Shri Vaishal Suryakant Shah, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 1499/AHD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8881 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SITA RAM MEENA
• Assessee Lawyers: BHARAT S SHAH
• Keywords: Reopening of assessment; Deduction for capital gain; Search and seizure; Principle of natural justice; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. APPELLANT BY SHRI BHARAT S. SHAH, AR RESPONDENT BY SHRI SITA RAM MEENA, SR.DR DATE OF HEARING: 16.3.2017 DATE OF PRONOUNCEMENT: 20/03/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THE ABOVE CAPTIONED FOUR APPEALS BY DIFFERENT ASSE SSEES HAVE BEEN PREFERRED AGAINST SEPARATE ORDERS OF LD. COMMI SSIONER OF INCOME TAX(A)-5, AHMEDABAD. SINCE THE GROUNDS RAISE D IN ALL THESE APPEALS ARE COMMON, THE ISSUES ARE SIMILAR AND THE ASSESSEES ARE OF S R. N O ITA NO. AY APPELLANT RESPONDENT CIT(A)S ORDER DATED 1 1499/AHD/16 2007-08 SHRI VAISHAL SURYAKANT SHAH, F-104, TULIP CITADEL FLATS, SHREYANS TEKRA AMBAWADI, AHMEDABAD. PAN APXPS 7301G ITO, WD- 5(2)(3), AHMEDABAD. 13.04.2016 2 1500/AHD/16 -DO- SHRI PRATIK S. SHAH, F-104, TULIP CITADEL FLATS, SHREYANS TEKRA, AMBAWADI, AHMEDABAD. PAN APZPS0112B -DO-- -DO- 3 1501/AHD/16 -DO- SHRI SURYAKANT P. SHAH, F-104, TULIP CITADEL FLATS, SHREYANS TEKRA, AMBAWADI, AHMEDABAD. PAN ACXPS 7059J -DO- -DO- 4 1502/AHD/16 -DO- SHRI SURYAKANT P. SHAH(HUF) F-104, TULIP CITADEL FLATS, SHREYANS TEKRA, AMBAWADI, AHMEDABAD. PAN AAPHS 7043J -DO- -DO- ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 2 THE SAME GROUP, THESE WERE HEARD TOGETHER AND ARE B EING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. THE COMMON GRIEVANCE IN ALL THESE APPEALS IS REL ATING TO REOPENING OF ASSESSMENT U/S 147 OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) AND ANOTHER COMMON ISSUE IS ABOUT LO NG TERM CAPITAL GAIN FROM SALE OF SHARES TREATED AS UNDISCLOSED INC OME OF THE ASSESSEE THEREBY DENYING EXEMPTION U/S 10(38) OF TH E ACT. 3. FOR THE SAKE OF CONSIDERATION, WE TAKE UP THE CA SE OF SHRI VAISHAL SURYAKANT SHAH IN ITA NO.1499/AHD/2016 WHER EIN FOLLOWING GROUNDS HAVE BEEN RAISED :- : 1. THE PART OF IMPUGNED ORDER IS CONTRARY TO THE EVIDENCE AND MATERIAL ON RECORD, CONTRARY TO THE PRINCIPLES OF LAW AND BINDING JUDGM ENTS OF THE COURT, CONTRARY TO THE RELEVANT PROVISIONS OF THE ACT AND DESERVES TO BE QUASHED AND SET ASIDE. 2. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED CONFI RMING THE INVOCATION OF THE PROVISIONS U/S 147 MADE BY LEARNED A.O. AND WHO DOE S NOT HAVE ANY REASON TO BELIEVE THAT THE INCOME CHARGEABLE FOR THE YEAR HAS ESCAPED THE ASSESSMENT. 3. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CI T(A) SHOULD NOT HAVE ACCEPTED THE ADDITION OF RS.3,51,540/- BEING INCOME OF LONG TERM CAPITAL GAIN U/S.10(38) OF INCOME-TAX ACT, 1961 THE SAID ADDITION IS MADE BY L EARNED A.O. WITHOUT GOING INTO THE FACTS AND LEARNED CIT(A) SHOULD HAVE DECID ED THE ISSUE ON MERITS OF THE FACTS. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY AND/OR VARY ANY OR ALL OF THE GROUNDS AFORESAID AT THE TIME OF HEARING. 4. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT ASSESSEE BEING AN INDIVIDUAL FILED HIS RETURN OF IN COME ON 22.02.2008 DECLARING TOTAL INCOME OF RS.1,36,738/- AND THE SAI D RETURN WAS DULY PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY ON TH E BASIS OF INFORMATION RECEIVED FROM INVESTIGATION DEPARTMENT IN RELATION TO A ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 3 SEARCH AND SEIZURE ACTION CARRIED OUT IN THE CASE O F M/S MAHASAGAR SECURITIES (P) LTD. AND GROUP COMPANIES WHICH WERE CONTROLLED BY MR. MUKESH M. CHOKSI, LD. ASSESSING OFFICER IN ORDER TO REOPEN THE ASSESSMENT U/S 147 OF THE ACT ISSUED NOTICE U/S 148 OF THE ACT ON 28.03.2014 AFTER RECORDING THE REASONS AND OBTAININ G NECESSARY APPROVAL U/S 151 OF THE ACT. A SHOW CAUSE NOTICE DA TED 8.12.2014 WAS ISSUED AND DULY SERVED ON THE ASSESSEE AND RELE VANT PORTION OF THIS NOTICE READS AS FOLLOWS :- 'THIS OFFICE HAS RECEIVED INFORMATION THAT YOU HAVE MADE PURCHASE SALE TRANSACTIONS HAS BEEN RECEIVED BY THIS OFFICE FROM THE DIT(I & CI), NEW DELHI THAT SHRI MUKESH M. CHOKSHI AND ALL HIS GROUP COMPANIES ARE PROVIDING ENTRY FOR TALKING PROFIT OR LOSS BY SHOWING PURCHASE OR SALE OF THE SHARES AND SECURITIES TO VARIOUS PARTIES OR LOSS BY SHOWING PURCHASE OR SALE OF THE SHARE AND SECURITIES TO VARIOUS PARTIES ACROSS INDIA ON WHICH HE WAS CHARGE D CERTAIN COMMISSION FROM THE BENEFICIARY PARTIES. THE SAME INFORMATION RECEI VED BY THIS OFFICE SUPPLIED BY THE DIRECTOR OF INCOME TAX ( I & CI), NEW DELHI VID E LETTER DATED 07.03.2013 ALONG WITH COPY OF STATEMENT OF SHRI MUKESH M. CHOK SHI RECORDED BY THE DEPARTMENT ON OATH U/S.131 OF THE IT ACT. IN WHICH ALSO DETAIL PERTAIN TO VARIOUS ASSESSEE OF THE CIT-V, AHMEDABAD'\S CHARGE, WHICH W ERE BY NAME ONLY AND WITHOUT PAN. ACCORDINGLY, ALL THE PURCHASE AND SALE TRANSACTIONS REGARDING SHARES AND SECURITIES MADE BY THE ABOVE NAMED ASSES SEE THROUGH GROUP COMPANIES BELONGING TO SHRI MUKESH M. CHOKSHI WHICH WAS KNOWN AS MAHASAGAR SECURITIES LTD., WHICH IS TOTALLY UNVERIF IABLE TRANSACTION AS THE CONTROLLING PERSON NAMELY SHRI MUKESH M. CHOKSHI HI MSELF ADMITTED IN HIS STATEMENT RECORDED. ON DEEP SCRUTINIZED TO THE DATA /DETAILS RECEIVED IN THIS OFFICE IT IS ASCERTAIN THAT THE ASSESSEE NAMELY VAISHAL SH AH WAS ALSO INVOLVED FOR TAKING UNVERIFIABLE/BOGUS BENEFICIAL ENTRIES FROM T HE GROUP COMPANIES BELONGS TO SHRI MUKESH CHOKSHI DURING THE F. Y,2006-07 THE ASS ESSEE'S TOTAL TRANSACTION INVOLVED OF RS.3,51,540/ - FOR TAKING UNVERIFIABLE/BOGUS ENTRIES BY SHOWING PURCHASE AND SALE OF SHARE AND SECURITIES. AS THE I NFORMATION RECEIVED WITHOUT PAN HENCE ASSESSEE HAS WHETHER FILED RETURN OF INCO ME FOR A,Y.2007-08 OR NOT IS NOT ACCESSIBLE. ACCORDINGLY, ALL THE TRANSACTIONS M ADE BY THE ASSESSEE ARE UNVERIFIABLE AND ALSO NOT ASCERTAINED THAT THE ASSE SSEE SAID TRANSACTIONS WHETHER REFLECTED IN HIS RETURN OF INCOME OR NOT. H ENCE, SAME TRANSACTIONS ALSO SHOULD BE R EQUIRED FOR DETAILED VERIFICATION FROM VARIOUS ASPECTS FOR GENUINENESS OF THE SAID TRANSACTIONS AS PER THE INFORMATION SUPPLIED BY THE DIRECTOR OF INCOME-TAX ( I & CI), NEW DELHI IN THIS CASE.' ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 4 IN VIEW OF THE ABOVE, YOU ARE HEREBY REQUIRED TO SH OW CAUSE AS TO WHY THE AMOUNT OF RS.3,51,540/- SHOULD NOT BE ADDED TO YOU R TOTAL INCOME AS UNEXPLAINED INCOME. IN ABSENCE OF SATISFIED REPLY B Y THE GIVEN DATE, THE AMOUNT OF RS.3,51,540/- WILL BE ADDED TO YOUR TOTAL INCOME .' 5. IN RESPONSE TO THE ABOVE REFERRED NOTICE AND THE QUERIES NECESSARY DETAILS WERE FILED BY THE ASSESSEE RELATI NG TO THE NATURE OF TRANSACTION INCLUDING PURCHASE AND SALE OF SHARES. IT WAS ALSO EXPLAINED THAT PAYMENT HAS BEEN RECEIVED THROUGH BA NKING CHANNELS AND THE SHARES WERE TRANSFERRED TO THE RESPECTIVE D EMAT ACCOUNT AND WERE SOLD THEREOF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE ALSO QUESTIONED THE STATEMENT OF SHRI MUKE SH M. CHOKSI AND STRONGLY CONTENDED THAT NO ADVERSE VIEW SHOULD BE TAKEN MERELY ON THE BASIS OF STATEMENT OF A THIRD PARTY. HOWEVER , LD. ASSESSING OFFICER DISMISSED THE REQUEST OF ASSESSEE FOR PROVI DING AN OPPORTUNITY OF CROSS-EXAMINATION AND THE RELEVANT F INDING OF ASSESSING OFFICER IS REPRODUCED BELOW :- (VI) REGARDING ASSESSEE'S OPINION/REQUEST TO GIVE AN OPPORTUNITY EXAMINATION BOTH OF MATERIAL FOUND FROM THE THIRD PARTY, I.E. HIS BOOK, ET C. AS WELL AS CROSS-EXAMINATION OF THE PERSON WHO HAS' WITHOUT COMPLIANCE OF THE SAME, IT WOU LD BE CORRECT OR MAINTAINABLE TO DRAW ANY ADVERSE INFERENCE AS OBSERVED ION THE SHOW CAUSE NOTICE, IT H AS NO WEIGHT FOR THE FOLLOWING REASONS : A) IT IS CONFIRMED BY THE NSC/BSE THAT NO TRADES HAV E BEEN EXECUTED IN THE NAMES OF THE PERSONS WHO HAVE TRADED THROUGH THE GROUP COMPANIES OF M/S.MAHASAGAR SECURITIES PVT. ITD. CONTROLLED BY SHRI MUKESH R. CHOKSHI. B) SINCE, M/S.ALLIANCE INTERMDIATERIES & NETWORK PVT . LTD. IS NO MORE SUB-BROKER IN NSC, SO HOW IT IS POSSIBLE TO GIVE CREDIT OF ANY CLAIM CONSEQ UENT UPON THE SHARES TRADED THROUGH M/S.ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD. C) FURTHER, THE KEY PERSON OF M/S.ALLIANCE INTERMED IATERIES & NETWORK PVT. LTD. SHH MUKESH CHOKSHI HAS HIMSELF ADMITTED IN HIS STATEMENT DURING T HE SEARCH OPERATION U/S.132 OF THE I.T. ACT THAT HIS GROUP COMPANIES WERE ENGAGED IN FRAUDULE NT BILLING ACTIVITIES IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS, SHORT-TERM/LO NG-TERM CAPITAL GAIN/LOSS, COMMODITIES PROFIT/LOSS ON COMMODITY TRADING (THROUGH MCX). D) THE ASSESSEE HAS NOT FURNISHED ANY SUPPORTING EVIDE NCES FOR PURCHASE AND SALE OF SHARES, SUCH AS NATURE AND SOURCE OF PAYMENT, PAYME NT RECEIPTS, THE NAME AND ADDRESS OF ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 5 THE PARTY TO WHOM PAYMENT WAS MADE FOR PURCHASE OF SHARES, COPY OF BILLS/INVOICES, COPY OF TRANSFER FORMS, ANY DETAILS REGARDING ANY APPLICATION M ADE FOR DEMAT OF SUCH SHARES, ETC. E) THERE IS NO REASON TO DISBELIEVE THE STATEMENT O F SHRI MUKESH R. CHOKSHI THAT HE WAS ENGAGED IN FRAUDULENT BILLING ACTIVITIES IN THE BUS INESS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS, SHORT TERM/LONG TERM CAPITAL GAIN/LOSS ETC AND THE RELEVANT FINDINGS OF THE DDIT(INV), MUMBAI IN THIS REGARD THAT NO COMPANY OTHER THAN M/S.RICHMOND SECURITIES PVT. LTD. HAS TRADED THOUGH T OUR EXCHANGE. THUS, THE TRANSACTIONS WHICH HAVE NOT BEEN CARRIED OUT THOUGH THE STOCK / EXCHANGE ARE ILLEGAL AND FRAUDULENT AND ARE NOT ELI GIBLE FOR CLAIM OF EXEMPT U/S. 10(38) OF THE IT ACT. THUS, AS STATED ABOVE, THERE IS NO REASON TO GIVE A N OPPORTUNITY TO THE ASSESSEE TO CROSS- EXAMINE SHRI MUKESH R. CHOKSHI AND THE MATERIALS FO UND FROM THE THIRD PARTY I.E. BOOKS, ETC. THEREFORE, I DO NOT AGREE WITH THE OPINION OF THE A SSESSEE AND REJECT THE REQUEST OF THE ASSESSEE. AFTER TAKING THE ABOVE VIEW LD. ASSESSING OFFICER DENIED ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN EXEMPTION U/S 10(38 ) OF THE ACT OF RS.3,51,540/-. 6. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CO MMISSIONER OF INCOME TAX(A) BUT COULD NOT SUCCEED. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L CHALLENGING THE REOPENING OF ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AS WELL AS DENIAL OF EXEMPTION U/S 10(38) OF THE ACT FOR LO NG TERM CAPITAL GAIN. AT THE OUTSET LD. AUTHORISED REPRESENTATIVE SUBMITT ED THAT THE ISSUES RAISED IN THESE APPEALS ARE SQUARELY COVERED IN FA VOUR OF ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH IN THE CAS E OF SHRI PRATIK SURYAKANT SHAH & OTHERS IN ITA NO.810/AHD/2015 FOR ASST. YEAR 2006-07 & ORS. WHEREIN APPEAL OF THE ASSESSEE HAS B EEN ALLOWED DIRECTING THE ASSESSING OFFICER TO TREAT THE SURPLU S AS LONG TERM CAPITAL GAIN AND ALLOW EXEMPTION AS CLAIMED BY THE ASSESSEE. ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 6 8. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT MAKE A NY DISTINCTION OF THE FACTS ADJUDICATED BY THE CO-ORDI NATE BENCH IN THE CASE RELIED ON BY THE LD. AUTHORISED REPRESENTATIVE . 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. COMMON GRIEVANCES IN ALL THESE FOUR APPEALS ARE CHA LLENGING THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AS WELL AS LD. COMMISSIONER OF INCOME TAX(A)S CONFIRMING THE ACTI ON OF LD. ASSESSING OFFICER BY NOT ALLOWING THE BENEFIT OF EX EMPTION U/S 10(38) OF THE ACT FOR LONG TERM CAPITAL GAIN ON SHARES. 10. WE OBSERVE THAT FACTS, GROUNDS OF APPEAL AND OT HER RELATED ISSUES RAISED IN THESE FOUR APPEALS ARE VERBATIM SI MILAR TO THOSE DEALT BY THE CO-ORDINATE BENCH IN THE CASE OF PRATIK SURY AKANT SHAH & OTHERS (SUPRA) SO MUCH SO THAT THE LANGUAGE OF NOTI CES AS WELL AS RE- ASSESSMENT ORDERS ARE ALSO SIMILAR EXCEPT WITH THE CHANGE OF FIGURE(S) OF LONG TERM CAPITAL GAIN WHICH DIFFERS F ROM CASE TO CASE. COMMON FACT ALSO RELATES TO NOT PROVIDING OPPORTUNI TY OF CROSS- EXAMINATION TO THE ASSESSEE WITH THE THIRD PARTIES WHOSE FULL STATEMENTS HAVE BEEN RELIED ON FOR TAKING ACTION AG AINST THE ASSESSEE. WE OBSERVE THAT CO-ORDINATE BENCH ALLOWED ASSESSEES APPEAL IN THE CASE OF PRATIK SURYAKANT SHAH BY OBSE RVING AS FOLLOWS:- 13. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CA REFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS MENTIONED ELSEWHERE, WE HAVE CONSIDERED THE FACTS IN ITA NO.810/AHD/2015. WE FIND THAT THE ASSESSEE HAD PURCHASED 3000 SHARES OF TELANT INFO LTD FROM M/S. MAHASAGAR SECURITIES PVT LTD ON APRIL 2004. THE CONSIDERATION WAS PAID AND THE PAYMENT OF CONSIDERA TION IS NOT IN DISPUTE. THE ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 7 SHARES OF TELANT INFO LTD WERE LISTED IN THE BOMBAY STOCK EXCHANGE AT THAT POINT OF TIME. THE SHARES SO PURCHASED WERE SOLD THROUGH M/S. ALLIANCE INTERMEDIATERIES & NETWORK PVT LTD AND THE CONSIDERATION WAS RECEIVED BY CHEQUE. IT W OULD BE PERTINENT TO MENTION HERE THAT THOUGH THE SHARES WE RE PURCHASED IN PHYSICAL FORM, THE SAME WERE SENT TO THE COMPANY WITH SHARE APPLIC ATION FORM AND THE SHARES WERE TRANSFERRED BY THE COMPANY IN THE NAME OF THE PURCHASER. THEREAFTER, THE SHARES WERE TRANSFERRED IN THE DEMAT ACCOUNT, FROM WHERE THEY WERE SOLD. IT IS NOT THE CASE OF THE REVENUE THAT THE CONSIDERATION PAID BY THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES WAS RECEIVED BACK IN CASH, NOR I T IS THE CASE OF THE REVENUE THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS RETURNED BACK IN CASH. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES IN QUES TION ARE STILL LYING WITH THE ASSESSEE, NOR IT IS THE CASE OF THE REVENUE THAT TH E AMOUNTS RECEIVED BY THE ASSESSEE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEME NT OF SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMENT WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION W AS GIVEN BY THE ASSESSING OFFICER/CIT(A). THE HONBLE SUPREME COURT IN THE C ASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEI ZED WITH THE FOLLOWING ACTION OF THE TRIBUNAL:- 6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION O F THE DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE PO SSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN STATIC. SINCE WE ARE NOT UPHOLDING AND APPLYING THE EX FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVIS AGED UNDER SECTION 4(1), WE FIND NO REASON TO DISTURB THE COMMISSIONER S ORDERS. 15. THE HONBLE APEX COURT 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 MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLAT ION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS A DVERSELY 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. EV EN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANT ED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORD ER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONE D THAT SUCH AN ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 8 OPPORTUNITY WAS SOUGHT BY THE ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WI TH BY THE ADJUDICATING 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 HAVE BROU GHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WA S NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLA NT WANTED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNIT Y OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIE D UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. T HEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS-EXAMINATION AND MAKE THE REMARK S AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION W HEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHO W CAUSE WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISION OF THE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED. 17. FOR THE SAKE OF THE COMPLETENESS OF THE ADJUDIC ATION, EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AUTHORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHARES WERE PU RCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS N OTHING ON RECORD WHICH COULD ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 9 SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN T HE NAME OF THE ASSESSEE. THERE IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES W ERE NEVER WITH THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRE D TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WERE OF S OME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONA L STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOU S PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACT IONS WERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE SU PREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING T HE FACTS IN TOTALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT E VIDENCES ON RECORD RELATING TO THE SALE/PURCHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH RE GULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. AS MENTIONED ELSEWHERE AND AS AGREED BY THE REP RESENTATIVES OF BOTH THE SIDES; SINCE THE FACTS ARE COMMON IN ALL THE IMPUGN ED APPEALS, ALL THE APPEALS BY THE ASSESSEES ARE ALLOWED. THE ASSESSING OFFICER I S DIRECTED TO TREAT THE SURPLUS AS LONG TERM CAPITAL GAINS AND ALLOW THE EXEMPTION AS CLAIMED BY THE ASSESSEES. 11. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDIN ATE BENCH WHICH HAS RELIED ON THE JUDGMENT OF HON. APEX COURT IN TH E CASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO.4228 O F 2006 AND CONSIDERING THE FACTS IN TOTALITY INCLUDING THE CLA IM OF ASSESSEE OF THE LONG TERM CAPITAL GAIN FROM SALE OF SHARES DISREGAR DING THE DIRECT EVIDENCES ON RECORD, RELATING TO SALE/PURCHASE TRAN SACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION O F RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND DEMAN T ACCOUNT, WE QUASH THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND DIRECT THE ASSESSING OFFICER TO TREAT THE SURPLUS AS LONG TERM CAPITAL GAIN ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 10 FROM SALE OF SHARES AND ALLOW EXEMPTION U/S 10(38) OF THE ACT. ACCORDINGLY ALL THE FOUR APPEALS ARE ALLOWED. 12. IN THE RESULT, ALL THE FOUR APPEALS OF ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 20/03/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1499 TO 1502/AHD/2016 ASST. YEAR 2007-08 11 1. DATE OF DICTATION: 17/03/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 20/03/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 20/3/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: