AJAY J DOSHI (HUF), MUMBAI V. ITO 12(2)(4), MUMBAI

ITA 121/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0485 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Unexplained expenditure; Capital asset; Income from undisclosed sources; Search and seizure; Salary income; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Source of fund; Cost of acquisition; Tangible material; Validity of assessment; Accommodation entries; Retraction; Sham transactions; Reason to believe; Reassessment proceedings
• Section: 143(3); 153A; 260A; 131; 68; 148; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.121/MUM/2015 ASSESSMENT YEAR: 2005-06 SHRI AJAY J. DOSHI-HUF, 21, MARKER TOWER L G.D. SOMANI MARG, CUFF PARADE, MUMBAI-400005 / VS. INCOME TAX OFFICER-12(2)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI ( ! ' # /ASSESSEE) ( $ / REVENUE) P.A. NO. AACHA8912M !' # / ASSESSEE BY SHRI SASHI TULSIYAN $ / REVENUE BY SHRI RAJAT MITTAL -DR % $& ' # ( / DATE OF HEARING : 04/05/2017 ' # ( / DATE OF PRONOUNCEMENT 31/05/2017 ITA NO.121/MUM/2015 AJAY J. DOSHI 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 09/10/2014 OF THE FIRST APPELLATE AUTHORITY, MUMBAI . THE ASSESSEE, THROUGH GROUND NO.1, HAS CHALLENGED REOPE NING OF ASSESSMENT U/S 148 UPHOLDING THE ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE AC T) AND THUS PASSING THE REASSESSMENT ORDER AND AS WELL AS ON MERIT. 2. SO FAR AS, LEGALITY OF REOPENING U/S 148 OF THE ACT IS CONCERNED, DURING HEARING, SHRI SHASHI TULSYAN, LD. COUNSEL FOR THE ASSESSEE, INVITED OUR ATTENTION TO THE LETTER DATED 18/01/2007, WHICH WAS CLAIMED TO BE MERE AN INTIMATION BY PLACING RELIANCE UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS M/S D ESIRE JEWELLS PVT. LTD. (ITA NO.136/MUM/2015), WHEREIN, T HE FACTS WERE CLAIMED TO BE IDENTICAL. IT WAS CONTENDED THA T NOT A SINGLE MATERIAL WAS REFERRED BY THE ASSESSING OFFIC ER IN THE CASE OF THE PRESENT ASSESSEE. RELIANCE WAS PLACED U PON THE DECISION FROM HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS G AND G PHARMA INDIA LTD. (2016) 384 ITR 147 (DE L.), KHUBCHANDANI HEALTHPARKS PVT. LTD. VS INCOME TAX OF FICER (2016) 384 ITR 322 (BOM.) AND BANKE BIHARI PROPERTI ES PVT. LTD. VS INCOME TAX OFFICER (ITA NO.5128/DEL./2015 ; (2016) 46 CCH 546 (DEL. TRIB.) ORDER DATED 22/04/2016. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI RAJAT MIT TAL, CONTENDED THAT STATEMENT OF BROKER WAS RECORDED AND RELIED ITA NO.121/MUM/2015 AJAY J. DOSHI 3 UPON THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE HUF EARNED SHORT TERM CAPITAL GAIN, LONG TERM CAPITAL AND ALSO INCOME FROM OTHER SOURCE S, FILED ITS RETURN ON 12/08/2005, DECLARING TOTAL INCOME OF RS.2,05,598/-, WHICH WAS PROCESSED ON 31/03/2007, U /S 143(1) OF THE ACT. THE LD. ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 29/02/2012 (PAGE-1 OF THE PAPER B OOK) AND THE ASSESSMENT WAS REOPENED AFTER LAPSE OF MORE THA N FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE SOUGHT THE REASONS FOR REOPENING, WHICH WE RE PROVIDED BY THE ASSESSING OFFICER (PAGE-3 OF THE PA PER BOOK). IN RESPONSE TO NOTICE U/S 148 OF THE ACT, THE ASSES SEE THROUGH ITS COMMUNICATION CLAIMED THAT THE RETURN F ILED ON 12/08/2005 MAY BE TREATED AS RETURN FILED AGAINST T HE SAID NOTICE. THE REASONS PROVIDED TO THE ASSESSEE ARE RE PRODUCED HEREUNDER:- 'AN INTIMATION HAS BEEN RECEIVEDFROM ACIT CENT. CIR . 12, MUMBAI AS PER LETTER NO. A CT/CC12/2008-09 DT. 13.03. 200 9 STATING THAT A SEARCH ACTION IN DOSHI GROUP OF CASES WERE CARRIED OUT ON 18.01. 07, WHEREIN THE ASSESSES IN THIS GROUP HAVE OBTAINE D ARTIFICIAL BOGUS 'CAPITAL GAINS' THROUGH SHARE MARKET HAWALA O PERATIONS. THEY HAVE OBTAINED BOGUS BACKDATED PURCHASE BILLS OF SHA RES AND SUCH SHARES WERE RECEIVED IN PHYSICAL FORMAT. THEREAFTER , THE SAID PHYSICAL SHARES HAVE BEEN DE MATERIALIZED AND SOLD IN STOCK EXCHANGES EITHER IN OPEN MARKET OR THROUGH ENGINEER ED TRANSACTIONS, THUS FABRICATING ARTIFICIAL/BOGUS CAP ITAL GAINS AND ITA NO.121/MUM/2015 AJAY J. DOSHI 4 THEREBY GAINING THE ENTAILING BENEFITS OF TAXATION AT LOWER RATES OR TAX EXEMPTION. IT IS FURTHER INTIMATED THAT SHRI AJAY DOSHI, HUF, HAS ALSO CLAIMED BOGUS/ARTIFICIAL LONG TERM CAPITAL GAIN AMOUNTING T O RS. 41,80,055/- IN THE YEAR UNDER CONSIDERATION. IN VIEW OF THE AFORESAID, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS. 41,80,055/- HAS ESCAPED ASSESSMENT. THEREFORE THIS IS A FIT CASE TO ISSUE N OTICE U/S. 148 OF THE INCOME TAX ACT, 1961. AS SUCH, PERMISSION MAY PLEASE BE ACCORDED AS PER T HE PROVISIONS OF SECTION 151 (1) OF THE INCOME TAX ACT, 1961. ' IF THE AFORESAID REASONS OF REOPENING ARE ANALYZED, WE FIND THAT THE LD. ASSESSING OFFICER HAS RELIED UPON A LETTER RECEIVED FROM ANOTHER ASSESSING OFFICER I.E. ACIT, WHICH SPEAKS ABOUT SEARCH CARRIED OUT IN THE CASE OF GROU P CONCERN, WHICH WAS ALLEGED TO BE INVOLVED IN ARTIFICIAL CAPI TAL GAINS. FURTHER IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS A LSO CLAIMED ARTIFICIAL LONG TERM CAPITAL GAIN AMOUNTING TO RS.41,80,055/-. HOWEVER, AS CLAIMED BY THE ASSESSE E, DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED VARI OUS EVIDENCES IN SUPPORT OF THE CLAIM OF THE LONG TERM CAPITAL GAIN, WHICH WAS DISREGARDED BY THE ASSESSING OFFICE R BY HOLDING THAT THE SAME CLAIM IS ARTIFICIAL LONG TERM CAPITAL GAIN ON SALE OF SHARES. THE ASSESSEE HAS CHALLENGED BOTH LEGALITY OF REOPENING OF ASSESSMENT AND AS WELL AS THE ADDIT ION ON MERIT. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) CONFIRMED BOTH ON MERIT AS WELL AS THE LEGALITY OF ASSESSMENT FRAMED U/S 147 R.W.S 143(3) OF THE ACT AND THE CONS EQUENT ADDITIONS. ITA NO.121/MUM/2015 AJAY J. DOSHI 5 2.2. BEFORE US, THE ASSESSEE HAS CONTENDED THAT TH ERE IS NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER AND ALSO THERE IS ABSENCE OF TANGIBLE MATERIAL, WHI CH IS THE REQUIREMENT FOR REOPENING THE ASSESSMENT. WE FIND THAT THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS M/S DESIRE JEWELLS PVT. LTD. (SUPRA) VID E ORDER DATED 29/02/2016 OBSERVED/HELD AS UNDER:- 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. ONE OF THE NECESSARY INGREDIENTS REQUIRED TO INITIATE REAS SESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT IS FORMATI ON OF BELIEF BY THE ASSESSING OFFICER THAT CERTAIN INCOME CHARGE ABLE TO TAX HAD ESCAPED ASSESSMENT. IT IS ALSO A TRITE LAW THAT THE FORMATION OF SUCH BELIEF SHOULD BE DISCERNIBLE FROM THE MATER IAL AND INFORMATION ON RECORD WHEN THE ASSESSING OFFICER RE CORDS HIS REASONS. IN OTHER WORDS, IT IS AN ACCEPTED POSITION OF LAW THAT THERE SHOULD BE A LIVE LINK BETWEEN THE REASONS AND THE EVIDENCE/MATERIAL AVAILABLE WITH THE ASSESSING OFFI CER. IN THE PRESENT CASE, THE CIT(APPEALS) HAS EXTRACTED THE RE ASONS RECORDED BY THE ASSESSING OFFICER IN PARA 3.2 OF HI S ORDER. A READING OF SUCHREASONS REVEAL THAT THE ASSESSING OF FICER REFERS TO INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE MADE BOGUS PURCHASES FROM ONE M/S. U.M EXP ORTS TO THE EXTENT OF RS.4,90,275/-. MERELY NOTICING SUCH I NFORMATION, THE ASSESSING OFFICER PROCEEDS TO RECORD A BELIEF T HAT INCOME CHARGEABLE TO THE AFORESAID EXTENT HAD ESCAPED ASSE SSMENT. IN THE CONTEXT OF SUCH RECORDING OF REASONS THE CIT(AP PEALS) REFERRED TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MEERA KAPOOR (SUPRA), WHEREIN A SOMEWHAT SI MILAR REASONS RECORDED WERE HELD TO BE NON- COMPLAINT WIT H THE REQUIREMENT OF SECTION 147/148 OF THE ACT. 6.1 AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE PAPER BOOK, WHEREIN A COPY OF THE STATEMENT RENDERED BY SHRI MAHESH P. MEHTA, PROPRIE TOR OF ITA NO.121/MUM/2015 AJAY J. DOSHI 6 M/S. U.M EXPORTS IS PLACED. ON THAT BASIS, IT IS SO UGHT TO BE EXPLAINED THAT THE ASSESSEE HAS NOT BEEN SPECIFICAL LY NAMED THEREIN. 6.2 BE THAT AS IT MAY, I AM PRESENTLY ONLY EXAMININ G THE CONCLUSION OF THE CIT(APPEALS) THAT THE REASONS REC ORDED BY THE ASSESSING OFFICER DO NOT REFLECT INDEPENDENT APPLIC ATION OF MIND AS TO WHETHER THE INFORMATION BEFORE HIM SUGGESTED ANY ESCAPEMENT OF INCOME. TO THAT EXTENT, IN MY VIEW, T HE REASONS RECORDED DO NOT SATISFY THE REQUIREMENT OF SECTION 147 OF THE ACT IN AS MUCH AS THEY DO NOT REFER TO ANY DOCUMENTS OR STATEMENT, ETC., WHICH WOULD PRIMA-FACIE ESTABLISH A LINK BETW EEN THE BOGUS NATURE OF THE IMPUGNED PURCHASES AND CONSEQUE NTIAL ESCAPEMENT OF INCOME. THEREFORE, HAVING REGARD TO T HE FACTS AND MATERIAL FOUND BY THE CIT(APPEALS), THE INITIAT ION OF PROCEEDINGS UNDER SECTION HAVE BEEN RIGHTLY HELD TO BE AB-INITO INVALID. THE ORDER OF THE CIT(APPEALS) ON THIS ASPE CT IS HEREBY AFFIRMED. 2.3. IN THE AFORESAID ORDER, THE JURISDICTIONAL TR IBUNAL HAS OBSERVED THAT FOR INITIATING REASSESSMENT PROCE EDINGS U/S 147 OF THE ACT, ONE OF THE NECESSARY INGREDIENT S IS INFORMATION OF BELIEF BY THE ASSESSING OFFICER THAT CERTAIN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND FURTHER SUCH BELIEF SHOULD BE DISCERNIBLE FROM THE MATERIAL AND INFORMATION ON RECORD WHEN THE ASSESSING OFFICE R RECORD HIS REASONS, MEANING THEREBY, THERE SHOULD BE LIVE LINK BETWEEN THE REASONS AND THE EVIDENCE/MATERIAL AVAIL ABLE WITH THE ASSESSING OFFICER. IN THE PRESENT APPEAL, THE L D. ASSESSING OFFICER REFERS TO AN INFORMATION RECEIVED FROM ANOTHER ASSESSING OFFICER. THE LD. ASSESSING OFFICE R MERELY BASED UPON SUCH INFORMATION PROCEEDED TO RECORD THE BELIEF THAT INCOME CHARGEABLE TO A PARTICULAR EXTENT HAS E SCAPED ITA NO.121/MUM/2015 AJAY J. DOSHI 7 ASSESSMENT. IDENTICAL ARE THE FACTS IN THE CASE OF M/S DESIRE JEWELLS PVT. LTD. (SUPRA), WHEREIN, IT WAS HELD THA T THE PROCEEDINGS SO INITIATED WERE AB-INITIO INVALID. 2.4. LIKEWISE, IN THE CASE OF PR. CIT VS G AND G. PHARMA INDIA LTD. (2016) 384 ITR 147 (DEL.), HON'BL E DELHI HIGH COURT HELD AS UNDER:- 1. THIS APPEAL BY THE REVENUE UNDER SECTION 260A O F THE INCOME TAX ACT, 1961 (ACT ) IS DIRECTED AGAINST THE ORDER DATED 9TH JANUARY 2015 PASSED BY THE INCOME TAX APPELLATE TRI BUNAL (ITAT ) IN ITA NO. 3149/DEL/2013 FOR THE ASSESSMENT YEAR (AY ) 2003-04. 2. THE ISSUE SOUGHT TO BE PROJECTED BY THE REVENUE IS WHETHER THE ITAT WAS CORRECT IN HOLDING THAT THE ASSESSING OFFI CER (AO ) HAS NOT APPLIED HIS MIND AND NOT COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT THE INCOME OF TH E ASSESSEE HAS ESCAPED ASSESSMENT WHICH WAS THE JURISDICTIONAL REQ UIREMENT FOR REOPENING OF THE ASSESSMENT UNDER SECTION 147/148 O F THE ACT. 3. THE ASSESSEE FILED ITS RETURN ON 14TH NOVEMBER 2 004 AT RS.1,190/- WHICH WAS PROCESSED UNDER SECTION 143(3) OF THE ACT ON 1 ST MARCH 2004. THEREAFTER, ON THE BASIS OF INF ORMATION RECEIVED FROM THE DIRECTORATE OF INVESTIGATION, THE AO ISSUED NOTICE UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 19TH MARCH 2010 I.E., MORE THAN SIX YEARS AFTER THE ASSESSMENT . THE AO MADE VARIOUS ADDITIONS AND COMPLETED THE ASSESSMENT AT RS.55,50,180/. THE APPEAL OF THE ASSESSEE WAS DISMI SSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] BY O RDER DATED 30TH AUGUST 2011. 4. THE ASSESSEE S FURTHER APPEAL WAS ALLOWED BY THE ITAT BY THE IMPUGNED ORDER DATED 9TH JANUARY 2015. THE ITAT SET OUT IN THE IMPUGNED ORDER THE REASONS RECORDED BY THE AO FOR T HE REOPENING OF THE ASSESSMENT BY THE AO BY THE LETTER DATED 15TH SEPTEMBER 2010, AND CAME TO THE CONCLUSION THAT, AP ART FROM MAKING A MERE REFERENCE TO INFORMATION RECEIVED FRO M THE INVESTIGATION WING, THE AO MECHANICALLY ISSUED NOTI CE UNDER SECTION 148 OF THE ACT, WITHOUT COMING TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT THE I NCOME HAS ESCAPED ASSESSMENT DURING THE AY IN QUESTION. ITA NO.121/MUM/2015 AJAY J. DOSHI 8 5. WHEN THIS APPEAL WAS FIRST LISTED ON 7TH AUGUST 2015, THE COURT ENQUIRED FROM MR. KAMAL SAWHNEY, LEARNED SENIOR STA NDING COUNSEL FOR THE REVENUE, WHETHER HE COULD PRODUCE T HE MATERIALS ON THE BASIS OF WHICH THE ASSESSMENT WAS REOPENED. HE SOUGHT AND WAS GRANTED THREE WEEKS TIME FOR THIS PURPOSE. THE MATTER WAS NEXT LISTED ON 10TH SEPTEMBER 2015 WHEN ON ACCO UNT OF THE FACT THAT THE DATE HAD BEEN WRONGLY NOTED BY THE LE ARNED STANDING COUNSEL , THE CASE WAS ADJOURNED FOR TODAY . IT WAS MADE CLEAR ON 10TH SEPTEMBER 2015 THAT THE ORDER DATED 7 TH AUGUST 2015 MUST BE COMPLIED WITH POSITIVELY BEFORE THE NE XT DATE OF HEARING. 6. TODAY WHEN THE CASE WAS CALLED OUT, MR. SAWHNEY PRODUCED BEFORE THE COURT THE VERY SAME LETTER OF THE AO DAT ED 15 TH SEPTEMBER 2010 WHICH HAS BEEN REPRODUCED IN ITS ENT IRELY IN THE IMPUGNED ORDER OF THE ITAT. HE SUBMITTED THAT THE A O WAS HIMSELF PRESENT IN THE COURT AND FURTHER EFFORTS WO ULD BE MADE TO LOCATE THE MATERIALS ON THE BASIS OF WHICH THE AO F ORMED HIS OPINION REGARDING REOPENING OF THE ASSESSMENT. THE COURT WAS NOT PREPARED TO GRANT FURTHER TIME FOR THIS PURPOSE SINCE IT WAS NOT CLEAR THAT THE MATERIALS WERE, IN FACT, AVAILAB LE WITH THE DEPARTMENT. 7. MR. SAWHNEY, HAS PLACED EXTENSIVE RELIANCE ON TH E DECISION DATED 21 ST MARCH 2012 PASSED BY THIS COURT IN ITA NO. 643 OF 2011 (CIT V. INDIA TERMINAL CONNECTOR SYSTEM LTD.) WHERE, ACCORDING TO MR. SAWHNEY, IN SIMILAR CIRCUMSTANCES, THE APPEAL OF THE REVENUE WAS ALLOWED AND THE MATTER WAS REMAN DED TO THE ITAT FOR EXAMINATION OF THE CASE ON MERITS. HE ALSO RELIED UPON THE DECISION OF THE SUPREME COURT IN PHOOL CHAND BA JRANG LAL V. INCOME-TAX OFFICER (1993) 203 ITR 456 SC. THE MAIN THRUST OF THE SUBMISSION OF MR. SAWHNEY IS THAT, AS WAS IN TH E CASE OF INDIA TERMINAL CONNECTOR SYSTEM (SUPRA), IN THE PRESENT C ASE AS WELL, THERE WAS SPECIFIC INFORMATION REGARDING THE NAME O F THE ENTRY PROVIDER, THE DATE ON WHICH THE ENTRY WAS TAKEN, TH E CHEQUE DETAILS AS WELL AS THE AMOUNT CREDITED TO THE ACCOU NT OF THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT THIS BY ITS ELF CONSTITUTED SUFFICIENT MATERIAL FOR THE AO TO FORM AN OPINION T HAT THE 'ASSESSEE COMPANY HAS INTRODUCED HIS OWN UNACCOUNTE D MONEY IN ITS BANK ACCOUNT BY WAY OF ACCOMMODATION ENTRIES '. 8. MR. KAPIL GOEL, LEARNED COUNSEL FOR THE ASSESSEE , PLACED RELIANCE ON OTHER DECISIONS OF THIS COURT INCLUDING CIT V. PRADEEP KUMAR GUPTA (2008) 303 ITR 95; THE DECISION DATED 2 7TH MARCH 2015 IN W.P.(C) NO. 5330 OF 2014 (KROWN AGRO FOODS PVT. LTD. V. ACIT); THE DECISION DATED 4TH AUGUST 2015 IN ITA NO . 486 OF 2015 (CIT V. SHRI GOVIND KRIPA BUILDERS P.LTD.) AND THE DECISION ITA NO.121/MUM/2015 AJAY J. DOSHI 9 DATED 24TH AUGUST 2015 IN ITA NO. 226 OF 2015 (CIT V. ASHIAN NEEDLES PVT. LTD.) 9. THE COURT AT THE OUTSET PROPOSES TO RECAPITULATE THE JURISDICTIONAL REQUIREMENT FOR REOPENING OF THE ASS ESSMENT UNDER SECTION 147/148 OF THE ACT BY REFERRING TO TW O DECISIONS OF THE SUPREME COURT. IN CHHUGAMAL RAJPAL V. SP CHALIH A (1971) 79 ITR 603, THE SUPREME COURT WAS DEALING WITH A CASE WHERE THE AO HAD RECEIVED CERTAIN COMMUNICATIONS FROM THE COM MISSIONER OF INCOME TAX SHOWING THAT THE ALLEGED CREDITORS OF THE ASSESSEE WERE 'NAME-LENDERS AND THE TRANSACTIONS ARE BOGUS.' THE AO CAME TO THE CONCLUSION THAT THERE WERE REASONS TO B ELIEVE THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE SUPREME COURT DISAGREED AND OBSERVED THAT THE AO 'HAD NOT E VEN COME TO A PRIMA FACIE CONCLUSION THAT THE TRANSACTIONS TO W HICH HE REFERRED WERE NOT GENUINE TRANSACTIONS. HE APPEARED TO HAVE HAD ONLY A VAGUE FELLING THAT THEY MAY BE ''BOGUS TRANS ACTIONS'.' IT WAS FURTHER EXPLAINED BY THE SUPREME COURT THAT: 'BEFORE ISSUING A NOTICE UNDER S. 148, THE ITO MUST HAVE EITHER REASONS TO BELIEVE THAT BY REASON OF THE OMISSION O R FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER S. 139 FOR ANY ASSESSMENT YEAR TO THE ITO OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THA T YEAR, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THAT Y EAR OR ALTERNATIVELY NOTWITHSTANDING THAT THERE HAS BEEN N O OMISSION OR FAILURE AS MENTIONED ABOVE ON THE PART OF THE ASSES SEE, THE ITO HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT FOR ANY ASSESSMENT YEAR. UNLESS THE REQUIREMENTS OF CL. (A) OR CL. (B) OF S. 147 ARE SATISFIED, THE ITO HAS NO JURISDICTIO N TO ISSUE A NOTICE UNDER S. 148.' THE SUPREME COURT CONCLUDED THAT IT WAS NOT SATISFI ED THAT THE ITO HAD ANY MATERIAL BEFORE HIM WHICH COULD SATISFY THE REQUIREMENTS UNDER SECTION 147 AND THEREFORE COULD NOT HAVE ISSUED NOTICE UNDER SECTION 148. 10. IN ACIT V. DHARIYA CONSTRUCTION CO.(2010)328 IT R 515 THE SUPREME COURT IN A SHORT ORDER HELD AS UNDER: 'HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS C ASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO. OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PURPOSES OF REOPENING ASSESSMEN T UNDER S. 147 OF THE IT ACT, 1961. THE AO HAS TO APPLY HIS MI ND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELI EF THEREON. IN ITA NO.121/MUM/2015 AJAY J. DOSHI 10 THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL A PPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE ASSESSMEN T.' 11. THE ABOVE BASIC REQUIREMENT OF SECTIONS 147/148 HAS BEEN REITERATED IN NUMEROUS DECISIONS OF THE SUPREME COU RT AND THIS COURT. RECENTLY, THIS COURT RENDERED A DECISION DAT ED 22ND SEPTEMBER 2015 IN ITA NO. 356 OF 2013 (COMMISSIONER OF INCOME TAX II V. MULTIPLEX TRADING AND INDUSTRIAL C O. LTD.) WHERE THE ASSESSMENT WAS SOUGHT TO BE REOPENED BEYO ND THE PERIOD OF FOUR YEARS. THIS COURT CONSIDERED THE DEC ISION OF THE SUPREME COURT IN PHOOL CHAND BAJRANG LAL V. INCOME- TAX OFFICER (SUPRA) AS WELL AS THE DECISION OF THIS COU RT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. V. CIT 3 08 ITR 38 (DEL). THE COURT NOTED THAT A MATERIALCHANGE HAD BE EN BROUGHT ABOUT TO SECTION 147 OF THE ACT WITH EFFECT FROM 1S T APRIL 1989 AND OBSERVED: '29. IT IS AT ONCE SEEN THAT THE AMENDMENT IN SECTI ON 147 OF THE ACT BROUGHT ABOUT A MATERIAL CHANGE IN LAW W.E.F. 1 ST APRIL, 1989. SECTION 147(A) AS IT STOOD PRIOR TO 1ST APRIL 1989 REQUIRED THE AO TO HAVE A REASON TO BELIEVE THAT (A) THE INC OME OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND (B) THAT SUCH E SCAPEMENT IS BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO FILE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MATERIA L FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. AFTER THE AMENDME NT, ONLY ONE SINGULAR REQUIREMENT IS TO BE FULFILLED UNDER SECTI ON 147(A)AND THAT IS, THAT THE AO HAS REASON TO BELIEVE THAT INC OME OF AN ASSESSEE HAS ESCAPED ASSESSMENT. HOWEVER, THE PROVI SO TO SECTION 147 OF THE ACT PROVIDES A COMPLETE BAR F OR REOPENING AN ASSESSMENT, WHICH HAS BEEN MADE UNDER SECTION 14 3(3) OF THE ACT, AFTER THE EXPIRY OF FOUR YEARS. HOWEVER, THIS PROSCRIPTION IS NOT APPLICABLE WHERE THE INCOME OF AN ASSESSEE HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OR TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THUS, IN ORDER TO REO PEN AN ASSESSMENT WHICH IS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE CONDITION THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO TRULY AND FULLY DISCLOSE ALL MATERIAL FACTS MUST BE CONCLUDED WITH CERTAIN LEVEL OF CERTAINTY. IT IS IN THE AFORESAID CONTEXT THAT THIS COURT IN M/S HARYANA ACRYLIC MANUFACTURING CO. (P) LTD. (SUPRA) EXPLAINED THAT T HE RATIO OF THE DECISION IN PHOOL CHAND BAJRANG LAL (SUPRA) MAY NOT BE ENTIRELY APPLICABLE SINCE THE SAME WAS IN RESPECT OF SECTION 147(A) AS IT EXISTED PRIOR TO THE AMENDMENT.' 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENT RIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ITA NO.121/MUM/2015 AJAY J. DOSHI 11 ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGA TION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE C OMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK AC COUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONC LUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED H IS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINC E HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE O N WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KN OWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOU NTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCE SSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THAT TH E ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIEN T CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFO RE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRO DUCED DURING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFT ER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF T HE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLE SS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORT EM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOP ENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY . 14. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE ITAT CANNOT BE SAID TO BE ERRONEOUS. NO SUBSTANTIAL QUES TION OF LAW ARISES. 15. THE APPEAL IS DISMISSED. ITA NO.121/MUM/2015 AJAY J. DOSHI 12 2.5. WE NOTE THAT WHILE COMING TO A PARTICULAR CONCLUSION, HON'BLE HIGH COURT DULY CONSIDERED VARI OUS DECISIONS INCLUDING FROM HON'BLE APEX COURT/HIGH CO URT AND FINALLY HELD THAT THE BASIC REQUIREMENT OF LAW FOR REOPENING OF ASSESSMENT IS APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE MATERIAL PRODUCED PRIOR TO REOPENING THE ASSESS MENT TO CONCLUDE THAT HE HAD REASON TO BELIEF THAT INCOME, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE ALSO, THE LD. ASSESSING OFFICER MERELY REOPENED THE ASSESSMEN T ON THE BASIS OF INFORMATION RECEIVED FROM ANOTHER ACIT AND DID NOT INDEPENDENTLY APPLIED HIS MIND, THUS, THE AFORESAID DECISION SQUARELY APPLIES TO THE PRESENT APPEAL ALSO. THE RA TIO LAID DOWN IN THE CASE OF BANKE BIHARI PROPERTIES PVT. LT D. VS INCOME TAX OFFICER (SUPRA) FURTHER SUPPORT THE CASE OF THE ASSESSEE. IN THE PRESENT APPEAL, THE LD. ASSESSING OFFICER MERELY MENTION ONE LETTER NO. ACIT/CC.12/2008-2009 DATED 13/03/2009 MENTIONING ONE SEARCH ACTION IN DOSHI GR OUP OF CASES WAS CARRIED OUT ON 18/01/2007. NEITHER ANY INDEPENDENT ENQUIRY WAS MADE BY HIM NOR ANY MATERIA L WAS BEFORE HIM EVIDENCING/SUGGESTING THAT INCOME HAD RE ALLY ESCAPED TAXATION IN THE PRESENT APPEAL ALSO. THE RA TIO LAID DOWN IN DEVESH KUMAR (ITA NO.2068/DEL./2010) (PAGES 93 TO 106 OF THE PAPER BOOK), DCIT VS BHART CHANDRA SHETH (ITA NO.622/MUM/2014) (PAGE 107 TO 11 OF THE PAPER BOOK) , PANKAJ GAS CYLINDERS VS ACIT (ITA NO.5273/DEL./2013 ) DATED 03/05/2016, R.M.G. PLYVINXL (I) LTD. (2016) 48 ITR (TRIB.) 674 (DEL.), HON'BLE JURISDICTIONAL HIGH COURT IN PRASHA NT JOSHI VS INCOME TAX OFFICER (324 ITR 154)(BOM.), GODREJ INDU STRIES ITA NO.121/MUM/2015 AJAY J. DOSHI 13 LTD. VS DCIT & ORS. (2015) 377 ITR 1(BOM.) SUPPORTS THE CASE OF THE ASSESSEE. IN THE PRESENT APPEAL, THE AS SESSEE, DURING ASSESSMENT PROCEEDINGS, FURNISHED THE NECESS ARY DOCUMENTS, AS CLAIMED IN THE PAPER BOOK (FILED BEFO RE THIS TRIBUNAL), WHICH IS SUMMARIZED HEREUNDER FOR READY REFERENCE AND ANALYSIS:- PARTICULARS EVIDENCE PAPER BOOK PG. NO. EVIDENCE OF PURCHASE OF ROBINSON IMPEX (INDIA) LTD. (I) COPY OF PURCHASE OF 25000 SHARES OF ROBINSON IMPEX (INDIA) LTD. FROM DPS SHARES & SECURITIES PVT . LTD. (II) COPY OF LEDGER ACCOUNT OF DPS SHARES & SECURITIES PVT. LTD. EVIDENCING PURCHASE OF 25,000 OF SHARES T O THE APPELLANT. (III) COPY OF THE RETURN OF INCOME FOR A.Y. 2004-05, BALANCE SHEET OF ASSESSEE AS AT 31.3.2004 AND STATE MENT SHOWING INVESTMENT IN SHARES FILED ALONG WITH RETUR N OF INCOME FOR A.Y. 2004-05 SHOWING PURCHASE OF 25,000 SHARES FOR ROBINSON IMPEX (INDIA) LTD. (IV) COPY OF ASSESSMENT ORDER FOR A.Y. 2004-05 DATED 30.11.2006 IN ASSESSEES OWN CASE. 04 05 06-12 13-14 EVIDENCE OF SOURCE OF PURCHASE/MODE OF PAYMENT (V) COPY OF THE SALE BILL SHOWING SALE OF SHARES OF MASTEK LIMITED AND RIL IND. (VI) THE BALANCE SHEET AND STATEMENT SHOWING INVESTMENT IN SHARES FILED ALONG WITH RETURN OF INC OME FOR A.Y. 2004-05 SHOWING PURCHASE OF 25,000 SHARES OF ROBINSON IMPEX (INDIA) LTD. (VII) COPY OF ASSESSMENT ORDER FOR A. Y. 2004-05 DATED 30.11.2006 IN ASSESSEE'S OWN CASE. 28 11 13-14 EVIDENCE FOR PHYSICAL SHARES RECEIVED (VIII) DETAILS OF PHYSICAL SHARE CERTIFICATES OF M/S.ROBINSON WORLDWIDE TRADE LTD. (IX) COPY OF THE LETTER DATED 30.04.2003 RECEIVED FROM ROBINSON WORLDWIDE LTD. REGARDING TRANSFER OF SHARE S AND ISSUE OF JUMBO CERTIFICATE. (X) COPY OF JUMBO CERTIFICATE OF ROBINSON IMPEX (INDIA) LTD. ISSUED ON 30.04.2003 19-23 24 25 EVIDENCE FOR DEMATERIALIZATION OF SHARES (XI) ACKNOWLEDGED COPY OF REQUEST ISSUED BY HDFC BA NK ACCEPTING THE ASSESSEE'S SHARES 111 PHYSICAL FORM F OR DEMATERIALIZATION. (XII) COPY OF TRANSACTION CUM HOLDING STATEMENT REF LECTING CONFIRMATION OF SAID DEMAT. 26 27 EVIDENCE FOR SALE OF SHARES (XIII) COPY OF SALE BILL OF PRUTHVI BROKERS & SHARE HOLDINGS PVT. LTD. (XIV) LEDGER COPY EVIDENCING SALES IN THE BOOKS OF PRUTHVI BROKERS FOR A.Y. 2005-06. (XV)COPY OF TRANSACTION CUM HOLDING STATEMENT REFLE CTING CONFIRMATION OF SALE OF SHARES FROM DEMAT. (XVI) COPY OF POOL ACCOUNT OF PRUTHVI BROKERS & SHAREHOLDINGS PVT. LTD. IN ORIENTAL BANK OF COMMERC E FOR A.Y.2005-06. (XVII) SAMPLE COPY OF BR FILES RECEIVED BY PRUTHVI BROKERS 15-18 29-30 27 31-42 43-46 ITA NO.121/MUM/2015 AJAY J. DOSHI 14 FROM BOMBAY STOCK EXCHANGE REFLECTING SALE WITH TRA DE ID, TRADE TIME & CLIENT CODE FOR A. Y. 2005-06. (XVIII) STATEMENT OF COMPUTATION OF LONG TERM CAPIT AL GAINS FROM SALE OF SHARES OF ROBINSON IMPEX (INDIA) LTD. (XIX) COPY OF THE RETURN OF INCOME FOR A.Y. 2005-06 , BALANCE SHEET OF ASSESSEE AS AT 31.3.2005 AND STATEMENT SHO WING INVESTMENT IN SHARES FILED ALONG WITH RETURN OF INC OME FOR A.Y. 2004-05 SHOWING PURCHASE OF 25,000 SHARES OF ROBINSON IMPEX (INDIA) LTD. 47 48-54 EVIDENCE FOR RECEIPT OF SALE CONSIDERATION FOR SHARES (XX) COPY OF BANK STATEMENT OF HDFC BANK 55 2.6. FROM THE ABOVE, ONE QUESTION ARISES WHETHER T HE ASSESSEE FULLY AND TRULY DISCLOSED THE MATERIAL FAC TS FOR MAKING THE ASSESSMENT. FROM THE AFORESAID SUMMARIZE D CHART, IT IS EVIDENTLY CLEAR THE ASSESSEE PRODUCED THE EVIDENCE OF PURCHASE OF SHARES OF ROBINSON IMPEX (INDIA) LTD . FOR PURCHASE OF 25,000 SHARES, FROM DPS SHARES AND SECU RITIES PVT. LTD., (PAGE-4 OF THE PAPER BOOK), COPY OF LEDG ER ACCOUNT OF DPS SHARES AND SECURITIES PVT. LTD. EVIDENCING PURC HASE OF 25,000 SHARES TO THE ASSESSEE (PAGE-5 OF THE PAPER BOOK), COPY OF RETURN OF INCOME FOR ASSESSMENT YEAR 2004-0 5, COPY OF BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2004 A ND THE STATEMENT SHOWING INVESTMENT IN SHARES ALONG WITH R ETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 SHOWING PURCHASE OF AFOREMENTIONED SHARES (PAGE-6 TO 12 OF THE PAPER BO OK) AND THE COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 04-05 DATED 30/11/2006 IN THE CASE OF THE ASSESSEE (PAPER BOOK PAGE 13 TO 14). SO FAR AS, EVIDENCE OF SOURCE OF PURCHASE/MODE OF PAYMENT IS CONCERNED, THE ASSESSEE FILED COPY OF SALE BILL, SHOWING SALE OF SHARES OF MASTEK LTD. AND RIL INDIA (PAGE 28 OF THE PAPER BOOK), THE BALANCE SHEET AND ITA NO.121/MUM/2015 AJAY J. DOSHI 15 STATEMENT SHOWING INVESTMENT IN SHARES, COPY OF ASS ESSMENT ORDER FOR ASSESSMENT YEAR 2004-05 WERE DULY FURNISH ED. THE EVIDENCE FOR PHYSICAL SHARES, RECEIVED BY THE ASSES SEE SUCH CERTIFICATE IS AVAILABLE AT PAGE 19 TO 23 AND 24 OF THE PAPER BOOK. THE COPY OF THE CERTIFICATE OF ROBINSON IMPEX (INDIA) LTD., ISSUED ON 30/04/2003 (PAGE 25 OF THE PAPER BO OK) WAS MADE AVAILABLE BEFORE THE ASSESSING OFFICER. THE E VIDENCE OF DEMATERIALIZATION OF SHARES, ACKNOWLEDGED COPY OF R EQUEST, ISSUED BY HDFC BANK, ACCEPTING THE ASSESSEES SHARE S IN PHYSICAL FORM FOR DEMATERIALIZATION (PAGE 26 OF THE PAPER BOOK) AND COPY OF TRANSACTION CUM HOLDING STATEMENT , REFLECTING CONFIRMATION OF SAID D-MAT IS AVAILABLE AT PAGE 26 OF THE PAPER BOOK. SO FAR AS, EVIDENCE OF SALE OF S HARES IS CONCERNED, THE ASSESSEE PRODUCED THE NECESSARY DOCU MENTS WHICH ARE AVAILABLE TO PAGE 15 TO 54 OF THE PAPER B OOK. SO FAR AS, EVIDENCE OF RECEIPT OF SALE CONSIDERATION FOR S HARES IS CONCERNED, THE COPY OF BANK STATEMENT OF HDFC BANK IS AVAILABLE ON PAGE 55 OF THE PAPER BOOK. CONSIDERIN G THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS, DISCUSSED HEREINABOVE, IT CAN BE SAID THAT REOPENING OF ASSES SMENT WAS NOT JUSTIFIED AS THE MATERIAL FACTS FOR MAKING THE ASSESSMENT WERE DULY DISCLOSED/FURNISHED BY THE ASSESSEE. IN SUCH A SITUATION, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KHUBCHANDANI HEALTHPARKS P. LTD. VS INCOME TAX OFFI CER (2016) 384 ITR 322 (BOM.) AFTER FOLLOWING THE DECIS ION IN ACIT VS RAJESH JHAVERI STOCK BROKER PVT. LTD. (2007 ) 291 ITR 500 (SC) AND ON EXPLAINING AND DISTINGUISHING DCIT VS ZUARI ITA NO.121/MUM/2015 AJAY J. DOSHI 16 ESTATE DEVELOPMENT & INVESTMENT CO. LTD. (2015) 373 ITR 661 (SC) HELD AS UNDER:- 5. IT IS SETTLED POSITION IN LAW THAT THE DECISION OF THE COURT HAS TO BE READ IN THE CONTEXT OF THE FACTS INVOLVED THEREI N AND NOT ON THE BASIS OF WHAT LOGICALLY FLOWS THEREFROM AS HELD BY THE SUPREME COURT IN AMBICA QUARRY WORKS VS. STATE OF GUJARAT, 1987(1) SCC 213 . THE APEX COURT IN ZUARI ESTATE DEVELOPMENT AND INVESTMENT CO. LTD. (SUPRA)NOT HAVING DEALT WITH THE I SSUE OF REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS E SCAPED ASSESSMENT ON THE PART OF THE ASSESSING OFFICER IN CASES WHERE REGULAR ASSESSMENT WAS COMPLETED BY INTIMATION UNDER SE CTION 143(1) OF THE ACT, IT WOULD NOT BE WISE FOR US TO INF ER THAT THE SUPREME COURT IN ZUARI ESTATE DEVELOPMENT AND INVESTME NT CO. LTD. (SUPRA) HAS HELD THAT THE CONDITION PRECEDENT FOR THE ISSUE OF REOPENING NOTICE NAMELY, REASON TO BELIEVE THAT INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HAS NO APPLIC ATION WHERE THE ASSESSMENT HAS BEEN COMPLETED BY INTIMATION U NDER SECTION 143(1) OF THE ACT. THE LAW ON THIS POINT HAS BEEN EXPRESSLY LAID DOWN BY THE APEX COURT IN THE CASE OF RA JESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) AND THE SAME WOU LD CONTINUE TO APPLY AND BE BINDING UPON US. THUS, EVEN IN C ASES WHERE NO ASSESSMENT ORDER IS PASSED AND ASSESSMENT IS COMPLETED BY INTIMATION UNDER SECTION 143(1) OF THE AC T, THE SINE QUA NON TO ISSUE A REOPENING NOTICE IS REASON TO BELI EVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN T HE ABOVE VIEW, IT IS OPEN FOR THE PETITIONER TO CHALLENGE A NOT ICE ISSUED UNDER SECTION 148 OF THE ACT AS BEING WITHOUT JURISDICT ION FOR ABSENCE OF REASON TO BELIEVE EVEN IN CASE WHERE THE A SSESSMENT HAS BEEN COMPLETED EARLIER BY INTIMATION UNDER SECTION 143(1) OF THE ACT. 6. ACCORDINGLY, THE OBJECTION RAISED BY THE REVENUE IS NOT ACCEPTABLE. WE PLACE ON RECORD OUR APPRECIATION FOR THE ASSISTANCE RENDERED BY MR. PARDIWALLA, SENIOR COUNSEL AS AN AMICUS CURIAE. 7. WE THEREAFTER HEARD THE PETITION ON ITS CHALLENG E TO THE REOPENING NOTICE DATED 20TH MARCH, 2015 UNDER SECTION 148 OF THE ACT, SEEKING TO REOPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 20101 1. 8. RULE. 9. THE REASON IN SUPPORT OF THE IMPUGNED NOTICE PROCEED ON THE BASIS THAT THE REGULAR RETURN OF INCOME WAS ASSESSED BY INTIMATION UNDER SECTION 143(1) OF THE ACT AND NO SCR UTINY ASSESSMENT WAS DONE. IN THE ABOVE VIEW, TO ASCERTAIN THE NATURE AND THE JUSTIFICATION FOR CHARGING SHARE PREM IUM, THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT CHARGING OF SHARE PREMIUM OVER AND ABOVE THE INTRINSIC VALUE OF THE SHARE IS INCOME WHICH HAS ESCAPED ASSESSMENT. THE NOTICE ITSELF DOES NOT INDICAT E THE APPROXIMATE AMOUNT OF INCOME, WHICH THE ASSESSING OFF ICER HAS REASON TO BELIEVE HAS ESCAPED ASSESSMENT NOR DOES IT QU ANTIFY THE EXTENT TO WHICH THE SHARE PREMIUM RECEIVED WAS IN EX CESS OF ITA NO.121/MUM/2015 AJAY J. DOSHI 17 INTRINSIC VALUE, WHICH HAS ESCAPED ASSESSMENT. IT GIV ES NO REASONS TO INDICATE THE BASIS OF COMING TO THE CONCL USION THAT SHARE PREMIUM IS EXCESSIVE AND, THEREFORE, INCOME. MO REOVER, THE NOTICE ALSO DOES NOT DISPUTE THAT THIS IS A SHARE PRE MIUM BUT SEEK JUSTIFICATION FOR CHARGING THE SHARE PREMIUM OVER AND ABOVE INTRINSIC VALUE OF THE SHARE PREMIUM. PRIMAFACIE, WE ARE OF THE VIEW THAT THE BASIS OF THE IMPUGNED NOTICE STANDS CONCL UDED BY THE DECISION OF THIS COURT IN VODAFONE INDIA SERVICES LTD. VS. CIT 368 ITR 01 , WHEREIN IT HAS BEEN HELD THAT THE SHARE PREMIUM BEIN G ON THE CAPITAL AMOUNT CANNOT BE SUBJECTED TO TAX AS INC OME. 10. MR. MALHOTRA, LEARNED COUNSEL FOR THE REVENUE S UBMITS THAT VODAFONE INDIA SERVICES LTD. (SUPRA) WILL NOT APPLY AND PLAC ES RELIANCE UPON THE DECISION OF THIS COURT IN MAJOR METALS LTD. VS. UNION OF INDIA & ORS. 359 ITR 450 AND THE DECISION OF THIS COURT IN M/S. ALLIANCE SPACE PVT. LTD. VS. THE INCOME TAX OFFICER 6(1)(1), MUMBAI & OR S. (WRIT PETITION (L) NO. 735 OF 2015) RENDERED ON 27TH MARC H, 2013. PRIMAFACIE, BOTH THE DECISIONS DO NOT TAKE THE REVENUE'S CASE A NY FURTHER AS THEY ARE INAPPLICABLE. SO FAR AS DECISION IN THE CASE OF MAJ OR METALS LTD. (SUPRA) IS CONCERNED, IT TURNED ON ITS OWN FACTS AND WAS RENDE RED AT A POINT OF TIME PRIOR TO THAT OF VODAFONE INDIA SERVICES LTD. (SUPR A). BESIDES, IT AROSE OUT OF AN ORDER OF THE SETTLEMENT COMMISSION AND WAS NO T ARISING ON CHALLENGE TO A REOPENING NOTICE. THE TEST IN A CHAL LENGE TO A REOPENING NOTICE ON THE ISSUE OF JURISDICTION IS WHETHER THE REASONS RECORDED DO INDICATE A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. PRIMAFACIE, WE DO NOT FIND IT SO RECORD ED. SO FAR AS THE DECISION IN ALLIANCE SPACE PVT. LTD. (SUPRA) IS CON CERNED, MR. MALHOTRA, PLACES RELIANCE ON PARAGRAPH 24 THEREOF WHICH STATE S THAT ALL CASES OF SHARE PREMIUM CANNOT BE CONSIDERED TO BE COVERED BY THE DECISION OF THIS COURT IN VODAFONE INDIA SERVICES LTD. (SUPRA) AS WE LL AS THE CIRCULAR ISSUED BY THE CBDT CONSEQUENT TO THE DECISION OF VO DAFONE INDIA SERVICES LTD. (SUPRA). THERE CAN BE NO QUARREL WITH THE ABOVE PREPOSITION. EACH CASE HAS TO BE DECIDED ON ITS OWN MERITS AND SO FA R AS REOPENING IS CONCERNED, THE SAME HAS TO BE VIEWED ON TH E TOUCHSTONE OF REASON TO BELIEVE AS RECORDED WHILE IS SUING THE NOTICE. PRIMAFACIE, WE OBSERVE THAT THE DECISION IN T HE CASE OF VODAFONE INDIA SERVICES LTD. (SUPRA) WOULD APPLY TO THE FACTS OF THE PRESENT CASE. 2.7. THUS, CONSIDERING THE TOTALITY OF FACTS AND T HE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, WE F IND THAT ONE OF THE NECESSARY INGREDIENTS REQUIRED TO INITIA TE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT IS FORM ATION OF BELIEF BY ASSESSING OFFICER THAT CERTAIN INCOME CHA RGEABLE TO TAX HAD ESCAPED ASSESSMENT. SUCH BELIEF SHOULD BE DISCERNABLE FROM THE MATERIAL AND INFORMATION ON RE CORD. IN OTHER WORDS, IT IS AN ACCEPTED POSITION OF LAW THAT THERE SHOULD BE LIVE LINK BETWEEN THE REASON AND THE MATE RIAL ITA NO.121/MUM/2015 AJAY J. DOSHI 18 EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE LD. ASSESSING OFFICER WAS MERELY HAVING INFORMATION REC EIVED FROM THE INVESTIGATION WING AND MERELY NOTICING SUC H INFORMATION, WITHOUT VERIFYING THE SAME, PROCEEDED TO RECORD THE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPE D ASSESSMENT. NO INDEPENDENT APPLICATION OF MIND HAS BEEN DONE BY THE ASSESSING OFFICER SUGGESTING ESCAPEMENT OF INCOME. THEREFORE, HAVING REGARD TO THE FACTUAL MAT RIX AND THE JUDICIAL DECISIONS LIKE PR. CIT VS G AND G PHAR MA INDIA LTD. (2016) 384 ITR 147 (DEL.) AND HON'BLE JURISDIC TIONAL HIGH COURT IN KHOOBCHANDANI HEALTHPACK PVT. LTD. (2016) 384 ITR 322 (BOM.), WE ARE OF THE VIEW THAT THE INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE LD. ASSESSING OFFICER ARE HELD TO BE AB-INITIO INVALID. 3. SO FAR AS, MERITS OF THE CASE IS CONCERNED, WE FIND THAT THE ASSESSEE ORIGINALLY FILED THE RETURN ON 12 /08/2005 DECLARING TOTAL INCOME AT RS.2,05,598/-. ASSESSMEN T U/S 147 R.W.S 143(3) OF THE ACT WAS COMPLETED ON 28/03/ 2013, MAKING ADDITION OF RS.41,79,305/- ON THE ALLEGED BO GUS LONG TERM CAPITAL GAIN ON THE SAME OF SHARES OF ROBINSON IMPEX (I) LTD. TREATING THE SAME AS INCOME FROM OTHER SOURCE S. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE FIRST A PPELLATE AUTHORITY, WHEREIN, IT WAS AFFIRMED. THE ASSESSEE I S IN APPEAL BEFORE THIS TRIBUNAL. THE WHOLE ISSUE BOILS DOWN WH ETHER THE AMOUNT OF SALE PROCEED OF SHARES OF ROBINSON IMPEX (I) LTD. CAN BE TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSEE BEFORE US, HAS ALSO FILED WRITTEN SUBMISSIONS, WHER EIN, IT WAS ITA NO.121/MUM/2015 AJAY J. DOSHI 19 CLAIMED THAT DURING FINANCIAL YEAR 2003-04 (ASSESSM ENT YEAR 2004-05), THE ASSESSEE PURCHASED THE FOLLOWING SHARES. SR. NO. NAME OF SCRIP NOS. OF SCRIP PURCHASED THROUGH SOLD THROUGH 1 ROBINSON WORLDWIDE TRADE LTD. 25,000 (SOLD IN A.Y.-2005-06) DPS SHARES & SECURITIES PVT. LTD. (SEBI REGN. NO. INB-010986539 CLG. NO.151) PRUTHVI BROKERS & SHARE HOLDINGS PVT. LTD. (SEBI REGN NO. INB 011059830, CLG. NO. 529) 3.1. WE HAVE PERUSED THE ASSESSMENT ORDER AND FOUN D THAT BROADLY, EVEN AFTER SUBMISSION OF AFORESAID DO CUMENTS, THE LD. ASSESSING OFFICER MADE ADDITION BY MAKING F OLLOWING BROAD OBJECTIONS:- I. SEARCH WAS CONDUCTED ON THE DOSHI GROUP OF CASES ON 18.01.2007, WHEREIN IT WAS FOUND THAT THE ASSESSEE HAD OBTAINED ARTIFICIAL LONG TERM CAPITAL GAINS. II. THE ASSESSEE'S IN THE GROUP HAVE BACKDATED THE PURCHASE OF SHARES AS THE SAME HAVE BEEN PAID EITHER THROUGH CASH OR THROUGH SPECULATIVE CAPITAL GAINS AND NO ACTUAL PURCHASE OF THE SAID SHARES WAS EVER MADE . III. IT IS SEEN THAT ON THE DATE OF PURCHASE OF THESE SH ARES, THE MARKET PRICE OF THE SAID SHARES IS VERY NOMINAL. IV. ON THE DATE OF PURCHASE OF THE SAID SHARES, NO TRAN SACTION FOR THESE SHARES WAS CONDUCTED ON THE BOMBAY STOCK EXCHANGE (BSE). V. SIMILARLY, THE SPECULATION PROFITS NEVER ACTUALLY A ROSE OUT OF TRANSACTIONS ON BSE. VI. THE ASSESSEE ON THE DATE ON WHICH IT HAD SUPPOSEDLY EARNED LONG TERM CAPITAL GAINS WAS IN POSSESSION OF UNEXPLAINED MONEY TO THE EXTENT OF RS. 41,79,305/-. VII. ADDITIONS WITH REGARDS TO THE SALE OF SCRIP OF M/S. ROBINSON WORLDWIDE TRADE LTD. WAS MADE IN ALL THE DOSHI GROUP CASES BY ACIT CENTRAL CIRCLE - 12 AND A S THE ITA NO.121/MUM/2015 AJAY J. DOSHI 20 ASSESSEE'S CASE WAS LEFT OUT OF CENTRALIZATION, INF ORMATION WAS SENT TO THIS OFFICE FOR MAKING THE ADDITIONS ON ACCOUNT OF BOGUS/ARTIFICIAL CAPITAL GAINS . 3.2. IN THE BACKDROP OF THE ABOVE OBSERVATIONS, WE HAVE ALSO ANALYZED THE IMPUGNED ORDER, WHEREIN, THE FIRS T APPELLATE AUTHORITY, CONFIRMED THE ADDITION BY OBSE RVING AS UNDER I. THE SHARE BROKER THROUGH WHOM THE SHARES IN QUESTIO N HAVE BEEN CLAIMED TO HAVE BEEN PURCHASED HAS CATEGORICALLY STATED THAT THE PURCHASES IN QUESTION ARE BOGUS AND IN THE NATURE OF ACCOMMODATION ENTRIES. II. IT APPEARS THAT THERE ARE HUNDREDS OF PERSONS UNREL ATED TO EACH OTHER WHO HAVE ADOPTED THE SAME MODUS OPERA NDI IN RESPECT OF TRANSACTIONS IN THE SHARES OF M/S. RO BINSON IMPEX AND THE INVOLVEMENT OF SAME SHARE BROKER I.E. M/S. DPS SHARE BROKERS. THIS CANNOT HE A MERE COINCIDENC E. III. THE FACT AS MENTIONED IN SUB-PARA 'B' ABOVE CANNOT BE IGNORED MERELY BECAUSE THE ASSESSEE HAS SOME DOCUMENTS IN ITS POSSESSION. IV. THE SPECULATIVE TRANSACTIONS, ESPECIALLY OF BLUE CH IP COMPANIES LIKE RIL, IN QUESTION WERE NOT EFFECTED O N THE STOCK EXCHANGE PLATFORM. V. THE ALLEGED BROKER HAD NOT INFORMED THE SPECULATIVE TRANSACTIONS TO THE STOCK EXCHANGE IN ALL CASES. VI. IT IS NOT UNDERSTANDABLE AS TO WHY THE ASSESSEE WOU LD INVEST IN PENNY STOCK WITH NO TRACK RECORD. VII. THE SHARES WERE SENT FOR DE-MATERIALISATION LONG AF TER PURCHASING THE SAME. VIII. THE ASSESSEE HAS FILED THE DEMAT REQUEST FORM SUBMI TTED TO ORIENTAL BANK OF COMMERCE FOR DEMATERIALIZATION OF SHARES, WHICH IS INCOMPLETE AND NOT SIGNED/STAMPED BY THE AUTHORIZED PARTICIPANT. IX. THEREFORE, FROM THE FACTS ON RECORD IT EMERGES THAT EVEN THOUGH THE SHARES WERE DEMATERIALIZED, IT WAS PART OF THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE ITA NO.121/MUM/2015 AJAY J. DOSHI 21 COMPANY. X. EVEN IF IT IS ACCEPTED THAT THE SAID SHARES WERE IN FACT PURCHASED BY THE ASSESSEE, THE SAME IS TO HE HELD T O HAVE BEEN PURCHASED FOR PROFIT MOTIVE AS TRADING ASSET A ND NOT AS A CAPITAL ASSET OR INVESTMENT. XI. FURTHER, NO DEDUCTION OF PURCHASE COST CAN HE ALLOW ED TO THE ASSESSEE SINCE IT HAS BEEN HELD THAT THE SAID P URCHASE HAS NOT BEEN SUBSTANTIATED BY IT. XII. NO RELIANCE CAN BE PLACED ON THE ASSESSMENT ORDER F OR A. Y. 2004-05 FOR GENUINENESS OF PURCHASES SINCE THE SAID ISSUE WAS NOT EXAMINED BY THE ASSESSING OFFICER. 3.3. NOW, WE SHALL ANALYZE, THE SEARCH PROCEEDINGS , AS OBSERVED IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER. THE SUBMISSIONS ON BEHALF OF THE ASSESSEE, B EFORE US, ARE SUMMARIZED AS UNDER:- THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) HAS PLACED RELIANCE ON THE SEARCH PROCEEDINGS CONDUCTED ON THE D OSHI GROUP ON 18.01.2007 TO CONCLUDE THAT THE APPELLANT HAD CLAIMED BOGUS LONG TERM CAPITAL GAINS. IT IS SUBMITTED HEREWITH THAT SEARCH ACTION WAS CARRIED OUT U/S. 132(4) OF THE ACT ON THE DOSHI GROUP ON 18.01.2007. HOWEVER, NO INCRIMINATING MATERIAL WAS SEIZED/FOUND DURING THE COURSE OF THE SAID SEARCH ACTION THAT IN ANY MANNER POINTS OUT THAT EITHER IN THE ASSESSEE'S GROUP CONCERN OR IN THE APPELLANT WAS ENGAGED IN THE OBTAINING ACCOMMODATION ENTRIES WITH REGARDS TO LONG TERM CAPITAL GAINS ON SALE OF SHARE S. THE FOLLOWING ASSESSEE'S OF DOSHI GROUP WERE BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH:- SR. NO. NAME OF THE ASSESSEE ASST. YEARS. ITA NO. DATE OF ORDER 1. SMT. NEETA DOSHI & SMT. MANISHA DOSHI 2005-06 439/MUM/2010 AND 441/MUM/2010 30.11.2015 2. SHRI BRIJESH D. SHAH 2002-03, 2003-04, 2004-05 & 2005- 06 1417 TO 1420/MUM /2010 03.02.2016 ITA NO.121/MUM/2015 AJAY J. DOSHI 22 IN THE CASE OF SAID ASSESSEES, THE ASSESSING OFFICE R HAD ISSUED NOTICES U/S. 153A OF THE ACT AND PASSED ASSESSMENT ORDERS U/S. 153A R.W.S. 143(3) OF THE AC T. THE SAID ASSESSEE'S HAD CHALLENGED THE SAID ORDER ON BO TH THE ISSUES OF LEGALITY OF THE ASSESSMENT AND MERITS OF THE ADDITION MADE BY THE ASSESSING OFFICER. THE HON 'BLE TRIBUNAL IN THE CASE OF THE ABOVE-REFERRED ASSESSEE S GRANTED RELIEF ON THE ISSUE OF LEGALITY OF ASSESSME NT FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT ITSELF'. THE SAID RELIEF WAS GRANTED LOOKING INTO THE FACT THAT THERE WAS NO INCRIMINATING MATERIAL WHICH WAS EITHER FOUN D OR SEIZED DURING THE COURSE OF SEARCH TO JUSTIFY AD DITION U/S 153A R.W.S. 143(3) OF THE ACT. RELIANCE FOR THI S CONTENTION IS PLACED ON THE ORDER OF HON'BLE MUMBAI TRIBUNAL IN THE CASE OF SKIL BRIJESH D. SHAH VS. AC IT CENTRAL CIRCLE 11, MUMBAI IN THE ITA NO. 1417 TO 1420/M/2010 DATED 03.02.2016 (PAGE NO 125-133 OF THE PAPERBOOK). THE RELEVANT PORTION OF THE SAID OR DER IS REPRODUCED HEREUNDER: '15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND A LSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDER AS WELL AS CI TED BY LD A. R. AND D. 1?. DURING THE COURSE BEFORE US, IN THE CONT EXT OF FACTUAL MATRIX OF THE INSTANT CASES BEFORE US. FROM THE REC ORD, WE FOUND THAT A SEARCH WAS CARRIED OUT UNDER SECTION 132(1) ON TH E ASSESSEE'S PREMISES ON 18.01.2007 ON THE ALLEGATION THAT ASSESSEE OBTAINED ARTIFICIAL CAPITAL GAINS. HOWEVER , NOWHERE IN THE ASSESSMENT ORDER THE AO HAS STATED ANY INCRIMIN ATING DOCUMENT, PAPER OR EVIDENCE FOUND DURING SEARCH IN ALLEGATION OF BOGUS CAPITAL GAIN. 16. IN VIEW OF ABOVE DISCUSSION, SINCE NO INCRIMINA TING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH, THE ADDITION MADE UNDER SECTION 153A, WHEN THE ASSESSMENT WAS NOT PEN DING, WAS NOT JUSTIFIED.' SIMILAR ORDER WAS PASSED BY HON'BLE MUMBAI TRIBUNAL IN THE CASE OF SMT. NEETA DOSHI & SNIT MANISHA DOSHI, IN T HE ITA NO. 439/MUM/2010 AND 441/MUM/2010 DATED 30.11.2015 (PAG E NO 134-150 OF THE PAPERBOOK). FROM, A PERUSAL OF THE ABOVE ORDER IT GETS AMPLY CL EAR THAT THE SEARCH AND SEIZURE OPERATION ON THE DOSHI GROUP HAD ITA NO.121/MUM/2015 AJAY J. DOSHI 23 NOT YIELDED WITH ANY FINDINGS WITH REGARDS TO THE GENUINENESS OF CLAIM OF LONG TERM CAPITAL GAINS IN E ITHER THE CASE OF THE SAID ASSESSEE'S OR IN THE CASE OF THE A PPELLANT. NO CONFRONTATION OF THE PURCHASE BROKER/ NO OPPORTUNIT Y TO CROSS-EXAMINE: THE LD. CIT(A) IN THE APPELLATE ORDER HAS GIVEN CRE DENCE TO STATEMENT OF M/S. DPS SHARES & SECURITIES PVT. L TD. AND HAS STATED THAT SHARE BROKER HAS CATEGORICALLY STATED THAT THE PURCHASES IN QUESTION ARE BOGUS AND IN THE NATURE OF ACCOMMODATION ENTRIES. HE HAS EMPHASIZED THAT INVOLVEMENT OF SAME SHARE BROKER I.E. M/S. DPS SHARE BROKERS WITH REGARDS TO THE SHARES OR M/S. ROBINSON WORLDWIDE TRADE LTD IN CASE OF HUNDREDS OF PERSONS CANNOT BE A MERE COINCIDENCE. IT IS PERTINEN T TO NOTE HERE THAT NO SUCH AVERMENT WAS MADE BY THE ASSESSIN G OFFICER AS CAN BE SEEN FROM A PERUSAL OF THE ASSESSM ENT ORDER. IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER H AS NEVER CONFRONTED THE APPELLANT WITH ANY STATEMENT RECORDED OF THE SHARE BROKER I.E. M/S. DPS SHARES & SECURITIES PVT. LTD DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO OPPORTUNITY HAS BEEN PROVIDED TO TH E APPELLANT TO CROSS- EXAMINE THE SAID BROKER. THEREF ORE, ANY RELIANCE PLACED ON THE STATEMENT OF M/S. DPS SH ARE & SECURITIES PVT. LTD. WOULD BE IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE PROPAGATED BY COURTS TI ME AND AGAIN. THE ASSESSMENT ORDER THEREFORE CANNOT BE SUSTAIN ED ON THIS GROUNDS ITSELF. RELIANCE FOR THIS CONTENTION IS PLACED ON THE FOLLO WING JUDGMENT) THE JUDGMENT OF HON BLE BOMBAY HIGH COURT IN THE CASE OF H. R. MEHTA VS. ACIT, ITA NO.58 OF 2001 DATE D 30.06.2016, WHEREIN THE HON?* HIGH COURT (PAGE NO 1 51- 163 OF THE PAPERBOOK) HAS HELD AS UNDER: '17. IN OUR VIEW IN THE LIGHT OF THE . FACT THAT THE MONIES WERE ADVANCED APPARENTLY BY THE ACCOUNT PAYEE CHEQU E ITA NO.121/MUM/2015 AJAY J. DOSHI 24 AND WAS REPAID VIDE ACCOUNT PAYEE CHEQUE THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS 10 GRANT AN OPPORT UNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PRO VIDING THE MATERIAL SOUGHT 10 HE USED AGAINST ASSESSEE IN ARRIVING BEFORE PASSING THE ORDER OF REASSESSMENT. THIS NOT HAVING BEEN DONE, THE DENIAL OF SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STRIKES AT THE VER Y FOUNDATION OF THE REASSESSMENT AND THEREFORE RENDERS THE ORDERS PASSED BY THE CIT (A) AND THE TRIBUNAL VULNERABLE. IN OUR VIEW THE ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APAR T FROM BEING PERMITTING HIM TO CROSS EXAMINE THE DEPONENTS . DESPITE THE REQUEST DATED 15TH FEBRUARY, 1996 SEEKI NG AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT AND . FURNISH THE ASSESSEE WITH COPIES OF STATEMENT AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. IN THE VIEW OF THE MATTER, WE ARE INCLINED TO ALLOW THE APPEAL ON THIS VERY ISSUE.' THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II, CIVIL APPEAL NO. 4228 OF 2006 WHEREIN THE HON'BLE SU PREME COURT (PAGE NO 164-170 OF THE PAPER BOOK) HAS HELD AS UNDER: - 'ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE 'NUDE THE BASIS OF THE IMPUGNE D ORDER IS A SERIOUS/LAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAU SE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NO T GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDI CATING AUTHORITY. AS . FAR AS THE TRIBUNAL IS CONCERNED, WE , FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF TH E APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PR ICES REMAIN STATIC. IT WAS NOT FIN . THE TRIBUNAL TO HAVE GUESS WORK AS TO FUR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM . ITA NO.121/MUM/2015 AJAY J. DOSHI 25 RELIANCE IS PLACED ON THE ORDER OF HON'BLE MUMBAI T RIBUNAL IN THE CASE OF ADAMJI &CO., MUMBAI VS. ITO, IN ITA NO. 25/MUM/2016 DATED 27.05.2016, WHEREIN THE HON'BLE JURISDICTIONAL TRIBUNAL (PAGE NO 171-179 OF THE PAPE R BOOK) HAS HELD AS UNDER:- 'AS IT APPEARS, NEITHER THE ASSESSING OFFICER HAD CONFRONTED THE ADVERSE MATERIAL TO THE ASSESSEE NOR HAS ALLOWED THE ADAMJI & COMPANY ASSESSEE TO CROSS-EXAM INE THE CONCERNED PERSONS. THEREFORE, THE ADVERSE MATERIAL USED BY THE ASSESSING OFFICER IN DETRIMENT TO ASSESSEE'S IN TEREST REMAINED UNCONTESTED WHICH IS IN CLEAR VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. MOREOVER, ILLS A FACT ON RECORD THAT THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS HAS PRODUCED DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES. IT IS ALSO NOT DISPUT ED THAT THE ASSESSING OFFICER HAS ACCEPTED THE SALES TURNOVER D ISCLOSED BY THE ASSESSEE. THEREFORE, UNLESS, THE ASSESSEE HAD M ADE PURCHASES HE COULD NOT HAVE EFFECTED CORRESPONDING SALES. THEREFORE, BEFORE TREATING THE PURCHASES MAD E BY THE ASSESSEE AS BOGUS, THE ASSESSING OFFICER SHOULD HAVE CONDUCTED NECESSARY ENQUIRY KEEPING IN VIEW OF THE AFORESAID FACT. WITHOUT CONDUCTING ANY ENQUIRY, THE ASSESSING OFFICER SOLELY RELYING UPON THE INVESTIGA TION MADE BY THE SALES TAX DEPARTMENT CANNOT MAKE THE AD DITION. 117(1T TOO, ON THE BASIS OF UNTESTED MATERIAL. THE DECISIONS RELIED UPON BY THE LEARNED AUTHORIZED REPRESENTATIV E REFERRED TO ABOVE FULLY SUPPORT THIS VIEW. THEREFOR E, IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE ARE A/THE VIE W, THE ADDITION MADE ON ACCOUNT ON ACCOUNT OF ESTIMATION O F PROFIT BY TREATING THE PURCHASES AS BOGUS HAS NO LEGS TO S TAND. ACCORDINGLY, WE DELETE THE SAME. 3.4. IF THE AFORESAID SUBMISSIONS OF THE ASSESSEE AND OBSERVATION MADE IN VARIOUS ORDERS ARE ANALYZED, AD MITTEDLY, SO FAR AS THE EVIDENCE OF PURCHASE OF ROBINSON IMPE X(I) LTD. IS CONCERNED, THE ASSESSEE DULY FURNISHED THE COPY OF PURCHASE BILL FOR PURCHASE OF 25000 SHARES FROM DPS SHARES AND SECURITIES PVT. LTD. (PAGE-4 OF THE PAPER BOOK) , COPY OF LEDGER ACCOUNT OF DPS SHARES AND SECURITIES LTD., E VIDENCING PURCHASE OF 25000 SHARES TO THE ASSESSEE (PAGE -5 O F THE PAPER BOOK), COPY OF RETURN OF INCOME OF ASSESSMENT YEAR 2004-05, BALANCE SHEET OF ASSESSEE AS ON 31/03/2004 AND ITA NO.121/MUM/2015 AJAY J. DOSHI 26 STATEMENT SHOWN INVESTMENT IN SHARES (FILED ALONG W ITH RETURN OF INCOME) FOR ASSESSMENT YEAR 2004-05 (PAGE S 6 TO 12 OF THE PAPER BOOK), COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05 DATED 31/11/2006 IN THE CAS E OF THE ASSESSEE ITSELF (PAGES 13 AND 14 OF THE PAPER B OOK). 3.5. SO FAR AS EVIDENCE OF SOURCE OF PURCHASE/MODE OF PAYMENT IS CONCERNED, THE ASSESSEE DULY FURNISHED T HE COPY OF SALE BILL, SHOWING SALE OF SHARES OF MASTEK LTD. AND RIL INDIA (PAGE 28 OF THE PAPER BOOK), THE BALANCE SHEE T AND STATEMENT SHOWING INVESTMENT IN SHARES, FILED ALONG WITH THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 (PAGE 11 OF THE PAPER BOOK) AND COPY OF ASSESSMENT ORDER DATED 30/11/2006 FOR ASSESSMENT YEAR 2004-05 WAS MADE AVAILABLE BY THE ASSESSEE. 3.6. SO FAR AS EVIDENCE OF PHYSICAL SHARES, RECEIV ED BY THE ASSESSEE, THE ASSESSEE DULY FURNISHED THE DETAI LS OF PHYSICAL SHARES CERTIFICATE OF M/S ROBINSON WORLDWI DE TRADE LTD. (PAGES 19 TO 23 OF THE PAPER BOOK), COPY OF LE TTER DATED 30/04/2003 RECEIVED FROM M/S ROBINSON WORLDWIDE LTD . REGARDING TRANSFER OF SHARES AND ISSUE OF JUMBO CER TIFICATE (PAGE -24 OF THE PAPER BOOK) AND CERTIFICATE OF ROB INSON IMPEX ISSUED ON 30/04/2003 (PAGE 25 OF THE PAPER BO OK) WAS DULY FURNISHED. SO FAR AS, EVIDENCE FOR DEMATER IALIZATION OF SHARES IS CONCERNED, THE ASSESSEE DULY FURNISHED THE ACKNOWLEDGE, COPY OF REQUEST ISSUED BY HDFC BANK ACCEPTING THE ASSESSEES SHARES IN PHYSICAL FORM FO R ITA NO.121/MUM/2015 AJAY J. DOSHI 27 DEMATERIALIZATION (PAGE 26 OF THE PAPER BOOK) AND C OPY OF TRANSACTION CUM HOLDING STATEMENT REFLECTING CONFIR MATION OF SAID DE-MAT (PAGE 27 OF THE PAPER BOOK) WERE FURNIS HED BY THE ASSESSEE. 3.7. SO FAR AS, EVIDENCE OF SALE OF SHARES CONCERN , THE ASSESSEE DULY FURNISHED THE COPY F SALE BILL OF PRU THVI BROKERS & SHAREHOLDING PVT. LTD. (PAGES 15 TO 18 OF THE PAPER BOOK ), LEDGER COPY EVIDENCING SALES IN THE BOOKS OF PRUTHVI BROKERS FOR A.Y. 2005-06 (PAGES 29 TO 30 OF THE PAPER BOOK), COPY OF TRANSACTION CUM HOLDING STATEMENT RE FLECTING CONFIRMATION OF SALE OF SHARES FROM DE-MAT (PAGE 27 OF THE PAPER BOOK), COPY OF POOL ACCOUNT OF PRUTHVI BROKER S & SHAREHOLDINGS PVT. LTD. IN ORIENTAL BANK OF COMMERC E FOR A.Y.2005-06 (PAGES 31 TO 42 OF THE PAPER BOOK), SAM PLE COPY OF BR FILES RECEIVED BY PRUTHVI BROKERS FROM BOMBAY STOCK EXCHANGE REFLECTING SALE WITH TRADE ID, TRADE TIME & CLIENT CODE FOR A. Y. 2005-06 (PAGES 43 TO 46 OF THE PAPER BOOK). STATEMENT OF COMPUTATION OF LONG TERM CAPITAL GAINS FROM SALE OF SHARES OF ROBINSON IMPEX (INDIA) LTD. (PAGE S 47 OF THE PAPER BOOK), COPY OF THE RETURN OF INCOME FOR A.Y. 2005-06, BALANCE SHEET OF ASSESSEE AS AT 31.3.2005 AND STATE MENT SHOWING INVESTMENT IN SHARES FILED ALONG WITH RETUR N OF INCOME FOR A.Y. 2004-05 SHOWING PURCHASE OF 25,000 SHARES OF ROBINSON IMPEX (INDIA) LTD. (PAGES 48 TO 54 OF T HE PAPER BOOK), WAS MADE AVAILABLE BY THE ASSESSEE. SO FAR A S, EVIDENCE FOR RECEIPT OF SALE CONSIDERATION OF SHARE S CONCERN, THE ASSESSEE FILED COPY OF BANK STATEMENT OF HDFC B ANK ITA NO.121/MUM/2015 AJAY J. DOSHI 28 (PAGE 55 OF THE PAPER BOOK), THEREFORE, IT IS OBSER VED THAT NECESSARY EVIDENCE WAS FURNISHED BY THE ASSESSEE. THUS, EVEN ON MERIT, THE ASSESSEE HAS DULY SUBSTANTIATED HIS CLAIM. THE MUMBAI BENCH OF THE TRIBUNAL VIDE ORDER DATED 30/12/2011 (ITA NO.787 TO 791/MUM/2010) FOR ASSESSM ENT YEAR 2005-06 IN THE CASE OF SHRI ARVIND M. KARIYA A ND ORS. VS ACIT ON THE ISSUE OF LONG TERM CAPITAL GAINS AND CONSEQUENT ADDITION U/S 68 OF THE ACT, WHEREIN, THE SHARES WERE PURCHASED FROM M/S DPS SHARES AND SECURITIES P VT. LTD. AND M/S ROBINSON WORLDWIDE TRADE LTD., THE FAC TUAL MATRIX WAS CONSIDERED AND FINALLY THE SALE AND PURC HASE OF SHARES WERE HELD TO BE PROVED AND THUS ORDER TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS, FORTIFIES THE CASE OF THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER IS REP RODUCED HEREUNDER:- IN THIS GROUP OF CASES IDENTICAL ISSUES ARE RAISED . BOTH THE PARTIES AGREED THAT SINCE FACTS AND ISSUES INVOLVED ARE IDENTICAL, TH EREFORE, THE CASE OF SHRI ARVIND M. KARIA IN I.T.A.NO.787-MUM2010 MAY BE TAKEN UP FOR DETAILED HEARING. IN THIS CASE THE GROUNDS RAISED BY THE ASSES SEE ARE AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE GROSS SALE CONSIDERATION OF RS.23,44,985/-, CLAIMED AS GIVING RI SE TO LONG TERM CAPITAL GAINS, AS UNEXPLAINED CASH CREDIT U/S.68. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIR MING THE ADDITION OF RS.1,17,249/- BEING 5% OF THE GROSS SALE CONSIDERATI ON OF RS.23,44,985/- AS UNEXPLAINED EXPENDITURE U/S.69C ON ACCOUNT OF COMMISS ION/SERVICE CHARGES PAYABLE TO THE BROKER ALTHOUGH NO SUCH EXPE NDITURE WAS INCURRED BY THE APPELLANT. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT A SE ARCH WAS CONDUCTED IN THIS GROUP WHEREIN SOME CASH AND JEWELLERY WAS FOUND. THE SEARCH WAS ITA NO.121/MUM/2015 AJAY J. DOSHI 29 CONDUCTED ON THE SPECIFIC INFORMATION THAT THE ASSESS EE IN THIS GROUP HAD OBTAINED ARTIFICIAL CAPITAL GAINS BY MANIPULATING SH ARE TRANSACTIONS. IT WAS ALLEGED THAT ASSESSEE HAD OBTAINED BOGUS BACK DATED PUR CHASE BILLS AND SHARES AND RECEIVED THE DELIVERY IN PHYSICAL FORMAT AN D LATER ON THESE SHARES WERE SOLD AT THE STOCK EXCHANGE THROUGH ENGIN EERED TRANSACTIONS AVAILING BOGUS CAPITAL GAINS. IN THIS CASE THE BOGU S CAPITAL GAINS WERE SAID TO BE GENERATED ON THE PURCHASE AND SALE OF 15,500 S HARES OF M/S ROBINSON WORLDWIDE TRADE LTD. (ALSO KNOWN BY THE NAME M/S. ROBIN SON IMPEX INDIA LTD.). IT WAS NOTED THAT THE SHARES WERE SAID TO HAVE BEEN PURCHASED FROM M/S. DPS SHARES & SECURITIES PVT. LTD. A STATEMENT U /S.131 OF SHRI SUJAL C. SHAH DIRECTOR OF M/S. DPS SHARES & SECURITIES (P) LT D. WAS RECORDED DURING THE SURVEY CONDUCTED U/S.133A ON 18-1-2007. IN THIS S TATEMENT HE HAS SPECIFICALLY STATED THAT ACTUALLY NO PURCHASE TRANSA CTION IN THE SCRIP OF M/S ROBINSON WORLDWIDE TRADE LTD. WERE CARRIED OUT, BUT ONLY ACCOMMODATION BILLS WERE ISSUED. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ANOTHER DIRECTOR SHRI PRATIK C. SHAH OF M/S. DPS SHARES & SE CURITIES PVT. LTD. WAS CALLED TO THE OFFICE AND HE AGAIN ADMITTED THAT THES E TRANSACTIONS WERE ONLY ACCOMMODATION TRANSACTIONS DURING THE CROSS EXAMINATI ON. IT WAS ALSO STATED BY HIM THAT FOR PURCHASE OF THESE SHARES MADE BY M/S. DPS SHARES & SECURITIES PVT. LTD. FROM A THIRD PARTY SPECULATION B ILLS WERE ISSUED WHERE PROFITS WERE SHOWN IN SPECULATION BUT ACTUALLY THER E WAS NO SUCH TRANSACTIONS WHERE SPECULATION PROFIT WAS GENERATED. IT WAS FURTHER ADMITTED THAT SPECULATION TRANSACTIONS WERE NOT SHOWN IN THEIR BOOKS OF ACCOUNT. THEREAFTER, ASSESSEE WAS GIVEN SPECIFIC OP PORTUNITY FOR CROSS EXAMINATION OF SHRI PRATIK C. SHAH. THE ASSESSEE AV AILED THIS OPPORTUNITY AND HIS REPRESENTATIVE SHRI KETAN MEHTA EXAMINED SHRI PRATIK C. SHAH. EVEN DURING THE COURSE OF CROSS EXAMINATION SHRI PRATIK C . SHAH STATED THAT PURCHASE TRANSACTIONS OF M/S ROBINSON WORLDWIDE TRADE LTD. WERE BOGUS. IT WAS STATED THAT THOUGH PHYSICAL DELIVERY WAS GIVE N BUT SUCH PHYSICAL SHARES WERE GIVEN BY SHRI NARESH SAHU AND SHRI SHIRI SH C. SHAH. IT WAS ULTIMATELY SUBMITTED BEFORE THE AO THAT SHARES WERE ACTUALLY PURCHASED FOR WHICH BILLS WERE THERE AND THE SOURCE OF THE PURCHAS E WAS THE SPECULATION PROFIT EARNED BY THE ASSESSEE. IF THE BROKER HAS NOT SHOWN THOSE TRANSACTIONS IN HIS BOOKS, THEN IT WAS NOT ASSESSEE S FAULT. THE AO AFTER EXAMINING THE SUBMISSIONS OBSERVED THAT PURCHASE OF SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD. WERE EITHER SOURCED BY SU PPOSED SPECULATIVE GAINS OR BY PAYING CASH, WHICH MEANS TH E ASSESSEE IN THIS GROUP BAS BACK DATED THIS SUPPOSED PURCHASES AND SUCH SPECULA TIVE TRANSACTIONS WERE ALSO PROVED TO BE BOGUS. ON THE BASIS OF THESE OBSERVATIONS AND THE STATEMENT OF SHRI SUJAL C. SHAH AND SHRI PRATIK C. S HAH REGARDING BOGUS TRANSACTIONS, IT WAS CONCLUDED BY THE AO THAT CAPITAL GAINS GENERATED WAS BOGUS. 3. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT SH ARES OF M/S ROBINSON WORLDWIDE TRADE LTD. WERE PURCHASED ON 23-4-2003 @ RS. 1.47 PER SHARE AND THE SAME WERE SHOWN IN THE BALANCE-SHEET FOR THE YEAR 2004-05. THE ITA NO.121/MUM/2015 AJAY J. DOSHI 30 SOURCE OF PURCHASE OF THE SHARES WAS SPECULATION PR OFIT. THE SHARES WERE SOLD THROUGH ANUGRAH STOCK AND BROKING PVT. LTD. IN A.Y 2005-06 AND COPIES OF THE SALES BILLS WERE FURNISHED BEFORE THE AO. THE CONSIDERATION WAS RECEIVED BY ACCOUNT PAYEE CHEQUES. IT WAS ALSO P OINTED OUT THAT ORIGINALLY THE SHARES WERE ISSUED IN PHYSICAL FORMAT WHICH WERE DEMATERIALISED ON 30-11-2004. THUS, IT IS CLEAR THAT ALL EVIDENCE FOR PURCHASE AND SALE OF SHARES WAS THERE WHICH HAS BEEN IGNORED BY THE AO AND THE TRANSACTIONS WERE HELD TO BE BOGUS ONLY ON TH E BASIS OF THE STATEMENTS OF THE TWO DIRECTORS, NAMELY, SHRI SUJAL C. SHAH AND SHRI PRATIK C. SHAH OF M/S. DPS SHARES & SECURITIES PVT. LTD. IT WAS ALSO SUBMITTED THAT ONCE TRANSACTIONS OF PURCHASE AND SALES WERE ENTERED INTO BY THE ASSESSEE THERE WAS NO NEED TO VERIFY THE TRANSACTIONS BY HIM AS TO WHETHER SAME WERE THROUGH STOCK EXCHANGE OR RECORDED IN THE BOOKS OF THE BROKER. IT SEEMS DURING THE SEARCH ASSESSEE HAS ACCEPTED IN THE STATEMENT U/S.132(4) THAT THIS TRANSACTION WAS BOGUS. DURING THE APPELLA TE PROCEEDINGS IT WAS SUBMITTED THAT ASSESSEE HAD MADE THE SURRENDER U/S.132 [4] TO BUY PEACE OF MIND AND TO AVOID LITIGATION. SINCE DEPARTMENT HAD GONE AHEAD WITH THE LITIGATION, THEREFORE, THIS DECLARATION WAS WITHDRAW N. RELIANCE ON SOME CASE LAW WAS ALSO PLACED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OBSERVED THAT THERE WAS A RACKET GOING ON IN THE MAR KET IN PENNY STOCK WHICH WAS USED FOR BOOKING CAPITAL GAINS. IN THIS RA CKET STOCK INVOLVED WERE THAT OF M/S ROBINSON WORLDWIDE TRADE LTD, DATA B ASE FINANCE LTD., BAFFIN ENGG. PROJECT LTD. AND HINDUSTAN STOCKLAND LTD. THESE RACKETS WERE BUSTED BY THE INVESTIGATION WING AND SEARCHES WERE CO NDUCTED AT VARIOUS PLACES IN THE COUNTRY. THE MODUS OPERANDI FOR ADOPTI NG ENGINEERED BOGUS CAPITAL GAINS USING SUCH PENNY STOCK WAS THAT SOME KEY PLAYERS WERE INVOLVED WHICH CAN BE CALLED OPERATOR AND BENEFICIARIE S. THE OPERATOR IS A PERSON WHO MANIPULATES ALL THE TRANSACTIONS NECESSA RY TO FABRICATE THE CAPITAL GAINS ON ACCOUNT OF SHARES INCLUDING THE ARR ANGEMENT OF BILLS FOR SUCH TRANSACTIONS. THE BENEFICIARY IS A PERSON WHO PURCHASES ARTIFICIAL/BOGUS CAPITAL GAINS FROM THE OPERATOR BY PAYING THE GROSS AMOUNT OF SALE PRICE OF SUCH SHARES IN CASH. THE OPERATOR GIVES PHYSICAL SHARES TO THE BENEFICIARY, WHOSE MARKET VALUE IS ROUGHLY EQUI VALENT TO THE MONEY, THE BENEFICIARY INTENDS TO LAUNDER. SUCH SHARES WOULD BE ACCOMPANIED BY A BACKDATED CONTRACT NOTE SHOWING THE SALE OF SHARES T O THE BENEFICIARY AT LESS THAN A RUPEE OR JUST A FEW RUPEES PER SHARE, A S THEY WERE QUOTED EARLIER (ABOUT AN YEAR. OR SO). THE CONSIDERATION FROM BENEF ICIARY IS MOSTLY SHOWN IN CASH SO THAT THE BACKDATING OF THE BOGUS PURCHASE TRANSACTION IS CAMOUFLAGED. SOMETIMES, BOGUS SPECULATION PROFIT GEN ERATED BY HAWALA BILLS IS ALSO USED FOR THIS PURPOSE. IN SOME RARE CA SES, CHEQUE PAYMENTS ARE SHOWN WHEREIN THE PAYMENTS ARE SEEN TO E AT A LATER DATE FOR OBVIOUS REASONS. SINCE THE SHARES CANNOT BE SOLD IN PHYSICAL FORMAT, THE BENEFICIARY SENDS THE SHARES TO DEPOSITARY TO BE DEMATERIALIZED AND CONVERTED INTO ELECTRONIC FORM. THE BENEFICIARY SELLS SUCH DEMATERI ALIZED SHARES ON SECONDARY MARKET AT THE PREVALENT PRICE AND RECEIVES CHEQUE PAYMENT THEREBY CONVERTING BLACK MONEY INTO WHITE. DEPENDING UPON HOW FAR THE ITA NO.121/MUM/2015 AJAY J. DOSHI 31 CONTRACT NOTE FOR PURCHASE OF SUCH SHARES WAS BACKDA TED, THE BENEFICIARY LAUNDERS THE MONEY BY EITHER PAYING ZERO OR 10% CAPI TA GAIN TAX (DEPENDING ON THE RATES OF TAXATION OF CAPITAL GAINS FOR THE RELEVANT A.Y.) IN SOME CSES IT IS GATHERED THROUGH MARKET INTELLIGENCE THAT THE OPERATORS BY USING BENAMI ENTITIES/NAME LENDERS RECYCLE THE SAME SET OF SHARES SEVERAL TIMES OVER BY RE-MATERIALIZATION. I.E., CONVERSION OF SHARES FROM ELECTRONIC FORM TO PHYSICAL, FORM AND THEREBY EXTENDING THE FACI LITY OF LAUNDERING BLACK MONEY TO ANOTHER BENEFICIARY. IT HAS BEEN FOU ND DURING THE COURSE OF INVESTIGATION THAT THIS CYCLE OF REMATERIALIZATION/ DEMATERILZATION HAS, BEEN USED SEVERAL TIMES OVER IN THE CASE OF SUCH PENNY S TOCKS. DURING SUCH PROCESS, HUGE AMOUNT OF BLACK MONEY WERE CONVERTED B Y FABRICATING ARTIFICIAL CAPITAL GAINS. 4. HE FURTHER OBSERVED THAT ASSESSEE IS ALSO ONE OF THE BENEFICIARIES OF THIS PENNY STOCK SCAM WHICH WAS PROVED DURING THE ASSESSM ENT PROCEEDINGS THROUGH THE STATEMENT OF DIRECTORS OF M/S. DPS SHARE S & SECURITIES PVT. LTD. EVEN DURING THE CROSS EXAMINATION, DIRECTORS OF M/S. DPS SHARES & SECURITIES PVT. LTD ADMITTED THAT THESE TRANSACTIONS W ERE ONLY ACCOMMODATION TRANSACTIONS. HE FURTHER OBSERVED THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE THE PURCHASES TRANSACTIONS AND NO SOURCE FOR THE SAME HAS BEEN SHOWN. THE TRANSACTION OF PURCHASE OF SO C ALLED TRANSACTION OF SPECULATION PROFIT WAS NOT ROUTED THROUGH BSE & NSE . THE LD. CIT(A) THEREAFTER DISCUSSED THE STATEMENTS OF DIRECTORS OF M/S. DPS SHARES & SECURITIES PVT. LTD AND ALSO REFERRED TO CASE LAWS AN D ULTIMATELY HELD THAT THE TRANSACTIONS WERE BOGUS. 5. BEFORE US, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE BASIS OF THE GENERAL OBSERVATION REGARDING PENNY STOCK SCAM AND HAS NOT EXAMINED THE IS SUE PROPERLY. HE ARGUED THAT ASSESSEE HAS PURCHASES THE SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD ON 17-4-2003 FOR WHICH CONTRACT NOTE WAS AV AILABLE. HE REFERRED TO VARIOUS DOCUMENTS IN THE PAPER BOOK AND POINTED OU T THAT ASSESSEE HAD EARNED SOME SPECULATION PROFIT IN A.Y 2004-05 WHICH WAS USED FOR THE PURPOSE OF PURCHASE OF SHARES OF M/S ROBINSON WORLDW IDE TRADE LTD. SUCH PROFITS WERE DULY RETURNED IN THE RETURN OF INCOME FI LED FOR A.Y 2004-05 WHICH HAS BEEN ACCEPTED AND EVEN PURCHASES WERE REFL ECTED IN THE BALANCE SHEET WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT. OR IGINALLY THE SHARES WERE ISSUED IN PHYSICAL FORMAT WHICH GOT TRANSFERRE D IN ASSESSEES NAME AND ONLY ONE SHARE CERTIFICATE WAS ISSUED BY THAT COM PANY WHICH WAS LATER ON SPLIT INTO 150 SHARE CERTIFICATES AND THEREAFTER SAME WERE DEMATERIALISED TO DE-MAT ACCOUNT WITH THE DEPOSITORY KN OWN AS ACTION FINANCIAL SERVICES LTD. SUCH DE-MAT SHARES WERE SOLD THROUGH ANUGRAH STOCK BROKING LTD. ON 9-12-04 TO 6-1-05 AND THE PAYME NTS HAVE BEEN RECEIVED THROUGH CHEQUES. HE ARGUED THAT ONCE A CLIEN T GOES TO THE BROKERS OFFICE HE CANNOT GO BEHIND THE SCENE TO FIND OUT WHET HER THE TRANSACTION ITA NO.121/MUM/2015 AJAY J. DOSHI 32 HAS BEEN CARRIED OUT THROUGH THE STOCK EXCHANGE OR I T IS A OFF MARKET TRANSACTION. IN ANY CASE, EVEN UNDER THE REGULATION OFF MARKET TRANSACTIONS ARE PERMITTED BY THE BROKERS. HE THEN REFERRED TO THE CROSS EXAMINATION OF SHRI PRATIK C. SHAH IN WHICH IN REPLY TO QUESTION N O.22 IT WAS AGREED BY HIM THAT SUCH BOGUS BILLS WERE ISSUED AT THE INSTANCE OF SHRI NARESH SAHU AND PHYSICALLY SHARES WERE GIVEN TO MS. JIGNA A. KARIYA [I.E. ONE OF THE ASSESSEE BEFORE US]. HOWEVER, THE REVENUE HAS NOT BROUGHT AN Y EVIDENCE ON RECORD TO SHOW THAT SHRI NARESH SAHU WAS ACTING ON BEHALF OF THE ASSESSEE AND THIS PERSON WAS NOT KNOWN TO THE ASSESSEE AT ALL AND THE RE IS NO EVIDENCE TO PROVE THAT THIS PERSON WAS KNOWN TO THE ASSESSEE. I N ANY CASE, IN THE SAME REPLY IT HAS BEEN CLEARLY ADMITTED BY SHRI PARTIK SHA H THAT PHYSICALLY SHARES WERE GIVEN TO THE ASSESSEE. SIMILARLY, IN REPLY TO QUESTION NO.34 IT HAS BEEN AGAIN REITERATED THAT DELIVERY OF PHYSICAL SHARES W AS GIVEN TO THE ASSESSEE. THE ASSESSEE WAS NOT REQUIRED TO FIND OUT ANYTHING MO RE THAN THIS BECAUSE AGAINST THE PAYMENT IN TERMS OF SPECULATION PROFIT ASSESSEE WAS GIVEN PHYSICAL DELIVERY OF THE SHARES, THEREFORE, THIS STA TEMENT CANNOT BE RELIED UPON AT ALL. HE CONTENDED THAT ASSESSEE HAS PROVED TH E PURCHASE IN THE EARLIER YEARS WHICH HAS BEEN ACCEPTED BY THE DEPARTME NT AND NOTHING MORE WAS REQUIRED TO BE PROVED. THE INCOME GENERATED FROM S UCH SALES WAS OFFERED UNDER THE HEAD LONG TERM CAPITAL GAIN WHICH PROVED THAT ASSESSEE HAD GENERATED GENUINE CAPITAL GAIN. HE ALSO RELIED ON THE FOLLOWING DECISIONS: 1. MUKESH R. MAROLIA VS. ACIT 6 SOT 247 (MUM) 2. DCIT VS. MS. INDIRAMMA 6SOT 261 (BANG) 3. I.T.A.NOS.2669 & 2670-M-06 IN THE CASE OF SMT. P USHPA R. SHAH & SHRI RAMESH V. SHAH VS. ITO 4. I.T.A.NO.1718-M-06 & ORS. IN THE CASE OF SHRI PO PATLAL BACHUBHAI NANDU VS. ACIT & ORS. 6. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED THE OR DER OF THE AO AND THE CIT(A). HE ALSO FILED A LETTER DATED 14-11-11 AND POINT ED OUT THAT WHEN THE ISSUE REGARDING THE PAPER BOOK WAS TAKEN UP WITH TH E AO THE THEN DCIT-12, HAS REPORTED THAT PAGES 42 TO 45 WERE NOT TRACEABLE IN THE RECORDS OF THE OFFICE. A COPY OF THE LETTER OF DCIT HAS BEEN ENCLO SED WITH THIS LETTER. HE ALSO STRONGLY RELIED ON THE DECISION OF THE HON'BLE S C IN THE CASE OF SUMATI DAYAL VS. CIT [214 ITR 801]. 7. IN THE REJOINDER, LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT THE REPLY OF THE AO TO THE CIT DR SHOWS THAT PAGES 42 TO 45 ARE NOT TRACEABLE, BUT THESE PAPERS WERE FILED ALONG WITH ANNEXURE K IN LETTER DAT ED 5-11-08, COPY OF WHICH HAS BEEN FURNISHED BEFORE US. HE POINTED OUT T HAT PAGE 42 IS A COPY OF THE SHARE TRANSFER FORM DULY EXECUTED BY THE TRAN SFEROR AND TRANSFEREE AND PAGE 45 IS A COPY OF THE SHARE CERTIFICATE SHOWI NG 15500 SHARES HAVING DISTINCTIVE NOS.3948701 TO 3964200. HE ALSO PRODUCED COPIES OF 155 SHARE ITA NO.121/MUM/2015 AJAY J. DOSHI 33 CERTIFICATES WHICH WERE LATER ON ISSUED BY M/S ROBIN SON WORLDWIDE TRADE LTD BY SPLITTING ONE CERTIFICATE IN TO 155 CERTIFICA TES WHICH PROVES OWNERSHIP OF THE SHARES. HE ALSO POINTED OUT THAT IT IS NOT CORRECT STATEMENT BY THE DCIT THAT M/S ROBINSON WORLDWIDE TRADE LTD IS NO T IN EXISTENCE AND IN THIS REGARD HE FILED COPIES OF LIST CONTAINING THE NAMES OF THE COMPANIES BY THE MINISTRY OF CORPORATE AFFAIRS, WHI CH CLEARLY SHOWS THAT M/S ROBINSON WORLDWIDE TRADE LTD IS EXISTING AT SR.NO. 2 AND THE NAME OF THE COMPANY HAS BEEN CHANGED TO SUN & SINE WORLDWIDE LTD. AND UNDER COLUMN GLM IT IS SHOWN TO BE THE ACTIVE COMPANY. HE ALSO FILED A COPY TAKEN FROM BSE INDIA SITE WHICH SHOWS THAT THE NAME OF THE COMPANY WAS CHANGED BY EXTRA ORDINARY GENERAL MEETING FROM M/S ROBINSON WORLDWIDE TRADE LTD TO SUN & SINE WORLDWIDE LTD. HE ALSO FILED ANOT HER COPY FROM BSE WHICH SHOWS THAT SHARES WERE QUOTED ON 6 TH SEPT EMBER, 2011 AND PRICE AT THAT MOMENT WAS RS.36.75 PER SHARE. ALL TH ESE DOCUMENTS CLEARLY SHOW THAT THE COMPANY IS VERY MUCH IN EXISTENCE UNDE R THE NEW NAME SUN & SINE WORLDWIDE LTD. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE MAINLY ON GENERALIZATION THAT THERE WAS A PENNY STOCK SCAM WHICH WAS UNEARTHED BY THE DEPARTMENT AND ALSO THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE THE PURCHASE OF SHARES A ND IT WAS AN ACCOMMODATION TRANSACTION AS STATED BY THE DIRECTORS OF M/S. DPS SHARES & SECURITIES PVT. LTD. THE LD. CIT(A) AS WELL AS THE LD. DR HAS MAINLY RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CAS E OF SUMATI DAYAL VS. CIT [SUPRA]. IN THAT CASE THE FACTS WERE AS UNDER: THE APPELLANT CARRIED ON BUSINESS AS A DEALER IN ART PIECES, ANTIQUES AND CURIOS AT BANGALORE. DURING THE ASSESSMENT YEAR 197 1-72, SHE CLAIMED THAT RECEIVED A TOTAL AMOUNT OF RS.3,11,831 BY WAY OF RAC E WINNINGS IN JACKPOTS AND TREBLE EVENTS IN RACES AT TURF CLUBS IN BANGALOR E, MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE APPELLANT IN THE CAPITAL ACCOUNT IN THE BOOKS. FOR THE ASSESSMENT YEAR 1972- 73, SHE CLAIMED RECEIPTS OF RS.93500/- AS RACE WINNINGS IN TWO JACK POTS AT BANGALORE AND MADRAS AND THE SAID AMOUNT WAS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE INCOME-TAX OFFICER THE INCLUDED THE AMOUN T AS INCOME FROM OTHER SOURCES AND ASSESSED THEM. THE APPELLANT REFERR ED MATTER TO THE SETTLEMENT COMMISSION. THE SETTLEMENT COMMISSION BY A MAJORITY HELD THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUIN E FOR THE FOLLOWING REASONS: (I) THE APPELLANT'S KNOWLEDGE OF RACING IS VERY MEAGRE. (II) A JACKPOT IS A STAKE OF FIVE EVENTS IN A SINGLE DAY AN D ONE CAN BELIEVE A REGULAR AND EXPERIENCED PUNTER CLEARING A JACKPOT OCCASIONALL Y BUT THE CLAIM OF THE APPELLANT TO HAVE WON A NUMBER OF JACKPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE BUT AT THREE DIFFERENT CENTRES, NAMELY, MADRAS, BANGALORE AND HYDERABAD APPEARS, PRIMA FACIE, TO BE WI LD AND CONTRARY TO THE STATISTICAL THEORIES AND EXPERIENCE OF THE FREQU ENCIES AND PROBABILITIES. (III) THE APPELLANT'S BOOKS DO NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATELY PRECEDING DAYS FOR THE PURCHASE OF JACKPO T COMBINATION ITA NO.121/MUM/2015 AJAY J. DOSHI 34 TICKETS, WHICH ENTAILED SIZABLE AMOUNTS VARYING GEN ERALLY BETWEEN RS. 2,000 AND RS. 3,000. THE DRAWINGS RECORDED IN THE BOOK S CANNOT BE CO- RELATED TO THE VARIOUS RACING EVENTS AT WHICH THE AP PELLANT MADE THE ALLEGED WINNINGS. (IV) WHILE THE APPELLANT'S CAPITAL ACCOUNT WAS CREDITED WITH THE GROSS AMOUNTS OF RACE WINNINGS, THERE WERE NO DEBITS EITHER FOR EXPENSES AND PURCHASE OF TICKETS OR FOR LOSSES. (V) IN VIEW OF THE EXCEPTIONAL LUCK CLAIMED TO HAVE BEEN ENJOYED BY THE APPELLANT, HER LOSS OF INTEREST IN RACES FROM 1972 ASSUMES SIGNIFICANCE. W INNINGS IN RACING BECAME LIABLE TO INCOME-TAX FROM APRIL 1, 1972, BUT ONE WOULD NOT GIVE UP AN ACTIVITY YIELDING OR LIKELY TO YIELD A LARGE INCOM E MERELY BECAUSE THE INCOME WOULD SUFFER TAX. THE POSITION WOULD BE DIFFER ENT, HOWEVER, IF THE CLAIM OF WINNINGS IN RACES WAS FALSE AND WHAT WERE PASSED OFF AS SUCH WINNINGS REALLY REPRESENTED THE APPELLANT'S TAXABLE INCOME FROM SOME UNDISCLOSED SOURCES. ON THE ABOVE FACTS IT WAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THE SETTLEMENT COMMISS ION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLAN T'S CLAIM ABOUT THE AMOUNT BEING HER WINNINGS FROM RACES IS NOT GENUINE . FROM THE ABOVE DECISION IT IS CLEAR THAT HUMAN PROBA BILITIES OR CIRCUMSTANTIAL EVIDENCES CAN BE TAKEN INTO ACCOUNT F OR DECIDING AN ISSUE. HOWEVER, IN THAT CASE THE CIRCUMSTANCES WERE SO STR ONG AGAINST THAT THE DOCUMENTARY EVIDENCE WAS IGNORED BY THE HON'BLE APEX C OURT. BUT IN THE CASE OF THE ASSESSEE BEFORE US IT SHOWS THAT CIRCUM STANTIAL EVIDENCE IS NOT SO OVER WHELMING AND RATHER THE DOCUMENTARY EVIDENCE C LEARLY PROVES THE TRANSACTIONS. 9. FIRST LET US DEAL WITH THE CONTENTIONS OF THE LD. DR THAT SOME PAPERS IN THE PAPER BOOK AT PAGE NOS.42 TO 45 WERE NOT TRACEA BLE IN THE FILE OF THE AO. THE SECOND ALLEGATION VIDE LETTER DATED 11-11-11 IS TH AT THE COMPANY M/S ROBINSON WORLDWIDE TRADE LTD IS NOT IN EXISTENCE. PAGES 42 AND 43 OF THE PAPER BOOK, WHICH IS A COPY OF THE TRANSFER FORM SI GNED BY THE TRANSFEROR AND THE TRANSFEREE. PAGE 4 IS A COPY OF THE COVERING LETTER BY THE COMPANY TO THE ASSESSEE TRANSFERRING THE SHARES BY WAY OF A JU MBO CERTIFICATE I.E. ONE CONSOLIDATED CERTIFICATE IN THE NAME OF THE ASSESSEE AND PAGE-45 IS A COPY OF THE SHARE CERTIFICATE. IT HAS BEEN POINTED OUT THAT SUCH PAPERS WERE FILED WITH THE AO WITH THE LETTER DATED 5-11-08 ALONG WITH ANNEXURE K AND COPY OF THIS LETTER HAS BEEN FURNISHED BEFORE US WHICH IS PLACED ON RECORDS. IN THE COLUMN DEALING WITH ANNEXURE K IT IS STATED THAT VARI OUS DOCUMENTS ARE BEING FURNISHED TO PROVE THE GENUINENESS OF PURCHASE S WHICH INCLUDES THE TRANSFER FORM PLACED AT PAGES 42 AND 43 AND COPY OF T HE SHARE CERTIFICATE AT PAGE 45. THIS MAKES IT CLEAR THAT DOCUMENTS WERE FIL ED BEFORE THE AO BECAUSE IT HAS NOT BEEN DENIED THAT LETTER DATED 5-11- 08 WAS FILED BEFORE THE AO. IN ANY CASE, DURING THE HEARING PHOTO COPIES OF 150 CERTIFICATES ITA NO.121/MUM/2015 AJAY J. DOSHI 35 ISSUED IN THE NAME OF THE ASSESSEE BY SPLITTING THE JUMBO CERTIFICATE, HAVE BEEN FILED, WHICH SHOW THAT SHARES WERE IN THE NAME OF THE ASSESSEE. A DOCUMENT FROM THE MINISTRY OF CORPORATE AFFAIRS, GOV ERNMENT OF INDIA FROM THE CITE HTTP://WWW,.MCA,GOV.IN SERIAL NOS.1 & 2 OF THE SAME READ AS UNDER: OLD NAME NEW NAME (1) ROBINSON IMPEX (INDIA) LTD. SUN AND SHINE WORLDWI DE LTD. (2) M/S ROBINSON WORLDWIDE TRADE LTD SUN AND SHINE WOR LDWIDE LTD. THIS CLEARLY SHOWS THAT ROBINSON IMPEX (INDIA) LTD. AS WELL AS M/S ROBINSON WORLDWIDE TRADE LTD WERE MERGED AND THE NEW NAME OF THE COMPANY IS SUN AND SHINE WORLDWIDE LTD. THE ABOVE EXTRACT HAS BEEN TAK EN ON 12-12-2011 WHICH SHOWS THAT THE COMPANY IS VERY MUCH IN EXISTE NCE EVEN AS ON TODAY. THIS IS FURTHER SUPPORTED BY ANOTHER EXTRACT FROM M/ S. DPS SHARES & SECURITIES PVT. LTD TAKEN FROM WWW.BSEINDIA.COM. THIS EXTRACT SHOWS THE FOLLOWING INFORMATION: OUTCOME OF EGM 02-05-2011 18:36 M/S ROBINSON WORLDW IDE TRADE LTD HAS INFORMED THAT THE SHAREHOLDERS AT THE EXTRA ORDINARY GENERAL MEETING (EGM) OF THE COMPANY HELD ON MAY 02,2011, INTER ALIA, HAV E TAKEN THE FOLLOWING DECISIONS: 1) TO CHANCE TO THE NAME OF THE COMPANY FROM M/S R PBINSON WORLDWIDE TRADE LTD. TO SUN AND SHINE WORLDWIDE LTD. THIS CONFIRMS THAT THE NAME OF THE COMPANY WAS CHANGED IN THE EXTRA ORDINARY GENERAL MEETING HELD ON 2-5-2011. PERHAPS BECAUSE OF THE CHANGE OF N AME, THE AO HAS NOT BEEN ABLE TO CONFIRM THE EXISTENCE OF THE COMPANY. THE THIRD DOCUMENT IS ALSO TAKEN FROM THE BSE SITE SHOWS THAT SHARES WERE TRADED ON 6-9-2011 AT RS.36.75. THIS CLEARLY SHOWS THAT SHARES OF THE COM PANY ARE STILL BEING TRADED BUT UNDER THE NEW NAME. IN THE LIGHT OF THESE DOCUMEN TS, WE FIND NO MERIT IN THE OBJECTION RAISED IN THE LETTER OF THE DCIT -12, ADDRESSED TO THE CIT DR, WHICH WAS PLACED BEFORE US. 10. THE SECOND IMPORTANT ISSUE ON THE BASIS OF WHICH THE CLAIM OF THE ASSESSEE FOR CAPITAL GAIN WAS HELD TO BE BOGUS WAS T HE STATEMENT OF DIRECTOR OF M/S. DPS SHARES & SECURITIES PVT. LTD. THE AO HAS FAIRLY GIVEN CROSS EXAMINATION TO THE ASSESSEE OF THE DIRECTOR OF M/S. DPS SHARES & SECURITIES PVT. LTD. SHRI PRATIK SHAH DIRECT OR OF M/S. DPS SHARES & SECURITIES PVT. LTD WAS CROSS EXAMINED BY THE REPRES ENTATIVE OF THE ASSESSEE SHRI KETAN MEHTA ON 20-11-2008 AND AO HAS REPRODUCED T HE WHOLE CROSS EXAMINATION. THE QUESTION AND ANSWER TO QS. NOS.22 & 34 READ AS UNDER: ITA NO.121/MUM/2015 AJAY J. DOSHI 36 Q.22. YOU HAVE SLATED IN YOUR STATEMENT U/S. 13] ON ]8.IJ.2008 THAT ALL THE BOGUS BILLS WERE ISSUED BY YOU AT THE INSTRUCTION OF MR.NARESH SABOO AND MR. SHIRISH C.SHAH. DO YOU AGREE WITH THE SAME? ANS. YES I AGREE. THE BOGUS BILLS WERE ISSUED BY .N Y COMPANY AT THE INSTRUCTIONS OF MR.NARESH SABOO. AS THESE HILLS WER E BOGUS AND OFF MARKET TRANSACTION. THE PHYSICAL SHARES WHICH WERE GIVEN B Y US TO THE SAID MS..JIGNA A.KARIYA WERE RECEIVED BY US FROM NARESH SAHOO AND WE RE FORWARDED BY US TO MS.JIGNA .A. KARIYA, BECAUSE THESE TRANSACTIONS WERE NOT ON THE FLOOR, THE SAID PHYSICAL SHARES HAD NOT CONIC FROM BSE. HENCE T HIS WAS AN ACCOMMODATION TRANSACTION, WE RECEIVED THE SHARES FR OM NARESH SAHOO AND FORWARDED TO MS..JIGNA A.KARIYA. Q.34. DO YOU WANT TO SAY ANYTHING ELSE? ANS. YES. ALL THESE ACCOMMODATION HILLS/BOGUS BILL S WERE GIVEN BY OUR COMPANY FOR THE ACCOMMODATION OF THE SAID ASSESSEES F OR THE LTCG PURPOSE AND THE DELIVERY OF PHYSICAL SHARES WHICH WERE GIVEN BY US TO THE SAID ASSESSEES WERE RECEIVED BY US FROM MR.NARESH SABOO A ND HANDED OVER TO THE SAID ASSESSEES. THE ABOVE CLEARLY SHOWS THAT THE SO CALLED BOGUS SH ARES WERE ISSUED ON THE INSTRUCTIONS OF SHRI NARESH SABOO. BEFORE US IT WAS DENIED THAT ASSESSEE HAS ANYTHING TO DO WITH SHRI NARESH SABOO. NEITHER THE A O NOR THE LD. CIT(A) HAS BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT SHRI NAR ESH SABOO HAS SOME CONNECTION WITH THE ASSESSEE. EVEN LD. CIT DR HAS NO T PLACED ANY EVIDENCE TO SHOW THAT SHRI NARESH SABOO WAS ACTING ON BEHALF OF THE ASSESSEE. SECONDLY, SHRI PRATIK SHAH IN ANSWER TO BOTH QUESTION NOS.22 & 34 HAS CLEARLY ADMITTED THAT PHYSICAL DELIVERY OF THE SHARES WAS GIVEN TO TH E ASSESSEE. NOW THE QUESTION IS HOW ASSESSEE IS GOING TO FIND OUT WHETH ER THIS TRANSACTION WAS BOGUS WHEN PHYSICAL DELIVERY HAS BEEN HANDED OVER TO THE ASSESSEE. THE AUTHORITIES BELOW HAVE ALSO DOUBTED THE SOURCE FOR PURCHASES. AS POINTED OUT BY THE LD. COUNSEL ASSESSEE HAS EARNED SPECULATION PR OFIT AMOUNTING TO RS.28,941/- WHICH HAS BEEN INCLUDED IN THE RETURN OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES FOR A.Y 2004-05, A COPY OF THE COMPUTATION IS ON PAGES 22 & 23 OF THE PAPER BOOK AND THIS HAS BEEN AC CEPTED BY THE DEPARTMENT. THE ASSESSEE HAS ALSO FILED THE BALANCE S HEET IN WHICH INVESTMENT IN SHARES HAS BEEN SHOWN AT RS.1,45,06,0 54/- AND IN THE ANNEXURE SHOWING THE DETAILS OF INVESTMENT IN M/S ROBINSON WO RLDWIDE TRADE LTD SHARES HAVE BEEN INCLUDED AT 15500 SHARES AMOUNTING TO RS.28810.54. THIS PURCHASE HAS TO BE TREATED AS ACCEPTED BECAUSE THIS B ALANCE SHEET WAS FILED IN A.Y 2004-05 AND NO ADVERSE INFERENCE HAS BEEN TAKEN I N THAT YEAR. THESE DOCUMENTS ARE AVAILABLE AT PAGES 24 TO 26 OF THE PAP ER BOOK. THE ASSESSEE HAD ALSO FILED THE CONTRACT NOTE FOR SALE AND PURCHASE OF SHARES GENERATING SPECULATING PROFIT FILED AT PAGES 36 & 37 OF THE PAP ER BOOK. THE CONTRACT NOTE FOR PURCHASE OF 15500 SHARES OF M/S ROBINSON WORLDWI DE TRADE LTD FROM M/S. DPS SHARES & SECURITIES PVT. LTD HAS BEEN FILED AT PAGE-38 OF THE PAPER ITA NO.121/MUM/2015 AJAY J. DOSHI 37 BOOK AND THE PARTICULARS READ AS UNDER: XXXXXXXXXXXXXXXXXXXXXXXXXXXX THE ABOVE PARTICULARS WOULD NOT INDICATE THAT IT WAS A BOGUS TRANSACTION. IN ANY CASE, ASSESSEE HAS NO NEED TO KNOW WHETHER THE T RANSACTION WAS BOGUS OR NOT BECAUSE EVEN INVOICE HAS BEEN ISSUED BY M/S. DPS SHARES & SECURITIES PVT. LTD FOR PURCHASE OF THESE SHARES, COPY OF WHICH IS PLACED AT PAGE 39 OF THE PAPER BOOK AND DELIVERY WAS ALSO GIVEN WHICH IS AT P AGE 40 OF THE PAPER BOOK. LATER ON ASSESSEE FILED AN APPLICATION FOR TRANSFER OF THESE SHARES AND WE HAVE ALREADY DISCUSSED THE PARTICULARS OF TRANSFER FORM. U LTIMATELY, A JUMBO SHARE CERTIFICATE SHOWING 15500 SHARES WAS ISSUED BY THE C OMPANY, COPY OF WHICH IS AT PAGE 45 OF THE PAPER BOOK. LATER ON ASSESSEE LODGED A DEMAT REQUEST WITH ACTION FINANCIAL SERVICES (INDIA) LTD. FOR DEMA T OF 15500 SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD AND COPY OF THAT REQUEST I S AVAILABLE AT PAGE 46. THE DEMAT ACCOUNT STATEMENT OF THE ASSESSEE WITH ACTION FINANCIAL SERVICES (INDIA) LTD. SHOWS THAT 15500 SHARES HAVE B EEN DEMATERIALISED. WE FAIL TO UNDERSTAND HOW THE SHARES WERE ACTUALLY TRANS FERRED IN PHYSICAL FORM AND LATER ON DEMATERIALISED AND HOW THIS WHOLE PROCESS CAN BE CALLED BOGUS. THIS CANNOT BE CALLED BOGUS UNLESS THE CONNIVANCE OF M/S ROBINSON WORLDWIDE TRADE LTD AND ACTION FINANCIAL SERVICES (INDI A) LTD. IS ALSO ALLEGED AND PROVED. BUT NO ENQUIRY SEEMS TO HAVE BEEN CONDUCTE D WITH THESE ENTITIES. ULTIMATELY, THE SHARES HAVE BEEN SOLD THRO UGH ANUGRAH STOCK AND BROKING PVT. LTD. ON VARIOUS DATES AS UNDER: XXXXXXXXXXXXXXXXXXX THE CONTRACT NOTES FOR THE ABOVE SALES ARE PLACED IN THE PAPER BOOK AT PAGES 48 TO 55. THE ABOVE SALES HAVE BEEN REFLECTED IN THE LATER DEMAT ACCOUNT WITH ACTION FINANCIAL SERVICES (INDIA) LTD., COPY OF WHICH IS AT PAGES 57 AND 58 OF THE PAPER BOOK. FROM THE ABOVE IT IS CLEAR THAT ASS ESSEE HAS PROVED THE PURCHASES AS WELL AS THE SALES TRANSACTIONS. THE SH ARES HAVE BEEN SOLD THROUGH BSE AND IT IS NOT ALLEGED THAT THESE TRANSACT IONS ARE ALSO OFF MARKET. ALL THESE FACTS CLEARLY PROVE THAT THE TRANSACTIONS ARE GENUINE AND THE SAME CANNOT BE DOUBTED UNLESS AND UNTILL THE OTHER PARTICI PANTS LIKE DEPOSITORY KNOWN AS ACTION FINANCIAL SERVICES (INDIA) LTD. IS A LSO PROVED TO BE BOGUS OR IN CONNIVANCE WITH THE PENNY STOCK SCAM AND EVEN THE SALE CONDUCTED THROUGH ANUGRAH STOCK AND BROKING PVT. LTD. IS PROVED TO BE BOGUS. IN OUR OPINION, WHEN OVERWHELMING DOCUMENTARY EVIDENCE IS A VAILABLE TO PROVE THE PURCHASE AND SALE TRANSACTIONS PART OF WHICH HAS ALR EADY BEEN ACCEPTED BY THE REVENUE IN A.Y 2004-05, THEN A MERE STATEMENT B Y THE BROKER WHO HAS SOLD THE SHARES TO THE ASSESSEE THAT THIS WAS AN ACC OMMODATION ENTRY CANNOT LEAD TO A CONCLUSION THAT THE WHOLE TRANSACTION WAS BOGUS. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE SALE AND PURCHASE OF THE SHARES STAND PROVED AND SHOULD BE ASSESSED UNDER THE HEAD CAPITA L GAINS. ITA NO.121/MUM/2015 AJAY J. DOSHI 38 3.8. IDENTICALLY, IN THE CASE OF LATE SMT. KANCHAN BEN J. SHAH VS INCOME TAX OFFICER (ITA NO.6544/MUM/2011 ) ORDER DATED 18/02/2016, THE SALE CONSIDERATION ON S ALE OF SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD. AS INC OME FROM OTHER SOURCES INSTEAD OF INCOME FROM LONG TERM CAPITAL GAINS BY HOLDING THE PURCHASE TRANSACTION OF SAID S HARES AS NOT GENUINE WAS CONSIDERED BY THE TRIBUNAL AND FINA LLY THE APPEAL OF THE ASSESSEE WAS ALLOWED DIRECTING THE AS SESSING OFFICER TO ACCEPT THE LONG TERM CAPITAL GAIN AS RET URNED BY THE ASSESSEE. THE RELEVANT PORTION OF THE AFORESAID ORD ER DATED 18/02/2016 IS REPRODUCED HEREUNDER FOR READY REFERE NCE AND ANALYSIS:- THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST T HE ORDER BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 22, MUMBAI ( CIT(A) FOR SHORT) DATED 16/08/2011 , THE ASSESSEES APPEAL CONTESTING ITS A SSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER FOR SHO RT) FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED FOLLOWING REVISED GROUNDS O F APPEAL IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL:- 1) THE LEARNED CIT(A) ERRED IN TREATING SALE CONSIDER ATION OF RS.9,19,015/- ON SALE OF SHARES OF M/S. ROBINSON WORLDWIDE TRADE LTD. AS INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM LONG TERM CAPITAL GAI NS BY HOLDING THE PURCHASE TRANSACTION OF SAID SHARES AS NOT GENUINE WITHOUT AP PRECIATING THAT SAID SHARES WERE SOLD THROUGH REGISTERED BROKER AND SALE OF SAID SH ARES IS CONFIRMED BY BSE, SAID SHARES WERE ENDORSED IN FAVOUR OF ASSESSEE I N PHYSICAL FORMAT BY THE COMPANY & THE SAID SHARES WERE DEMATTED AND SUCH SALE TRANSACTION IS NOT TREATED AS NOT GENUINE BY A.O. & CIT(A). 2) THE LEARNED CIT(A) ERRED IN TREATING PURCHASE TRAN SACTION OF SHARES OF M/S. ROBINSON WORLDWIDE TRADE LTD. AS NOT GENUINE WITHOUT AP PRECIATING THAT A.O WAS UNABLE TO AFFORD CROSS EXAMINATION OF MR. RAJKUM AR MASALIA TO ASSESSEE, MR RAJKUMAR MASALIA HAD RETRACTED HIS STATEMENT AND ASSES SEE HAD PRODUCED AFFIDAVIT OF MR PRATIK C SHAH DIRECTOR OF BROKING C OMPANY WHO HAD EXECUTED PURCHASE TRANSACTION FOR ASSESSEE. 3) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND DERIVES INCOME FROM SALARY, BUSINESS, CAPITAL GAINS AND INCO ME FROM OTHER SOURCES. THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO ) ENQUIRED THE DETAILS OF ITA NO.121/MUM/2015 AJAY J. DOSHI 39 PROFIT EARNED ON SALE OF SHARES. THE ASSESSEE FURNI SHED THE DETAILS OF SUCH PROFIT AND FILED COPIES OF PURCHASE AND SALE BILLS, BROKERS NOTES AND SOURCE OF FUNDS FROM WHICH IT PURCHASED THE SHARES ON WHICH CAPITAL GAINS WERE EARNED. FROM THE DETAILS , IT WAS SEEN BY THE AO THAT THE ASSESSE E HAS EARNED LONG TERM CAPITAL GAIN ON SALE OF 10,000 SHARES OF ROBINSON WORLDWIDE T RADE LTD. [FORMERLY KNOWN AS ROBINSON IMPEX. AS PER THE SUBMISSIONS MADE , THE ASSESSEE HAD PURCHASED THESE SHARES @ RS. 1.30 PER SHARE FOR THE TOTAL CONSIDERATION OF RS. 13,210.43 INCLUDING BROKERAGE AND TAXES, WHICH WAS P URCHASED AGAINST THE PROFIT ON THE INTRA-DAY SALE / PURCHASE TRANSACTION IN 950 SHARES OF MASTEK ON WHICH THE ASSESSEE HAS SHOWN TO HAVE MADE PROFIT OF RS. 13,168.67. THE TRANSACTIONS WERE CLAIMED TO HAVE BEEN MADE THROUGH A BROKER, NAMELY, M/S. DPS SHARES & SECURITIES PVT. LTD.. IN ORDER TO ASCERT AIN GENUINENESS OF THE TRANSACTION, THE AO SENT THE LETTER TO BOMBAY STOCK EXCHANGE ON 13/08/2007 TO CONFIRM THE FOLLOWING TRANSACTIONS:- 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SMT. KANCHANBEN J. SHAH FOR A.Y. 2005-06 I.E. F.Y. 2004-05, IT IS SEEN THAT THE ASSESSEE I.E. SMT. KANCHANBEN J. SHAH HAS CLAIMED TO HAVE MADE PURCHASE AND SALE OF SHARES THROUGH M/S. DPS SHARES & SECURITIES PVT. LTD., WHO IS A MEMBER OF THE BOMBAY STOCK EXCHANGE HAVING ITS OFFICE AT 414-B, ROTUNDA, BOMBAY SAMACHAR MARG, FORT, MUMBAI 400 001 (SEBI REGN. INB 010986539 CLG. NO. 151) AS UNDER: XXXXXXXXXXXXXXXXXXXXXXXXXX YOU ARE' REQUESTED TO CONFIRM IF THE ABOVE TRANSACT IONS HAVE TAKEN PLACE THROUGH THE BOMBAY STOCK EXCHANGE OR IF THE SAME WE RE OFF MARKET TRANSACTIONS. COPIES OF THE CONTRACT NOTE IN FORM A AND THE CORRESPONDING BILLS ISSUED BY M/S. DPS SHARES & SECURITIES PVT. LTD. TO T HE ASSESSEE ARE ENCLOSED FOR YOUR PERUSAL AND REFERENCE. THE SURVEILLANCE AND SUPERVISORY DEPARTMENT OF BOMBA Y STOCK EXCHANGE VIDE LETTER DATED 20/08/2007, INTER ALIA, STATED AS UNDER:- ON VERIFICATION OF THE TRADES MENTIONED IN THE CON TRACT NOTES IN THE SCRIP MASTEK LTD. WITH THE TRADES EXECUTED BY THE MEMBER AT THE EXCHANGE, MANY DISCREPANCIES WERE OBSERVED IN THE CLIENT CODES AND THE QUANTITY OF SHARES TRADED ETC. HENCE, PLEASE FIND ENCLOSED HEREWITH TRADE LOG IN RESPECT OF THE TRADES EXECUTED BY THE SAID MEMBER IN THE SCRIP MASTEK LTD. ON THE DATES M ENTIONED IN THE CONTRACT NOTES. ALSO, NO TRADES WERE FOUND TO BE EXECUTED BY THE ME MBER DSP SHARES & SECURITIES (151) IN THE SCRIP ROBINSON WORLDWIDE LTD., FORMERL Y KNOWN AS ROBINSON IMPEX (532154) ON THE DATES MENTIONED IN THE CONTRACT NOT ES.' THE BOMBAY STOCK EXCHANGE ENCLOSED THE COPIES OF THE TRADES CARRIED OUT BY THE DPS SHARES & SECURITIES LTD AS UNDER, WHEREBY THERE W AS DISCREPANCIES IN THE TRANSACTIONS OF SHARES OF MASTEK LTD. AS PER THE BRO KERS NOTES AND THE TRADE LOG OF THE BROKER AS PER BOMBAY STOCK EXCHANGE OF 04/04 /2003 AS DETAILED BELOW:- XXXXXXXXXXXXXXXXXXX THUS, IT WAS OBSERVED BY THE AO THAT THE CONTRACT NO TE ISSUED BY THE BROKER AND SUBMITTED BY THE ASSESSEE IS AT VARIANCE WITH THE TR ADE LOG OF THE BOMBAY STOCK ITA NO.121/MUM/2015 AJAY J. DOSHI 40 EXCHANGE. THE SAID CONTRACTS NOTES AND THE BILLS DID NO T CONTAIN PAN OF THE ASSESSEE. THE AO ISSUED THE SUMMONS U/S. 131 OF THE ACT TO THE PRINCIPAL OFFICER OF M/S. DPS SHARES & SECURITIES PVT. LTD. WHICH ISSU ED THE CONTRACT NOTES. WHEREBY, SHRI RAJKUMAR MASALIA, THE AUTHORIZED OFFI CER OF DPS SHARES AND SECURITIES PRIVATE LIMITED APPEARED BEFORE THE AO ON 05-12-2007 AND VIDE STATEMENT DATED 05-12-2007 RECORDED U/S 131 OF THE ACT THAT M/S DPS SHARES AND SECURITIES PRIVATE LIMITED ISSUED THE ACCOMMODATIO N BILLS AND NO TRANSACTION WAS DONE ON THE FLOOR OF THE BSE ON BEHA LF OF SMT. KANCHANBEN J. SHAH. HE FURTHER CONFIRMED THAT SHARE OF ROBINSON IM PEX (INDIA) LTD. ARE LISTED ON THE BOMBAY STOCK EXCHANGE BUT WERE SUSPENDED OR TH INLY TRADED ON 04/04/2003 , THE CAPTIONED PERIOD. HE SUBMITTED THAT N O TRANSACTIONS WERE CARRIED ON WITH THE ASSESSEE AND SUBMITTED THAT THESE BILLS ARE ONLY ACCOMMODATION ENTRIES AND ARE NOT ACTUAL TRANSACTIONS , THUS HE SUBMITTED THAT THE PURCHASES AND SALES ARE BOGUS. THE ASSESSEE SUBM ITTED THAT THE ASSESSEE PURCHASED SHARES OF ROBINSON IMPEX (INDIA) LTD. ON 04. 04.2003 FROM M/S. DSP SHARES AND SECURITIES LTD. WHICH WAS THEN HAVING ITS OFFICE AT 414 B ROTUNDA, MUMBAI SAMACHAR MARG, FORT MUMBAI-400 001. THEY ARE REGISTERED STOCK BROKERS WHO ARE REGISTERED WITH BOMBAY STOCK EXCHANG E HAVING THEIR SEBI REGISTRATION NUMBER. ALL THE SHARES ARE PURCHASED B Y THE ASSESSEE IN PHYSICAL FORM. THE REASON FOR PURCHASE IN PHYSICAL FORM WAS THAT THE BROKER OF THE ASSESSEE HAD ADVISED HIM TO DO SO. THE ASSESSEE WAS GIV EN TO UNDERSTAND THAT IF THE SHARE WERE PHYSICALLY PURCHASED THEN IT WOULD COS T HIM A LITTLE LESS THAN THE MARKET PRICE. THE INFORMATION OR TIP OF THE ABOVE M ENTIONED SCRIP I.E. ROBINSON IMPEX LTD. WAS GIVEN TO THE ASSESSEE BY HIS COMMON F RIENDS WHO SPECIALIZES IN TRADING OF SHARES. SINCE IN THE PAST MANY OF THE ASS ESSEES FRIENDS HAD BENEFITED FROM THE ADVICE OF THEIR COMMON FRIEND THE ASSESSEE T OOK AN OPPORTUNITY TO FOLLOW THE ADVICE OF HIS FRIEND SO AS TO MAKE PROFIT IN THE TRANSACTIONS OF SHARES. DURING THE RELEVANT ASSESSMENT YEAR 2005-06, THE AS SESSEE SOLD THE ABOVE SHARES. BEFORE SELLING THE SHARES, THE ASSESSEE GOT THEM DEMATED. AFTER DEMATING THE SHARES THEY WERE SOLD THROUGH RECOGNIZED STOCK BROKERS WHO ARE REGISTERED MEMBERS OF THE BOMBAY STOCK EXCHANGE. THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES CANNOT BE TREATED AS BOGU S SINCE ALL THE SHARES WERE PURCHASED AND SOLD THROUGH BROKERS WHO WERE REGISTERED WITH BOMBAY STOCK EXCHANGE. ALSO THE COMPANY UNDER CONSIDERATION WAS L ISTED IN THE STOCK EXCHANGE WITH BOTH BSE AND NSE. THE SHARE TRANSACTIO NS ARE GENUINE TRANSACTIONS; THE SHARES THAT ARE PURCHASED WERE TRA DED IN THE STOCK MARKET. RATES OF THESE SHARES WERE, REFLECTED IN THE BHAV CO PIES AND ALSO IN ALL LEADING NEWSPAPERS AND THEY ARE EXISTING COMPANIES FILING TH EIR BALANCE SHEETS REGULARLY WITH THE ROC, AND ARE LISTED IN THE STOCK M ARKET AND ARE BEING TRADED. THE SALE TRANSACTION IS THROUGH BROKER AND PAYMENTS FOR SALE HAVE BEEN EFFECTED THROUGH THE CHEQUE TRANSACTIONS AND CHEQUE W ERE ISSUED BY THE BROKERS THEMSELVES. THE ASSESSEE SUBMITTED THAT IF A NY DISCREPANCY IS REPORTED BY BSE, IT IS DUE TO MISTAKE OF THE BROKER FOR WHICH THE ASSESSEE CANNOT BE PENALIZED. THE ASSESSEE RELIED UPON THE DECISIONS OF T HE MUMBAI TRIBUNAL IN THE CASE OF THE MUKESH MAROLIA V. ADDITIONAL COMMISSIONE R OF INCOME TAX . A LETTER FROM THE DIRECTOR OF DPS SHARES AND SECURITIES PVT. LTD DATED 19/12/2007 WAS ITA NO.121/MUM/2015 AJAY J. DOSHI 41 SUBMITTED BEFORE THE AO WHICH CLEARLY STATED THAT THE EARLIER STATEMENT MADE BY THEIR REPRESENTATIVE ON 05-12-2007 WAS INCORRECT AND TRANSACTIONS IN THE SHARES ARE GENUINE TRANSACTION. IT WAS ENCLOSED BEFO RE THE AO AND THE ASSESSEE ASKED FOR THE CROSS EXAMINATION OF THE REPRESENTATIV E OF M/S. DPS SHARES AND SECURITIES PVT. LTD TO VERIFY THE CORRECTNESS AND VAL IDITY OF STATEMENT AND HENCE REQUESTED TO THE ASSESSING OFFICER TO TREAT THAT THE PURCHASE OF SHARE OF M/S. ROBINSON IMPEX LTD. AS A GENUINE TRANSACTIONS IN SHA RES THERE BY TREATING THE INCOME AS LONG TERM CAPITAL GAIN . THE ASSESSEE ENC LOSED THE LETTER DATED 19-12- 2007 FROM DIRECTOR OF THE COMPANY DPS SHARES AND SEC URITIES PVT. LTD TO THE AO WHICH READ AS UNDER:- DEAR SIR SUB:- CONFIRMATION OF 1000 SHARES OF ROBINSON IMPEX LTD. SOLD TO MR. JAGDISH H. SHAH (F.Y.- 2003-04)_ I UNDERSIGNED, HAVE TO STATE THAT MR. JAGDISH H. SHAH WAS A FAMILY FRIEND OF OUR DIRECTOR WHO IN TRADING IN SHARES EARNED A SPECULATION PROFIT OF RS. 15156.56 DURING THE F.Y.- 2003 AS WE WERE IN RELATION WE HAD RECOMMEND HIM TO PURCHA SE 1000 SHARES OF ROBINSON IMPEX LTD. AT THE PRICE AROUND RS.1.50 PER S HARES, SINCE THE SHARES WERE NOT TRADED IN THE STOCK EXCHANGE AND WERE SOLD IN PHYSICAL MODE BY US OFF MARKET AND BILLS WERE ISSUES. WE FURTHER CONFIRM THAT 10000 SHARES OF ROBINSON IM PEX LTD. WERE HANDED OVER IN THE PHYSICAL MODE AGAINST OUR OFF MARKET TR ANSACTIONS ONLY WHICH WAS NOT REPORTED TO BSE. WE FURTHER STATE THAT ANY STATEMENT/LETTER MADE EAR LIER TO THE CONTRARY TO THIS IS BY MISTAKE AND NOT RELEVANT TO ALL. THANKING YOU, YOURS FAITHFULLY FOR DPS SHARES AND SECURITIES PVT. LTD. SD/- DIRECTOR THE ASSESSEE ASKED FOR CROSS EXAMINATION OF REPRESEN TATIVE OF M/S DPS SHARES AND SECURITIES TO VERIFY THE CORRECTNESS AND VALIDITY OF THEIR STATEMENT. THE AO OBSERVED THAT MR. RAJKUMAR MASALIA WAS AUTHORIZED BY DIRECTORS OF DPS SHARES AND SECURITIES PRIVATE LIMITED VIDE LETTER DATED 05/12 /2007 TO DISCUSS AND GIVE STATEMENT BEFORE THE REVENUE WHICH WILL BE BINDING O N DPS SHARES AND SECURITIES PRIVATE LIMITED .IN RESPONSE , MR RAJKUMA R MASALIA APPEARED BEFORE THE AO AND STATED ON OATH THAT CONTRACTS BILLS IN RES PECT OF SPECULATION PROFIT AND PURCHASE OF SHARES OF ROBINSON IMPEX LIMITED ARE ONLY ACCOMMODATING ENTRIES AND NO ACTUAL TRANSACTION HAS TAKEN PLACE AN D NOW THE DIRECTOR OF THE DPS SHARES AND SECURITIES PRIVATE LIMITED HAS STATED THAT TRANSACTION FOR PURCHASE OF SHARES OF ROBINSON IMPEX LIMITED WAS MADE OFF MARKET IN PHYSICAL FORM WHICH WAS NOT REPORTED TO BSE. THE AO HELD THAT NO PROOF OF GENUINENESS OF THE TRANSACTION WAS SUBMITTED BY THE ASSESSEE. TH E DIRECTOR OF DPS SHARES AND SECURITIES PRIVATE LIMITED HAS DEVIATED FROM ITS ST ATEMENT AND HAS NOW ITA NO.121/MUM/2015 AJAY J. DOSHI 42 STATED THAT THESE PURCHASE OF SHARES OF ROBINSON IMP EX WAS IN OFF MARKET FORM AND SHARES WERE GIVEN IN PHYSICAL FORM AND REQUEST FO R CROSS EXAMINATION IS BEING MADE AT FAG END WHEN THE MATTER IS GETTING TIM E BARRED AND THESE TRANSACTIONS ARE SHAM AND BOGUS. EVEN IN RESPECT OF SALE AND PURCHASE OF SHARES OF MASTEK LIMITED, THE TRADE LOG IS NOT TALLYING WITH BSE RECORDS. EVEN PROCEDURE FOR CARRYING OFF MARKET TRANSACTIONS AS P RESCRIBED BY THE BSE AND SEBI HAS NOT BEEN COMPLIED WITH. THUS, THE AO TREATE D THE SALE CONSIDERATION OF 10000 SHARES OF ROBINSON IMPEX LIMITED OF RS.9,19,01 5.00 AS INCOME FROM UNDISCLOSED SOURCES AS THE TRANSACTION FOR PURCHASE OF 10000 SHARES OF ROBINSON IMPEX LIMITED WERE NOT PROVED TO BE GENUINE AND THE ENTIRE SALE CONSIDERATION IS TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES, VIDE ASSESSMENT ORDER DATED 28/12/2007 PASSED U/S 143(3) OF THE ACT BY THE AO. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28/12/2007 PASSED U/S 143(3) OF THE ACT BY THE AO, THE ASSESSEE FILED FIRST APPEAL WITH THE CIT(A). THE ASSESSEE REITERATED ITS SUBMISSIONS AS MADE BEFORE THE AO WHI CH ARE NOT REPEATED FOR SAKE OF BREVITY. THE CIT(A) CALLED FOR REMAND REPORT FROM AO WHICH WAS SUBMITTED BY AO. THE CIT(A) AFTER CONSIDERING ASSESSM ENT ORDER, REMAND REPORT, SUBMISSION OF THE ASSESSEE AND DISCUSSIONS WI TH THE ASSESSEE HELD THAT THERE ARE MANY DISCREPANCIES IN THE RECORDS WITH RE SPECT TO CLIENT CODE AND QUANTITY OF SHARES TRADED WITH THE RECORDS OF BSE. THE ASSESSEE EVEN DURING APPELLANT PROCEEDINGS HAVE SUBMITTED THAT THE SAME IS DUE TO MISTAKE OF THE BROKER.THE CIT(A) OBSERVED THAT THERE IS NO PAN IN C ONTRACT NOTES NOR IN BILLS ISSUED BY BROKERS WHICH IS MANDATORY. THE STATEMENT O F MR RAJKUMAR MASALIA, THE AUTHORIZED OFFICER OF DPS SHARES AND SECURITIES P RIVATE LIMITED HAS BEEN RECORDED WHO ACCEPTED THAT BILLS/CONTRACT NOTES WERE I SSUED AS ACCOMMODATION ENTRIES AND NO TRANSACTIONS HAVE TAKEN PLACE. THE CI T(A) NOTED THAT THE ASSESSEE HAS SUBMITTED BEFORE HIM THAT THE STATEMENT OF MR RAJKUMAR MASALIA STOOD RETRACTED AND SAME COULD NOT BE TAKEN AS CORRECT AS HE FAILED TO APPEAR BEFORE THE AO DURING REMAND PROCEEDINGS FOR CROSS EXAM INATION ON THREE DIFFERENT DATES. THE CIT(A) HELD THAT THE PERSON DULY AUTHORIZED HAS GIVEN THE STATEMENT ON OATH THAT THE TRANSACTIONS WERE BOGUS AND ANY SUBSEQUENT STATEMENT APPEAR TO BE AN AFTER-THOUGHT AND STATEMEN T OF MR. RAJ KUMAR MASALIA RECORDED U/S 131 OF THE ACT HAS EVIDENTIARY VALUE. THE CIT(A) ALSO HELD THAT EVEN THERE IS NO COMPLIANCE OF BSE/SEBI REPORT ING MECHANISM WITH RESPECT TO OFF MARKET PURCHASE OF 10000 SHARES OF R OBINSON IMPEX LIMITED AND THE ASSESSEE HAS MERELY TERMED IT AS MISTAKE OF BROK ER WHICH IS AN AFTER- THOUGHT. THUS, THE CIT(A) VIDE ORDERS DATED 16.08.201 1 UPHELD THE ACTION OF THE AO BY TREATING THE INCOME OF RS.9,19,015/- AS INCOM E FROM UNDISCLOSED INCOME AND TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURC ES. 4. AGGRIEVED BY THE ORDERS DATED 16.08.2011 OF THE CIT(A), THE ASSESSEE FILED APPEAL WITH THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELO W WHICH ARE NOT REPEATED FOR SAKE OF BREVITY. THE LD. COUNSEL FOR T HE ASSESSEE STATED BEFORE US THAT THE 10000 SHARES OF ROBINSON IMPEX ( INDIA) LIMITED WAS PURCHASED ON 04-04-2003 VIDE PHYSICAL DELIVERY FROM DPS SHARES AND ITA NO.121/MUM/2015 AJAY J. DOSHI 43 SECURITIES PRIVATE LIMITED WHO ARE SEBI APPROVED RE GISTERED BROKER WITH BSE WHICH ARE DULY EVIDENCED BY CONTRACT NOTES ISSU ED BY THE SAID BROKER WHICH IS PLACED AT PAGE 29-30 PAPER BOOK FILED BEFO RE THE TRIBUNAL . THE LD. COUNSEL STATED BEFORE US SAID SHARES WERE TRANS FERRED IN FAVOUR OF THE ASSESSEE ON 30-04-2003 VIDE SHARE CERTIFICATE ISSUE D BY THE COMPANY WHICH IS PLACED AT PAGE 30 OF THE PAPER BOOK FILED WITH THE TRIBUNAL. THE LD. COUNSEL STATED BEFORE US THAT PAYMENT OF THE SA ID 10000 SHARES OF ROBINSON IMPEX (INDIA ) LIMITED AGGREGATING TO RS.1 3210.43 WAS SETTLED THROUGH SPECULATIVE PROFIT OF RS.13168.67 EARNED BY THE ASSESSEE IN THE SHARES OF MASTEK LIMITED ON 04-04-2003 WHICH IS ALS O SUPPORTED BY CONTRACT NOTES ISSUED BY DPS SHARES AND SECURITIES PRIVATE LIMITED WHICH ARE PLACED AT PAPER BOOK PAGE 27- 28. THE LD. COUNS EL STATED BEFORE US THAT THE SPECULATIVE PROFIT OF RS 13168.67 EARNED B Y THE ASSESSEE WAS DULY DECLARED AND DISCLOSED TO THE REVENUE AND OFFERED F OR TAXATION BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REV ENUE WHICH IS PLACED AT PAPER BOOK PAGE 42-46 FOR THE ASSESSMENT YEAR 2004- 05. THE LD. COUNSEL STATED BEFORE US THAT PURCHASE OF 10000 SHARES OF R OBINSON IMPEX (INDIA) LIMITED WERE DULY DECLARED AND DISCLOSED TO THE REV ENUE IN THE RETURN OF INCOME FILED WITH THE REVENUE FOR FINANCIAL YEAR 20 03-04(ASSESSMENT YEAR 2004-05) WHICH IS PLACED AT PAGE 42-46 OF PAPER BOO K. THE SAID 10000 SHARES OF ROBINSON IMPEX (INDIA) LIMITED WERE DEMAT TED IN THE MONTH OF JUNE 2004 IN FAVOUR OF THE ASSESSEE WHICH IS PLACED AT PAGE 32 OF PAPER BOOK. THE LD. COUNSEL STATED THAT THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES ARE GENUINE ALTHOUGH THERE ARE DISCREPANCIES IN TRADE LOG WITH BSE AT THE TIME OF PURCHASE AS DETAILED BY AO IN THE AS SESSMENT ORDER WHICH IS A MISTAKE OF BROKER. THE LD. COUNSEL STATED THAT TH E SALE OF 10000 ROBINSON IMPEX INDIA LIMITED WAS ALSO UNDERTAKEN TH ROUGH REGISTERED SHARE BROKER AND CONTRACT NOTES ARE PLACED AT PAGE 21- 26 OF PAPER BOOK AND PAYMENTS WERE RECEIVED BY CHEQUE , THE RELEVANT BANK STATEMENTS ARE PLACED AT PAGE 11 OF PAPER BOOK WHERE SALE PROCEED CHEQUES WERE CREDITED . THE LD. COUNSEL OF THE ASSESSEE DREW OUR ATTENTION TO REMAND REPORT SUBMITTED BY THE AO TO THE CIT(A) WHEREBY MR RAJKUMAR MASALIA DID NOT APPEAR BEFORE THE AO FOR CROSS EXAMINATION THREE TIMES ON 18.2.2009, 29.04.2009 AND 09.11.2009 WHILE THE ASSE SSEE REPRESENTATIVE WAS DULY PRESENT BEFORE THE AO ON THOSE DATES. THE AO IN REMAND REPORT HAS CONFIRMED THAT BSE HAS CONFIRMED THE SALE TRANS ACTION OF 10000 ROBINSON IMPEX (INDIA) LIMITED WHICH WAS SOLD BY TH E ASSESSEE ON 10-06- 2004. THE LD. COUNSEL RELIED UPON THE DECISION OF M UMBAI TRIBUNAL IN THE CASE OF MR. JAGDISH H.SHAH IN ITA NO. 6557/MUM/2011 VIDE ORDERS DATED 05/09/2012 FOR THE ASSESSMENT YEAR 2005-06, WHEREBY ON THE IDENTICAL FACTS , INCOME EARNED ON SALE OF SHARES OF ROBINSON IMPEX (INDIA) LIMITED HAS BEEN ACCEPTED TO BE INCOME ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAIN . THE LD. COUNSEL HAS ALSO FILED A TA BULATION SHOWING SIMILARITY OF FACTS BETWEEN THE CASE OF THE ASSESSE E AND THAT OF JAGDISH H SHAH(SUPRA). THE TABULATION FURNISHED BY THE ASSESS EE DEPICTS THE SIMILARITY IN SCRIP INVOLVED, ASSESSMENT YEAR INVOL VED,THE BROKER INVOLVED ITA NO.121/MUM/2015 AJAY J. DOSHI 44 , ENQUIRIES BY THE AO FROM BSE , ETC. . APART THERE -FROM ,IT HAS ALSO BEEN POINTED OUT THAT THE SAME AO AS WELL AS THE SAME CI T(A) HAVE RENDERED THE DECISIONS ON THE SAME DATES IN THE CASE OF JAGD ISH H SHAH(SUPRA) AS WELL AS THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IT HAS BEEN POINTED OUT THAT THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES A RE UNSUSTAINABLE AND THAT INCOME FROM SALE OF THE SHARES OF ROBINSON IMP EX (INDIA) LIMITED BE ACCEPTED AS LONG TERM CAPITAL GAIN AS RETURNED BY T HE ASSESSEE. THE RELIANCE IS ALSO PLACED ON THE SIMILAR CASE ON IDEN TICAL FACTS IN THE CASE OF NIKUNJ J SHAH V. ITO IN ITA NO. 6545/MUM/2011 WHERE BY MUMBAI TRIBUNAL VIDE ORDERS DATED 31/07/2015 HAS ACCEPTED THE INCOME FROM SALE OF SHARES OF ROBINSON IMPEX (INDIA) LIMITED AS INCOME ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAIN AS RETURNED. 5. THE LD. DR SUBMITTED THAT THESE TRANSACTIONS OF SA LE AND PURCHASE OF SHARES IN APRIL 2003 WERE SHAM TRANSACTIONS . THE BROKERS HAVE NOT REPORTED OFF MARKET TRANSACTIONS TO BSE/SEBI AS PER REQUIREMENTS OF LAW. THERE IS DIFFERENCE IN CLIENT CODE IN TRADE LOG OF BSE WHICH E VIDENCES THAT THE TRANSACTIONS ARE SHAM. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS EVIDENT THAT SIMILAR CONTROVERSY HAS BE EN CONSIDERED BY OUR CO- ORDINATE BENCH IN THE CASE OF JAGDISH H. SHAH (MUMBAI TRIBUNAL ITA NOS.6557/MUM/2011 FOR THE ASSESSMENT YEAR 2005-06 V IDE ORDERS DATED 05- 09-2012) AND NIKUNJ J SHAH (MUMBAI TRIBUNAL - ITA NO . 6545/MUM/2011 VIDE ORDERS DATED 31-07-2015).THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ALSO PLACED ON RECORD COPIES OF THE ASSESSMENT ORDER AS WE LL AS THE ORDER OF CIT(A) IN THE CASE OF JAGDISH H.SHAH (SUPRA) WHICH REVEAL T HAT THE DISCUSSION CONTAINED THEREIN IS ALMOST SIMILAR TO THE DISCUSSION IN THE IMPUGNED ORDERS BEFORE US. THE ENQUIRIES MADE BY THE AO IN CASE OF JADISH H. SHA H (SUPRA) ARE ON SIMILAR LINES TO THOSE MADE IN THE CASE BEFORE US. IN THE C ASE OF THE ASSESSEE AS WELL AS IN THE CASE OF JAGDISH H. SHAH(SUPRA) THE SHARES WERE P URCHASED FROM THE SAME BROKER NAMELY DPS SHARES AND SECURITIES IT IS ALSO EMERGING THAT THE AO CARRIED OUT A VERIFICATION EXERCISE WHICH INVOLVED RECORDING OF STATEMENT OF ONE SHRI RAJ KUMAR MASALIA, PRINCIPAL OFFICER OF DPS SHARES & SE CURITIES LTD.; SIMILAR ACTION WAS TAKEN IN THE CASE OF JAGDISH H. SHAH (SUPRA) ALS O. BE THAT AS IT MAY, IT IS QUITE CLEAR THAT THE STAND OF THE REVENUE AS WELL AS THE A SSESSEE IN THE PRESENT CASE IS ON SIMILAR FOOTING TO THEIR RESPECTIVE STANDS IN TH E CASE OF JAGDISH H. SHAH (SUPRA). HAVING REGARD TO THE AFORESAID SIMILARITIES, WHICH ARE NOT CONTROVERTED BY THE REVENUE, WE DEEM IT FIT AND PROPER TO RELY UPO N THE REASONING TAKEN BY THE CO-ORDINATE BENCH IN THE CASE OF JAGDISH H. SHAH( SUPRA) AND HOLD THAT THE INCOME TAX AUTHORITIES HAVE ERRED IN TREATING THE SA LE CONSIDERATION ON THE SALE OF SHARES OF ROBINSON WORLDWIDE TRADE LTD. AS AN INCOM E FROM UNDISCLOSED SOURCES. IDENTICAL DECISION WAS ALSO RENDERED IN THE CA SE OF MR NIKUNJ J. SHAH(SUPRA) BY MUMBAI TRIBUNAL IN ITA NO. 6545/MUM/ 2011 FOR ASSESSMENT YEAR 2005-06 VIDE ORDERS DATED 31-07-2015 , RELEVANT EX TRACTS ARE REPRODUCED BELOW: 6. HAVING PERUSED THE ORDERS OF THE AUTHORITIES BELO W AS WELL AS THE ITA NO.121/MUM/2015 AJAY J. DOSHI 45 SUBMISSIONS PUT FORTH BEFORE US, IT IS EVIDENT THAT SIMILAR CONTROVERSY HAS BEEN CONSIDERED BY OUR CO-ORDINATE BENCH IN THE CASE OF JA GDISH H. SHAH (SUPRA).THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ALSO PLACED ON RECORD COPIES OF THE ASSESSMENT ORDER AS WELL AS ORDER OF CIT(A) IN THE C ASE OF JAGDISH H. SHAH(SUPRA) WHICH REVEAL THAT THE DISCUSSION CONTAI NED THEREIN IS ALMOST SIMILAR TO THE DISCUSSION IN THE IMPUGNED ORDERS BEFO RE US. THE ENQUIRIES MADE BY THE AO IN CASE OF JADISH H. SHAH (SUPRA) ARE ON SIMILAR LINES TO THOSE MADE IN THE CASE BEFORE US. IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF JAGDISH H. SHAH(SUPRA) THE SHARES WERE PURCHASED FROM THE SAME BROKER NAMELY DPS SHARES AND SECURITIES PVT. LTD. IT IS ALSO EMERGING T HAT THE AO CARRIED OUT A VERIFICATION EXERCISE WHICH INVOLVED RECORDING OF STATEMENT OF ONE SHRI RAJ KUMAR MASALIA, PRINCIPAL OFFICER OF DPS SHARES & SE CURITIES LTD.; SIMILAR ACTION WAS TAKEN IN THE CASE OF JAGDISH H. SHAH (SUPRA) ALS O. BE THAT AS IT MAY, IT IS QUITE CLEAR THAT THE STAND OF THE REVENUE AS WELL AS THE A SSESSEE IN THE PRESENT CASE IS ON SIMILAR FOOTING TO THEIR RESPECTIVE STANDS IN TH E CASE OF JAGDISH H. SHAH (SUPRA). HAVING REGARD TO THE AFORESAID SIMILARITIES, WHICH ARE NOT CONTROVERTED BY THE REVENUE, WE DEEM IT FIT AND PROPER TO RELY UPO N THE REASONING TAKEN BY THE CO-ORDINATE BENCH IN THE CASE OF JAGDISH H. SHAH( SUPRA) AND HOLD THAT THE INCOME TAX AUTHORITIES HAVE ERRED IN TREATING THE SA LE CONSIDERATION ON THE SALE OF SHARES OF ROBINSON WORLDWIDE TRADE LTD. AS AN INCOM E FROM UNDISCLOSED SOURCES. NEVERTHELESS IN ORDER TO IMPART COMPLETENES S TO THIS ORDER, WE DEEM IT FIT AND PROPER TO REPRODUCE HEREAFTER THE RELEVANT P ORTION OF THE ORDER OF THE TRIBUNAL IN THE CASE OF JAGDISH H. SHAH(SUPRA), WHIC H IS AS UNDER: 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES AND ALSO THE PAPER BOOK SUBMITTED BY THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE SHARES WERE PURCHASED IN P HYSICAL FORM IN OFF MARKET TRANSACTION. IT IS ALSO NOT IN DISPUTE T HAT THE SHARES WERE SUBSEQUENTLY DEMATTED AND THE SALES HAVE TAKEN PLACE O UT OF THE DMAT A/C. THE ONLY DISPUTE RELATES TO THE GENUINENES S OF THE PURCHASES' AS DOUBTED BY THE LOWER AUTHORITIES. WE FI ND THAT THE PURCHASES. ARE SUPPORTED BY PURCHASE BILLS ISSUED BY M/ S. DPS SHARES AND SECURITIES PVT. LTD., EXHIBITED AT PAGES 28 TO 32 OF THE PAPER BOOK. WE ALSO FIND THAT THE SHARES SO PURCHASE D WERE TRANSFERRED TO DMAT A/C WITH HDFC BANK. COPY OF WHIC H IS EXHIBITED AT PAGE NO. 34 OF THE PAPER BOOK. WE HAVE ALSO CONSIDERED THE LETTER OF THE DIRECTOR OF M/S. DPS SHARES & SEC URITIES PVT. LTD., ADDRESSED TO THE AO BY WHICH THE. DIRECTOR HAS CONFIAN ED 'THE OFFMARKET TRANSACTION IN PHYSICAL MODE OF SHARES OF THE 11,500 SHARES OF M/S.ROBINSON IMPEX (INDIA) LTD (ROBINSON WORLDWIDE TRADE LTD.,). WE HAVE ALSO CONSIDERED THE RETRACTION LETTER OF SHRI RAJKUMAR MASALIA ADDRESSED TO THE AO BY WHICH HE ACCEP TED THAT HE. WAS NOT AWARE OF THE TRANSACTION AND HE HAS STATED WR ONG FACTS DURING THE COURSE OF HIS STATEMENT RECORDED BY THE A.O . 12. WE FIND THAT DURING THE COURSE OF THE APPELLATE P ROCEEDINGS, THE CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE AO RELATING TO THE PURCHASE OF 11500 SHARES OF M/S. ROBINSON WORLDWIDE TRADE LTD., (FORMERLY KNOWN AS ROBINSON IMPEX (INDIA) LTD.]. WE HAVE PERUSED THE REMAND REPORT OF ITO 10(3)(2) MUMBAI DT. 11.4.2011. IN HIS REMAND REPORT, THE AO ST ATES THAT AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI RAJKUMAR M ASALIA WAS GIVEN TO THE ASSESSEE ON 18-02-2009, 29-04-2009 AND 09-11-2009. H OWEVER, DESPITE OF GIVING AFORESAID OPPORTUNITIES, SHRI RAJKUMAR MASALI A DID NOT ATTEND THOUGH ASSESSEES REPRESENTATIVE ATTENDED ON ALL OF ABOVE DAT ES AND WHOSE ITA NO.121/MUM/2015 AJAY J. DOSHI 46 ATTENDANCE WAS DULY RECORDED ON THE ATTENDANCE SHEET. IN HIS REMAND REPORT, THE AO FURTHER STATES THAT THE SAID SHARES OF M/S. ROBINSON WORLDWISE TRADE LTD. (FORMERLY KNOWN AS ROBINSON IMPEX (INDIA) LTD.] W ERE PURCHASED ON 05- 04-2003 FOR A CONSIDERATION OF RS.15191.99 FROM M/S . DPS SHARES AND SECURITIES PVT. LTD. AS PER RECORD OF THE SAID COMPANY , THE SHARES WERE ENDORSED IN FAVOUR OF THE ASSESSEE ON 30-04- 2003 IN PHYSICAL FORMAT ONLY. THE AO FURTHER STATES THAT AS PER INVESTIGATION MADE , THESE SHARES WERE SENT FOR DEMATERIALIZATION TO HDFC BANK ON 03-05-2004 AN D WERE CONVERTED INTO DE-MAT FORM ON 22-05-2004. IN HIS REMAND REPORT, THE AO HAS FURTHER CONFIRMED THE SALE TRANSACTION MADE THROUGH BROKER, M/S. AJMEERA ASSOCIATES PVT. LTD. 13. AFTER CONSIDERING ALL THE ABOVE STATED FACTS IN T OTALITY, WE DO NOT FIND ANY REASON OR LOGIC IN TREATING THE PURCHASE OF 11,500 SHARES AS BOGUS. THE LOWER AUTHORITIES COULD HAVE DIRECTLY VERIFIED THE TRANSACTI ON FROM THE COMPANY ITSELF, WHOSE SHARES WERE QUESTIONED TO BE BOGUS BUT BOTH TH E LOWER AUTHORITIES DID NOT DO THIS EXERCISE. THE REMAND REPORT OF THE AO ITS ELF SHOW THAT THE TRANSACTIONS HAVE BEEN TREATED AS GENUINE SUBSEQUENT LY BY THE AO HIMSELF WHILE SENDING THE REMAND REPORT TO THE CIT(A). WE FIN D THAT THE SALE TRANSACTION OF 11,500 SHARES OF M/S.ROBINSON IMPEX (INDIA) LTD. (ROBINSON WORLDWIDE TRADE LTD.) HAS BEEN DOUBTED OR QUESTION BY THE LOWER AUTHORITIES. A SIMPLE LOGICAL QUESTION ARISES IF THE SHARES WERE NEVER PURCHASED, HOW CAN THEY BE SOLD SUBSEQUENTLY? 14. AFTER CONSIDERING ALL THE FACTS AND SUBMISSIONS, WE FIND THAT BOTH THELOWER AUTHORITIES HAVE GROSSLY ERRED IN TREATING THE SALE CONSIDERATION AS INCOMEFROM UNDISCLOSED SOURCES. 15. WE, THEREFORE, REVERSE HT FINDING OF LOWER AUTH ORITIES AND DIRECT THE AO TO ACCEPT THE LONG TERM CAPITAL GAINS AS RETURNED BY TH E ASSESSEE. 6.1 FOLLOWING THE AFORESAID PRECEDENT WE HEREBY ALLOW THE APPEAL OF THE ASSESSEE, AND DIRECT THE AO TO ACCEPT THE LONG TERM CAPITAL GAIN AS RETURNED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. FOLLOWING THE AFORESAID PRECEDENT WE HEREBY ALLOW THE APPEAL OF THE ASSESSEE, AND DIRECT THE AO TO ACCEPT THE LONG TERM CAPITAL GAIN AS RETURNED BY THE ASSESSEE. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. IF THE AFORESAID ELABORATE ORDERS OF THE TRIBUNAL I N THE CASE OF DIFFERENT ASSESSEE ARE ANALYZED, WE FIND TH AT THE TRIBUNAL HAS DULY DISCUSSED THE SALE THROUGH A BROK ER NAMELY M/S DPS SHARES & SECURITIES PVT. LTD. ON SAL E OF SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD. AND FIN ALLY THE FINDING OF THE LOWER AUTHORITIES WERE REVERSED AND THE LD. ASSESSING OFFICER WAS DIRECTED TO ACCEPT THE LONG T ERM CAPITAL ITA NO.121/MUM/2015 AJAY J. DOSHI 47 GAINS, AS RETURNED BY THE ASSESSEE. OUR VIEW IS FUR THER FORTIFIED BY THE DECISION OF THE TRIBUNAL IN THE CA SE OF SMT. NEETA R. DOSHI AND SMT. MANISHA A. DOSHI (ITA NO.43 9 AND 441/MUM/2010) ORDER DATED 30/11/2015, WHEREIN, THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT, RE PORTED IN (2015) 374 ITR 645 (BOM.) WAS CONSIDERED AND THEREA FTER THE APPEALS OF THE ASSESSEE WERE ALLOWED. NO CONTRARY FACTS WERE BROUGHT TO OUR NOTICE BY EITHER SIDE, THEREFORE, IN THE PRESENT CASE OF THE ASSESSEE, BEING ON IDENTICAL FACTS/PART IES INVOLVED, NO U-TURN IS PERMISSIBLE UNLESS AND UNTIL CONTRARY FACTS ARE BROUGHT TO OUR NOTICE, THEREFORE, FOLLOWING THE AFO RESAID ORDERS OF THE TRIBUNAL, HON'BLE HIGH COURTS INCLUDI NG FROM JURISDICTIONAL HIGH COURT, WE ALLOW THE APPEAL OF T HE ASSESSEE ON MERIT AS WELL. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/05/2017 SD/- (N.K. PRADHAN) SD/- (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; - DATED : 31/05/2017 F{X~{T? P.S/. .. , !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ./01 / THE APPELLANT 2. 201 / THE RESPONDENT. 3. 3 3 4# , ( ./ ) / THE CIT, MUMBAI. 4. 3 3 4# / CIT(A)- , MUMBAI ITA NO.121/MUM/2015 AJAY J. DOSHI 48 5. 6$7# , 3 ./(. + , / DR, ITAT, MUMBAI 6. 8!9 / GUARD FILE. ! / BY ORDER, 26/## //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI