SHAILESH K PATEL-HUF,AHMEDABAD vs. ITO, WARD-3(3)(5), AHMEDABAD

This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-3, Ahmedabad, (in short ‘the CIT(A)’) dated 24.01.2019 for the Assessment Year 2015-16.

The assessee has taken following grounds of appeal:

The grounds taken by the assessee pertain to disallowance of Rs.73,29,100/- on account of Long Term Capital Gain (LTCG) claimed exempt under Section 10(38) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and which was added under Section 68 of the Act in the assessment order. Before we adjudicate the grounds taken by the assessee, it would be relevant to re-capitulate the facts of the case.

After considering the reply to the assessee, the AO concluded that the assessee had failed to explain as to why the shares of LDPL and MARL were purchased in off market transactions when the assessee maintained a de-mat account and regular trading in market was done through the demat account. Further, the assessee had also not explained why the purchased shares were kept in pool account of the broker M/s. Vijay Bhagwandas & Co., when the assessee was maintaining its own demat account. Considering these factors and circumstantial evidences, the AO concluded that the intention of the assessee was to obtain accommodation entries and he held that the assessee had failed to discharge the onus to establish the genuineness of the transactions. Therefore, the amount credited in the accounts of the assessee as LTCG was held as unexplained and accordingly addition of Rs.73,29,100/- was made under Section 68 of the Act. The AO also held that the transaction of LTCG was a sham transaction only to bring its own unaccounted money in the guise of exempted LTCG and only paper work was done to give a color of authenticity to the transactions by creating a façade of legitimate transactions.

As regarding the copy of statement of Shri Anuj Agarwal, Shri Pravin Agarwal, Shri Ashok Kayan and Shri Karshvardhan Kayan provided to the assessee in the course of assessment, the Ld. AR submitted that various seized/impounded materials were referred in their statements and assessee had requested the AO to provide him a copy of those seized documents. According to the Ld. AR in the absence of seized materials, based on which the statements of those persons were recorded, the assessee could not have given a meaningful reply to the AO. He further submitted that those statements had no evidentiary value and the opportunity of cross examining those person were never allowed to the assessee in spite of specific request. He emphasized that the statement made during the search and survey without supporting evidences has no evidentiary value and the third party statement without an opportunity to cross examine the parties cannot be relied upon. Further that the enquiry report as referred in the assessment order was also not provided. In this regard, he has relied upon various judicial pronouncements as under: i. Vijay K. Patel-HUF vs. ITO in ii. Chandra Prakash Jhunjhunwala vs. DCIT in ITA No.2351/Kol/2017 iii. ITO vs. M/s. Ice Worth Reality LLP in ITA Nos. 565 & 566/Ahd/2020 iv. PCIT vs. Parasben Kasturchand Kochar, [2021] 130 taxmann.com 177 (SC) v. PCIT vs. Sandipkumar Parsottambhai Patel, [2023] 150 taxmann.com 192 (Gujarat) vi. DCIT vs. Shri Ambalal Chimanlal Patel in ITA No.2398/Ahd/2018 (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 8 – vii. ITO vs. M/s. Indravadan Jain in & Anr. viii. Dipesh Ramesh Vardhan vs. DCIT in ITA No.7648/Mum/2019 & Ors. ix. DCIT vs. Saurabh Mittal in ITA No. 16/Jp/2018 x. Mrs. Neeta Bothra vs. ITO, [2022] 137 taxmann.com 463 (Chennai- Trib.) xi. PCIT vs. Champalal Gopiram Agarwal, [2023] 155 taxmann.com 66 (Gujarat) xii. Atulbhai Amritlal Mehta vs. DCIT, [2023] 150 taxmann.com 90 (Ahmedabad – Trib.) 9. The Ld. AR further submitted that SEBI had suspended the trading of shares of these two companies after the purchase and sale transactions in the shares was completed by the assessee and that the assessee was never aware of the fact that scrips were in the nature of penny stock companies. He contended that in the investigation report carried out by the Calcutta Directorate as well as in the statements recorded by different persons the name of the assessee never appeared and there was no specific allegation against the assessee that he had entered into an accommodation entry. The Ld. AR submitted that assessee was a regular investors in shares and this was not the only transaction carried out by the assessee. He assailed the invocation of provisions of Section 68 of the Act by the AO and submitted that this provision was not at all attracted as the AO had not added the entire sale consideration which was credited to the books of accounts. Submission of the Revenue: 10. Shri Ashok Kumar Suthar, Ld. SR-DR appearing for the Revenue submitted that there is no dispute to the fact that the shares of LDPL and MARL were penny stock company. He explained that the assessee had (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 9 – declared exempted capital-gain from shares of LDPL & MARL which were identified by Income-tax Department as “Penny-stock” and even the operations in the shares of these companies were suspended by SEBI. The Ld. DR submitted that these facts were clearly evident from “Investigation Report in the case of Project Bogus LTCG / STCL Through BSE Listed Penny Stocks” dated 27.04.2015 released by Directorate of Income-tax (Investigation), Kolkata. The Ld. DR strongly supported the orders of the AO and the CIT(A) and placed reliance on the decision of Hon’ble High Court of Kolkata in PCIT Vs. Swati Bajaj, (139 taxmann.com 352) decided in favour of Revenue. He emphasized that this decision has taken into account the Investigation-Report prepared by Investigation-Wing of Income- tax Department; considered the issues of cross-examination, human probability etc. and various legal precedents of various Courts on this issue was also considered therein. Findings and Order: 11. We have carefully considered the rival submissions and the materials on record. The crux of the issue to be decided in this appeal is whether the claim of LTCG made by the assessee would be considered as genuine. The assessee has contended that it was a regular investor in shares and stocks, payments were received through banking channels, the stock brokers are registered entities and the regulatory authorities namely SEBI or the Stock Exchange had not taken any action against the trading of the shares of the companies during the trading period of the assessee. Further that the materials/documents based on which statements was recorded were not provided to the assessee and the persons who had given statements were not made available for cross examination in spite of specific request. Therefore, the theory of circumstantial evidence or the theory of human probabilities (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 10 – cannot be applied to the assessee’s case. The assessee has pleaded absolute innocence to the allegation of accommodation entry as made in the assessment order.

The assessee has submitted that the sale of shares were made through stock exchange on which STT was paid, the payment was received through banking channel and the exemption of LTCG was rightly claimed. Where the issue of LTCG is involved, not only the sale of shares but the genuineness of the purchases also has to be examined. In the mechanism of capital gains computation what is relevant is not only the sale of shares but also the purchase of shares. Therefore, the genuineness of the entire transaction of acquisition as well as sale of shares has to be looked into as a whole. One can’t adopt a dissecting approach by accepting the sale of shares as genuine without examining the genuineness of purchase of the shares. The AO had casted aspersion on purchase of shares while doubting the genuineness of the entire transaction. The contention of the assessee that the purchases were not doubted as no disallowance on account of purchase was made can’t be accepted. The AO in the assessment order had specifically pointed question mark on the purchase transactions.

The primary facts of this case not under dispute. The assessee has contended that it was a regular investor in shares and that the transactions giving rise to LTCG were not one off transactions. It is found that the assessee had opened a demat account with Tradebulls Securities (P) Ltd. on 21.07.2011. The first investment in shares made by the assessee was in F.Y. 2012-13 and the investment in the scrip’s of NHPC Ltd. (713 shares), Reliance Industries (138 shares) & Reliance Power Ltd. (25 shares) were appearing in the demat statement as on 31.03.2013. The same investment (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 11 – continued in subsequent years and in F.Y. 2014-15 another investment in share of Salvation Develop was added. It is, thus, found that the assessee was making investment in shares through it’s demat account with Tradebulls Securities (P) Limited. If so, the assessee has not explained as to why it purchased shares of LDPL and MARL in off market transactions in F.Y. 2013-14. The ld. AR submitted that the purchase of shares in off- market was the own call of the assessee it is the prerogative of the assessee as how to conduct its business and that the Revenue cannot doubt the transactions for this reason alone. It is true that it is the prerogative of the assessee to conduct its business in the manner, as it deems proper. Nevertheless, any deviation in the conduct of the assessee has to be judged considering the overall manner in which the business was conducted and such deviation has to be properly explained. The explanation given by the assessee for this deviation of off-market purchase of shares is not found convincing. When the assessee had made all the past investments as well as entered into the future transactions through its demat account, the incidence of off-market purchase of shares certainly raises the doubt about the conduct and real intention the assessee.

The transaction carried through recognized Stock Exchange not only proves the time of transaction but also conclusively decides the holding period of the shares. The purchase of LDPL and MARL shares by the assessee in off market when all the past investment in shares were made through recognized Stock Exchange through demat account; had rightly raised the eyebrows of the Revenue regarding genuineness of these share transactions and the claim of LTCG. The contract note issued by the broker for off market purchase of shares is only an internal voucher between the related party (buyer and seller) which is always subject to manipulation.

If the assessee was having sufficient cash balance why the payment was not made in a single go and why the payment was made in installments. Further, if the cash payment was made in staggered manner to obviate the rigors of section 40A(3) of the Act, what prevented the assessee to deposit the available cash in the bank account and make the single payment through cheque, was also not explained by the assessee. The conduct of the (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 13 – assessee is not only inexplicable but it raises serious doubt about the timing of the purchase transaction as well on the genuineness of the entire LTCG claim. The contract bills for purchase of shares and ledger account of the assessee for payment in cash are essentially self-serving evidence and they don’t establish the factum of purchase of shares on the given date.

What is relevant to establish the purchase transaction is the date of dematerialization of shares. As already discussed earlier, the assessee was maintaining demat account since July 2011. The assessee has not explained as to why the shares purchased on 01.04.2013 and on 26.06.2013 in the off market transactions were not dematerialized immediately after purchase. The assessee has brought on record a letter dated 5th April, 2014 from the broker M/s. Vijay Bhagwandas & Co. to the effect that 5000 shares of MARL and 21,500 shares of LDPL were being held by the broker in the pool account as on 31st March, 2014. This letter is also in the nature of self-serving evidence. The share of MARL was dematerialized on 28.08.2014 whereas the share of LDPL was dematerialized on 01.09.2014 only few days prior to their respective sale in the first week of September 2014. Why the shares purchased in April 2013 and June 2013 were dematerialized after long delay on 28.08.2014 and 01.09.2014, has not been explained by the assessee. Rather the dematerialization of the shares, only a few days prior to their sale, is strong evidence to the orchestration of the entire event of purchase of shares. The purchase of the shares were close to the date of their dematerialization, which was orchestrated to the preceding year by creating evidence of off market transactions and by payment of purchase price of shares in cash, which cannot be verified with any independence evidence.

The genuineness of transactions can be tested on the principle of preponderance of human probability as settled by the Hon’ble Apex Court in the case of Smt. Sumati Dayal vs. CIT, (1995) 214 ITR 801 (SC). The documentary evidences in themselves, cannot be held as conclusive evidence of the transaction. When someone is deliberately entering into a transaction in shares of penny stock company, it is obvious that all the documentary evidences will be in order. After all, one has to establish the transactions with reference to the documentary evidences so as to claim the benefit of exemption of LTCG available under the Act. Therefore, while examining such evidences, surrounding circumstances also has to be taken into account in order to unravel the true nature of the transactions. The Hon’ble Supreme Court has observed in the case of CIT vs. Durga Prasad More, [1971]82ITR540(SC) that “the taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.” In penny stock transactions a facade of genuineness is created and in order to unravel the truth one has to go behind such façade. The Hon’ble Supreme Court had held in the case of Vodafone International Holdings B.V. v. Union of India (204 Taxman 408)(SC) that the Revenue may invoke the "substance over form" principle or "piercing the corporate veil" test after it is able to establish on the basis of the facts and circumstances surrounding the transaction that the impugned transaction is a sham or tax avoidant.

The department had conducted detailed enquiries in the organized racket of bogus LTCG transactions which were claimed exempt from tax. During the course of investigation the transactions in BSE listed penny stocks, which were used for generating bogus LTCG, were verified. The SEBI had suspended the trading of shares of LDPL & MARL. It is immaterial that such suspension was after completion of trading in shares by (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 16 – the assessee. The suspension by SEBI reflects the dubious nature of the transactions, which can’t be ignored and which was pursuant to manipulation / abrupt movement in the price of these security as noticed by BSE. The AO has analyzed the price movement of these share during the period from 1st April, 2013 to 2nd September, 2014 in the assessment order from which it is evident that there was continuous manipulation of the price of these shares. The volume of trade in these shares was mostly in single digit and the price of LDPL was progressively increased from Rs.36.1 as on 1st April, 13 to high of Rs.584.35 on 12th November, 2013 and on the next day i.e. 14th November, 2014 the price had suddenly dipped to Rs.59.55/-. We see similar trend and fluctuation in the share price of MARL as well. These enquiries and evidences conclusively proved that the trades were manipulated and the gains/losses made by beneficiaries in trade of these securities can’t be held as genuine. The AO had further analyzed the financial statements of LDPL & MARL in the assessment order and found that the movement of its share price was abrupt, unrealistic and not based upon any sound realistic parameter. The Supreme Court has held in the case of SEBI Vs. Rakhi Trading (P) Ltd. (90 taxmann.com 147(SC)) that abnormal difference between the prices at which the trades were executed without corresponding effect on the price of the underlying security, shows that the option in which the party traded was not in demand in the market and that it was unusual that the trades were transacted with such huge profits when there was no change in the underlying prices. It was held by the Apex Court that such trade transactions were obviously only aimed at carrying out manipulative objective. Following this principle laid down by the Apex Court, there was nothing wrong in the Revenue’s doubt about the genuineness of the transaction, considering the volatile fluctuation in share price of LDPL & MARL. The AO had issued a detailed show cause notice to the assessee to (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 17 – establish the genuineness of the LTCG as claimed. It is apparent from the assessment order that the AO had doubted the genuineness of the transactions and this aspect was not at all addressed by the assessee in its submissions.

The AO has referred to the investigation carried out by the Calcutta Directorate in respect of penny stock companies. During the course of investigation, the transactions in BSE penny stock which was utilized for generating bogus LTCG were verified. The modus operandi of accommodation entry through the transaction of penny stock companies have been discussed in detail in the orders of the AO and the CIT(A). From the statements recorded by the some of the brokers in Calcutta, it revealed that bogus LTCG of huge proportion was provided by some of the brokers to the interested beneficiaries and the total quantum of such entry provided was as under:

The surrounding circumstances that the shares of LDPL & MARL were utilized for generating huge bogus LTCG having total trade value of above proportion, as revealed in the investigation carried out by the (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 18 – Department, puts a question mark on the genuineness of the transactions carried out by the assessee. The statement of the share brokers of Kolkata who were involved in providing accommodation entries through Jamakarchi/shell Companies also casts a serious doubt on the genuineness of the transactions. They had categorically admitted to have provided accommodation entries through multilayered transactions and trading in the shares of LDPL & MARL. Though the assessee was nowhere indicted in their statements the fact that accommodation entries were provided by dealing in shares of LDPL & MARL, stands established.

The assessee was provided with a copy of statements of Shri Anuj Agarwal, Shri Pravin Agarwal, Shri Ashok Kayan and Shri Harshvardhan Kayan in the course of assessment proceeding. The contention of the assessee is that the assessee was not named as a beneficiary by any of the brokers and thus there was no direct evidence in their statements. The ld. AR vehemently argued that the assessee was never allowed an opportunity to cross examine the brokers nor a copy of the documents referred in their respective statements and the investigation report of Kolkata Directorate was made available.

It is true that in the statement of the stock brokers/entry operators as relied upon by the Revenue, the name of the assessee was not appearing. If that being the case, the assessee cannot take a plea that it was not allowed an opportunity to cross-examine them as there was nothing in their statements to implicate the assessee. The allegation against the assessee is not of insider trading or manipulating the price of the shares, rather the allegation is that the claim of the LTCG made by the assessee was bogus. It has not been explained as to how non-production of persons for cross examination has (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 19 – caused prejudice to the assessee as the name of the assessee didn’t appear in their statements. In fact, the investigation carried out by the Calcutta Directorate did not commence from the individuals, but it commenced with the entities who had dealt in penny stock and provided accommodation entries. It was by working backwards that the investigation was taken to the logical end in the hands of the beneficiaries. It was held by Hon’ble Supreme Court in the case of State Of Jammu And Kashmir vs Bakshi Ghulam Mohammad, AIR 1967 SC 122 that the right of hearing cannot include the right of cross examination and the right must depend upon the circumstances of each case and must also depend on the statute under which the allegations are being inquired into. Following this legal pronunciation, there was no vested right for the assessee to cross examine the persons who had not deposed anything against the assessee.

Hon’ble Calcutta High Court in the case of Swati Bajaj (supra) had observed on the right of cross-examination and on not providing the investigation report of Kolkata Directorate in entirety as under:

It is also found that the AO had not relied solely on the investigation report of the Calcutta Directorate as well as the statement of share brokers explaining the modus operandi of accommodation entries. Rather the AO had independently examined the true nature of the transactions carried out by the assessee. It is difficult to get direct information or evidence in respect of manipulative activities of price rigging and accommodation entry which happens with prior meeting of minds between the beneficiary and the stock broker. It was held by the Hon’ble Calcutta High Court in the case of PCIT vs. Swati Bajaj (supra) that a holistic approach is required to be made and the test of preponderance of probabilities have to be applied and while doing so, we cannot lose sight of the fact that the shares of very little-known companies with in-significant business had a steep rise in the share prices within the period of little over a year. To reproduce from the said order:

It is very rare and difficult to get direct information or evidence with regard to the prior meeting of minds of the persons involved in the manipulative activities of price rigging and insider trading. We can draw a parallel in cases of adulteration of food stuff, more than often action is initiated under the relevant Act after the adulteration takes place, the users of adulterated products get affected etc. Therefore, a holistic approach is required to be made and the test of preponderance of probabilities have to be applied and while doing so, we cannot loose sight of the fact that the shares of very little known companies with in- significant business had a steep rise in the share prices within the period of little over a year. The Income-tax department was not privy to such peculiar trading activities as they appear to have been done through the various stock exchanges and it is only when the assessees made claim for a LTCG/STCL, the investigation commenced. As pointed out the investigation did not commence from the assessee but had commenced from the companies and the persons who were involved in the trading of the shares of these companies which are all classified as penny stocks companies. Therefore, the argument of the assessee that the copy of the investigation report has not been furnished, the persons from whom statements have been recorded have not been produced for cross examination are all contention which has to necessarily fail for several reasons which we have set out in the proceedings paragraphs. To reiterate, the assessee we not named in the report and when the assessee makes the claim for exemption the onus of proof is on the assessee to prove the genuinity. Unfortunately, the assessees have been harping upon the transactions done by them and by relying upon the documents in their hands to contend that the transactions done were genuine. Unfortunately, the test of genuinity needs to be established otherwise, the assessees are lawfully bound to prove the huge LTCG claims to be genuine. In other words if there is information and data available of unreasonable rise in the price of the shares of these penny stock companies over a short period of time of little more than one year, the genuinity of such steep rise in the prices of shares needs to be established and the onus is on the assessee to do so as mandated in Section 68 of the Act. Thus, the assessees cannot be permitted to contend that the assessments were based on surmises and conjectures or presumptions or assumptions. The assessee (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 22 – does not and cannot dispute the fact that the shares of the companies which they have dealt with were insignificant in value prior to their trading. If such is the situation, it is the assessee who has to establish that the price rise was genuine and consequently they are entitled to claim LTCG on their transaction. Until and unless the initial burden cast upon the assessee is discharged, the onus does not shift to the revenue to prove otherwise. It is incorrect to argue that the assessees have been called upon to prove the negative in fact, it is the assessees duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled with genuinity and identity. The assesses cannot be heard to say that their claim has to be examined only based upon the documents produced by them namely bank details, the purchase/sell documents, the details of the D-Mat Account etc. The assesses have lost sight of an important fact that when a claim is made for LTCG or STCL, the onus is on the assessee to prove that credit worthiness of the companies whose shares the assessee has dealt with, the genuineness of the price rise which is undoubtedly alarming that to within a short span of time. ………… 75. While it may be true that M/s. Swati Bajaj, Mr. Girish Tigwani or other assessees who are before us could have been regular investors, investors could or could not have been privy to the information or modus adopted. In our considered view, what is important is that it is the assessee who has to prove the claim to be genuine in terms of section 68 of the Act. Therefore, the assessee cannot escape from the burden cast upon him and unfortunately in these cases the burden is heavy as the facts establish that the shares which were traded by the assessees had phenomenal and fanciful rise in price in a short span of time and more importantly after a period of 17 to 22 months, thereafter has been a steep fall which has led to huge claims of STCL. Therefore, unless and until the assessee discharges such burden of proof, the addition made by the assessing officer cannot be faulted.

It was argued that unless there are foundational facts, circumstantial evidence cannot be relied on. This argument does not merit acceptance as wealth of information and facts were on record which is the outcome of the investigation on the companies, stock brokers, entry operators etc. Based on those foundational facts the department has adopted the concept of "working backward" leading to the assessees. While at that relevant stage the sounding circumstances, the normal human conduct of a prudent investor, the probabilities that may spill over, were all taken into consideration to negative the claim for exception made by the assessee. Therefore, the department was fully justified in taking note of the prevailing circumstances to decide against the assessees.”

The Hon’ble High Court thus endorsed that surrounding circumstances has to be taken into account and the matter can’t be decided only on the basis of documentary evidences brought on record by the assessee. The Court also upheld the approach of the Department by ‘working (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 23 – backwards’ to reach to the beneficiaries who had taken accommodation entries. Further, the Court re-iterated that the onus was squarely on the assessee to prove the genuineness of the credit entry appearing in the form of LTCG in their books of accounts. The discrepancies and adverse evidence collected by the AO in the course of assessment were not explained by the assessee and the thrust was always on the documentary evidence of the transactions. The documentary evidences cannot be relied upon and treated as conclusive in view of various unanswered questions as already discussed earlier and the dubious nature of transactions. The surrounding circumstances of the transactions establish that the transactions entered into by the assessee were not genuine. The assessee had not discharged its onus against the overwhelming adverse evidences that has been brought on record by the Revenue authorities.

The thrust of the assessee’s argument is that the sale consideration was received by cheque on which STT was paid and, therefore, the LTCG earned was genuine. This cannot be accepted in view of multiple adverse evidences collected by the Revenue and the assessee cannot be treated as a passive beneficiary of the transactions. The Hon’ble Supreme Court held in the case of Security And Exchange Board of India vs. Rakhi Traders Pvt. Ltd., (supra) that in trade transactions with huge price variations of the transactions, it will be too naïve to hold that the transactions were through screen based trading and hence anonymous. According to the Apex Court, such conclusion would be overlooking the prior meeting of minds involving synchronization of buy and sale order and that such transactions were manipulative/deceptive device to create a desired loss and/or profit.

The assessee has relied upon several case laws which are found to be different on facts. On the other hand, the AO and the ld. CIT(A) have also relied upon various decisions in their respective orders. The issue is not of application of any particular case law, but to examine and appreciate the facts and circumstances of the instant case. The ld. AR has submitted that identical issue of sale of shares of LDPL and MARL was involved in the case of the sister concern, Shailesh M Patel (HUF), which was decided by the ITAT Ahmedabad in dated 29.10.2021 in favour of the assessee. On the other hand, there are decisions where the issue of LTCG on sale of shares of LDPL was involved and which was decided against the assessee. It is also found that the decisions relied upon by the assessee were delivered prior to the judgement of Hon’ble Calcutta High Court in the case of Swati Bajaj (supra). The decision in the case of Swati Bajaj is a detailed (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 25 – one wherein various legal precedents of Hon’ble Supreme Court and other Courts have been taken into account. Further the investigation report prepared by Kolkata Directorate, the issue of cross- examination, human probability etc. were considered and discussed in detail therein. We have already extracted the relevant portion of the decision in our order earlier. Be that as it may, the legal position is well settled that each case rests on its own facts. Our decision in this case is guided solely by the facts and circumstances of the instant case, including the assessee’s explanations in respect thereof. The case laws relied upon by the assessee were delivered in peculiar facts of each case. Therefore, the assessee cannot derive assistance from those case laws as the issue is principally factual.

The issue involved in the case is not of application of any particular case law but to examine and appreciate the facts and circumstances of the instant case. As the Revenue had invoked the provisions of Section 68 of the Act, the onus was squarely on the assessee to prove the genuineness of the credit transaction, which has not been discharged. The objection of the Ld. AR that the Revenue didn’t add the entire sale consideration u/s 68 of the Act is also not relevant. The facts remains that the LTCG claim of the assessee was credited to books of the assessee and when the addition is made to the extent of LTCG credit we can’t expand it to include the entire sale consideration. What is relevant is that the Revenue has brought enough materials on record to exhibit the transactions as sham or bogus as well as unexplained and the assessee has miserably failed to establish the genuineness of the impugned credit entry of LTCG appearing in the accounts. Since the exempted LTCG claim of the assessee was only a façade (Shailesh K Patel – HUF vs. ITO) A.Y.– 2015-16 - 26 – created to conceal the true nature of the credit entry of Rs.73,29,100/- appearing in the accounts, the addition as made by the AO is confirmed and the order of the ld. CIT(A) is upheld.

In the result, appeal preferred by the assessee is dismissed.