Nirmala Kumari Chordia, CHENNAI V. ITO NCW 5(2), CHENNAI

ITA 1636/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4785 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 14-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: B RAMANA KUMAR
• Keywords: Reopening of assessment; Share purchase agreement; Accommodation entries; Reason to believe
• Section: 147

Judgement Text

, /SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 1636/CHNY/2018 / ASSESSMENT YEAR : 2012-2013 SMT. NIRMALA KUMARI- CHORDIA, FLAT NO.3-J, DOOR NO.76, OSIAN HEIGHTS, BASIN BRIDGE ROAD, OLD WASHERMENPET, CHENNAI-600 021. [PAN: AEXPC 7359 F ] VS. THE INCOME TAX OFFICER, NCW-5(2) CHENNAI 600 006. ( ' / APPELLANT) ( #$' /RESPONDENT) / APPELLANT BY : SHRI. B. RAMANA KUMAR, ADV. /RESPONDENT BY : SHRI. B. SAGADEVAN, JCIT. /DATE OF HEARING : 11.10.2018 /DATE OF PRONOUNCEMENT : 15.10.2018 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE, DIRECTED AGAINST AN ORDER DATED 20.03.2018 OF LD. COMMISSIONER OF INCOM E TAX (APPEALS)- 5, CHENNAI. 2. GROUNDS TAKEN BY BOTH THE ASSESSEE ASSAILS THE REOP ENING DONE FOR THE IMPUGNED ASSESSMENT YEAR AS WELL AS ME RITS OF THE ADDITIONS DONE UNDER THE HEAD INCOME FROM OTHER S OURCES. ITA NOS.1636/CHNY/2018 :- 2 -: 3. FACTS APROPOS ARE THAT ASSESSEE HAVING INCOME FROM HIRING HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR D ECLARING INCOME OF RS.2,39,520/-. SUCH RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). LD. ASSESSING OFFICER RECEIVED INFORMATION FROM DDIT (INVESTIGATION), UNIT-1, CRU, CHENNAI THAT ASSESSEE WAS BENEFICIARY OF CERTAIN TRANSACTIONS D ONE THROUGH ONE MR. PRAKASH KUMAR JOJODIA, PROMOTER OF M/S. QUEST FINAN CIAL SERVICES LIMITED AND M/S. KWALITY CREDIT AND LEASING LIMITED , KOLKATA, WHICH RESULTED IN BOGUS LONG TERM CAPITAL GAINS TO VARI OUS PERSONS, INCLUDING THE ASSESSEE. ASSESSEE HAD CLAIMED LON G TERM CAPITAL GAINS OF RS.22,38,981/- ARISING ON SALE OF EQUITY SHARES, AS EXEMPT U/S.10(38) OF THE ACT. INFORMATION REGARDING THES E TRANSACTIONS, OF WHICH SHRI. PRAKASH KUMAR JOJODIA WAS ONE OF THE PR INCIPAL PLAYERS, CAME TO THE KNOWLEDGE OF REVENUE WHEN HE WAS SUBJEC TED TO A SEARCH OPERATION BY THE REVENUE. SHRI. PRAKASH KUMAR JOJOD IA WAS THE MANAGING DIRECTOR OF M/S. QUEST FINANCIAL SERVICES LTD. REVENUE IT SEEMS WAS HAVING WITH THEM A STATEMENT RECORDED FRO M SHRI. PRAKASH KUMAR JOJODIA, WHICH ADMITTED OF TRANSACTIONS UNDER TAKEN FOR PROVIDING BOGUS LONG TERM CAPITAL GAINS, ON COMMISS ION BASIS, THROUGH PRIVATE LIMITED SHELL COMPANIES OWNED OR CONTROLLED BY HIM. OR IN OTHER WORDS, WHAT ARE KNOWN AS TRANSACTIONS OF PENN Y STOCK COMPANIES. ITA NOS.1636/CHNY/2018 :- 3 -: 4. NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSE E ON 09.01.2017. ASSESSEE SOUGHT REASONS FOR THE REOPEN ING AND SUCH REASONS WERE FURNISHED TO THE ASSESSEE. REASONS IN TERALIA MENTIONED ABOUT THE STATEMENT GIVEN BY SHRI. PRAKASH KUMAR JO JODIA. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, LD. ASSESSING OFFICER PUT THE ASSESSEE ON NOTICE ON WHY THE CLAIM OF LONG TERM CA PITAL GAINS SHOULD NOT BE DISALLOWED AND WHY SUCH AMOUNTS SHOULD NOT B E ASSESSED AS INCOME FROM OTHER SOURCES. AS PER THE LD. ASSESSIN G OFFICER MODUS OPERANDI WAS TO BUY UNLISTED SHARES OF PRIVATE LIM ITED COMPANY AT A VERY LOW BOOK VALUE IN CASH, WHICH COMPANY AT A LAT ER STAGE GOT AMALGAMATED WITH A LISTED PENNY STOCK COMPANY WIT H A HIGH COURT APPROVAL FOR SUCH SCHEME FOR AMALGAMATION. FURTHER , AS PER THE LD. ASSESSING OFFICER PRICES OF THE SHARES OF THE PENNY STOCK COMPANIES WERE MANIPULATED TO 20 TO 25 TIMES SO THAT INVESTOR S MADE BOGUS LONG TERM CAPITAL GAINS ON SALE OF ITS SHARES. LD. ASSESSING OFFICER NOTED THAT SHRI. PRAKASH KUMAR JOJODIA HAD ADMITTED FLOATING A NUMBER OF COMPANIES THROUGH WHICH TRANSACTIONS IN CASH, CHEQUES AND RTGS CREDITS WERE CARRIED OUT AND HE HAD ALSO OFFERED A SUM OF RS.1,00,00,000/- AS INCOME EARNED FOR GIVING ACCOMM ODATION ENTRIES TO VARIOUS PARTIES LIKE ASSESSEES. ITA NOS.1636/CHNY/2018 :- 4 -: 5. WHEN QUERIED ON THE ABOVE, REPLY OF THE ASSESSEE W AS THAT SHE HAD PURCHASED THREE HUNDRED EQUITY SHARES OF O NE M/S. REWARD AGENCIES PRIVATE LIMITED THROUGH OFF MARKET DEAL, B Y PAYING RS.500/- PER SHARE TO ONE M/S. SANKLAP VINCOME (P) LTD. AS PER THE ASSESSEE SUCH EQUITY SHARES WERE DULY TRANSFERRED TO HER NAM E BY M/S. REWARD AGENCIES PRIVATE LIMITED. CONTENTION OF THE ASSESSE E WAS THAT M/S. REWARD AGENCIES PRIVATE LIMITED WAS LATER CONVERTED AS A PUBLIC LIMITED COMPANY AND THEREAFTER AMALGAMATED WITH ONE M/S. QUEST FINANCIAL SERVICES LIMITED WHICH HAD THE APPROVAL O F HONBLE CALCUTTA HIGH COURT THROUGH ITS ORDER DATED 25 TH AUGUST, 2011. AS PER THE ASSESSEE THROUGH THIS AMALGAMATION SCHEME SANCTION ED BY HONBLE CALCUTTA HIGH COURT, FOR ONE EQUITY SHARE IN M/S. REWARD AGENCIES PRIVATE LIMITED, HUNDRED EQUITY SHARES OF M/S. QUES T FINANCIAL SERVICES LIMITED WERE ALLOTTED. CONTENTION OF THE ASSESSEE WAS THAT THIRTY THOUSAND EQUITY SHARES WERE ALLOTTED TO HER IN M/S. QUEST FINANCIAL SERVICES LIMITED AND THESE WERE DEMATTED AND SOLD IN KOLKATA STOCK EXCHANGE THROUGH ONE M/S. K. PRASAD & CO. FOR RS. 23,92,500/- AS PER THE ASSESSEE, M/S. QUEST FINANCIAL SERVICES LIM ITED BEING A LISTED COMPANY LONG TERM CAPITAL GAINS ARISING TO THEM, ON SALE OF SHARES OF THE SAID COMPANY, THROUGH KOLKATA STOCK EXCHANGE WA S EXEMPT U/S.10(38) OF THE ACT. ASSESSEE ALSO POINTED OUT T HAT THE SALE TRANSACTION WERE CARRIED OUT THROUGH BANKING CHANNE LS. ITA NOS.1636/CHNY/2018 :- 5 -: 6. HOWEVER, LD. ASSESSING OFFICER DID NOT ACCEPT THE R EPLY GIVEN BY THE ASSESSEE. ACCORDING TO HIM, JOINT COMMISSIO NER OF INCOME TAX IN A PROCEEDING U/S.144A OF THE ACT HAD REJECTED SI MILAR CONTENTIONS OF THE ASSESSEE. FURTHER, ACCORDING TO HIM, THE STATE MENT RECORDED FROM SHRI. PRAKASH KUMAR JOJODIA, WHO WAS A PROMOTER AND DIRECTOR OF M/S QUEST FINANCIAL SERVICES LIMITED, CLEARLY PROVED TH AT HE HAD PROVIDED ACCOMMODATION ENTRIES TO MANY PERSONS INCL UDING THE ASSESSEE. LD. ASSESSING OFFICER ALSO NOTED THAT AS SESSEE COULD NOT FURNISH ANY EVIDENCE AS TO HOW THEY CAME TO KNOW AB OUT M/S. REWARD AGENCIES P. LTD FOR PURCHASING THEIR SHARES. AS PER THE LD. ASSESSING OFFICER THESE WERE ISOLATED TRANSACTIONS DONE BY TH E ASSESSEE WITH THE M/S. SANKLAP VIBCOM (P) LTD, KOLKATA, WHO WERE SELL ER OF THE SHARES AND ASSESSEE HAD NO MEANS OF KNOWING SUCH COMPANY O R BUYING THEIR SHARES. LD. ASSESSING OFFICER REFUSED TO TAKE INTO CONSIDERATION AVERMENT OF THE ASSESSEE THAT SHRI PRAKASH KUMAR JO JODIA HAD RETRACTED FROM HIS EARLIER STATEMENT GIVEN TO THE R EVENUE AND AFFIRMED THAT PURCHASE AND SALE OF SHARES WERE GENU INE. HE THUS DISBELIEVED THE CLAIM OF LONG TERM CAPITAL GAINS A ND MADE AN ADDITION OF THE EQUIVALENT AMOUNT UNDER THE HEAD INCOME FROM OTHER SOURCES. 7. AGGRIEVED, THE ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). APART FROM AS SAILING THE ITA NOS.1636/CHNY/2018 :- 6 -: VALIDITY OF THE REOPENING DONE FOR THE IMPUGNED ASS ESSMENT YEAR, ASSESSEES ALSO CHALLENGED THE MERITS OF THE ADDITIO N. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THE REOPE NING TO BE VALID. ACCORDING TO HIM INFORMATION RECEIVED FROM INVESTI GATION WING OF THE DEPARTMENT, KOLKATA WAS GOOD ENOUGH REASON FOR REOP ENING THE ASSESSMENT. IN SO FAR AS, MERITS WERE CONCERNED, L D. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT PURCHASE OF THE SHAR ES WERE INITIALLY DONE THROUGH OFF-MARKET DEALS IN CASH AND THE SELL ING RATES WERE ARTIFICIALLY HIKED. ACCORDING TO HIM, FINANCIALS OF M/S. QUEST FINANCIAL SERVICES LTD DID NOT JUSTIFY THE PRICES AT WHICH ITS SHARES WERE SOLD. FURTHER, ACCORDING TO THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) ADDITIONS MADE BY THE LD. ASSESSING OFFICER WERE N OT SOLELY BASED ON THE STATEMENTS RECORDED FROM SHRI. PRAKASH KUMAR JO JODIA BUT FOR OTHER REASONS AS WELL. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT LD. ASSESSING OFFICER WAS JUSTIFIED IN CO NSIDERING THE LONG TERM CAPITAL GAINS AS BOGUS AND IN MAKING THE ADDI TIONS U/S.68 OF THE ACT. 8. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE STRONG LY ASSAILING THE REOPENING DONE FOR THE IMPUGNED ASSES SMENT YEAR SUBMITTED THAT REASONS GIVEN BY LD. ASSESSING OFFIC ER, FOR SUCH REOPENING STATED THAT KEY PERSON SHRI. PRAKASH KU MAR JOJODIA, WHO ITA NOS.1636/CHNY/2018 :- 7 -: WAS THE PROMOTER OF M/S. QUEST FINANCIAL SERVICES L IMITED AND M/S. KWALITY CREDIT AND LEASING LIMITED, KOLKATA, ADMITT ED HIS INVOLVEMENT IN PROVIDING BOGUS LONG TERM CAPITAL GAINS TO VARIO US PERSONS ON COMMISSION BASIS. AS PER THE LD. AUTHORISED REPRES ENTATIVE, THIS COULD NOT BE STATED AS A REASON. ACCORDING TO HIM, THOUGH SUFFICIENCY OF THE REASON COULD NOT BE QUESTIONED, ITS RELEVAN CY COULD BE LOOKED INTO. AS PER THE LD. AUTHORISED REPRESENTATIVE, O NE OF THE ESSENTIAL CONDITIONS REQUIRED FOR REOPENING OF AN ASSESSMENT , AS SET-OUT IN SECTION 147 OF THE ACT, WAS NOT SATISFIED. 9. ARGUING ON THE MERITS OF THE CASE, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PURCHASE OF SHARES OF M/S. REWARD AGENCIES P. LTD WERE PROVED THROUGH SHARE CERTIFICA TES WHICH REFLECTED TRANSFER OF THESE SHARES FROM M/S. SANKLAP VINCOM ( P) LTD TO THE ASSESSEES. ACCORDING TO HIM, AMALGAMATION OF M/S. R EWARD AGENCIES P. LTD WITH M/S. QUEST FINANCIAL SERVICE LTD COUL D NOT BE QUESTIONED SINCE IT HAD THE APPROVAL OF THE HONBLE CALCUTTA HIGH COURT. AS FOR THE SALE OF THE SHARES IN M/S. QUEST FINANCIAL SERV ICE LTD, CAPITAL GAINS ARISING FROM WHICH WAS CLAIMED AS EXEMPT, CONTENTIO N OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT SUCH SALE WAS DO NE THROUGH KOLKATTA STOCK EXCHANGE BY A RECOGNIZED STOCK BROKE R AND PAYMENTS RECEIVED THROUGH BANKING CHANNELS. ACCORDING TO HI M, UNDUE RELIANCE ITA NOS.1636/CHNY/2018 :- 8 -: WAS PLACED BY THE REVENUE ON A STATEMENT RECORDED F ROM SHRI. PRAKASH KUMAR JOJODIA WHO WAS NEVER KNOWN TO THE AS SESSEE. ACCORDING TO HIM, ASSESSEE HAD NEVER PURCHASED SHAR ES FROM SHRI. PRAKASH KUMAR JOJODIA. AS PER THE LD. AUTHORISED RE PRESENTATIVE THE SO CALLED STATEMENT RECORDED FROM SHRI PRAKASH KUMA R JOJODIA WAS NEVER PUT TO THE ASSESSEE. FURTHER, AS PER THE LD. AUTHORISED REPRESENTATIVE, ASSESSEE WAS NEVER GIVEN AN OPPORTU NITY TO CROSS- EXAMINE THE SAID PERSON. LD. AUTHORISED REPRESENTA TIVE SUBMITTED THAT ASSESSEE HAD FILED AN AFFIDAVIT OF SHRI. PRAK ASH KUMAR JOJODIA RETRACTING HIS EARLIER STATEMENTS. CONTENTION OF L D. AUTHORISED REPRESENTATIVE WAS THAT SHRI PRAKASH KUMAR JOJODIA HAD AFFIRMED THE TRANSACTIONS OF SHARES OF M/S. QUEST FINANCIAL SERV ICES LTD AS GENUINE. ACCORDING TO HIM, SIMILAR TRANSACTIONS WHERE CAPITA L GAINS WERE CONSIDERED AS BOGUS HAD COME UP BEFORE BANGALORE B ENCH OF THE TRIBUNAL IN THE CASE OF VIMALA DEVI CHHAJER AND OTHERS VS. DCIT (ITA NOS.513 TO 518/BANG/2010, 519 TO 526/BANG/2010, 946 TO 949, 955, 956, 970/BANG/2010, 1000 TO 1005/BANG/2010 AND 1071 /BANG/2010, VIDE ORDER DATED 23.03.2011 ), AND THE TRIBUNAL HAD HELD THE CAPITAL GAINS CLAIMED TO BE NOT BOGUS. RELIANCE WAS ALSO PLACED ON THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CA SE OF MANISH KUMAR BAID AND MAHENDRA KUMAR BAID VS. AICT,( ITA NOS.123 6 & 1237/KOL/2017, DATED 18.08.2017 ) AND THAT OF MUMBAI BENCH OF THE ITA NOS.1636/CHNY/2018 :- 9 -: TRIBUNAL IN THE CASE OF ITO VS. ARVIND KUMAR JAIN, ITA NO.4862/MUM/2014, DATED 18.09.2017 . AS PER THE LD. AUTHORISED REPRESENTATIVE IN THE CASE DECIDED BY KOLKATA BENCH ALSO THE COMPANY IN WHICH CONCERNED ASSESSEE HAD INVESTED WAS MERGED WITH ANOTHER LISTED COMPANY AND THE CLAIM OF LONG TERM CAPITAL GAINS WAS ON SALE OF EQUITY SHARES OF SUCH LISTED COMPANY. FURTHER, AS PER THE LD. AUTHORISED REPRESENTATIVE, KOLKATA BENCH HAD HELD THAT TRANSACTIONS RELATING TO THE LONG TERM CAPITAL GAINS COULD NOT B E DISBELIEVED SINCE THE SALE OF THE SHARES WERE EFFECTED THROUGH REGIST ERED STOCK BROKERS. AGAIN, AS PER THE LD. AUTHORISED REPRESENTATIVE, EQ UITY SHARES OF M/S. QUEST FINANCIAL SERVICE LTD HELD BY THE ASSESSEE WE RE DEMATERIALIZED OR DEMATTED AND SUCH DEMATTING CLEARLY PROVED THE HOLDING OF SHARES BY THE ASSESSEE IN THE SAID COMPANY. THUS, ACCORDIN G TO HIM, LOWER AUTHORITIES FELL IN ERROR IN DISBELIEVING THE LONG TERM CAPITAL GAINS AND MAKING AN ADDITION U/S.68 OF THE ACT FOR THE AMOUNT S WHICH WERE RECEIVED THROUGH A RECOGNIZED STOCK EXCHANGE AND S OURCE OF WHICH WAS CLEARLY EXPLAINED. 10. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUBM ITTED THAT SHRI PRAKASH KUMAR JOJODIA WAS THE PROMOTER OF M/S. QUES T FINANCIAL SERVICES LTD. ACCORDING TO HIM, ASSESSEE WAS MENTI ONED IN THE ITA NOS.1636/CHNY/2018 :- 10 -: STATEMENT RECORDED FROM THE SAID PERSON, AS ONE AMO NG MANY TO WHOM HE HAD PROVIDED ACCOMMODATION ENTRIES. AS PE R THE LD. DEPARTMENTAL REPRESENTATIVE, SHARE PRICE OF M/S. QU EST FINANCIAL SERVICE LTD WERE ARTIFICIALLY JACKED UP WITHOUT ANY CREDIBLE FINANCIALS FOR THE SAID COMPANY. ACCORDING TO HIM, ASSESSEE COULD NOT SAY THAT SHE WAS NOT AWARE OF THE STATEMENT GIVEN BY SHRI PR AKASH KUMAR JOJODIA SINCE ASSESSEE HAD FILED AN AFFIDAVIT FROM THE VERY SAME PERSON RETRACTING WHAT HE EARLIER SAID. ACCORDING TO HIM, ADDITIONS WERE RIGHTLY MADE DISBELIEVING THE SERIES OF TRANSACTIONS, WHICH WERE MANUFACTURED ONLY FOR ILLEGAL EVASION OF TAX. 11. ON THE ASPECT OF REOPENING, THE CONTENTION OF THE L D. DEPARTMENTAL REPRESENTATIVE WAS THAT REASONS CLEARL Y INDICATED ESCAPEMENT OF INCOME FROM ASSESSMENT. 12. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. FIRST TAKING UP TH E QUESTION WHETHER THE REOPENING WAS VALID OR NOT, ADMITTEDLY, THE ORI GINAL RETURN WAS ONLY SUBJECTED TO A PROCESSING U/S.143(1) OF THE ACT. WH EN THE ORIGINAL RETURN WAS ONLY PROCESSED U/S.143(1) OF THE ACT, I CANNOT SAY THAT AN ASSESSMENT WAS BEEN DONE AFTER APPLICATION OF MI ND BY THE LD. ASSESSING OFFICER. SUCH PROCESSING IN MY OPINION IS A MINISTERIAL ACT. IN TAKING THIS VIEW, I AM FORTIFIED BY THE JUDGMENT OF APEX COURT IN THE ITA NOS.1636/CHNY/2018 :- 11 -: CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD 291 IT R 500. REASONS RECORDED BY THE LD. ASSESSING OFFICER FOR R EOPENING THE ASSESSMENT READ AS UNDER:- THIS OFFICE IS IN RECEIPT OF INFORMATION, THAT THER E WAS A SEARCH OPERATION IN THE CASE OF MLS QUEST FINANCIAL SERVICES AND KWALITY CREDIT AND LEASING LIMITED ,KE Y PERSON MR. PRAKASH JAJODIA REVEALED THE FACT THAT H E AND HIS GROUP INVOLVED IN PROVIDING BOGUS LONG TERM CAP ITAL GAINS TO VARIOUS PERSONS ON COMMISSION BASIS THROUG H A NUMBER OF PRIVATE LIMITED SHELL COMPANIES OWNED OR CONTROLLED BY HIM AS WELL AS SOME LISTED PENNY STOC K COMPANIES. SMT. NIRMAL KUMARI CHORDIA IS ONE OF THE BENEFICIARIES. THE TRANSACTION AMOUNT DURING THE PE RIOD IS RS.23,92,500 /-, THE WHOLE OF WHICH IS BOGUS. THEREFORE. I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX RELEVANT FOR' THE A Y 2012-13 HAS ESCAPED ASSESSMENT DUE TO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS RELEVANT FOR THE PURPOSE OF ASSESSMENT. CONSIDERING THE FACT THAT ORIGINAL RETURN WAS SUBJE CT ONLY TO A PROCESSING U/S.143(1) OF THE ACT, I AM OF THE OPINI ON THAT REASON ABOVE GIVEN WAS RELEVANT ENOUGH FOR RESORTING TO A REOPENING. PRESENCE OF A RELEVANT REASON IS ENOUGH IN SUCH CAS ES, AND IT IS NOT NECESSARY THAT ESCAPEMENT OF INCOME HAS TO BE ESTAB LISHED. RULES FOR REOPENING ARE MUCH MORE LIBERAL WHERE ORIGINAL RETU RNS ARE ONLY SUBJECT TO PROCESSING U/S.143(1) OF THE ACT. I THE REFORE UPHOLD THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) I N SO FAR AS THE REOPENING OF ASSESSMENT IS CONCERNED. ITA NOS.1636/CHNY/2018 :- 12 -: 13. COMING TO THE MERITS OF THE ADDITIONS WHAT I FIND I S THAT LOWER AUTHORITIES HAD RELIED ON A STATEMENT FROM ON E SHRI. PRAKASH KUMAR JOJODIA WHO WAS THE PROMOTER AND DIRECTOR OF M/S. REWARD AGENCIES PVT. LTD WHICH WAS AMALGAMATED WITH M/S. Q UEST FINANCIAL SERVICE LTD, PURSUANT TO A SCHEME SANCTIONED BY HO NBLE CALCUTTA HIGH COURT. ONCE THE SCHEME IS SANCTIONED BY HONBL E CALCUTTA HIGH COURT, I CANNOT CONSIDER THE AMALGAMATION AS A SHAM ONE. RATIO OF ALLOTMENT OF SHARES IN M/S. QUEST FINANCIAL SERVICE LTD WHICH WAS 1: 100, VIZ; HUNDRED SHARES OF M/S. QUEST FINANCIAL SE RVICE LTD., FOR ONE SHARE OF M/S. REWARD AGENCIES PVT. LTD. THIS RATIO WAS AS PER THE APPROVED SCHEME. THIS IS CLEARLY MENTIONED AT PARA 3 TO SCHEDULE A OF THE SAID SCHEME, WHICH READ AS UNDER:- (A) THE TRANSFEREE COMPANY SHALL, WITHOUT FURTHER ACT, DEED, SHALL ALLOT TO EVERY SHARE-HOLDERS OF M/S DRISTI BUPPLIERS LIMITED, 90 :NINETY) EQUITY SHARE; OF RS. 10/ - EACH CREDITED IS FULLY PAID UP FOR 1 (ONE) EQUITY S HARES OF RS. 10/- EACH FULLY PAID UP AND HELD BY SUCH SHARE- HOLDERS IN M/S DRISU SUPPLIERS LIMITED, AND SHALL ALLOT TO EVERY SHARE HOLDER OF M/S PRAN [EEVAN DISTRIBUTORS LIMITE D, 90 (NINETY: EQUITY SHARES OF RS 10/- EACH CREDITED AS FULLY PAD UP FOR :. (ONE) EQUITY SHARES OF 10/ - EACH FULLY PAID UP AND HELD BY SUCH SHARE-HOLDERS IN M/S. PRUN ]EEVAN DIST RIBUTORS LIMITED .AND SHALL ALLOT TO EVERY SHARE-HOLDERS OF M/5 REWARD AGENCIES LIMITED 100 (HUNDRED) EQUITY SHARE; OF RS. 10L- EACH CREDITED AS FULLY PAID UP FOR 1 (ONE) EQUITY SHARES OF RS. 10/ - EACH FULLY PAID UP AND HELD BY SUCH SHARE-HOLDERS IN MS REWARD AGENCIES LIMITED. THOUGH LD. ASSESSING OFFICE CONSIDERED THE PRICES O F SHARES OF M/S. QUEST FINANCIAL SERVICE LTD, TO HAVE BEEN JACKED UP ARTIFICIALLY, NOTHING ITA NOS.1636/CHNY/2018 :- 13 -: IS AVAILABLE ON RECORD WHICH COULD SHOW WHAT WERE T HE FINANCIALS OF M/S. QUEST FINANCIAL SERVICE LTD. LD. ASSESSING OFF ICER OUGHT TO HAVE ANALYSISED THE FINANCIALS OF THE SAID COMPANY BEFOR E COMING TO A CONCLUSION THAT SUCH FINANCIALS WERE NOT AT ALL IN RHYME WITH THE SHARE PRICES. IT MAY BE TRUE THAT ASSESSEE HAD ACQUIRED ORIGINAL SHARES IN M/S. REWARD AGENCIES P. LTD IN OFF-MARKET TRANSACTI ONS BY PAYING CASH. HOWEVER, BACKSIDE OF THE SHARE CERTIFICATES OF M/S. REWARD AGENCIES P. LTD., CLEARLY SHOW THAT THE EQUITY SHARES WERE TRAN SFERRED TO THE ASSESSEE ON 25.01.2011. ORIGINAL OWNER OF THESE SH ARES WERE ONE M/S. DRISTI SUPPLIERS PRIVATE LIMITED AND THEY HAD TRANSFERRED SUCH SHARES TO M/S. SANKLAP VINCOM PRIVATE LIMITED ON 25 .10.2010. THE SELLER OF THE SHARES TO THE ASSESSEE WAS M/S. SANKL AP VINCOM PRIVATE LIMITED. WHAT RELATION SHRI. PRAKASH KUMAR JOJODIA HAD WITH M/S. SANKLAP VINCOM PRIVATE LIMITED IS NOT AVAILABLE ON RECORD. ASSESSEE HAS MAINLY RELIED ON THE ORDERS OF THE BANGALORE BE NCH OF THE TRIBUNAL IN THE CASE OF VIMALA DEVI CHHAJER AND OTHERS (SUPRA) THAT OF KO LKATA BENCH OF THE TRIBUNAL IN THE CASE OF MANISH KUMAR B AID (SUPRA) AND THAT OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ARVIND KUMAR JAIN (SUPRA). HOWEVER IN ALL THESE CASES RELIED ON BY THE ASSESSE E WHAT I FIND IS THAT STATEMENT RELIED ON BY THE REVENUE FOR DISBELIEVING LONG TERM CAPITAL GAINS, DID NOT MENTION THE NAME OF THE CONCERNED ASSESSEE CLEARLY. AS AGAINST THIS, THE CASE OF THE REVENUE HERE IS THAT ITA NOS.1636/CHNY/2018 :- 14 -: ASSESSEES NAME WAS MENTIONED BY SHRI PRAKASH KUMAR JOJODIA IN THE STATEMENT RECORDED FROM HIM. THUS THE STATEMENT OF SHRI. PRAKSH KUMAR JOJODIA WAS THE CRUCIAL LINK FOR DISBELIEVING THE LONG TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE. RULES OF NATURE JUST ICE, IN MY OPINION REQUIRED SUCH STATEMENT TO BE GIVEN TO THE ASSESSEE . NEITHER WAS IT GIVEN NOR ASSESSEE GIVEN AN OPPORTUNITY TO CROSS EX AMINE SHRI. PRAKASH KUMAR JOJODIA. NO DOUBT ASSESSEE MIGHT HAV E FILED AN AFFIDAVIT FROM SHRI. PRAKASH KUMAR JOJODIA RETRACTI NG HIS EARLIER STATEMENT. THIS WILL NOT IN MY OPINION ABSOLVE THE REVENUE FROM ITS DUTY TO PLACE BEFORE THE ASSESSEE THE STATEMENT OF SHRI. PRAKASH KUMAR JOJODIA RELIED ON BY THEM FOR DISBELIEVING TH E LONG TERM CAPITAL GAINS CLAIMED BY THE ASSESSEE. THE ENTIRE ADDITION EMANATED FROM THE STATEMENT GIVEN SHRI. PRAKASH KUMAR JOJODIA AND A F INDING THAT PRICES OF THE SHARES OF M/S. QUEST FINANCIAL SERVICE LTD W ERE ARTIFICIALLY JACKED UP. IN MY OPINION SALE OF THE SHARES, HAVING BEEN D ONE RECOGNIZED STOCK EXCHANGE AND SALE CONSIDERATION HAVING BEEN R ECEIVED THROUGH BANKING CHANNELS, THE SALE AS SUCH OUGHT NOT HAVE B EEN DISBELIEVED UNLESS THERE WERE STRONG REASONS FOR DISBELIEVING T HE CLAIM. IN THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE ISSUE R EQUIRES A FRESH LOOK BY THE LD. ASSESSING OFFICER. LD. ASSESSING OFFICE R HAS TO GIVE A COPY OF THE STATEMENT OF SHRI. PRAKASH KUMAR JOJODIA TO THE ASSESSEE SO THAT THEY CAN PLACE THEIR OBJECTIONS. LD. ASSESSING OFFICER HAS TO ITA NOS.1636/CHNY/2018 :- 15 -: CONSIDER THE MERITS OF THE OBJECTIONS IF ANY FILED BY THE ASSESSEE, AND IF REQUIRED THE ASSESSEES SHALL BE GIVEN AN OPPORTUN ITY TO CROSS EXAMINE SHRI. PRAKASH KUMAR JOJODIA. LD. ASSESSING OFFICER ALSO NEEDS TO CORRECTLY VERIFY THE FINANCIALS OF M/S. QUEST FI NANCIAL SERVICES LTD BEFORE COMING TO A CONCLUSION THAT ITS SHARE PRICES WERE JACKED UP. NEEDLESS TO MENTION IF THE NAME OF THE ASSESSEE IS NOT APPEARING IN THE STATEMENT OF SHRI. PRAKASH KUMAR JOJODIA, TRANS ACTIONS GIVING RISE TO THE LONG TERM CAPITAL GAINS CANNOT BE DISBELIEV ED, UNLESS THERE ARE OTHER VERY STRONG REASONS FOR DOING SO. WITH THE SE DIRECTIONS, I SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMI T THE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERA TION AFRESH IN ACCORDANCE WITH LAW. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 15 TH OF OCTOBER, 2018, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER # / CHENNAI $ / DATED: OCTOBER 15, 2018. TLN '( )( / COPY TO: 1 . / APPELLANT 3. * () / CIT(A) 5. ( / / DR 2. / RESPONDENT 4. * / CIT 6. / GF