Asstt. C.I.T., Cirlce-3(1), Gwalior V. Sh. Rajesh Gupta L/H Late Shri Mohan Lal Gupta, Gwalior

ITA 10/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0378 (ITAT-AGRA)
• Duration Of Justice: 8 year(s) 4 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Income from undisclosed sources; Share purchase agreement; Accommodation entries; Sham transactions; Reason to believe
• Section: 143(3); 147; 68; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.10/AGRA/2011 ASSESSMENT YEARS: 2001-02 ASST. COMMISSIONER OF INCOME TAX, VS. SMT. RAJESH G UPTA, CIRCLE-3(1), GWALIOR. L/H. LATE SHRI MOHAN LAL G UPTA, 61, MLB COLONY, GWALIOR (M.P.) (PAN : ACOPG 5442 Q). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. REVENUE BY : SHRI ANURAG SINHA, ADVOCATE DATE OF HEARING : 22.05.2013 DATE OF PRONOUNCEMENT : 24.05.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 01.10.2010 PASSED BY THE LD. CIT(A), GWALIOR FOR THE ASSESSMEN T YEAR 2001-02. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.29,56,142/- ON ACCOUNT OF ACCOMMODATION ENTRIES RECEIVED FROM M /S M.K.M. FINSEC PVT. LTD. 2 ITA NO.10/AGRA/2011 A.Y. 2001-02 3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE A.O. M ADE ADDITION OF RS.29,56,142/- ON ACCOUNT OF CAPITAL GAIN ON SHARES FROM M/S. M.K. M. FINSEC PVT. LTD. THE A.O. TREATED IT AS INCOME FROM UNDISCLOSED SOURCES. THE A.O. NOTICED THAT ON DETAILED ENQUIRY CONDUCTED IN CASE OF SHRI MAHESH BATRA BY I NVESTIGATION WING, NEW DELHI IT WAS FOUND THAT SHRI MAHESH BATRA IS AN ENTRY OPE RATOR AND HAS PROVIDED ACCOMMODATION ENTRIES TO VARIOUS PERSONS THROUGH HI S COMPANY M/S. M.K.M. FINSEC PVT. LTD. THE STATEMENT ON OATH OF SHRI MAH ESH BATRA WAS RECORDED ON 23.01.2004 BY INVESTIGATION WING, NEW DELHI IN WHIC H SHRI MAHESH BATRA HAS ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES THR OUGH ITS COMPANY M/S. M.K.M. FINSEC PVT. LTD. AS CAPITAL GAIN ON SHARES F OR WHICH ONE OF THE MAJOR RECIPIENT OF THESE ACCOMMODATION ENTRIES IN THE FOR M OF CAPITAL GAIN ON SHARES FOR WHICH NO ACTUAL SALE/PURCHASE OF SHARES WERE TRANSA CTED. THE ADDITION MADE BY THE A.O. HAS BEEN DELETED BY THE CIT(A) AS UNDER :- (PA GE NOS.6 TO 9) 4.2 APPELLANTS SUBMISSIONS ALONG WITH ASSESSMENT ORDER AND RECORDS AND REMAND REPORT OF THE AO HAVE BEEN DULY CONSIDERED. IN HIS REMAND REPORT, AO HAS NOT MADE ANY ADVERSE COMM ENT REGARDING SUBMISSIONS OF THE APPELLANT SUPPORTED BY RELEVANT DOCUMENTARY EVIDENCE. HOWEVER, WHILE RELYING ON THE ASSESSMENT ORDER, AO HAS NOT ACCEPTED THE SUBMISSIONS OF THE APPELLANT AGAIN BY SOLELY RELYING ON THE STATEMENT OF SHRI MAHESH BATRA. THE STATEME NT, AS RECORDED BY THE INVESTIGATION WING, HAS NOT BEEN PROVIDED TO TH E APPELLANT NOR HE HAS BEEN GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE THE SAID SHRI MAHESH BATRA. IN FACT, ON PERUSAL OF RECORDS, IT I S SEEN THAT AFTER DISPOSING OF APPELLANTS OBJECTIONS ON 25.8.08 REGA RDING ISSUANCE OF NOTICE U/S 148, THE CASE HAS BEEN TRANSFERRED TO AC IT, CAIRCLE-3 VIDE ORDER DTD. 20.10.08 PASSED U/S 127 OF THE I.T. ACT BY CIT, GWALIOR. 3 ITA NO.10/AGRA/2011 A.Y. 2001-02 CASE RECORDS HAVE BEEN TRANSFERRED BY ITO, WARD-2(2 ) TO ACIT, CAIFRCLE-3 ON 24.10.08. FIRST NOTICE BY THE AO I.E . ACIT, CIRCLE-3 HAS BEEN ISSUED ON 4.12.08 FIXATING THE CASE FOR 11.12. 08 WHICH HAS BEEN ADJOURNED TO 17.12.08 ON APPELLANTS REQUEST. ON 1 7.12.08, THE APPELLANT HAS FILED ALL THE DETAILS ENCLOSING SHARE CERTIFICATES, QUOTATION LIST OF STOCK EXCHANGES, INVESTMENT MADE IN NHAI & NABARD BONDS ETC. VIDE LETTER DTD. 29.12.08 THE AP PELLANT HAS AGAIN RAISED OBJECTIONS TO THE NOTICES ISSUED U/S 148 & 1 42(1) REITERATING HIS EARLIER SUBMISSIONS. ASSESSMENT HAS BEEN FINALIZED U/S 143(3)/147 ON 31.12.08 BY TREATING THE AMOUNT MENTIONED BY INVEST IGATION WING AS UNDISCLOSED INCOME OF THE APPELLANT WITHOUT ANY BAS IS OR GIVING REASONS FOR REJECTING THE SUBMISSIONS OF THE APPELL ANT. IT IS FURTHER SEEN THAT IN CASE OF THE APPELLANT, ORIGINAL ORDER U/S 143(3) HAS BEEN PASSED BY THE THEN AO ON 15.3.04 WHEREBY INCOME DEC LARED AT RS.2,29,900/- HAS BEEN ACCEPTED, BUT SHORT TERM CAP ITAL LOSS OF RS.1,59,55,183/- HAS BEEN TREATED AS LOSS FROM SPEC ULATIVE BUSINESS TO BE SET OFF ONLY AGAINST SPECULATIVE BUSINESS INCOME AS PER SECTION 73 OF THE I.T. ACT. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, A.O. HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD WHER EBY PURCHASE OF SHARES ON 18.03.99 HAS BEEN DOUBTED BY HIM. HOWEVE R, ON THE SALE OF THESE SHARES, ENTIRE SALES RECEIPTS TAKEN AT RS.29, 56,142/- HAS BEEN ASSESSED BY THE A.O. AS INCOME FROM UNDISCLOSED SOU RCES. 4.3 FROM THE ENTIRE RECORDS AND THE ASSESSMENT ORDE R, IT IS EVIDENTLY CLEAR THAT THE AOS MIND WAS OVERWHELMED AND UNDULY INFLUENCED BY THE OBSERVATION MADE REGARDING THE SE ARCH OPERATIONS CONDUCTED BY THE INVESTIGATION WING IN THE CASES OF SHARE BARKERS AND THEIR COMPANIES AND PARTICULARLY THE STATEMENT OF I TS DIRECTORS AS NARRATED BY THE A.O. IT IS A FACT THAT A.O. HAS NO T AT ALL DOUBTED THE PURCHASES OF THE SHARES. HE HAS NOT EVEN DOUBTED T HE PURCHASE PRICE DECLARED BY THE APPELLANT. WHAT IN FACT HAS BEEN D OUBTED IS THE SALE CONSIDERATION WHICH ACCORDING TO THE AO IS ONLY A M ANEUVER TO CONVERT APPELLANTS BLACK MONEY INTO WHITE MONEY WI TH THE HELP OF UNSCRUPULOUS SHARE BROKERS WHO EITHER BY FLOATING S O-CALLED COMPANIES THEMSELVES OR DEALT IN SHARES OF SUCH SMA LL TIME COMPANIES WHICH WERE INCORPORATED FOR THIS PURPOSE ONLY. BY RELYING ON THE MODUS OPERANDI OF THESE PEOPLE, THE AO HAS IGNORED THE VITAL EVIDENCE PRODUCED BY THE APPELLANT IN THE SHAPE OF PURCHASE BILLS AND SALES BILLS ALONG WITH SHARE CERTIFICATES WHICH ALSO CONT AIN THE ENDORSEMENT 4 ITA NO.10/AGRA/2011 A.Y. 2001-02 OF TRANSFER. THE GENERAL OBSERVATIONS MADE BY THE INVESTIGATION WING PERCOLATED THROUGHOUT AND AROUSED A SUSPICION ABOUT ALL THE TRANSACTIONS CARRIED OUT BY THESE CONCERNS SUCH AS M/S. M.K.M. FINSEC PVT. LTD. AND SUCH SUSPICION SNOWBALLED INTO A KIND OF CONCLUSIVE PROOF THAT ANYBODY AND EVERYBODY WHO W AS FOUND TO BE DEALING WITH THESE CONCERNS IN SHARE TRANSACTIONS W AS EARNING ILLEGAL INCOME BY TAKING ACCOMMODATION ENTRIES WITH THE AIM TO CONVERT UNACCOUNTED MONEY INTO HIS ACCOUNTED MONEY. INVEST IGATION IN THE AFFAIRS OF THE BROKERS AND THEIR COMPANIES IS RELEV ANT TO RAISE A PRESUMPTION OF MALFUNCTION, BUT THIS PRESUMPTION IS ALSO REBUTTABLE. THE APPELLANT HAS TRIED TO DEFEND HIS CASE AND PROV E THE TRANSACTIONS BY WAY OF NUMBER OF EVIDENCES WHICH HAVE SIMPLY BEE N BRUSHED ASIDE UNDER THE WEIGHT OF HIGH SUSPICION. MOREOVER, AO H AS NOT EVEN THOUGHT OF INVESTIGATING ANY FURTHER TO ESTABLISH T HE UN-GENUINENESS OF THE TRANSACTIONS IN QUESTION. HE WAS REQUIRED TO E STABLISH WITH THE HELP OF EVIDENCES THAT THE SALE TRANSACTION OF SHAR ES IS BOGUS AND A RESULT OF COLLUSION BETWEEN THE PARTIES. EVEN DURI NG THE COURSE OF REMAND PROCEEDINGS WHICH HAVE BEEN CARRIED ON FOR A LMOST A YEAR, AO HAS FAILED TO BRING ANY ADVERSE MATERIAL ON RECO RD. THE SHARE CERTIFICATES HAVE BEEN ISSUED AS PER THE INDIAN COM PANIES ACT; BROKERS ARE FOUND TO BE MEMBERS OF DELHI EXCHANGE, INVESTMENT IN SHARES MADE IN EARLIER YEARS HAS BEEN SHOWN IN THE BALANCE SHEET OF THE APPELLANT WHICH HAS BEEN ACCEPTED BY THE DEPART MENT AND RELEVANT CONTRACT NOTES CONTAIN THE QUANTITY OF SHARES, SERV ICE TAX PAID, RATE OF BROKERAGE ETC. CHARGED. ASSESSING OFFICER HAS HEAV ILY RELIED ON THE STATEMENT OF SHRI MAHESH BATRA. HOWEVER, WHEN ORAL STATEMENTS ARE PITTED AGAINST SAID VALID DOCUMENTARY EVIDENCE, IT IS WELL ESTABLISHED LEGAL POSITION, THAT THE DOCUMENTARY EVIDENCE HAS T O PREVAIL OVER. IN THIS CASE, THE STATEMENT RECORDED BY THE INVESTIGAT ION WING, DELHI AND RELIED ON BY THE AO WITHOUT OFFERING THE OPPORTUNIT Y OF CROSS- EXAMINATION IS PITTED AGAINST THE DOCUMENTARY EVIDE NCES PRODUCED BY THE APPELLANT TO PROVE THE PURCHASE AND SALE OF SHA RES. SUCH DOCUMENTARY EVIDENCE HAS TO BE GIVEN PRECEDENCE AND ALSO CREDENCE IN THE ABSENCE OF ANY CONTRARY MATERIAL ON RECORD. THE INITIAL BURDEN CAST ON THE APPELLANT HAS BEEN DULY DISCHARGED BY H IM, WHO HAS BEEN ASCERTAINING THE TRANSACTIONS TO BE GENUINE WHEREAS AO HAS ONLY THE STATEMENT OF THE BROKER WHO HAS STATED IN GENERAL T ERMS THAT THE TRANSACTIONS CARRIED OUT BY ITS COMPANIES ARE NOT G ENUINE. IN MY VIEW, AO SHOULD HAVE ALSO EXERCISED HIS POWERS U/S 31 TO EXAMINE OR 5 ITA NO.10/AGRA/2011 A.Y. 2001-02 CROSS-EXAMINE THE PARTIES. IT IS THE AO ALONE WHO HAS TO APPLY HIS MIND AND FORM HIS OPINION WHICH IS INDEPENDENT AND UNGUIDED BY THE OPINION OF THE OFFICER INCHARGE OF INTELLIGENCE WIN G AT DELHI. THE STATEMENT HAS BEEN RECORDED AT THE BACK OF THE APPE LLANT WHO HAS NEVER STATED BEFORE THE AO THAT THE APPELLANT HIMSE LF HAS ENTERED INTO FICTITIOUS TRANSACTIONS OF PURCHASE AND SALE OF SHA RES. ALL THE TRANSACTIONS ARE THROUGH BANKING CHANNELS AND HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. THERE IS NO CORROBORATIVE EVIDENCE TO SHOW THAT THE CASH FOR DR AFTS IN THE BANK ACCOUNT OF M/S. M.K.M. FINSEC PVT. LTD. WAS RECEIVE D FROM THE APPELLANT. THERE IS NO DIRECT EVIDENCE FOR THE SAM E. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE, STATEMENT OF SHRI MAHES H BATRA CANNOT BE ACCEPTED AS TRUE ON HIS MERE IPSE DIXIT. HE HAS NEVER BEEN CONFRONTED WIH THE EVIDENCES PRODUCED BY THE APPELL ANT. THE APPARENT HAS TO BE TREATED AS REAL UNLESS PROVED OT HERWISE. THIS HAS LONG BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMAL (1964) 53 ITR 574 (SC), WHEREAS THE APPELLANT HAS COUNTERED THE STATEMENT OF SHRI MAHESH BATRA BY WAY OF HIS SUBMISSIONS AND EVIDENCES. CREDENCE CANNOT BE GIVE N TO THE STATEMENT OF A PERSON WHO HIMSELF ADMITS AND HAS DU BIOUS DEALINGS AS AGAINST THE DOCUMENTARY EVIDENCES PRODUCED BY THE A PPELLANT. THE SAME VIEW HAS BEEN HELD BY HONBLE ITAT, AGRA IN CA SE OF SHRI ASHOK KUMAR LAVANIA, PROP. BAJRANG AUTOMOBILES, AGRA IN I TA NO.112/AGR/2004 VIDE ORDER DATED 30.05.08. THE SAM E HAS BEEN FOLLOWED BY HONBLE ITAT IN CASE OF SHRI BAIJNATH A GRAWAL, PROP. M/S. BAIJNATH SCRAP CENTRE IN ITA NO.133/AGR/2005 VIDE ORDER DATED 13.04.2010 WHEREBY LD. THIRD MEMBER HAS ALSO AGREED WITH THE VIEW TAKEN BY THE LD. JUDICIAL MEMBER WHILE ALLOWING ASS ESSEES APPEAL. 4.4 IN VIEW OF FACTS ABOVE AND RESPECTFULLY FOLLOWI NG THE DECISION OF JURISDICTIONAL HONBLE ITAT, AGRA, IT IS HELD THAT AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.29,56,142/- AS UNDISCL OSED INCOME OF THE APPELLANT. THE SAME, IS HEREBY, DELETED. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICE THAT THE A.O. HAS HEAVILY RELIED UPON THE STATEMENT OF SHRI MAHESHA 6 ITA NO.10/AGRA/2011 A.Y. 2001-02 BATRA. THE CIT(A) RECORDED THAT THE STATEMENT RECO RDED BY INVESTIGATION WING WAS NOT PROVIDED TO THE ASSESSEE NOR OPPORTUNITY WA S GIVEN TO CROSS-EXAMINE SHRI MAHESH BATRA. IN THE LIGHT OF THE FACT, WE DIRECTE D THE LD. DEPARTMENTAL REPRESENTATIVE TO PLACE ON RECORD THE STATEMENT OF SHRI MAHESH BATRA VIDE ORDER SHEET ENTRY DATED 23.05.2012. THEREAFTER, A NUMBER OF OPPORTUNITIES WERE GIVEN TO THE REVENUE BUT COPY OF STATEMENT OF SHRI MAHESH BA TRA HAS NOT BEEN PLACED ON RECORD EVEN INSPITE OF LAST OPPORTUNITY FOR THIS PU RPOSE GIVEN BY US VIDE ORDER SHEET DATED 07.03.2013. THE CIT(A) HAS FOLLOWED THE ORDE RS OF I.T.A.T., AGRA BENCH IN THE CASE OF SHRI ASHOK KUMAR LAVANIYA, PROP. BAJRAN G AUTOMOBILES, AGRA IN ITA NO.112/AGR/2004 VIDE ORDER DATED 30.05.2008. THE S AME HAS BEEN FOLLOWED BY I.T.A.T. AGRA BENCH IN CASE OF SHRI BAIJNATH AGARWA L, PROP. M/S. BAIJNATH SCRAP CENTRE IN ITA NO.133/AGR/2005 VIDE ORDER DATED 13.0 4.2010. IT HAS ALSO BEEN NOTICED THAT ON IDENTICAL SET OF FACTS THE I.T.A.T. , ALLAHABAD BENCH IN ITA NOS.84 & 85/ALLD/2013 IN THE CASE OF SHRI ASHOK KUMAR AROR A VS. ITO VIDE ORDER DATED 13.05.2013 HAS DECIDED THE ISSUE AS UNDER :- 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE P ARTIES AND RECORDS PERUSED. THE IMPORTANT WORDS UNDER SECTION 147 ARE HAS REASON TO BELIEVE AND THESE WORDS ARE STRONGER THAN THE WORDS IS SAT ISFIED. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRR ATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS IT MUST BE BASED ON RE ASONS WHICH ARE RELEVANT AND MATERIAL. THE COURT CANNOT OF COURSE INVESTIGA TE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN COMING TO THE BELIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHIC H HE IS REQUIRED TO 7 ITA NO.10/AGRA/2011 A.Y. 2001-02 ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UND ER SECTION 147 AS HELD IN THE CASE OF GANGA SARAN & SONS (P) LTD VS. ITO [198 1] 130 ITR 1 (SC), ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR [1974] 97 ITR 239 (SC)/RAYMOND WOOLEN MILLS LTD. VS. ITO [1999] 236 ITR 34 (SC). 13.1 THE HONBLE SUPREME COURT IN THE CASE OF S. NA RAYANAPPA VS. CIT [1976] 63 ITR 219 (SC) HAS HELD THAT THE EXPRESSION REASON TO BELIEVE DOES NOT MEAN A PURELY SUBJECTIVE SATISFACTION ON THE PA RT OF THE ITO. THE BELIEF MUST BE HELD IN GOOD FAITH; IT CANNOT MERELY BE A P RETENCE. 13.2 THE HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH VS. AAC [1971] 82 ITR 147 (SC) HELD THAT THE WORDS REASON TO BELIEVE SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS, AND THAT THE ITO MAY ACT ON DIR ECT OR CIRCUMSTANTIAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOU R. THE ITO WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS B ELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS NOT MATERIAL OR RELE VANT TO THE BELIEF REQUIRED BY THE SECTION. 13.3 ON PERUSAL OF REASONS RECORDED, WE FIND THAT T HE REASONS RECORDED ARE NOT IN ACCORDANCE WITH LAW AS IT WAS SIMPLY ON THE BASIS OF ASSUMPTION OF THE A.O. IN THE REASONS RECORDED, IT IS STATED THA T SHARE TRANSACTIONS ON WHICH LONG TERM CAPITAL GAIN HAS BEEN CLAIMED DO NO T APPEAR TO BE GENUINE. THIS SUPPORTS TO THE FACT THAT THE REOPE NING HAS BEEN MADE ON THE BASIS OF PRESUMPTION AND NOT ON REASONS TO BELIEVE, THUS, NO REASONS RECORDED ARE IN ACCORDANCE WITH LAW. THE REASONS D O NOT REFLECT THAT THE A.O. HAS REASON TO BELIEVE THAT THERE IS AN ESCAPEM ENT OF INCOME. ONCE IT IS FOUND THAT THE REASONS ARE NOT IN ACCORDANCE WITH L AW, THE REOPENING IS BAD IN LAW. WE HOLD ACCORDINGLY. 14. AS REGARDS THE MERIT OF THE CASE, WE FIND THAT THE CASE OF THE ASSESSEE IS COVERED BY VARIOUS ORDERS ON IDENTICAL SET OF FA CTS. IN THE CASE OF DALPAT SINGH CHAUDHARY VS. ACIT (SUPRA), THE I.T.A.T., JOD HPUR BENCH IN A CASE WHERE SHARES WERE SOLD THROUGH M/S. M.K.M. FINSEC P VT. LTD., THE I.T.A.T., JODHPUR BENCH HAS DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE. THE RELEVANT FINDING IS REPRODUCED AS UNDER :- 11. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERE D THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PE RUSING OTHER 8 ITA NO.10/AGRA/2011 A.Y. 2001-02 MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN HIS APPEAL. IT IS SEEN THAT ASSESSEE PURCHASED SHAR ES OF M/S ELITE CAPITAL & MANAGEMENT SERVICES (P) LTD., 61,70 0 SHARES FOR A CONSIDERATION OF RS.92,550. THESE SHARES WERE PURCHASED BETWEEN 10TH APRIL, 2000 TO 17TH MAY, 2000. THE PAY MENTS WERE MADE IN CASH, COPY OF LEDGER ACCOUNT IS PLACED AT P. 228. THE COPY OF CERTIFICATE CONFIRMING THE SALE OF SHAR ES TO ASSESSEE IS PLACED AT P. 229 OF THE PAPER BOOK. COPY OF ACCO UNT OF M/S ELITE CAPITAL & MANAGEMENT SERVICES (P) LTD. CERTIF YING THAT 61,700 SHARES HAVE BEEN DEMATED IN THE NAME OF THE ASSESSEE IS PLACED AT P. 320 OF THE PAPER BOOK. THEREAFTER THE ASSESSEE SOLD SHARES NUMBERING 20,000 ON 28TH AUG., 2001 THROUGH M/S MKM FINSE (P) LTD., COPY OF WHICH IS PLACED AT P. 2 31 OF THE PAPER BOOK. THEREAFTER ASSESSEE SOLD FURTHER 41,700 SHARES, COPY OF THE SAME IS PLACED AT P. 232. THESE SHARES WERE SOLD VIDE BILL DT. 24TH AUG., 2001. PAYMENTS HAVE BEEN R ECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE CERTIFICATE FROM M/S STOCK HOLDING CORPORATION LTD. THROUGH WHOM THE SHARES AR E DELIVERED IS PLACED AT PP. 235 AND 236 OF THE PAPER BOOK. AFTER GOING THROUGH DETAILS, IT IS CLEARLY SEEN THAT ASSE SSEE PURCHASED SHARES IN EARLIER YEAR. THEY WERE SHOWN IN THE BALA NCE SHEET WHICH WAS FILED ALONG WITH THE RETURN OF INCOME. TH E PAYMENTS WERE MADE THROUGH BOOKS OF ACCOUNT WHICH HAS NOT BE EN DOUBTED. THE SHARES BELONG TO A LISTED COMPANY WHIC H IS ALSO NOT IN DOUBT. THE COMPANY ITSELF HAS ISSUED CERTIFI CATE THAT ALL THESE SHARES HAVE BEEN DEMATED, COPY OF THE SAME IS PLACED ON RECORD. ONCE THE PURCHASE OF SHARES IS NOT DOUBTED, THEN IN OUR CONSIDERED VIEW, THE SALE OF SAME SHARES SHOULD NOT HAVE BEEN DOUBTED. IF ASSESSEE HAS INVESTED HIS OWN MONEY UND ER THE GARB OF FICTITIOUS SALE OF SHARES THEN WHERE THE ACTUAL SHARES PURCHASED BY ASSESSEE WHICH WERE DULY DEMATED HAVE GONE. THIS FACT HAS NOT BEEN CONSIDERED EITHER BY AO OR B Y LEARNED CIT(A) WHO ORIGINALLY REJECTED THE CLAIM OF THE ASS ESSEE. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF LEARNED CIT( A) BY FILING MISCELLANEOUS APPLICATION UNDER SECTION 154 THAT TH E ASSESSEE HAS PURCHASED THE SHARES OF LISTED COMPANY AND THE AO HAS NOT MADE ANY ENQUIRY, RATHER HE HAS NOTED WRONG FACT, T HEN LEARNED CIT(A) REALIZED THIS MISTAKE AND RECTIFIED HIS ORDE R UNDER SECTION 154 BY ALLOWING THE CLAIM OF ASSESSEE. ONLY ON THE BASIS 9 ITA NO.10/AGRA/2011 A.Y. 2001-02 OF STATEMENT OF SHRI MAHESH BATRA, THE AO HAS DRAWN ADVERSE INFERENCE IN CASE OF ASSESSEE. IT MAY BE TRUE THAT SHRI MAHESH BATRA MAY HAVE INDULGED IN ISSUING ACCOMMODATION EN TRIES BUT IT CAN ALSO BE POSSIBLE THAT SHRI MAHESH BATRA MAY ALSO BE DOING GENUINE TRANSACTION. IT IS NOT A CASE THAT HE IS ONLY PROVIDING BOGUS ENTRIES. STATEMENT OF SHRI MAHESH B ATRA IS NOT AVAILABLE ON RECORD. THE LEARNED COUNSEL OF THE ASS ESSEE HAS STATED THAT THE STATEMENT OF SHRI MAHESH BATRA HAS NOT BEEN PROVIDED TO THEM. THE DEPARTMENT HAS NOT FILED COPY OF THE STATEMENT OF SHRI BATRA. THEREFORE, IN OUR VIEW, SI NCE THE PURCHASE OF SHARES IS GENUINE, THE SALE OF THE SAME SHARES SHOULD HAVE BEEN TREATED AS GENUINE. SIMILAR ISSUE CAME BEFORE THE VARIOUS BENCHES OF THE TRIBUNAL AND TIME AND AG AIN THE BENCHES HAVE DECIDED THAT WITHOUT BRINGING ANY COGE NT MATERIAL ON RECORD, THE CLAIM OF ASSESSEE CANNOT BE DENIED IN REGARD TO SALE OF SHARES. 14.1 THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. VISHAL HOLDING & CAPITAL PVT. LTD., 200 TAXMAN 186 (DELHI) (MAG.), ON IDENTICAL SET OF FACTS HAS HELD AS UNDER :- 6. WE ARE OF THE VIEW THAT THE ASSESSEE HAD PRODU CED COPIES OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S . MKM FINSEC PVT. LTD. AND HAD BEEN MAINTAINING BOOKS OF ACCOUNT AS PER COMPANIES ACT. THE ASSESSEE HAD ALSO DEMONSTRAT ED THE PURCHASE AND SALE OF SHARES OVER A PERIOD OF TIME A S SEEN FROM THE BALANCE SHEET/S. IN OUR OPINION, THE AO HAS SIM PLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE. TH E ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. 14.2 HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. SUDEEP GOENKA IN INCOME TAX APPEAL NO.468 OF 2009, JUDGMENT DATED 03.01.2013, HELD AS UNDER :- 7. WE HAVE CONSIDERED THE ARGUMENTS OF THE COUNSE L FOR THE PARTIES. THE CIT(A) AFTER CONSIDERING ENTIRE EVIDEN CE OF RECORD FOUND THAT PURCHASE AND SALE TRANSACTIONS WERE PROV ED. HE 10 ITA NO.10/AGRA/2011 A.Y. 2001-02 FURTHER FOUND THAT PAYMENT OF THE SALE PRICE WAS MA DE TO THE ASSESSEE THROUGH BANK CHANNEL AND NOT IN CASH AS SU CH THE TRANSACTIONS ARE ACTUAL TRANSACTIONS AND NOT A FICT ITIOUS ACCOMMODATION ENTRIES. THE SALE TRANSACTIONS CANNOT BE DISBELIEVED ONLY FOR THE REASON THAT THE ASSESSEE C OULD NOT GIVE THE IDENTITY OF THE PURCHASERS. ARGUMENTS OF THE SE NIOR STANDING COUNSEL IN THIS RESPECT IS NOT LIABLE TO BE ACCEPTE D. SIMILAR CONTROVERSY HAS BEEN RAISED IN THE CASE OF SHRI AKA SH GOENKA WHICH WAS DECIDED BY A COMMON JUDGMENT BY THE TRIBU NAL. THE REVENUE FILED INCOME TAX APPEAL (DEFECTIVE) NO. 261 OF 2009 IN THE CASE OF SHRI AKASH GOENKA WHICH HAS BEEN DIS MISSED BY THIS COURT BY JUDGMENT DATED 18.11.2010 AND THUS JU DGMENT OF THE TRIBUNAL HAS BEEN UPHELD. THE SENIOR STANDING C OUNSEL COULD NOT POINT OUT ANY DISTINGUISHING FEATURE FOR NOT FOLLOWING THE AFORESAID JUDGEMENT. 14.3 THE I.T.A.T., AGRA BENCH IN THE CASE OF ITO VS . SHRI RAKESH KHETRAPAL IN ITA NO.226/AGRA/2010, ORDER DATED 18.01.2013, HA S DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDING IS RE PRODUCED AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE FACTS OF THE CASE OF THE AS SESSEE ARE SIMILAR TO THAT OF DEPARTMENTAL APPEAL IN THE CASE OF RAM PRAKASH GARG IN ITA NO. 237/2011 FOR THE ASSESSMENT YEAR 2001-02, IN WHICH ITAT, AGRA BENCH DISMISSED THE DEPARTMENTAL APPEAL VIDE ORDER OF THE EVEN DATE, HO LDING AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION. THE AO, ON THE FACTS OF THE CASE FOUND TH AT SIMILAR ISSUE HAVE BEEN CONSIDERED IN THE CASE OF H UF OF ASSESSEE AND OTHER FAMILY MEMBERS SHRI RAJESH KUMAR GARG AND SMT. SEEMA GARG WHO HAVE ALSO SHOWN LONG- TERM CAPITAL GAINS OF THE SIMILAR NATURE OF THE SAM E BROKER AND OF THE SAME SCRIP IN THE ASSESSMENT YEAR UNDER APPEAL, WHICH WERE FOUND TO BE BOGUS BY THE A O AND ADDITIONS HAVE BEEN CONFIRMED BY THE LD. CIT(A) AS 11 ITA NO.10/AGRA/2011 A.Y. 2001-02 WELL. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE FIL ED COPY OF THE TRIBUNAL ORDER IN THEIR CASES DATED 31.03.20 09 IN WHICH THE ITAT, AGRA BENCH DELETED THE SIMILAR ADDI TIONS AND NO RELIANCE WAS PLACED ON THE STATEMENT OF SHRI MUKESH GUPTA AND HIS WIFE. THE ORDER OF THE TRIBUNA L HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATED 15.02.2011. IN THE AFORESAID DECISION, IT WAS FOUND THAT THOSE ASSESSEES HAD OBT AINED SHARES IN PREFERENTIAL ALLOTMENT DIRECTLY FROM THE COMPANIES AND THE PURCHASES DECLARED IN THE BALANCE SHEET OF EARLIER YEARS, WHICH WERE ACCEPTED BY THE DEPARTMENT. SHARES WERE SOLD TO THE REGISTERED STOC K BROKERS AND STOCK EXCHANGE. BROKERS HAVE CONFIRMED THAT MONEY WAS GIVEN THROUGH DRAFT. HONBLE ALLAHABAD HI GH COURT, THEREFORE, ON CONSIDERATION OF THESE RELEVAN T CONSIDERATIONS, CONFIRMED THE FINDINGS OF THE TRIBU NAL THAT THE SALES ARE NOT SHAM TRANSACTIONS. ACCORDING TO THE AO, THE FACTS OF THESE CASES ARE IDENTICAL TO THE C ASE OF THE ASSESSEE, THEREFORE, WHEN IN THE IDENTICAL CASE S OF THE FAMILY MEMBERS OF THE ASSESSEE, ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUN AL HAVE BEEN CONFIRMED BY ALLAHABAD HIGH COURT, THEREFORE, ON SUCH REASON ITSELF, THE DEPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. FURTHER, THE ASSESSEE HA S FILED PROPER EVIDENCES BEFORE THE AUTHORITIES BELOW TO SH OW THAT SHARES OF M/S. B.T. TECHNET LTD. WERE ALLOTTED DIRECTLY BY THIS COMPANY @ 10/- PER SHARE AND CONSIDERATION WAS TRANSFERRED THROUGH BANKING CHANN EL. ALL THE ALLOTMENT LETTERS, DRAFTS, CERTIFICATES OF THE COMPANY ARE FILED IN THE PAPER BOO;. THE PROFILE OF M/S. B.T. TECHNET IS ALSO FILED IN THE PAPER BOOK TO SHO W THAT IT WAS A GENUINE COMPANY. THE SAME WERE SHOWN IN TH E BOOKS OF EARLIER YEARS. THEREFORE, THE PURCHASE OF SHARES AND SOURCE OF PURCHASE COULD NOT HAVE BEEN DISPUTED . SAME SHARES WERE SOLD TO THE BROKER, M/S. CMS SECURITIES LTD. DELHI AND ALL THE CONTRACT NOTES, S ALE CONSIDERATION THROUGH DRAFTS HAVE BEEN FILED IN THE PAPER BOOK TO SUPPORT THE CONTENTION OF THE ASSESSEE. THE SALE RATE OF RS.114/- PER SHARE IS ALSO SUPPORTED BY THE 12 ITA NO.10/AGRA/2011 A.Y. 2001-02 INFORMATION RECEIVED FROM M.P. STOCK EXCHANGE. WHATEVER STATEMENTS OF CMS SECURITIES LTD. THROUGH THEIR DIRECTORS WERE RECORDED WERE NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, THE SAME CANNOT BE READ IN EVIDENCE, WHICH IS ALSO SUBSTANTIATED BY THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELARAM VS. CIT, 125 ITR 713. CONSIDERING THE TOTA LITY OF FACTS AND CIRCUMSTANCES, IN THE LIGHT OF THE DEC ISION OF THE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE GROU P CASES ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO IN TERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE AD DITION. THE ASSESSEE ON THE BASIS OF EVIDENCE AND MATERIAL ON RECORD HAS BEEN ABLE TO PROVE THAT HE HAS RECEIVED ENTIRE SALE CONSIDERATION OF SHARES THROUGH KNOWN SOURCES. THEREFORE, NO ADDITION U/S. 68 COULD BE MADE AGAINS T THE ASSESSEE. AS A RESULT, THE DEPARTMENTAL APPEAL FAIL S AND IS DISMISSED. 4.1 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE ORDER OF THE TRIBUNAL AND OTHER DECISIONS REFERRED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT T HE DEPARTMENTAL APPEAL HAS NO MERIT AND IS LIABLE TO B E DISMISSED. THE ASSESSEE PURCHASED SHARES OF M/S. CAPITAL TRADE LINKS LTD. IN EARLIER YEARS DIRECTLY FROM THE COMPANY AND CONS IDERATION RECEIVED IS PROVED AND THE PURCHASES MADE IN EARLIE R YEAR HAVE NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THE A SSESSEE SOLD SHARES THROUGH TWO BROKERS AND THEIR COPIES OF SALE BILLS AND CONTRACT NOTES ARE FILED AND SALE CONSIDERATION OF SHARE IS GIVEN TO THE ASSESSEE THROUGH BANKING CHANNEL AND THE RAT ES AT WHICH THE SHARES ARE TRANSFERRED ARE SIMILAR AS APPROVED BY M.P. STOCK EXCHANGE. THE LD. CIT(A) ASKED THE INCOME-TAX AUTHORITIES TO PRODUCE ALL RELEVANT EVIDENCES AND M ATERIAL BEFORE HIM TO PROVE THAT THE ASSESSEE HAS ACCEPTED BOGUS ACCOMMODATION ENTRY, BUT NO MATERIAL WAS PRODUCED B EFORE HIM IN THIS REGARD. THEREFORE, THE LD. CIT(A) ON PR OPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTL Y DELETED THE ADDITION. FURTHER, WHATEVER MATERIAL WAS COLLECTED AT THE BACK OF THE ASSESSEE WAS NOT FORWARDED TO THE ASSESSEE. THEREFORE, SAME CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSE E. SINCE, IT 13 ITA NO.10/AGRA/2011 A.Y. 2001-02 IS DEPARTMENTAL APPEAL AND NO MATERIAL IS PRODUCED BEFORE US TO REBUT THE FINDINGS OF THE LD. CIT(A), THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A) IN DELETING THE ADDITION. IN THE RESULT, THE DEPARTMEN TAL APPEAL FAILS AND IS DISMISSED. 14.4 IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSEE HAS FURNISHED THE RELEVANT DETAILS LIKE CONTRACT NOTES, DELIVERY NOTES, SALE OF SHARES AND PURCHASE BILL ETC. AND IN THE LIGHT OF T HE FACT, WE FIND THAT THE CASES UNDER CONSIDERATION ARE SQUARELY COVERED BY T HE ABOVE ORDERS INCLUDING THE ORDER OF I.T.A.T., AGRA BENCH IN ITA NO.226/AGRA/2010 IN THE CASE OF ITO VS. SHRI RAKESH KHETRAPAL (SUPRA). THE JUDGEMENT IN THE CASE OF AREVA T&D, SA VS. ASSTT. DIRECTOR OF INCOME TAX & O THERS, 349 ITR 127 (DELHI) RELIED UPON BY THE LD. DEPARTMENTAL REPRESE NTATIVE IS DISTINGUISHABLE ON FACTS. WE FOLLOW THE ABOVE ORDE R OF I.T.A.T., AGRA BENCH AND OTHER ORDERS. THUS, ADDITION OF RS.9,36,250/- FOR A.Y. 2002-03 IN THE CASE OF SHRI ASHOK KUMAR ARORA IS DELETED. 5. SINCE ON IDENTICAL FACTS THE ISSUE HAS BEEN DECI DED IN FAVOR OF THE ASSESSEE, THE CIT(A) HAS FOLLOWED THE ORDER OF I.T.A.T. AGRA BENCH. THEREFORE, TO MAINTAIN CONSISTENCY, WE ALSO FOLLOW THE ABOVE ORDERS OF I.T .A.T. AND IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) . ORDER OF CIT(A) IS, THEREFORE, CONFIRMED. 6. DURING THE COURSE OF HEARING, THE LD. AUTHORISED REPRESENTATIVE MADE SUBMISSIONS UNDER RULE 27 OF THE INCOME TAX (APPELL ATE TRIBUNAL) RULES 1963 THAT THE CIT(A) HAS WRONGLY DECIDED THE GROUND CHAL LENGING NOTICE UNDER SECTION 148 OF THE ACT AGAINST THE ASSESSEE. THE LD. AUTHO RISED REPRESENTATIVE SUBMITTED 14 ITA NO.10/AGRA/2011 A.Y. 2001-02 THAT ADMITTEDLY THE REOPENING WAS BEYOND FOUR YEARS AND ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT. THEREFORE, LEGALL Y THE A.O. IS NOT EMPOWERED TO INVOKE SECTION 147 OF THE ACT. SINCE WE HAVE DECID ED THE ISSUE ON MERIT IN FAVOUR OF THE ASSESSEE CONFIRMING THE ORDER OF CIT(A), IN THE LIGHT OF THE FACT, WE ARE NOT EXPRESSING ANY OPINION ON THIS CONTENTION OF THE LD . AUTHORISED REPRESENTATIVE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY