SUMIT GOEL,JAIPUR vs. INCOME TAX OFFICER , JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh]U;kf;d lnL; ,o aJh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ fu/kZkj.k o"kZ@AssessmentYears : 2012-13 Sumit Goel cuke Income Tax Officer, Flat No. 303, Krishna Kripa-3, Vs. Ward-4(5), Jaipur. Subhash Nagar, Shastri Nagar, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADCPG 8949 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri S.L. Poddar(Adv.)& Shri J.P. Singh (Adv.) jktLo dh vksjls@Revenue by: Smt. Monisha Choudhary(Addl.CIT) lquokbZ dh rkjh[k@Date of Hearing :10/08/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/10/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee against the order of the Ld. CIT(A) dated 26.12.2022, National faceless Appeal Centre, Delhi [herein after referred to as “NFAC”] for the assessment year 2012-13. 2. The assessee has raised the following grounds of appeal:-

“1. Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 22,84,800/- u/s 68 of the Income Tax Act, 1961 made by the learned AO on account of sale of shares total sales Sumit Goel vs. ITO consideration against profit for Rs. 10,83,067/- which is exempt u/s 10(38) of the Income Tax Act, 1961. 2.Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 45,696/- u/s 69C of the Income Tax Act, 1961 made by the learned AO on account of unexplained expenditure i.e. alleging that commission paid on obtaining bogus LTCG. 3.Under the facts and Circumstances of the case the learned Assessing Officer as well as the learned CIT(A) have erred in not givingopportunity of the cross examination of the persons on whosestatement he relied upon. 4.Under the facts and Circumstances of the case the learned Assessing Officer as well as the learned CIT(A) have erred in not providing the complete material on which he relied upon and opportunity to confront the same before completion of the assessment.

1. 1. Addition of Rs. 22,84,800/- u/s 68 on account of unexplained cash credit. 2. Addition of Rs. 45,696/- u/s 69C on account of unexplained expenditure. 3. Addition of Rs. 9,67,665/- u/s 56 by disallowing the brought forward losses.

4. Aggrieved with the order of the ld. Assessing Officer the assessee has preferred anappeal before the Ld. CIT(A). The Ld. CIT(A) confirmed all the additions made by the ld. AO observing as under:-

“23. In view of the facts and circumstances borne out of the assessment order and legal precedents as discussed above, I am of the view that documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions merely giving a colour of authenticity by creating a façade of transactions to create bogus profit in the garb of LTCG by well-organized network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or commission. It is relevant to mention here that the prices have increased many fold times as soon as the period of one year has expired so as to avail the benefit of exempt long term gain. There is no justifiable indicator such as some significant business transaction in the case of M/s Asian Bills Pvt. Ltd. to substantiate such abnormal rise in its scrips. The onus was on the appellant to explain the source and nature of the amount credited in his bank account on this account. The appellant, however, could not discharge the onus as the explanation furnished by her has been found to be unsatisfactory. The SEBI has, time and again, after thorough investigation, certified that such transactions are rigged and are carried out to convert black money into white. The appellant miserably failed to discharge the onus to prove that there was no such scheme of manipulation of scrips for routing unaccounted money as tax exempt bogus capital gains.

Nos. 1 and 2 are dismissed. 27. Ground No. 5 is general in nature. 28. In the result, the appeal is dismissed.”

Sumit Goel vs. ITO 5. Feeling dissatisfied from the order of the ld. CIT(A) the assessee has preferred this appeal on the grounds as reiterated here in above. Apropos to the grounds so raised the ld. AR of the assessee submitted the following written submissions: “BRIEF FACTS OF THE CASE AND SUBMISSION: The assessee is an individual. During the year the assesse has earned income from salary, rental income and business income.In response to notice u/s 148 return was filed on 10.06.2019 declaring total income at 2,75,770/- as filed originally on 28/09/2012. The Learned Assessing Officer has completed the assessment u/s 147/143(3) of the IT Act 1961 on 19/011/2019 determining the total income at Rs. 35,73,931/-by making the following additions – (i) Addition of Rs. 22,84,800/- u/s 68 on account of unexplained cash credit. (ii) Addition of Rs. 45,696/- u/s 69C on account of unexplained expenditure. (iii) Addition of Rs. 9,67,665/- u/s 56 by disallowing the brought forward losses. Aggrieved with the order of the Learned Assessing Officer the assessee has preferred appeal before the Learned CIT(A). The Learned CIT(A) confirmed all the additions made by the Learned Assessing Officer.

Aggrieved with the order of the Learned CIT(A) the assessee has preferred appeal before your honour. With this background the individual grounds of appeal are as under: - Ground No. 1:- Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 22,84,800/- u/s 68 of the Income Tax Act, 1961 made by the learned AO on account of sale of shares total sales consideration against profit for Rs. 10,83,067/- which is not exempt u/s 10(38) of the Income Tax Act, 1961.

1. Facts of the case: - The assessee is an individual and engaged in the business of sale and purchase of shares. He is trader of share and securities on regular basis. During the year under consideration the assessee has declared profit from share business for Rs. 9,67,665/- under the head business income (speculation business) (page no. 3 of the paper book). The copy of P&L A/c is on page no. 18 of paper book where the profit of Rs. 14,14,040/- is duly Sumit Goel vs. ITO reflected and highlighted. In this trading & Profit & Loss A/c, the sale of shares of Rs. 21,71,918/- is duly reflected under the head ‘sale (gross receipts of business)’ which includes sale of shares of Rs. 20,95,072/- of M/s LancoInfratech Limited vide contract note no. 7049547 dated 23.03.2012 through M/s IIFL India Infoline Limited. Copy of this contract note is also placed on paper book page no. 13 and 14. Copy of sales account and details of total sales of Rs. 21,71,917/- is placed on paper book page no.

20. The copy of demat ledger is on paper book page no. 16 where 112000 shares was credited on 23.02.2012 in demat account of the assessee and debited on 24.03.2012. The assessee has purchased these shares from M/s Mradul Securities Pvt Ltd 912/59, Lekhu Nagar, Tri Nagar, Delhi-110035. The ledger account and confirmation is placed on paper book page no 11 where the assessee has purchased 112000 shares of LancoInfratech on 21.12.2011 for Rs. 10,08,000/- and payment has been made by crossed account payee cheques on 20.03.2012 and 21.03.2012. The copy of bank account of the assessee is placed on paper book page no. 7 where the same payment of Rs. 10,08,000/- is duly reflected on the same dates and highlighted. The copy of purchase ledger is placed on paper book page no. 19 where total purchase is Rs. 10,82,216.62 is reflected and copy of trading, profit & loss account in the books of the assessee is placed on paper book page no.

21. The assessee has received the payment of sales consideration from M/s IIFL India Infoline Limited on 26/03/2012 and 27/03/2012 through RTGS for Rs. 13,200/- and Rs. 20,86,800/- totaling Rs. 20,90,000/- and Rs. 5,072/- was deducted as brokerage by IIFL India Infoline Limited. So the total profit in this transaction was Rs. 10,82,000/- which is included in net profit of Rs. 14,14,040/- as per P&L account on page no. 18 of paper book. Therefore, the transaction of sale and purchase of LancoInfratech shares was a business transaction and it was duly reflected in the books of account and ITR of the assessee. The profit earned in this business transaction was also part of declared profit of the assessee. The learned AO without verifying all the details has made the addition by treating the same transaction as long term capital gain transaction and made the addition of Rs. 22,84,800/-. It is also not understandable that how this amount of Rs. 22,84,800/- was calculated by the learned AO because the sale consideration of LancoInfratech was only Rs. 20,90,000/- and the assessee has received net amount of Rs. 20,90,000/- by sale of this share. On second last page of assessment order in first para the learned AO has mentioned as under – “In view of detailed analysis, the foregoing paras, of the evidences, it has been established beyond doubt that unaccounted income of Rs. 22,84,800/- routed back to the assessee, during the year under consideration, camouflaged as Long Term Capital Gains, which has been proved a bogus entry. The sum of Rs. 22,84,800/- is therefore added u/s 68 to the total income of the assessee for the year under consideration treating it as unexplained income.”

Sumit Goel vs. ITO The learned AO has mentioned in the assessment order on page 2 that the assessee has The learned AO has mentioned in the assessment order on page 2 that the assessee has The learned AO has mentioned in the assessment order on page 2 that the assessee has purchased bogus exempted LTCG as under: purchased bogus exempted LTCG as under: - Name of scrip Trade value M/s Asain Bulls Pvt Ltd M/s Asain Bulls Pvt Ltd Rs. 22,84,800/-

The assessee failed to disclose fully and truly all material facts necessary for assessment. The assessee failed to disclose fully and truly all material facts necessary for assessment. The assessee failed to disclose fully and truly all material facts necessary for assessment. By such accommodation entry assessee has introduced unaccounted income in his books By such accommodation entry assessee has introduced unaccounted income in his books By such accommodation entry assessee has introduced unaccounted income in his books of accounts without paying tax.” of accounts without paying tax.” The above facts narrated by the learned AO in The above facts narrated by the learned AO in the assessment order is totally wrong the assessment order is totally wrong and not correct. As the assessee not purchased or sold any shares of M/s Asain Bulls and not correct. As the assessee not purchased or sold any shares of M/s Asain Bulls and not correct. As the assessee not purchased or sold any shares of M/s Asain Bulls Pvt Ltd and the amount of Rs. 22,84,800/ Pvt Ltd and the amount of Rs. 22,84,800/- is not comparable with any purchase of is not comparable with any purchase of sales by the assessee. In the next para the learned In the next para the learned AO further mentioned as under: - The facts narrated in above para is totally incorrect because The facts narrated in above para is totally incorrect because –

Sumit Goel vs. ITO (i) The assessee has not made any dealing/purchase/sale with M/s Asian Bulls Capital Pvt Ltd. (ii) The assessee has not made any transaction/shown long term capital gain. (iii) The assessee has not claimed any exempted income on account of long term capital gain income. (iv) The assessee has not made any transaction with any entity which is controlled by Shri Deepak Goyal. (v) There is no name of assessee in the statement of Shri Deepak Goyal. (vi) There is no cash trail found in case of assessee. (vii) The learned AO has not brought any material on record nor conducted any enquiry from the broker or from the buyer or seller that the transaction was not genuine. The assessee has not made purchases of 112000 shares in Rs. 22,84,800/-. The assessee has made purchases of 112000 shares only for Rs. 10,08,000/-. Therefore, the facts mentioned in the assessment order is totally incorrect and not backed by any evidence. In fact the assessee has made following transactions – (i) Purchase of LancoInfratech Limited Shares on 21/12/2011 from M/s Mridul Securities Pvt Ltd for Rs. 10,08,000/-. (ii) Payment was made by account payee cheque. (iii) It was credited in the demat account of the assessee. (iv) Sale of LancoInfratech Limited Shares for a consideration of Rs. 20,95,072/- through IIFL Infoline Limited. (A SEBI registered broker) (v) The assessee has shown this transaction as speculation profit of Rs. 9,67,665/- after deducting brokerage and other expenses. (vi) The assessee has setoff this speculation profit out of carried forward speculation losses.

(vii) The Learned AO has made addition of Rs. 22,84,800/- which is not matches with any transaction of the assessee. The learned AO has wrongly made the addition of Rs. 22,84,800/- which is not pertained to the assessee u/s 68 of the Income Tax Act 1961. This transaction is not matching with any transaction made by the assessee. The Learned AO did not mention anything that how this transaction pertains to the assessee. The assessee has one transaction for sale of LancoInfratech shares which is for Rs. 20,95,072/- and duly recorded in the books of accounts and part of regular books of accounts and income tax return. Therefore, this Sumit Goel vs. ITO addition is not based on any transaction which is entered into by the assessee. Therefore, this addition deserves to be deleted. The learned AO has made the basis of addition, the report of investigation wing as well as statement recorded in search and survey proceedings of various persons who were entry providers. The learned AO also did not bring any further evidence on record. The Learned AO further alleged that the assessee has taken bogus long term capital gain, whereas the assessee has not earned any exempted income or any capital gain income during the year under consideration. The learned AO did not provide any material during the assessment proceedings or even after framing the assessment order on which he has relied upon and made the addition. The Learned AO has also not allowed opportunity of cross examination of the statement which has been used against the assessee. The following case laws are in support of contention of the assessee - (i) The Apex Court has observed that not allowing cross examination is a serious flaw and makes the order nullity. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). “not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity in as much as it amounted to violation of principle of natural justice because of which the assessee was adversely affected. (ii) COMMISSIONER OF INCOME TAX vs. BIJU PATNAIK HIGH COURT OF ORISSA 190 ITR 0396 Although answers can be recorded either in favour of the Department or against it, ultimately each answer would again become inconclusive on account of the final findings of fact of the Tribunal that ITO has not given reasonable opportunity to the assessee to rebut the statements recorded ex parte under s. 131 of the Act and to furnish explanation to some of the materials. It is true that Tribunal has not given due weight to the relevant and admissible evidence while recording the findings of fact. However, the findings of the Tribunal on such fact are also vulnerable as they may require reconsideration. If answers in respect of each of the questions are indicated in the absence of reasonable opportunity being afforded to the assessee, they would be of academic interest inasmuch as the answers against the assessee would become vulnerable on account of the need to undo the absence or reasonable opportunity. A clear and conclusive finding binding on the parties can be given only after reasonable opportunity is given to the assessee as found by the Tribunal. No answer should be given in advisory jurisdiction which would not finally decide the issue since final finding can be arrived at only after giving reasonable opportunity to the assessee and explanation

Sumit Goel vs. ITO given by the assessee would have material bearing on the finding. It is necessary that the Assessing Officer gives opportunity to the assessee. Tribunal has not considered the evidence in its proper perspective while rendering the decision in appeal and accordingly, the findings of the Tribunal are vitiated in law. As the final fact-finding forum, the Tribunal has to consider the same again. Since Tribunal has recorded a finding that reasonable opportunity has not been given to the assessee to give rebuttal evidence and explanation, this can effectively be done by the Assessing Officer. The reference applications are disposed of as above leaving it to the Tribunal to pass consequential orders. (iii) PRAKASH CHAND NAHTA vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF MADHYA PRADESH) (2008) 301 ITR0134 : Assessment—Validity—Opportunity of being heard vis-a-vis statements of third party—Unaccounted silver ornaments and utensils were found and seized during the search at the assessee’s premises—Assessee explained that the said silver items were purchased from one R & Co.—AO made addition to the income of the assessee after recording the statement of M, proprietor of R & Co., behind the back of the assessee—Not justified—AO has heavily relied upon the statement of M and has ignored the subsequent affidavit filed by M which is in variance of his original statement—Since the statement of M was used against the assessee and an affidavit was filed controverting the same, it was obligatory on the part of the AO to allow the prayer of assessee for cross-examination of M—AO having not summoned M under s. 131 in spite of the request of the assessee, evidence of M could not have been used against the assessee—Therefore, the assessment order is vitiated. (iv) HEIRS AND LRS OF LATE LAXMANBHAI S. PATEL vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF GUJARAT ) (2010) 327 ITR 0290 Opportunity of being heard—During search of one R, key of bank locker along with two packets containing six promissory notes were recovered—Out of those six promissory notes, one was in the sum of Rs. 8,78,358 executed by one K in the capacity of partner of firm DCI—In his statement recorded during search, R stated that the key of locker and the two envelopes were handed over to him by the assessee—K also admitted in his statement recorded on the same day at 2.00 AM midnight that he had executed the pronote and signed it on behalf of DCI after obtaining a sum of Rs. 8,78,358—Later, K filed an affidavit that his statement was recorded at late hours in the night under coercion and pressure— Subsequently, K along with two other partners of DCI, made a voluntary disclosure of a sum of Rs. 11 lacs including the amount of Rs. 8,78,358 and same was assessed in the hands of the three partners—Relying on the statement of R Sumit Goel vs. ITO and the retracted statement of K, AO made addition of Rs. 8,78,358 under s. 68 in the hands of assessee also and the same was confirmed by CIT(A) and Tribunal— Not justified—Apparently, there was a violation of principles of natural justice as the statement of one of the important witnesses, namely, R on which heavy reliance was placed by the AO is neither referred to in the assessment order nor copy thereof was given to the assessee nor the assessee was given an opportunity of cross-examining the said R—Authorities could not be absolved from doing so on the ground that the facts stated by R were admitted by the assessee—K had not only retracted his earlier statement but also made a voluntary disclosure, along with two other partners of DCI, in the sum of Rs. 11 lacs which included the amount of pronote of Rs. 8,78,358—Legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross- examination, is that if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice—Orders of all the three authorities set aside and addition deleted. (v) COMMISSIONER OF INCOME TAX vs. EASTERN COMMERCIAL ENTERPRISES (HIGH COURT OF CALCUTTA) 210 ITR 0103 Assessee showing a gross profit rate of 5.2%—Revenue being of the opinion that assessee inflated purchases, called in evidence one S from whom assessee made purchases and applied G.P. rate of 30%—S denied having made any sales to assessee in the face of earlier affidavits confirming such sales—Statement of S not furnished to assessee nor opportunity to cross-examine him given—Cross examination is sine qua non of the due process of taking evidence and no adverse inference can be drawn against a party unless that party is put on notice of the case made out against him—Matter remanded for cross-examination of S with opportunity to assessee to furnish evidence to rebut the evidence of S (vi) KALRA GLUE FACTORY. vs. SALES TAX TRIBUNAL & ORS. (SUPREME COURT OF INDIA) 167 ITR 0498 Statement which was not tested by cross examination is not good evidence. In view of the aforesaid decisions the assessment order deserves to be knocked down only on this lone ground i.e. not allowing opportunity for cross examination.

Sumit Goel vs. ITO of shares and income arising thereon are bogus transaction. The action of the Learned Assessing Officer is based merely on assumption and presumption.

The Learned Assessing Officer has no cogent evidence, which may establish that the purchase and sale of shares by the assessee was bogus. The AO simply making assumptions and presumptions from the statement of Shri Deepak Goel and taking slip shot extracts of the statement has made additions on frivolous grounds. The same deserve to be deleted. It is submitted that no such presumption could be drawn by the AO merely on surmises and conjectures. In the absence of any cogent material in this regard, having been placed on record, the AO could not make the additions.

3. Facts and document submitted by the assessee remain uncontroverted: - It is further submitted that the Learned Assessing Officer has failed to bring any material on record, any documentary on record or any evidence of any person to controvert the various documents produced before him by the assessee such as the purchase vouchers of shares, the d-mat account, payment by cheque, subsequent sale of the shares, contract notes of sale etc. etc. Not only that the Learned Assessing Officer failed in controverting the documents submitted by the assessee it also failed to bring any material on records which could have established that the purchase and sale of shares was a sham affair. In these circumstances it is pleaded that the addition made purely on assumption and presumption having no legs deserves to be deleted.

4. Supporting decision of the Rajasthan High Court: - (i) COMMISSIONER OF INCOME TAX vs. SMT. SUMITRA DEVI (HIGH COURT OF RAJASTHAN) (2014) 268 CTR 0351 (Raj) : (2014) 102 DTR (Raj) 0342 Cash Credit—Share transaction—Assessee had shown LTCG from the sale of shares and same was claimed as exempt u/s 10(38)—AO observed that companies, whose shares were allegedly dealt with, were not very well known and it was entirely unlikely that there was a huge rise in prices of their shares in a very short span of time—AO treated huge rise in price as manipulation by stock broker and made additions in income of assessee towards transactions of purchase and sale of shares and undisclosed commission paid in cash—CIT(A) observed that shares were sold by assessee for consideration through named stock broker and appellant furnished all the evidence to establish genuineness of transactions— That AO failed to bring any evidence in rebuttal nor was it proved that documents produced by Assessee were false, fabricated or fictitious—ITAT upheld Order of Sumit Goel vs. ITO CIT(A) that AO proceeded only on presumptions and was not justified in making additions under Section 68 of the Act—Held, findings of AO were based on presumptions rather than on cogent proof—CIT(A) and ITAT found that AO failed to show material documents placed on record by Assessee were false, fabricated or fictitious—Appellate authorities rightly observed that transaction could not be rejected altogether on basis of facts noticed by AO, particularly in absence of any cogent evidence to contrary—Finding recorded by appellate authorities, after thorough consideration of material on record, that transaction of purchase and sale of shares could not be treated as non-genuine was justified—No substantial question of law worth consideration in present case—Addition under Section 68 of the Act was not sustainable after due appreciation of evidence on record, on relevant considerations, and on sound reasoning—Finding of Appellate Authorities did not suffer from any perversity—No substantial question of law was involved in Appeal—Assessee’s appeal dismissed

(ii) COMMISSIONER OF INCOME TAX vs. SMT. PUSHPAMALPANIHIGH COURT OF RAJASTHAN : JAIPUR BENCH (2011) 242 CTR 0559 : (2011) 49 DTR 0312 Capital gains—Vis-a-vis income from other sources—Genuineness of sale of shares—Question whether there was sale of shares and receipt of appreciated value is essentially a question of fact—CIT(A) and the Tribunal have accepted the genuineness of the sale of shares in view of the fact that the assessee has produced several relevant documents to prove the transaction and directed the AO to treat the sale consideration of shares as long-term capital gain—Therefore, no substantial question of law arises

(iii) C I T Jaipur vs M/S A L Lalpuria Construction Pvt ... on 25 February, 2013 The assessee as alleged carried out construction activities and disclosed income from sub-contract and investment in building construction. After the search U/s 132 of the Act,1961 was carried out on 12.04.2005 in the case of another assessee M/s. B.C. Purohit & Company at Jaipur &Kolkatta, evidence was gathered and from the investigation it revealed that in the garb of tax consultation the owners and employees of this group were running the racket of providing accommodation entries of gifts, loans, share application money, share investment and long term capital gains in shares. It will be relevant to record that the present assessee might have been in consultation with M/s. B.C. Purohit & Company and a member of the group and has drawn inference regarding providing accommodation entries and the assessing officer was of the view that details made available by the assessee as regards unsecured loans and share application money, reference of Sumit Goel vs. ITO which has been made in para-4 of its order, appears to be the accommodation entries and the present assessee was middle man and invoking Sec.68 of the Act, it was considered to be part of the income in the hands of the assessee. However, on appeal preferred before the Commissioner (Appeals) by the assessee U/s 143(3) r/w 147 of the Act,1961 all the factual statements were examined at length and the Commissioner (Appeals), after due appreciation of material which came on record, observed that from independent enquiry the copies of bank account were obtained by the assessing officer and found that for clearing of the cheques issued by these companies either cash was deposited in the same account or in another account of the group company in fact was M/s. B.C. Purohit of which the present assessee was considered to be one of the group member. However, it was further observed that summons issued U/s 131 of the Act were served upon all such applicant/ creditors and their confirmation letters were filed and the companies were assessed to tax being the private limited companies, the existence of their separate legal entity ordinarily could not have been doubted. However on the basis of statement of Kripa Shanker Sharma which was recorded by the search authorities as regards accommodation entries, a sum of Rs.5 Lacs was assessed in the hands of present assessee alone and as regards other income, it was not considered to be in the hands of the present assessee. Obviously the department being aggrieved preferred appeal before the Tribunal and at the same time, the present assessee filed cross objection regarding part of the income, to the extent of a sum of Rs.5 Lacs, as being recorded in the hands of present assessee on the basis of statement of Kripa Shanker Sharma. The Tribunal while appreciating the factual matrix came on record observed that after the summons were issued U/s 131 of the Act,1961 to the applicant/creditors and their confirmation letters were filed and the companies were assessed to tax being private limited companies the existence of their separate legal entity ordinarily could not have been challenged more so when the identity of existence of the investor is not disputed and accordingly upheld the view of Commissioner (Appeals), at the same time further observed that merely on the basis of oral statement of Kripa Shanker Sharma recorded before the search authorities that the assessee provided accommodation entries was not sufficient for the income to be assessed for a sum of Rs.5 Lacs in the hands of the assessee and while allowing the cross objection filed by the assessee dismissed the appeal preferred by the revenue under order impugned. We have heard the parties at length and of the view that what has been observed by the Commissioner (Appeals) & the Tribunal appears to be based on factual matrix and there appears no substantial question of law arises which may require interference by this Court to be examined in the instant appeal.

Sumit Goel vs. ITO 5. Supporting decision of the Hon'ble ITAT, Jaipur and Jodhpur: - (i) INCOME TAX OFFICER vs. SMT. KUSUMLATA( ITAT, JODHPUR BENCH) (2006) 105 TTJ 0265 Income from undisclosed sources—Addition under s. 69—Unexplained investment in house property—Assessee is said to have made investment in the construction of residential house out of sale proceeds of shares of a company which were held by her for more than one year—Purchases of shares by assessee are evidenced from the contract note and the payment was made by cheque—Shares were held in the name of the assessee—She sold the shares to J, a member of the stock exchange, who has confirmed the transaction and the payment was received through cheque—Assessee has produced all the requisite evidence in support of these transactions—Simply because J could not produce his books of account or the transactions were not reported by J to the stock exchange, the transaction cannot be treated as bogus—This being a transaction between a member and a non-member, it was not reported to the stock exchange—There is no evidence that the amount did not come from the sale of shares—Therefore, the transactions in shares cannot be held to be bogus and the investment in the residential house cannot be treated as unexplained—CIT(A) justified in deleting the addition. (ii) ASSISTANT COMMISSIONER OF INCOME TAX vs. CHANDRESH KUMAR MAHESHWARI (ITAT, JODHPUR BENCH (2009) 120 TTJ 0132 : (2008) 16 DTR 0114 The AO has come to the conclusion that the amount of Rs. 66,90,330 found credited in the bank account of the assessee as unexplained credit simply on the ground that the assessee is not able to produce the broker before him for examination and basing on the statement of the assessee recorded under s. 131 and the purchase price was paid by the assessee in 8 instalments spreading over a period of two months but the assessee has produced the share certificate No. 132011, Regd. Folio No. G 03019 and distinctive Nos. 132501 to 13550000 issued by CSL for acquisition of 3,50,000 equity shares by producing the letter dt. 8th Sept. 2003 issued by the said company, these shares were sold by the assessee for consideration of Rs. 70,40,365.97 through stock broker R and thereby earned long-term capital gain of Rs. 66,90,331. The said company CSL is a public limited company where public are substantially interested. Its shares are listed in the Ahmedabad Stock Exchange. The said company is regularly filing statutory return as required under Companies Act to the RoC, Ahmedabad. If really the AO doubted the genuineness of transaction, he ought to have obtained the list of shareholders coupled with the holding of the said share holders together with the share certificate numbers and folio numbers of the shares held by each shareholder. This is cogent evidence, which goes to the root of Sumit Goel vs. ITO the matter to find as to the genuineness of the purchase and sale of shares by the assessee, but this was not done by the AO though he is having abundant powers under s.

Sumit Goel vs. ITO examination, such undisclosed and unverified material could be taken into consideration for the purposes of addition. The other submission that the Tribunal interfered with the order of addition without due consideration that no prudent investor would invest in companies in which the assessee had invested, if we may say so, is essentially in the realm of appreciation of facts and circumstances and does not by itself a substantial question of law. It is essentially a matter relating to assessment of particular circumstance. As far as submission of learned counsel for the appellant that statement recorded under Section 132 (4) of the I.T. Act by itself, without anything more, even if retracted after five months, could be taken into consideration, also does not appeal to us. Reliance has been placed on the two decisions of the High Court of Delhi in the case of Suman Poddar Versus Income Tax Officer, ITANo.841/2019 and Bhagirath Aggarwal Versus CIT, ITANo.28/2012. In both the aforesaid decisions, the High Court considered the material on record on its own facts. It was not propounded as the principle of law that without there being any other material, only on the basis ofstatement recorded under Section 132 (4) of the I.T. Act even though retracted, the addition could be justified. The judgments are distinguishable on facts. Learned counsel for the Revenue relying upon the judgment passed by the Supreme Court in the case of SumatiDayal Versus Commissioner of Income Tax, Bangalore reported in AIR 1995 SC 2109 would submit that the Tribunal has not examined the case on the touchstone of human probability. Reliance placed on the judgment of the Supreme Court in the case of Vijay Kumar Talwar Versus Commissioner of Income Tax, Delhi reported in (2011) 1 SCC 673, as to what would be substantial question of law, only demolishes the case of the appellant herein because on principles, which have been laid down by the Supreme Court in the aforesaid judgment as contained in Para 19 to 23 thereof, present is not a case where the finding of the Tribunal suffers from ignorance of any material evidence or based on no evidence much less “wrong inferences drawn from proved facts by erroneous application of law” or “where the Tribunal has wrongly cast the burden of proof” The argument advanced on the basis of the principle propounded by the Supreme Court in the case of SumatiDayal (supra), does not apply to the facts of the present case at all. The Tribunal’s findings are based on material placed on record. The aspect of human probability, in the present case, only goes against the Revenue because in the present case, a raid was conducted and in that process, statement is said to have been recorded under Section 132(4) of the I.T. Act, which was, later on, retracted by the Assessee. In a situation like this, where the office premises are sealed for many days and during that Sumit Goel vs. ITO period, a statement is said to have been recorded under Section 132 (4) of the I.T. Act, the Tribunal’s view that only the basis of such retracted statement, addition could not be justified without any other material admissible in evidence, warrants no interference as it is not a substantial question of law. In the case of Commissioner of Income Tax Versus Harjeev Aggarwal reported in (2016) 290 CTR (Del) 263 and KailashbenManharlalChokshi Versus Commissioner of Income Tax reported in (2010) 328 ITR 411 (Guj) various High Courts have held that addition based solely on statement later on retracted, without anything more, could not be justified in law. Thus, the view taken by the Tribunal cannot be faulted. In view of the above consideration, we are of the view that this appeal does not involve any substantial question of law and is, therefore, dismissed. Therefore, based on the above finding in the present case the facts are similar where the additions are based on the statement recorded u/s 132(4) and finding of investigation wings without any material admissible evidence. Therefore, the addition deserves to be deleted.”

Sumit Goel vs. ITO provisions of S.102 it can be said that the department did not discharge its burden of proof to discard evidences provided by assesse. (ii) Rule ‘finality of fact found by Tribunal’ not followed. HC has wrongly applied judgment in case of P. Mohankala and others. In fact SC in that case has held that the finding of ITAT was facts finally found and HC erred in disturbing fact found by ITAT. For this reasonappeal of department was allowed and order of Tribunal was confirmed. Just like in case of P.Mohankala and others, in case of Swati Bajaj honorable Calcutta High Court has disturbed facts found by ITAT and not followed rule of ‘Finality of fact found by Tribunal’. (iii) It appears that tax authorities doubting long term capital gains as bogus and honorable High Court also applied human probability by applying report of investigation wing only. The report of investigation wing is also biased, because it did not consider surveillance measures of S/E and SEBI. S/E regularly monitor and revises price limits within which price of any share is allowed to move. Therefore, it is wrong to say that there was price rigging followed by investors / traders. S/E have real time information and it is shared with SEBI. Therefore, after few years it cannot be said that there was unwarranted movement in price of any share. (iv) The department seems to have ignored documentary evidences, facts found by Tribunal in favor of assesse and relied on report of investigation wing only. Final Fact Finding authority: In this context it is worth to note that in reported judgement word ‘final’ find mention at six places but none of them is in context of Final – facts found by Tribunal. Phrase Finality of facts is not found anywhere. (v) Supreme Court’s order / judgement dismissing SLP of department not considered: Court has noted in judgement that “reliance was placed on the decision of the High Court of Gujarat in THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 VERSUS PARASBENKASTURCHANDKOCHAR - 2020 (10) TMI 299 - GUJARAT HIGH COURT in Tax Appeal No. 204 of 2020 dated 17.09.2020 wherein the revenue was unable to prove that the transaction was pre-arranged as well as sham and was carried out through penny scripts companies/paper companies and the appeal filed by the revenue was dismissed. “ Unquote: The SLP of revenue against above Gujarat High Court Judgment was dismissed by the Supreme Court, but we do not find any reference about the same. Therefore, it seems that order dismissing SLP of department was not referred before Calcutta HC and in any case this has not been considered. Similarly fact that SLP of department was dismissed by the Supreme Court in case of Mukesh Rati lalGada has not been mentioned. (vi) Although COMMISSIONER OF INCOME TAX, KOLKATA - III VERSUS BHAGWATI PRASAD AGARWAL - 2009 (4) TMI 138 - CALCUTTA HIGH COURT has been considered . In this case LTCG was added u/s 68 and amount

Sumit Goel vs. ITO deleted was Rs.34,81,165/- Department has not filed SLP though SLP could be filed because tax effect was more than monetary limit applicable at that time and the matter was not a once upon affair rather it was repetitive .So the judgment in this case has attained finality and is binding and not hit by S. 268A. However, this aspect has not been considered and many judgments of Calcutta High Court which are binding, while considering Swati Bajaj and other cases but have not been followed. Before the Judgement in case of Swati Bajaj there are many judgments, and it can be said that majority of High Courts have decided issue in favor of assessee when assessee had proved transactions by way of delivery of shares and payments for transactions. High Court has not considered the principal that when two or more views are possible a view in favor of assessee is to be applied. In cases before Calcutta High Court also facts were similar as in case of Bhagwati Prasad Agarwal, ParasbenKasturchandKochar ,Mukesh Rati lalGada etc. which have attained finality. Therefore, judgment in case of Swati Bajaj and others need to be reconsidered. In following recent cases, honorable Tribunal has considered case of Swati Bajaj and has not applied it: (A) ITAT, Cuttack order dt. 06.07.22 in case of INCOME TAX OFFICER, WARD-1(1) , CUTTACK VERSUS SMT. BIMALA DEVI SINGHANIA, SRI RADHESHYAMSINGHANIA [2022 (7) TMI 387 - ITAT CUTTACK] in and 213 /CTK/ 2019 (B) SHRI TRIVIKRAM SINGH TOOR VERSUS THE PR. CIT, CHANDIGARH - 2022 (11) TMI 523 - ITAT CHANDIGARH (C) ITO, WARD-3(3)(2) AHMEDABAD. VERSUS M/S. GOKULDHAM ENTERPRISE LLP - 2023 (1) TMI 613 - (D) ITAT AHMEDABAD SHRI PRAVIN C. BOKADIA VERSUS THE INCOME TAX OFFICER, WARD- 19 (2) (5) MUMBAI. - 2023 (1) TMI 119 –ITAT MUMBAI In view of above decisions made by various ITAT in which Swati Bajaj (supra.) has been considered and distinguished and not followed. Hence under the above mentioned facts our case is different from Swati Bajaj case and not applicable. Therefore, the addition of Rs. 22,84,800/- which is not based on any entry in the books of accounts or any transaction of the assessee deserves to be deleted, specially u/s 68 the any entry found recorded in the books of accounts can be added only. In our books of accounts there is no entry of Rs. 22,84,800/- which can be added u/s 68 of the Income Tax Act 1961.

Ground No. 2:- Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 45,696/- u/s 69C of the Income Tax Act, 1961 made by the learned AO

Sumit Goel vs. ITO on account of unexplained expenditure i.e. alleging that commission paid on obtaining bogus LTCG. Since the assessee has not taken any accommodation entry of Rs. 22,84,800/- therefore the commission expenditure @ 2% on such entry is also not sustainable and deserves to be deleted. The learned AO on second last page in last para has mentioned as under: - The learned AO has wrongly assumed that the share profit of Rs. 9,67,665/- is earned from penny stock company. The assessee has not earned any such profit from any penny stock company for Rs. 9,67,665/-. The assessee has earned profit of Rs. 10,82,000/- by sale of LancoInfratech shares which is part of total profit of Rs. 14,14,040/- declared by the assessee. The learned AO also did not bring any evidence on record that shares of M/s LancoInfratech Limited is penny stock. This share is regularly traded in all the stock exchanges and share of a reputed software company. In fact this addition is a double addition as it is part of earlier addition of Rs. 22,84,800/- made by the learned AO. Therefore this addition made u/s 56 is not sustainable and deserves to be deleted.

Ground No. 3 &4 :-

3. Under the facts and Circumstances of the case the learned Assessing Officer as well as the learned CIT(A) have erred in not giving opportunity of the cross examination of the persons on whose statement he relied upon. Covered in ground no. 1 and 2.

Sumit Goel vs. ITO Ground No. 5:- Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 9,67,655/- by not allowing the carried forward loss against long term capital gain earned by the assessee which tantamount to double addition. In the computation of income the assessee has shown speculation profit of Rs. 9,67,665/-page no. 3 of paper book. The speculation income was set off against the brought forward speculation losses of financial year 2007-08 and 2008-09. The assessee has offered speculation income for taxation if that income is part of share business so it cannot be added again by not allowing set off against brought forward losses. Therefore, this addition deserves to be deleted. Ground No. 6:- The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing. Not pressed. Your Honors are requested to decide the appeal in favour of the assessee by considering the above submission and oblige.”

5.1 In addition to the above to the written submission the ld. AR of the assessee filed the following evidences in support of the contentions raised in the written submissions:-

Sr. No. Particulars Page No. 1. A copy of acknowledgement of return and details filed with IT return 1-6 2. Copy of bank statement reflecting payment of purchase consideration 7 3. Copy of contract note for sale 8-10 4. Copy of statement of Mridul Securities Pvt. Ltd. from where purchases 11 were made along with confirmation 5. Copy of bank statement reflecting receipts of sale consideration 12

Sumit Goel vs. ITO 6. Copy of contract note of IIFL India Info Line Ltd. for sale of shares 13-15 7. Copy of demat account with IIFL India Infolime Limited reflecting 16-17 transaction related to Lanco Infratech Limited 8. Copy of trading account as per IT return 18 9. Copy of purchase ledger 19 10 Copy of sales ledger 20 11. Copy of trading, P & A A/c in the books of accounts 21 12. Copy of submission made before the learned CIT(A) 22-24 5.2 The ld. AR of the assessee in addition to the written submission so placed on record vehemently argued that when the assessee is shouting from the terrace that he has not claimed any long term capital gain in the computation of income filed (paper book page 1-6) and on this issue the ld. DR did not controvert to this fact that the assessee has claimed any long term capital gain for which the addition of Rs. 22,84,800/- made in the assessment order. Merely the assessee has made some speculation income /loss the same so assessed cannot be converted to long term capital gain. Since the assessee has not claimed in the return of income any claim of long term capital gain u/s. 10(38) the same cannot be added u/s 68 of the Act. Therefore, the addition of Rs. 45,696/- u/s 69C of the Act being the commission alleged as incurred for earning bogus long term capital gain also not required to be sustained.

Sumit Goel vs. ITO As regards the brough forward loss the ld. AR of the assessee submitted that 5.3 the assessee has shown speculation profit of Rs. 9,67,665/-page no. 3 of paper book. The speculation income was set off against the brought forward speculation losses of financial year 2007-08 and 2008-09. The assessee has offered speculation income for taxation if that income is part of share business so it cannot be added again by not allowing set off against brought forward losses. Therefore, this addition deserves to be deleted. The ld. AR of the assessee thus concluded that the assessee has not claimed any long term capital gain in the computation of income. The relevant finding of the lower authorities at length on the various other aspectis not applicable in the case of the assessee as there is no such claim as alleged. Therefore, the same are not applicable to the fact of the case.

6. Per contra, the ld. DR relied upon the orders of the CIT(A). Bench categorically raised a question whether the assessee has claimed any long term capital gain in the computation of income or not. But the ld. DR did not brought anything on record contrary to the submission so filed by the assessee.

7. We have heard the rival contentions and perused material available on record. The Bench noted that ground No. 1 and 2 is related to the Sumit Goel vs. ITO addition of Rs. 22,84,800/- u/s 68 of the Act alleging that the assessee has claimed bogus long term capital gain u/s 10(38) of the Act and ground no for Rs. 45,696/- which was added u/s 69C of the Act being the alleged commission for obtaining the bogus long term capital gain. Thus, the apple of the discord in this case is that presently numerous case of bogus claim of alleged long term capital gain claimed by various assessee u/s. 10(38) of the Act. On this issue in the case of Principal Commissioner of Income Tax vs. Swati Bajaj where in the various appeals are decided in favour of the revenue. But since in this case there is no claim of alleged long term capital gain is appeared to have been claimed by the assessee as it is evident from the computation of income and ITR filed by the assessee vide paper book at page 1 to 6. Therefore, in the light of this non controverted fact, we are of the considered view that in absence of any claim of exemption u/s 10(38) of the Act by the assessee the addition of Rs. 22,84,800/- made u/s 68 of the Act is charging the assessee which he has not even earned or claimed. Based on these facts we have hold that there is no claim of the assessee u/s. 10(38) for the year under consideration the action of the lower authority making the addition is against the facts and the same is deleted. In terms of this observations ground No. 1 raised by the assessee is allowed.

Sumit Goel vs. ITO 7.1 Since the issue in ground No. 2 is related to the commission of alleged bogus long term capital gain and since we have held in ground No. 1 that the assessee has not claimed any benefit of long term capital gain u/s 10(38) of the Act and therefore, the consequent the alleged addition of Rs. 45,696/- u/s 69C of the Act is also not required to be sustained and thus, ground No. 2 raised by the assessee is allowed.

7.2 As regards ground No. 3 and 4 which are general in nature and there is no specific arguments or submission advanced before us. Thus, the same is treated as dismissed.

7.3 In ground No. 5, the assessee has challenged the finding of the AO that the assessee has earned profit of Rs. 9,67,655/- on account of speculation of penny stock company which has been set off against carry forward loss since the income of the assessee is already taxed whether legal or not and there is no discussion in the order of the lower authorities as to whether the same has been excluded or not while computing income of the assessee. Merely carried forward of loss against the income already taxed cannot be denied. Therefore, ground No. 5 raised by the assessee is allowed.

Sumit Goel vs. ITO 7.4 Ground No. 6 is general in nature and therefore, the same is also not required to be adjudicated by us.

In the result,the appeal of the assessee is partly allowed.

Order pronounced in the open court on 26/10/2023.

Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 26/10/2023 *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Sumit Goel, Jaipur. 2. izR;FkhZ@ The Respondent- ITO, Ward-4(5),Jaipur. 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZQkbZy@ Guard File By order,

सहायकपंजीकार@Aेेजज. त्महपेजतंत