, notices issued u/s 153A notices issued u/s 153A and returns filed in response to notices issued u/s 153A of the and returns filed in response to notices issued u/s 153A of the and returns filed in response to notices issued u/s 153A of the

ITA Nos. 51 to 66/GAU/2023 ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (in ITA Nos. 51 to 66/GAU/2023) above Assessees are enclosed at in above Assessees are enclosed at in PB-1 to PB-16 filed in their filed in their respective cases.

Thus, as on the date of the search (i.e. on 20.11.2017), the time Thus, as on the date of the search (i.e. on 20.11.2017), the time Thus, as on the date of the search (i.e. on 20.11.2017), the time limit to issue a notice u/s 143(2) of the Act for and in respect of limit to issue a notice u/s 143(2) of the Act for and in respect of limit to issue a notice u/s 143(2) of the Act for and in respect of 15 cases tabulated above had already expired and in the case of 15 cases tabulated above had already expired and in the case of 15 cases tabulated above had already expired and in the case of Sri Bajarang Lal Bamalwa for A.Y. 2012 Sri Bajarang Lal Bamalwa for A.Y. 2012-13, the assessment 13, the assessment had 16

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) already been completed u/s 143(3). Thus, the assessment proceedings for the impugned assessment years in all the 16 cases herein were non-pending/completed and thus, stood unabated for the purpose of section 153A of the Act.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 9. BHAGWATI DEVI 2012-13 Twenty First Century 93,78,431 PB-9 BAMALWA India Ltd. 10. VISHAL 2012-13 Twenty First Century 4,74,95,786 PB-10 BAMALWA India Ltd. 11. VINAY BAMALWA 2012-13 Twenty First Century 3,94,75,511 PB-11 India Ltd. 12. RAVI BAMALWA 2012-13 Twenty First Century 3,91,91,171 PB-12 India Ltd. 13. MADAN LAL 2012-13 Twenty First Century 2,38,20,516 PB-13 BAMALWA India Ltd. 14. SHEETAL 2013-14 Twenty First Century 75,89,343 PB-14 BAMALWA India Ltd. 15. PRAMOD KUMAR 2013-14 Twenty First Century 3,93,36,039 PB-15 BAMALWA India Ltd. 16. VINOD 2013-14 Twenty First Century 2,39,89,732 PB-16 BAMALWA India Ltd. TOTAL ADDITION 64,48,50,444

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) that all these respondents belonged to Nemichand Bamalwa & Sons Group. M/s. Nemichand Bamalwa & Sons is one of the leading jewellers based in Kolkata, with centuries old traditional jewellery family background. The main persons of the group are Shri Madanlal Bamalwa, Sri Hansraj Bamalwa, Sri Bachh Raj Bamalwa and Shri Bajranglal Bamalwa.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) bear in mind as to how the claim made under section 10(38) is to be construed as a bogus claim. He devoted one & half page on comprehending the concept of a claim as a bogus claim and how this has been considered by the Investigation Wing carried out by the Department in Kolkata. He observed that DIT, Kolkata had investigated transactions in 84 penny stock companies quoted on BSE and examined a large number of brokers, directors of companies, promoters of penny stock companies, entry operators etc. and carried out a country-wide investigation to unearth the organised racket or any operators, who generate bogus entries of long-term capital gains, which is exempt from tax. The modus operandi by the operators was to make the beneficiary by shares of a pre-determined penny stock company controlled by them or their group. These shares are transferred to the beneficiary at a very marginal price mostly online by way of preferential allotment or off-line sales. The beneficiaries hold the shares for one year or more, the statutory period for claiming long-term capital gain, which is exempt under section 10(38) of the Income Tax Act. In the meantime, the operators regulate the price of the stock and gradually rise its price many times than its actual price. Often it rigged to as many as 500 to 1000 times of the purchase price. Thereafter ld. Assessing Officer has observed that how DIT Investigation was required to share the information of 20

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) such companies between different Government machineries namely SEBI etc. The ld. Assessing Officer thereafter made an analysis of Twenty First Century (India) Limited. He observed that this company is controlled and managed by Shri Anil Khemka and Rajendra Babna. Four companies, managed by the said persons were amalgamated into M/s. TFCIL for the purpose of booking pre-arranged bogus Long term capital gain, namely:- (i) Highland Dealcom Pvt. Limited, (ii) Dignity Supplies Pvt. Limited, (iii) Astha Tradelink Limited; (iv) Sarathi Dealers Pvt. Limited. and shares of this company were allotted to prospective beneficiaries. The ld. Assessing Officer has highlighted it and how that will give multi-fold gain to the investors. A perusal of this order would indicate that as if ld. Assessing Officer has pasted all those details, which has been communicated to him by Investigation Wing during some investigations. These details did not unearth from the premises of the assessee but these are the details which are general in nature and supplied by the investigating Wing. The ld. Assessing Officer thereafter discussed the general principle laid down in different judgments and held that this claim of long-term capital gain made by the assessee is a bogus claim.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 13. The ld. Counsel for the assessee, on the other hand, summarized the reasons harboured by the ld. Assessing Officer and the impugned assessment in his written submission filed before us. According to the assessee, a perusal of the assessment order would give rise to the following summarized reasoning for disbelieving their claim. (i) That an organized racket of generating bogus entries of LTCG on shares of certain penny stock companies had been unearthed by the conducting a country wide investigation by the Directorate of Investigation, Kolkata and the modus operandi adopted by the operators had been revealed.

(ii) That the price of shares of penny stock companies had been rigged and raised through circular trading by the entry operators.

(iii) That the Directorate of Investigation, Kolkata had investigated transactions in 84 penny stock companies quoted on BSE and examined on oath a large number of brokers, directors of companies that finally purchased the shares, promoters of penny stock companies, entry operators etc. The money trail of transactions had also been examined and in a large number of transactions, trail from cash deposit account to the beneficiaries account had been unearthed.

(iv) That several individuals who had taken bogus entries of LTCG between 2010-2014 had been identified. The results of the enquiry had also been shared with SEBI, which after investigation, had found the allegations to 22

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) be correct in several cases. Top 25 groups had been investigated and many of them had accepted having taken entries for a commission and surrendered substantial amounts voluntarily. SEBI had taken appropriate actions by passing of interim direction, suspension of trading, reducing price band etc. in certain cases.

(v) That an 11-member Special Investigation Team (SIT) had also pointed out the above-mentioned modus operandi in the Third SIT report on Black Money and had issued recommendations on “Misuse of exemption of Long-Term Capital Gains tax for money laundering”.

(vi) That the impugned scrip, Twenty First Century India Ltd. (TFCIL) was listed at CSE. The said company was controlled & managed by entry operators - Sri Anil Kumar Khemka & Rajendra Bubna. Four companies, also managed by the said persons were amalgamated into M/s. TFCIL for the purpose of booking pre- arranged bogus LTCG, namely: (1) Highland Dealcom Pvt. Ltd. (2) Dignity Suppliers Pvt. Ltd. (3) Astha Tradelink Ltd. (4) Sarathi Dealers Pvt. Ltd.

(vii) That on 19.01.2011, 38 shares of TFCIL were allotted at Rs. 10/- each to the shareholders of amalgamated companies in lieu of 1 share held by them. Thus, the beneficiaries got 38 times of their so-called investments. Appointed date of amalgamation was 01.04.2009. Date of passing of order was 26.09.2011.

(viii) That TFCIL had disclosed Nil income during F.Ys 2009-10 to 2015-16. 23

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023)

(ix) That the director of TFCIL as well as some other dummy directors had accepted that they were dummies of Sri Anil Khemka.

(x) That some brokers, like Ashok Kayan & Bikash Sureka had been involved in facilitating bogus LTCG on CSE earlier. In the present case also, they had deposed to the DDIT Unit-4(1), Kolkata that they had facilitated bogus LTCG to the family members of the Bamalwa Group.

(xi) That all the companies that had purchased the shares of TFCIL were also jamakharchi/paper companies with weak financial credentials. Most of them were controlled by well-known entry operators of Kolkata. Most of them were filing very low returns, they lacked creditworthiness to buy the shares quoted at such high values.

(xii) That majority of these companies were controlled by Sri Anil Khemka and Sri Devesh Upadhyay, both of whom had deposed to the DDIT, Unit 4(1), Kolkata that they had facilitated bogus LTCG to the family members of the Bamalwa Group.

(xiii) That members of Bamalwa family in their written statement recorded in the post search proceedings had neither denied the statements of the Directors and the brokers, nor did they bring any facts on record to prove otherwise.

(xiv) That, based on the above, it was clear that the LTCG taken by Nemichand Bamalwa& Sons group members

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) was bogus whereby they had routed their own unaccounted funds through LTCG in TFCIL.

(ii) The Assessee laid special emphasis on the fact that the price of shares of TFCIL as quoted on the stock exchange was around Rs. 245/- per share in 2005. The movement of quoted price of TFCIL as per the quotation of CSE was enclosed.

(iii) That the shares of TFCIL were held by the Assessee for more than one year. During F.Y 2011-12 relevant to 25

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) A.Y. 2012-13, the shares were sold through SEBI registered share broker over the CSE at the market rates prevailing on the exchange on respective dates. Securities Transaction Tax was paid on the sale of shares. The net consideration of Rs. 4,92,18,448.41 for sale of shares was received through a/c payee cheques on different dates.

(iv) In support of his claim, the Assessee submitted the following documents:- (a) Computation of income (b) Balance Sheet with annexure (c) Computation of LTCG (d) Copies of Bank Statements (e) Bills of Purchase of shares of HDPL (f) Demat transaction statement of a/c reflecting the transaction (g) Contract notes for sale of shares through CSE. The broker was Mr. Bikash Sureka & Ashok Kumar Kayan. (h) Ledger a/c of Broker (i) Copy of Amalgamation order of the Hon’ble Calcutta High Court (j) Allotment Letter.

(v) That the Assessee had claimed LTCG of Rs. 4,76,18,448.41 arising on the sale of above shares as exempt u/s 10(38) of the Act as allowed by the law. He was not aware of any scheme providing bogus LTCG. There was no question of any collusion on his part with anyone in this regard.

(vi) That he was not aware of any organized racket of any operators involved in the generation of bogus LTCG as alleged by the A.O. 26

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023)

(vii) That the price escalation in shares was due to the order of the Hon’ble Calcutta High Court for amalgamation, which was passed after due notices to all concerned authorities including the Income-tax Department, which did not object to the proposed amalgamation.

(viii) That the Assessee had sold the shares during the year yielding profit which was due to allotment of shares as a result of amalgamation. That he would not have earned such profit had the amalgamation not taken place.

(ix) That the Ld. A.O’s suggestion that the prices were rigged and increased manifold by circular trading did not cover the Assessee’s case. As per the A.O, the entry operators had managed to increase the price of shares, but in the case of the Assessee, it was consequent to the Order of the Hon’ble Calcutta High Court.

(x) That the Assessee did not know the alleged operators of the company and had nothing to do with them.

(xi) In rebuttal to the alleged circumstantial evidence/direct evidence against his claim of LTCG, the Assessee submitted as under:

(a) With respect to the alleged statements of Sri Anil Khemka and Sri Rajendra Bubna, the Assessee categorically denied knowing them. He was unaware of their workings or their network. He had invested in many companies but did not know about the products those companies sold.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (b) That he did not know any of the directors of TFCIL. He had invested in shares of many companies but did not know their directors. He was not required to know them. The Assessee requested for an opportunity of cross examination of the persons who had provided any evidence or given any statements against him.

(c) That he had regularly transacted in shares in recognized stock exchange. The transactions of sale and purchase of shares had been carried out through terminals where nobody was aware of who was purchasing or selling shares. Thus, the A.O’s evidence that the companies who had purchased the shares of TFCIL were paper companies was not sustainable. The Assessee had no connection/control over the purchaser of shares once the order was placed.

(d) That he did not know any person by the name of Devesh Upadhyay or Anil Khemka. He requested for an opportunity of cross examining them if they had provided any evidence or given any statement against him.

(e) The Assessee emphasized on the fact that in course of search u/s 132 of the Act at his business and residential premises on 20.11.2017, no incriminating document relating to share transactions had been found/seized, which strongly indicated that he was not involved in any bogus transactions as alleged. Consequently, the LTCG derived by him was not bogus.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (f) That his original assessment for the year under consideration had been completed u/s 143(3) of the Act after due enquiry in the matter of LTCG. Copy of the assessment order was enclosed. Therefore, change of opinion was against law..

(g) That the Jurisdictional Income-tax Appellate Tribunal (ITAT), Guwahati Bench in ITA No. 223 & 224/Gau, A.Y. 2014-15 in the case of M/s. Sandhya Mittal & M/s. Saurabh Mittal (HUF), Makum Road, Tinsukia Vs. ACIT had after considering plethora of similar cases decided by other Benches of the ITAT & High Courts, passed a detailed consolidated order in favour of the assessees on 12.07.2019 on closely similar facts. These two cases were decided ex-parte by the ITAT after hearing the Departmental Representative as the appellants therein had failed to represent their case when called up for hearing. Copy of the order was enclosed.

(h) The Assessee relied upon a plethora of other judgments pronounced by various High Courts & Tribunals under closely similar facts wherein the Hon’ble Courts had uniformly opined that no addition u/s 68 was warranted in respect of capital gains claimed on shares where the transactions were affected through recognized stock exchange via banking channels and the Assessee had furnished cogent documentary evidences in support the same which had remained uncontroverted by the Department.

(xii) That based on the above, it was submitted that LTCG of Rs. 4,76,18,448.41 could not be treated as bogus. 29

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Similar responses were filed by all the remaining Assessees wherein the shares of TFCIL were involved.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) addition can be made. Certain individual cases namely Vishal Bamalwa, it was contended that no search was conducted upon the assessee. The assessee has filed written submission, which has been reproduced in the impugned order. The ld. CIT(Appeals) has called for a remand report and ld. Assessing Officer has also submitted the remand report. The ld. CIT(Appeals) devoted little extra energy in deleting all these additions. His order is running into 565 pages in ITA No. 51/GAU/2023, which is not an advisable step at his end because the ld. 1st Appellate Authority has reproduced the complete judgments instead of ratio laid down in them and unnecessarily made his order extra-bulky from which it is quite difficult to find out the relevant finding. However, ld. Counsel for the assessee has filed written submission before us, which is running into 65 pages. He has summarised the finding of the ld. CIT(Appeals). The emphasis of the ld. 1st Appellate Authority is on the point that basically during the search, no direct evidence was found. The ld. Assessing Officer was also conscious of this fact and, therefore, he wrote a letter bearing no. 272 dated 18.02.2019 to DDIT, Unit-3(3), Kolkata. A copy of this letter has been reproduced by the ld. CIT(Appeals) on pages no. 115 to 118 of the impugned order. It was a commission issued under section 131(1)(d) in this letter, which has been reproduced verbatim same. The ld. Assessing Officer has observed in this letter- 31

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) “Further, the assessee has stated that no incriminating document relating to such share transaction was found/seized indicating such transactions to be bogus. The undersigned has examined the seized document and Harddisk but could not identify or draw any inference in contrary to the contention of the assessee”.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) inquiry. Therefore, on a detailed analysis of all the records, ld. CIT(Appeals) formed an opinion that no material actually was available with the ld. Assessing Officer, which can authorise him to take proceeding against the assessee under section 153A. The ld. CIT(Appeals) thereafter on the strength of large number of decisions propounded the scope of section 153A and how an assessment is to be made in a search case. He observed that since there was no incriminating material and in host of judgments at the end of the Hon’ble High Courts, which held that in case, no incriminating material was found and seized, then assessment which are unabated, no addition can be made under section 153A of the Income Tax Act. Accordingly ld. CIT(Appeals) has deleted the additions. The ld. 1st Appellate Authority has reproduced in details all the evidences possessed by the ld. Assessing Officer as well as important case laws relied upon before him.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) different compartments. In his first fold of submission, he apprised the Bench about the scope of section 153A and submitted that after the decision of the Hon’ble Supreme Court in the case of PCIT –vs.- Abhisar Buildwell Pvt. Limited reported in 149 taxmann.com 399(SC) on the point of the scope of section 153A has attained finality. He emphasized that there are a large number of cases across the country by the Hon’ble High Courts as well as of the Tribunal. In majority, all the Hon’ble High Courts have based their decisions in the line of the thought process of Hon’ble Delhi High Court propounded in the case of CIT –vs.- Kabul Chawla reported in 380 ITR 573 (Delhi) except Hon’ble Allahabad High Court and Hon’ble Karnataka High Court.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) shares of TFCIL in A.Ys. 2010-11, 2011-12 and 2012-13. In the case of Bajrang Lal Bamalwa, the ld. Assessing Officer has scrutinized the return of income for A.Y. 2012-13 and passed an assessment order under section 143(3) on 11.11.2014. He accepted the claim of the assessee under section 10(38) on sale of the shares of TFCIL. In other words, he did not doubt. Similarly same claim has been accepted in the case of Shri Bajranglal Bamalwa in a scrutiny assessment for A.Y. 2010-11. The assessee has earned long-term capital gain on sale of shares amounting to Rs.1.41 crores.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Officer to take a decision on the basis of pick and choose. He should have taken a consistent approach in the case of assessee for treating these shares as genuine.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 24. In his next fold of submission, he pointed out that in the case of one of the assessees i.e. Vishal Bamalwa, no search was carried out, but still ld. Assessing Officer has made the addition.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) down that if an assessee was not provided opportunity to cross examine the witness, whose statement is being used against the assessee, then, such evidence will be excluded for consideration of deciding controversy. Thus on the strength of this judgment of the Hon’ble Supreme Court, he submitted that reference to this statement has to be excluded and if it is excluded, then, nothing remain with the ld. Assessing Officer. The ld. Counsel for the assessee thereafter made reference to a large number of decisions, namely Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100. The ld. Counsel for the assessee further contended that if some disclosure was made by a witness against his interest, then, it is always upon to such person to explain the contents of an earlier statements, the circumstances in which the same was made and even retract from the same if the statement was made under threat/coercion or under mistaken impression of facts or of law. The assessees, whose statement was taken under section 132(4) of the Income Tax Act by the Department, have retracted their statements by bringing the correct fact to the notice of the Revenue. For buttressing this proposition, he relied upon the judgment of the Hon’ble Supreme Court in the case of Sri Krishna Vs. Kurukshetra University, AIR 1976 SC 376, Vinod Solanki Vs. UOI Civil Appeal No. 7407 of 2008, S. Khadar Khan (2008) 300 ITR 157, Ratan Corporation 196 CTR 536 (Guj).

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Ashok Kayan & Bikash Sureka. They have also retracted their statements and filed their affidavits. On the strength of such details compiled in his written submission, he submitted that the order of the ld. CIT(Appeals) on the first fold is to be upheld.

“153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years; PROVIDED THAT the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years : 39

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) PROVIDED FURTHER THAT assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate : PROVIDED ALSO THAT the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years: PROVIDED ALSO THAT no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. EXPLANATION 1.-For the purposes of this sub-section, the expression “relevant assessment year” shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. EXPLANATION 2.-For the purposes of the fourth proviso, “asset” shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner: PROVIDED THAT such revival shall cease to have effect, if such order of annulment is set aside. Explanation.-For the removal of doubts, it is hereby declared that,- (i) save as otherwise provided in this section, section 153B and section 153C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year”.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) This compartment provides that section 153A applies to a person in respect of whom search is initiated under section 132 of the Act, or whose books of account, other documents or any asset are requisitioned under section 132A after May 31, 2003. The second proviso attached with this section further contemplates that the assessments/reassessments, relating to any assessment year falling within the period of six assessment years, which are pending on the date of initiation of the search under section 132 or requisitioned under section 132A shall stand abate. It was further submitted that the second proviso also provides that if on the date of initiation of search or requisition under section 132 or under section 132A of the Act, any assessment/reassessment proceedings relating any assessment year falling within the period of six assessment years is pending, then the pending proceeding shall stand abated and fresh assessment of the same can be done under section 153A of the Act. It is also emphasized that if no proceeding was pending on the date of the search, then, the proceeding for that year stand concluded and such search shall have no impact on the concluded proceeding. Thus this proviso was enacted specifically to avoid two parallel proceeding of assessment of a particular year of the same person, i.e. one regular assessment proceeding under section 143(3) /147 of the Income Tax Act, vis-a-vis another assessment 42

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) proceeding under section 153A of the Act. The ld. Counsel for the assessee further explained the meaning of expression “abatement”. This expression would mean that something is to be eliminated or suspended, defeat, nullify of pending action. Thus a plain reading of second proviso would suggest that if the assessment or reassessment, which is pending on the date of initiation of search, shall only abate. Therefore, what will abate are only the pending assessment or reassessment and not the completed assessment. This proviso i.e. second, would not lead to any abatement of those assessments, which have already been concluded and are not pending on the date of search. The next question, which would pose before us is, what to be construed as pending. The expression “pending” would mean that where some proceeding has been initiated by the ld. Assessing Officer. We will amplify this proposition while taking note of the judgment of the Hon’ble Delhi High Court as well as of the Hon’ble Supreme Court on this aspect. In other words, if no proceedings are pending, namely in a regular assessment year, the time limit to issue notice under section 143(2) expired and no reassessment proceeding is pending, then it is to be construed that assessment in that year is completed. In such situation, it has been laid down that those assessments would not be tinkered with unless incriminating material exhibiting the escapement of income unearthed found during the course of search. 43

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Thus the power given by the 1st proviso to assess income for six assessment years has to be confined to the undisclosed income unearthed during the course of search by way of a seized material or documents etc.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) previous year relevant to the AY in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such A.Y.s will have to be computed by the AOs as afresh exercise. (iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although Section 153 A 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 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." (v) 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 completed assessment proceedings. (vi) 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 45

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) on the basis of the findings of the search and any other material existing or brought on the record of the AO. (vi) Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) undisclosed income unearthed during the search to imply incriminating material, as against the finding of the Delhi High Court in Filatex India Ltd. v. CIT- IV (2015) 229 Taxman 555 wherein it is held that during the assessment u/s 153A additions need not be restricted or limited to incriminating material found during the course of search?" 32. Hon'ble Court concurred with the decision of Hon'ble Delhi High Court. We deem it appropriate to take note of relevant part of the decision, which reads as under: "16. Section 153A bears the heading "Assessment in case of search or requisition". It is well settled as held by the Supreme Court in a catena of decisions that the heading of the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the legislature is clear viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment should be connected with something found during the search or requisition, viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153 A of the Act, in every case where there is a search or requisition, the Assessing Officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. 47

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) In case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) (supra), the earlier assessment would have to be reiterated. In case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147 of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) given by Shri Rohit P. Modi and Smt. Pareshaben K. Modi regarding the on-money received, copies of the assessment orders in case of said persons and also requested the Assessing Officer to permit him to cross-examine the said persons. The Assessing Officer issued summons to the said persons, however, they were out of station and it was not known as to when they would return. In this backdrop, without affording any opportunity to the assessee to cross-examine the said persons, the Assessing Officer made the addition in question. 18. In this case, it is not the case of the appellant that any incriminating material in respect of the assessment year under consideration was found during the course of search. At the relevant time when the notice came to be issued under section 153A of the Act, the assessee filed its return of income. Much later, at the fag end of the period within which the order under section 153A of the Act was to be made, in other words, when the limit for framing the assessment as provided under section 153 was about to expire, the notice has been issued in the present case seeking to make the proposed addition of Rs.l 1,05,51,000/- on the basis of the material which was not found during the course of search, but on the basis of a statement of another person. In the opinion of this court, in a case like the present one, where an assessment has been framed earlier and no assessment or reassessment was pending on the date of initiation of search under section 132 or making of requisition under section 132A, while computing the total income of the assessee under section 153A of the Act, additions or disallowances can be made only on the basis of the incriminating material found during the search or requisition. In the present case, it is an admitted position that no incriminating material was found during the course of search, however, it is on the basis of some 49

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) material collected by the Assessing Officer much subsequent to the search, that the impugned additions came to be made. 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of all the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as, the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, an assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai Steel (India), Jodhpur (supra). Besides, as rightly pointed out by the learned counsel for the respondent, the controversy involved in the present case stands concluded by the decision of this court in the case of Jayaben Ratilal Sorathia (supra) wherein it has been held that while it cannot be disputed that considering section 153A of the Act, the Assessing Officer can reopen and/or assess the return with respect to six preceding years; however, there must be some incriminating material available with the Assessing Officer with respect to the sale transactions in the particular assessment year.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 20. For the foregoing reasons, it is not possible to state that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to a question of law, much less, a substantial question of law, warranting interference. The appeal, therefore, fails and is, accordingly, dismissed."

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) per the second proviso to Section 153A, the assessment or re-assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no 52

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfillment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction 53

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or re- writing the said provisions, which is not permissible under the law. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfillment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No Costs”.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) carried out the searches and compiled the report to us. It appears that instead of examining analytically, he pasted that report as it is in the assessment order. The ld. Assessing Officer was also aware. He has not possessed any material. Therefore, he tried to collect the material by issuing a commission to the Investigation Wing, Kolkata and apprising them that basically during the course of search, nothing has unearthed. Therefore, DIT Investigation should again call the persons, who are alleged as an entry operator and record their statements afresh confronting the present assessees. He also requested them to provide an opportunity to these assessees for cross examination. The copy of the commission letter has been reproduced by the ld. CIT(Appeals) on pages no. 115 to 118 of the impugned order. We take note of the relevant part in the concluding paragraph of this letter:- “Further, the assessee has stated that no incriminating document relating to such share transaction was found/seized indicating such transactions to be bogus. The undersigned has examined the seized document and Harddisk but could not identify or draw any inference in contrary to the contention of the assessee”. In the light of above, I do hereby issue the commission under section 131(1)(d) read with Code of Civil Procedure 1908 to re-examine and cross examine all the family members of Nemichand 56

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Bamalwa & Sons, who have claimed such bogus long-term capital gains and the concerned Directors, the entry operators, the brokers. ACIT, Circle-1, Dibrugarh”.

This letter was replied by the Office of the Deputy Director (Investigation), Kolkata vide letter dated 11.11.2019 and he expressed his apprehension about going through examination, re-examination. All these exercises were left upon to the ld. Assessing Officer, who did not carry out any such exercise. Thus there was no documentary evidence found during the course of search, which can demonstrate that these transactions were bogus.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) mandatory requirements for amalgamation. No objection was raised by the Revenue Department.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) judgment of ITAT, Ahmedabad Bench in the case of Dr. Mansukh Kanjibhai Vs. ACIT, CC-2, Baroda in ITA No. 2878 to 2880/Ahd/2007 has been relied upon. Similarly he placed on record the judgment of the Hon’ble Orissa High Court in the case of CIT Vs. Sikhya ‘O’ Anusandhan in ITA Nos. 117 to 123 of 2011. He placed on record copies of both these orders in paper book no. 18 at pages 105-109. On the strength of these details, it was contended that the assessment order in the case of this assessee ought to have been quashed by the ld. CIT(Appeals).

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) the Hon’ble Orissa High Court as well as concurring with the view taken by ITAT, Ahmedabad Bench, we are of the view that this assessment order is not sustainable and accordingly quashed.

“RE: ASSESSEES’ CROSS OBJECTIONS – COMMON GROUND IN 16 CASES - GROUND NO. 1- NON-ADJUDICATION OF GROUNDS RAISED ON MERITS BY THE LD. CIT(A)

3.1.The Assessees herein have urged the following common ground vide their respective Cross-Objections filed before this Hon’ble Tribunal:

“ 1. That on the facts and circumstances of the case, the Ld. CIT(A), while correctly deleting the impugned addition of Rs. ……. (i.e., the impugned addition in each case) made by the Ld. A.O in assessments framed u/s 153A of the Income-tax Act, 1961 (‘the Act’) on jurisdictional/legal grounds, erred in not adjudicating the remaining grounds challenging the merits of the impugned addition made u/s 68 of the Act on account of alleged bogus LTCG claimed as exempt u/s 10(38) of the Act.” 3.1 As discussed earlier, the Ld. CIT(A), while allowing the Assessees’ Appeals on jurisdictional/legal grounds, has chosen not to adjudicate the grounds of appeal raised by the Assessees challenging the merits of 60

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) additions made u/s 68 of the Act under the particular facts and circumstances of the Assessees’ case(s). Hence the present Cross- Objections. 3.2 Since the impugned addition has been made u/s 68, it shall be relevant to quote the provisions of section 68 of the Act:

“68. Cash credits.--Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.” 3.3 Simply put, section 68 of the Income-tax Act, 1961 is attracted where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory. Under the provisions of section 68 of the Act, the primary onus to explain the nature and source of the amount so found credited is on the assessee. Section 68 of the Act has received considerable judicial attention through various pronouncements of the Courts. It is now well settled that u/s 68 of the Act, the assessee is required to prove identity of the creditor, genuineness of the transaction, and credit worthiness of the creditor [see CIT Vs. Oasis Hospitalities P. Ltd. (2011) 333 ITR 119 (Del)]. Once the Assessee proves the ingredients of Sec.68 by establishing the identity, genuineness and creditworthiness of the transactions involved, then the onus of the Assessee u/s 101 r/w Sec.102 and Sec.106 of the Evidence Act, 1872 stands discharged and the said burden thus shifts back to the Assessing Officer, to effectively rebut the evidences brought on record by the Assessee and show that the transaction undertaken is ingenuine in nature. Reference in this connection is craved to the following judgments wherein it has been consistently held that where the assessee leads evidence to prove the identity and creditworthiness of the creditors and furnishes confirmation letters indicating their PAN, the onus placed on the assessee stands discharged and the said burden shifts back to the AO:

(i) CIT-IV v. Dwarkadhish Investment (P.) Ltd, [2010] 194 Taxman 43 (Delhi) (ii) The Pr. CIT, Central-1 v. Adamine Construction (P.) Ltd., [2018] 99 taxmann.com 45 (SC) 61

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (iii) CIT Vs. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC)

3.4 The Law on Section 68 fixes the burden of proof on the Assessee to prove the nature and source of credit appearing in his books. If the Assessee is able to discharge the initial onus by submitting evidence to prove the requisite ingredients of section 68, then the onus will shift to the Revenue to put material on record to the effect that in spite of identity of the creditor and its creditworthiness being proved the transaction is still not genuine. Where the Assesses places on record sufficient evidence to discharge his initial onus u/s 68, the Revenue is required to place on record cogent and adequate material to prove that despite the entry being in the name of a third party, the same still represents the income of the Assessee from a suppressed source before making an addition u/s 68.

3.5 In the instant case, admittedly, the impugned share transactions were carried out via regular banking channels over recognized stock exchange. It is a matter of common knowledge that Stock exchange trading is screen based where the identities of the buyers and sellers are not known. Only prices offered along with quantity are shown. Anybody who bids for purchase or sale of those shares can enter into trading. In an electronic trading platform, whenever a person buys or sells shares, neither the identity of the other party nor the timing at which the shares are purchased or sold by the other party are known beforehand unless it is a synchronized trading. The Ld. A.O, in the instant case(s), has failed to prove, with cogent evidence that the impugned share transactions were conducted via synchronized trading and that the Assessees were a party to it. The Assessees sold the impugned shares through recognized share broker registered with the SEBI on online trading platform of the Calcutta Stock Exchange. The payments were settled by the settlement mechanism of the stock exchange to the broker after the payment of the securities transaction tax. The money came into the bank account of the broker through settlement mechanism of stock exchange. The broker in turn made payment to the Assessees. In support of his claim, the Assessees submitted the following documentary evidences: (i) Copy of Computation of Income (ii) Balance Sheet with annexure (iii) Calculation of LTCG (iv) Bank Statements for the period.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (v) Bills of purchase of shares of Twenty First Century( India) Ltd. (TFCIL)./Jackson Investment Ltd.(JIL) (as the case may be) (vi) Demat transaction statement of a/c reflecting the transactions (vii) Contract Notes for sale of shares (viii) Ledger account of Broker

The above documentary evidences in respect of Assessees specified against Sl. Nos. 1 to 16 of Table 1 are also enclosed in PB-1 to PB- 16filed before this Hon’ble Tribunal.

3.6 It is thus seen that in course of the assessment proceedings, the Assessees submitted all relevant documentary evidences conclusively establishing the requisite ingredients of section 68 before the Ld. A.O. The Assessees earnestly submitted before the Ld. A.O that they did not know any of the alleged entry operators who had allegedly rigged the share prices. They were not involved in any LTCG scam as allegedly unearthed by the Investigation Wing. In India, S.E.B.I looks into the irregular movement in share prices and the Assessees were not warned against any such unusual increase in share prices at the time when the impugned transactions were being carried out by them. Even if TFCIL/JIL was a penny stock company, the same did not invalidate the genuineness of the transactions carried out via perfectly legal channels by the Assessees. The A.O, in making the impugned addition, acted merely on suspicion and surmises and failed to produce any evidence whatsoever to prove that the proceeds received against sale of shares represented the Assessees’ undisclosed income from other sources or that the transactions as claimed by the Assessees were sham.

3.7 Thus, the Assessees discharged the primary onus cast upon them u/s 68 of explaining the nature and source of sums found credited in their respective bank accounts viz. sale proceeds of shares of TFCIL/JIL (as the case may be) by furnishing detailed documentary evidences in support thereof. The onus thereafter shifted to the Revenue to dislodge the authenticity of evidences filed by the Assessees by bringing on record cogent materials/ evidences. The A.O in the instant case failed to produce any material/ evidence to dislodge or controvert the genuineness of the conclusive documentary evidences produced by the Assessees in support of their claim. The additions made by the A.O u/s 68 therefore are heavily guided by surmises, conjecture and presumptions and have no legs to stand on and hence deserve to be quashed.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023)

3.8 On a bare perusal of the Assessment Order, it is explicit that in making the impugned addition, the Ld. A.O has predominantly relied upon alleged report of the Investigation Wing and also the brief result of such investigation carried out by the Directorate of Investigation, Kolkata. The A.O has raised inferences about rigging of prices of shares through alleged circular trading between connected parties without bringing any evidence on record in respect of the Assessees’ transactions. From the Assessment Order(s), it is seen that the Ld. A.O has mentioned that investigation was carried out on 84 penny stock shares quoted in BSE whereas the script in which the Assessees traded i.e., Twenty First Century (India) Ltd. (apart from the case of Sri Bachh Raj Bamalwa for A.Y. 2015-16 which involves the scrip of Jackson Investment Ltd.) was listed at the Calcutta Stock Exchange. Therefore, the said Report cannot be used in evidence against the Assessees. It is noteworthy that apart from making a general reference to the so-called report of the Investigation Wing, the Ld. A.O has desperately failed to bring on record any part of the said report wherein the Assessees have been named or implicated. The Ld. A.O has failed to bring on record any iota of evidence to prove that the transactions carried out by the Assessees were not genuine or that the documents furnished in support thereof were not authentic. No copy of the alleged report of the Investigation Wing was provided to the Assessees although the same was used unilaterally for fastening exorbitant liability on the Assessees.

3.9 Apart from the report of the Investigation Wing, the Ld. A.O has also made vague reference to certain statements of alleged entry providers, alleged dummy directors, brokers etc. recorded by the Investigation Wing. However, admittedly copies of such statements were never provided to the Assessees for rebuttal, thus violating the principles of natural justice. The said persons were never examined by the Ld. A.O in course of the assessment proceedings. No opportunity of cross- examination of the said persons was offered to the Assessees despite repeated requests during the course of the assessment proceedings u/s 153A of the Act. As stated earlier, the Ld. A.O issuedCommission issued u/s 131(1)(d) of the Act to the DDIT(Inv.) Kolkata vide Letter No. 272 dated 18.10.2019 requesting the Ld. DDIT(Inv) to re-examine and cross- examine all members of the Bamalwa Group and the concerned directors, entry providers, brokers. Further, vide the said letter the Ld. A.O categorically admitted that there was no incriminating material in respect of the claim of LTCG. In response, the Ld. DDIT(Inv), Kolkata 64

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) vide Letter No. 5264 Dated 11.11.2019 returned back the Commission issued to him by the Ld. A.O u/s 131(1)(d) of the Act and rather informed the Ld. A.O to conduct the necessary cross-examination. The Ld. A.O, however, did not take any further steps to comply with his own commission. Thus, the Assessees were not provided any cross- examination of the concerned Directors, Entry Operators and the Brokers. As discussed earlier, statements recorded behind the back of the Assessee could not unilaterally be used by the A.O. without testing the same on the anvil of cross examination as is now the settled law per the judgment in Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (supra).

3.10 It will not be out of place to reiterate here that the brokers, Sri Bikash Sureka and Sri Ashok Kayan vide their respective Affidavits dated 28.11.2017 and 30.11.2017 retracted from their earlier statements claiming them to be false. However, the said fact does not find a mention in the Assessment Order. Under the given circumstances, such retracted statements cannot be used in evidence against the Assessees. Moreover, the said brokers also confirmed the genuineness of the impugned transactions vide their respective responses to the notices issued by the Ld. A.O u/s 133(6) of the Act alongwith detailed documentary evidences in support thereof. They also offered to appear personally before the Ld. A.O for confirmation of the impugned transactions. However, for reasons best known to the Ld. A.O, the said persons were never summoned by the Ld. A.O.

3.11 The Ld. A.O. has also commented on the alleged abnormal price movement in the shares of TwentyFirst Century (India) Ltd. The same was duly explained by the Assessees before the Ld. CIT(A) with the aid of analysis of price movement of other shares in the following words:

“2. The A.O. had also referred to his examination of price movement in the shares of Twenty First Century (India) Ltd.. The A.O. tried to give a color of ingenuity to the increase in prices of shares of Twenty First Century (India) Ltd. by trying to correlate it with the low income and fundamentals of the company. In his order the learnt A.O. has stated that “Perusal of the financial status of Twenty First Century Ltd also reveals that during the FY 2009-10 to 2015-16,the company has disclosed NIL income”. The price of shares of companies in the stock market are not always in correlation to its financial performances which was suggested by the A.O. Morever the gains which arose after the sale 65

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) of the shares was not impossible. The Appellant Assessee states that the A.O. failed to appreciate that the reasons for investing in a particular security are not always bound by fundamentals. In fact, to say that one must only invest in securities of companies, which are “blue chip”, “with known directors having significant net worth” could not be further from the truth. Investment in a company with weak fundamentals can be for several reasons such as professional advice, reasonable price per share, a foreseeable turnaround, or even based on past pricing and volume patterns. Moreover, from the point of view of a lay man, investing in a stock with a low price per share, as in this case, is affordable and often in consonance with the quantum of his investment. Investing in such companies is risky definitely, but by no means illegal. In this respect, the principles of finance clearly divulge that risk and reward goes hand in hand and thus, it is not unknown for such high-risk investments to yield higher returns than normal. The A.O. raised inferences about rigging of prices of shares through alleged circular trading between connected parties without bringing any credible legal evidence in respect of assessee’s transaction. Further, the A.O. failed to appreciate that there is considerable changes both upwards and downwards in prices of various scripts in short span of time. The Appellant submits the following chart, by way of example, to say and submit that the steep rise or fall in the price of each script cannot be held to be the result of price rigging or other manipulations and the inference drawn by the A.O. against the assessee is preserve, arbitrary and therefore inadmissible.

ITA Nos. 51 to 66/GAU/2023 ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (in ITA Nos. 51 to 66/GAU/2023)

From the aforesaid two charts of different period it could be seen that, From the aforesaid two charts of different period it could be seen that, From the aforesaid two charts of different period it could be seen that, super normal returns have been delivered by not only fundamentally super normal returns have been delivered by not only fundamentally super normal returns have been delivered by not only fundamentally strong companies such as MRF Ltd., Page Industries Ltd., Eicher Motors strong companies such as MRF Ltd., Page Industries Ltd., Eicher Motors strong companies such as MRF Ltd., Page Industries Ltd., Eicher Motors Ltd. and La OpalaRg Ltd. but also by companie Ltd. and La OpalaRg Ltd. but also by companies with unexplainedly s with unexplainedly “weak fundamentals” such as SRK Industries Ltd and Surabhi “weak fundamentals” such as SRK Industries Ltd and Surabhi “weak fundamentals” such as SRK Industries Ltd and Surabhi Chemicals. On the other hand, it must also be noted that some of the Chemicals. On the other hand, it must also be noted that some of the Chemicals. On the other hand, it must also be noted that some of the otherwise fundamentally strong companies have underperformed the otherwise fundamentally strong companies have underperformed the otherwise fundamentally strong companies have underperformed the index by a huge margin such as MMTC, Suzlo index by a huge margin such as MMTC, Suzlon Energy and Steel n Energy and Steel Authority of India Ltd. It can also be seen that the price of Twenty First Authority of India Ltd. It can also be seen that the price of Twenty First Authority of India Ltd. It can also be seen that the price of Twenty First Century (India) Ltd. has not risen abruptly but the assessee has gained Century (India) Ltd. has not risen abruptly but the assessee has gained Century (India) Ltd. has not risen abruptly but the assessee has gained due to amalgamation pursuant to sanction of Honorable Calcutta High due to amalgamation pursuant to sanction of Honorable Calcutta High due to amalgamation pursuant to sanction of Honorable Calcutta High Court. Therefore, on t Court. Therefore, on the basis of fluctuations of prices of shares as seen he basis of fluctuations of prices of shares as seen in the chart above, it cannot be held that the market rates have been in the chart above, it cannot be held that the market rates have been in the chart above, it cannot be held that the market rates have been manipulated and/or rigged. The price performances of individual stocks manipulated and/or rigged. The price performances of individual stocks manipulated and/or rigged. The price performances of individual stocks are often far distinct from the broad market index depending on their are often far distinct from the broad market index depending o are often far distinct from the broad market index depending o individual betas, i.e., individual risk/volatility of a particular stock in individual betas, i.e., individual risk/volatility of a particular stock in individual betas, i.e., individual risk/volatility of a particular stock in comparison to the market as a whole. In view of the collective data as comparison to the market as a whole. In view of the collective data as comparison to the market as a whole. In view of the collective data as

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) set out above, it seems an ordinary fact that the assessee’s investment in Twenty First Century (India) Ltd. yielded the returns it did. The “steep rise” as alleged by the A.O. only seems “rigged” when the script is unjustly viewed in isolation, which in itself raises the question of discrimination and bias. The returns delivered by Twenty First Century (India) Ltd. when analyzed against the larger unbiased backdrop, will appear to be “real” and as well as “apparent”. The so called examination and/or analysis of the A.O. only reveal his attempt of “coloring” a legitimate transaction. It is also significant to note that stock price performance is not always governed by the underlying fundamentals. The data set out in the table above divulges that Thus, to conclude it can be safely said that price movement/performance cannot be held as any justifiable ground to comment on the fundamentals of a company and thus, certainly superior price performance cannot be held as a justifiable ground for accusing the assessee of rigging the prices. Moreover, the mere fact that the shares were sold at a high price cannot be termed as conclusive proof or ground for an allegation that the appellant assessee converted some unaccounted money through accommodation entries, as had been alleged by the A.O. In fact, any suspicion, however so ever strong, that the Department may have, cannot take place of proof as clearly laid down by the Honorable Supreme Court in the case of Umacharan Shah & Bros. vs. CIT [1959] 37 ITR 271.” 3.12 Further, insofar as the scrip of Jackson Investment Ltd. in the case of Sri Bachh Raj Bamalwa for A.Y. 2015-16 (Assessee at Sl. No. 4 supra) is concerned, the following further submissions are made in addition to the above:

(i) That, the Ld. A.O, in making the impugned addition, has relied upon the purported statements of promoters, alleged dummy directors etc. of TFCIL. The same are not relevant to the case of the above Assessee. The Ld. A.O has not brought on record any statement pertaining to Jackson Investments Ltd. Further, the impugned shares were sold through HDFC Securities Ltd. and not through the brokers - Sri Ashok Kayan or Sri Bikash Sureka. Therefore, the statements of Sri AskhokKayan and Sri Bikash Sureka are not relevant to the case of Sri Bachh Raj Bamalwa for A.Y. 2015-16. The broker in the said case, i.e., HDFC Securities was never examined either by the Investigation Wing or by the 68

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Ld. A.O. No investigation was carried out in the case of the said broker or in the case of Jackson Investments Ltd. Thus, insofar as the case of Sri Bachh Raj Bamalwa for A.Y. 2015-16 is concerned, the Ld. A.O has not brought on record any evidence whatsoever against the impugned transactions in the scrip of Jackson Investment Ltd. (ii) That the transactions in the shares of Jackson Investment Ltd. have been considered as bogus by the Ld. A.O on partial and inappropriate consideration of the financials of the said company. From the financial statements of Jackson Investment Ltd. for the years ended 31.03.2013 & 31.03.2014 (enclosed at pages 167- 168 of PB-4), it is seen that the turnover of the said company was approximately 13.20 crores, 35.47 cores and 20.09 crores for the year ended 31.03.2014, 31.03.2013 and 31.03.2012 respectively. Therefore, the contention of the Ld. A.O that the said company did not have a sound financial standing ismisplaced. (iii) That the share prices of the said company were not manipulated. The shares were traded in a particular range during the relevant period as evident from the list of share prices, volumes and other details of Jackson Investment Ltd. from June 2014 to 1st December, 2015 (enclosed at pages 169-175 of PB-4) (iv) That the allegation of the Ld. A.O that the Assessee had earned huge gains within a short span of timeis factually incorrect inasmuch as the impugned investments were made in the years 2011 and 2012 (as evident from the purchase bill enclosed at pages 78-79 of PB-4)and the sale was made during the A.Y 2015- 16 (as evident from the contract notes enclosed at pages 80-129 of PB-4), therefore the gains were made after holding period of more than three years which cannot not be considered as a short period. The Assessee had purchased the shares of Jackson InvestmentLimited when it was traded in Calcutta Stock Exchange the script was later delisted andagain listed in Bombay Stock Exchange. The listing price of the company in BSE was Rs 310 and the Assessee had soldthe same at a price of Rs.308 (approx). Thus, the Assessee had earned handsome profit due to the listing benefit of shares and not due to manipulation or riggingof price. 3.13 The Ld. A.O has further averred that the case has to be examined in light of principle of “Preponderance of Probabilities” and relied upon the judgments of the Hon’ble Supreme Court in the cases of Sumati Dayal 69

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Vs. CIT (1995) 214 ITR 801 (SC) and CIT Vs. Durga Prasad More (1971) 82 ITR 540 (SC). In this connection, it is submitted that the principles of preponderance of probabilities will come into play only when the basic test of direct and factual evidence fails. In the instant case, there is no ground whatsoever to doubt the direct and factual evidences furnished by the Assessees and accordingly, the question of relying upon circumstantial evidence and theory of preponderance of probability does not arise. The so-called evidences relied upon by the Ld. A.O viz. uncorroborated statements of third parties which were not made available for cross examination to the Assessees (and thus have no evidentiary/referral value to the Assessees’case) are not admissible as evidence for the purpose of making assessments u/s 153A of the Act.

3.14 Reference in this connection is craved to the judgment of the Hon’ble Delhi High Court in the case of PCIT-12 Vs. Smt. Krishna Devi [2021] 126 taxmann.com 80 (Delhi), wherein the Hon’ble Court under closely similar facts dismissed the reliance placed by the Revenue on the theory of preponderance of probabilities and differentiated the judgments rendered by the Hon’ble Apex Court in the cases of Suman Poddar & Sumati Dayal in the following words:

“11. On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two years, which is not supported by the financials. On an analysis of the data obtained from the websites, the AO observes that the quantum leap in the share price is not justified; the trade pattern of the aforesaid company did not move along with the sensex; and the financials of the company did not show any reason for the extraordinary performance of its stock. We have nothing adverse to comment on the above analysis, but are concerned with the axiomatic conclusion drawn by the AO that the Respondent had entered into an agreement to convert unaccounted money by claiming fictitious LTCG, which is exempt under section 10(38), in a preplanned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income-tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of providing entries of bogus LTCG. However, the reliance placed on the report, without further 70

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent' unaccounted money, but he did not dig deeper. Notices issued under sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged 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 shares were dematerialized and the sales have been routed from de-mat account and the consideration has been received through banking channels." The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain's submissions relating to the startling spike in the share price and other factors may be enough to show circumstances that might create suspicion; however the Court has to decide an issue on the basis of evidence and proof, and not on suspicion alone. The theory of human behavior and preponderance of probabilities cannot be cited as a 71

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) basis to turn a blind eye to the evidence produced by the Respondent. With regard to the claim that observations made by the CIT(A) were in conflict with the Impugned Order, we may only note that the said observations are general in nature and later in the order, the CIT(A) itself notes that the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar case (supra) and Sumati Dayal case (supra) is of no assistance. Upon examining the judgment of Suman Poddar case (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of Sumati Dayal (supra) too turns on its 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.” [emphasis supplied]

Further, the Hon’ble Delhi High Court has also quoted and upheld the following observations of the Hon’ble ITAT in the said case: "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 any independent and separate enquiry in the case of the assessee. Even, the statement recorded by the Investigation Wing has not been got confirmed or corroborated by the person during the assessment proceedings.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 23. It is provided u/s. 142 (2) of the Act that for the purpose of obtaining full information in respect of income or loss of any person, the Assessing Officer may make such enquiry as he considers necessary. In our considered view the Assessing Officer ought to have conducted a separate and independent enquiry and any information received from the Investigation Wing is required to be corroborated and affirm during the assessment by the Assessing Officer by examining the concerned persons who can affirm the statements already recorded by any other authority of the department.Facts narrated above clearly show that the Assessing Officer has not made any enquiry and the entire assessment order and the order of the first Appellate Authority are devoid of any such enquiry. 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. 30. Considering the vortex of evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by provisions of section 68 of the Act as mentioned elsewhere, such discharge of onus is purely a question of fact and therefore the judicial decisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand."

3.15 Thus, the Hon’ble Delhi High Court has held in unerring terms that Investigation Wing’s Report and pre-existing statements recorded by Investigation Wing cannot be the sole basis of assessment without conducting proper enquiry and examination during the assessment proceedings itself. Drawing support from the above cited judgment rendered on closely similar facts vis-à-vis the case(s) at hand, it is submitted that the impugned additions made in the instant case solely on the basis of general report of the Investigation Wing and certain third-party statements recorded by the Investigation Wing u/s 131 without examination and cross examination of such persons by the Ld. A.O in course of the assessment proceedings in the case of the

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Assessees are impermissible and unstainable in law and thus deserve to be deleted.

3.16 Further, insofar as the Ld. A.O’s reliance on the Third SIT Report on black money and the reports of the S.E.B.I is concerned, it is vehemently submitted that these have no bearing insofar as the income- tax proceedings of the Assessees are concerned. Admittedly, the S.E.B.I has not started any independent enquiry in the particular case of the Assessees. In the entire assessment order, the Ld. A.O has only spoken about the general modus operandi and the general reports/ order of the S.E.B.I without carrying out any independent enquiry to prove that the Assessees herein had not made any actual sales or any unaccounted money had been routed through this channel by the Assessees. The reports of the S.E.B.I do not prove anything adverse, whatsoever, in the case of the Assessees. Therefore, no addition can be made in the case of the Assessees merely by resorting to such reports/ orders of the S.E.B.I. wherein the names of the Assessees have not even been implicated. Reliance in this connection is placed on the following cases: (i) CIT Vs. Smt. PushpaMalpani (2012) 20 taxmann.com 597 (Raj HC) (ii) CIT v. Shreyashi Ganguli, (ITAT No.196/2012, dt.05.09.2012, Calcutta H.C.) (iii) Noorjaahan T. Mujahid Vs. ACIT (2014) 40 CCH 165 (Mum ITAT) (iv) Arun Kumar Agarwal (HUF) &Ors (order dt. 13.07.2012 in Tax Appeal No. 4 of 2011 of Jharkhand HC) (v) ITO, Ward-15(2)(1), Mumbai v.Iraisaa Hotels (P.) Ltd. ([2018] 97 taxmann.com 623 (Mumbai - Trib.) (vi) ITO Vs. Arvind Kumar Jain HUF (2017) 51 CCH 281 (Mum Trib) 3.17 The Ld. A.O has further alleged that the impugned transactions carried out by the Assessees were colorable device to evade tax. Reliance in this connection has been placed by the Ld. A.O on the judgment of the Hon’ble Supreme Court in the case of Mc. Dowell & Co. Ltd (154 ITR 148) in support of the proposition that a sham or make-believe transaction or colorable device cannot be part of tax planning.

3.18 In this regard, it is humbly submitted that the Ld. A.O in the instant case, apart from relying on suspicion, surmises, conjecture and general reports of S.E.B.I/ Investigation Wing regarding general modus operandi adopted by few promoters/ operators/ beneficiaries to create bogus LTCG in the shares of the impugned company, has nothing concrete whatsoever to conclusively establish that the transactions in

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) the impugned shares carried on by the Assessees were sham or make believe. The aforesaid judgment of the Hon’ble Supreme Court would apply only in cases where the impugned transactions were proved to be sham or make believe. In the instant case however, the Ld. A.O has failed to bring on record any material whatsoever to establish a clear- cut case against the Assessees. Therefore, the judgment of the Hon’ble Supreme Court in the case of Mc. Dowell & Co. Ltd. (supra), per se, is not applicable to the facts of the present case.

3.19 It will not be out of place here to refer to the judgment rendered by the Hon’ble Supreme Court in the case of Union of India V. AzadiBachaoAndolan [2003] 263 ITR 0706 which to a very large extent watered down the ratio laid down by the Apex Court in erstwhile case of Mc. Dowell and Co. Ltd. V. Commercial Tax Officer [1985] 154 ITR 148. In the said case of UOI Vs. AzadiBachaoAndolan, the Hon’ble Supreme Court observed as under: “In our judgment, from Westminster’s case [1936] AC 1 (HL) ; 19 TC 490 to Bank of Chettinad’s case [1940] 8 ITR 522 (PC) to Mathuram’s case [1999] 8 SCC 667, despite the hiccups of McDowell’s case [1985] 154 ITR 148 (SC), the law has remained the same. We are unable to agree with the submission that an act which is otherwise valid in law can be treated as non est merely on the basis of some underlying motive supposedly resulting in some economic detriment or prejudice to the national interests, as perceived by the respondents.” 3.20 Thus, the Hon’ble Supreme Court in the case of UOI Vs. AzadiBachaoAndolan (supra) has held in explicit terms that a valid act cannot be treated as non-est simply because it results in loss of Revenue to the State or some tax advantage to the assessee. An assessee is entitled to arrange his affairs in a manner that it would attract lower taxes provided he can do the same within the four corners of law. Such valid acts, although attracting lower taxes are not always required to be viewed with suspicion or to be treated as a device for avoidance of tax. In the instant case also, the impugned transactions were carried out by the Assessees within the four corners of law. The Ld. A.O, apart from relying on suspicion, surmises and conjectures, has nothing concrete whatsoever to establish a case against the Assessees. He has desperately failed to prove, by bringing on record some cogent evidence that the impugned transactions were sham or make-believe. The

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Assessees, on the other hand have submitted conclusive documentary evidences in support of their claim which the Ld. A.O has failed to controvert. Thus, the reliance placed by the Ld. A.O on the judgment of the Hon’ble Apex Court in the case of Mc. Dowell & Co. Ltd. does not serve any purpose.

3.21 Next the Ld. A.O has placed reliance on the judgment rendered by the Hon’ble Mumbai ITAT in the case of ITO v. Shamin M Bharwani (2016) (69 Taxmann.co m 65). On a perusal of the said judgment, Your Honours will appreciate that the said judgment was passed on completely disparate set of facts and as such is not applicable to the facts of the present case. In the case of Shamim M Bharwani (supra), the Hon‘ble ITAT recorded a finding of fact that the purchase was through a back dated contract note in cash and there was no trail. The assessee therein failed to explain why the shares were purchased in cash, the source of which was ascribed to cash-in-hand and not to any contemporaneous evidence as cash withdrawn from bank on that or nearby dates. The assessee therein failed to explain how the cash was transmitted from Mumbai, where the assessee was resident to Kolkata where the purchase was made and the broker was located. Under the given facts, the Hon’ble ITAT found the transaction suspicious and added the amount in question to the taxable income of the assessee u/s 68. The facts leading to suspicion in the case of Shamin M Bharwani are clearly absent in the instant case. The Assessees in the instant case have furnished conclusive documentary evidence in support of the LTCG claimed by them and the impugned transactions in shares were through banking channel. Thus, the judgment rendered in the said case is inconsequential to the facts of the present case. Even otherwise, there are umpteen number of cases wherein the Hon’ble Courts & Tribunals have deleted additions made u/s 68 in respect of LTCG earned on alleged penny stocks in view of the cogent documentary evidences furnished by the assessees which remained uncontroverted by the Department -as discussed infra.

3.22 Kind attention is invited to the judgment dated 07.05.2021 rendered by the Hon’ble Kolkata Tribunal on strikingly similar facts in the case of Anita Singhania, Kolkata Vs. D.C.I.T, CC-2(3), Kolkata (in IT(SS) A No. 45/Kol/2019) (copy of judgment enclosed at pages 60-83 of PB-18). In the said case, the assessee therein had claimed LTCG of Rs. 4.7 crores on the sale of shares of Twenty First Century (India) Ltd. in her return of 76

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) income for the impugned A.Y. 2012-13. A search and seizure operation was conducted in the case of the said assessee on 03.02.2017 wherein apart from seizure of documents forming part of official/regular records, no incriminating material was found. Similar to the case(s) at hand, the Ld. A.O in the said case also relied upon the Investigation Wing Report and statements of alleged entry operators such as Sri Anil Kumar Khemka to allege that that assessee therein had resorted to the scheme of booking bogus LTCG and added the same u/s 68 in assessment completed u/s 153A of the Act. However, copies of the Investigation Wing Report or the purported statements were not provided to the assessee and no opportunity of cross examination was afforded to her. On the said facts, the Hon’ble Tribunal has deleted the impugned addition made u/s 68 based on the following reasoning: (i) That no addition is warranted in respect of unabated assessment year in the absence of incriminating material being found in course of search in the assessee’s case; statements recorded during post search operation do not constitute incriminating material: The relevant excerpts from the judgment are reproduced below:

“6.4. An examination of this document demonstrates that they are not incriminating material. These are official documents forming part of the official record and books of account of the assessee. The assessee has relied on these documents to prove the genuineness of the transactions. Thus the AO as well as the ld. CIT(A) have erred in holding that these papers are incriminating materials. The Assessing Officer relies on certain statements recorded from persons during post search operation. Material collected during post search operation cannot be considered as incriminating material found or seized during the course of search. 6.5. Now we consider the legal position on the issue whether an addition can be made an assessment order passed u/s 153A read with section 143(3) of the Act, in the case of unabated assessment, when no incriminating material was found or seized during the course of search. The ld. CIT(A) did not follow the binding judgement of the Jurisdictional High Court. Judicial discipline demands that the proposition of law laid down by the Hon'ble Jurisdictional High Court has to be followed by the authorities falling within Jurisdictional of the Hon'ble High Court. 6.6. The law on this issue as to whether an addition can be made in an unabated assessment u/s 153A of the Act, when there is no

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) incriminating material found is laid down by various High Courts and Benches of ITAT as follows:…………….”

(ii) That no reliance can be placed on the Reports of Investigation Wing and the purported statements without confronting the same to the assessee and providing the assessee with an opportunity of cross examination – the relevant holdings of the Hon’ble Tribunal in this regard read as under:

“6.7. Even otherwise the Assessing Officer was duly bound to furnish the copies of all the statements recorded by him in post search investigation, to the assessee and to provide an opportunity to the assessee to cross examine the persons who have made the statements, before using these statements to make additions in the case of the assessee. In this case, the statement and reports of investigation wing of the Department used by the Revenue for making the additions in the assessment was never confronted to the assessee. The law on this issue has been laid down by the Hon'ble Supreme Court in the case of KishinchandChellaram vs. CIT 125 ITR 713 (SC) where it has held that an opportunity of cross examination must be provided to the assessee. 6.10. Thus it is well settled that the Assessing Officer has to confront the assessee with the material collected behind the back of the assessee, if he chooses to use the material against the assessee and that he should provide the assessee an opportunity of cross- examination. Not having done so makes the evidence in question bad in law.”

(iii) That no addition u/s 68 in respect of the impugned LTCGis warranted where the impugned transactions have taken place on the platform of a recognized stock exchange and the assessee has furnished documentary evidences which has remained uncontroverted by the Department – the relevant observations of the Hon’ble Tribunal read as under:

“6.11. In this case, the assessee has furnished all the bills evidencing the purchase of shares, copies of contract notes of the brokers, copies of the bank accounts disclosing the transaction etc. The transactions that they have taken place through banking channels. Demat statements demonstrate that the transactions had taken place on the platform of NSE. STT has been paid on these 78

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) transactions. This proves the genuineness of its transactions. The Assessing Officer has no evidence or adverse material to disprove these transactions. Additions cannot be made based on inferences. This bench of the Tribunal has considered similar cases in the following orders: (i) Meena Devi Gupta & Others vs ACIT - ITA Nos. 4512 & 4513/Ahd/2007 (Ahmedabad ITAT). (ii) Manish Kumar Baid ITA 1236/Kol/2017 (Kolkata ITAT). (iii) Mahendra Kumar Baid ITA 1237/Kol/2017 (Kolkata ITAT). This Bench of the Tribunal came to a conclusion that in such circumstances the additions are not maintainable. 6.12. The Hon'ble Calcutta High Court has in cases having similar facts upheld the contentions of the assessee that no addition can be made……….. 7. Applying the proposition of law laid down in all the case law referred above to the facts of the case, we find that the addition in question is bad in law.”

The above judgment was upheld by the Hon’ble Calcutta High Court vide order dated 26.04.2023 in P.C.I.T, Central-1, Kolkata Vs. Smt. Anita Singhania in ITA/88/2022. Copy of the said judgment is enclosed at pages 84-85 of PB-18.

3.23 Reference is further craved to the judgment of the Hon’ble Delhi Tribunal in the case of Anupama Garg&Ors, New Delhi Vs. ITO, Ward -40(2) in ITA Nos. 5971 to 5974/Del/2018 wherein exemption u/s 10(38) in respect of LTCG claimed in the scrip of M/s. Jackson Investment Ltd. (as in the case of Sri Bachh Raj Bamalwa for A.Y. 2015-16 – at Sl. no. 4 of the captioned appeals) was disallowed and added back by the A.O u/s 68 of the Act on the basis of Report of the Investigation Wing, Kolkata, Report of SIT, purported statements of entry providers, abnormal price rise, theory of preponderance of probabilities etc. The Hon’ble Tribunal allowed the appeal of the assessee with the following observations:

“8. In the present case, the A.O. relied upon certain statements of the share brokers recorded by Investigation Wing, Kolkata to prove that they have provided accommodation entries for long term capital gains. The assessee in her statement requested that assessee may be allowed for cross-examinations of these statements. However, no cross-examination have been allowed to the assessee to cross-examine any of such share brokers. Therefore, such statements could not be admissible in evidence 79

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) against the assessee. The decisions relied upon by the Learned Counsel for the Assessee squarely apply to this proposition. I also rely upon the decision of the Hon'ble Supreme Court in the case of Kishan Chand Chelaram 125 ITR 713 (SC). Learned Counsel for the Assessee also pointed-out from the assessment order that A.O. recorded balance-sheet and P & L A/c of M/s. Jackson Investment Ltd., and their figures of income and net worth for several years to show that the said Company was declaring the profit as well as having net worth. Considering the above discussion, the decisions relied upon by the Ld. D.R. would not support the case of the Revenue. The issue is therefore, covered by the Order of ITAT, Delhi SMC Bench in the case of Shri Amar Nath Goenka, New Delhi & Others vs. The ACIT, Circle-20(1), New Delhi (supra). I, accordingly, set aside the Orders of the authorities below and delete the addition of Rs.6,14,000/- under section 68 of the I.T. Act and addition of Rs.18,420/- under section 69C of the I.T. Act towards commission. Accordingly, appeal of assessee is allowed.”

3.24 Also relevant in this regard is the recent judgment dated 12.07.2023 rendered by the Hon’ble Bombay High Court in the case of PCIT-31, Mumbai Vs. Indravadan Jain, H.U.F. in ITA No. 454 of 2018(enclosed at pages 128-131 of PB-18)In the said case, the assessee had shown sale proceeds of shares in scrip RamkrishnaFincap Ltd. (RFL) as LTCG and claimed the same as exemption u/s 10(38) of the Act. It was the A.O’s case that investigation had revealed that the scrip was a penny stock and the capital gain was held to be accommodation entries. A broker BasantPeriwal& Co. (the said broker) through whom these transactions had been affected had appeared and it was evident that the broker had indulged in price manipulation through syncronised and cross deal in RFL. SEBI had also passed an order regarding irregularities and syncronised trades carried out in the scrip of RFL by the said broker. On the said fact, the Hon’ble Bombay High Court while dismissing the appeal filed by the Department against the judgment of the Hon’ble ITAT, Mumbai Bench in the case of ITO Vs. M/s. Indravadan Jain, HUF (enclosed at pages 132-147 of PB-18) held as under: “4. The A.O. did not accept respondent’s claim of long term capital gain and added the same in respondent’s income under Section 68 of the Act. While allowing the appeal filed by respondent, the CIT[A] deleted the addition made under Section 68 of the Act. The CIT[A] has observed that the A.O. himself has stated that SEBI had conducted independent enquiry in the case of the said broker and in the scrip of

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) RFL through whom respondent had made the said transaction and it was conclusively proved that it was the said broker who had inflated the price of the said scrip in RFL. The CIT[A] also did not find anything wrong in respondent doing only one transaction with the said broker in the scrip of RFL. The CIT[A] came to the conclusion that respondent brought 3000 shares of RFL, on the floor of Kolkata Stock Exchange through registered share broker. In pursuance of purchase of shares the said broker had raised invoice and purchase price was paid by cheque and respondent’s bank account has been debited. The shares were also transferred into respondent’s Demat account where it remained for more than one year. After a period of one year the shares were sold by the said broker on various dates in the Kolkata Stock Exchange. Pursuant to sale of shares the said broker had also issued contract notes cum bill for sale and these contract notes and bills were made available during the course of appellate proceedings. On the sale of shares respondenteffected delivery of shares by way of Demat instructions slip and also received payment from Kolkata Stock Exchange. The cheque received was deposited in respondent’s bank account. In view thereof, the CIT[A] found there was no reason to add the capital gains as unexplained cash credit under Section 68 of the Act. The tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of Stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of Stock Exchange. The ITAT therefore, in our view, rightly concluded that there was no merit in the appeal.” 3.25 Further, reference is once again craved to the judgments cited at para 2.55 supra wherein under closely similar facts as in the case at hand, the Hon’ble Courts & Tribunals have deleted additions made u/s 68 in respect of LTCG earned on alleged penny stocks in assessments framed u/s 153A in respect of unabated assessment years on the ground that no incriminating material on the issue of LTCG was found in the course of search in the case of the concerned assessee.

3.26 In addition, attention is invited to the following judicial pronouncements wherein it has been uniformly opined that mere fact that sales were made in penny stock would not result in any adverse influence to hold the transactions as non-genuine - the burden cast on the assessee u/s 68 would stand discharged where the assessee furnished relevant documentary evidences to prove that the genuineness of the transactions

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) i.e. the transactions in shares were carried out through regular banking channels via a registered share broker over a recognized stock exchange at prevalent market rates; no liability could be fastened on the assessee u/s 68 unless the AO brought on record cogent evidence to dislodge the authenticity of the evidences filed by the assessee. It was uniformly held that statements recorded u/s 132(4)/131/133A of alleged entry operators, brokers, dummy directors etc. did not by themselves constitute incriminating material in the absence of corroborative evidence. Further, Revenue’s reliance on Report of Investigation Wing on Penny Stocks, abnormal price movement of stock, SIT Report, theory of preponderance of probability etc. was not held by the Hon’ble Courts and Tribunals as sufficient ground to sustain the impugned additions:

(i) PCIT (Central), Ludhiana vs. Prem Pal Gandhi passed in ITA No. 95 of 2017 (P&H HC) (ii) CIT v. Sumitra Devi , [2014] 49 taxmann.com 37 (Rajasthan HC) (iii) CIT Vs. Smt. PushpaMalpani (2012) 20 taxmann.com 597 (Raj HC) (iv) CIT vs. Vishal Holding and Capital Pvt. Ltd. (Delhi HC) order dated 9th August, 2010 upholding the order dated 30.7.2009 of the ITAT in ITA no. 1788/Del/2007 for the A.Y. 2000-2001 (v) Arun Kumar &Ors. Vs. ACIT (2018) 54 CCH 183 (Del ITAT) (2018) 54 CCH 183 (vi) AmarnathGoenka&Ors. Vs. ACIT (2018) 54 CCH 344 (Del ITAT) order dt. 12.12.2018 (vii) Meenu Goel Vs. ITO, Ward 31(1), ITA No. 6235/Del/2017 (Del ITAT) (viii) ITO Vs. Aarti Mittal (2013) 37 CCH 227 HydTrib, 149 ITD 728 (ix) Vishal Suryakant Shah &Ors Vs. ITO &Ors (2017) 49 CCH 106 (AhdTrib) (x) ITO Vs. Arvind Kumar Jain HUF (2017) 51 CCH 281 (Mum Trib) (xi) Farrah Marker Vs. Income Tax Officer (2016) 46 CCH 535 Mum Trib (xii) CIT Vs. Anirudh Narayan Agrawal (2013) 84 CCH 28 (All) (xiii) CIT Vs. Smt. Jamnadevi Agarwal &Ors (2010) 328 ITR 656 (Mum) (xiv) Kamala Devi S. Doshi&Ors Vs. ITO &Ors (2017) 50 CCH 53 Mum Trib (xv) Smt. Smita P. Patil&Ors. Vs. ACIT (2014) 159 TTJ 182 (Pune) (xvi) ACIT Vs. Kamal Kumar S. Agarwal (Indl) &Ors: (2010) 113 TTJ 818 (Nag Trib) (xvii) CIT v. ShreevashiGanguli (ITA No. 196 of 2012) (Cal HC) (xviii) CIT v. Bhagwati Prasad Agarwal in (No. 22 of 2009, dt. 29-4- 2009) (Cal HC)

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) (xix) CIT v. Lakshmangarh Estate & Trading Co. Limited in (ITA No. 270 of 1999, dt. 7-10-2013) (xx) M/s Classic Growers Ltd. vs. CIT [ITA No. 129 of 2012] (Cal HC) (xxi) CIT V. Rungta Properties Private Limited [ITA No. 105 of 2016] (Cal HC)

3.27 Kind attention is also sought to the judgment rendered by the Hon’ble Jurisdictional Tribunal, Guwahati Bench, Guwahati in ITA No 223 & 224/Gau/2017, A Y 2014-15 in the case of M/s Sandhya Mittal & M/s Saurabh Mittal (HUF), Makum Road, Tinsukia vs. ACIT, Tinsukia(order dated 12.07.2019 – copy enclosed at pages 86-104 of PB-18)wherein the Hon’ble Tribunal had an occasion to consider an identical issue. The A.O in the said case made addition in respect of LTCG claimed by the assessees therein on alleged penny stock relying general observations based on statements, theory of preponderance of probabilities, discovery of modus operandi adopted in earning alleged bogus LTCG etc. The Hon’ble Tribunal, relied upon the judgments rendered in the following cases decided by other Benches of the ITAT and the High Courtswherein under similar facts, the assessee’s appeal against the order of the A.O treating LTCG claimed by it as bogus was allowed by the Hon’ble Tribunal/Court considering the supporting evidences brought on record by the assessee: (i) BLB Cables &Conductuors (ITA No. 78 of 2017) order dated 19.06.2018 of the Hon’ble Kolkata High Court (ii) CIT Vs. Bhagwati Prasad Agarwal [ITA No. 22/Kol/2009] order dated 29.04.2009 of the Hon’ble Calcutta High Court (iii) Prem Pal Gandhi [ITA-95-2017 (O&M)] order dated 18.01.2018 of the Hon’ble P&H High Court (iv) Vivek Mehta [ITA No. 894 of 2010] order dated 14.11.2011 of the Hon’ble P&H High Court (v) Vivek Agarwal (ITA No. 292/JP/2017) order dated 06.04.2018 of the Hon’ble Jaipur ITAT (vi) Gautam Pincha [ITA No. 569/Kol/2017] order dated 15.11.2017 of the Hon’ble Kolkata ITAT (vii) Kiran Kothari HUF [ITA No. 443/Kol/2017] order dated 15.11.2017 of Hon’ble Kolkata ITAT (viii) Shaleen Khemani [ITA No. 1945/Kol/2014] order dated 18.10.2017 of the Hon’ble Kolkata ITAT (ix) Arvind Kumar Jain HUF [ITA No. 4682/Mum/2014] order dated 18.09.2017 of the Hon’ble Mumbai ITAT. (x) Sanjeev Goel (HUF) Vs. ITO (ITA No. 354/Kol/2018) order dated 24.08.2018 of the Hon’ble Kolkata ITAT

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) After considering the aforesaid judgments, the Hon’ble Guwahati Tribunal in the penultimate paragraph of its decision held as under:

“It has thus come on record that hon'ble high court's have adopted varying opinions qua correctness of identical long term capital gains. In other words, hon'ble Calcutta high court is of the view that such an addition on involving an assessee's profits derived from sale of shares can be declined only in absence of the supportive evidence on record whereas hon'ble Bombay high court has gone by circumstantial evidence. We quote hon'ble apex court's judgment in CIT vs. Vegetable Products (1973) 88 ITR 192 (SC) in these peculiar facts and adopt the view of hon'ble Calcutta high court in taxpayer's favour. We further make it clear that hon'ble jurisdictional high court has not decided the issue till date. The impugned additions are deleted therefore.” The above two cases were decided ex-parte by the Hon’ble Guwahati Bench after hearing theDepartmental representative as the assessees therein failed to represent their case when called upfor hearing.

3.28 Finally, it is urged most respectfully that the Assessees, in the instant case, have completely and effectively discharged the primary onus cast u/s 68 by placing on record cogent documentary evidences duly establishing the essential ingredients of section 68 viz. the identity, creditworthiness and the genuineness of the impugned transactions, thus shifting the onus to disprove the same on the Department. The A.O, on the other hand, has failed to discharge the secondary onus of rebutting the documentary evidences filed by the Assessees. Apart from relying on suspicion, surmises, conjecture and general reports of S.E.B.I/ Investigation Wing regarding general modus operandi adopted by few promoters/ operators/ beneficiaries to create bogus LTCG (which asdiscussed above are insufficient to fasten liability on the Assessees), the Ld. A.O has nothing concrete whatsoever to conclusively establish that the transactions in the impugned shares carried on by the Assessees were ingenuine. Although the Ld. CIT(A), while rendering his decision, has categorically noted that the Assessees had furnished detailed documentary evidences in support of the impugned transactions at the assessment stage and that the Ld. A.O failed to bring on record any evidence whatsoever to controvert the genuineness of the such evidences furnished by the Assessees, he has chosen not to finally adjudicate the grounds of appeal urged by the Assessees challenging the merits of the additions made u/s 68 on the 84

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) ground that such additions already stood deleted by him on jurisdictional ground. 3.29 In view of the detailed discussions made above, it is submitted that the Assessees have a strong case on merits as well. Accordingly, the Hon’ble Tribunal, in addition to its decision on the jurisdictional grounds, may be pleased to also record its findings on the illegality of the additions made u/s 68 under the facts and circumstances of the present case”. 42. On the other hand, ld. D.R. submitted that these are the assessment orders passed under section 153A. The scope of section 153A could only be explored. The ld. CIT(Appeals) has not recorded specific finding on this aspect. Though the ld. Assessing Officer has disbelieved the genuineness of the claim made by the assessee, therefore, ld. D.R. has relied upon the assessment order.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) disagreement on the scope of section 153A in further appeal unless Hon’ble Supreme Court took a different view later on.

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) our attention on those details on page no. 32 of his submissions, which read as under:- (i) Assessment Order dt. 11.11.2014 passed u/s 143(3) in the case of Sri Bajrang Lal Bamalwafor A.Y. 2012-13 (corresponding order passed u/s 153A in respect of the very same year has also been impugned in the present set of appeals) wherein the erstwhile A.O., after inspection of relevant documents and conscious application of mind vis-à-vis the impugned issue had found the impugned share transactions in TFCIL to be perfectly genuine and allowed the Assessee’s claim of exemption u/s 10(38) of the Act. The relevant holdings of the A.O are excerpted hereunder:

“4……The assessee also claimed exemption u/s 10(38) of the Income Tax Act 1961 for Long Term Capital Gains on sale of shares. The A/R filed details of the same which were examined, verified and recorded. Thus, the increase of capital has been explained.”

Detailed assessment records including details of enquiries conducted by the Ld. A.O and copy of assessment order u/s 143(3) in the above case have been reproduced by the Ld. CIT(A) at pages 102 to 109of the appellate order passed in the case of Sri Bajrang Lal Bamalwa for A.Y. 2012-13. Copy of the above assessment order is enclosed at pages 59-65 of PB-17

(ii) Assessment Order dated 31.03.2013 passed u/s 143(3) in the case of Sri Bajrang Lal Bamalwa for A.Y. 2010-11, wherein identical exemption of Rs. 1,41,14,446.89 claimed by the Assessee u/s 10(38) on LTCG arising on the sale of the same scrip i.e., TFCIL was allowed by the A.O after detailed inspection of the documents filed by the Assessee viz. copies of contract notes, purchase and sales bills etc. and the reply received from the Calcutta Stock Exchange in response to notice issued u/s 133(6) etc. duly confirming the sales of the impugned shares. Detailed assessment records including details of enquiries conducted by the Ld. A.O and copy of assessment order u/s 143(3) in the above case have been reproduced by the Ld. CIT(A) at pages 69 to 84 of the appellate order passed in the case of Sri Bajrang Lal Bamalwa for A.Y. 87

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) 2012-13. Copy of the above assessment order is enclosed at pages 66-72 of PB-17

(iii) Assessment Order dated 31.03.2013 passed u/s 143(3) in the case of Sri HansrajBamalwa for A.Y. 2010-11 wherein similar exemption claimed on the LTCG arising on sale of shares of TFCIL was allowed duly by the Ld. A.O after an in-depth inspection and analysis of supporting documents furnished by the Assessee and enquiry conducted by him. Detailed assessment records including details of enquiries conducted by the Ld. A.O and copy of assessment order u/s 143(3) in the above case have been reproduced by the Ld. CIT(A) at pages 85 to 101of the appellate order passed in the case of Sri Bajrang Lal Bamalwa for A.Y. 2012-13. Copy of the above assessment order is enclosed at pages 73-79 of PB-17

(iv) Assessment Order dated 24.12.2018 passed u/s 147 r.w.s 143(3) in the case of Smt. MeenakshiBamalwa(also one of the Assessees herein) for A.Y. 2011-12. In the said case, reassessment proceedings were initiated by the A.O on the basis of the same purported materials/information as in the case of the Assessees herein viz. the purported information received from the DDIT(Inv), Kolkata relating to the alleged racket of availing bogus LTCG, the statements of promoters, brokers, directors etc. recorded by the Investigation Wing u/s 131 etc. The A.O after considering the purported information and evidences in his possession and the detailed documentary evidences furnished by the assessee therein, found the LTCG of Rs. 1,54,21,323/- claimed by the said assessee on the sale of TFCIL (i.e., the same scrip as in the present case) to be perfectly genuine and accordingly, completed the assessment u/s 147 at the returned figure. Copy of the above assessment order u/s 147 is enclosed at pages 80-86 of PB-17 (v)Assessment Order dated 24.12.2018 passed u/s 147 r.w.s 143(3) in the case of Smt. Bhagwati Devi Bamalwa(also one of the Assessees herein) for A.Y. 2011-12 wherein similar to the case of Smt. MeenakshiBamalwa, supra, the reassessment proceedings were initiated on identical information as in the case of the Assessees herein. The A.O passed similar order u/s 147 duly allowing the exemption claimed by the assessee therein u/s 10(38) on LTCG of Rs. 1,52,02,169/- arising on the

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) sale of shares of TFCIL. Copy of the above assessment order u/s 147 is enclosed at pages 87-91 of PB-17

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) was not possessing any details, which authorize it to doubt the claim made by the assessee. Therefore, even otherwise on merit also, no addition is sustainable.

Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President Kolkata, the 1st day of September, 2023 Copies to :(1) Bajrang Lal Bamalwa, Ground Floor, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (2) Bachh Raj Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (3) Hans Raj Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam

(4)Hans Raj Bamalwa (HUF), Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (5) Usha Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (6)Meenakshi Bamalwa Soni, 90

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023) Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (7) Bhagwati Devi Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (8) Vishal Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (9) Vinay Bamalwa, Mahalaya Road,C/o. A.K. Varma, Dibrugarh- 786001, Assam (10)Ravi Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (11) Madan Lal Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (12) Sheeetal Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (13) Pramod Kumar Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (14) Vinod Bamalwa, Mahalaya Road, C/o. A.K. Varma, Dibrugarh-786001, Assam (15) Deputy Commissioner of Income Tax, Circle-1, Dibrugarh Pushkara House, Natun Gaon, NH-37, Mohanaghat, Dibrugarh, Assam-786008 91

ITA Nos. 51 to 66/GAU/2023 & CO Nos. 6 to 21/GAU/2023 (in ITA Nos. 51 to 66/GAU/2023)

(16) Commissioner of Income Tax (Appeals), North East Region, Guwahati (17) Commissioner of Income Tax- , (18) The Departmental Representative (19) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.