Shri Kamla Prasad Kajaria, Kolkata V. ACIT, Circle - 35, Kolkata, Kolkata

ITA 1688/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1437 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 07-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI ROY JCIT SRDR
• Keywords: Unexplained cash credit; Search and seizure; Onus to prove
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1688/KOL/2018 ASSESSMENT YEARS: 2014-15 SHRI KAMALA PRASAD KAJARIA 32, ARMENIAN STREET, KOLKATA-700 001 [ PAN NO.SHFPK 0068 P ] / V/S . ACIT, CIRCLE-35 AAYKAR BHAWAN, POORVA, 110, SHANTIPALLY, 7 TH FLOOR, KOLKATA-107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SUNIL SURANA. FCA /BY RESPONDENT SHRI DHRUBAJYOTI ROY, JCIT-SR-DR /DATE OF HEARING 02-12-2019 /DATE OF PRONOUNCEMENT 13-12-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATAS ORDER DATED 06.06.2018 PASSED IN CASE NO.154/CIT(A)-10/CIR-35/14-15/2016-17, INVO LVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CHALLE NGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ITS CLAIM OF BUSINESS LOSS(S) AMOUNTING TO 7,14,011/- DERIVED FROM COMMODITY FUTURES TRADING T HEREBY TREATING THE SAME AS ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 2 BOGUS UNEXPLAINED CASH CREDITS. THE CIT(A)S DETAIL ED DISCUSSION TO THIS EFFECT READS AS UNDER:- 10. FINDINGS & DECISION: 1. I HAVE CAREFULLY EXAMINED THE ACTION OF THE LD. AO IN MAKING THE IMPUGNED DISALLOWANCE OF RS.7,14,011/-, BEING THE AMOUNT OF TRADING LOSS IN EXCHANGE FUTURES. 2. IN ARRIVING AT SUCH CONCLUSIONS, I FIND THAT THE MAIN FINDINGS AND REASONS RECORDED BY THE LD. AO ARE AS UNDER:- A. THE TRADE HAS BEEN FACILITATED BY THE BROKER M/S SIMPLEX COMMODITIES EXCHANGE LTD. B. ENQUIRIES WITH THE SAID BROKER THROUGH THE INSPE CTOR OF INCOME TAX REVEALED THAT THE SAID BROKER COMPANY WAS NOT FOUND AT THE ADDRESS STATED, AND THE EXISTENCE OF THE SAID BROKER WAS IN SEVERE DOUBT. C. THE UNIVERSAL COMMODITY EXCHANGE (UCX) THROUGH W HICH THE TRADING WAS PURPORTEDLY CARRIED OUT HAD BEEN CLOSED DOWN BY THE SEBI REGULATOR DUE TO SUSPECTED FRAUD . D. THEREFORE THE LOSS / GAINS BOOKED THROUGH THE SA ID EXCHANGE OR THE BROKER WERE FRAUDULENT AND TO BE TREATED AS BOGUS . '. 3. QUITE ON THE OTHER HAND, IN APPEAL, THE APPELLAN T / LD. A.R FOR THE APPELLANT HAS PLACED THE FOLLOWING ARGUMENTS / CONTENTIONS: A. THE APPELLANT COULD NOT BE HELD AS RESPONSIBLE F OR THE CLOSURE OF THE EXCHANGE OR NON-COMPLIANCE OF THE BROKER, AS THESE WERE CIRCUMSTANCES BEYOND HIS CONTROL. B. THE TRANSACTIONS WERE CARRIED OUT IN BONA FIDE B ELIEF AND WERE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. C. THE TRANSACTIONS ARE GENUINE AND SUPPORTED BY VA LID CONTRACT NOTES, AND THE LOSS INCURRED WAS GENUINE AND NOT BOGUS AS CLAIMED BY THE LD. AO. THE LD AO HAS MADE THE DISALLOWANCE ON MERE SUS PICION AND CONJECTURE. D. THE LD ASSESSING OFFICER INSTEAD OF INDEPENDENTL Y VERIFYING THE GENUINENESS OF TRANSACTIONS EFFECTED ON RECOGNIZED STOCK EXCHANGE THROUGH REGISTERED BROKER HAS DISALLOWED ASSESSEE'S GENUINE CLAIM MERELY RELYING ON THE INFORMATION AVAILABLE IN THE INTERNET OR IN PUBLIC DOMAIN. IT CANNOT BE SAID THE BROKER WAS PROVIDING BOGUS ENTRIES OF LOSS IN EXCHANGE DERIVATIVES BY TAKING CHEQUE AND R ETURNING CASH TO THE BENEFICIARIES WITHOUT BRINGING AN IOTA OF EVIDENCE ON RECORD TO PROVE THE SAME. ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 3 E. THE LD. AO HAS NOT BROUGHT ANYTHING ON RECORD TO PROVE THAT THE TRANSACTIONS IN EXCHANGE DERIVATIVES IN WHICH THE A PPELLANT HAS SUFFERED THE LOSS WERE NOT GENUINE TRANSACTIONS. ON THE OTHER HAND, THE APPELLANT HAS SUBMITTED THE COMPLETE DOCUMENTARY EV IDENCE TO PROVE HIS TRANSACTIONS IN EXCHANGE DERIVATIVES. THE LD. A O HAS NOT PROVED THAT THE EVIDENCE SUBMITTED BY THE APPELLANT WERE F ALSE OR FICTITIOUS. 4. I HAVE CAREFULLY CONSIDERED ALL THE FACTUAL ISSU ES WHICH EMANATE FROM THE ACTION OF THE LD. AO IN MAKING THE IMPUGNED DISALLO WANCE. I FIND THAT THE TRANSACTIONS OF THE APPELLANT IN TRADING IN CURRENC Y DERIVATIVES IN THE UCX STOCK EXCHANGE LTD DO HAVE CERTAIN FEATURES WHICH H AVE LED TO SUSPICION IN THE MINDS OF THE LD. AO, AND THAT THESE ARE MOSTLY THAT THE APPELLANT HAD NO TRANSACTIONS WITH THE BROKER IN EARLIER OR IN LATER YEARS, AND THAT THE ASSESSEE HAS ALSO NOT ENTERED INTO TRANSACTIONS OF DEALING I N FUTURES IN THE PAST OR FUTURE. AFTER EXAMINATION OF THE MATTER, I WOULD TEND TO AG REE WITH THE LD. AO THAT THE TRANSACTIONS ARE OF SUSPICIOUS NATURE ON ACCOUN T OF THE REASONS OFFERED BY THE LD. AO IN THAT VIEW I FIND THAT ALL THE OTHER DIRECT EVIDENCES ARE MERE ARRANGEMENTS OF THE PARTIES TO GIVE THE TRANSACTION S A SHEEN OF GENUINENESS. THERE IS NO REASON FOR ANY BROKER TO CONFESS TO SHA M TRANSACTIONS WERE THIS NOT THE CASE, AS HAS BEEN DONE BY THE DIRECTOR OF THE B ROKING COMPANY WHILE GIVING THE STATEMENT DURING THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT BY THE DEPARTMENT. THE DIRECT EVIDENCE MAY WELL BE IN FAVOUR OF THE ASSESSEE, BUT THE SAME CANNOT BE ACCEPTED DUE TO THE CIRCUMST ANCES. OF NORMAL PROBABILITY BEING AGAINST THE .ASSESSEE-INDIVIDUAL AS BROUGHT ON RECORD BY THE LD. AO. THEREFORE, I HAVE TO RECORD THAT ALL THE JU DICIAL CITATIONS DO NOT COME TO THE RESCUE OF THE APPELLANT. IT IS TO BE SAID TH AT THAT THE ENTIRE TRANSACTIONS WERE CARRIED OUT ON THE STOCK EXCHANGE TO GIVE IT A COLOR OF REAL TRANSACTIONS, WITH THE CONNIVANCE OF THE BROKER, WHO HAS SINCE DI SAPPEARED. 5. IT MUST ALSO BE STATED HERE THAT IN COMMISSIONER OF INCOME TAX VS NR PORTFOLIO PVT LTD ON 22 NOVEMBER, 2013, THE HON'BLE DELHI HIGH COURT HAS HELD .... 'THE ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR. WHEN A FACT IS ALLEGED AND STATED BEFORE THE ASSESS ING OFFICER BY AN ASSESSEE, HE MUST AND SHOULD EXAMINE AND VERIFY, WH EN IN DOUBT OR WHEN THE ASSERTION IS DEBATABLE. NORMALLY A FACTUAL ASSERTION MADE SHOULD BE ACCEPTED BY THE ASSESSING OFFICER UNLESS FOR JUSTIFICATION AND REASONS THE ASSESSING OFFICER FEELS THAT HE NEEDS/R EQUIRES A DEEPER AND DETAILED VERIFICATION OF THE FACTS ALLEGED. THE ASS ESSEE IN SUCH CIRCUMSTANCES SHOULD COOPERATE AND FURNISH PAPERS, DETAILS AND PARTICULARS. THIS MAY ENTAIL ISSUE OF NOTICES TO TH IRD PARTIES TO FURNISH AND SUPPLY INFORMATION OR CONFIRM FACTS OR EVEN ATT END AS WITNESSES. THE ASSESSING OFFICER CAN ALSO REFER TO INCRIMINATI NG MATERIAL OR EVIDENCE AVAILABLE WITH HIM AND CALL UPON THE ASSES SEE TO FILE THEIR RESPONSE. WE CANNOT LAY DOWN OR STATE A GENERAL OR UNIVERSAL PROCEDURE OR METHOD WHICH SHOULD BE ADOPTED BY THE ASSESSING OFFICER WHEN VERIFICATION OF FACTS IS REQUIRED. THE MANNER AND M ODE OF CONDUCTING ASSESSMENT PROCEEDINGS HAS TO BE LEFT TO THE DISCRE TION OF THE ASSESSING OFFICER, AND THE SAME SHOULD BE JUST, FAIR AND SHOU LD NOT CAUSE ANY ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 4 HARASSMENT TO THE ASSESSEE OR THIRD PERSONS FORM WH OM CONFIRMATION OR VERIFICATION IS REQUIRED. THE VERIFICATION AND INVE STIGATION SHOULD BE ONE WITH THE LEAST AMOUNT OF INTRUSION, INCONVENIEN CE OR HARASSMENT ESPECIALLY TO THIRD PARTIES, WHO MAY HAVE ENTERED I NTO TRANSACTIONS WITH THE ASSESSEE. THE ULTIMATE FINDING OF THE ASSESSING OFFICER SHOULD REFLECT DUE APPLICATION OR MIND ON THE RELEVANT FAC TS AND THE DECISION SHOULD TAKE INTO CONSIDERATION THE ENTIRE MATERIAL, WHICH IS GERMANE AND WHICH SHOULD NOT BE IGNORED AND EXCLUDE THAT WH ICH IS IRRELEVANT. CERTAIN FACTS OR ASPECTS MAY BE NEUTRAL AND SHOULD BE NOTED. THESE SHOULD NOT BE IGNORED BUT THEY CANNOT BECOME THE BE DROCK OR SUBSTRATUM OF THE CONCLUSION. THE PROVISIONS OF EVI DENCE ACT ARE NOT APPLICABLE, BUT THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY, MUST TAKE CARE AND CAUTION TO ENSURE THAT THE DECIS ION IS REASONABLE AND SATISFIES THE CANONS OF EQUITY, FAIRNESS AND JUSTIC E. THE EVIDENCE SHOULD BE IMPARTIALLY AND OBJECTIVELY ANALYZED TO ENSURE T HAT THE ADVERSE FINDINGS AGAINST THE ASSESSEE WHEN RECORDED ARE ADE QUATELY AND DULY SUPPORTED BY MATERIAL AND EVIDENCE-AND CAN WITHSTAN D THE CHALLENGE IN APPELLATE PROCEEDINGS. PRINCIPLE OF PREPONDERANCE O F PROBABILITIES APPLIES. WHAT IS STATED AND THE SAID STANDARD, EQUA LLY APPLY TO THE TRIBUNAL AND INDEED THIS COURT. THE REASONING AND T HE GROUNDS GIVEN IN ANY DECISION OR PRONOUNCEMENT WHILE DEALING WITH TH E CONTENTIONS AND ISSUES SHOULD REFLECT APPLICATION OF MIND ON THE RE LEVANT ASPECTS. WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO A VOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSARILY CREATE S DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACTS AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CONTENTION OR FA CTUAL ASSERTION BY THE ASSESSEE BEFORE HIM. IN CASE AN ASSESSEE DELIBE RATELY AND INTENTIONALLY FAILS TO PRODUCE EVIDENCE BEFORE THE ASSESSING OFFICER WITH THE DESIRE TO PREVENT INQUIRY OR INVESTIGATION , AN ADVERSE VIEW SHOULD BE TAKEN'. 6. IN THIS CONNECTION, I WOULD ALSO WISH TO REFER T O THE DECISION OF THE HON'BLE ITAT BOMBAY BENCH ' B ' ( ITA NO.614/BOM/87 A.V. 1983-84 ) IN THE CASE OF M/S. MONT BLANE PROPERTIES AND INDUSTRIES PVT. LTD. , WHICH WAS UPHELD BY THE HON'BLE SUPREME COURT. THE HON'BLE TRIBUNAL HELD TH AT THE WORD ' EVIDENCE ' AS USED IN SEC. 143(3) COVERED CIRCUMSTANTIAL EVIDENCE ALSO. THE WORD ' EVIDENCE ' AS USED IN SEC. 143(3) OBVIOUSLY COULD NOT BE CONFI NED TO DIRECT EVIDENCE. THE WORD ' EVIDENCE ' WAS COMPREHENSIVE ENOUGH TO COVER THE CIRCUMSTANT IAL EVIDENCE ALSO. UNDER THE TAX .JURISPRUDENCE, THE WO RD ' EVIDENCE ' HAD MUCH WIDER CONNOTATIONS. WHILE THE WORD ' EVIDENCE ' MIGHT RECALL THE ORAL AND DOCUMENTARY EVIDENCE AS MAY BE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT THE USE OF WORD ' MATERIAL ' IN SEC.143(3) SHOWED THAT THE ASSESSING OFFICER, NOT BEING A COURT COULD RELY UPON MATERIAL, WHICH MIGHT NOT STRICTLY BE EVIDENCE ADMISSIBLE UNDER THE INDIAN EVIDENCE ACT FOR THE PU RPOSE OF MAKING AN ORDER OF ASSESSMENT. COURT OFTEN TOOK, JUDICIAL NOTICE OF CERTAIN FACTS WHICH NEED NOT BE PROVED BEFORE THEM. THE PLAIN READING OF SECTION 142 AND 143 CLEARLY SUGGESTS THAT THE ASSESSING OFFICER MAY ALSO ACT ON THE MATERIAL GATHERED BY HIM. THE WARD ' MATERIAL ' CLEARLY SHOWS THAT THE ASSESSING OFFICER IS NOT FETTERED BY THE TECHNICAL RULES OF EVIDENCE AND THE LIKE, AND THAT HE MAY ACT ON MATERIAL WHICH MAY NOT STRICTLY SPEAKING BE ACCEPTE D EVIDENCE IN COURT OF LAW. ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 5 7. THE HON'BLE SUPREME COURT IN CIT V, DURGA PRASAD MORE [1971] 82 ITR 540 AT PAGES 545-547 MADE A REFERENCE TO THE TEST O F HUMAN PROBABILITIES IN THE FOLLOWING FACT SITUATION :- ' IT IS TRUE THAT AN APPARENT MUST BE CONSIDERE D REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE AP PARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS. OTHER WISE IT WILL BE VERY EASY TO MAKE SELF- SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOR THEN THE D OOR WILL BE LEFT WIDE-OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITA LS MADE IN THOSE DOCUMENTS 8. IT IS A WELL SETTLED PRINCIPLE OF LAW AS DECLARE D BY THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAI VS.CIT ( 214 ITR 801 ) ( SC ) THAT THE TRUE NATURE OF TRANSACTION HAVE TO BE ASCERTAINED IN THE LIGHT OF SURROUNDING CIRCUMSTANCES. IT NEEDS TO BE EMPHASIZED THAT STAND ARD OF PROOF BEYOND REASONABLE DOUBT HAS NO APPLICABILITY IN DETERMINAT ION OF MATTERS UNDER TAXING STATUTES. IN THE PRESENT CASE, IT IS DEAR THAT APPA RENT IS NOT THE REAL AS EVIDENCED FROM THE INVESTIGATION REPORT. FURTHER, THE HON'BLE SUPREME COURT, IN THE CASE OF CHUHAR MAL VS CIT (1988) 172 ITR 250, HIGHLIGHTE D THE FACT THAT THE PRINCIPLE OF EVIDENCE LAW ARE NOT TO BE IGNORED BY THE AUTHORITIES, BUT AT THE SAME TIME, HUMAN PROBABILITY HAS TO BE THE GUIDING PRINCIPLE, SINCE THE AO IS NOT FETTERED, BY TECHNICAL RULES OF EVIDENCE, AS HE LD BY THE HON'BLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS V CIT (1954) 261 ITR 775. THE HON'BJE SUPREME COURT CHUHAR MAL VS CIT (SUPRA) HEL D THAT WHAT WAS MEANT BY SAYING THAT EVIDENCE ACT DID NOT APPLY TO THE PR OCEEDINGS UNDER INCOME-TAX ACT, 1961, WAS THAT THE RIGORS OF RULES OF EVIDENCE , CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT MEAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLES OF EVIDENC E ACT, IN PROCEEDINGS BEFORE THEM, THEY WERE PREVENTED FROM DOING SO. IT WAS FURTHER HELD BY THE HON'BLE APEX COURT THAT ALL THAT SECTION 110 OF THE EVIDENCE ACT, 1872 DID, WAS TO EMBODY A SALUTARY PRINCIPLE OF COMMON LAW, J URISPRUDENCE VIZ, WHERE A PERSON WAS FOUND IN POSSESSING OF ANYTHING THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER, WAS ON THAT PERSON. THUS, THIS PRINC IPLE COULD BE ATTRACTED TO A SET OF CIRCUMSTANCES THAT SATISFIES ITS CONDITIONS AND WAS APPLICABLE TO TAXING PROCEEDINGS. 9. I AM IN AGREEMENT WITH THE LD. AO THAT THE TRANS ACTIONS RELATING TO THE CLAIM OF LTCG AS MADE BY THE LD. AO COME WITHIN THE AMBIT OF ' SUSPICIOUS TRANSACTIONS ', AND THEREFORE THE RULES OF SUSPICIOUS TRANSACTIO NS WOULD APPLY TO THE CASE. PAYMENT THROUGH BANKS, PERFORMANCE THR OUGH STOCK EXCHANGE AND OTHER SUCH FEATURES ARE ONLY APPARENT FEATURES. THE REAL FEATURES ARE THE MANIPULATED AND ABNORMAL PRICE OF OFF LOAD AND THE SUDDEN DIP THEREAFTER. ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 6 THEREFORE, I HAVE TO REACH THE INEVITABLE CONCLUSIO N THAT THE TRANSACTIONS AS DISCUSSED BY THE LD.AO FALL IN THE REALM OF ' SUSPICIOUS ' AND ' DUBIOUS TRANSACTIONS. THE LD. AO HAS THEREFORE NECESSARILY TO CONSIDER THE SURROUNDING CIRCUMSTANCES, WHICH HE INDEED HAS DONE IN A VERY M ETICULOUS AND CAREFUL MANNER. IN THE CASE OF WIN CHADHA VS CIT ( INTERNATIONAL TAXATION ) IN ITA NO.3088 & 3107/DEL/2005, THE HON'BLE DELHI ITAT ' B '-BENCH HAS OBSERVED, ON 31.12.2010 AS UNDER: ' SUSPICIOUS AND DIBIOUS TRASANCTION HOW TO BE DEALT WITH : 6.11. THE TAX LIABILITY IN THE CASES OF SUSPICIOUS TRANSACTIONS IS TO BE ASSESSED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD, S URROUNDING CIRCUMSTANCES, HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND N ATURE OF INCRIMINATING INFORMATION / EVIDENCE AVAILABLE WITH AO. 6.12. IN THE CASE OF SUMATL DAYAL VS. CIT (1995) 8 0 TAXMAN 89 (SC), THE HON'BLE SUPREME COURT HAS DEALT WITH THE RELEVANCE OF HUMAN CONDUCT, PREPONDERANCE OF PROBABILITIES AND SURROUNDING CIRC UMSTANCE, BURDEN OF PROOF AND ITS SHIFTING ON THE DEPARTMENT IN CASES OF SUSP ICIOUS CIRCUMSTANCES, BY FOLLOWING OBSERVATIONS: IT IS, NO DOUBT, TRUE THAT IN ALL CASES IN WHIC H A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPAR TMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF PROVING THAT IT IS NOT TAXABL E BECAUSE IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT LIES UPON THE ASSESSEE. BUT IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE, VTZ., TH E, RECEIPT OF MONEY, AND IF HE FALLS TO REBUT THE SAME, THE SAID EVIDENC E BEING UN-REBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT IS A REC EIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE AS SESSEE, THE DEPARTMENT CANNOT, HOWEVER, ACT UNREASONABLY. HAVING REGARD TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT; AS WELL AS OTHER MATERIAL ON T HE RECORD, AN INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNIN G TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT, THE MAJ ORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTLY CONCLUDED THAT THE APPELL ANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES, WAS NOT GENUIN E. IT COULD NOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAD BEEN REJECTED UNREASONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS WERE INCOME OF THE APPELLANT FROM OTHE R SOURCES WAS NOT BASED ON EVIDENCE. ' ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 7 CIRCUMSTANTIAL EVIDENCE HOW TO BE USED 6.13. IT WOULD, AT THIS STAGE, BE RELEVANT TO CONSI DER THE ADMISSIBILITY AND USE OF CIRCUMSTANTIAL EVIDENCE IN INCOME TAX PROCEEDING S. CIRCUMSTANTIAL EVIDENCE IS EVIDENCE OF THE CIRCUMSTANCES, AS OPPOS ED TO DIRECT EVIDENCE. IT MAY CONSIST OF EVIDENCE AFFORDED BY THE BEARING ON THE FACT TO BE PROVED, OF OTHER AND SUBSIDIARY FACTS, WHICH ARE RELIED ON AS INCONSISTENT WITH ANY RESULT OTHER THAN THE TRUTH OF THE PRINCIPAL FACT. IT IS E VIDENCE OF VARIOUS FACTS, OTHER THAN THE FACT IN ISSUE WHICH ARE SO ASSOCIATED WITH THE FACT IN ISSUE, THAT TAKEN TOGETHER, THEY FORM A CHAIN OF CIRCUMSTANCES LEADIN G TO AN INFERENCE OR PRESUMPTION OF THE EXISTENCE OF THE PRINCIPAL FACT. IN THE APPRECIATION OF CIRCUMSTANTIAL EVIDENCE, THE RELEVANT ASPECTS, AS L AID DOWN FROM TIME TO TIME ARE - (1) THE CIRCUMSTANCES ALLEGED MUST BE ESTABLISHED B Y SUCH EVIDENCE, AS IN THE CASE OF OTHER EVIDENCE (2) THE CIRCUMSTANCES PROVED MUST BE OF A CONCLUSIV E NATURE AND NOT TOTALLY INCONSISTENT WITH THE CIRCUMSTANCES OR CONT RADICTORY TO OTHER EVIDENCE. (3) ALTHOUGH THERE SHOULD BE NO MISSING LINKS IN TH E CASE, YET IT IS NOT ESSENTIAL THAT EVERY ONE OF THE LINKS MUST APPEAR O N THE SURFACE OF THE EVIDENCE ADDUCED ; SOME OF THESE LINKS MAY HAVE TO BE INFERRED FROM THE PROVED FACTS ; (4) IN DRAWING THOSE INFERENCES OR PRESUMPTIONS, TH E AUTHORITIES MUST HAVE REGARD TO THE COMMON COURSE OF NATURAL EVENTS, TO HUMAN CONDUCT AND THEIR RELATION TO THE FACTS OF THE PARTICULAR C ASE. (5) THE CIRCUMSTANTIAL EVIDENCE CAN, WITH EQUAL FAC ILITY, BE RESORTED TO IN PROOF OF A FACT IN ISSUE WHICH ARISES IN PROCEED INGS FOR THE ASSESSMENT OF TAXES BOTH DIRECT AND INDIRECT, CIRCU MSTANTIAL EVIDENCE CAN BE MADE USE OF IN ORDER TO PROVE OR DISPROVE A FACT ALLEGED OR IN ISSUE. IN FACT, IN WHATEVER PROCEEDINGS OR CONTEXT INFERENCES ARE REQUIRED TO BE DRAWN FROM THE EVIDENCE OR MATERIALS AVAILABLE OR LACKING, CIRCUMSTANTIAL EVIDENCE HAS ITS PLACE TO A SSIST THE PROCESS OF ARRIVING AT THE TRUTH.' 6.14. IT WILL ALSO BE WORTHWHILE TO CONSIDER THE NA TURE OF BURDEN OF PROOF ON THE AO FOR PROVING A FACT OR CIRCUMSTANCE IN THE IN COME TAX PROCEEDINGS. THE QUESTIONS RAISED ABOUT THE TAX LIABILITY BY THE AO ARE TO BE ANSWERED BY THE ASSESSEE BY FURNISHING REASONABLE AND PLAUSIBLE EXP LANATIONS. IF ASSESSEE IS NOT FORTHCOMING WITH PROPER OR COMPLETE FACTS OR HIS ST ATEMENT OR EXPLANATION IS CONTRADICTORY, DRAWING OF SUITABLE INFERENCES AND E STIMATION OF FACTS IS INEVITABLE. COURTS GENERALLY WILL NOT INFERENCE OR WITH SUCH ESTIMATES ARE PERVERSE OR CAPRICIOUS. 6.15. THE ASSESSEES TECHNICAL CONTENTIONS ABOUT AD MISSIBILITY AND RELIANCE ON MATERIAL AVAILABLE ON THE AO'S RECORD ARE IN THE NA TURE OF CONTENTIONS CHALLENGING CRIMINAL OR CIVIL LIABILITIES IN A COUR T OF LAW. WE ARE DEALING WITH A ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 8 PROCESS OF ADJUDICATION OF ASSESSES TAX LIABILITY I .E. ASSESSMENT UNDER INCOME TAX ACT RATHER THAN CONDUCTING CRIMINAL OR CIVIL CO URT PROCEEDINGS. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF S.S. GADGIL (SUPRA) NO ' LIS ' IS INVOLVED IN ADJUDICATION OF TAX LIABILITY. THE ASSE SSEE'S CONTENTION THAT THERE WAS NO NEW MATERIAL BEFORE THE AO AFTER THE CIT(A)' S SETTING ASIDE ORDER CANNOT BE ACCEPTED. NEW INFORMATION AND MATERIAL DI D INDEED COME ON RECORD. IN OUR VIEW, IN A SENSITIVE MATTER LIKE THIS, EVEN A SINGLE DUE OR REVELATION CAN BE OF GREAT IMPORTANCE. TO REVERSE THE ORDER OF THE AO ON THIS TECHNICAL PLEA WILL AMOUNT TO TAKING A LOPSIDED VIEW OF THE PROCEE DINGS. BESIDES, THE JPC HAS UNDERLINED THE IMPORTANCE OF REPORTS OF INVESTIGATI ON AGENCIES LIKE CBI, DRI, ED WHOSE WERE IN THE OFFING, AS THE RELEVANT INVEST IGATIONS WERE IN PROCESS. IN VIEW OF THESE OBSERVATIONS, WE DO NOT ACCEDE TO THE ASSESSEE'S PLEAS IN THIS BEHALF. THE ASSESSEE'S CONTENTIONS AND OBJECTIONS I N THIS BEHALF THAT THE MATERIAL AVAILABLE ON RECORD WAS NOT ADMISSIBLE AS EVIDENCE AND THAT IT CANNOT BE RELIED ON BY THE AO, ARE DEVOID OF ANY MERIT AND ARE REJECTED OUTRIGHT . IN VIEW OF THE ABOVE DISCUSSION, I FIND NO INFIRMIT Y IN THE FINDING OF THE LD. AO, AND CONFIRM THE SAME. GROUNDS 3 TAKEN BY THE APPELLANT-INDIVIDUAL STANDS DISMISSED . 3. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY C ONTENDED DURING THE COURSE OF HEARING THAT THE BOTH THE ASSESSING OFFICER AS W ELL AS CIT(A) HAVE RIGHTLY TREATED THE ASSESSEES COMMODITY LOSSES DERIVED THROUGH M/S SIMPLEX COMMODITIES TRADE PVT. LTD. ON UNIVERSAL COMMODITY EXCHANGE UCX IN VIEW OF THE OVERWHELMING CIRCUMSTANTIAL EVIDENCE AND DOCUMENTARY EVIDENCE ON RECORD PIN-POINTING SUSPICIOUS TRANSACTIONS. HE QUOTES SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) WHILST PLEADING THAT THE IM PUGNED DISALLOWANCE / ADDITION DESERVES TO BE CONFIRMED. W E FIND NO SUBSTANCE IN REVENUES INSTANT ARGUMENT SUPPORTING BOTH THE LOWER AUTHORIT IES ACTION. THIS TRIBUNAL CO- ORDINATE BENCHS DECISION IN ASSESSEES FAMILY MEMB ERS CASES NAMELY, SHRI NAVEEN KUMAR KAJARIA VS. ACIT, CIRCLE-35, KOLKATA AND SMT. SUSHILA DEVI KAJARIA VS. ACIT, CIRCLE-36, KOLKATA IN ITA NO.S 1254 & 1255/KOL/2018 DECIDED ON 03.04.2019 HAVE DELETED IDENTICAL ADDITION(S) INVOLVING THE SAME ST OCK EXCHANGE AS WELL AS BROKERAGE ITA NO.1688/KOL/2018 ASSESSMENT YEAR 2014-15 SHRI KAMALA PRASAD KAJARIA VS ACIT,CIR-35, KO L. PAGE 9 FIRM, LEARNED CO-ORDINATE BENCH HOLDS THAT IT IS TH E ACTUAL AND NOT CIRCUMSTANTIAL EVIDENCE WHICH HAS TO BE CONSIDERED. THE SAID CO-OR DINATE BENCHS ORDER TO THIS EFFECT FORM PART OF RECORD. WE GO BY THE VERY REASONING MUTATIS MUTANDIS TO REVERSE BOTH THE LOWER AUTHORITIES ACTION UNDER CHALLENGE. THE IMPU GNED ADDITION IS DIRECTED TO BE DELETED. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13/12/2019 SD/- SD/- ( ') () ') (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 13/12/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI KAMALA PRASAD KAJARIA, 32, ARMENIAN STREET, KOLKATA-001 2. /RESPONDENT-ACIT, CIRCLE-35, AAYKAR BHAWAN, POORVA 110, SHANTIPALY, 7 TH FLOOR, KOLKATA 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,