IMPORTANT POINT
The appellate forum's ruling in favor of the petitioner undermined the foundation of the complaint, and the court noted jurisdictional and procedural irregularities in the proceedings.

JUDGMENT :

Shampa Dutt (Paul), J.

1. The present revision has been preferred praying for quashing of proceedings being Complaint Case No. C-1522 of 2018 under Sections 276C(1) and Section 277 of the Income Tax Act, 1961, read with Section 120B of the Indian Penal Code, now pending before the Court of the Chief Judicial Magistrate, at Alipore, South 24 Parganas, and all orders passed therein.

2. The petitioner states that the petitioner runs a reputed business house which deals in jewelry and precious stones under the name and style of “Nemichand Bamalwa & Sons”. The petitioner and even prior to him, his forefathers, had been in the said trade for the last few decades.

3. The petitioner states that the petitioner has been maliciously arraigned as an accused person in the impugned case, which was initiated at the behest of Assistant Commissioner of Income Tax i.e. the opposite party herein.

4. Several search and seizure operations were carried out at the business premises of the petitioner.

5. The allegations in the complaint are that:-

The accused person runs various types of businesses under different names. Search and seizure operations were conducted under Section 132 of the Income Tax Act, 1961 at the business premises of M/s. Nemichand Bamalwa & Sons, M/s. Nemichand Bamalwa & Sons Jewellers Pvt. Ltd., Bamalwa Finance Pvt. Ltd., Easy Commodities Trade Pvt. Ltd., Bamalwa Diamonds Ltd. at 16A, Shakespeare Sarani, Kolkata – 700 071 by the complainant.

6. It is further alleged that the accused person was a beneficiary of a penny scrip company M/s. Twenty First Century (India) Limited, incorporated, listed and designated to provide pre-arrange bogus Long Term Capital Gain/Short Terms Capital Loss in order to evade taxes. This company is a CSE listed company and is controlled and managed by Entry Operators Sri Anil Khemka and Rajendra Bubna who engaged the accused person in 2004. There is no registered office of M/s Twenty First Century (India) Ltd. It is only on paper that it has its registered office at 9, Lalbazar Street, Block B, 3rd Floor, Room No. 4, Kolkata – 700 001. All the directors are dummy. It is an investment company used for providing accommodation entry. The CSE banned this scrip in 2005. In 2007, suspension was revoked and due to limits on trading, rise in the price of scrip, no significant upward movement was there. Later, in 2011, four companies (which existed only on paper) were merged into M/s. Twenty First Century (India) Limited. Before the merger, client/beneficiaries of pre-arranged bogus LTCG were allotted shares of Astha Tradelink Pvt. Limited, Highland Dealcom Pvt. Limited, Dignity Suppliers Pvt. Limited and Sarathi Dealers Pvt. Limited. These companies were controlled and managed by Sri Anil Khemka. By this scheme of merger, share holders of these companies got 38 shares of M/s. Twenty First Century (India) Limited in lieu of one share. After passing of one year, the beneficiary was provided exit where counter party client on CSE, which were companies only on paper were controlled by Anil Khemka or other entry operators. At the time of exit for LTCG, the scrip rate was around 310-30. The source of funds for buying these shares of M/s. Twenty First Century (India) Limited for these companies on paper were unaccounted cash funds of the beneficiaries which was pumped into the various proprietorship concerns or companies (Which exists only on paper) and routed to companies that exist on paper or exist providing concerns. During this whole process there was no significant change in price of the scrip. Beneficiary was getting 38 times of the shares or to say 38 times of so called invested amount due to merger. Therefore, it is a penny stock and its main purpose was providing pre-arranged bogus LTCG entry.

7. Blueprint Securities Ltd. is also identified as penny stock which is controlled by Sri Praveen Agarwal and Sri Subhash Agarwal. It is also a company that exists only on paper with dummy directors and it is an i