Shri Sukhwani Totaram Jangaldas, Pune V. Dy.CIT,Cen.1(1), Pune, Pune

ITA 1437/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9797 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: R G NAHAR
• Keywords: Capital asset; Search and seizure; Cost of acquisition; Corroborative evidences; Accommodation entries; Penny stocks
• Section: 143(3)

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 1434/PN/2010 TO ITA NO.1437/PN/2010 (ASSESSMENT YEARS 2003-04 TO 2006-07) SUKHWANI TOTARAM JANGALDAS C/O.SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN NO.ACAPS 3896E .. APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), PUNE .. RESPONDENT ASSESSEE BY : SRI R.G. NAHAR DEPARTMENT BY : SRI S.K. SINGH, CIT DATE OF HEARING : 29-10-2012 DATE OF PRONOUNCEMENT : 23-11-2012 ORDER PER R.S. PADVEKAR, JM: THIS BATCH OF 4 APPEALS ARE FILED BY THE ASSESSEE C HALLENGING THE COMMON ORDER OF THE CIT(A)-I, PUNE DATED 30-03-2010 . THE ASSESSMENT YEARS INVOLVED ARE 2003-04, 2004-05, 2005-06 & 2006 -07. THESE APPEALS ARE ARISING OUT OF THE ASSESSMENTS FRAMED IN CONSEQ UENT OF THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE U/S.132(1) O F THE ACT. 2. THE FIRST ISSUE WHICH IS COMMON IN ALL THE FOUR ASSESSMENT YEARS IS WHETHER THE ADDITION MADE ON ACCOUNT OF THE RECEIPT OF ALLEGED ON MONEY FROM SALE OF FLATS IN SUKHWANI CITY PROJECT. 3. RELEVANT FACTS WHICH REVEALED FROM THE RECORD AR E AS UNDER : THERE WAS A SEARCH AND SEIZURE OPERATION U/S.132 O F THE ACT IN THE SUKHWANI GROUP OF CASES ON 14-06-21006. THE ASSESS EE IS A MEMBER OF THE SUKHWANI GROUP AND AS OBSERVED BY THE AO HIS NAME W AS INCLUDED IN THE WARRANT OF AUTHORISATION. THERE WAS ALSO SURVEY ACT ION U/S.133A OF THE INCOME TAX ACT ON THE SAME DAY IN THE BUSINESS PREM ISES OF THE ASSESSEE. IN THE COURSE OF THE ASSESSEE, ONE LOOSE PAPER INDI CATING THE SELLING PRICE OF THE FLAT WAS FOUND. THE SAME WAS IMPOUNDED (BUNDLE NO.15 PAGE NO.28). 2 3.1 THE AO HAS OBSERVED THAT THE NOTINGS ON PAGE NO .28 OF THE BUNDLE NO.15 CLEARLY INDICATED THAT THE ASSESSEE USED TO D EMAND 25% OF THE AGREED SALE CONSIDERATION IN CASH ON THE SALE OF THE FLATS IN SUKHWANI CITY. AS PER THE NOTINGS ON THE IMPOUNDED PAPER THE BUYER WAS TO MAKE THE CASH PAYMENT BEFORE THE AGREEMENT IS ENTERED INTO. THE AO SOUGHT THE EXPLANATION OF THE ASSESSEE BY ISSUING THE SHOW CAU SE NOTICE. THE ASSESSEE WAS ALSO PROVIDED WITH THE COPY OF THE IMPOUNDED DO CUMENT. IN RESPONSE TO THE SHOW CAUSE NOTICE OF THE AO SEEKING THE EXP LANATION IN RESPECT OF THE NOTINGS ON THE SEIZED DOCUMENT, THE ASSESSEE FILED THE REPLY STATING THAT HE HAS EXECUTED THE HOUSING PROJECT IN THE NAME AND ST YLE OF SUKHWANI CITY. THE PROJECT HAS VARIOUS BUILDINGS AND VARIOUS FLATS , THE DETAILS OF WHICH ARE RECORDED IN THE REGISTER WHICH WAS SEIZED BY THE DE PARTMENT DURING THE COURSE OF THE SEARCH. THE ASSESSEE ALSO TOOK A STA ND THAT ALL THE SALES OF THE FLATS PERTAINING TO THE SAID PROJECT WERE DULY RECO RDED INTO THE BOOKS OF ACCOUNT. IN RESPECT OF THE SEIZED PAPER, I.E. PAGE NO.28 OF BUNDLE NO.15, THE ASSESSEE CONTENDED THAT THE SAID PAPER IS NOT W RITTEN IN THE HANDS OF THE ASSESSEE OR ANY OF HIS RELATIVES. IT WAS ALSO DENI ED THAT THE NOTINGS ON THE SAID PAPER WERE WRITTEN BY ANY STAFF MEMBERS. THE ASSESSEE TOOK THE STAND THAT IT IS POSSIBLE THAT NUMBER OF CUSTOMERS, SUPPL IERS, CONTRACTORS WHO COME TO HIS OFFICE PREMISES FOR THEIR WORK FOR ENQU IRIES & THE SAID SEIZED PAPER COULD BE BELONGING TO AND WRITTEN BY ANY THOS E PERSONS. THE ASSESSEE ALSO CLAIMED THAT AS PER THE NOTINGS ON THE SEIZED PAPER NO LINK CAN BE ESTABLISHED TO FLAT NO.18 WHICH REFERENCE IS MADE. THE ASSESSEE DENIED THE SAID PAPER AS BELONGING TO HIM. 3.2 THE OPERATIVE PART OF THE EXPLANATION OF THE AS SESSEE DENYING OR KNOWLEDGE OF THE SAID PAPER IS REPRODUCED IN THE AS SESSMENT ORDER WHICH IS AS UNDER : WE MAY STATE THAT NO SUCH LINK EXISTS BETWEEN THE FIGURES & DESCRIPTION RECORDED ON PAGE NO. 28, BUNDLE NO.15. THE REASONS OF THE SAME ARE AS FOLLOWS : 1. FLAT NO.18 IS CONSTRUCTED IN BUILDING A AS WEL L AS BUILDING C. THE PAGE NO.28 DO NOT STATE ANYTHING WHETHER THE CALCULATION S WRITTEN ARE PERTAINING TO FLAT NO.18 IN BUILDING A OR BUILDING C OR ANY O THER CONSTRUCTED AREA. 2. AGREEMENT FOR FLAT NO.18 IN BUILDING A WAS EXE CUTED ON 30-01-2005. THERE IS NO DATE ON PAGE NO.28 WHEREBY IT COULD BE CO-RELATED TO THE SALE OF FLAT NO.18. THE PAGE NO.28 IS UNDATED. 3. THE PROJECT NAME VIZ SUKHWANI CITY IS NOWHERE MENTIONED ON SEIZED PAPER, SO THAT IT COULD BE CORRELATED TO SALE OF FL AT IN THIS PROJECT. 4. FLAT NO.18 IN BUILDING A WA SOSLD TO PURSHOTTAM S. ISRANI & MANJU P. ISRANI NO. SUCH NAME IS FOUND ON PAGE NO.28. 3 5. THE AGREEMENT VALUE AS PER THE AGREEMENT AS WELL AS PER THE REGISTER IS RS.11,35,000/- (INCLUDING PARKING CHARGES) WHEREAS THE AGREEMENT VALUE AS STATED IN PAGE NO.28 IS RS.11,43,520/-. THIS ALSO DOES NOT MATCH WHEREBY ONE COULD REASONABLY ASSUME & CONCLUDE THAT NOTINGS ON PAGE NO.28 ARE PERTAINING TO FLAT NO.18 OF A BUILDING. 6. DURING THE COURSE OF SEARCH THE STATEMENT OF TOT ARAM SUKHWANI WAS RECORDED ON 15-06-2006 DATE. VIDE QUESTION NO.15 T HE EXPLAINED WAS ASKED TO THE ASSESSEE PERTAINING TO TRANSACTION & THE FIGURE S RECORDED ON PAGE NO.28. THE ASSESSEE HAS REPLIED AT THE TIME OF SEARCH ITSE LF THAT THIS PAPER DOES NOT RELATE TO HIM. THERE IS NO ADMISSION ON THE PART O F THE ASSESSEE THAT ANY ON MONEY WAS CHARGED & COLLECTED WHILE EFFECTING THE S ALES OF THE FLATS CONSTRUCTED IN SUKHWANI CITY. 7. WE ARE FILING THE CONFIRMATION FROM THE PURCHASE RS OF FLAT NO.18 IN BUILDING A AS WELL AS BUILDING C TO THE EFFECT THAT THE PURCHASER PAID THE ASSESSEE ONLY AGREEMENT VALUE & NOTING OVER & ABOVE IT. 8. THUS, IT MAY PLEASE BE NOTED THAT THE SELLER AS WELL AS PURCHASER SPECIFICALLY DENY THE RECEIPT/PAYMENT OF ANY ON MON EY WHILE THE FLAT NO.18 WAS SOLD. 9. APART FROM PAGE NO.28 WHICH WAS SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE, WHICH ALSO DOES NOT BELONG & IS NOT I N THE HAND WRITING OF THE ASSESSEE & THE CONTENTS OF WHICH DO NOT TALLY ON TH E PARAMETERS OF THE NAME OF THE PURCHASER, THE DATE OF THE SALE, THE AMOUNT OF THE SALE ETC. NO OTHER PAPER WAS FOUND . . . .NO NOTHINGS WERE FOUND . . . . NO STATEMENT WAS RECORDED OF EITHER SELLER OR PURCHASER AT ANY POINT OF TIME THAT THE O N MONEY WAS EVER COLLECTED BY THE SELLER OR PAID BY THE PURCHASER IN RESPECT OF A NY OF THE FLAT SOLD BY THE ASSESSEE. 4. THE AO WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSESSEE AND ON THE BASIS OF THE SAID SEIZED PAPER COLLECTED HE CON CLUDED THAT THE ASSESSEE WAS TO RECEIVE 25% OF THE SALE CONSIDERATION IN BL ACK ON ACCOUNT OF SALE OF FLAT BEFORE THE AGREEMENT, HOWEVER, THE SAME WAS NO T OFFERED TO TAX. HE ACCORDINGLY WORKED OUT UNACCOUNTED SALE CONSIDERATI ON AFTER CONSIDERING ACCOUNTED SALE RECEIPTS AS UNDER AND MADE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. ASSESSMENT YEAR SALE EFFECTED (RS.) ADDITION MADE @ 25% OF THE SALES VALUE 2003-04 68,00,000 17,00,000 2004-05 3,25,46,100 81,36,525 2005-06 56,25,000 14,06,250 2006-07 22,26,000 5,56,500 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) BUT WITHOUT SUCCESS. THE LD. CIT(A) CONFIRMED THE ADDITION. TH E OPERATIVE PART OF THE REASONINGS AND FINDINGS IS AS UNDER : 7. THE SUBMISSIONS OF THE APPELLANT ARE CAREFULLY CONSIDERED WITH REFERENCE TO THE IMPOUNDED DOCUMENTS AND THE MATERIAL PLACED ON RECO RD. IN THE CASE OF THE APPELLANT/ THE ENTIRE ADDITION ON ACCOUNT OF. ON-MONEY ON SALE OF FLATS WAS MADE ON THE BASIS OF NOTINGS MADE ON PAGE NO.28 OF BUNDLE NO.15 IMPOUNDE D DURING SURVEY OPERATIONS IN THE 4 BUSINESS PREMISES OF THE APPELLANT. TO UNDERSTAND T HE ISSUE IN PROPER PERSPECTIVE, IT IS NECESSARY TO REFER TO THE ENTRIES IN THE SAID IMPOU NDED PAGE NO.28, WH1CH ARE REPRODUCED HEREUNDER: FLAT NO.18 RS.1021 X1400 - 14,29,400/- 1,00,000 - CAR PARKING/MSEB LIFT/GENERATOR AGREEMENT VALUE - 11,43,520/- (WHITE) + 2,85,880/- (BLACK) REGISTRATION A) 47,400 JOINT DIST. REGISTRAR, PU NE B) 11,500 JOINT REGISTRAR, HAVELI C) 3,000 ADVOCATE FEES D) 800 ------------------- 62,700 BLACK AMOUNT TO BE PAID BEFORE THE AGREEMENT (W RITTEN IN PENCIL). 7.1 A BARE READING OF THE' ABOVE NOTING CLEARLY IN DICATES THAT THE ACTUAL SALE CONSIDERATION AGREED UPON UN RESPECT OF FLAT NO.18 WAS RS.14,29,400J- AND OUT OF WHICH, AN AMOUNT OF RS.2,85,880J- IS 'BLACK' (UNACCOUNTED SALE CONSIDERATION OR ON-MONEY), WHICH CONSTITUTES ABOUT 25% OF THE AGREEMENT VALUE FOR THE SAID FLAT. THE CLAIM OF THE APPELLANT IN THIS REGARD IS THAT THE SAID PAPER WAS NOT WRITTEN IN THE HANDWRITING OF THE PROPRIETOR OR THE RELATIVES OF THE PROPRIETOR AND I T IS ALSO NOT IN THE HANDWRITING OF ANY STAFF MEMBER OF THE APPELLANT. THE APPELLANT ARGUED THAT SEVERAL CUSTOMERS, SUPPLIERS, CONTRACTORS ETC. VISIT THE OFFICE PREMISES OF THE A PPELLANT FOR THEIR ENQUIRIES AND WORK AND THIS PAPER COULD BE BELONGING TO ONE OF THOSE PARTI ES AND SINCE IT WAS LEFT IN HIS OFFICE, THE SAME WAS FOUND DURING THE SURVEY OPERATIONS. IT IS FURTHER ARGUED BY THE APPELLANT THAT NO LINK EXISTS BETWEEN THE FIGURES AND DESCRIP TION RECORDED ON PAGE NO.28 AND THE FLAT NO.18 IN BUILDING 'A' OR BUILDING 'C' OR ANY O THER CONSTRUCTED AREA IN THE SCHEME KNOWN AS '5UKHWANI CITY'. THESE ARGUMENTS OF THE AP PELLANT ARE NOT WELL FOUNDED. FIRSTLY, THE SAID LOOSE PAPER NO. 28 WAS FOUND IN T HE BUSINESS PREMISES OF THE APPELLANT AND ON VERIFICATION OF THE AGREEMENT IN RESPECT OF FLAT NO. 18, THE AGREEMENT VALUE FOR THE SALE OF FLAT OF RS. 11,35,000/- MORE OR LESS TA LLIES WITH THE AMOUNT OF RS.11,43,520/- WRITTEN AS 'WHITE' IN THE IMPOUNDED DOCUMENT. THE A REA OF 1400 SQ.FT. NOTED ON THE SLIP ALSO MATCHES WITH THE AREA SHOWN IN THE AGREEMENT. THE DOCUMENT SPEAKS OF RECEIPTS IN 'BLACK' AND 'WHITE' IN NO UNCERTAIN TERMS. THE RECE IPTS SHOWN AS 'WHITE' MORE OR LESS TALLIED WITH THE AMOUNT SHOWN IN THE AGREEMENT AND BOOKS OF ACCOUNT. THEREFORE, IT IS A NATURAL CONSEQUENCE THAT THE RECEIPT IN 'BLACK' HAD ALSO BEEN MADE. FURTHER, THE NOTING MADE REGARDING REGISTRATION AMOUNTS ALSO DEMONSTRAT ES THAT THE ENTRIES MADE THEREIN REPRESENT THE ACTUAL SALE CONSIDERATION IN RESPECT OF FLAT NO.18 IN THE PROJECT KNOWN AS 'SUKWANI CITY'. FURTHER, THE ENTRIES RELATING TO CA R PARKING, MSEB, LIFT GENERATOR ETC. ALSO LEND AUTHENTICITY TO THE ENTRIES MADE IN THE DOCUME NT THAT THE FIGURES INDICATED THEREIN REPRESENT THE ACTUAL SALE CONSIDERATION RECEIVED BY THE APPELLANT FOR THE SALE OF FLAT NO.L8. THUS, THE DOCUMENT IS NOT A DUMB DOCUMENT BU T IT IS A SPEAKING DOCUMENT AND IT PERTAINED TO THE SALE OF FLATS I.E. BUSINESS TRANSA CTIONS OF THE APPELLANT. IN THESE CIRCUMSTANCES, THE CLAIM OF THE APPELLANT THAT THE LOOSE SHEET DOES NOT BELONG TO THE APPELLANT AND IT WAS LEFT BY ONE OF THE CUSTOMERS O R VISITORS TO THE OFFICE OF THE APPELLANT DOES NOT STAND TO REASON. THUS, THE IMPOUNDED DOCUM ENT IS AN ELOQUENT DOCUMENT REGARDING THE RECEIPT 'ON MONEY' BY THE APPELLANT. 7.2 AS REGARDS THE AFFIDAVIT FURNISHED BY THE APPE LLANT BEFORE THE ASSESSING OFFICER, PURPORTEDLY OBTAINED FROM THE BUYERS OF THE IMPUGNE D FLAT NO.L8, IT MAY BE MENTIONED THAT THOUGH THE SAID AFFIDAVIT IS FROM A THIRD PART Y, THE SAME IS GIVEN AT THE INSTANCE OF THE APPELLANT ONLY. THEREFORE, NO CREDENCE CAN BE G IVEN SO SUCH SELF SERVING AFFIDAVITS WHEN THE THIRD PERSON IS ALSO AN INTERESTED PARTY N THE PROJECT. AS REGARDS RELIABILITY OF 5 SELF-SERVING AFFIDAVITS, IT MAY BE RELEVANT TO REFE R TO THE DECISION OF ALLAHABAD' HIGH' COURT IN THE CASE OF SRI KRISHNA VS CIT REPORTED IN 142 ITR 618, WHEREIN IT IS OBSERVED AS UNDER: ''IT IS NEITHER A RULE OF PRUDENCE NOR A RULE OF LA W THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINS UNCONTROVERTED MUST INVARIA BLY BE ACCEPTED AS TRUE AND RELIABLE. ORDINARILY, IN THE ABSENCE OF DENIAL, THE STATEMENTS MAY BE ACCEPTED AS TRUE BUT IF THERE ARE CIRCUMSTANCES WHICH SUGGEST T HAT STATEMENTS ON AFFIDAVIT SHOULD NOT BE ACCEPTED AS RUE, THE ABSENCE OF DENIA L BY OTHER SIDE, WOULD NOT BY ITSELF BE SUFFICIENT TO CLOTHE THE STATEMENTS WITH TRUTHFULNESS AND RELIABILITY. ' REFERENCE CAN ALSO BE MADE TO THE DECISION OF THE I TAT CHANDIGARH IN THE CASE OF ITO VS. JAGAN NATH REPORTED IN 97 TIJ 265 WHEREIN THE ITAT HELD THAT IT IS NOT THE LAW THAT EVERY AFFIDAVIT IS TO BE ACCEPTED ON ITS FACE VALUE. AFFI DAVIT'S COLOUR SHOULD MATCH WITH OTHER MATERIALS ON RECORD AND SHOULD FIT INTO THE FACTS AND CIRCUMSTANCES OF THE CASE. ONLY THEN THE AFFIDAVIT HAS EVIDENTIARY VALUE. THUS, IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES AS DISCUSSED ABOVE, THE SELF SERVING AFFI DAVITS FILED BY THE APPELLANT IN SUPPORT OF HIS CLAIM THAT THE SALE CONSIDERATION FOR THE FL AT NO.18 IS AS SHOWN IN THE AGREEMENT CANNOT BE ACCEPTED. 7.3 HAVING HELD THAT THE NOTING MADE IN THE ABOVE SEIZED DOCUMENT DENOTES THE ACTUAL SALE CONSIDERATION RECEIVED BY THE APPELLANT FOR FLAT NO. 18 IN THE PROJECT OF THE APPELLANT, THE NEXT QUESTION THAT ARISES, ON THE BA SIS OF BLACK COMPONENT IN SALE CONSIDERATION OR ON-MONEY IN RESPECT OF ONE FLAT AS INDICATED IN THE SEIZED DOCUMENT, CAN THE ASSESSING OFFICER EXTRAPOLATE OR ESTIMATE THE O N-MONEY FOR ALL THE FLATS IN THE PROJECT KNOWN AS 'SUKHWANI CITY'. ONCE IT IS ESTABLISHED ON THE BASIS OF EVIDENCE FOUND DURING THE SURVEY THAT THE APPELLANT HAD RECEIVED 'ON MONE Y' IN RESPECT OF ONE FLAT SOLD, WHICH WAS NOT RECORDED IN THE REGULAR BOOKS OF A/C, IT IS FOR THE APPELLANT TO ESTABLISH THAT NO 'ON MONEY' WAS RECEIVED IN RESPECT OF SALE OF OTHER FLATS. WHEN EVIDENCE WAS FOUND OF APPELLANT HAVING RECORDED ONLY PART OF THE MONEY RE CEIVED IN RESPECT OF THE SALE OF FLATS AND THE OTHER PART NOT HAVING BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT, IT IS FOR THE APPELLANT TO ESTABLISH AS TO UNDER WHAT CIRCUMSTANC ES SUCH 'ON MONEY' WAS NOT CHARGED IN RESPECT OF SALE OF OTHER FLATS OF THE SAME PROJE CT. THE EVIDENCE FOUND CLEARLY INDICATES THAT THE APPELLANT IS IN THE HABIT OF RECEIVING ON- MONEY ON SALE OF FLATS. THUS, IF THERE IS MATERIAL ON RECORD TO ESTABLISH THAT THE APPELLANT HAS CHARGED 'ON MONEY' IN REGARD TO SALE OF FLATS WHICH IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT, IT IS PERMISSIBLE FOR THE ASSESSING OFFICER TO MAKE AN ESTIMATE IN RESPECT OF OTHER FLATS IN THE SAME PROJECT ON THE BASIS OF SUCH MATERIAL. IN MANY CASES, THE DEPARTME NT MIGHT NOT GET THE ENTIRE MATERIAL IN REGARD TO THE UNACCOUNTED TRANSACTIONS AND IN SU CH CASES THERE IS NOTHING WRONG IN ESTIMATING THE UNDISCLOSED INCOME IN RESPECT OF SUC H TRANSACTIONS WHICH ARE NOT RECORDED IN THE DIARIES, DOCUMENTS OR OTHER PAPERS. THIS PRINCIPLE IS UPHELD BY SUPREME COURT IN THE CASE OF H.M. ESUFALI H.M. ABDULALI (9 0 ITR 271). IN THAT CASE THE ASSESSING OFFICER HAD DETECTED SALES ) FOR 19 DAYS AS NOT HAV ING - BEEN ENTERED IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER ESTIMATED THE TURNO VER FOR THE ENTIRE YEAR BASED ON THE UNDISCLOSED SALES FOR THE PERIOD OF 19 DAYS. THE HO N'BLE SUPREME COURT UPHELD THE ESTIMATION OF INCOME BY THE ASSESSING OFFICER AS CO MPETENT. SIMILARLY, IN THE CASE OF OVERSEAS CHINESE CUISINE, THE ITAT MUMBAI HELD THAT WHEN THERE WAS EVIDENCE OF SUPPRESSED SALES FOR THREE MONTHS, THE ASSESSING OF FICER WAS ENTITLED TO ADOPT THE BASIS OF UNACCOUNTED SALES THROUGHOUT THE YEAR ON THE BAS IS OF SUCH MATERIAL. THE TRIBUNAL FURTHER OBSERVED THAT THE SAID MATERIAL COULD BE UT ILIZED FOR ESTIMATION OF UNACCOUNTED SALES IN EARLIER YEARS AS WELL AS IN SUBSEQUENT ASS ESSMENT YEARS. IN THE CASE OF THE APPELLANT, THE ESTIMATE OF ON-MONEY IN RESPECT OF S ALE OF FLATS WAS MADE BY THE A.O. AT 25% OF THE SALE CONSIDERATION SHOWN BY THE APPELLAN T IN THE REGULAR BOOKS OF ACCOUNTS. THE ESTIMATE WAS MADE ON THE BASIS OF THE QUANTUM O F 'BLACK COMPONENT' SHOWN IN THE SAID LOOSE SHEET NO. 28, WHICH IS ABOUT 25% OF THE CONSIDERATION RECORDED IN THE BOOKS OF A/C. THUS, THE BASIS FOR ESTIMATING THE ON-MONEY CO MPONENT IN RESPECT OF OTHER FLATS IN THE SAME PROJECT HAS NEXUS WITH FACTS DISCOVERED DU RING THE SURVEY OPERATIONS IN THE CASE OF THE APPELLANT. THEREFORE, BY NO STRETCH OF IMAGINATION IT CAN BE SAID THAT THE ESTIMATE IS ARBITRARY OR WITHOUT BASIS OR IT IS NOT A BONAFIDE ESTIMATE. AT THIS JUNCTURE, 6 REFERENCE CAN BE MADE TO THE DECISION OF ITAT, PUNE IN THE CASE OF KHOPADE KISANRAO MANIKRAO REPORTED IN 74 ITD 25 WHEREIN THE HON'BLE ITAT HELD AS UNDER: 28. THE CRUCIAL FACT IN THIS CASE IS THAT THE RECEI PT OF 'ON MONEY' IN RESPECT OF THE LAND DEALS HAS NOT ONLY BEEN ESTABLISHED BUT EVEN A DMITTED BY THE ASSESSEE. AS RIGHTLY HELD BY THE LEARNED JM, ONCE IT IS ESTABLIS HED THAT THE ASSESSEE HAD RECEIVED 'ON MONEY' IN RESPECT OF THE LAND DEALS WH ICH WERE NOT RECORDED IN THE REGULAR COURSE OF BUSINESS, IT WAS FOR THE ASSESSEE TO ESTABLISH THAT NO 'ON MONEY' WAS RECEIVED IN RESPECT OF SOME OF THE DEALS. IT HA D BEEN ARGUED BEFORE THE BENCH AS WELL AS BEFORE ME THAT IT WAS NOT NECESSAR Y THAT IN ALL CASES THE ASSESSEE,' WOULD HAVE RECEIVED 'ON MONEY'. IN CERTA IN CIRCUMSTANCES NO 'ON MONEY' MIGHT HAVE BEEN RECEIVED BY THE ASSESSEE. AS ALREADY POINTED OUT, WHEN EVIDENCE HAS BEEN FOUND OF ASSESSEE HAVING RECORDED ONLY PART OF THE MONEY RECEIVED IN RESPECT OF THE LAND DEALS AND THE OTHER PART NOT HAVING BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT, IT IS FOR THE ASSE SSEE TO ESTABLISH AS TO UNDER WHAT CIRCUMSTANCES SUCH 'ON MONEY' WAS NOT CHARGED IN RESPECT OF SOME OF THE LAND DEALS. I AGREE WITH THE FINDING OF THE LEARNED JM THAT APPARENT IS REAL UNLESS CONTRARY IS PROVED. IN THIS CASE THE CONSIDERATION RECEIVED BY THE ASSESSEE IN RESPECT OF THE LAND TRANSACTIONS WAS RECORDED IN TH E SALE DEEDS. THE CONSIDERATION RECORDED IN THE SALE DEEDS WAS APPARE NT AND IT WAS THEREFORE FOR THE REVENUE TO ESTABLISH THE CONTRARY. HOWEVER, IN THIS CASE, ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND ON T HE BASIS OF THE ADMISSION OF THE ASSESSEE THAT 'ON MONEY' WAS RECEIVED, IT HAS B EEN ESTABLISHED THAT WHAT IS APPARENT DOES NOT REFLECT THE TRUE STATE OF AFFAIRS . THEREFORE, THE BURDEN THAT RESTED WITH THE DEPARTMENT STANDS DISCHARGED. THE O NUS HAS SHIFTED TO THE ASSESSEE. IT IS IN THESE CIRCUMSTANCES THAT THE ASS ESSEE IS REQUIRED TO DISCHARGE THE ONUS FOR ESTABLISHING THAT IN RESPECT OF CERTAI N DEALS NO ON MONEY HAD BEEN RECEIVED. 7.4 IT MAY ALSO BE RELEVANT TO REFER TO THE DECISIO N OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF RAJNIK & CO., (251 ITR 561) WH EREIN THE HIGH COURT OBSERVED AS UNDER: IN THE LIGHT OF THE ABOVE DICTA OF THE SUPREME COUR T IF ONE LOOKED INTO THE FACTS OF THE CASE, IT WAS CLEAR THAT THERE WAS ABUNDANT MATE RIAL ON RECORD NOT ONLY IN THE FORM OF LEASE SLIPS/ SHEETS SHOWING THE SUPPRESSED TURNOVER RELATING TO THE DAY- TO-DAY SUPPRESSIONS BUT ALSO BY WAY OF ADMISSION IN THE SWORN STATEMENT OF A PARTNER OF THE FIRM, SHOWING THAT THE DAY-TO-DAY SU PPRESSIONS WERE CARRIED ON THROUGHOUT THE ASSESSMENT YEARS FOR THE ENTIRE BLOC K PERIOD. THEREFORE, THERE WAS ABSOLUTELY NO MERIT IN THE CONTENTION OF THE AS SESSEE THAT THE ESTIMATIONS MADE BY THE ASSESSING OFFICER AS WELL AS BY THE TRI BUNAL WERE NOT BASED ON ANY MATERIAL BUT MERELY BASED ON CONJECTURES AND HYPOTH ESES. THOUGH THE APPELLANT DISOWNED THE IMPOUNDED DOCUMEN T AND THE ENTRIES RECORDED THEREIN UNLIKE IN THE CASES REFERRED ABOVE, THE ENT RY RELATING TO THE AGREEMENT VALUE IS MORE OR LESS CORROBORATED BY THE AGREEMENT VALUE SH OWN IN THE BOOKS OF ALE MAINTAINED BY THE APPELLANT. IN THE INSTANT CASE, THE LOOSE SH EET FOUND WAS NOT THE COMPLETE RECORD OF THE PAYMENTS OF UNACCOUNTED MONEY RECEIVED BY TH E, APPELLANT. THEREFORE, THE PRINCIPLE LAID DOWN IN THE ABOVE CASES IS APPLICABL E TO THE FACTS OF THE PRESENT CASE. SUCH LOOSE SLIPS NOT HAVING BEEN MAINTAINED IN THE REGUL AR COURSE OR IN CHRONOLOGICAL ORDER, THE COMPUTATION OF UNDISCLOSED INCOME NEED NOT BE L IMITED TO THE TRANSACTIONS RECORDED IN SUCH LOOSE SHEETS AND ALL RELEVANT PROVISIONS OF ACT ARE ATTRACTED INCLUDING SECTION 145. EVEN WITHOUT AID OF SECTION 145, ASSESSING OFFICER HAD POWER TO ESTIMATE INCOME UNDER SECTION 143(3) WITH REFERENCE TO MATERIAL AVAILABLE TO HIM. 7.5 COMING TO THE DECISIONS RELIED UPON BY THE APP ELLANT IN THE CASE OF MUSTAQ AHMED VS. ACIT (66 TTJ 305), IN THAT CASE ASSESSING OFFICER HAD IDENTIFIED AND ASCERTAINED UNDISCLOSED EXPENDITURE AND IN THAT CON TEXT IT WAS HELD THAT AN ESTIMATION 7 BASED ON ASSETS AND EXPENDITURE WAS BETTER THAN MAK ING A WILD GUESS ESTIMATION BY WAY OF A POSITIVE WORKING AS DONE BY ASSESSING OFFICER . SIMILARLY, IN THE CASE OF DR. RML MEHROTRA (68 ITO 288), IT WAS A CASE OF DOCTOR AND ON THE FACTS OF THE CASE IT WAS HELD THAT THE ASSESSING OFFICER COULD ONLY MAKE ADDITION IN RESPECT OF ENTRIES FOUND IN SEIZED NOTE BOOK. THESE DECISIONS WERE RENDERED IN A DIFFE RENT FACTUAL CONTEXT AND CANNOT BE EXTENDED TO THE CASE OF THE APPELLANT, ENGAGED IN T HE BUSINESS OF DEVELOPMENT OF PROPERTIES AND SALE OF CONSTRUCTED AREA. 7.6 THE OTHER CONTENTION OF THE APPELLANT IS THAT I F ON-MONEY TO THE EXTENT OF 25% OF THE AGREEMENT VALUE WAS RECEIVED ON SALE OF FLATS, SUBS TANTIAL CASH OR OTHER UNDISCLOSED INVESTMENTS /EXPENDITURE SHOULD HAVE BEEN FOUND DUR ING THE SEARCH AND SEIZURE OPERATIONS. BUT DURING SEARCH OPERATIONS, NO SUCH A SSETS OR ANY EVIDENCES INDICATING INVESTMENTS OUT OF THE CASH SO GENERATED WERE FOUND . THIS ARGUMENT ALSO CANNOT BE ACCEPTED. AS MENTIONED BY THE ASSESSING OFFICER, TH E APPELLANT GROUP WAS SUBJECTED TO SEARCH IN THE YEAR 1996 AND OBVIOUSLY HE WOULD BE C AUTIOUS IN MAINTAINING RECORDS FOR UNDISCLOSED/UNRECORDED TRANSACTIONS/ASSETS. THEREFO RE, MERELY BECAUSE THE ASSETS CORRESPONDING TO THE ON-MONEY COMPONENT WERE NOT FO UND DURING THE SEARCH, IT CANNOT BE SAID THAT THE APPELLANT HAS NOT RECEIVED ON MONE Y FROM SALE OF FLATS IN SUKHWANI CITY. AS ALREADY MENTIONED, ONCE EVIDENCE WAS FOUND FOR O N-MONEY TRANSACTION IN RESPECT OF ONE FLAT, THE ONUS IS ON THE APPELLANT TO PROVE THA T HE HAS NOT RECEIVED ON-MONEY IN RESPECT OF OTHER FLATS. BUT EXCEPT DISOWNING THE IM POUNDED PAPER AND DENYING THE TRANSACTIONS NOTED THEREIN, THE APPELLANT HAS NOT C OME FORWARD WITH ANY OTHER EVIDENCE TO SHOW THAT THEY HAVE NOT RECEIVED ON-MONEY ON SA LE OF FLATS. 7.7 IN VIEW OF THE ABOVE FACTS AND IEGAL POSITION, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER IS JUSTIFIED IN MAKING AN ESTIMAT E ON THE BASIS OF THE EVIDENCES FOUND DURING THE SURVEY OPERATION IN RESPECT OF ON-MONEY COMPONENT IN THE SALE OF FLATS. ACCORDINGLY, THE ADDITIONS MADE BY THE ASSESSING OF FICER ON ACCOUNT OF ON-MONEY @ 25% OF THE SALES CONSIDERATION SHOWN IN THE BOOKS OF AC COUNTS FOR THE RESPECTIVE ASSESSMENT YEARS UNDER APPEAL ARE UPHELD. GROUND OF APPEAL NO. 2 FAILS. IN SUM AND SUBSTANCE THE LD. CIT(A) REJECTED ALL T HE CONTENTIONS OF THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIE S AND PERUSED THE RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT ASSESSEES RESIDENCE WAS COVERED IN THE SEARCH AND THE SURVEY ACTION WAS TAKEN U/S.133A OF THE ACT IN THE BUSINESS PREMISES ON 14- 06-2006. THE LEARNED COUNSEL REFERRED TO PAPER BOOK AND SUBMITS THAT THE ALLEGED DOCUMENT IS UNSIGNED AND THE SAID DOCUMENT DOES NOT BELONG TO T HE ASSESSEE. HE SUBMITS THAT THERE IS NO CLEAR IDENTITY IN RESPECT OF THE FLAT NOR THERE IS A NAME ON THE SAID ALLEGED SEIZED DOCUMENT WHO IS THE OWNER OF THE FLAT. HE SUBMITS THAT IN THE STATEMENT RECORDED IN THE COURS E OF SEARCH, THE ASSESSEE CATEGORICALLY DENIED EVEN THE KNOWLEDGE OF THE SAID SEIZED PAPER. HE REFERRED TO PAGE NO.18 OF THE PAPER BOOK AND SUBMIT S THAT AT THE TIME OF SEARCH ACTION ITSELF IN THE STATEMENT RECORDED U/S. 132(4) ON 15-06-2006, THE ASSESSEE STATED IN REPLY TO QUESTION NO.15 THAT IT WAS NOT WRITTEN BY HIM OR 8 HIS BROTHER SURESH T. SUKHWANI OR ANY OF OTHER EMPL OYEES. HE SUBMITS THAT THE PURCHASER OF THE FLAT ALSO DENIED TO HAVE MADE ANY PAYMENT OVER AND ABOVE THE CONSIDERATION SHOWN IN THE SALE AGREEMENT . HE FURTHER SUBMITS THAT THE PURCHASER OF THE FLAT HAS ALSO AN AFFIDAVI T DENYING ANY PAYMENT OVER AND ABOVE SALE CONSIDERATION IN THE AGREEMENT. HE VEHEMENTLY ASSAILED THE GENERAL ENQUIRY MADE BY THE INSPECTOR AND SUBMITTED THAT NOTHING WAS CONFRONTED TO THE ASSESSEE BEFORE THE ADDITION WAS MADE. HE PLEADED FOR DELETING THE ADDITION OR ALTERNATIVELY SUBMITTED TH AT THE ADDITION SHOULD BE SUSTAINED TO THE EXTENT OF THE ALLEGED EXCESS SALE CONSIDERATION SHOWN IN THE SAID SEIZED PAPER. 7. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITS THAT AS PER THE PROVISIONS OF LAW ONCE T HE PAPER IS SEIZED FROM THE POSSESSION OF THE ASSESSEE DISCLOSING UNACCOUNT ED SALE CONSIDERATION, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE WRI TINGS ON THE SEIZED PAPER ARE NOT CORRECT. MERE BLANK DENIAL BY THE ASSESSEE IS NOT SUFFICIENT AS NOBODY IS GOING TO ACCEPT THE EVIDENCE OF THE UNREC ORDED TRANSACTIONS. MOREOVER, THE AGREEMENT VALUE TALLY WITH DOCUMENTS AND HENCE IT CANNOT BE SAID THAT THE LD. CIT(A) IS WRONG TO CONFIRM THE OR DERS OF THE ASSESSING OFFICER. 8. IN THE PRESENT CASE, ADMITTEDLY, OTHER THAN THE LOOSE PAPER, THERE IS NO OTHER SEIZE MATERIAL OR ANY DOCUMENT. THE DOCUM ENT IS ONLY SEIZED DURING THE COURSE OF SURVEY ACTION U/S.133A AND NOT DURING THE COURSE OF SEARCH ACTION. AS REPRODUCED BY THE AO, NOTINGS ON THE SEIZED PAPER ARE AS UNDER : PAGE NO.28: WORKING OF COST OF FLAT NO.18 ON THIS PAGE IS AS UNDER : RS.1021 X 1400 - 14,29,400/- AGREEMENT VALUE - 11,43,520/- (WHITE) + 2,85,880/- (BLACK) REGISTRATION A) 47,400 JOINT DIST. REGISTRAR, P UNE B) 11,500 JOINT REGISTRAR, HAVELI C) 3,000 ADVOCATE FEES D) 800 ------------------- 62,700 BLACK AMOUNT TO BE PAID BEFORE THE AGREEMENT (WR ITTEN IN PENCIL) ADMITTEDLY, EVEN IN THE COURSE OF SEARCH NOTHING WA S FOUND. NOW THE QUESTION IS WHETHER ON THE BASIS OF A SINGLE NOTING ON THE PAGE, IS THERE ANY JUSTIFICATION IN COMING TO THE CONCLUSION THAT ASSE SSEE WAS INDULGING INTO 9 TAKING THE SALE CONSIDERATION TO THE EXTENT OF 25% OF THE FLATS SOLD BY HIM IN BLACK OR AS ON MONEY. 9. WE HAVE EXAMINED THE CONTENTS OF THE SEIZED DOCU MENT. WE FIND THAT THERE IS NO MENTION OF ANY NAME, NOR ANY BUILDING O R ANY WING. THOUGH WE PRESUME MANY OF THE THINGS AND PRESUMPTIONS MAY BE RIGHT ALSO, BUT IN THE JUDICIAL DECISION THE EVIDENCE IS REQUIRED. WE DO NOT AGREE WITH THE ASSESSEE THAT THE SAID LOOSE PAPER DOES NOT BELONG TO HIM NOR HE HAS NO KNOWLEDGE ABOUT THE SAID PAPER. EVEN THE DEFENCE O F THE ASSESSEE IS NOT ACCEPTED THAT THE SAID PAPER MAY BE LEFT WITH BY SO ME OTHER PERSON IN HIS OFFICE. BUT AT THE SAME TIME, WE HAVE TO EXAMINE WH ETHER THERE IS ANY SUPPORTING EVIDENCE TO PRESUME THAT THE ASSESSEE HA S ACCEPTED ON MONEY OVER AND ABOVE THE SALE PRICE OR CONSIDERATION DECL ARED IN THE AGREEMENT TO SALE. ADMITTEDLY, THE ENTIRE ASSUMPTION IS BASED O NLY ON THE SINGLE LOOSE PAPER. AS THERE IS NO OTHER EVIDENCE TO SHOW THAT THE ASSESSEE WAS INDULGED INTO ACCEPTING ON MONEY ON FLAT NO.18, W E HAVE TO RESTRICT THE ADDITION TO SAID TRANSACTION ALONE. IN OUR OPINION , THE ADDITION CANNOT GO BEYOND THE ON MONEY SHOWN IN THE SEIZED PAPER, I. E. RS.2,85,880/- AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HAT THE AGREEMENT OF THE FLAT NO.18 WAS ENTERED INTO ON 03-01-2005 AND HENCE THE SAID ADDITION IS TO BE SUSTAINED IN A.Y. 2005-06. 10. WE ACCORDINGLY DELETE THE ADDITIONS ON THIS ISS UE BY THE AO IN THE A.Y. 2003-04, 2004-05, AND 2006-07 AT ENTIRETY AND SUSTA INED THE ADDITION TO THE EXTENT OF RS.2,85,880/- IN A.Y. 2005-06. 11. IN THE RESULT, THE GROUNDS TAKEN IN A.Y. 2003-0 4, 2004-05 AND 2006- 07 ARE ALLOWED AND THE GROUND TAKEN ON THIS ISSUE I N A.Y. 2005-06 IS PARTLY ALLOWED. 12. THE NEXT ISSUE IS WHETHER THE ADDITION OF RS.9, 69,573/- MADE BY THE AO BY HOLDING THAT THE CAPITAL GAIN ON THE SALE OF SHARES OF DATABASE FINANCE COMPANY WERE OUT OF THE FICTITIOUS TRANSACTION AND THIS ISSUE ARISES IN A.Y. 2003-04. 13. RELEVANT FACTS REVEALED FROM THE RECORD ARE AS UNDER : THE ASSESSEE HAS SHOWN SALE OF SHARES OF THE DATAB ASE FINANCE LTD. AND DECLARED THE LONG TERM CAPITAL GAIN OF RS.9,18, 957/-. THE AO HAS GIVEN 10 THE DETAILS OF THE PURCHASE AND SALE OF SHARES IN T HE ASSESSMENT ORDER AS UNDER : PURCHASE DATE NAME OF THE BROKER QUANTITY PURCHASE AMOUNT DEMAT IN DATE 02-05-2001 SHALLEE SECURITIES, MUMBAI 11000 13365 30-10-2002 SALE DATE NAME OF THE BROKER QUANTITY SALE AMOUNT DEMAT OUT DATE 02-11-2002 ACTION FINANCIAL SERVICES (INDIA) PVT. LTD. 11000 9,32,282 05-11-2002 14. THE AO HAS OBSERVED THAT THE BOMBAY STOCK EXCHA NGE (BSE) AND SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) HAS M ADE A FULL FLEDGED ENQUIRIES IN RESPECT OF THE PURCHASE AND SALE OF SH ARES OF DATABASE FINANCE LTD. AND IT WAS FOUND THAT THE PRICES OF SAID SHARE S WERE MANIPULATED. IT WAS OBSERVED THAT SEBI SUSPENDED THE LICENSE OF BRO KERS M/S. VIJAY BHAGWANDAS & CO. DPS SHARES AND SECURITIES PVT. LTD . T.H. VAKIL SHARES SECURITIES PVT. LTD. AND SEVERAL OTHER ENTITIES FOR PRICE MANIPULATION. THE AO DOUBTED THE GENUINENESS OF THE LONG TERM CAPITAL GA IN DECLARED BY THE ASSESSEE. WHILE RAISING THE GENUINENESS OF THE DOU BT THE AO HAS GIVEN THE FOLLOWING REASONS: 1. PAYMENT FOR THE PURCHASE OF SHARES HAS BEEN DON E IN CASH. 2. THE PURCHASE TRANSACTION IS NOT ROUTED THROUGH THE BSE BOLT SYSTEM. IT IS AN OFF MARKET DEAL. 3. SHARES HAVE COME TO THE DEMAT ACCOUNT AFTER SEV ERAL MONTHS OF PURCHASE, I.E. IN AND AROUND THE DATE OF SALE. 4. SHARE WAS PURCHASED ON 02-05-2001, SHARE HAS COM E IN THE DMAT ACCOUNT ONLY ON 31-10-2002. WHAT HAPPENED IN BETWEEN THIS TIME IS NOT KNOWN. THERE IS NO THIRD PARTY DOCUMENTARY EVIDENCE REGARDING THE DELIVERY L IKE POSTAL PROOF. THERE IS NO THIRD PARTY EVIDENCE TO SHOW THAT THE ASSESSEE SENT SHARE S FOR DMAT. THUS, THE ISSUE OF DATE OF PURCHASE AND DELIVERY IS HIGHLY QUESTIONABLE. 5. THE MUMBAI BROKERS WHO WERE PART OF THE RING WHI CH USED THE MANIPULATE THE PRICE IN THIS SCRIP HAVE CATEGORICALLY ADMITTED THA T THEY/THEIR EMPLOYEES HAVE GIVEN ACCOMMODATION ENTRIES TO THE NEEDY AT THEIR REQUEST . 6. DURING PROBE BY INVESTIGATION WING BY INCOME TAX DEPARTMENT, MUMBAI, ALL THE BROKERS IN THIS RING HAVE ADMITTED THAT THE PURCHAS E TRANSACTIONS REGARDING THE SHARES OF DATABASE FINANCE LIMITED WAS NOT GENUINE. 7. SHARES COME TO THE ASSESSEES DEMAT ACCOUNT THRO UGH AN ENTITY OTHER THAN THE BROKER WHO SOLD THE SHARES. 8. THE FUNDAMENTALS OF THE COMPANY WERE NEGATIVE AN D THE COMPANY HAD INCOME OF NOT MORE THAN COUPLE OF LAKHS. HOWEVER, THERE W AS A HUGE PRICE FLUCTUATION. 11 IN SUM AND SUBSTANCE THE AO FINALLY CONCLUDED THAT IT WAS ONLY THE ACCOMMODATION ENTRY FROM THE BROKER WITH THE SOLE I NTENTION OF SHOWING HUGE LONG TERM CAPITAL GAINS. THE AO, THEREFORE, T REATED THE ENTIRE SALES PROCEEDS OF 1000 SHARES OF THE DATABASE FINANCE LTD . AT RS.19,32,282/- AS UNDISCLOSED INCOME AND AS WELL AS OF RS.37,291/- TH AT WAS TOWARDS ALLEGED PAYMENT OF COMMISSION AT 4% TO THE BROKER FOR GETTI NG ACCOMMODATION ENTRY. 15. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE LD. CIT(A) WITH THE DETAILED REASONING CONFIRMED THE AC TION OF THE AO. OPERATIVE PART OF THE REASONINGS OF THE LD. CIT(A) IS AS UNDER : 10. THE SUBMISSIONS OF THE APPELLANT HAVE BEEN CAR EFULLY CONSIDERED AND THE MATERIAL AVAILABLE ON RECORD PERUSED. DURING THE SEARCH AND SEIZURE OPERATIONS CONDUCTED BY THE INVESTIGATION WING, MUMBAI IN THE MONTH OF JANUARY, 2006 IN THE OFFICE AND RESIDENTIAL PREMISES OF SEVERAL STOCK BROKERS AND MANAGERS OF F INANCE COMPANIES AND SEVER-AL OTHER PERSONS, IT WAS FOUND THAT THERE WAS A LARGE SCALE OF MANIPULATION IN THE PURCHASE AND SALE OF SHARES, IN PARTICULAR, THE SHARES OF M/ S. DATABASE FINANCE LTD AND M/S. FAST TRACK ENTERTAINMENT LTD. DURING THE ENQUIRIES BY TH E INVESTIGATION WING, STATEMENT OF ONE SHRI MILAN RAMNIKLAL PAREKH, MANAGING DIRECTOR OF M/S. ACTION FINANCIAL SERVICES (I) PVT. LTD. SHARE BROKERS THROUGH WHOM THE APPELLANT CLAIMED TO HAVE SOLD THE SHARES OF DATA BASE FINANCE LTD., WAS RECORDED ON 20/01/2006. IN THE STATEMENT, HE HAS CLEARLY STATED THAT ONE OF THEIR EMPLOYEES HAS RECORDED OFF MARKET TRANSACTIONS IN A FEW SCRIPS INCLUDING DATA BASE AND FAST TRACK. IT WAS ALSO ST ATED BY THE MANAGING DIRECTOR OF THE SAID COMPANY THAT THEY HAVE ISSUED BOGUS BILLS TO S OME PARTIES SHOWING DATE OF TRANSACTION AS DESIRED BY THEM AND THE OPERATOR AND THEY ARE NOT GENUINE TRANSACTIONS. THE RELEVANT QUESTIONS AND ANSWERS ARE EXTRACTED BE LOW FROM THE STATEMENT : Q.NO.1 PLEASE IDENTIFY YOURSELF. PLEASE STATE WHETH ER CONSEQUENCES OF GIVING FALSE STATEMENT ARE EXPLAINED TO YOU? ANS. I SHRI MILAN RAMNIKLAL PAREKH, AGED 46 RESIDIN G AT 314, VEENA VIHAR, 174, BLANK ROAD, SION, MUMBAI- 22. I ALSO STATE THAT THE CONSEQUENCES OF GIVING WRONG STATEMENT ARE EXPLAINED TO ME. .. . . . . . . . . . . . Q.NO.5 YOU ARE MEMBER OF WHICH STOCK EXCHANGE? ANS. I AM A MEMBER OF BOMBAY STOCK EXCHANGE AND N ATIONAL STOCK EXCHANGE. Q.NO.6 YOU HAVE CARRIED OUT ANY OFF MARKET DEALING IN RESPECT LIKE DATA BASE FINANCE LTD AND FAST TRACK ENTERTAINMENT? ANS. WE NORMALLY DO NOT CARRY OUT OFF MARKET DEALIN G. HOWEVER, FEW YEARS BACK SOME OPERATORS IN CAPITAL GAIN BUSINESS, THROU GH ONE OF OUR EMPLOYEES, RECORDED SOME OFF-MARKET TRANSACTIONS IN A FEW SCRI PS INCLUDING DATA BASE AND FAST TRACK. WE APPRISE THAT THESE ARE NOT GENUINE O FF-MARKET TRADE AND ONLY BILLS HAVE BEEN ISSUED BY USING OUR STATIONERY AND SYSTEM . THESE BILLS ARE ISSUED SHOWING DATE OF TRANSACTIONS DESIRED BY THE CLIENT AND THE OPERATOR. Q.NO.7 WHO ARE THESE OPERATORS AND CLIENTS? ANS. I DON'T KNOW THE OPERATORS ARE PUT I HAVE LEAR NED THAT ONE SHRI SHRIRISHH SHAH HAVING OFFICE AT 2ND FLOR, MOHANLAL BUILDING, NEXT TO GOLDEN WHEEL 12 RESTAURANT, GIRGAON, MUMBAI -4 WAS ONE OF THE PERSO NS INVOLVED. I AM READY TO GIVE YOU THE DETAILS OF BILLS ISSUED. 10.1 FURTHER, IN THE COURSE OF INVESTIGATIONS, A S TATEMENT OF SHRI PRATHIK SHAH WHO WAS ONE OF THE DIRECTORS OF DPS SHARES & SECURITIES, MU MBAI WAS ALSO RECORDED ON 28/03/2006 AND IN THE STATEMENT HE CATEGORICALLY ST ATED THAT IN THE CASE OF SHARES OF SOME COMPANIES INCLUDING FAST TRACK ENTERTAINMENT L TD., THEY WERE ISSUING OFF- MARKET PURCHASE BILLS WHICH WERE NOT GENUINE TO THE NEEDY PEOPLE WHO APPROACHED THEM. IT IS ALSO STATED THAT THEY WERE ONLY ACCOMMODATION ENTRI ES PROVIDED TO THE NEEDY PERSONS GIVEN BY THE BROKERS FOR A COMMISSION OF TWO PAISA PER SHARE. THE RELEVANT QUESTIONS AND ANSWERS FROM THE STATEMENT ARE REPRODUCED AS UNDER: Q.NO.6 PLEASE EXPLAIN IN DETAIL WHAT EXACTLY YOU WE RE DOING IN THE CASE OF FAST TRACK ENTERTAINMENT. ANS. IN THE CASE OF ABOVE COMPANY, WE WERE ISSUING OFF-MARKET PURCHASE BILLS WHICH WERE NOT GENUINE, TO THE NEEDY PEOPLE WHO APP ROACHED US. Q. NO.10 PLEASE EXPLAIN THE OPERATIONAL PART OF ISS UANCE OF THE ABOVE OFF-MARKET PURCHASE BILLS. ANS. SINCE THERE IS NO TRANSACTION DONE ON THE BOTT WS AND THE SAID ABOVE TRANSACTIONS ARE SAID TO BE OFF-MARKET DEAL. THESE ARE THE ACCOMMODATION ENTRIES/ TRANSACTIONS GIVEN BY US TO THE SAID ABOVE CLIENTS. Q. NO.12 WHAT WAS THE PERCENTAGE OF COMMISSION RECE IVED BY YOU FOR ISSUANCE OF ACCOMMODATION ENTRIES/ BILLS. ANS. THE COMMISSION WHICH WE GOT WAS 0.02 PAISA P ER SHARE. Q.NO.14 DO YOU CONFIRM THAT YOU WERE ISSUING BACK D ATED ACCOMMODATION BILLS IN FAST TRACK ENTERTAINMENT LTD. TO THE NEEDY PEOPLE W HO APPROACHED YOU WHERE IN FACT NO GENUINE TRANSACTIONS HAVE BEEN TAKEN PLACE. ANS. YES, I DO CONFIRM WHAT I HAVE STATED ABOVE. 10.2 SIMILAR STATEMENT WAS RECORDED FROM OTHER BRO KER, NAMELY, SHRI NARENDRA RAMANLAL SHAH, ACCOUNTS OFFICER OF M/S. TH WAKIL SE CURITIES SHARES PVT. LTD. ON 19/03/2006. THUS, THE STATEMENTS RECORDED OF THE PE RSONS SEARCHED AND BROKERS REVEALED THAT THE SHARES OF THE ABOVE MENTIONED COM PANIES ARE SHOWN TO HAVE BEEN PURCHASED BY SEVERAL PERSONS 12 MONTHS PRIOR TO THE DATE(S) OF SALE OF SHARES TO FACILITATE THE CONCERNED PERSONS TO CLAIM THAT THEY WERE HOLDI NG SHARES AS A 'LONG TERM CAPITAL ASSET', SO THAT THE SALE CONSIDERATION ON SALE OF T HESE SHARES COULD BE CLAIMED AS EXEMPT UNDER SEE 10(38) OF THE LT. ACT. THESE PERSONS ARE CLAIMED TO HAVE PURCHASED SHARES, IN PHYSICAL FORM THROUGH SHARE BROKERS, WHO HAVE ISSUE D THE BACK-DATED CONTRACT NOTES SHOWING DATE OF PURCHASE PRIOR TO THE ACTUAL DATE O F PURCHASES OF SHARES. IN OTHER WORDS, THE DATE OF PURCHASE OF SHARES IS ANTE-DATED OR MAN IPULATED IN SUCH A WAY THAT PERIOD OF HOLDING PRIOR TO THE SALE WAS 12 MONTHS OR MORE. IN REALITY, THERE WAS NO ACTUAL PURCHASE TRANSACTION AT ALL AS ON THE DATE OF PURCHASE SHOWN IN STATEMENTS OF SHARE BROKERS AND ACTUAL TRANSFER OR DELIVERY OF SHARES HAD NOT TAKEN PLACE ON THE SAID DATE. THE PERSONS HAVE CONVERTED THE SHARES IN DE-MAT FORM, HARDLY A FEW DAYS/WEEKS, BEFORE THE SALE. THE SALE IS SHOWN TO HAVE BEEN DONE BY THE PERSON IN WH OSE FAVOUR ENTRY FOR SALE OF SHARES IS TO BE GIVEN. THE SALE OF SHARES HAS ALSO BEEN ARRAN GED BY BROKERS ON ARTIFICIALLY JACKED UP PRICE, WHICH IS 70-80 TIMES OF PURCHASE PRICE OF SH ARES. IN THE ABOVE TRANSACTIONS, THE EQUIVALENT AMOUNT OF SALE CONSIDERATION OF SHARES I NCLUDING THE COMMISSION IS PASSED ON TO THE CONCERNED BROKER BY CASH AND, IN TURN, THE S ALE CONSIDERATION IS PAID BY CHEQUE BY THE BROKER TO THE BENEFICIARY. THE PURPOSE BEHIND T HE ENTIRE ARRANGEMENT IS TO CONVERT THE UNACCOUNTED MONEY OF THE BENEFICIARIES AND TO B RING THE SAME INTO THE REGULAR BOOKS OF ACCOUNT IN THE GARB OF EXEMPTED LONG TERM CAPITA L GAIN ON SALE OF SHARES. IN SHORT, THE WHOLE ARRANGEMENT OR SCHEME IS A MONEY-LAUNDERING D EVICE AND THE MODUS OPERANDI OF 13 THE SAME IS AS FOLLOWS: I) THE SHARES OF THE CERTAIN COMPANIES, KNOWN AS PE NNY STOCKS, ARE SHOWN TO HAVE BEEN PURCHASED BY SOME PERSONS AT THE PREVAILI NG MARKET RATE OF RS.1.00 TO 3.00 PER SHARE ON A PARTICULAR DATE TO FACILITATE T HE BENEFICIARIES TO CLAIM HOLDING OF SHARES FOR 12 MONTHS OR MORE PRIOR TO THE SALE. BUT, IN FACT THERE IS NO REAL PURCHASE OF SHARES BY THE SAID PERSONS AT ALL. THE PURCHASE COST OF THE SHARES IS SHOWN TO HAVE BEEN PASSED ON TO THE BROKER CONCERNE D IN CASH. THE SHARES ARE DEMATERIALIZED JUST BEFORE SALE TO GIVE A COLOUR OF GENUINENESS TO THE TRANSACTIONS. II) THE BROKER, WHO MANIPULATED THE PURCHASE OF SHA RES, ARRANGES FOR THE ENTRY OF SALE OF THE SAID SHARES IN SUCH A WAY THAT THE HOLD ING PERIOD OF THE SHARES WAS MORE THAN 12 MONTHS PRIOR TO THE SALE. THE EQUIVALE NT AMOUNT OF SALE CONSIDERATION OF SHARES INCLUDING THE COMMISSION IS PASSED ON TO THE BROKER CONCERNED IN CASH AND, IN TURN, THE SALE III) THE SOLE PURPOSE BEHIND THE ENTIRE ARRANGEMENT IS TO LAUNDER THE BLACK MONEY THROUGH LONG TERM CAPITAL GAINS ON TRANSFER OF SHAR ES AS THE TAX LIABILITY ON SUCH INCOME IS EITHER NIL OR @ 10% AS THE CASE MAY BE. 10.3 THE SEARCH OPERATIONS AT MUMBAI HAVE ALSO REV EALED THAT THERE ARE NUMBER OF BENEFICIARIES OF SUCH ARRANGEMENT AT PUNE ALSO BY S HOWING THE ALLEGED PURCHASES AND SALES OF SHARES OF M/S. FAST TRACK ENTERTAINMENT LT D. & M/S. DATABASE FINANCE LTD. IN THE CASE OF APPELLANT ALSO, 11000 SHARES OF DATABAS E FINANCE LTD. ARE SHOWN TO HAVE BEEN PURCHASED THROUGH SHARE BROKER, M/S. SHAILEE S ECURITIES, MUMBAI FOR A CONSIDERATION OF RS.13,365/- ON 02/05/2001 AT RS.1. 215 PER SHARE. THE ENTIRE CONSIDERATION OF RS.13,365/- WAS CLAIMED TO HAVE BE EN PAID IN CASH. THE SHARES WERE CREDITED TO DE-MAT ACCOUNT ON 30-10-2002 AFTER A GA P OF ABOUT 1 YEARS. SOON AFTER CREDITING TO THE DEMAT ACCOUNT, THE SHARES ARE SHOW N TO HAVE BEEN SOLD THROUGH ANOTHER BROKER, NAMELY, ACTION FINANCIAL SERVICES LTD. ON 3 1/10/2002 FOR A CONSIDERATION OF RS.9,32,282/-. THE FACTUAL MATRIX OF THE CASE ,FROM THE PURCHASE OF SHARES OF DATABASE FINANCE LTD AT THE RATE OF RS.1.215 PER SHARE OF ON E RUPEE, PAYMENT OF ENTIRE PURCHASE CONSIDERATION OF RS.13,365/- BY CASH TO THE BROKER, HOLDING OF SHARES IN PHYSICAL FORM, DE- MATING OF THE SHARES IN OCTOBER 2002 I.E. JUST PRIO R TO THE SALE OF SHARES AND THE SALE OF SHARES ON A SINGLE DATE I.E. 31/10/2002 AT A RATE R ANGING FROM RS. 84.75 TO RS.84.95 CLEARLY INDICATE THAT THIS IS ALSO AN ARRANGEMENT T HROUGH ONE OF THE BROKERS AND SHARES OF DATA BASE FINANCE TO BRING IN THE UNACCOUNTED INCOM E OF THE APPELLANT IN THE GUISE OF EXEMPTED LONG TERM CAPITAL GAINS. SUCH TYPES OF COM PANIES FUNCTION IN THE CAPITAL MARKET AND SALE PRICE OF SHARES OF THESE COMPANIES IS MANIPULATED TO ASTRONOMICAL HEIGHT ONLY TO CREATE THE ARTIFICIAL TRANSACTION IN THE FORM OF CAPITAL GAIN. ALL THESE FACTS ONLY LEAD TO THE INFERENCE THAT THE TRANSACTIONS AR E NOT GENUINE AND MAKE BELIEVE ONLY TO LAUNDER THE UNDISCLOSED INCOME OF THE APPELLANT. 10.4 THE ACCOUNT EXTRACT OF THE APPELLANT IN THE B OOKS OF THE SHARE BROKER, WAS NOT FURNISHED BY THE APPELLANT BEFORE THE A.O. OR DURIN G THE PRESENT APPELLATE PROCEEDINGS. NO CONFIRMATION LETTER WAS FURNISHED FROM THE BROKE RS CONCERNED FOR THE ALLEGED TRANSACTIONS IN SHARES OF DATABASE FINANCE LTD. THU S, THOUGH ADEQUATE OPPORTUNITY WAS GIVEN TO THE APPELLANT TO PROVE THE GENUINENESS OF THE SHARE TRANSACTIONS, THE APPELLANT HAS NOT DISCHARGED THE ONUS THAT LAY UPON HIM AND F AILED TO SUBSTANTIATE THE CLAIM WITH CORROBORATIVE EVIDENCE. WHEN THE SHARES WERE ACQUIR ED IN A PHYSICAL FORM AND THE ENTIRE PAYMENT WAS MADE BY CASH AND ALSO CONSIDERING THE F ACT THAT THE SHARE BROKERS THROUGH WHOM THE TRANSACTIONS WERE CARRIED OUT HAVE CATEGOR ICALLY STATED THAT THE TRANSACTIONS IN SHARES OF THE ABOVE SAID TWO COMPANIES ARE NOT G ENUINE TRANSACTIONS, IT IS FOR THE APPELLANT TO PRODUCE RELIABLE AND COGENT EVIDENCE I N SUPPORT OF THE ACQUISITION OF SHARES IN MAY 2001 AT RS.1.215 PER SHARE. BUT THE APPELLAN T HAS NOT BEEN ABLE TO FURNISH ANY INDEPENDENT CORROBORATIVE' EVIDENCE THAT THE SHARES IN QUESTION WERE ACQUIRED ON 02/05/2001. THE APPELLANT HAS NOT EVEN FURNISHED TH E ACCOUNT EXTRACT IN THE BOOKS OF 14 ACCOUNTS OF THE BROKERS CONCERNED, NOR THE LATEST A DDRESS OF THE BROKERS EXCEPT STATING THAT THE ACTION FINANCIAL SERVICES THROUGH WHOM THE SHARES WERE CLAIMED TO HAVE BEEN SOLD IS A MEMBER OF THE STOCK EXCHANGE AND IS HAVIN G SEBI REGISTRATION NUMBER. 10.5 THE ENQUIRIES CARRIED OUT BY THE DEPARTMENT R EVEALED THAT IT IS A DESIGN OR A PATTERN OR A PARTICULAR MODUS OPERANDI AND THE FIND INGS ARE NOT CONFINED TO A PARTICULAR BROKER OR AN INVESTOR. IT IS NOT THE STATEMENT OF O NE BROKER ALONE WHICH REVEALED THAT THE TRANSACTIONS IN THE SHARES OF THE SAID COMPANIES AR E NOT GENUINE. THE STATEMENTS RECORDED FROM SEVERAL BROKERS BY THE INVESTIGATION WING, MUMBAI CORROBORATES THAT TRANSACTIONS IN SHARES OF DATA BASE FINANCE LTD. AN D FAST TRACK ENTERTAINMENT ARE ONLY ACCOMMODATION ENTRIES TO LAUNDER THE UNACCOUNTED MO NEY OF THE BENEFICIARIES AND THE ANTE-DATED BILLS /CONTRACT NOTES WERE RAISED TO GIV E A COLOUR OF GENUINENESS TO NON- GENUINE TRANSACTIONS. IN VIEW OF THESE CATEGORICAL STATEMENTS OF THE BROKERS, IT IS ALL THE MORE NECESSARY FOR THE APPELLANT TO PRODUCE CORROBO RATIVE EVIDENCE IN SUPPORT OF ITS Y CLAIM AND THE BROKERS CONCERNED FOR EXAMINATION. BU T THE APPELLANT FAILED TO TENDER THE NECESSARY EVIDENCE OR BROKERS TO SUBSTANTIATE ITS C LAIM IN SPITE OF PROVIDING OPPORTUNITY TO THE APPELLANT BY THE ASSESSING OFFICER. THUS, IN THE INSTANT CASE, ADDITION WAS NOT MADE MERELY ON THE BASIS OF STATEMENTS OF SHARE BRO KERS ALONE. THE APPELLANT ALSO FAILED TO SUBSTANTIATE THE CLAIM OF PURCHASE OF SHARES IN MAY 2001 WITH INDEPENDENT EVIDENCE THOUGH ONUS OF VERY HIGH DEGREE WAS CAST UPON THE A PPELLANT TO PROVE THE FACTUM OF PURCHASES IN MAY 2001 IN THE WAKE OF MATERIAL GATHE RED BY THE INVESTIGATION WING OF THE DEPARTMENT. 10.6 WHEN TRANSACTIONS ARE THROUGH CONTRACT NOTES OF TWO BROKERS AND THROUGH DEMAT A/C AND SALE CONSIDERATION WAS RECEIVED BY CH EQUE, IT MAY APPARENTLY LOOK LIKE REAL TRANSACTION BUT AUTHORITIES ARE PERMITTED TO L OOK BEHIND THE TRANSACTIONS AND FIND OUT THE MOTIVE BEHIND TRANSACTIONS. THE FACTS OF TH E CASE AND ENQUIRIES BY THE INVESTIGATION WING AT MUMBAI CLEARLY PROVE THAT THE SE TRANSACTIONS ARE NOT GENUI1E AND MAKE BELIEVE ONLY TO BRING IN UNDISCLOSED INCOME OF THE APPELLANT IN THE GUISE OF EXEMPTED CAPITAL GAINS. MERE ISSUE OF CONTRACT NOTE S BY THE SHARE BROKERS AND RECEIPT OF SALE CONSIDERATION BY CHEQUE DO NOT RENDER OTHERWIS E NON-GENUINE TRANSACTION A 'GENUINE ONE. FURTHER, AS POINTED OUT BY THE ASSESS ING OFFICER, THE FUNDAMENTALS OF THE COMPANY, DATA BASE FINANCE LTD. WERE NOT SOUND AND NO PRUDENT GENUINE INVESTOR WOULD MAKE INVESTMENT IN SHARES OF SUCH A WORTHLESS COMPANY. IT WAS ALSO HIGHLY IMPROBABLE THAT SHARE PRICE OF A WORTHLESS COMPANY COULD GO FROM RS.1 TO RS.85 IN A SHORT SPAN OF TIME UNLESS MANIPULATED BY THE INTERE STED PERSONS. IT IS ALSO STRANGE THAT SEVERAL PERSONS ENTERED INTO SIMILAR TYPES OF TRANS ACTIONS IN SHARES OF A FEW COMPANIES AND PENNY STOCKS 'THROUGH SELECTED BROKERS IN A SHO RT SPAN OF TIME WHICH DOES NOT ACCORD WITH HUMAN PROBABILITIES AND IT IS ONLY AN A RRANGEMENT IN CONNIVANCE WITH A FEW UNSCRUPULOUS BROKERS FOR LAUNDERING OF UNACCOUNTED MONEY OF THESE PERSONS. AT THIS JUNCTURE, REFERENCE CAN BE MADE TO THE OFT-QUOTED D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT REPORTED IN 214 IT R 801 WHEREIN IT IS HELD THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES CIT V. DURGA PRASAD MORE [1971] 82 ITR 540, AT PP. 545, 54 7 (SC). IN THIS CONTEXT, REFERENCE CAN ALSO BE MADE TO THE DECISION OF HON'BLE ITAT, CHAND IGARH IN THE CASE OF ACIT VS. SOMNATH MAINI AS REPORTED IN 100 TTJ 917, WHEREIN T HE HON'BLE ITAT HELD AS UNDER :- ..... IT IS TRUE THAT WHERE TRANSACTIONS ARE THROU GH CHEQUES, IT LOOKS LIKE REAL TRANSACTION BUT AUTHORITIES ARE PERMITTED TO LOOK B EHIND THE TRANSACTION AND FIND OUT THE MOTIVE BEHIND TRANSACTIONS. GENERALLY, IT I S EXPECTED THAT APPARENT IS REAL BUT IT IS NOT SACROSANCT. IF FACTS AND CIRCUMSTANCE S SO WARRANT THAT IT DOES NOT ACCORD WITH THE TEST OF HUMAN PROBABILITIES, TRANSA CTIONS HAVE BEEN HELD TO BE NON GENUINE. IT IS HIGHLY IMPROBABLE THAT SHAM PRIC E OF A WORTHLESS COMPANY CAN GO FROM RS. 3 TO RS. 55 IN A SHORT SPAN OF TIME. ME RE PAYMENT BY CHEQUE AND RECEIPT BY CHEQUE DOES NOT RENDER A TRANSACTION GEN UINE. IN THE CASE OF APPELLANT ALSO, SERIES OF TRANSACTIO NS APPARENTLY CARRIED OUT THROUGH A FEW SHARE BROKERS ARE NOT THE REAL AND GENUINE TRANSACT IONS. THUS, THE IMPUGNED TRANSACTIONS ARE ONLY ACCOMMODATION ENTRIES TO BRIN G IN THE UNDISCLOSED INCOME OF THE 15 APPELLANT IN THE BOOKS OF ACCOUNT THROUGH THE MEDIU M OF SHARE BROKERS AND PENNY STOCKS WITH AN EYE ON THE PROVISIONS OF SEC. 10(38) OF THE LT. ACT. 10.7 TURNING TO THE CASE LAWS RELIED UPON BY THE A PPELLANT, IN THE CASE OF ACIT VS. CHANDRESH KUMAR MAHESHWARI (120 TTJ 132), THE ITAT JODHPUR HELD THAT IN THE ABSENCE OF ANY ENQUIRIES WITH THE BROKERS, STOCK EXCHANGE E TC., IT COULD NEVER BE SAID THAT THE TRANSACTIONS OF PURCHASE AND SALE CONDUCTED BY THE ASSESSEE THROUGH BROKER WERE NOT GENUINE. SIMILARLY, IN THE CASE OF CIT VS ANUPAM KA POR, IT WAS HELD THAT THERE WAS NO MATERIAL BEFORE THE ASSESSING OFFICER, WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. IN THE PRESENT CASE, ENQUIRIES WERE CONDUCTED WITH THE BROKERS CONCERNED AND STATEMENTS OF THE BROKERS WERE RECORDED BY THE INVESTIGATION W ING OF THE DEPARTMENT, WHICH AS DISCUSSED ABOVE REVEALED THAT THE IMPUGNED TRANSACT IONS ARE NOT GENUINE. HENCE, THE DECISIONS RELIED UPON BY THE APPELLANT CANNOT BE AP PLIED TO THE FACTS OF THE PRESENT CASE. 16. WE HAVE HEARD THE PARTIES. IT IS TRUE THAT THE SALE OF THE SHARES IS ROOTED THROUGH THE DEMAT ACCOUNT OF THE ASSESSEE. IT IS CERTAINLY STRANGE THAT ASSESSEE CLAIMED TO HAVE PURCHASED THE SHARES ON 02-05-2001. THEREFORE, ONE BROKER NAMELY SHAILEE SECURITIES, MU MBAI AND THOSE SHARES WERE CLAIMED TO HAVE HELD IN THE PHYSICAL FORM AND CREDITED TO THE DEMAT ACCOUNT ONLY ON 30-10-2002. THE ASSESSEE SOLD THE SAID SHARES ON 02-11- 2002, I.E. WITHIN 3 TO 4 DAYS OF CONVERSION BY CRED ITING TO THE DEMAT ACCOUNT. THE ASSESSEE COULD NOT PRODUCE ANY EVIDEN CE TO SUBSTANTIATE WHY THE ASSESSEE ALLEGEDLY HELD THE SHARES IN THE PHYSI CAL FORM FOR APPROXIMATELY 18 MONTHS WHICH ARE NOT AS PER THE SEBI REGULATIONS . THE LD. CIT(A) HAS ALSO RECORDED THAT THE SEARCH AND SEIZURE OPERATION S WAS CONDUCTED BY INVESTIGATION WING, MUMBAI IN THE MONTH OF JANUARY 2006 AGAINST THE SEVERAL STOCK EXCHANGE BROKERS AND MANAGERS DURING WHICH IT WAS REVEALED THAT THERE WAS A SERIOUS MANIPULATION IN THE PURCHA SE AND SALE OF SHARES OF M/S. DATABASE FINANCE LTD. BEFORE US ALSO THE FIND INGS OF THE LD. CIT(A) WERE NOT CONTROVERTED. WE DO NOT FIND IT NECESSARY TO TAKE A DIFFERENT VIEW AND ACCORDINGLY THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS CONFIRMED. IN THE RESULT, GROUND NO.2 IN A.Y. 2003-04 IS DISMISSED. 17. IN THE RESULT, APPEALS FOR A.YS. 2003-04 AND 20 05-06 ARE PARTLY- ALLOWED AND APPEALS FOR A.Y. 2004-05 AND 2006-07 AR E ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 23RD DAY OF NOVEMBER 2012. SD/- SD/- (R.K. PANDA) (R.S. PADV EKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: THE 23 RD NOVEMBER 2012 SATISH 16 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. THE D.R, B PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE