NEETA RAJESH LODHA,MUMBAI vs. CIT (A), NFAC, DELHI

4. However, the AO didn’t agree. According to him, the gain shown by the assessee were from sale of penny scrips. According to AO, shares of M/s TTML was classified as penny scrips which were used for providing accommodation entries to beneficiaries like assessee in the form of bogus capital gain/losses. Thereafter, the AO discussed about the investigation report of the wing which spelled out the modus operandi of unscrupulous entry providers from para nos.7.1 to 7.8 and 14 of the assessment order; and made general assertions and observations, which according to him, is the manner and mode used by entry operators in active connivance with exit providers to accommodate bogus LTCG and losses in transactions of these penny scrips. The relevant facts concerning the assessee case, is noted by the AO from para no. 6 and 8 onwards. The AO is noted to have found from records that the assessee on 27.01.2010 had acquired 1,20,000 shares of M/s. TTML for a consideration of Rs.12,00,000/-. And the assessee sold these shares in this AY for a consideration of Rs. 2,61,43,231/- as noted in Para 6 of the assessment order. According to AO, there was circumstantial and other material to suggest that transaction of sale of shares of M/s TTML are not natural but are arranged one. Thereafter, AO discussed about the transaction in M/s 4 A.Y. 2011-12 Neeta Rajesh Lodha TTML and noted the share price movement from Rs.1.85 in August 2010 to Rs.207/- in August 2012 and then came down to Rs.1.45, were not based on any fundamental or extraordinary cause or performance. After extracting the financials of M/s TTML from para no. 8.1 of his order, the AO observed that there was no extraordinary events to justify price rise in share prices and thus held that the price was indeed rigged by operators to accommodate beneficiaries. After taking note of the unusual price movement and fluctuations he was of the opinion that no prudent person would trade/invest in the shares of M/s TTML. The AO thereafter, summoned the assessee and recorded her statement on oath u/s 131 of the Act, which question & answer he has reproduced at page 7 to 12; and thereafter, issued SCN dated 03.12.2018 to assessee which contents he reproduced at pages 12 and 13 and assessee’s reply has been reproduced at page 13 and 14 of his order, wherein the AO acknowledged that assessee submitted reply dated 07.12.2018 wherein she pointed out that the whole transaction of buying and selling of shares happened through banking channel; the purchase and sale of shares was through the Bombay Stock Exchange through registered broker; shares were demated; and filed all the relevant evidences in the form of contract notes, Brokers Ledger Account, bank statements. The assessee relied on few case laws of Hon’ble Bombay High Court in CIT Vs. Pooja Agarwal , CIT Vs Prem Pal Gandhi and Pramod Jain & Others Vs DCIT.

5. And thereafter, the AO discussed about investigations carried out against exit providers/entry operators at paras 13 and 14 .The AO 5 A.Y. 2011-12 Neeta Rajesh Lodha notes at para 13 that he had issued notice u/s 133(6) of the Act to the exit providers (anonymous) and in very few cases he received replies; and in the replies, those exit providers, have stated that they had no transactions with assessee and in other cases no replies were received. Thus according to AO, assessee was not a genuine trader of this scrip. The AO noted at para 14 the investigation carried out against entry operators wherein he takes note of the statement recorded u/s 133A of Mr. Subrata Haldar, an associate of Mr. Bikash Sureka. And Mr Subrata Haldar, maintained clients Sauda books as well as back office work of BSAS Secuities Ltd and that he was director of BSAS Secuities which is a broking company in BSE & NSE. And Shri Subrata Haldar have admitted on 30.12.2014 that through his broking company M/s BSAS Securities Ltd, they have helped various persons in obtaining accommodation entries in the form of LTCG/STCG through transaction of shares in M/s TTML; and in the aforesaid background AO was of the opinion that assessee has taken accommodation entry of LTCG and therefore, the claim of LTCG/exemption u/s 10 (38) of the Act was bogus. The AO on the basis of report of investigation wing wherein modus operandi of unscrupulous entry providers have been explained and taking note of the surrounding circumstances, human conduct was of the view that preponderance of probability lien in favour of revenue to disbelieve the documentary evidence; and he was of the opinion that the sale proceeds of shares was found to be not explained to his satisfaction. Further according to AO, the assessee has resorted to the transaction 6 A.Y. 2011-12 Neeta Rajesh Lodha from which LTCG was earned was intended for bringing in her books, unaccounted money without giving tax. Thus according to the AO, the LTCG on sale of shares of M/s TTML shown by assessee is not genuine and represent her undisclosed income and therefore, rejected the claim of exemption/LTCG on sale of scrip of M/s TTML and made an addition of Rs. 2,61,43,231/- u/s 68 of the Act and also added Rs.5,22,865/- as commission (2% of LTCG) for arranging bogus LTCG u/s 69 of the Act.

6. On appeal, the Ld. CIT(A) upheld the action of the AO. The Ld. CIT(A) is noted to have rejected the submissions put forth by the assessee. Aggrieved, the assessee is before us.

7. Assailing the action of the Lower Authorities, the Ld AR pointed out that AO as well as Ld. CIT(A) has not doubted the purchase of 1,20,000 shares of M/s. TTML on 27.01.2010 for Rs.12,00,000/- and the sales of the aforesaid shares through broker M/s. Sushil Financial Services Private Ltd during the financial year through BSE for Rs. Rs. 2,61,43,231/- on which assessee claimed LTCG of Rs. 2,51,62,370/-; and contended that the claim of LTCG and resultant exemption u/s 10(38) of the Act ought not to have been denied to assessee, since sale of share took place at the Bombay Stock Exchange wherein STT was paid; and the consideration of purchase and sales happened through banking channel. According to Ld. AR, when the purchases & sales, and holding period of shares have been accepted by both the authorities, merely on suspicion and surmises, the 7 A.Y. 2011-12 Neeta Rajesh Lodha impugned action of disallowing the LTCG/exemption is erroneous. Therefore, the action of AO/Ld. CIT(A) to disallow the LTCG claim is un-sustainable in law. According to him, findings rendered by them were factually misplaced and unjustified. The Ld AR submitted that the assessee is neither responsible nor has any role in the price of M/s TTML and it is governed by market forces. The Ld AR submitted that the AO has merely relied upon the investigation report of the Investigation wing of Kolkata and has not carried out independent enquiry to support his conclusion that the LTCG claim of the asssessee is bogus.

10. Per contra, the Ld. DR appearing for the revenue supported the orders of the lower authorities. The Ld. DR submitted that shares of both were purchased by assessee for meagre cost and later sold when the prices have been artificially rigged/increased by synchronous trading and as pre-planned, the shares were sold to exit entry operators at an exorbitant price. According to the Ld. DR, by this modus operandi undue benefit in the form of exempted gains was claimed by assessee. According to Ld. DR, assessee couldn’t explain why she invested in M/s. TTML and pointed out to the financials of the company and wondered as to how such a company can fetch such high price unless it was pre-fixed by unscrupulous entry providers as revealed by the investigation report of the Investigation Wing of Department. Therefore, he does not want us to interfere with the action of the Ld. CIT(A) and prayed for dismissing the appeal of the assessee.

11 A.Y. 2011-12 Neeta Rajesh Lodha 12. We have heard both the parties and perused the records; and we find that AO/Ld. CIT(A) has not found any infirmity in the primary documents produced by the assessee in support of claim of exemption of LTCG u/s 10(38) of the Act. We find that AO during assessment proceedings had asked the assessee to prove the claim of LTCG of Rs 2,51,62,370/- [AO to verify whether it is Rs 2,51,62,370/-or Rs.2,49,43,431/- as noted at page 2 supra] from sale of shares of M/s TTML pursuant to which, the assessee filed documents (refer page no.7 to59 of PB along with documents) to prove the claim, which documents have not been found by AO to suffer from any infirmity. The assessee placed evidence to prove the allottment of 1,20,000 shares of M/s. TTML, which is seen from perusal of Share Allotment Letter (refer Page 7 of PB) , Share Certificate is found placed at Page 11 of PB, Contract notes and Ledger Account of assessee with Broker M/s Sushil Financial Services Private Limited a copy of which are seen from perusal of Pages 38 to 56 of paper book; and copy of demat statement of Standard Chartered Wealth Manager DP of NSDL at Page 14 to 20 of Paper Book. And further, we note that assessee has paid for the allotment of shares through Banking channel, which fact is discernable from bank statement wherein Rs 12 Lakhs has been seen debited in her bank account of Union Bank of India A/c No 315302010045433 with Abdul Rehman Street Branch, Mumbai on 15.01.2010 [refer Page 8 & 9 of the Paper book]. Thus, the purchase of the shares of M/s TTML by assessee cannot be disputed. It is further noted that, assessee sold 1,20,000 Shares of M/s TTML 12 A.Y. 2011-12 Neeta Rajesh Lodha between 03.02.2011 to 18.3.2011 in Bombay Stock Exchange through broker M/s Sushil Financial Services Private Limited (refer contract notes placed at page 42 to 56 of PB) and consideration have passed through banking channel (refer page no. 57 to 59 of PB) and STT paid on the sale transaction (refer contract notes at pages 42 to 56 of PB), thus sale of shares cannot be held as bogus; and once the assessee produced all relevant evidence to substantiate the transaction of purchase, dematerialization and sale of shares then, in the absence of any contrary material brought on record, the same cannot be held as bogus transaction merely on the basis of a general investigation report wherein there is no mention of any wrong doing by assessee or of her broker, or involvement in modus-operandi as stated in Report of Kolkata Investigation Wing (referred at para 4 and 14 of the order) which we note are general report and does not impute any wrong doing of assessee/broker. According to the Ld. AR, the AO also doubted the financial prudence of the assessee to have purchased in the first place the shares of M/s. TTML ; and wondered as to how the price of shares of M/s. TTML could have increased 27 times in a span of two years, and AO also relied on the selected statements of Shri Bikash Sureka, Shri Subrata Haldar; and according to AO enquiries were made with exit providers and only some replied by denying any transaction with assessee and others, didn’t bother to even reply. So, the AO drew adverse inference against the claim made by assessee and according to AO, by making such a claim of LTCG/exempt income, assessee was bringing in her books unaccounted money.

13 A.Y. 2011-12 Neeta Rajesh Lodha Thus, according to AO, assessee has laundered her black money to white and therefore, he held the transaction as bogus and added Rs. 2,61,43,231/- u/s 68 of the Act along with commission of Rs 5,22,865/-.

13. The main plea of the assessee is that such an action of the AO/Ld. CIT(A) cannot be legally sustained in the light of the fact that assessee has discharged the burden of proving the genuineness of claim regarding LTCG by submitting primary documents to substantiate the claim (LTCG) by proving the events of purchase of shares, dematerialization of the shares, and transfer of shares to demat account, and the sale happening through Bombay Stock Exchange Electronic platform. Therefore, according to Ld. AR, AO could not have drawn adverse view against the claim made by assessee without first finding any infirmity in the primary documents filed by the assessee, which in this case AO/Ld. CIT(A) have not made any allegation about it. In such a scenario, according to Ld. AR, the AO was duty bound to show from the incriminating evidences, he relies upon in the assessment order (like report of investigation wing, statement of entry providers, non-compliance by exit providers etc) that assessee was participant in the modus operandi to convert black money of assessee in active connivance with these statement- makers/exit-providers (anonymous). Unless AO is able to point out from the report/statement of entry operators/name of exit-providers and any material to indicate the role of assessee as a wrong doer or 14 A.Y. 2011-12 Neeta Rajesh Lodha participant in the modus-operandi (as stated in the investigation wing report), the impugned action of AO/Ld CIT(A), in the light of primary documents has to fall.

14. As noted (supra), AO/Ld. CIT(A) has been influenced by the investigation report submitted by the Investigation Wing of the Department functioning at Kolkata. It is true that some unscrupulous entry operators had devised methods/modus-operandi to beneficiaries to facilitate laundering their black money to white through pre-planned receipt in the form of bogus LTCG, loans etc. But the discussion of lower authorities, we find to be general in nature and there is nothing in the discussion to link/connect the assessee somehow with the modus-operandi of the Investigation Wing or Report. Since there is no evidence incriminating assessee in the investigation report of being part of the nefarious conspiracy or abetment, such a report of investigation wing cannot be of any aid to the revenue and both the authorities erred in placing reliance on such report to draw adverse inference against assessee.

15. As noted (supra), the lower authorities have not doubted the documents which were furnished in support of the purchases. Rather the lower authorities doubted the investment rational of the assessee purchasing the shares of M/s.TTML. The AO wondered as to how the assessee could have invested in such an entity which did not have any future outlook at the time of purchase, which according to him was unusual and suspicious. Moreover, the AO have not brought on record 15 A.Y. 2011-12 Neeta Rajesh Lodha any evidence/material to show that assessee’s investment in M/s. TTML was the outcome of any pre-planned scheme for facilitating huge gain by rigging the share market. Other than citing bald statement of Shri Subrata Haldar, there is no iota of evidence/material to connect the aforesaid persons with assessee or anyone associated with assessee in any wrong doing. And it is not the case of AO that the aforesaid persons has imputed any role of assessee in the alleged modus- operandi to rig the share market or that assessee was a beneficiary of accommodation entry. Without any incriminating material to connect assessee with the aforesaid persons; their statement cannot in anyway discredit the LTCG claim of assessee on sale of shares of M/s.TTML. Therefore, we find that statements referred by AO (of Shri Subrata Haldar,) is of any use to disbelieve/discredit the documents submitted by assessee to claim the LTCG.

16. As noted (supra), during the year, in several lots, shares of M/s TTML were sold. The assessee has placed before us the contract notes issued by registered stockbroker M/s Sushil Financial Services Private Limited which fact is evident from page 42 to 56 of PB. The consideration for allotment/sale of shares in question, has happened through the banking channel which has not been disputed. It is noted that none of these documents to have been found to be defective or forged by any of the lower authorities. It is also noted that the broker through whom assessee had conducted then transaction M/s Sushil Financial Services Private Limited has also not been alleged to be guilty of any wrongdoing or manipulation. It is also not the case of the 16 A.Y. 2011-12 Neeta Rajesh Lodha revenue that the shares were not sold at the prices at the prevailing price on the floor of Bombay Stock Exchange on the given date of sale. Further, we agree with the submission of Ld AR that no adverse view can be drawn from observation by AO at para 13 of his order that notices sent under section 133(6) to the exit-providers where some replied and some didn’t comply, because it is common knowledge that there is no scope for sellers of shares in stock market to know who has purchased the shares in the market. Secondly, it is noted that the AO has neither spelled out the name of the so called exit providers nor confronted the assessee while she was examined and therefore in such a scenario, without bringing any evidence/material about the identity of exit providers, and the nexus of such entities with the assessee/broker, no adverse view could have been taken against the assessee in the given facts and circumstances of the case. Thus, we find that the assessee had discharged her burden of substantiating the sale of the listed shares which were subjected to STT, on the floor of stock exchange in order to avail the benefit of the exemption set-out in section 10(38) of the Act.

20 A.Y. 2011-12 Neeta Rajesh Lodha TTML for 91,000 at a cost of Rs.9,10,000 was continued to be reflected in the Balance sheet as on 31/03/2011. Copy of Balance Sheet as on 31/03/2011 is found placed at page 95 of paper book. We also note that the assessee has submitted an extract of price data of BSE to substantiate that the shares were sold at prevailing market price. Copy of the BSE price data during the period of sale is found placed at pages 96 and 97 of paper book. We note that the AO did not find any defect/ discrepancy about the documents which were produced to establish the genuineness of the share transaction. Before us the Ld. AR submitted that the AO’s show cause notice was replied denying any relation with the parties referred in the investigation report. Copy of the reply is found placed at pages 98 to 100 of the paper book. We note that the AO based on the general investigation report of the department discarded all the above evidences. Further the AO taking note of the price rise, high volume, low fundamentals etc. held that the share transaction as bogus. It was brought to our notice that the AO did not provide during the assessment proceedings, any copies of the material, investigation reports, statements purportedly recorded behind the back of the assessee to create a smoke screen of suspicion and doubt against the assessee. And AO based on third party evidence which were not supplied to the assessee brushed aside the aforesaid documents which substantiated the LTCG and held the transaction to be bogus, which according to Ld. AR, is not fair just and reasonable and so wants the claim of assessee allowed as done in similar case.

24 A.Y. 2011-12 Neeta Rajesh Lodha 10.1 The assessee has purchased the shares of four companies viz., Allan Industrial Gases Ltd., Mobile Telecom, Rashee Agrotech and Centil Agrotech, during the previous years relevant to the assessment years 1999-2000 and 2000-01. The books of account maintained by the assessee for both the years clearly reflected the purchase of those shares. The shares are reflected in the balance sheets filed by the assessee along with the returns of income for the assessment years 1999-2000 and 2000-01. Therefore, it is seen that as a prima facie evidence, the purchases of shares have been contemporaneously entered into the books of account of the assessee.

10.2 The assessee has been declaring agricultural income in his returns of income for the assessment years from 1990-91 to 2001-02. The total agricultural income returned by the assessee up to the assessment year 1999-2000 was at Rs. 7,57,883. The amount invested in the purchase of shares as on 31-3-1999 was Rs. 4,48,160. The cash available with the assessee by way of agricultural income was much higher than the investment made by the assessee in the purchase of shares as on 31-3-1999. After making the investments in the shares, the assessee had a surplus cash balance of Rs. 3,09,000 as on 1-4-1999. Thereafter, the assessee has further returned an agricultural income of Rs. 66,000 for the assessment year 2000-01. The amount invested in the purchase of shares in the year ending on 31-3-2000 was Rs. 2,57,020. Again the assessee had a cash balance thereof of Rs. 1,18,771. Therefore, it is, very clear that the investment made by the assessee in shares during the previous periods relevant to the assessment years 1999-2000 and 2000-01 was supported by cash generated out of agricultural income. The above agricultural income have been considered in the respective assessments. Therefore, the contention of the assessing authority that the assessee had no sufficient resourcefulness to make investments in the shares is unfounded.

10.3 Purchase and sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off-market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the CIT(A) that off-market transactions are not permissible. The assessee has stated that the transactions were made with the help of professional mediators who are experts in off-market transactions.

25 A.Y. 2011-12 Neeta Rajesh Lodha 10.4 When the transactions were off-market transactions, there is no relevance in seeking details of share transactions from Stock Exchanges. Such attempts would be futile. Stock Exchanges cannot give details of transactions entered into between the parties outside their floor. Therefore, the reliance placed by the assessing authority on the communications received from the Stock Exchanges that the particulars of share transactions entered into by the assessee were not available in their records, is out of place. There is no evidential value for such reliance placed by the assessing authority. The assessee had made it very clear that the transactions were not concluded on the floor of the Stock Exchange. The matter being so, there is no probative value for the negative replies solicited by the assessing authority from the respective Stock Exchanges. We are of the considered view that the materials collected by the assessing authority from the Stock Exchanges are not valid to dispel or disbelieve the contentions of the assessee.

10.5 The next set of evidences relied on by the assessing authority are the statements obtained from various parties. When certain persons like Radha Ashok and Sandeep D. Shah made negative statements against the assessee, persons like Satish Mandovara and Mangesh Chokshi had given positive statements in support of the contention of the assessee. But, the assessing authority sought to pick and choose the statements given by various parties. While accepting and rejecting such statements given by the parties, the Assessing Officer has made a mistake of accepting irrelevant statements and rejecting relevant statements. During the relevant period in which the assessee transacted in shares, persons like Radha Ashok and Sandeep D. Shah were not carrying on their business of brokers as in the manner they carried on the business in the past. Even their Stock Exchange Memberships were cancelled. It was Shri Satish Mandovara who was carrying on the business mainly for and on behalf of Shri Mangesh Chokshi, Director of M/s. Richmond Securities Pvt. Ltd. Those two persons have categorically admitted before the assessing authority that they had dealings with the assessee in respect of the share transactions. They have confirmed the transactions stated by the assessee that he had with them. These positive statements made before the assessing authority supported the case of the assessee. There is no force in the action of the assessing authority in relying on the negative statements of the other parties whose role during the relevant period was either irrelevant or insignificant. Therefore, in the facts and circumstances of the case, it is, our considered view that certain statements relied on by the assessing authority do not dilute the probative value of the statements given by other persons 26 A.Y. 2011-12 Neeta Rajesh Lodha in favour of the assessee confirming the share transactions entered into by the assessee.

10.6 The above circumstances have made out a clear case in support of the book entries reflecting the purchase and sale of shares and ultimately supporting the money received on sale of shares and finally investing the same in the purchase of flat. The chain of transactions entered into by the assessee have been properly accounted, documented and supported by evidences.

10.7 Therefore, we find that the explanations of the assessee seems to have been rejected by the assessing authority more on the ground of presumption than on factual ground. The presumption is so compelling that comparatively a small amount of investment made by the assessee during the previous year period relevant to the assessment years 1999- 2000 and 2000-01 have grown into a very sizable amount ultimately yielding a fabulous sum of Rs. 1,41,08,484 which was used by the assessee for the purchase of the flat at Colaba. The sequence of the events and ultimate realization of money is quite amazing. That itself is a provocation for the Assessing Officer to jump into a conclusion that the transactions were bogus. But, whatever it may be, an assessment has to be completed on the basis of records and materials available before the assessing authority. Personal knowledge and excitement on events, should not lead the Assessing Officer to a state of affairs where salient evidences are over-looked. In the present case, howsoever unbelievable it might be, every transaction of the assessee has been accounted, documented and supported. Even the evidences collected from the concerned parties have been ultimately turned in favour of the assessee. Therefore, it is, very difficult to brush aside the contentions of the assessee that he had purchased shares and he had sold shares and ultimately he had purchased a flat utilizing the sale proceeds of those shares.

10.8 For a moment, even if all the above evidences are ignored, one cannot overlook the pressure of the evidence coming out of the survey carried out by the department in the business premises of the assessee. There was a survey carried out by the department in the business premises of the assessee. In the course of survey, contract notes for sale of shares, copies of bills thereof, photocopies of share certificates etc., were found. The purchase and sale of shares were also found recorded in the books of account. The department has no case that the survey was a staged enactment. A 27 A.Y. 2011-12 Neeta Rajesh Lodha survey is always unexpected. So, it is not possible to presume that the assessee had collected certain fabricated documents and kept at his business premises so as to hoodwink the survey party to lead them to believe that the assessee had entered into share transactions. Atleast such an inference is not possible in law. The department has no defence against the forcible argument of the learned counsel that the survey conducted by the department has out and out upheld the contention of the assessee that he had purchased and sold shares. We find that this solitary evidence collected in the course of survey is sufficient to endorse the bona fides of the share transactions made by the assessee.”

“2. We take notice of the fact that the issue in the present appeal is whether the assessee earned long term capital gain through transactions with bogus companies. In this regard, the finding of fact recorded by the Tribunal in paras 9, 10 and 11 reads thus:— "9. In our considered opinion, in such case assessee cannot be held that he earned Long Term Capital gain through bogus company when he has discharged his 28 A.Y. 2011-12 Neeta Rajesh Lodha 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.

11. In support of its contention, learned A.R. also cited an order of Coordinate Bench in in the matter of Mohan Polyfab (P.) Ltd. v. 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."

3. 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.

4. We take notice of the fact that the assessee has a Demat Account maintained with the ICICI Securities Ltd. and has also furnished the details of such bank transactions with regard to the purchase of the shares. In the last, the Tribunal took notice of the fact that the statements recorded by the investigation wing of the Revenue with regard to the Tax entry provided were informed to the assessee despite giving him opportunity to meet such an allegation. In the overall view of the matter, we believe that the proposed question cannot be termed as a substantial question of law for the purpose of maintaining the appeal under section 260-A of the Act, 1961.”

15. Reliance placed by the counsel for the Revenue on the decision of the apex court in the case of Sumati Dayal [1995] 214 ITR 801 is wholly misplaced. In that case, the assessee therein had claimed income from horse races and the finding of fact recorded was that the assessee therein had not participated in races, but purchased 30 A.Y. 2011-12 Neeta Rajesh Lodha winning tickets after the race with the unaccounted money. In the present case, the documentary evidence clearly shows that the transactions were at the rate prevailing in the stock market and there was no question of introducing unaccounted money by the assessees. Thus, the decision relied upon by the counsel for the Revenue is wholly distinguishable on the facts.

31 A.Y. 2011-12 Neeta Rajesh Lodha “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 assessee that it has participated in any price rigging in the market on the shares of RFL.

3. Therefore we find nothing perverse in the order of the Tribunal.

4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 vs. NRA Iron & Steel (P.) Ltd.1 but that does not help the revenue in as much as the facts in that case were entirely different.

I. ''Whether on the facts and in the circumstances of the case, the Learned ITAT was justified in deleting the addition of Rs. 7593444/- made on account of unexplained credit u/s 68 of the Act when the assessee was unable to justify equity trading by picking the shares of specific companies with poor net worth?

II. Whether on the facts and in the circumstances of the case, the Learned ITAT, Jaipur was justified in deleting the addition of Rs. 7593444/- by holding the transaction as genuine because transaction is through Stock Exchange and payment is by cheque, completely ignoring the fact that such 32 A.Y. 2011-12 Neeta Rajesh Lodha masquerade is used methodically to provide accommodation entries in order to show the sham transaction as genuine?

III. Whether on the facts and in the circumstances of the case, the Learned ITAT, Jaipur was justified in deleting the addition of Rs. 151869/- being commission paid to acquire such accommodation entry?

IV. Whether on the facts and in the circumstances of the case, the Learned ITAT, Jaipur was justified in rejecting the Revenue's appeal without considering the case on merit where the additions were made by the AO on the basis of corroborative information received from Investigation Wing, Kolkata given that the case fails under exception as per para 10(e) of CBDT circular no. 03/2018 dated 20-08-2018.

..Learned ITAT has specifically held that the assessee has produced all the relevant documentary evidence to establish genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee and therefore treating the transaction of purchase and sale as sham is not justified. Further, learned ITAT has also relied upon the decision of the jurisdictional High Court in CIT v. Smt. Pooja Agarwal, [2018] 99 taxmann.com 451 (Raj.) wherein learned ITAT has relied upon the judgment of Division Bench involving the same facts wherein the Division Bench has dismissed the appeal filed by the Revenue.

19. On the above facts and circumstances, we find that the transaction of the assessee of deriving long term capital gains of Rs. 1, 93, 56, 813/- by selling shares of M/s Trinity Tradelink Ltd. was treated as bogus by the Revenue only on the basis of suspicion and probability and without finding any defect in the various documentary evidences filed by the assessee and further, the finding recorded by ld CIT (A) on page 26 of his order that the addition has been made on independent analysis of the documents, is contrary to material available on record. As on perusal of the order of assessment, we find that no independent inquiry was made with regards to alleged entry operator Sh. Vikrant Kayan. Whereas, the sole basis of making the impugned addition was statement of Sh. Vikrant Kayan, which too was recorded behind the back of assessee by DIT (Inv) Kolkata and the statement alone cannot be the conclusive evidence to nail the assessee and hence needs to be excluded for consideration as the said person has not been allowed cross examination by assessee, even though various requests were made by assessee. As such, the transaction of the assessee was duly supported by relevant documentary evidences without there being any rebuttal by lower authorities; the addition made by the Assessing Officer of Rs. 1,93,56,813/- by treating the LTCG as bogus is unsustainable. In view of our above finding, we, therefore, delete the addition of Rs.1,93, 56,813/-.

37 A.Y. 2011-12 Neeta Rajesh Lodha 5. We also find no infirmity in the order passed by the ITAT and no substantial questions of law as proposed in the appeal arises.

1. The CIT(A) relies on the decision of Swati Bajaj [2022] 139 taxmann.com 352 where the Hon’ble Calcutta High Court in that particular case has rejected the evidence of LTGC and went by general Investigation report and of Investigation wing but the jurisdictional Bombay High Court in several cases Indravada Jain, Moralia, Syam R Pawar , Jamnadevi Agarwal (supra) has allowed the LTCG claim.