Vineet Sureshchandra Agarwal, Ahmedabad V. The ACIT, Circle-7, Ahmedabad

CO 209/AHD/2013

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2676 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-11-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained cash credit; Loose papers; Principle of natural justice; Opportunity of cross examination; Difference of opinion; Corroborative evidences; Accommodation entries; Block assessment; Change of opinion; Reassessment proceedings
• Section: 143(3); 133(6); 68; 69; 148; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1442/AHD/2013 & CO NO. 209/AHD/2013 / ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE-7, AHMEDABAD VS VINEET SURESHCHANDRA AGARWAL, 12, RATNAM, ROYAL CRESCENT BUNGALOWS, OPP. NEW YORK TOWER, THALTEJ, SARKHEJ- GANDHINAGAR, AHMEDABAD-58 PAN : AAZPA 8396 C / (APPELLANT) / (RESPONDENT) & CROSS OBJECTOR REVENUE BY : SHRI JAMES KURIAN, SR DR ASSESSEE BY : SHRI G.C. PIPARA, AR / DATE OF HEARING : 30/11/2016 / DATE OF PRONOUNCEMENT: 06/01/2017 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION THEREOF FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD DATED 21.03.201 2 FOR AY 2005- 2006. 2. BEFORE US, AT THE OUTSET, ASSESSEES SIDE DID NO T PRESS THE CROSS- OBJECTION; ACCORDINGLY THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 3. THE SOLITARY GROUND RAISED BY THE REVENUE READS AS UNDER:- ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION MADE U/S 68 OF THE ACT BY THE AO ON ACCOUNT OF CRED ITS OF RS.94,49,384/- AS LTCG AND RS.19,76,810/- AS STCG, EVEN THOUGH THE SHARE TRANSACTIONS WERE NOT RECORDED IN THE NAME OF ASSESSEE ON THE FLOOR OF STOCK EXCHANGE AND TRANSACTIONS WERE PROVE D BOGUS 4. BRIEF FACTS ARE IN THE RETURN OF INCOME, THE A SSESSEE QUA THE SALE OF SHARES OF PRRANET INDU DECLARED INCOME FROM SHOR T TERM CAPITAL GAIN OF RS.32,94,684/- AND LONG TERM CAPITAL GAIN O F RS.94,49,383/- ON SALES OF SHARES OF TELENT INFOWAYS LIMITED. IN R ESPECT THEREOF, ASSESSEE FURNISHED THE RELEVANT DETAILS AND BILLS I SSUED BY M/S. GOLDSTAR FINVEST PVT. LTD. [GFPL FOR SHORT] (FOR PU RCHASE) AND BY M/S. MAHASAGAR SECURITIES PVT. LTD. [MSPL FOR SHORT] (FO R SALES). THE BILLS REFLECTED THAT:- (I) THE BROKER GOLDSTAR FINVEST PVT. LTD. WAS WAS M ENTIONED AS 'DEALER OF INTER-CONNECTED STOCK EXCHANGE OF INDIA LIMITED (ISE)/ SUB-BROKER OF NATIONAL STOCK EXCHANGE INDIA LIMITED MEMBER - ISE SECURITIES AND SERVICES LIMITED, SEBI REG. NO.INB- 230932431/23-10777. (II) WHILE M/S. MAHASAGAR SECURITIES PVT. LTD. WAS MENTIONED AS 'DEALER OF INTER-CONNECTED STOCK EXCHANGE OF INDIA LIMITED / SUB-BROKER OF NATIONAL STOCK EXCHANGE INDIA LIMITED MEMBER - ISE SECURITIES AND SERVICES LIMITED, SEBI REG. NO.I NB- 230683331/23-10777. 4.1 LD. AO SENT LETTERS U/S 133(6) IN RESPONSE THER ETO THE NSE FURNISHED A REPLY DATED 22.11.2011 REVEALING THAT: ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 3 (I) M/S. GOLDSTAR FINVEST PVT LTD WAS REGISTERED W ITH IT AS A SUB- BROKER; HOWEVER, ISE REPLIED THAT IT WAS A REGISTER ED TRADING MEMBER BUT EXPELLED AND A SUB-BROKER STILL REGISTERED BUT EXPELLED. (II) M/S. MAHASAGAR SECURITIES PVT LTD WAS FOUND AS A MEMBER FROM DATABASE. ISE REPLIED THAT IT WAS NOT REGISTERED W ITH IT. THE LD. ASSESSING OFFICER AGAIN ISSUED LETTERS U/S 133(6) OF THE I.T. ACT TO THE NSE, BSE & ISE TO VERIFY THE SHARE TRANSACTIONS IN THE ASSESSEE NAME DURING THE YEAR. IN REPLY, ISE STATE D THAT 'AS PER OUR RECORD NO TRADES WERE EXECUTED ON OUR EXCHANGE IN T HE NAME OF VINEET S. AGARWAL DURING F.Y. 2004-05.' NSE STATED THAT 'BASED ON THE PAN PROVIDED IN YOUR LETTER, RECORD HAVING MATCHING PAT TERN WITH DATA UPLOADED BY TRADING MEMBERS TO THE EXCHANGE AS ON DATE FOR T HE CLIENT VINEET S. AGARWAL (PAN: AAZPA 8396 C) FOR THE CAPITAL MARKET SEGMENT ARE BEING ENCLOSED AS ANNEXURE -A. KINDLY NOTE THAT AS PER T HE RECORDS AVAILABLE WITH EXCHANGE, NO TRADE WERE FOUND TO BE EXECUTED FOR TH E COMBINATION OF MEMBER AND CLIENT CODE FOR THE PERIOD 01 APRIL 2003 TO 31 MARCH 2004 IN THE CAPITAL MARKET SEGMENT HENCE NOT FURNISHED.' LD. AO OBSERVED THAT AS PER BSE ASSESSEE HAS SOLD O NLY 30,000 SHARES OF PRRANETA INDUSTRIES WHILE HE IS CLAIMING THAT, HE HAS SOLD 50,000 SHARES DURING THE CONCERNED F.Y. IT WAS FU RTHER OBSERVED THAT A SEARCH WAS CARRIED OUT ON A GROUP OF CONCERNS VIZ M AHASAGAR SECURITIES PVT LTD (MSPL), SHRI MUKESH CHOKSI AND M /S. GOLDSTAR FINVEST PVT LTD WHICH WERE ALLEGEDLY PROVIDING ACC OMMODATION ENTRIES AND THE ASSESSEE WAS FOUND TO BE ONE OF THE BENEFICIARIES. THE ASSESSEE WAS ASKED TO CLARIFY AS TO WHY THE SALE PR OCEEDINGS OF THE SHARES SHOULD NOT BE TREATED AS UNEXPLAINED CASH CR EDIT U/S 68 OF THE ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 4 ACT. THE RELEVANT REPLY OF THE ASSESSEE DATED 05.1 2.2011 READS AS UNDER:- 4) COMING TO THE EXACT TRANSACTION, IT IS RESPECT FULLY SUBMITTED THAT FOR THE ASSESSMENT YEAR 2005-06 VIDE LETTER DATED 2 0/09/2011,1 HAVE FILED THE STATEMENT OF DETAILS OF PURCHASES AS WELL AS DETAILS OF SALES RELATING TO 2,00,000 SNARES OF TALENT INFOWAY LIMIT ED I HAVE ALSO SUBMITTED COPIES OF PURCHASE MEMO, CONTRACT NOTE RE LATING TO PURCHASES. ACCORDINGLY, THE ENTIRE PURCHASES ARE THROUGH GOLDS TAR FININVEST (P) LTD. I HAVE ALSO FURNISHED THE DETAILS RELATING TO THE SALE OF 2,00,000 SHARES TO TALENT INFOWAY LIMITED WHICH HAS BEEN SOL D THROUGH MAHASAGAR SECURITIES PVT. LTD. VIDE BILLS DATED 20/ 8/2004, 24/08/2004, 01/09/2004, 08/09/2004 AND 09/09/2004. THE COPIES O F INVOICES, CONTRACT NOTE, ETC. HAS ALREADY BEEN SUBMITTED AND THESE COPIES AND CONTRACT NOTE INCLUDES COMPLETE DETAILS SHOWING ORD ER NUMBER, TRADE NUMBER, TRADE TIME, QUANTITY, SALE RATE, BROKERAGE, NET RATE AND AMOUNT. THE ENTIRE AMOUNT HAS BEEN RECEIVED BY ACCOUNT PAYE E CHEQUE AND FROM MAHASAGAR SECURITIES PVT. LTD. THE TRANSACTION HAS TAKEN PLACE IN THE NORMAL COURSE OF THE BUSINESS AND I HAVE NOTHIN G TO DO WITH THE SEARCH CARRIED OUT IN THE CASE OF MAHASAGAR SECURIT IES PVT. LTD. AS THE REASONS MENTIONED FOR REOPENING OF THE ASSESSMENT T HAT THE GROUP WAS FOUND TO BE ENGAGED IN FRAUDULENT BILLING ACTIVITIE S. PLEASE NOTE THAT THE SAID INVOICE AS WELL AS CONTRACT NOTE INCLUDES THE COMPLETE DETAILS SUCH AS QUANTITY, RATE, ORDER NUMBER, TRADE NUMBER, TRAD E TIME, SALE RATE, BROKERAGE, NET RATE AND AMOUNT WITH RESPECT OF EACH SALE, ETC. 5) ACCORDINGLY, THE ENTIRE PURCHASE AS WELL AS SAL E RELATING TO 2,00,000 SHARES OF TALENT INFOWAY LIMITED IS GENUINE. THE SA LE TRANSACTION HAS TAKEN PLACE THROUGH MAHASAGAR SECURITIES PVT. LTD. THE COPY OF MEMO, ETC. HAS ALREADY BEEN SUBMITTED BY ME, THE PAYMENT HAS BEEN RECEIVED BY ME THROUGH ACCOUNT PAYEE CHEQUE FROM MAHASAGAR S ECURITIES PVT. LTD. AND WHY THE SAID TRANSACTION IS NOT REPORTED I N ISE/BSE/NSE CANNOT BE COMMENTED BY ME. AS PER THE CONTRACT NOTE GIVEN TO ME THE TRANSACTION HAS TAKEN PLACE IN BOLT AND THEREFORE, I HAVE NO REASONS OF NOT BEING REPORTED. THEREFORE, SO FAR AS THE GAIN W HICH HAS BEEN SHOWN BY ME IS CONCERNED, THE SAME IS GENUINE, CORRECT, S UPPORTED BY DOCUMENTARY EVIDENCE AND IF SOMETHING IS WRONG, IT MAY BE EITHER DUE TO INCORRECT INQUIRY OR MAY BE IN THE HANDS OF MAHA SAGAR SECURITIES PVT. LTD. 6) MOREOVER, THE ENTIRE 2,00,000 SHARES OF TALENT INFOWAY LIMITED WERE HELD BY ME IN DEMAT ACCOUNT AND I AM SUBMITTIN G HEREWITH THE ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 5 TRANSACTION STATEMENT ISSUED BY SHAH INVESTOR'S HOM E LTD. IN MY NAME WHEREIN THE SHARES OF TALENT INFOWAY LIMITED H AS BEEN DEMATERIALIZED, THE RECEIPT IS ALSO ENCLOSED ALONG WITH THE DEMAT STATEMENT, FROM THE PERUSAL OF WHICH, YOUR HONOUR W ILL FIND THAT ON 09/08/2004 THE SHARES HAVE BEEN DEMATERIALIZED. ACC ORDINGLY, THE SHARES HAVE BEEN SOLD AFTER BEING DEMATERIALIZED. 7) THEREFORE, IN VIEW OF ABOVE FACTS, SUBMISSIONS AND EVIDENCES ALREADY SUBMITTED AS WELL AS ENCLOSED HEREWITH, THE ENTIRE GAIN ON SALE OF SHARES IS GENUINE, THE SAME HAS TAKEN PLACE IN THE NORMAL COURSE OF BUSINESS. THERE MAY BE SOMETHING WRONG IN THE HANDS OF MAHASA GAR SECURITIES PVT. LTD. BUT SO FAR AS 1 AM CONCERNED, THESE SHARE S WERE HELD BY ME, THE SAME HAS BEENSOLD IN THE OPEN MARKET. THE TRANS ACTION HAS TAKEN PLACE AND THEREFORE, THE GAIN ON THE SAME HAS RIGHT LY BEEN SHOWN AS CAPITAL GAIN. 8) UNDER THE CIRCUMSTANCES, YOUR HONOUR'S PROPOSE D ACTION REQUIRES TO BE DROPPED. 4.2 THE LD. ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF LONG TERM CAPITAL GAINS QUA SHARE TRANSACTIONS AND THE I MPUGNED ADDITION U/S 68 OF THE ACT WAS MADE AS INCOME FROM OTHER SOU RCES BY FOLLOWING OBSERVATIONS:- AFTER CAREFULLY PERUSAL UPON THE REPLY OF THE ASSES SEE IT IS NOT TENABLE BECAUSE THE ASSESSEE HAS SUBMITTED THE COPY OF BILL S FROM M/S. GOLDSTAR FINVEST PVT. LTD. AND FROM M/S. MAHASAGAR SECURITIE S PVT. LTD. : IT IS CONFIRMED BY THE NSE / ISE THAT NO TRADES HAVE BEEN EXECUTED IN THE NAME OF THE ASSESSEE DURING THE CONCERN FINA NCIAL YEAR. SINCE, NO TRADES WERE EXECUTED IN THE NAME OF THE ASSESSEE SO IT CAN BE PRESUME THAT ASSESSEE TOOK ONLY ACCOMMODATION ENTRI ES TO CLAIM THE SPECULATION PROFIT FOR THAT HE HAS SUBMITTED THE BI LLS ISSUED BY THE M/S. GOLDSTAR FINVEST PVT. LTD. AND FROM M/S. MAHAS AGAR SECURITIES PVT. LTD. SINCE, M/S. MAHASAGAR SECURITIES PVT. LTD. IS N O MORE IN EXISTENCE SO HOW IT IS POSSIBLE GIVE CREDIT OF ANY CLAIM BASE D UPON THE BILLS ISSUED BY THE M/S. MAHASAGAR SECURITIES PVT. LTD. S IMILARLY, M/S. GOLDSTAR FINVEST PVT. LTD. IS NO MORE MEMBER / SUB- BROKER IN ISE. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 6 FURTHER, THE KEY PERSON OF THE M/S. MAHASAGAR S ECURITIES PVT. LTD., SHRI MUKESH CHOKSI HAS ALSO ADMITTED IN HIS STATEME NT DURING THE SEARCH OPERATION U/S.132 OF THE I. T. ACT, 1961 THA T THE GROUP WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES IN THE BUS INESS OF PROVIDING BOGUS SPECULATION PROFIT / LOSS, SHORT TERM / LONG TERM CAPITAL GAIN / LOSS, COMMODITIES PROFIT / LOSS ON COMMODITY TRADIN G (THROUGH MCX). HOWEVER, ON REQUEST OF THE ASSESSEE, THE INFORMATIO N RECEIVED FROM THE RESPECTIVE STOCK EXCHANGES HAS BEEN SUPPLIED TO THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL W HERE ALL THE FACTS WERE REITERATED AND FOLLOWING EXPLANATIONS AND WRIT TEN SUBMISSIONS DATED 10.12.2011 WERE MADE :- 1) REGARDING COPIES OF PURCHASE INVOICE RELATING TO 2,00,000 SHARES OF TALENT JNFOWAY LIMITED. THE SHARES HAVE B EEN PURCHASED FOR AN AMOUNT OF RS. 2,60,691/- AGAINST THE PROFIT WHIC H I HAVE GAINED FROM INTRA DAY TRADING OF CERTAIN SHARES OF GOLDSTAR FIN INVEST PVT. LTD. THE DETAILS THEREOF HAS ALREADY BEEN SUBMITTED VIDE REP LY DATED 5/12/2011 RELATING TO ASSESSMENT YEAR 2004-05 AS SHARES WERE ACQUIRED IN FINANCIAL YEAR 2003-04 ACCORDINGLY SHOWN IN THE BAL ANCE SHEET OF FINANCIAL YEAR 2003-04. I AM SUBMITTING HEREWITH TH E RETURN OF INCOME FOR A.Y. 2004-05 SHOWING GAIN OF RS.2,57,151/- WHIC H IS THE NET PROFIT I HAVE EARNED WHICH HAS BEEN UTILIZED FOR ACQUIRING T HE SAID SHARES AFTER PAYMENT OF CASH OF RS. 3,539/-ON 08/05/2003. 2) REGARDING INVOICE OF THE SALES AND CONTRACT NOTE , ETC., SAME HAS ALREADY BEEN SUBMITTED BY ME VIDE MY SUBMISSION DAT ED 20/09/2011. ACCORDINGLY, THE ENTIRE SALES ARE THROUGH MAHASAGA R SECURITIES PVT. LTD., THE DETAILS OF WHICH HAS ALSO BEEN SUBMITTED BY ME ALONGWITH MY SUBMISSION DATED 05/12/2011. 3) I AM SUBMITTING HEREWITH THE COPY OF THE BANK S TATEMENT/BANK PASSBOOK RELEVANT TO F.Y. 2004-05 WHEREIN THE SALE PROCEEDS OF TALENT INFOWAY LIMITED HAS BEEN CREDITED. 4) REGARDING COPY OF THE DEMAT STATEMENT, I HAVE AL SO SUBMITTED THE SAME ALONG WITH MY EARLIER REPLY DATED 05/12/2011, THE COPY OF THE DEMAT STATEMENT WHERE 2,00,000 SHARES OF TALENT INF OWAY LIMITED ARE ADMITTED AND UPON SALE, THE SAME HAS BEEN DEBITED L EAVING A 'NIL' BALANCE AS ON 10/09/2004. THE SAID DP ACCOUNT IS WI TH SHAH INVESTOR'S ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 7 HOME LTD. AND COMPLETE DOCUMENTARY EVIDENCE THEREOF HAS ALREADY BEEN SUBMITTED. HOWEVER, COPY IS ONCE AGAIN ENCLOSED HER EWITH. 5) I HAVE ALSO NOW CAREFULLY GONE THROUGH THE COPI ES OF THE THREE LETTERS OF BSE, INTER-CONNECTED STOCK EXCHANGE OF INDIA LTD . AND NSE WHICH HAS BEEN PROVIDED TO MY AUTHORIZED REPRESENTATIVE O N 6 TH DECEMBER 2011 AND WOULD LIKE TO CLARIFY THAT BSE CLEARLY STA TED THAT PAN BASED TRANSACTION HAVE BECOME MANDATORY WITH EFFECT FROM 01/01/2007. FURTHER INTERCONNECTED STOCK EXCHANGE OF INDIA LTD. HAS STATED THAT NO RECORDS OF TRADE WERE EXECUTED AND FURTHER NSE HAS STATED THAT INFORMATION RELATING TO VINEET SURESHCHANDRA AGARWA L ARE BEING ENCLOSED AS ANNEXURE A. 6) FURTHER, FROM THE PERUSAL OF THE COPIES OF THE B ILLS ALREADY-SUBMITTED, YOUR HONOUR WILL FIND THAT THE SHARES WERE IN DEMAT FORM AND HAVE BEEN SOLD THROUGH THE BROKER. THE BILL CLEARLY MENT ION OF THE DELIVERY, TRADE NUMBER, TRADE ORDER, TRADE TIME, QUANTITY, ET C. ARE CLEARLY MENTIONED. FURTHER, BILL STATES THAT HE IS DEALER O F INTER-CONNECTED STOCK EXCHANGE OF INDIA LTD. AS WELL AS SUB-BROKER OF NSE MEMBER ALONG WITH SEBI REGISTRATION NUMBER. THE CONTRACT NOTE AL SO MENTION THAT HE IS THE SUB-BROKER OF NSE MEMBER, THEREFORE, I DO NO T KNOW IN WHICH EXCHANGE THE TRADE HAS BEEN EXECUTED AS NORMALLY IT IS NOT BEING LOOKED INTO BY ANY INVESTOR; AS I WAS INTERESTED TO SELL A ND THE RATE WAS INTIMATED TO ME WHICH HAS BEEN CONFIRMED BY ME AND ACCORDINGLY, SHARES WERE DELIVERED, SAME WERE SOLD AND PAYMENT H AS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. 7) FURTHER, BSE HAS CLEARLY REPORTED THE TRANSACTI ON PERTAINING TO PRRANETA INDUSTRIES.' THE COPY OF LETTER DATED 10/12/2011 ALONG WITH ENCL OSURES IS ATTACHED HEREWITH VIDE ANNEXURE-8. 8. IN VIEW OF ABOVE FACTS AND COMPREHENSIVE EVIDE NCES, THE LTCG AND STCG ON SALE OF SHARES OF VARIOUS COMPANIES BEING G ENUINE AND DULY SUPPORTED BY INDEPENDENT EVIDENCES, THE SAME REQUIR ES TO BE ACCEPTED. IT IS THUS CONTENDED THAT THE AO'S ALLEGATION THAT THE APPELLANT HAS ENTERED INTO ACCOMMODATION ENTRIES WITH MAHASAGAR S ECURITIES PVT. LTD. (NOW ALAG SECURITIES PVT. LTD.) MERELY ON THE BASIS OF CERTAIN MATERIAL GATHERED BEHIND THE BACK OF THE APPELLANT IS NOT SUFFICIENT TO DISPROVE THE COMPREHENSIVE EVIDENCES FILED BY THE A PPELLANT. THAT APART, IT IS CONTENDED THAT IN ABSENCE OF ANY CROSS-EXAMINATION OF SHRI MUKESH CHOKSHI HAVING BEEN GRANTED, WHOSE STAT EMENT HAS BEEN ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 8 HEAVILY RELIED UPON FOR DRAWING ADVERSE INFERENCE I N CASE OF THE APPELLANT, THE IMPUGNED ADDITION AND THE REASSESSME NT ORDER PASSED IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE A ND EQUITY. HENCE, EVEN OTHERWISE, THE IMPUGNED ADDITION SUFFERS FROM THE V ICE OF ARBITRARINESS AND THUS REQUIRES TO BE DELETED. 9. IT IS BY NOW TRITE LAW THAT IN ABSENCE OF AN O PPORTUNITY OF CROSS EXAMINATION OF A PARTY WHOSE STATEMENT IS PROPOSED TO BE RELIED UPON, NO ADDITION IS WARRANTED BASED ON SUCH STATEMENT. THAT SINCE THE A.O. HAS PLACED HEAVY RELIANCE ON TH E STATEMENT OF A THIRD PARTY AS WELL AS MATERIAL FOUND AND SEIZED FR OM SUCH THIRD PARTY, THE APPELLANT RELIES UPON THE FOLLOWING DECISIONS I N SUPPORT OF THE PROPOSITION OF LAW THAT NO ADDITION IS WARRANTED ON THE BASIS OF MATERIAL SEIZED FROM THE THIRD PARTY AND THE STATEMENT OF SU CH THIRD PARTY NOT CORROBORATED BY ANY EVIDENCE. PRARTHANA CONSTRUCTION (P.) LTD. VS. DY. CIT (2001) 70 TTJ 122 (AHD.) 'IT IS A SETTLED PROPOSITION, AS HELD BY VARIOUS JU DICIAL AUTHORITIES, THAT RIGOURS OF THE RULES OF EVIDENCE CONTAINED IN THE E VIDENCE ACT ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS. HOWEVER, THE PRINCIPALS CONTAINED IN THE EVIDENCE ACT, INCORPORATED FROM RU LES OF NATURAL JUSTICE FORMING PART OF THE COMMON LAW WOULD NATURA LLY BE APPLICABLE TO INCOME TAX PROCEEDINGS. IT IS AMPLY CLEAR THAT T HE LOOSE PAPERS AND DOCUMENTS CANNOT POSSIBLY BE CONSTRUED AS BOOKS OF ACCOUNTS REGULARLY KEPT IN THE COURSE OF BUSINESS. SUCH EVIDENCE WOULD , THEREFORE, BE OUTSIDE THE PURVIEW OF S.34 OF THE EVIDENCE ACT, 18 72. THEREFORE, THE REVENUE WOULD NOT BE JUSTIFIED IN RESTING ITS CASE ON THE LOOSE PAPERS AND DOCUMENTS FOUND FROM THE RESIDENCE OF A THIRD P ARTY EVEN IF SUCH DOCUMENTS CONTAIN NARRATIONS OF TRANSACTIONS WITH T HE ASSESSEE COMPANY - CBI VS. V.C. SHUKLA & ORS. (1998) 3 SCC 4 10 AND CHUHARMAL VS. CIT (1988) 70 CTR (SC) 88: (1988) 172 JTR 250 (SC) APPLIED. THE PRESUMPTION UNDER THE PROVISIONS OF S. 132 (4A) WOULD IN ANY CASE NOT BE APPLICABLE TO A THIRD PARTY FROM WHOSE POSSE SSION SUCH PAPERS AND DOCUMENTS HAVE NOT BEEN FOUND BY THE REVENUE. S TATEMENTS RECORDED AT THE BACK OF THE ASSESSEE WOULD NOT IPSO FACTO INCLUDE THE CASE AGAINST THE ASSESSEE PARTICULARLY WHEN THE MAKERS O F THE STATEMENTS HAVE NOT BEEN ALLOWED BE INTERROGATED BY THE ASSESS EE COMPANY. ON FACTUAL MERITS ALSO STATEMENTS OF R AND S RECORD ED AT THE BACK OF THE ASSESSEE CANNOT BE RELIED UPON FOR FASTENING TAX LI ABILITY AGAINST THE ASSESSEE PARTICULARLY WHEN THE ASSESSEE HAS NOT BEE N ALLOWED ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 9 OPPORTUNITY OF CROSS EXAMINATION AND NO SUPPORTING EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE A.O. AMARIIT SINSH BAKSLTI (HUF) VS. ASST. CIT (2003) 26 3 ITR 75 (A.T) (DELHI) 'WHEREIN IT IS HELD THAT THE PROVISIONS OF THE INDI AN EVIDENCE ACT ARE NOT STRICTLY APPLICABLE TO THE PROCEEDINGS UNDER TH E INCOME-TAX ACT, BUT THE BROAD PRINCIPLES OF THE LAW OF EVIDENCE APPLY T O SUCH PROCEEDINGS. FURTHER AN ENTRY IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS IS RELEVANT FOR PURPOSES OF CONS IDERING THE NATURE AND IMPACT OF A TRANSACTION, BUT NOTING ON SLIPS OF PAPER OR LOOSE SHEETS OF PAPER CANNOT FALL IN THIS CATEGORY. NOTING ON LO OSE SHEETS OF PAPER ARE REQUIRED TO BE SUPPORTED/CORROBORATED BY OTHER EVID ENCE WHICH MAY INCLUDE THE STATEMENT OF A PERSON, WHO ADMITTEDLY I S A PARTY TO THE NOTING. A FURTHER DISTINCTION HAD TO BE DRAWN BETWE EN SLIPS OF PAPER OR LOOSE SHEETS FOUND FROM THE POSSESSION OF THE ASSES SEE AND SIMILAR DOCUMENTS FOUND FROM A THIRD PERSON. IN CASE THE ST ATEMENT OF THE THIRD PERSON IS RECORDED WITH REFERENCE TO THE NOTING, TH EN SUCH A STATEMENT UNDOUBTEDLY HAS TO BE CONFRONTED TO THE ASSESSEE AN D HE IS TO BE ALLOWED AN OPPORTUNITY OF CROSS EXAMINATION. IN THE PRESENT REFERENCE THE DOCUMENT IN QUESTION HAD NOT BEEN FOUND FROM THE AS SESSEE'S POSSESSION, BUT FROM THE POSSESSION OF A AND UNDOUB TEDLY NO OPPORTUNITY OF CROSS EXAMINATION HAD BEEN ALLOWED T O 'THE ASSESSEE AND IT HAD CLEARLY EMERGED FROM THE RECORD THAT THE TES TIMONY OF A WAS NOT CREDIBLE AT ALL SINCE IN THREE SEPARATE STATEMENTS HE HAD INDICATED DIFFERENT FIGURES, HIS SECRETARY, G, HAD GIVEN YET ANOTHER FIGURE AND IN PROCEEDINGS BEFORE THE TWO DIFFERENT COURT AT DELHI AND DHANBAD, HE HAD GIVEN A DIFFERENT PICTURE ALTOGETHER AND, LASTL Y, IN HIS INCOME-TAX ASSESSMENT HE HAD RETRACTED FROM ALL HIS EARLIER ST ATEMENT AND HAD CATEGORICALLY STATED THAT THE DOCUMENT WHICH HAD BE EN SIGNED BOTH BY HIM AND BY THE ASSESSEE CONTAINED ONLY PROJECTIONS AND PURPORTED FIGURES IN RESPECT OF THE PROPERTY IN QUESTION. IN OTHER WORDS, THE ENTIRE ADDITION IN THE HANDS OF THE ASSESSEE WAS BASED ON THE DOCUMENT FOUND, BUT THERE WAS NO EVIDENCE TO SUPPORT THE REVENUE'S CASE THAT A HUGE FIGURE WHATEVER BE ITS QUANTUM OVER AND ABOVE THE F IGURE BOOKED IN THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN THE PART IES. NO ADDITION COULD THEREFORE BE MADE TO THE INCOME OF THE ASSESS EE '. KISHANCHAND CHELLARAM V. CIT [1980] 125 ITR 713 (SC ) 'THOUGH THE PROCEEDINGS BEFORE THE INCOME-TAX AUTHO RITIES ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE, BEFORE TH E INCOME-TAX AUTHORITIES COULD RELY UPON A PIECE OF EVIDENCE, TH EY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 10 STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY FOR CROSS- EXAMINATION OF THE PERSON WITH REFERENCE TO THE STA TEMENTS MADE BY HIM. ' SMT RAJRANI GIWTA VS. DV. CIT (2000) 72ITD155 (MUM. ) 'EVEN FOR THE ASSESSMENT YEARS 1994-95 TO 1996-97, THE ESTIMATE HAD TO BE BASED ONLY ON THE PATIENT'S FORMS. THIS WAS BECA USE THE DEPOSITIONS TAKEN FROM THE FOUR PATIENTS WERE NEVER PUT TO THE APPELLANT. ALLOWING THE APPELLANT TO TAKE PHOTOCOPIES OF THE SEIZED MAT ERIALS WAS NOT THE SAME THING AS SUPPLYING THE COPIES OF THE DEPOSITIO NS AND GIVING AN OPPORTUNITY OF CROSS-EXAMINING THOSE PATIENTS TO TH E APPELLANT. SIMPLY BECAUSE THE DEPOSITIONS WERE TAKEN BEFORE A, IT COU LD NOT BE SAID THAT AN OPPORTUNITY, MUCH LESS SUFFICIENT OPPORTUNITY OF CR OSS-EXAMINING, WAS OFFERED. ANY MATERIAL COLLECTED BY THE ASSESSING OF FICER HAS TO BE PUT TO THE ASSESSEE BEFORE AN ADVERSE INFERENCE ON THE BAS IS OF THAT MATERIAL IS DRAWN TO THE PREJUDICE OF THE ASSESSEE. IN RESPECT OF THE FOUR DEPOSITIONS RELIED UPON BY THE ASSESSING OFFICER NO SUCH OPPORT UNITY WAS GIVEN AND ACCORDINGLY, THEY COULD NOT BE A BASIS FOR DRAW ING ANY ADVERSE INFERENCE TO THE PREJUDICE OF THE APPELLANT.' CIT VS. SMC SHARE BROKERS LTD, (2007) 288 ITR 345 ( DELHI) 'WHERE BLOCK ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE UNDER SECTION 158BD AND THOUGH DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE REQUESTED THE A. O. TIME AND AGAIN TO PERMIT HIM TO CROSS-EXAMINE THE PERSON ON THE BASIS OF WHO SE STATEMENT PROCEEDINGS HAD BEEN LAUNCHED AND FROM WHOSE POSSES SION THE DOCUMENTS WERE RECOVERED, SO THAT THE ASSESSEE COUL D PROVE ITS CASE, BUT THE REQUEST WAS NOT ACCEDED TO BY THE A. O. AND THE TRIBUNAL FOUND THAT THAT WAS IN COMPLETE VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ASSESSM ENT UNDER SECTION 158BD. ' 10. ON THE BASIS OF THE ABOVE FACTS, YOUR HONOUR WI LL APPRECIATE THAT ALL THE MATERIAL AND PRIMARY FACTS AND EVIDENCES IN RES PECT OF THE ISSUE UNDER CONSIDERATION IN THE REASSESSMENT PROCEEDINGS WERE ALREADY DISCLOSED IN THE RETURN OF INCOME. HENCE, IT CANNOT BE HELD THAT THERE WAS ANY NONDISCLOSURE OF MATERIAL AND PRIMARY FACTS BY THE ASSESSEE AND ACCORDINGLY, REOPENING OF THE ASSESSMENT U/S. 1 48 BEYOND FOUR YEARS IS INVALID AND BAD IN LAW, THE SAME BEING BAS ED MERELY ON THE BASIS OF CHANGE OF OPINION WHICH IS NOT PERMITTED U NDER THE ACT AS ELABORATELY DISCUSSED HEREINABOVE. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 11 5.1 THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIO NS, MADE FOLLOWING OBSERVATIONS:- (I) I FIND THAT IN THIS CASE, THE APPELLANT HAS S HOWN IDENTITY OF THE PERSON FROM WHOM SALE CONSIDERATION WAS RECEIVED. T HE APPELLANT HAS ALSO PROVED THE GENUINENESS OF THE TRANSACTION BY S UBMITTING DEMAT STATEMENT WITH SHAH INVESTORS HOME LTD., SALE INVOI CES OF THE BROKER, COPY OF BANK STATEMENT THROUGH WHICH TRANSACTIONS W ERE ROUTED. (II) THE A.O. HAS ON PAGE NO. 2, PARA. NO. 3.2 HAS OBSERVED THAT THE BROKER GOLDSTAR FINVEST PVT. LTD. AT NSE WAS 'AT PR ESENT AS M/S. GOLDSTAR FIN VEST PVT. LTD. IS REGISTERED AS A SUB- BROKER'. FURTHER, THE ISE STATED THAT 'M/S. GOLDSTAR FINVEST PVT. LTD. AT PRESENT MEMBERSHIP AS A TRADING MEMBER - TRADING MEMBER EXPELLED AND A S A SUB-BROKER STILL REGISTERED BUT EXPELLED'. I AM OF THE VIEW THAT THE SAID BROKER WAS AUTHORIZE D BROKER WITH NSE AND ISE AT THE TIME OF TRANSACTIONS OF THESE SHARES , THOUGH WAS EXPELLED FROM ISE AT THE TIME OF ENQUIRIES CONDUCTED BY THE A.O., NEVERTHELESS THE TRANSACTIONS WERE ROUTED THROUGH STOCK EXCHANGE SUPPORTED BY DOCUMENTARY EVIDENCES. (III) COMING TO THE OBSERVATION OF THE AO IN PARA N O.3.3 OF THE ASSESSMENT ORDER WHEREIN AO HAS REFERRED CERTAIN IN QUIRY U/S 133(6) WITH RESPECT TO NSE, BSE AND ISE, IN RESPONSE TO TH IS THE APPELLANT VIDE HIS LETTER DATED 10.12.2011 WHICH HAS BEEN REP RODUCED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER ITSELF IN PARA NO.3.6. . (IV) THE APPELLANT HAS PURCHASED 200000 SHARES OF T ELANT INFOWAYS LIMITED ON APRIL 2003 AND SOLD THE SAME ON AUG/SEP 2004. THE APPELLANT -HAS SUBMITTED XEROX COPIES OF PURCHASE A S WELL AS SALE INVOICES. THE APPELLANT HAS ALSO SUBMITTED XEROX CO PIES OF DEMAT STATEMENTS. THE APPELLANT HAS ALSO SUBMITTED XEROX COPIES OF BANK STATEMENT THROUGH WHICH TRANSACTIONS WERE ROUTED. CONSIDERING THE ABOVE DOCUMENTARY EVIDENCES OF THIR D PARTY, AS WELL AS THE FACT THAT THE SAID SHARES WERE PURCHASE D/SOLD THROUGH STOCK BROKER APPEARING IN DEMAT STATEMENT SUPPORTED BY IN VOICES, THE GENUINENESS OF THE SAID TRANSACTIONS CANNOT BE DOUB TED. THE APPELLANT HAS PURCHASED AND SOLD 50000 SHARES O F PRRANETA INDUSTRIES LIMITED. THE BSE HAS SUBMITTED EVIDENCES OF SALE OF 30000 SHARES IN RESPONSE TO NOTICE ISSUED BY A.O. U/S 133 (6) OF THE ACT. THE ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 12 SALE OF SHARES AS REPORTED BY BSE ARE MATCHING WITH DEMAT STATEMENT. IT ALSO PROVES THAT THE SAID BROKER WAS REGISTERED WITH BSE. HOWEVER FOR 20000 SHARES THE SAME IS NOT APPEARING IN ANNEX URE OF BSE, NEVERTHELESS SINCE ENTRIES FOR 20000 IS ALSO APPEAR ING IN DEMAT STATEMENT AND THE APPELLANT WAS HOLDING 20000 SHARE S ON THE DATE OF SALE, THE APPELLANT HAS ALSO RECEIVED CHEQUES AGAIN ST THE SALE. STOCK BROKERS ARE UNDER CONTROL OF SEBI, THEREFORE IT CAN NOT BE DENIED THAT THE APPELLANT HAS NOT SOLD THESE SHARES, OTHERWISE HOW AMOUNT WAS RECEIVED AND SUPPORTED BY SALE BILLS OF STOCK BROKER AND SAL E WAS ENTERED INTO THROUGH BSE. ANY EVIDENCE HAS TO BE CONSIDERED IN I TS ENTIRETY AND ONE CANNOT DRAW A CONCLUSION BASED ON PART INFORMATION. THE LONG TERM CAPITAL GAIN SHOWN BY THE APPELLANT I N THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2005-06 ON 2/9/2005 WHICH HAS BEEN OFFERED TO TAX @ 10%. THE SAID LONG TERM GAIN IS PERTAINING TO LISTED SECURITIES VIZ. TALENT INFOWAY LTD. WHEREIN THE APPELLANT HAS SOLD 2,00,000 SHARES ON 26/8/2004, 28/8/2004 AND 13/9/20 04 FOR AN AMOUNT OF RS.97,10,074/-. THE SAID SHARES WERE ACQUIRED BY THE APPELLANT ON 4/4/2003, 8/4/2003 AND 11/4/2003 FOR AN AMOUNT OF R S. 2,60,690/-. CONSIDERING THE COST INFLATION INDEX, LONG TERM CAP ITAL GAIN OF RS. 94,49,384/- HAS BEEN SHOWN BY THE APPELLANT IN THE RETURN OF INCOME FILED. A.O. IN PARA 3.4 HAS REFERRED TO CERTAIN SEA RCH AND SEIZURE U/S. 132 IN THE CASE OF ALAG SECURITIES PVT. LTD. VIDE L ETTER DATED 5/12/2011 THE APPELLANT HAS SUBMITTED THE COMPLETE DETAILS AS WELL AS REPLY TO THE ORDER SHEET ENTRY DATED 29/11/11 ON THE BASIS OF IN QUIRY CONDUCTED BY THE A.O. RELATING TO THE TRADE EXECUTED IN THE NAME OF APPELLANT IN NSE AND ISE WHEREIN IT IS STATED THAT NO TRADE HAS BEEN EXECUTED IN THE NAME OF APPELLANT. AS PER CAREFUL EXAMINATION OF SA ME REPLY WHICH IS REPRODUCED BY THE A.O. IN PARA 3.6 IT IS NOTED THAT COPIES OF PURCHASE MEMO, CONTRACT NOTE RELATING TO PURCHASE, COPIES OF INVOICE, CONTRACT NOTE, ORDER AS PER TRADE NUMBER, TRADE TIME, QUANTI TY, SALE RATE, BROKERAGE, NET RATE AND AMOUNT, ETC. HAS ALREADY BE EN SUBMITTED. IT WAS FURTHER CLAIMED THAT PAYMENT HAS BEEN RECEIVED THRO UGH A/C. PAYEE CHEQUES AND AS TO WHY THE TRANSACTION IS NOT REFLEC TED IN INTER CONNECTED STOCK EXCHANGE OF INDIA, BSE AND NSE CANN OT BE COMMENTED BY THE APPELLANT BUT IT IS SUBMITTED THAT AS PER THE CONTRACT NOTE, THE TRANSACTION HAS TAKEN IN BOLT. COPY OF DE MAT ACCOUNT FOR SHAH INVESTOR'S HOME LTD. HAS ALSO BEEN FILED IN BR IEF THAT THE SHARES WERE HELD IN DEMAT ACCOUNT. FURTHER, IN PARA 3.8 OF THE ASSESSMENT ORDER, A.O. HAS - -REFERRED TO REPLY DATED 10/10/11 APPENDED AS ANNEXURE - A OF THE SUBMISSION. THE PERUSAL OF THE SAID LETTER REVEALS THAT THE APPELLANT HAS FURTHER SUBMITTED COPY OF TH E BANK STATEMENT ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 13 INDICATING THE SALE PROCEEDS AND GONE THROUGH THE C OPIES OF THE 3 LETTERS OF BSE, ISE AND NSE AND CLARIFIED THAT BSE HAS CLEA RLY STATED THAT PAN BASED TRANSACTION HAVE BECOME MANDATORY WITH EF FECT FROM 1/1/2007 AND THESE TRANSACTIONS BEING RELEVANT TO F INANCIAL YEAR 2004- 05 HAVE NOT BEEN REPORTED BY BSE. FURTHER, INTER CO NNECTED STOCK EXCHANGE OF INDIA HAS STATED THAT THE TRANSACTIONS WERE NOT WITH ISE AND WITH RESPECT TO NSE, INFORMATION WAS SUPPLIED TO THE A.O. THEREFORE, EVEN FROM THE INQUIRY CONDUCTED BY THE A .O. IT HAS NOT BEEN PROVED THAT IMPUGNED TRANSACTIONS RELATING TO THE SALE OF THE SHARES OF PRRANETA INDUSTRIES ARE NOT GENUINE WHEN BSE HAS CL EARLY INFORMED ABOUT THE TRANSACTION RELATING TO APPELLANT IN ANNE XURE A. THIS SUBMISSION OF THE APPELLANT THOUGH CONSIDERED BY TH E AO IN PARA NO. 3.8, BUT AO SIMPLY STATED THAT IN THE SAID REPLY OF APPELLANT NOTHING WAS NEW AND EVERYTHING WAS ALREADY STATED IN THE EA RLIER SUBMISSION DATED 5/12/2011. THEREFORE, A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCES INDICATING THAT THE SAID GAIN OF RS . 94,49,384/- IS NOT GENUINE. ANY TRANSACTION CANNOT BECOME SUOMOTO NON- GENUINE SIMPLY BECAUSE THERE HAS BEEN SEARCH & SEIZURE IN SOME CAS ES WHEREIN CONTRARY DOCUMENTARY EVIDENCES WERE FOUND DURING THE COURSE OF SEARCH IN THOSE CASES. THE ISSUE TO BE CONSIDERED IS WHETHER ANY AD VERSE EVIDENCE WAS RELATING TO APPELLANT AND IF SO WHETHER IT WAS GIVE N FOR EXPLANATION. THERE BEING NO SUCH LINK AND IN VIEW OF EVIDENCES F ILED AND FACTS COLLECTED THROUGH INQUIRIES, THE SUM OF RS.94,49,38 4/- BEING THE LONG TERM GAIN ON SALE OF SHARES CANNOT BE CONSIDERED DE FINITELY AS UNEXPLAINED FOR THE PURPOSE OF ADDITION U/S. 68 OF THE I. T. ACT, 1961 AND THAT TOO FOR A. Y. 2005-06. ONE CANNOT IGNORE P LETHORA OF DOCUMENTARY EVIDENCES CONTAINING PARTICULARS SUCH A S COMPLETE CONTRACT NOTE, DETAILS OF TRADE, VERIFICATION OF TH E TRADE, ETC. AND EXPLANATION OF APPELLANT WHICH REMAINED UNCONTROVER TED. THE A.O. IS DIRECTED TO TREAT THE SAME AS LONG TERM CAPITAL GAI N OF RS.94,49,384/- AS SHOWN IN THE RETURN OF INCOME. THIS GROUND OF AP PEAL IS ACCORDINGLY ALLOWED. WITH RESPECT OF GROUND RELATING TO ADDITION OF RS. 13,17,873/- BEING SHORT TERM CAPITAL GAIN WHICH HAS BEEN ADDED BY THE A.O. U/S. 68 OF THE I. T. ACT, 1961,THE ISSUE IS DISCUSSED BY THE A.O. IN PARA NO. 4 OF THE ASSESSMENT ORDER. THE TOTAL SHORT TERM CAP ITAL GAIN OF RS. 32,94,684/- IS RELATING TO THE SALE OF 50,000 SHARE S. PROPORTIONATE AMOUNT RELATING TO 30,000 SHARES HAS BEEN ALLOWED B Y THE A.O. RESULTING INTO THE ADDITION OF RS.13,17,873/- RELAT ING TO 20,000 SHARES. THIS IS BASED ON THE INFORMATION FURNISHED BY THE B SE WHEREIN 30,000 SHARES OF PRRANETA INDUSTRIES LTD. SOLD BY THE APPE LLANT HAS BEEN ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 14 CONFIRMED, A.O. HAS CONSIDERED SHORT TERM CAPITAL G AIN RELATING TO THE SAID SHARES AS ONLY GENUINE AND STCG ON ACCOUNT OF REMAINING SHARES IS ADDED U/S. 68. FROM THE PERUSAL OF PARA 4, IT IS SEEN THAT THE TRANSACTION RELATING TO PRRANETA INDUSTRIES LTD. AR E NOT THROUGH MAHASAGAR SECURITIES PVT. LTD. ALSO AS PER THE INQU IRY LETTER, THERE IS NO REFERENCE TO THE 'SHARES OF PRRANETA INDUSTRIES LTD. I HAVE ALSO LOOKED INTO THE DETAILS OF SALES AND PURCHASES OF SHARES R ELATING TO PRRANETA JNDUSTRIES LTD. AND IT IS SEEN THAT TOTAL SHARES HA VE BEEN SOLD THROUGH NEPTUNE SECURITIES PVT. LTD. AND VIMLA EXIMS PVT. L TD. TOTAL 30,000 SHARES HAVE BEEN SOLD THROUGH NEPTUNE SECURITIES PV T. LTD. THROUGH 3 DIFFERENCE INVOICES AND 20,000 SHARES HAVE BEEN SOL D THROUGH VIMLA EXIM PVT. LTD. THROUGH 2 DIFFERENT INVOICES. A.O. H AS REFERRED THAT AS PER THE INFORMATION FURNISHED BY BSE ONLY 30,000 SH ARES HAVE BEEN REPORTED. THEREFORE, IT SEEMS THAT 30,000 SHARES SO LD THROUGH NEPTUNE SECURITIES PVT. LTD. WHO IS THE MEMBER OF AHMEDABAD STOCK EXCHANGE AS WELL AS BSE SUB-BROKER HAVE BEEN CONFIRMED AND R EMAINING 20,000 SHARES SOLD THROUGH VIMLA EXIM PVT. LTD. WHO IS A S UB-BROKER OF ASE CAPITAL MARKET LTD. HAVE NOT BEEN PROPERLY INQUIRED . MOREOVER, THE INVOICES BY VIMLA EXIM PVT. LTD. CONTAIN THE ORDER NUMBER, TRADE NUMBER, TRADE TIME, QUANTITY SOLD, SETTLEMENT NUMBE R, SETTLEMENT PERIOD AS WELL AS CONTRACT NUMBER, ETC. INFORMATION PROVIDED IN THE INVOICE OF VIMLA EXIM PVT. LTD. IS SIMILAR TO INFOR MATION PROVIDED BY NEPTUNE SECURITIES PVT. LTD. AND THE PERIOD AND RAT E IS ALSO ALMOST SAME IN BOTH THE CASES. THEREFORE, HAVING ACCEPTED THE PURCHASES AS GENUINE, FURTHER SALE OF 30,000 SHARES HAVING BEEN ACCEPTED AS GENUINE, NO EVIDENCES HAVE BEEN BROUGHT ON RECORD BY THE A.O . ABOUT THE REMAINING 20,000 SHARES TO TREAT THE SAME AS NON-GE NUINE. NO FURTHER INQUIRY HAS BEEN CONDUCTED WITH ANY OF THE BROKERS AND NON- AVAILABILITY OF EXACT INFORMATION ABOUT THE 20,000 SHARES HAS BEEN CONSIDERED FOR THE PURPOSE OF ADDITION U/S. 68 OF T HE I.T. ACT, 1961. THE FACT REMAINS THAT TOTAL SHARES WERE HELD IN DEMAT F ORM, COPIES OF THE DEMAT TRANSACTION WAS SUBMITTED BEFORE THE A.O. AND EVEN AS PER THE TRANSACTION STATEMENT ISSUED BY NSDL, THERE IS DEA R CUT DEBIT OF 10,000 SHARES EACH, TWO TIMES RELATING TO TRANSFER OF SHARES THROUGH VIMLA EXIM PVT. LTD. ROLLING MARKET LOT NO. 2004241 AND 2004246. I NOTE THAT FOR ASE CAPITAL MARKET PVT. LTD. ALSO THE RE IS SOME DISCREPANCY OF ROLLING MARKET LOT NUMBER. THEREFORE , I FIND NO JUSTIFICATION FOR TREATING CAPITAL GAINS RELATING T O 20,000 SHARES FOR THE PURPOSE OF ADDITION U/S. 68 OF THE I. T. ACT, 1961. (I) WHEN CONDITIONS STIPULATED U/S. 68 ARE NOT E XISTING, & ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 15 (II) SHORT TERM CAPITAL GAINS ARE SHOWN BY THE AP PELLANT IN RETURN OF INCOME. THE CONTROVERSY HAS ARISEN AS THE AO WAS HAVING INF ORMATION THAT M/S. MAHASAGAR SECURITIES LTD. AND RELATED GROUP CO MPANIES WERE ENGAGED IN ARRANGING LONG TERM CAPITAL GAIN/SHORT T ERM CAPITAL GAIN THROUGH ACCOMMODATION ENTRIES. IN THIS REGARD, IT I S MENTIONED THAT ARRANGED LTCG/STCG TRANSACTIONS ARE NORMALLY HAVING SHORT LIFE. THE ARRANGED TRANSACTIONS ARE COMPLETED IN THE SHORTEST POSSIBLE TIME. IN THE ORGANIZED TRANSACTIONS ALL EVIDENCES, WHICH ARE AVA ILABLE ON RECORD CANNOT BE MANAGED. THE WHOLE ISSUE IS RELATING TO THE STATEMENT U/S. 1 31/132 OF THE I.T. ACT, 1961 OF SHRI MUKESH CHOKSI INSPITE OF ALL COGE NT EVIDENCES PRODUCED AND KEPT ON RECORD. THE FACT THAT SHRI MUK ESH CHOKSI HAS NOT BEEN CROSS-EXAMINED BY APPELLANT CANNOT BE IGNORED AS HEAVY RELIANCE IS PLACED ON HIS STATEMENT BY THE AO. IT IS ALSO NOTED THAT SHRI MUKESH CHOKSI HAS GIVEN CONTRARY STATEMENTS IN CASE OF FEW ASSESSEES THROUGH AFFIDAVIT THAT THEIR TRANSACTIONS WERE GENUINE AND THE VERY ISSUE HAS BEEN EXAMINED BY COURTS. I FEEL THAT THE ENTIRE ISS UE IS COVERED BY HON'BLE THE MUMBAI TRIBUNAL IN THE CASE OF SHRI JAF FERALI K. RATTONSEY VS. DCIT REPORTED IN 53 SOT 220 (MUM.)(URO). IT IS APPROPRIATE TO REPRODUCE THE RELEVANT EXTRACT OF THE FINDING PORTI ON OF THE MUMBAI TRIBUNAL1 ORDER IN THE CASE OF JAFFERALI AS UNDER: '9.5 FROM THE ABOVE, IT IS CLEAR THAT MR. MUKESH CH OKSI IS DOUBLE SPEAKING IN HIS STATEMENTS I.E. ONE GIVEN BEFORE TH E A.O. AND THE ONE DURING CROSS SHN JAFFERALI K. RATTONSEY EXAMINA TION BEFORE THE A.O. UNDER THESE CIRCUMSTANCES ONE HAS TO SEE THE E VIDENTIARY VALUE OF A PERSON MAKING DOUBLE SPEAKING. WE FIND T HE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EASTERN COMMERCI AL ENTERPRISES (SUPRA) HAS HELD THAT A MAN INDULGING IN DOUBLE SPE AKING CANNOT BE SAID BY ANY MEANS A TRUTHFUL MAN AT ANY STAGE AND N O COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL. WE FIND T HE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MRS. UTTARA S. SHOREWALA (SUPRA) (IN WHICH ONE OF US THE ACCOUNTANT MEMBER IS A PARTY) FOLLOWING THE DECISION OF HON 'BLE CALCUTTA HIGH CO URT UPHELD THE ORDER OF THE ID. CIT(A) IN HOLDING THAT THE A.O. CA NNOT MAKE ANY ADDITION IN THE ASSESSEE'S HANDS DESPITE THE ASSESS EE NOT HAVING MADE ANY PAYMENT TO THE ENTITIES MENTIONED BY SHRI CHOKSI, WHOSE STATEMENT IS BEING RELIED UPON BY HIM. THE CIT (A) ALSO NOTED THAT MR. MUKESH CHOKSI HAS BEEN VACILLATING RIGHT THROUG H AND HAS ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 16 GIVEN DIFFERENT VERSIONS AT DIFFERENT STAGES OF THE PROCEEDINGS AND THEREFORE HIS EVIDENCE WAS UNRELIABLE. 9.6 IN VIEW OF THE ABOVE JUDICIAL DECISIONS THE STA TEMENT OF MR. MUKESH CHOKSI CANNOT BE A DECIDING FACTOR FOR REJEC TING THE GENUINENESS OF THE PURCHASE OF SHARES BY THE ASSESS EE ESPECIALLY WHEN ALL OTHER SUPPORTING EVIDENCES FILED BY THE AS SESSEE WERE NEITHER PROVED TO BE FALSE OR UNTRUE. WE FURTHER FI ND MERIT IN THE SUBMISSION OF THE ID. COUNSEL FOR THE ASSESSEE THAT THE DEMATERIALIZATION OF SHARES FROM PHYSICAL HOLDING I S A LENGTHY PROCESS AND TAKES CONSIDERABLE TIME. THEREFORE, WHE N THERE IS NO DISPUTE TO THE DEMATERIALIZATION OF SHARES BEFORE T HE DATE OF SALE, THEREFORE, THE SHARES WERE PURCHASED MUCH PRIOR TO THE DATE OF SALE.' IN ADDITION TO ABOVE, I HAVE ALSO GONE THROUGH THE FOLLOWING ORDERS OF THE MUMBAI TRIBUNAL, WHEREIN ALSO, IN RESPECT OF THE 'SHARES SCAM' ALLEGED TO BE INVOLVED BY SHRI MUKESH CHOKSI ACTION S WERE TAKEN AGAINST MANY PERSONS DISALLOWING THEIR CLAIM IN RES PECT OF LONG TERM CAPITAL GAIN / SHORT TERM CAPITAL GAIN AND UNDER TH E IDENTICAL SET OF FACTS THE BEEN CONSIDERED BY THE TRIBUNAL HAS DELETED ADD ITION MADE U/S. 68 / 69 OF THE I. T. ACT, 1961: (A) SMT. HAMIDA J. RATTONSEY VS. DCIT (B) ITO VS. RASILA N. GADA (C) SMT. DURGADEVI MUNDRA VS. ITO (D) SACHIN N. MORAKHIA VS. ITO (E) MUKESH R. MOROLIA VS. ACIT (F) CIT VS. MUKESH R. MAROLIA (BOMBAY HC) (G) ITO VS. TRUPTIC SHAH (H) ACIT VS. SHRIRAVINDRAKUMAR TOSHNIWAL (I) ITO VS. SMT. NAVNEET MEHRA NOW COMING TO THE VARIOUS ORDERS OF JURISDICTIONAL ITAT, AHMEDABAD, THOUGH IN SUCH CASES ALLEGED TRANSACTION S WITH SHRI MUKESFI CHOKSI WERE NOT INVOLVED, BUT THERE ALSO AD DITION WAS MADE U/S. 68 / 69 OF THE I. T. ACT, 1961 . ON ALLEGATION OF OFFERING SHORT / LONG TERM CAPITAL GAIN ON THE BASIS OF ACCOMMODATION BIL LS / CONTRACT NOTES PROVIDED BY THE DIFFERENT BROKER, WHEREIN ALSO THE TRIBUNAL AFTER TAKING INTO CONSIDERATION VARIOUS EVIDENCES HAS HELD THAT ADDITION CANNOT BE MADE U/S. 68 / 69 OF THE I. T. ACT, 1961: (A) ITO VS. SHRI PRAKASHCHAND S. SANDH (B) ACIT VS. MAHESHG. VAKIL (C) ACIT VS. HIMANI M. VAKIL ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 17 (D) MANOJKUMARSARAWANGI HUF VS. ACIT THE PROPOSITION THAT, IF PURCHASE TRADES CARRIED OU T THROUGH BROKER MAHASAGAR SECURITIES PVT. LTD. ARE NOT RECORDED IN THE NAME OF, THE ASSESSEE ON THE FLOOR OF STOCK EXCHANGES AND THEREF ORE THE PURCHASE OF SUCH SHARES WERE NOT GENUINE, IS CONCERNED I AM OF THE OPINION THAT PURCHASE AND SALE OF SHARES OUTSIDE THE FLOOR OF ST OCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY AS HELD BY MUMBAI ITAT IN THE CAS E OF MUKESH MORALIA (SUPRA) AS UNDER: '10.3 PURCHASE AND SALE OF SHARES OUTSIDE THE FLOOR OF STOCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY. OFF-MARKET TR ANSACTIONS ARE NOT ILLEGAL. IT IS ALWAYS POSSIBLE FOR THE PARTIES TO ENTER INTO TRANSACTIONS EVEN WITHOUT THE HELP OF BROKERS. THER EFORE, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSACTIONS REPORTED BY THE ASSESSEE WERE QUITE SHAM ON THE LEGAL PROPOSITION ARRIVED AT BY T HE CIT(A) THAT OFF-MARKET TRANSACTIONS ARE NOT PERMISSIBLE. THE AS SESSEE HAS STATED THAT THE TRANSACTIONS WERE MADE WITH THE HELP OF PR OFESSIONAL MEDIATORS WHO ARE EXPERTS IN OFF-MARKET TRANSACTION S. 70.4 WHEN THE TRANSACTIONS WERE OFF-MARKET TRANSACT IONS, THERE IS NO RELEVANCE IN SEEKING DETAILS OF SHARE TRANSACTIO NS FROM STOCK EXCHANGES. SUCH ATTEMPTS WOULD BE FUTILE. STOCK EXC HANGES CANNOT GIVE DETAILS OF TRANSACTIONS ENTERED INTO BETWEEN T HE PARTIES OUTSIDE THEIR FLOOR. THEREFORE, THE RELIANCE PLACED BY THE ASSESSING AUTHORITY ON THE COMMUNICATIONS RECEIVED FROM THE STOCK EXCHA NGES THAT THE PARTICULARS OF SHARE TRANSACTIONS ENTERED INTO BY T HE ASSESSEE WERE NOT AVAILABLE IN THEIR RECORDS, IS OUT OF PLACE. TH ERE IS NO EVIDENTIAL VALUE FOR SUCH RELIANCE PLACED BY THE ASSESSING AUT HORITY. THE ASSESSEE HAD MADE IT VERY CLEAR THAT THE TRANSACTIO NS WERE NOT CONCLUDED ON THE FLOOR OF THE STOCK EXCHANGE. THE M ATTER BEING SO, THERE IS NO PROBATIVE VALUE FOR THE NEGATIVE REPLIE S SOLICITED BY THE ASSESSING AUTHORITY FROM THE RESPECTIVE STOCK EXCHA NGES. 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.' IT IS FURTHER SEEN THAT THE MUMBAI TRIBUNAL ORDER O F MUKESH MORALIA HAS BEEN FOUND TO BE CORRECT AND IT IS CONF IRMED BY THE BOMBAY HIGH COURT IN TAX APPEAL NO.456 OF 2007. THEREFORE, RESPECTFULLY FOLLOWING SUCH ORDERS, I HOLD THAT EVEN IF ALLEGED SHARES PURCHASED THROUGH OFF-MARKET TRADE THE SAME CANNOT BE CONSIDE RED ILLEGAL AND CONSEQUENTLY NON-GENUINE. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 18 THE CIT(A)-XI, AHMEDABAD VIDE ITS APPEAL ORDER NO. CIT(A)- XI/437/ACIL CIR. 6(5)/11-12 DATED 07/05/2012 IN THE CASE OF SMT. JAYA VINEET AGARWAL FOR A. Y. 2004-05 HAS ALSO DELETED A DDITION U/S. 69 OF THE I.T. ACT, 1961 ON THE FACTS AND CIRCUMSTANCES R ELATING TO THE STATEMENT OF SHRI MUKESH CHOKSI. THUS, THE ISSUE IS SQUARELY AND DIRECTLY COVERED BY THE JURISDICTIONAL AHMEDABAD OR DER IN THE CASE OF MANOJKUMAR SARWANGI (SUPRA) AND THE DECISIONS REFER RED TO IN THE SAME ORDER. 5.2 THE LD. CIT(A), ON THE BASIS OF THESE OBSERVATI ONS, THE IMPUGNED ADDITION WAS DELETED. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. CIT( A), THE REVENUE IS NOW IN APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE RELEVANT FACTS AND CONTENDS THAT THE ADDITIONS HAVE BEEN DELETED BY LD . CIT(A) AFTER DUE APPRECIATION OF FACTS AND LEGAL PROPOSITIONS. THE P ARTICULARS IN RESPECT OF LTCG/STCG RECEIVED BY THE ASSESSEE OUT OF SALE O F SHARES OF TALENT INFOWAY LTD AND PARRANET INDUS. LTD ARE AS UNDER:- A) AMOUNT GAIN SHARE RS. 94,49,383/- LONG TERM CAPITAL GAIN TALEN T INFOWAY LTD DETAILS OF PURCHASES: PURCHASED ON: 4/4/2003 50,000 8/4/2003 50,000 11/4/2003 1,00,000 ----------- 2,00,000 ====== (I) AS ON 31/3/2004 (AY 2004-05) ASSESSEE HAS DULY SHOW N THESE AS INVESTMENT IN THE BOOKS OF ACCOUNTS. SAME ARE DULY ENCLOSED WITH RETURN OF INCOME AND ACCEPTED BY I T DEPARTMEN T IN AY 2004-05 NOT ONLY IN ORIGINAL BUT ALSO IN REASSESSME NT U/S 143(3) RWS 147. THUS IN BOTH ASSESSMENTS FOR THE SAME YEAR AFTER DETAILED SCRUTINY HAVE BEEN ACCEPTED AS ASSESSEES INVESTMENTS. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 19 THESE SHARES WERE PURCHASED THROUGH GOLD STAR FINVE ST P. LTD. BESIDES THE THEY WERE ALSO IN D-MAT ACCOUNT. (II) LD. AO DID NOT CONDUCT ANY ENQUIRY FROM GOLD STAR F INVEST P. LTD. WHICH IS FOUND TO BE REGISTERED AS A SUB BROK ER OF NSE DETAILS OF SALES (I) THE SHARES ARE SOLD ON 26/8/2004, 28/8/2004, 06/9/2 004, 11/9/2004, 13/9/2004 THROUGH MAHA SAGAR SECURITIES P. LTD. WHICH IS A DEALER OF INTER CONTINENTAL STOCK EXCHAN GE AND SUB BROKER OF NSE WHICH HAS DULY SUPPLIED THE INFORMATI ON RECEIVED IN PURSUANCE TO INQUIRIES U/S. 133(6). VIDE REPLY T O SHOW CAUSE NOTICE DATED 10/12/2011 - PARA NO. 5 PLACED ON PAGE NO. 84 TO 85 THE DETAILS HAVE BEEN PROVIDED BY NSE TO THE LD. AO IN ANNEXURE A CONFIRMING THE TRANSACTIONS. CONTENTS OF ANNEXURE A HAVE NEITHER BEEN DISCUSSED BY THE AO IN THE ASSE SSMENT ORDER NOR GIVEN TO THE ASSESSEE FOR ANY FURTHER CLA RIFICATIONS. (II) THEREFORE, NSE HAVING CONFIRMED THE TRANSACTION TO LD. AO IN REPLY TO STATUTORY INQUIRIES U/S 133(6), LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. B) AMOUNT GAIN SHARE RS. 13,17,873/- SHORT TERM CAPITAL GAIN - PARRANET INDUS. LD. COUNSEL CONTENDS THAT: (I) TOTAL 50,000 SHARES SOLD ON 16/3/2005 WHICH WERE PU RCHASED BY CHEQUE PAYMENTS ON 3/9/2004 AND DULY ENTERED IN THE BOOKS OF ACCOUNTS. LD. AO MADE NO ENQUIRY FROM PURCHASER COM PANY. (II) AO HAS ACCEPTED 30,000 SALES AS GENUINE THUS THE ID ENTITY OF PARTY AND CAPACITY TO PAY THE AMOUNT IS CLEARLY DEM ONSTRATED. THERE IS NO JUSTIFICATION TO HOLD THE PART OF SALE AS GENUINE AND PART AS UNEXPLAINED CASH CREDIT. (III) LD. AO FOR 20,000 SHARES RS. 13,17,873 HAS MADE THE ADDITION U/S 68 ON PROPORTIONATE BASIS BY HOLDING IT AS UNEXPLAI NED/ INCOME FROM OTHER SOURCES. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 20 (IV) BSE HAS CONFIRMED TRANSACTION OF 30,000 SHARES (OF NEPTUNE SECURITIES P. LTD) AND 20,000 SHARES HAVE BEEN SOLD THROUGH VIMLA EXIM P. LTD. SURPRISINGLY NO ENQUIRY HAS BEEN CONDUCTED FROM VIMLA EXIM P. LTD WHO IS A MEMBER OF AHMEDABAD STOCK EXCHANGE. THIS FACT IS NOT DISPUTED BY THE DEPARTME NT. 7.1 IT IS VEHEMENTLY CONTENDED THAT ALL THE TRANSAC TIONS OF SALE OF SHARES ARE GENUINE, PURCHASES RELEVANT TO AY 2004-0 5 HAVE BEEN AFFECTED THROUGH BANKING CHANNELS, ENTERED IN BOOKS OF ACCOUNTS AND ACCEPTED BY THE DEPARTMENT IN TWO ASSESSMENTS FOR T HE SAME YEARS. LD. CIT(A) DULY CONSIDERED THE MATERIAL AND FACTS AVAIL ABLE ON THE RECORD AND ACCEPTED THE EXPLANATION OF THE ASSESSEE TO BE CORRECT AFTER DETAILED VERIFICATION AND CONSIDERATION OF LEGAL PROPOSITION S. CONSEQUENTLY THERE IS NO INFIRMITY IN HIS ORDER. 7.2 IT IS FURTHER CONTENDED THAT IN THE ASSESSMENT U/S 143(3) OF ASSESSEES WIFE SMT. JAYA AGRAWAL FOR AY 2004-05 QU ESTIONS WERE RAISED FOR SIMILAR TYPE OF SHARE TRANSACTION. LD. A O IN HER CASE ACCEPTED THEM BY FOLLOWING OBSERVATION: IN THE MEANWHILE, THE UNDERSIGNED ALSO WITH A VIEW FIND OUT THE GENUINENESS OF INCOME UNDER THE HEAD LONG TERM CAPI TAL GAIN CALLED FOR THE RELEVANT INFORMATION FROM THE COMPANY NAMED GWALIOR TANK & VESSELS LTD., THE SHARES OF WHICH THE ASSESSEE SOLD AND EARNED INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN AS MENTIONED EARLIER. THE INFORMATION FROM THE BROKER, GOLD STAR FINVEST PVT. LTD., INDORE STOCK EXCHANGE AND UNION BANK OF INDIA WAS ALSO CALLED FO R. AFTER GOING THROUGH THE REPLIES RECEIVED FROM UNION BANK OF IND IA AND GWALIOR TANK & VESSELS LTD. AND THE DETAILED SUBMISSIONS MA DE BY THE ASSESSEE MENTIONED ABOVE, THE TRANSACTION OF SHARES ON WHICH THE ASSESSEE HAS GAINED APPEARS TO BE GENUINE. THE LETTER ISSUED TO BROKER WAS RETURNED AS THE BROKER GOLD STAR FINVEST PVT. LTD. HAS SHIFT ED ITS OFFICE FROM JUHU, MUMBAI TO SHANTAKRUZ, MUMBAI. THE ASSESSEE HO WEVER HAS FILED CONFIRMING LETTERS FROM THE BROKER DATED 6/11/2003 AND 2/12/2003 ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 21 WHEREIN IT IS STATED THAT 99,400 SHARES WERE RECEIV ED BY THEM IN PHYSICAL FORM. THE COPIES OF CONTRACT NOTE, SALE DE ED CONFIRMING THE SALES OF SHARES, DISTINCTIVE NOS. OF SHARES AND THE AMOUNT REALIZED WITH SALE RATE ETC. HAVE ALSO BEEN MADE AVAILABLE. MADHY A PRADESH STOCK EXCHANGE LTD. HOWEVER, HAD REPLIED THAT NO DATA WAS AVAILABLE WITH THEM AND THEREFORE, THE SAME CANNOT FEE PROVIDED. B UT, AS ALL THE OTHER REQUIRED DETAILS INCLUDING THE INFORMATION FROM THE BANK CONFIRMING THE DEPOSITS OF THE CHEQUES WITH AMOUNT AND THE DAT ES OF DEPOSIT AS SHOWN BY THE ASSESSEE IN HIS BANK ACCOUNT INDICATE THAT THE ASSESSEE EARNED INCOME FROM LTCG. THE ASSESSEE HAS SOLD THE SHARES IN OPEN MARKET THROUGH A REGISTERED BROKER WHO CONFIRM THE SALE RATE IN THE CONTRACT NOTE AND IN THE BILLS. 7.3 SIMILARLY, IN THE ASSESSMENT U/S 143(3) OF SHRI SURESHCHANDRA AGRAWAL ALSO, THESE TRANSACTIONS AND CAPITAL GAINS ON SALES HAVE BEEN ACCEPTED. COPIES OF THEIR ASSESSMENT ORDERS ARE PLA CED ON RECORD. 7.4 IN VIEW OF ALL THESE FACTS, CIRCUMSTANCES, CONT ENTIONS AND PROPOSITION OF LAW, THE ORDER OF LD. CIT(A) IS PERF ECTLY JUSTIFIED AND DESERVES TO BE UPHELD. 8. LD. SR. DR RELIED ON THE ORDER OF LD. AO. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. APROPOS THE ISSUE OF ALLEGED S HARE SCAM OF SHRI MUKESH CHOKSI, THE MUMBAI TRIBUNAL HAS ALREADY CONS IDERED THE ASPECTS OF ALLEGED 'SHARES SCAM', INVOLVEMENT OF SH RI MUKESH CHOKSI AND GROUP ENTITIES IN VARIOUS CASES. IN SIMILAR SET OF FACTS, THE TRIBUNAL HAS DELETED ADDITION MADE U/S. 68/69 OF THE I. T. A CT, 1961 QUA THE CLAIMS OF LONG TERM AND SHORT TERM CAPITAL GAINS IN FOLLOWING CASES WHICH ARE RELIED ON BY LD. CIT(A): (A) SMT. HAMIDA J. RATTONSEY VS. DCIT (B) ITO VS. RASILA N. GADA ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 22 (C) SMT. DURGADEVI MUNDRA VS. ITO (D) SACHIN N. MORAKHIA VS. ITO (E) MUKESH R. MAROLIA VS. ACIT((2006) 6 SOT 247) (F) CIT VS. MUKESH R. MAROLIA (BOMBAY HC) (G) ITO VS. TRUPTIC SHAH (H) ACIT VS. SHRIRAVINDRAKUMAR TOSHNIWAL (I) ITO VS. SMT. NAVNEET MEHRA 9.1 FOLLOWING THESE PRECEDENTS, THE ITAT-AHMEDABAD BY FOLLOWING JUDGMENTS, DELETED SIMILAR ADDITIONS MADE BY AUTHOR ITIES BELOW BY HOLDING THAT SHORT/LONG TERM CAPITAL GAIN OFFERED B Y ASSESSEE WERE ACCOMMODATION ENTRIES PROVIDED BY SUCH PERSONS AND ADDING THE AMOUNTS OF SUCH GAINS U/S. 68 / 69 OF THE I. T. ACT , 1961: A) ITO VS. SHRI PRAKASHCHAND S. SANDH B) ACIT VS. MAHESHG. VAKIL C) ACIT VS. HIMANI M. VAKIL D) MANOJKUMARSARAWANGI HUF VS. ACIT 9.2 THE PROPOSITION THAT, SHARE PURCHASES THROUGH B ROKER MAHASAGAR SECURITIES PVT. LTD. ARE NOT RECORDED IN THE NAME O F, THE ASSESSEE ON THE FLOOR OF STOCK EXCHANGES OUTSIDE THE FLOOR OF STOCK EXCHANGE HAS NOT BEEN HELD AS UNLAWFUL ACTIVITY AS HELD BY MUMBAI IT AT IN THE CASE OF MUKESH MORALIA ((2006) 6 SOT 247) AS UNDER: '10.3 PURCHASE AND SALE OF SHARES OUTSIDE THE FLOOR OF STOCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY. OFF-MARKET TRANSACTIONS A RE NOT ILLEGAL. IT IS ALWAYS POSSIBLE FOR THE PARTIES TO ENTER INTO TRANS ACTIONS EVEN WITHOUT THE HELP OF BROKERS. THEREFORE, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSACTIONS REPORTED BY THE ASSESSEE WERE QUITE SH AM ON THE LEGAL PROPOSITION ARRIVED AT BY THE CIT(A) THAT OFF-MARKE T TRANSACTIONS ARE NOT PERMISSIBLE. THE ASSESSEE HAS STATED THAT THE T RANSACTIONS WERE MADE WITH THE HELP OF PROFESSIONAL MEDIATORS WHO ARE EXP ERTS IN OFF-MARKET TRANSACTIONS. 70.4 WHEN THE TRANSACTIONS WERE OFF-MARKET TRANSACT IONS, THERE IS NO RELEVANCE IN SEEKING DETAILS OF SHARE TRANSACTIONS FROM STOCK EXCHANGES. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 23 SUCH ATTEMPTS WOULD BE FUTILE. STOCK EXCHANGES CANN OT GIVE DETAILS OF TRANSACTIONS ENTERED INTO BETWEEN THE PARTIES OUTSI DE THEIR FLOOR. THEREFORE, THE RELIANCE PLACED BY THE ASSESSING AUT HORITY ON THE COMMUNICATIONS RECEIVED FROM THE STOCK EXCHANGES TH AT THE PARTICULARS OF SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WERE NOT AVAILABLE IN THEIR RECORDS, IS OUT OF PLACE. THERE IS NO EVIDENT IAL VALUE FOR SUCH RELIANCE PLACED BY THE ASSESSING AUTHORITY. THE ASS ESSEE 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 PR OBATIVE VALUE FOR THE NEGATIVE REPLIES SOLICITED BY THE ASSESSING AUTHORI TY 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 TH E ASSESSEE.' 9.3 THE MUMBAI TRIBUNAL ORDER IN THE CASE OF SHRI M UKESH MORALIA HAS BEEN UPHELD AND CONFIRMED BY THE BOMBAY HIGH CO URT IN TAX APPEAL NO.456 OF 2007. THEREFORE, IN VIEW OF FOREGO ING, THE SHARES PURCHASED THROUGH OFF-MARKET TRADE THE SAME CANNOT BE CONSIDERED NON-GENUINE IGNORING THE FACTS THAT THE PURCHASES A RE ACCEPTED BY DEPARTMENT IN PRECEDING YEAR BY TWO ASSESSMENTS FOR THE SAME YEAR AND THE PAYMENTS OF PURCHASES AND SALES ARE EFFECTE D BY A/C PAYEE CHEQUES. 9.4 FURTHER IN THE CASE OF SMT. JAYA VINEET AGARWAL FOR A. Y. 2004-05, LD. CIT(A)-XI, AHMEDABAD VIDE ITS APPEAL ORDER NO. CIT(A)- XI/437/ACIL CIR. 6(5)/11-12 DATED 07/05/2012, ON S IMILAR FACTS, HAS ALSO DELETED ADDITION U/S. 69 OF THE I.T. ACT, 1961 ON THE FACTS AND CIRCUMSTANCES RELATING TO THE STATEMENT OF SHRI MUK ESH CHOKSI. THIS ORDER HAS BEEN ACCEPTED BY THE REVENUE. THE PARTIES TO SHARE TRANSACTIONS AND FACTS BEING SIMILAR, LD. CIT(A) HA S TAKEN A CORRECT VIEW IN DELETING THE ADDITIONS. ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 24 9.5 LD. AO, THOUGH CONFIRMED THE SALE OF 30,000 SHA RES OF NEPTUNE SECURITIES P. LTD, HOWEVER FOR PART OF 20,000 SALE OF SHARES HELD TO BE NON-GENUINE AND RS. 13,17,873 WERE ADDED U/S 68 ON PROPORTIONATE BASIS. IT LEADS TO A CONTRADICTION AND DESPITE THE FACTS THAT BSE HAS CONFIRMED TRANSACTION OF 30,000 SHARES. IN THE ABSE NCE OF ANY INQUIRY FROM VIMLA EXIM P. LTD WHO IS A UNDISPUTEDLY A MEMB ER OF AHMEDABAD STOCK EXCHANGE NO ADVERSE INFERENCE CAN BE DRAWN. 9.6 IN VIEW OF THESE GLARING FACTS, THE ASSESSMENT OF SMT. JAYA AGRAWAL AND THE FACT THAT THE RELEVANT PURCHASES FO R AY 2004-05 HAVE BEEN HELD TO BE GENUINE, WE SEE NO INFIRMITY IN THE ORDER OF LD. CIT(A) IN DELETING THESE ADDITIONS. ON THE ISSUES OF SHRI CHOKSHI, MAHASAGAR SECURITIES PVT. LTD. AND GOLDSTAR FINVEST PVT. LTD. , A CATENA OF JUDGMENTS FROM ITAT, MUMBAI AND AHMEDABAD IS AVAILA BLE IN FAVOUR OF THE ASSESSEE WHICH VIEW ALSO STANDS CONFIRMED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SHRI MUKESH MORALIA. RESP ECTFULLY FOLLOWING THESE JUDICIAL PRECEDENTS AND FACTS AND CIRCUMSTANC ES AS MENTIONED ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A). REVENUES GROUND STANDS DISMISSED. 10. IN THE RESULT, REVENUES APPEAL AS WELL ASSESSE ES CO, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 6 TH JANUARY, 2017 AT AHMEDABAD. SD/- SD/- AMARJIT SINGH (ACCOUNTANT MEMBER) R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 06/01/2017 *BIJU T., SR PS ITA NO. 1442 & CO NO. 209/AHD/2013 ASSESSEE - VINEET SURESHCHANDRA AGARWAL AY : 2005-06 25 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD