MEENA HASMUKH SAVLA,MATUNGA MUMBAI vs. ASSESSMENT UNIT, NATIONAL FACELESS ASSESSMENT CENTRE

.\n\n3. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of CIT(A) in upholding the additions made by AO u/s 68 of the Act and also on account of addition of commission paid @ 3% of the LTCG. Therefore, I have decided to take up all the grounds together and adjudicate the same through the present consolidated order.\n\n4.\nThe Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before the lower authorities and also relied upon the written submissions mentioned herein below:\n\n1.1 The appellant is an individual deriving income from Salary and Other Sources. Return of Income for the Assessment Year under consideration was filed on 24/06/2016 declaring total income at Rs.11,34,200/-, and the same was processed under section 143[1] of Income Tax Act, 1961.\n\n1.2 Subsequently, the assessment was reopened by issuing notice under section 148 of Income Tax Act, 1961 on 22/07/2022. In response to notice under section 148, the appellant had filed return of income on 20/08/2022. The Appellant objected the reopening of the assessment proceedings vide her letter dated 30/01/2023 which was not considered by the Assessing Officer and rejected summarily.\n\n1.3 Thereafter, notice under section 143(2) and 142[1] was issued on the Appellant, in response to the said notices the appellant furnished all the necessary documents, evidences with explanation from time to time.\n\n1.4 The assessment was completed under section 147 r.w.s.144B of the Income Tax Act, 1961 on 15/05/2023 assessing the total income at Rs.34,19,425/- after making the following addition to the total income of the appellant.\n\nA) Addition of LTCG claimed as exempt u/s.10[38] of the I.T. Act 1961 under section 68 of Income Tax Act, 1961 Rs.22,20,150/-\n\nB] Addition of commission paid @3% of the LTCG. Rs.65,075/-\nTotal Rs.22,85,225/-\n\n2. ASSESSMENT PROCEEDINGS\n\n2.1 The appellant had shown Long Term Capital Gain of Rs.21,69,150/- and has claimed the same as exempt under section 10[38] of the Income Tax Act, 1961. Ongoing through the working of the capital gain the Assessing Officer has observed that the appellant has shown purchased of 5,100 shares of M/s. Ojas Asset Reconstruction Co. Ltd. on 02/04/2014 for Rs.51,000/-, These shares were brought at the face value of Rs.10/- per shares. During the year under consideration the appellant had sold these 5,100 shares during the period 09/09/2015 to 16/09/2015 netting a gain of Rs.21,69,150/-.\n\n2.2 The Assessing Officer was received the information that, the Appellant had sold shares in scrip M/s. Ojas Asset Reconstruction Co. Ltd [new name is Toyam Industries Ltd]. In the meanwhile, the Director of Investigation Wing, Delhi had carried out country wide investigation in order to unearth the organized racket generating Long Term Capital Gain which is exempt from Income Tax.\n\n2.3 The Assessing Officer, after the examination of the information provided by the Investigation Wing and return of income of the Appellant, the case of the Appellant was reopened under section 147 of Income Tax Act, 1961 and notice under section 148 was issued on 22/07/2022.\n\n2.4 Thereafter, various notices under section 143(2) and 142[1] was issued on the Appellant, in response to the notices issued by the Assessing Officer, the appellant had furnish the complete details and evidence including contract note for purchase and sale of shares, demat account, Bank statement, Broker Ledger etc. in respect of Long Term Capital Gain which has been claimed exempt under section 10[38] of Income Tax Act, 1961.\n\n2.5 Thereafter, the Assessing Officer had issued a show cause notice dated 06/05/2023 to the appellant which contents various observation and allegation which are very much general in nature and also without any reference to the appellant. The appellant had given detailed reply in response to the show cause notice issued by the Assessing Officer. The appellant has also requested for the cross verification of the persons on whose statement the Assessing Officer was relying for making addition.\n\n2.6 The Assessing Officer after pursuing and analyzing the various submissions made by the appellant, Investigation by various Directorates, facts of the case and investigations conducted, the Assessing Officer concluded that LTCG claimed is prearranged, therefore, bogus and is required to be rejected and the entire sale proceeds received on sale of shares was added as taxable income u/s.68 of the Act, without any eligibility of exemption u/s.10[38] of the Act.\n\n2.7 The Assessing Officer then completed the assessment by making addition of Rs 22,85,225/- on account of Long-Term Capital Gain of Rs.22,20,150/- and 3% commission of Rs.65,075/-\n\n2.8 Being aggrieved by the abovementioned addition the appellant had preferred the abovementioned appeal before your Honour to get justice on the basis of facts of the case and law on the subject.\n\n2.9 The Appellant is challenging the Assessment Order in this Appeal on following grounds:\n\nA] ADDITION U/S.68 OF THE ACT IN RESPECT OF LTCG CLAIMED AS EXEMPT U/S.10[38] OF THE I.T. ACT 1961 RS.22,20,150/-\n\nB] ADDITION U/S.69C OF THE ACT IN RESPECT OF 3% COMMISSION PAID ON TRANSACTION VALUE OF LTCG.- RS.65,075/-\n\n3. APPELLANT'S SUBMISSIONS\n\nA] ADDITION U/S.68 OF THE ACT IN RESPECT OF LTCG CLAIMED AS EXEMPT U/S.10[38] OF THE I.T. ACT 1961 RS.22,20,150/-\n\n3.1 The Appellant had purchased 5100 shares of M/s. Ojas Asset Reconstruction Co. Ltd. for Rs.51,000/- on 02/04/2014 through Shreenath Commercial & Finance Ltd. Following documents were submitted in support of the purchase of these shares.\n\ni] Copy of Contract note\nii] Demat Statement\nIII] Bank statement\niv] Ledger account of Broker\n\n3.2 The Appellant has sold 5,100 shares during the 09/09/2015 to 16/09/2015 on Bombay Stock exchange through Broker M/s. Prabhudas Liladhar Pvt. Ltd., which is a leading public sector stock broker at the prevalent market rates then. In support of the sale the appellant has furnished the following detail to the Assessing Officer during the course of Assessment proceedings.\n\ni] Copy of Contract note\nii] Demat Statement\niii] Form 10DB\niv] Global Report\nv] Bank statement\nvi] Ledger account of Broker\n\n3.3 Since, the period of holding of equity shares was more than 12 months, capital gain earned was long term in nature subject to STT and therefore exempt under section 10[38] of the Income Tax Act, 1961.\n\n3.4 On perusal of the above-mentioned documents it is evident that the purchase transactions have taken place through banking channels and that the shares sold were subjected to securities transaction tax and have been sold through a recognized stock exchange, leaving no scope for share price manipulation by the appellant. Hence, the appellant has precariously followed the prescribed procedure, from the stage of purchase till the shares are dematerialized and sold, leaving no room for doubt or suspicion that the transactions are not genuine.\n\n3.5 Further, the appellant has sold the shares of M/s. Ojas Asset Reconstruction Co. Ltd. not in one stroke. Thus, it cannot be inferred that appellant colluded with operators for obtaining alleged bogus long-term capital gains.\n\n3.6 respetusal of the Assessment Order will highlight that the claim of the appellant in followings, Long-Term Capital Gain has been that ded mainly on account of -\n\ni] Investigation done by Director of Investigation [Delhi]\nii] Statement of various operators and brokers.\niii) unusual trend in the market price of the shares.\n\n3.7 It is respectfully submitted that, in none of the above Investigation, the appellant has been named as either operator or accused of converting black money into white. In fact, the appellant has been named as 'beneficiary' above reports which itself are general in nature [not pointing out at the appellant in particular was available with the Assessing Ont peito reject the claim of the No other evidence except the appellant in respect of Long-Term Capital Gain. There are no circumstantial as well as direct evidence against the appellant to prove that, Long-Term Capital Gain shown by the appellant is not natural one but arranged one. Hence the addition made by the Assessing Officer is arbitrarily and unjustified.\n\n3.8 The Assessing Officer has stated \"the quantum of long term capital gain was found suspicious and detailed investigation of this issue was undertaken. Various tools available were examined including ITD data, BSF data, money-control website, taxmann, court rulings, internet as well as investigation wing's report and findings of the SEBI. In this respect the finding of Investigation Wing, Delhi in which Penny Stock has been discussed and investigated at length, is worth mentioning which is being reproduced as under \". Thus, the impugned addition has been solely on the ground that the name of scrip sold appears in the penny stocks investigated by Investigation wing. There is no other evidence except the above reports/findings which are general in nature [not in any way pointing to the Appellant in particular] was available with the Assessing Officer to reject the claim of the Appellant in respect of Long-term capital gain. There are no circumstantial as well as direct evidence against the Appellant to prove that Long term capital gain shown by the Appellant is not natural but arranged one. Hence the addition made by the Assessing Officer is arbitrary and unjustified. There is no mention as to how has he connected the scrip investigated by Investigation Wing, Delhi and that the appellant is an accommodation entry beneficiary.\n\n3.9 The fact that these shares have appreciated in value to a great extent does not mean that the capital gain earned is bogus. It may be appreciated that the purchase transactions have taken place through banking channels, shares are in dematerialized form and the sale transactions have taken place on recognized stock exchange which have been subject to securities transaction tax. It may be appreciated that the market price of an equity share on the stock exchange cannot be controlled by an individual and the market prices keep fluctuating depending upon various factors. Thus, there is no question of the capital gain being bogus\n\n3.10 The Assessing Officer has not brought any cogent evidence on record to prove that transactions were not genuine and that the appellant is a beneficiary of accommodation entry. The Assessing Officer has proceeded to arrive at his conclusion that the appellant has obtained accommodation entry solely based on assumptions and presumptions, which Courts have held have no place in framing an assessment under the Income-tax Act. The Assessing officer has brushed aside all the positive evidences filed by the appellant to prove the genuineness of transactions.\n\n3.11 The modus operandi explained by the Assessing Officer is general and devoid of facts in the case of the appellant. He has not mentioned that cash has gone from the coffers of the appellants. Also, there is no corroborative evidence available on record that cash has been exchanged.\n\n3.12 The Assessing Officer falsely presume that the Appellant is not at all acquittance with share market or absence of any regular share activity and therefore the Appellant has bought shares of M/s. Ojas asset with sole aim to bring back unaccounted money into the system. The appellants submit that no addition could be made merely on the basis of assumptions\n\nand presumptions. The appellants submit that the Honourable Apex Court in Umacharan Shaw & Bros (37 ITR 271) has held that no addition could be made on presumption; suspicion however strong cannot take place of proof.\n\n3.13 The appellant has duly discharged the onus that lies on him by establishing the identity, creditworthiness and genuineness of the transactions, by way of submissions made by her during the assessment proceedings, and that being so, it is for the revenue to disprove the claim of the appellant, by bringing on record the evidence to the contrary. The ordinary rule is that apparent state of affairs is real unless contrary is proved and the burden of proving contrary lies on the person who asserts it.\n\n3.14 Your Honour's kind attention is invited to judgment of Hon'ble Delhi High Court in the case of I. T. A.125/2020, I.T.A. 130/2020 and I.T.A.131/2020. The Hon'ble High Court has dismissed the appeal of ITAT stating that, 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 basis to turn a blind eye to the evidence produced by the respondent. It e cittfurther held by Court that, reliance placed on Suman Poddar vs. ITO and Suvas Dayal vs. CIT is of no assistance and held that this case is quite different fromatthe factual matrix at hand. Similarly, the case of Suman Dayal vs. CIT [Supra] tomums on its specific facts. It was held that there cannot be addition without any cogent material on record. Statements relied by the Assessing Officer in the assessment proceedings were not recorded by the Assessing Officer but they were preexisting statements recorded by the Investigation Wing and the same cannot be 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 evidence to disprove the evidences produced by the assessee. The report of the Investigation Wing is much later than the dates of purchase / sale of shares and the order of the SEBI is also much later than the date of transactions transacted\n\nand nowhere SEBI has declared the transaction at earlier dates as void.\n\n3.15 Thus, the appellant contend that the impugned order of assessment is a nullity since it is framed in utter disregard to the principle of natural justice and for this proposition, the appellant place reliance on the following decisions.\n\nA] Andaman Timber Industries - 62 taxmann.com 3 [SC]\nB] Sahara India [Firm] - 300 ITR 403 [SC}\nC] H.R.Mehta - 72 Тахапп.com 110 [bom]\nD] SMC Share Brokers Ltd. - 288 ITR 345 [Del]\nE] Mahesh Gulabrai Joshi -

In our considered opinion, in such case assessee cannot be held that he earned Long Term Capital gain through bogus\n\ncompany when he has discharged his onus by placing all the relevant details and some of the shares also remained in the account of the appellant after earning of the long term capital gain.\n\n10. Learned A.R. contention is that no statement of the Investigation Wing was given to the assessee which has any reference against the assessee.\n\n11. In support of its contention, learned A.R. also cited an order of Coordinate Bench in ITA No.62/Ahd/2018 in the matter of Mohan Polyfab Pvt. Ltd. Vs. ITO wherein ITAT has held that A.O. should have granted an opportunity to cross examine the person on whose statement notice was issued to the assessee for bogus long term capital gain. But in this case, neither statement was supplying to the assessee nor cross examination was allowed by the learned A.O. Therefore, in our considered opinion, assessee has discharged his onus and no addition can be sustained in the hands of the assessee.\"\n\n3. Thus, the Tribunal has recorded the finding of fact that the assessee discharged his onus of establishing that the transactions were fair and transparent and further, all the relevant details with regard to such transactions were furnished before the Income Tax authorities and the Tribunal also took notice of the fact that some of the shares also remained in the account of the appellant.\n\n4. We take notice of the fact that the assessee has a Demat Account maintained with the ICICI Securities Ltd. and has also furnished the details of such bank transactions with regard to the purchase of the shares. In the last, the Tribunal took notice of the fact that the statements recorded by the investigation wing of the Revenue with regard to the Tax entry provided were informed to the assessee despite giving him opportunity to meet such an allegation. In the overall view of the matter, we believe that the proposed question cannot be termed as a substantial question of law for the purpose of maintaining the appeal under Section 260-A of the Act, 1961.\n\n5. In the result, this appeal fails and is hereby dismissed.\n\nReliance is also placed on the decision of Supreme Court of India in the case of PCIT v. Parasben Kasturchand Kochar [130 taxmann.com 177 of 2021]: -\n\nSection 10(38) of the Income-tax Act, 1961 - Capital gains - Income arising from transfer of long-term securities (Shares) - Assessment year 2014-15 - Assessee individual engaged in business of trading in shares claimed long term capital gains arising out of sale of shares as exemption under section 10(38) - Assessing officer denied claim and made certain additions into assessee's income on grounds that said gains were earned through bogus penny stock transactions and companies to whom sold shares belonged were bogus in nature Tribunal observing that assessee by submitting records of purchase bills, sale bills, demat statement, etc., had discharged his onus of establishing said transactions to be fair and transparent, same not being earned from bogus companies was eligible for exemption under section 10(38) - High court by impugned order held that no substantial question of law arose from Tribunal's order Whether SLP against said impugned order was to be dismissed - Held, yes (Para 2) (In favour of assessee)\n\n3.24 Further, we also rely on the Jurisdictional High Court Decision of Mumbai High Court in the case of PCIT v. Ziauddin A. Siddique [Income tax Appeal No 2012 of 2017]: -\n\n\"2. We have considered the impugned order with the assistance of the learned Counsels and we have no reason to interfere. There is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. (\"RFL\") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (\"STT\") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against\n\nassessee that it has participated in any price rigging in the market on the shares of RFL\"\n\n3. Therefore we find nothing perverse in the order of the Tribunal.\n\n5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law.\n\n6. The appeal is devoid of merits and it is dismissed with no order as to costs.\"\n\n3.25 We are enclosing herewith a latest order of Honble, CIT[A] NFAC, Delhi has received in the case of Sulochanadevi A. Agrawal wherein on the identical facts and circumstances, the Hon'ble CIT[A] has deleted the addition made after following observations:-\n\n\"9. Thus, considering the totality of the facts and circumstances, keeping in view the position of law, and respectfully following the above binding judicial precedents, I find that the transaction of purchase and sale of shares of M/s Fiberweb India Limited (FIL) undertaken by the appellant was a genuine financial transaction, and not a colourable device to evade taxes. The claim of exemption under section 10(38) in respect of long term capital gains arising on such transaction is genuine, AO is accordingly directed to delete the addition of Rs.15,42,933/- made on account of unexplained cash credits under section 68 of the Act. These Grounds of appeal are allowed.\"\n\n3.26 Recently the order dated 08/03/2024 of the Honourable CIT[A] NFAC, Delhi has received in the case of Ankur Agrawal wherein on the identical facts and circumstances, the Hon'ble CIT[A] has deleted the addition made after following observations:-\n\n\"Therefore, in view of the above factual matrix and circumstances in respect of purchases and sales of shares of M/s JMD Telefilms Ltd. and M/s Splash Media & Infra Ltd. by the Appellant and also in view of the decisions of Hon'ble Supreme Courts and various High Courts including binding decisions of the jurisdictional High Courts and a plethora of decisions of various benches of ITATs including binding decision of jurisdictional ITAT, as discussed in foregoing paragraphs, I find that the addition of Rs.25,14,62,940/- in respect of LTCG claimed on sale of shares of M/s JMD Telefilms Ltd. and Rs.1,55,70,963/- in respect of LTCG claimed on sale of shares of M/s Splash Media & Infra Ltd. u/s 68 of the IT Act made by the AO is unsustainable and unjustified and therefore, the said additions of LTCG made by the AO are hereby deleted and is directed the AO to accept the LTCG income shown as exempt u/s 10(38) of the Income Tax Act. Accordingly, the Appellant gets relief and thus, ground nos.3, 4, 5 & 6 of appeal are allowed.\"\n\nCopy of decision is enclosed herewith\n\n3.27 Further, latest order dated 28/02/2024 of the Honourable CIT[A] NFAC, Delhi has received in the case of M/s. Comfort Intech Limited wherein on the identical facts and circumstances, the Hon'ble CIT[A] has deleted the addition made after following observations; -\n\n\"Furthermore, the appellant relied in the case of Parasben Kasturchand Kochar [2021] 130 taxmann.com 177 (SC), wherein the Hon'ble Apex Court held that the assessec-individual was engaged in business of trading in shares claimed long term capital gains arising out of sale of shares as exemption under Section 10(38). The Assessing Officer denied claim and made certain additions into assessee's income on grounds that said gains were earned through bogus penny stock transactions and companies to whom sold shares belonged were bogus in nature. The Tribunal observing that assessce by submitting records of purchase bills, sale bills, demat statement, etc., had discharged his onus of establishing said transactions to be fair and transparent, same not being carned from bogus companies was\n\neligible for exemption under Section 10(38) of the Act The High court by impugned order held that no substantial question of law arose from Tribunal's order. The SC dismissed the SLP against said impugned order. The appellant also relied in the judgement of Hon'ble Apex Court in the case of PCIT vs. Renu Aggarwal 153 taxmann.com 579 (SC) wherein the Hon'ble Apex Court dismissed the SLP filed by the Department against the order of High Court which held that were Assessing Officer disallowed exemption claimed by the assessee under Section 10(38) of the Act and made additions, alleging involvement in penny stock which were misused for providing bogus accommodation of Long Term Capital Gain (in short \"LTCG\"), however, there was lack of adverse comments from stock exchange and officials of company involved in these transactions and no material relating to assessee was found in Investigation Wing Report, addition made by Assessing Officer has been rightly deleted.\n\nIn the light of the above, and considering the submission made by the appellant and taking into account the entire conspectus of this case, I see no reason to uphold the addition made by the AO amounting to Rs.59,30,318/- Hence, this ground of appeal is Allowed.\"\n\nCopy of decision is enclosed herewith\n\n3.28 Further, latest order dated 03/01/2024 of the Honourable CIT[A] NFAC, Delhi has received in the case of Mr. Keshavji Nongha Shah wherein on the identical facts and circumstances, the Hon'ble CIT[A] has deleted the addition made after following observations:-\n\n\"The AO has not brought any cogent evidence on record to prove that transactions were not genuine and that the appellant is a beneficiary of accommodation entry. AO has proceeded to arrive at his conclusion that the appellant has obtained accommodation entry solely based on assumptions and presumptions, which Courts have held have no place in framing an assessment under the Income-tax Act. The AO has brushed\n\naside all the positive evidences filed by the appellant to prove the genuineness of transactions.\n\nIn view of the above, these grounds of appeal are, accordingly, allowed and the addition made by AO on this account is, hereby, deleted.\"\n\nCopy of decision is enclosed herewith\n\n3.29 Further, order dated 28/08/2023 of the Honourable CITIA] NFAC, Delhi has received in the case of Mr. Keshavji Nongha Shah wherein on the identical facts and circumstances, the Hon'ble CIT[A] has deleted the addition made to total income of the appellant. Copy of the decision is enclosed herewith\n\n3.30 The Honourable High Court, Mumbai in the case of PCIT vs Indravadan Jain vide their order dated 12/07/2023 [Income Tax Appeal No.454 of 20181, on identical facts and circumstances of the case has dismissed the appeal filed by the PCIT, Mumbai Copy of the decision is enclosed herewith\n\n331 Now the question is that, Do all the investments made by the investor is seen from the eye of suspicion? Answer is no, it is not necessary that all the investment made in penny stock is treated as bogus or treated as cash credit u/s 68 of the income Tax Act 1961 There are various case laws which are in favour or the assessee, which help assessce to present its case of genuine investments, are as under.\n\n11 High Court of Gujarat in case of Commissioner of Income-tax-I Vs. Maheshchandra G. Vakil [2013]40 taxmann.com 326 (Gujarat) held that Where assessee proved genuineness of share transactions by contract notes for sale and purchase, bank statement of broker, demat account showing transfer in and out of shares, as also abstract of transactions furnished by stock exchange, Assessing Officer was not justified in treating capital gain arising from sale of shares as unexplained cash credit.\n\nHigh Court of Gujarat in case of Commissioner of Income-tax-I Vs. Himani M Vakil [2013]10 taxmann.com 326 (Gujarat) held that where assessce duly proved genuineness of share transactions by bringing on record contract notes for sale and purchase, bank statement of broker and demat account showing transfer in and out of shares, Assessing Officer was not justified in bringing to tax capital gain arising from sale of shares as unexplained cash credit.\n\nIIII Tribunal at Kolkata in case of DCIT vs Sunita Khema in ITA nos 714 to 718/ kol/2011 has held that :-\n\nThe AO cannot treat a transaction as bogus only on the basis of suspicion or surmise. He has to bring material on record to support his finding that there has been collusion/connivance between the broker and the assessee for the introduction of its unaccounted money. A transaction of purchase and sale of shares, supported by Contract Notes and demat statements and Account Payee Cheques cannot be treated as bogus\n\nIV1 High Court of Rajasthan at Jodhpur in case of CIT Vs. Smt Sumitra Devi in ITA 54/2012 has held that:-\n\nTrue it is that several suspicious circumstances were indicated by the AO but then, the findings as ultimately recorded by him had been based more on presumptions rather than on cogent proof. As found concurrently by the CIT(A) and the ITAT, the AO had failed to show that the material documents placed on record by the assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat statement etc. were false, fabricated or fictitious. The appellate authorities have rightly observed that the facts as noticed by the AO, like the notice under Section 136 to the company having been returned unserved; delayed payment to the brokers, and de-materialisation of shares just before the sale would lead to suspicion and call for detailed examination and verification but then, for these facts alone, the transaction could not be rejected altogether, particularly in absence of any cogent evidence to the contrary.\n\nV] High Court of Allahabad in case of CIT Vs. Udit Narain Agarwal in ITA 560 of 2009 has held that:-\n\nThe Tribunal has upheld the finding. It had held that the assess was in possession of the shares in question and had sold the said shares in course of ordinary transaction of sale of shares at stock exchange and if the broker did not file any evidence since the same were seized by the Revenue Department, there is no fault with the assessee. From the aforesaid facts it is clear that the shares in question were allotted to the assessee in the public issue which were held in demat a/e of Stock Holding Corporation of India Ltd. The shares were transferred to Abhipra Capital Ltd. The sale consideration was received by demand draft. Therefore, the transaction in question cannot be said to be fake and is a genuine transaction. The Tribunal has not committed any error in upholding the order of CIT(Appeals) on this point.\n\nVI] As recently held bys Kolkata Tribunal in Dolarrai Hemani vs. ITO (ITAT Kolkata) Ι.Τ.Α No. 19/Kol/2014 vide order dated 02.12.2016, the fact that the stock is thinly traded and there is unusually high gain is not sufficient to treat the long-term capital gains as bogus when all the paper work is in order. The revenue has to bring material on record to support its finding that there has been collusion / connivance between the broker and the assesse for the introduction of its unaccounted money.\n\nVII] Long-term capital gains on sale of \"PENNY\" stocks cannot be treated as bogus & unexplained cash credit if the documentation is in order. Farrah Marker vs. ITO (ITAT Mumbai) ITA No. 3801/Mum/2011 vide order dated 27.04.2016\n\nVIII] Further Ahmedabad Tribunal in Manojkumar Sarawagi (HUF) (ITAT 'A' Bench, Ahmedabad Order dated 16.3.2012 in ITA No. 3233 & 3156/Ahd/2010) has held that evidence and explanation of the assesse support the case of the assesse that the assesse entered into genuine transaction. As per the rulings, details provided clearly prove the sources of sales of the shares; therefore, no addition was required to be made u/s 68 of the IT Act\n\nX] Similar view was upheld in Jagdish Prasad Goel (ITAT_'C' Bench, Kolkata, order dated 13.4.2011 in ITA No.541/Kol/2010).\n\nAs assessee had filed bills, vouchers, contractor's note and also detail of transactions of sale and purchase of shares,which had been routed through banking channels and Assessing Officer had not found any defect in assessment order, same could not be treated as bogus[2014] 45 taxmann.com 420 (Allahabad)\n\nXII] As documentary evidence was produced to establish genuineness of claim, the transactions were not sham and bogus [2012] 20 taxmann.com 529 (Bombay)\n\n3.32 Reliance is also placed on the decision of Bombay High Court in the case of CIT v. Mukesh Ratilal Marolia [ITA No.456 of 2007]: -\n\nThe assesse had sold the shares of four companies, namely M/s. Alang Industrial Gases Ltd. Mobile Telecommunication Ltd., M/s. Rashel Agrotech Ltd. and M/s Sentil Agrotech Ltd, which were purchased during the year 1999-00 and 2000-01. The entire sale consideration amounting to Rs.1,41,08,484/- was utilized for the purchase of a flat at Colaba, Mumbai and accordingly benefit of section 54E of the Income Tax Act, 1961 was claimed. The Assessing Officer has held that neither the purchase nor sale of shares were genuine and that the amount of Rs.1,41,08,484/- stated to have been received by the\n\nassesse on sale of shares was undisclosed income and accordingly made addition under section 69\n\nHon'ble High Court held that\n\nThe sale of the said shares for Rs.1,41,08,484/- through two brokers namely, M/s. Richmond Securities Pvt Ltd. and M/s. Scorpio Management Consultants Pvt Ltd. cannot be disputed, because the fact that the assesse has received the said amount is not in dispute. It is neither the case of the Revenue that the shares in question are still lying with the assesse nor it is the case of the revenue that the amounts received by the assesse on sale of the shares is more than what is declared by the assesse. In these circumstances, the decision of the ITAT in holding that the purchase and sale of shares are genuine and therefore, The Assessing Officer was not justified in holding that the amount of Rs.1,41,08,484/-/ represented unexplained investment under section 69 of the Income Tax Act, 1961 cannot be faulted.\n\n3.33 Attention is also drawn to another decision of the Jurisdictional High Court in the case of CIT vs. Shaym R. Pawar, 229 Taxmann 256 [bom] where it was held that where DMAT account and contract note showed details of share transaction and the Assessing Officer had not proved said transaction as bogus, capital Gain earned on said transaction could not be treated as unaccounted income under section 68.\n\n3.34 Attention is invited to the decision of CIT vs. Vivek Mehta 204 Taxman 177 [Punjab & Haryanal-\n\nThe Assessee declared long term capital gain on sale / purchase of the shares of 'M' Ltd. and claimed the same as exempt under section 54F. The Assessing Officer held that the purchase of shares of \"M'Ltd. was bogus and manipulated and therefore the subsequent sale was also bogus. The Assessing Officer further held that the assesse introduced his unaccounted income under the garb of long term capital gain and claimed same as exempt under section 54F. The credit entries in bank account of the assesse reflecting sale\n\nconsideration of share were found to be unexplained credits and added to the income of the assesse under section 68.\n\nOn appeal, the Commissioner [Appeals] accepted the appeal of the assesse and deleted the addition made on account of unexplained deposits on ground that it was a genuine transaction pf purchase of shares through stock broker 'D' and also the sale thereof through \"K\" and the assesse had assessed the genuine long term capital gain.\n\nIt was held by the High Court that on the basis of the documents produced by the assesse in appeal. The commissioner [appeals], recorded a finding of fact that there was a genuine transaction of purchase of share by the assesse on 16/03/2001 and sale thereof on 21/03/2002. The transactions of sale and purchase were as per the valuation prevalent in the stock exchange. Such finding of fact has been recorded on the basis of evidence produced on record. The Tribunal has affirmed such finding. Such finding of fact is sought to be disputed in the present appeal. The finding of fact recorded by the Commissioner [Appeals] does not give rise to any question[s] of law as sought to be raised in the instant appeal. Hence, the revenue's appeal is dismissed.\n\n3.35 Attention is also invited to the decision of Udit Agarwal vs DCIT [I.T.A.No 1839/kol/2017] 26/12/2018-\n\n\"We hold that the revenue fails to indicate any specific evidence against the assessee in above terms qua the LTCG derived from transfer of shares in the aforesaid two companies. We therefore adopt the above extracted reasoning mutatis mutandis to delete the impugned bogus LICG addition of Rs 96,17,065/, Consequently the addition made towards unexplained expenditure on account of commission of Rs 48,085/- also stands automatically deleted.\"\n\n3.36 Apart from the above referred decisions, reliance is also place in the following decisions of the various Appellate Authorities which will substantiate that the claim of the appellant.\n\nA] Bhavesh Shambulal Somani vs. ITO [ITA No.2263/Ahd/2015]\nB] Asha Nahar vs. ITO [ITA No.2193/Bang/2016\nC] Saroj Damani vs. ACIT [ITA No. 7286/7287/7288/Mum/2010]\nD] Vaishal Suryakant Shah vs. ITO [ITA No.1499/Ahd/2016]\nE] Indravadan Jain vs. ITO [ITA No.4861/Mum/2014]\nF] Narangi Devi vs. ITO [ITA No.487/Bang/2017]\nG] Kamla Devi Doshi vs. ITO [ITA No.1957/Mum/2015]\nH]Jawantraj Bhutaji Shah-HUF vs. ITO [ITA No.3018/Mum/2015]\nI] Rajmal M. Sanghvi vs. ITO [ITA No 3019/Mum/2015\n\n3.37 The equity shares were sold on Bombay stock exchange through the broker Prabhudas Liladhar Pvt. Ltd. It may be appreciated that when shares are sold on recognized stock exchange, the seller can never come to know as to who is the counter party purchasing the shares. Thus, the appellant has no control over the sales transaction once the shares are kept for sale under the exchange. Thus, there cannot be an iota of doubt that the said transaction is completely genuine.\n\n3.38 Further, a general confession by a person that all his transactions are bogus or that he has indulged only in bogus transactions cannot be basis for additions in the case of an appellant who has transactions with this person. This is more particularly so when the appellant has not been specifically named in the confession. The Appellant would like to rely on the following judicial pronouncements in this regards: -\n\nA] In the case before the Supreme Court ITO vs. Lakhmani Mewal Das [1976] 101 ITR 427[sc] the assesse had obtained a loan from a lender. The lender had given a confessional statement subsequently to the Income Tax Department that he\n\nhad 'only' indulged in name lending transactions 'only'. The assessment of the assesse was proposed to be reopened on the basis of this statement. The Apex Court held that re-assessment proceedings must be constituted by 'reasons to believe' based on relevant material on hand. There must be a live connection between the materials and the belief. If the materials itself were vague, then the belief founded on the same would be as good as non-existent. In the instance case, there was only general statement by the lender that he had indulged in name lending transactions 'only without naming the assesse or referring to his loan transaction. The same was held not to constitute good material for founding the belief that income has escaped assessment The Supreme Court therefore upheld the High Court's action in quashing the reassessment proceedings.\n\nB] In the case before the Culcutta High Court namely SP Agarwal vs. ITO [1983] 140 ITR 1010 [cal.] the assessment of the assesse was proposed to be re-opened on the ground that the lender had given a confessional statement that all his loan transaction were bogus. The Culcutta High Court, following the decision of the Supreme Court in the case of ITO vs. Lakhmani Mewal Das [1976] 101 ITR 427 [SC] cited above, struck down the reassessment proceedings on the ground that such general statement cannot constitute relevant material to form a belief that income has escaped assessment.\n\n3.39 To sum up, the appellant has submitted the following document / information to prove the identity, creditworthiness and genuineness of the share transactions.\n\nA] Copy of contract note/purchase bill of shares along with copy of bank statement highlighting the payment made for acquisition of shares.\n\nB] Copy of Demat statement submitted, stating that demat request of shares has been affected and shares were credited to the demat A/c.\n\nC] Copy of Demat statement submitted, showing shares were held in demat A/e for more than 365 days.\n\nD Copy of contract note is submitted, stating that sale is affected on the floor of Bombay Stock Exchange and also stating that STT has been paid on the sale of shares. The sale cum contract bill is a system generated and prescribed by the stock exchange and in which code no. of client and time of each transaction is mentioned.\n\nE] Copy of Demat statement submitted, stating that shares were sold on the Bombay stock exchange on the sale of share.\n\nF Copy of bank statement reflecting receipt of sale consideration from the said broker.\n\nThe Appellant has disclosed the purchases and sale of shares in financial statements and relevant returns of income.\nAnd therefore, onus on the appellant has been discharged by him.\n\n3.40 We also rely on the following case laws wherein addition has been deleted by various benches of ITAT:-\n\nSr.\nNo.\nDescription\nCitation No.\n1\nMeghraj Singh Shekhawat\nITA No. 443 & 444/JP/2017\n2\nPramod Jain\nITA No.368/JP/2017\n3\nMeena Goel\nITA No. 6235/Del/2017\n4\nMohit Hora-HUF\nITA No. 410/Del/2018\n5\nNavneet Agarwal Vs. ITO\nITA No. 2281/Kol/2017\n6\nPrakash Chand Bhutoria\nITA No. 2394/Kol/2017\nVs. ITO\n7\nSurya Prakash Toshniwal\nHUF Vs. ITO\nITA No. 1213/Kol/2016\n8\nMadhu Killa Vs. ACIT\nITA No. 834/Kol/2018\n9\nPawan Kumar Todi Vs. ITO\nITA No. 2243/Kol/2017\n10\nNeha Chowdhary Vs. ITO\nITA No. 1790-1791/Kol/2019\n11\nVijayarattan B. Mittal Vs.\nDCIT\nITA No. 3429-3428-\n3427/Mum/2019\n\n12\nPooja Mittal Vs. DCIT\nITA No. 3311-3312-3313-\n3314/Mum/2019\n\n13\nMahendra B. Mittal HUV\nVs. DCIT\nITA No. 3264-3247-3265-\n3248/M/2019\n\n14\nHimanchu Chowdhary Vs.\nITO\nITA No. 7772/Del/2017\n15\nSumita Khemta Vs. ACIT\nITA No. 389/Del/2018\n16\nAsha Nahar Vs. ITO\nITA No. 2193/Mum/2016\n17\nSuresh Gupta Vs. ITO\nITA No. 1730/Kol/2017\n\n18\nKantaben Kubadia VsITO\nITO No. 1937/Mum/2018\n\n19\nJayesh S. Vira Vs. ACIT\nITA No. 72 & 73/Mum/2021\n\n3.41 In view of the above, it is submitted that, Long Term Capital Gain carned by the appellant is completely genuine and addition made on this count may kindly be deleted and oblige.\n\n4. B] ADDITION U/S.69C OF THE ACT IN RESPECT OF 3% COMMISSION PAID ON TRANSACTION VALUE OF LTCG.-\nRS.65,075/-\n\n4.1 The Assessing Officer has made an addition of a sum of Rs 65,075/- on account of commission paid by the appellant at the rate of 3 per cent of sale consideration of shares during the year under reference by invoking the provisions of section 69 of the Act.\n\n4.2 The appellant contends that\n\nThe transactions of sale and purchase of the aforesaid shares are genuine inasmuch as all the details and supporting evidences are filed with the Assessing Officer during the course of assessment proceedings. Further, the Assessing Officer has not brought anything on record to show that the appellant has paid any commission to anyone. The impugned addition is made solely on the basis of suspicion.\n\n4.3 The provisions of section 69C of the Act get triggered only when any evidence or tangible material is available on record to prove that the assessee is found to have incurred any expenditure and the same not recorded in their books of\n\naccount. Therefore, the condition precedent as to the existence of expenditure must be conclusively established by evidence and/or material on record and hence, the primary onus is on the Assessing Officer. In the present case, the Assessing Officer has failed to prove that the appellant has incurred any expenditure in addition to the expenditure recorded in the books of account.\n\nIn view of the above, the impugned addition Rs.65,075/- under section 69C of the Act ought to have been deleted.\n\n5. The Appellant trust the above submissions sufficiently clarify the facts and the Appellant's claims, contentions and grounds of appeal and request your Honour to consider the same at the time of deciding the appeal. However, in case your Honour desires any further information/clarification vis-à-vis any issue / grounds of appeal. Please let us know. The Appellant will be pleased to furnish the same.\n\n5. From the facts of the present case I noticed that assessee had purchased 5100 shares of M/s Ojas Asset Reconstruction Co. Ltd, (Now M/s Toyam industries) for Rs.5,100/- on 02.04.2014 through Shreenath Commercial & Finance Ltd., following documents were submitted in support of the purchase of these shares.\n\na. copy of contract note\nb. Demat Statement\nc. Bank Statement\nd. Leger account of broker\n\n6. The assessee had sold the said shares during the year under consideration on Bombay Stock Exchange (BSE) through broker M/s Prabhudas Liladhar Pvt Ltd, and in support of sale of said shares the assessee had furnished\n\nthe following details to the AO during the course of assessment proceedings.\n\na. Copy of contract note\nb. Demat Statement\nc. Form 10DB\nd. Global Report\ne. Bank Statement\nf. Ledger Account of broker\n\n7. It was further submitted that the broker through whom the assessee had sold share on BSE one of the leading public sector stock broker and the shares have been sold at prevalent market rates. After having gone through the documents placed on record by the assessee, it is evident that the purchase transaction have taken place through banking channel and the shares were also sold through banking channel and the said sale was subjected to security transaction tax (STT) and have been sold through a 'recognized stock exchange', therefore apparently leaving no scope for share price manipulation by the assessee. From the facts I also gathered that the assessee had sold the said shares in tranches on different dates therefore prima-facie it can be inferred that assessee did not collude with operators for obtaining bogus long term capital gains.\n\n8. In the order of assessment the exemption of long term capital gain was denied to the assessee mainly on account of the following reasons:\n\na. Investigation done by Director of Investigation\nb. Statement of various operators and brokers\nc. Unusual trend in the market price of the shares\n\n9 However, in none of the investigation proceedings the assessee has been named as either an operator or accused indulging in any wrong doing and there are no circumstantial as well as direct evidences available on the court file against the assessee to prove that long term capital gain shown by the assessee was not natural but arranged one.\n\n10. After evaluating and appreciating the records, I found that purchase transactions have taken placed through banking channel, shares are in dematerialized form and the sale transactions have taken placed on recognized stock exchange and the transactions have been subjected to 'security transaction tax'. Whereas on the contrary the AO has not brought on record any cogent evidences to prove that the transactions were not genuine and that the assessee is a beneficiary of accommodation entry. Even modus operandi explained by the AO is general in nature and devoid of facts in the case of the assessee the AO has\n\nnot brought on record any evidence to prove that the assessee has received / made payment in cash. There is no corroborative evidence on record that cash has been exchanged. Therefore considering the entirety of circumstance as discussed by me above, I am of the considered view that assessee has duly discharged its onus which lies upon him to establish the identity, creditworthiness and genuineness of the transaction by way of submissions during the assessment proceedings and that being so, it was for the revenue to disprove the claim of the assessee, by proving on record the evidences contrary evidences on record but he same has not been done through inference is drawn against the revenue.\n\n10. The assessee has also submitted that the same script has already been dealt with by the Coordinate Bench of ITAT in the case of Sanjeev Agarwal Vs. ACIT in ITA No. 1518 to 1519/Del/2021 decided on 20.09.2023, the operative portion of the decision of the Coordinate Bench is reproduced herein below:\n\n8. We have heard the rival contentions and perused the material on record. We have also given our thoughtful consideration to several contentions raised by the ld. Counsel along with judicial precedents referred by him. Fact of the case and detailed arguments made by the parties are all captured in the above paragraphs which are not repeated for the sake of brevity. We first look to the chronology of events which transpired in the present case, the same is extracted below:\n\nCHRONOLOGICAL SEQUENCE OF EVENTS\nSr.\nNo.\nDate\nParticulars\n(Page of Paper Book)\n1\n16.10.2016\nReturn of income filed declaring an income of\nRs.3,58,34,630/- for financial year 2015-16 relevant to\n assessment year 2016-17 (pages 1-15 of Paper Book)\n\n2\n07.07.2017\nNotice issued u/s 143(2) of the Act. (16-19)\n\n3\n14.08.2018\nNotice issued u/s 142(1) of the Act along with Questionnaire.\n(20-23)\n\n4\n14.09.2018\nReply filed in response to notice dated 14.08.2018. (24-25)\n\n5\n05.10.2018\nShow Cause Notice issued u/s 142(1) of the Act. (26-29)\n\n6\n18.10.2018\nReply filed in response to notice dated 14.08.2018. (30-59)\n\n7\n06.11.2018\nReminder - Show Cause Notice issued u/s 142(1) of the Act on\n05.10.2018 (61)\n\n8\nReply filed before Assessing Officer. (64-72)\n9\nReply before before Assessing Officer submitting entire details\nof long term capital gain earned in respect of shares of capital\ntrade links. (73-263\n\n10\nReply filed before Assessing Officer clarifying that shares of\nCapital Trade Link purchased outside the Stock Market from\nVenus Insec Private Limited on 13.06.2014. (264, 280-284)\n\n11\nReply filed before Assessing Officer. (285-310)\n\n12\nReply filed before Assessing Officer alongwith copy of chart\nshowing price history of share on the Stock Exchange. (311-\n317)\n\n13\n22.12.2018\nOrder passed u/s 143(3) of the Act assessing income at Rs.\n6,61,40,343/- after making addition of Rs.3,03,05,713/-\ndisallowing exemption u/s 10(38) of the Act.\n\n13\n16.01.2019\nAggrieved by an order of learned Assessing officer assessee\nfiled an appeal before First Appellate Authority.\n\n14\n11.01.2021\nAdditional ground filed by assessee (318-320) along with\n\nwritten submission. (321-374)\n\n15\nCopy of show cause notice for enhancement. (375)\n\n16\n11.01.2021\nFurther written submission filed by assessee before First\nAppellate Authority. (376-385)\n\n17\n27.09.2021\nOrder passed by first appellate authority disposing the various\ngrounds raised by appellant as under:\nGround\nNo.\n1,6-7\nParticulars\nGeneral\nPage no\nof CIT(A)\norder\nDismissed\n(43-56)\n\n2-5\nAddition of Rs.3,03,05,713/-\ndisallowing exemption u/s 10(38)\nof the Act is bad in law\n\nAdditional\nGround\nEnhancement of expenditure (56-57)\nincurred u/s 69C of the Act of Rs.\n9,09,171/-\n\nThat the Ld AO has erred in law\nand on facts in levying the tax\n@77.25% invoking the provisions\nof S. 115BBE of the Act as\nagainst the lower tax rate of 20%\nas prescribed u/s 112 of the Act.\nDismissed\n(67-69)\n\n18\n25.10.2021\nAggrieved by the aforesaid order of Hon'ble First Appellate\nAuthority assessee filed instant appeal raising below mentioned\ngrounds:\nS.no\nGrounds\nParticulars\ni)\n1,5\nGeneral\nii)\n2-3.7\nThat the addition made and confirmed\nof Rs.3,03,05,713/- disallowing\nexemption u/s 10(38) of the Act is bad\nin law.\n\niii)\n4-4.1\nThat the addition made of Rs.\n9,09,171/- u/s 69C of the Act is bad in\nlaw.\n\nby\nLd\nCommissioner\nof\nIncome\nTax\n(Appeals) in the impugned order is\nbeyond the scope of powers vested u/s\n251(2) of the Act and thus in excess of\njurisdiction.\n\n8.

On a specific query by the Bench in respect of details of\nDMAT account in which the purchase of shares of CTL were\ncredited, ld. Counsel furnished the DMAT statement with DP ID\n12069800 and Client ID 00001312, issued by Rajgul Securities\nPvt. Ltd., DP of Central Depository Services (I) Ltd. From the\nperusal of the said statement, it is noted that purchase of\n5,00,000 shares of CTL were credited on 19.06.2014 in the\nDMAT account which were purchased off-market on 13.06.2014.\nThus, in our observation, it is not a case where purchased\nshares are credited in the DMAT account just prior to the date\nof sale and remain in the pool account of the broker until then.\nEven though shares were purchased in an off-market\ntransaction, the same were dematerialized and credited in the\nDMAT account at the earliest possible date, immediately after\nits actual purchase.\n\n8.

Further, from the perusal of the note from the office of\nDirectorate of Income Tax (Invest), New Delhi, referred by the\nld. DR in his submission and as extracted above, we find that it\ndoes not in way suggest that scrip of CTL is suspended or has\nfailed to comply with listing requirements of the stock exchange\nso as to conclude on an adverse finding recorded by the\nauthorities below.\n\n8.

Also, under section 142(3), it is incumbent upon the ld. AO\nto give an opportunity of being heard in respect of any material\ngathered by him and proposed to be utilised for the purpose of\nthe assessment. We note that compliance of provisions of sec.\n142(3) is a mandatory statutory procedural requirement in\ncompleting the assessment proceeding, failure of which may\nvitiate the entire assessment itself since this sub-section uses\nthe word “shall”. The only exception to this requirement is\nwhere an assessment is made u/s 144 which is not so in the\npresent appeal before us. In the present case before us,\nrequirement mandated by section 142(3) has not been complied\nwith by the ld. AO in completing the impugned assessment.\n\n8.

4. If the inference is drawn that ld. AO has made a\ndisallowance of claim of exemption by the assessee u/s 10(38),\nthen, first and foremost, his statement of applying the rate of\n60% under section 115BBE does not hold good. Further, for\nclaiming exemption under section 10(38) on the LTCG of equity\nshare in a company, only two conditions are prescribed in the\nsaid section, viz. first, transaction of sale of such equity share\nshould be entered into on or after 01.10.2004 and second, such\ntransaction is chargeable to securities transaction tax (STT). In\nthe present case, assessee has established compliance of both\nthe conditions which is not in dispute even by the ld. AO. Also,\nin the show cause notice, while proposing for the addition as\nwell as in the impugned assessment order, while making the\naddition, ld. AO has made no such reference to section 10(38)\nabout its non-fulfilment. Thus, even this inference fails.\n\nof\n8.

Considering the totality of the facts and circumstances of\nthe case, factual matrix and submissions of parties narrated\nabove and judicial precedents relied upon as discussed as well\nas discussion and observations made herein above, we set\naside the orders of the authorities below and delete the\naddition made towards Long Term Capital Gain on sale of\nshares of CTL. Accordingly, grounds taken by the assessee in\nthis respect are allowed.\n\n8.

Also, addition made by resorting to enhancement of income\nby ld. CIT(A) towards brokerage/commission as unexplained\nexpenditure u/s 69C by treating the LTCG as bogus and\naccommodation entry is deleted since it is consequent to the\naddition made towards LTCG. Accordingly, grounds taken by\nthe assessee in this respect are allowed.\n\n10. After having gone through the decision of the\nCoordinate Bench I found that the “same script” has\nalready been dealt with by the Coordinate Bench and the\nappeal of the assessee in the said case was allowed thereby\ndeleting the additions made on account of treating the long\nterm capital gains as bogus and accommodation entries.\n\n11. Even otherwise as per the facts of the present case the\ngenuineness of the transaction has been clearly proved by\nthe assessee by submitting all the required documents as\ndiscussed in the above paras which includes.......\n\na] Details of the broker\nb] DP ID\nc] Client ID\nd] Contract number with trade date, order no, order time, trade\nпо.\nc] Scrip name\nf] Quantity of shares sold, rate at which sold, brokerage\ng] Amount of STT charged, service tax levied\n\nii] Bank statement showing the sales consideration received\nfrom the broker.\n\nIii] Demat statement showing the holding of shares for more\nthan 12 moths.\n\nIV] Purchase bill, letter confirming the purchase, bank\nstatement highlighting the payment made for acquisition of\nshares.\n\nv] Demat statement showing the dematerialization of shares.\n\n12. But still the additions have been made without\ncontroverting the above documents on the basis of\nsurmises, which are bad in law. In this regard I found\nreliance from the decision in the case of Hon'ble Delhi High\nCourt in ITA. 130 & 131/2020,\nwherein the Hon'ble Delhi High Court specifically held that\nthe “theory of human behavior and preponderance of\nprobabilities cannot be cited as a basis to turn a blind\neye to the evidence produced by the respondent\".\n\n13. In my view, since assessee had already discharged his\npart of initial onus by establishing identity,\ncreditworthiness and genuineness of the transaction,\ntherefore it was now revenues onus to disprove the claim\nof the assessee by proving on record the evidences to the\ncontrary. Ordinary rule is that “appellant state of affair\nis real unless contrary is proved” and therefore burden\nof proving lies on the person who asserts it. Since in the\n\npresent case, the genuineness of the transaction has been\nclearly proved beyond doubt therefore additions are not\nwarranted, for this proposition reliance is placed upon the\ndecision of PCIT v. Parasben Kasturchand Kochar [130\ntaxmann.com 176 of 2020]: -\n\n1. This appeal under Section 260A of the Income Tax Act, 1961\n(for short 'the Act 1961") is at the instance of the Revenue and\nis directed against the order passed by the Income Tax\nAppellate Tribunal, Ahmedabad Bench dated 20-2-2020 in the\nITA No.549/Ahd/2018 for the A.Y. 2014-15. The Revenue has\nproposed the following question of law for the consideration of\nthis Court:\n\n\"Whether the Appellate Tribunal was right in law and on facts\nin deleting the addition of Rs.9,70,468/- made on account of\nLTCG claimed as exempt_u/s_10(38) of the Act without\nappreciating the fact that the transaction was pre-arranged as\nwell as sham and was carried out through penny scripts\ncompanies/paper companies?\"\n\n2. We take notice of the fact that the issue in the present appeal\nis whether the assessee earned long term capital gain through\ntransactions with bogus companies. In this regard, the finding\nof fact recorded by the Tribunal in paras 9, 10 and 11 reads\nthus:\n\n\"9. In our considered opinion, in such case assessee cannot be\nheld that he earned Long Term Capital gain through bogus\ncompany when he has discharged his onus by placing all the\nrelevant details and some of the shares also remained in the\naccount of the appellant after earning of the long term capital\ngain.\n\n10. Learned A.R. contention is that no statement of the\nInvestigation Wing was given to the assessee which has any\nreference against the assessee\n\n11. In support of its contention, learned A. R. also cited an\norder of Coordinate Bench in ITA No.62/Ahd/2018 in the matter\nof Mohan Polyfab Pvt. Ltd. Vs. ITO wherein ITAT has held that\nA.O. should have granted an opportunity to cross examine the\nperson on whose statement notice was issued to the assessee\nfor bogus long term capital gain. But in this case, neither\nstatement was supplying to the assessee nor cross examination\nwas allowed by the learned A.O. Therefore, in our considered\nopinion, assessee has discharged his onus and no addition can\nbe sustained in the hands of the assessee.\"\n\n3. Thus, the Tribunal has recorded the finding of fact that the\nassessee discharged his onus of establishing that the\ntransactions were fair and transparent and further, all the\nrelevant details with regard to such transactions were\nfurnished before the Income Tax authorities and the Tribunal\nalso took notice of the fact that some of the shares also\nremained in the account of the appellant.\n\n4. We take notice of the fact that the assessee has a Demat\nAccount maintained with the ICICI Securities Ltd and has also\nfurnished the details of such bank transactions with regard to\nthe purchase of the shares. In the last, the Tribunal took notice\nof the fact that the statements recorded by the investigation\nwing of the Revenue with regard to the Tax entry provided were\ninformed to the assessee despite giving him opportunity to meet\nsuch an allegation. In the overall view of the matter, we believe\nthat the proposed question cannot be termed as a substantial\nquestion of law for the purpose of maintaining the appeal under\nSection 260-A of the Act, 1961.\n\n5. In the result, this appeal fails and is hereby dismissed.\n\nReliance is also placed on the decision of Supreme\nCourt of India in the case of PCIT υ. Parasben\nKasturchand Kochar [130 taxmann.com 177 of 2021]: -\n\nSection 10(38) of the Income-tax Act, 1961 Capital gains\nIncome arising from transfer of long-term securities (Shares)\n Assessment year 2014-15 - Assessee\n\nas\nindividual engaged in business of trading in shares claimed\nlong term capital gains arising out of sale of shares\nexemption under section 10(38) - Assessing officer denied claim\nand made certain additions into assessee's income on grounds\nthat said gains were earned through bogus penny stock\ntransactions and companies to whom sold shares belonged\nwere bogus in nature Tribunal observing that assessee by\nsubmitting records of purchase bills, sale bills, demat\nstatement, etc., had discharged his onus of establishing said\ntransactions to be fair and transparent, same not being earned\nfrom bogus companies was eligible for exemption under section\n10(38) - High court by impugned order held that no substantial\nquestion of law arose from Tribunal's order Whether SLP\nagainst said impugned order was to be dismissed - Held, yes\n(Para 2) (In favour of assessee)\n\nFurther reliance on is placed upon the decision of the\nJurisdictional High Court Decision of Mumbai High Court\nin the case of PCIT v. Ziauddin A. Siddique [Income tax\nAppeal No 2012 of 2017]: -\n\n\"2. We have considered the impugned order with the assistance\nof the learned Counsels and we have no reason to interfere.\nThere is a finding of fact by the Tribunal that the transaction of\npurchase and sale of the shares of the alleged penny stock of\nshares of Ramkrishna Fincap Ltd. (\"RFL\") is done through stock\nexchange and through the registered Stock Brokers. The\npayments have been made through banking channels and even\nSecurity Transaction Tax (\"STT\") has also been paid. The\nAssessing Officer also has not criticized the documentation\ninvolving the sale and purchase of shares. The Tribunal has\nalso come to a finding that there is no allegation against\nassessee that it has participated in any price rigging in the\nmarket on the shares of RFL.\"\n\n3. Therefore we find nothing perverse in the order of the\nTribunal.\n\n5. In our view, the Tribunal has not committed any perversity or\napplied incorrect principles to the given facts and when the\nfacts and circumstances are properly analysed and correct test\nis applied to decide the issue at hand, then, we do not think\nthat question as pressed raises any substantial question of\nlaw.\n\n6. The appeal is devoid of merits and it is dismissed with no\norder as to costs.\"\n\nI also noticed that in a latest decision in the case of\nSulochanadevi A. Agrawal wherein on the identical\nfacts\nand circumstances, the Hon'ble CIT[A] has deleted the\naddition made after following observations:-\n\n\"9. Thus, considering the totality of the facts and\ncircumstances, keeping in view the position of law, and\nrespectfully following the above binding judicial precedents, I\nfind that the transaction of purchase and sale of shares of M/s\nFiberweb India Limited (FIL) undertaken by the appellant was a\ngenuine financial transaction, and not a colourable device to\nevade taxes. The claim of exemption under section 10(38) in\nrespect of long term capital gains arising on such transaction is\ngenuine, AO is accordingly directed to delete the addition of Rs.\n15,42,933/- made on account of unexplained cash credits under\nsection 68 of the Act. These Grounds of appeal are allowed.\"\n\n14. Considering the totality of the facts and circumstances\nand legal proposition as discussed by me above, I am of the\nconsidered view that the long term capital gain earned by\n\nthe assessee is genuine and therefore addition made on\nthis ground is directed to be deleted.\n\n15. In the result the appeal filed by the assessee is\nallowed.\n\nOrder pronounced in the open court on 18.02.2025.\n\n(SANDEEP GOSAIN)\nJUDICIAL MEMBER\n\nMumbai, Dated 18/02/2025\n\nKRK, PS\n\nआदेश की प्रतिलिपि अग्रेषित/