ITO, New Delhi V. M/s M.S. Portifolio P Ltd., New Delhi

ITA 1866/DEL/2011

• Counselvise Citation: 186620114 RSA 2011
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-07-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: A K JAINCA
• Keywords: Reopening of assessment; Unexplained cash credit; Income from undisclosed sources; Share purchase agreement; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 69C; 234B; 147; 131; 148; 139; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.1866/DEL/ 2011 (ASSESSMENT YEAR :2002-03) ITO VS. M. S. PORTFOLIO PVT. LTD. WARD-6(1), ROOM NO.418A 138, DEEPALI C. R. BUILDING PITAMPURA NEW DELHI. NEW DELHI. PAN: AAACM7548L (APPELLANT) (RESPONDENT) CO. NO. 192/DEL/2011 IN ITA NO.1866 /DEL/ 2011 (ASSESSMENT YEAR: 2002-03) M. S. PORTFOLIO PVT. LTD. VS. ITO 138, DEEPALI WARD-6(1), ROOM NO. 418A PITAMPURA C. R. BUILDING NEW DELHI. NEW DELHI. PAN: AAACM7548L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A. K JAIN,CA. REVENUE BY : SHRI SAMEER SHARMA, SR.DR. ORDER PER T. S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IX, NEW DELHI DATED 15.12.2010. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE APPEAL ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 2 OF REVENUE. THE RESPECTIVE GROUNDS OF APPEAL AND GR OUNDS OF CROSS OBJECTIONS ARE AS UNDER: GROUNDS FOR ITA NO. 1866 (A.Y-2002-03) 1 THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND C ONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN DELETED THE ADDITION OF RS.40,00,000/- MADE U/S 68 OF THE ACT BEING THE UNEXPLAINED CASH CREDITS AND RS.80,000/- BEING UNACCOUNTED CASH PAID FOR OBTAINING THE ACCOMMODATI ON ENTRIES. 2.1 THE LD. CIT (A) IGNORED THE FINDING RECORDED BY THE ASSESSING OFFICER AND THE FACT THAT THE ASSESSEE IS INVOLVED IN OBTAINING ACCOMMODATION ENTRIES AND ALSO THE FACT T HAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF H EARING. GROUNDS FOR CO NO. 192 (A. Y- 2002-03) 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE AC TION OF THE ASSESSING OFFICER FOR TAKING RECOURSE TO THE PROVIS ION OF SECTION 147/148 OF THE INCOME TAX ACT.1961 FAILING TO APPRE CIATE THAT THERE WERE NO MATERIAL ON RECORD TO BELIEVE THAT IN COME OF ASSESSEE COMPANY HAS ESCAPED ASSESSMENT FOR THE A.Y -2002-03. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE THE CIT (A) HAS ERRED IN CONFIRMING THE VALIDI TY OF THE IMPUGNED ASSESSMENT ORDER WHICH WAS FRAMED WITHOUT ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 3 COMPLYING THE MANDATORY CONDITIONS OF SECTION 147 T O 153 OF THE INCOME TAX ACT, 1961 AND REOPENING OF THE CASE IS BAD IN LAW AND MAY PLEASE BE ANNULLED. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE VERY BASIS OF RE-INITIATION OF ASSESSMENT P ROCEEDINGS IS ERRONEOUS AND IT VITIATE THE ENTIRE ASSESSMENT PROC EEDING AB- INITIO HENCE THE ASSESSMENT IS BAD IN LAW. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX HAS ERRED IN CO NFIRMING THE CHARGING OF INTEREST OF RS.14,20,867/- U/S 234B OF INCOME TAX ACT. 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE ACT, ON THE BASIS OF AN INF ORMATION RECEIVED FROM INVESTIGATION WING OF INCOME TAX DEPARTMENT, WHICH HAD CONVEYED THAT ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES IN THE GAR B OF SALE-PURCHASE OF SHARES. IN RESPONSE TO THE NOTICE U/S 148, THE ASSE SSEE SUBMITTED THAT ITS RETURN FILED U/S 139 (1) BE TREATED AS RETURN FILED U/S 148. THE REASONS FOR ISSUANCE OF NOTICE WERE PROVIDED TO THE ASSESSEE AN D ASSESSEE WAS ASKED TO EXPLAIN THE NATURE AND SOURCE OF PAYMENT RECEIVED F ROM M/S MKM FINSEC PVT. LTD. THE ASSESSING OFFICER IN HIS ORDER AT PA GE 1 AND 2 HAD SOUGHT AN EXPLANATION FOR AN AMOUNT OF RS.40,00,000/- RECEIVE D ON DIFFERENT DATES FROM M/S MKM FINSEC PVT. LTD. IN ITS WRITTEN SUBMISSIONS DATED 28.10.2009, 07.12.2009 AND 18.12.2009, THE ASSESSEE SUBMITTED D ETAILS REGARDING TRANSACTIONS WITH M/S MKM FINSEC PVT. LTD. AND ALSO FURNISHED COPIES OF ITS ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 4 BANK ACCOUNT, COPY OF SALE BILLS AND THE COPY OF TH E RETURN OF M/S MKM FINSEC PVT. LTD. AS PER THE REPORT OF THE INVESTIGA TION WING M/S MKM FINSEC PVT. LTD. WAS NOT CARRYING ON ANY ACTUAL SHA RE-BROKING BUSINESS AND WAS FOUND TO BE ENGAGED IN THE ACTIVITY OF PROVIDIN G ACCOMMODATION ENTRIES. THE ASSESSING OFFICER OBSERVED THAT MR. MAHESH BATR A, THE DIRECTOR OF M/S MKM FINSEC PVT. LTD, IN HIS STATEMENT HAD CATEGORIC ALLY STATED THAT COMPANY WAS NOT ENGAGED IN ANY REAL TRANSACTIONS IN SALE/ PURCHASE OF SHARES AND IN THE GARB OF TRANSACTIONS OF SALE/ PURCHASE O F SHARES, IT WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO OTHER PARTIES. T HE ASSESSING OFFICER FURTHER OBSERVED THAT THE CASE OF M/S MKM FINSEC PV T. LTD. WAS ALSO ASSESSED IN HIS WARD AND PROCEEDINGS U/S 148 WERE A LSO INITIATED IN THEIR CASE FOR THE ASSESSMENT YEAR 2002-03. IN THAT CASE HE HA D CALLED FOR ALL BOOKS OF ACCOUNTS ALONG WITH ALL THE PURCHASE/ SALES BILLS, CONTRACT NOTES, DAY BOOK ETC. AND IN REPLY, THE SAID COMPANY HAD SUBMITTED A S UNDER: WITH REFERENCE TO ABOVE, WE MAY SUBMIT THAT THE DO CUMENTS REQUIRED BY YOUR GOODSELF HAD BEEN FORFEITED BY THE EXCISE DEPARTMENT. THE RELATED PANCHNAMA IN THIS REGARD IS ENCLOSED FOR YOUR READY REFERENCE. SO WE ARE NOT ABLE TO SUB MIT THE DOCUMENTS AS REQUIRED BY YOU. HOWEVER, WE ARE IN CO NTINUOUS TOUCH WITH EXCISE DEPARTMENT FOR OBTAINING THE DOCU MENTS AND IT WILL BE SUBMITTED AS SOON AS WE WILL RECEIVE THE SAME. 3. FROM THE ABOVE REPLY, THE ASSESSING OFFICER OBSE RVED THAT COPY OF SO CALLED PANCHNAMA DID NOT BEAR ANY STAMP OF THE OFFI CE OR THE OFFICER WHO ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 5 HAD ALLEGEDLY IMPOUNDED/ SEIZED THE RECORD AND FURT HER THERE WAS NO MENTION OF BOOKS OF ACCOUNTS OF THE PERIOD RELEVANT TO ASSESSMENT YEAR- 2002-03 IN THE SO CALLED PANCHNAMA. HE FURTHER OBSE RVED THAT STATEMENT OF SHRI PREM CHAND BATRA, DIRECTOR OF M/S MKM FINSEC P VT. LTD. WAS RECORDED ON OATH ON 10.12.2009 IN THE ASSESSMENT PR OCEEDINGS OF M/S MKM FINSEC PVT. LTD. AND IN THE STATEMENT OF SHRI PREM CHAND BATRA, HE HAD STATED THAT HE WAS PRACTICING CHARTERED ACCOUNTANT AND HE DID NOT LOOK AFTER DAY TO DAY WORKING OF THE COMPANY AND RATHER THE OT HER DIRECTOR SHRI MAHESH BATRA USED TO LOOK AFTER THE RETURN OF THE A SSESSEE COMPANY. 4. IN VIEW OF THE ABOVE FACTS AND FINDINGS, THE AS SESSING OFFICER HELD THAT SUBMISSION OF SHRI MAHESH BATRA RECORDED ON TH E OATH BEFORE THE ADDITIONAL DIRECTOR OF INCOME TAX HELD GOOD AND DES CRIBED WELL THE ACTIVITIES OF M/S MKM FINSEC PVT. LTD. 5. THEREFORE, DURING ASSESSMENT PROCEEDINGS A COPY OF STATEMENT OF SHRI MAHESH BATRA RECORDED BY INVESTIGATION WING, WAS GI VEN TO THE AR OF ASSESSEE ON 07.12.2009 AND HE WAS ASKED TO SHOW CAU SE AS TO WHY RECEIPT FROM M/S MKM FINSEC PVT. LTD. SHOULD NOT BE TREATED AS UNEXPLAINED INCOME U/S 68OF THE INCOME TAX ACT, 1961. IN RESPON SE THE AR REITERATED HIS RELIANCE UPON VARIOUS DOCUMENTS PERTAINING TO TRANS ACTIONS WITH M/S MKM FINSEC PVT. LTD. TO ESTABLISH THE GENUINENESS OF TH E TRANSACTIONS WITH SUCH ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 6 COMPANY. THE ASSESSING OFFICER HELD THAT IN NORMAL CIRCUMSTANCES IT WAS A CLEAR CASE WHERE THE VALIDITY OF SUCH DOCUMENTS SHO ULD NOT BE DOUBTED BUT IN THE LIGHT OF FINDINGS GIVEN BY INVESTIGATION WING, SUCH DOCUMENTARY EVIDENCE CANNOT BE RELIED AS THE SAME HAD BEEN SO A RRANGED SO AS TO MAKE BOGUS TRANSACTIONS APPEAR GENUINE. THEREFORE, RELYI NG UPON THE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. DURGA PRASAD MORE REPORTED IN 82 ITR 540, THE ASSESSING OFFICER HELD THE AMOUNT RECE IVED BY ASSESSEE AS BOGUS AND MADE ADDITION U/S 68. A FURTHER AMOUNT O F RS.80,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE KEEPING IN VIEW THE F ACT THAT USUALLY ENTRY OPERATORS USE TO CHARGE 2% OF THE AMOUNT OF ENTRIES AS COMMISSION. 6. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE CIT (A) AND CHALLENGED THE REOPENING OF THE CASE AND ARGUED ON THE MERITS OF THE CASE. THE SUBMISSIONS OF THE ASSESSEE TO THE LD. CI T (A) ARE AS UNDER: (I) ON PERUSAL OF THE REASONS RECORDED FOR THE RE- OPENING OF THE ASSESSMENT U/S 147/148 CLEARLY INDICATE THAT TH E CASE HAS BEEN RE-OPENED MERELY ON THE BASIS OF INFORMATION R ECEIVED FROM THE OFFICE OF DIRECTOR OF INCOME TAX (INV.), N EW DELHI THAT THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATIO N ENTRIES FROM M/S MKM FINSEC PVT. LTD. THE REASONS DO NOT DI SCLOSE THE BASIS ON WHICH THE DIT (INV.) HAS TERMED THE RE CEIPT OF MONEY BY THE ASSESSEE FROM M/S MKM FINSEC PVT. LTD. TOWARDS SALES OF SHARES AS BOGUS ACCOMMODATION ENTR IES. IF ANY INVESTIGATION WERE CARRIED OUT BY THE DIT (INV.) OR ANY WITNESSES WAS EXAMINED BY HIM WHO IMPLICATED THE AS SESSEE, THE REPORT OF SUCH INVESTIGATION OR STATEMENT OF TH E WITNESS DO NOT FORM PART OF THE REASONS. ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 7 (II) EVEN IF IT IS PRESUMED THAT THE INFORMATION OF THE DIT (INV.), NEW DELHI WAS BASED UPON THE STATEMENT OF O NE OF THE DIRECTOR (MR. MAHESH CHAND BATRA) OF M/S MKM FINSEC PVT. LTD. RECORDED ON 23/01/2004 ON OATH U/S 131 OF THE I. T. ACT, 1961. HOWEVER IN THE SAID STATEMENT SHRI MAHESH BAT RA HAS NOT IMPLICATED THE APPELLANT I.E. HE HAS NEITHER MENTIO NED THE NAME OF THE ASSESSEE AS BENEFICIARY OF RECEIVING ACCOMMO DATION ENTRY NOR SPECIFIED THE TRANSACTION ENTERED Y THE ASSESSE E WITH THEM AS BOGUS OF SHAM. IN FACT IT WAS A STATEMENT OF GENERA L NATURE BASED UPON WHICH PROCEEDING U/S 147/148 CANNOT BE I NITIATED. (III) THE ASSESSING OFFICER HAS RE-OPENED THE ASSES SMENT MERELY ON THE BASIS OF INFORMATION PROVIDED BY DIT (INV.), NEW DELHI AND TABULATED THE DETAILS AS RECEIVED FROM TH E INVESTIGATION WING OF I. T. DEPARTMENT, WHICH IS EV IDENT FROM THE FACT THAT PARTICULARS OF ALLEGED ACCOMMODATION ENTRIES WERE RECORDED TWICE BY THE ASSESSING OFFICER IN HIS NOTE SHEET FOR REASONS RECORDED FOR RE-OPENING THE ASSESSMENT. ( R EFER S. NO. (I) & (II), (III) & (IV) AND (V) & (VI)). (IV) THE ASSESSING OFFICER HAS ADMITTED THE AFORESA ID MISTAKE AND MADE ADDITION OF RS.40.80 LAKHS AS AGAINST RS.6 6.30 LAKHS ALLEGED IN THE NOTE SHEET OF REASONS RECORDED FOR R E-OPENING OF THE ASSESSMENT. THIS ADMISSION OF MISTAKE BY THE AS SESSING OFFICER PROVE THE FACT THAT REASONS TO BELIEVE WERE RECORDED MECHANICALLY WITHOUT INDEPENDENTLY ARRIVED AT, WHIC H IS THE BASIC PRE-REQUISITE FOR ISSUING NOTICE U/S 148. (V) THAT IN THE REASONS RECORDED THE ASSESSING OFFI CER ALLEGED THAT INVESTIGATION WING, NEW DELHI HAS ESTA BLISHED THAT M/S MKM FINSEC PVT. LTD. WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES. HOWEVER, THE DEPARTMENT COUL D NOT GATHER ANY MATERIAL TO ESTABLISH THE FINDING GIVEN BY THE INVESTIGATION WING IN ITS REPORT IN SUBSEQUENT VARI OUS PROCEEDINGS DURING THE PAST 5 YEARS I. E. FROM THE DATE DATE OF SUCH INVESTIGATION REPORT TILL THE DATE OF ISSUE OF NOTICE U/S 148 TO THE APPELLANT IN MARCH, 2009. IN FACT VARIOUS AP PELLATE AUTHORITIES INCLUDING JURISDICTIONAL DELHI HIGH COU RT HAVE DELETED THE ADDITION MADE BY THE I. T. DEPARTMENT O N THE ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 8 STRENGTH OF AFORESAID ALLEGED REPORT OF THE DIT (IN V.), NEW DELHI OR ON THE BASIS OF AFORESAID STATEMENT DATED 23/01/2004 OF SHRI MAHESH CHAND BATRA (CIT VS M/S VISHAL HOLDING & CAPITAL SERVICES PVT. LTD. IN ITA NO. 1031/2010 DEL HI HIGH COURT) . (IV) THAT THE ALLEGED INFORMATION PROVIDED BY THE D IT (INV.) HAS BEEN ACCEPTED AS GOSPEL TRUTH WITHOUT ANY VERIF ICATION BY THE ASSESSING OFFICER. THE LAW POSTULATES THE ASSES SING OFFICER (AND NOT THE DIT (INV.)) TO HAVE REASON TO BELIEVE. BLIND ACCEPTANCE OF THE INFORMATION FURNISHED BY THE DIT (INV.) CANNOT FORM REASONS LEADING TO THE BELIEF BY THE AS SESSING OFFICER OF ANY ESCAPEMENT OF INCOME. (VII) THAT THE ASSESSING OFFICER HAS RECORDED THE S TATEMENT OF SHRI PREM CHAND BATRA, DIRECTOR & PRINCIPLE OFFICER OF M/S MKM FINSEC PRIVATE LIMITED ON OATH ON 26/11/2007 U/ S 131 OF I. T. ACT, 1961 DURING THE COURSE OF ASSESSMENT PRO CEEDINGS OF M/S MKM FINSEC PRIVATE LIMITED FOR THE A. Y. 2000-0 1 AND IT WAS ARGUED THAT THE ABOVE WAS THE LAST STATEMENT RE CORDED ON OATH U/S 131 OF M/S MKM FINSEC PRIVATE LIMITED BEFO RE ISSUE OF NOTICE DATED 26/03/2009 U/S 148 BY THE ASSESSING OFFICER IN THE PRESENT CASE. ON PERUSAL OF THE ABOVE STATEMENT OF SHRI PREM CHAND BATRA, IT IS EVIDENT THAT HE HAS DENIED THAT M/S MKM FINSEC PRIVATE LIMITED WAS INDULGING IN PROVIDI NG ACCOMMODATION ENTRIES BUT ON THE CONTRARY ADMITTED THAT M/S MKM FINSEC PRIVATE LIMITED WAS CARRYING ON THE GENU INE BUSINESS OF SHARE BROKER. HENCE, RE-OPENING OF THE CASE MERELY ON THE BASIS OF REPORT FROM THE OFFICER OF DIT (INV .), NEW DELHI WHICH WAS BASED UPON THE STATED DATED 23/01/2004 OF SHRI MAHESH CHAND BATRA IS WRONG AND THAT TOO WITHOUT C ONSIDERING THE SUBSEQUENT STATEMENT DATED 26/11/2007 RECORDED U/S 131 ON OATH IN THE OWN CASE OF M/S MKM FINSEC PRIVATE LIMI TED. IMMEDIATELY, BEFORE ISSUE OF NOTICE U/S 147/148 TO THE APPELLANT M/S MKM FINSEC PRIVATE LIMITED HAD ADMITTED THAT AL L ITS TRANSACTIONS WERE GENUINE AND THEY ARE NOT INDULGIN G IN PROVIDING ACCOMMODATION ENTRY. RELIANCE WAS PLACED ON THE RECENT JUDGMENT OF HONBLE KARNATAKE HIGH COURT IN THE CASE OF CIT VS. N. THIPPA SETTY (2010) 322 ITR 525 (KARN .). ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 9 (IX) IT WAS FURTHER CONTENDED THAT IN THE ASSESSMEN T ORDER THE ASSESSING OFFICER HAS ALLEGED THAT AN INFORMATION W AS RECEIVED FROM THE DIT (INV.), NEW DELHI THAT THE ASSESSEE HA D RECEIVED ACCOMMODATION ENTRY TO THE EXTENT OF RS.40 LAKHS. I T IS A WELL SETTLED LAW THAT EVIDENCE/ MATERIAL FOR ESCAPEMENT OF INCOME SHALL BE AVAILABLE ON RECORD AT THE TIME OF RECORDI NG THE REASONS TO BELIEF FOR REOPENING OF ASSESSMENT AND GATHERING OF SUBSEQUENT MATERIAL CANNOT VALIDATE THE ISSUE OF NO TICE FOR REOPENING OF THE ASSESSMENT. 7. THE LD. CIT (A) AFTER GOING THROUGH THE SUBMISSI ONS OF ASSESSEE UPHELD THE REOPENING OF THE CASE U/S 147. HOWEVER O N MERITS, HE DELETED THE ADDITION BY HOLDING AS UNDER: 8.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED A.R, THE FACTS OF THE CASE AND THE JUDICIAL DECISIO NS RELIED UPON. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND D OCUMENTS PLACED IN THE PAPER BOOK FURNISHED BY THE APPELLANT . A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ADDITION IN AGGREGATE OF RS.40 LAKHS WAS MADE ON THE BASIS OF THE STATEMENT OF MR. MAHESH CHAND BATRA, DIRECTOR OF MIS. MKM FINSEC PRI VATE LIMITED WHICH WAS RECORDED ON OATH BEFORE THE ADD!. DIT (INV.), UNIT-1, NEW DELHI AND REPORT RECEIVED FROM THE INVESTIGATION WING, NEW DELHI THAT THE APPELLANT HA D RECEIVED ACCOMMODATION ENTRIES FROM MIS. MKM FINSEC PRIVATE LIMITED, WHO WAS ALLEGEDLY ENGAGED IN THE BUSINESS OF PROVIDING BOGUS ACCOMMODATION ENTRIES. 8.3 IN VIEW OF ABOVE, THE ASSESSING OFFICER ALLEGE D THAT THE APPELLANT'S TRANSACTIONS OF SALE OF SHARES THROUGH M/S. MKM FINSEC PRIVATE LIMITED WERE MERELY BOGUS ACCOMMODAT ION ENTRIES AND ALLEGED THAT THE APPELLANT HAD PAID RS. 40,00,000/- BESIDE COMMISSION @ 2% I.E. RS. 80,000/- (TOTAL RS. 40,80,000/- ) IN CASH IN LIEU OF CHEQUES RECEIVED FROM M/S. MKM FINSEC PRIVATE LIMITED OF EQUAL AMOUNT WHICH WAS ADDED TO THE TOTAL INCOME OF THE APPELLANT AS INCOME FROM UNDISCLOSED SOURCES. ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 10 8.4 THE ASSESSING OFFICER HAS RELIED ON THE ALLEGED STATEMENT RECORDED BY THE INVESTIGATION WING. NO EXERCISE TO EXAMINE THE MATERIAL AND CONFRONT THE APPELLANT WITH THE INCRIM INATING DOCUMENTS APPEARS TO HAVE TAKEN PLACE IN THE PRESEN T CASE IN FACT THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL IN THE ASSESSMENT ORDER TO JUSTIFY HIS ALL EGATION EXCEPT FOR THE REPORT OF INVESTIGATION WING, NEW DELHI AND STATEMENT DATED 23/01/2004 OF MR. MAHESH CHAND BATRA, DIRECTO R OF M/S MKM FINSEC PVT. LTD. BEFORE THE ADDL. DIT (INV.), U NIT -1, NEW DELHI. THE SUBMISSION OF THE APPELLANT, EXPLAIN ING THE NATURE OF THE ENTRIES AND STATING THAT NO CASH TRAN SACTION WAS INVOLVED, HAS ALSO NOT BEEN REBUTTED. THE ASSESSING OFFICER HAS NOT ABLE TO POINT OUT SINGLE INSTANCE TO SHOW THAT THE EXPLANATIONS OFFERED BY THE APPELLANT WERE INCORREC T. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT IT WAS A CASE OF TAKING FALSE ENTRIES OR OF MONEY LAUNDERING. ON THE CONTRARY, THE ASSESSING OFFICER HAS IGNORED THE DOCUMENT PROV IDED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDIN G VIZ. COPY OF SHARE CERTIFICATE, CERTIFICATE DATED 03/11/2009 ISSUED BY M/S YOUNG BUILDERS (P) LTD & M/S. YOUTH CONSTRUCTION (P ) LTD. (COMPANIES WHOSE SHARES WERE SOLD BY THE ASSESSEE T HROUGH MIS. MKM FINSEC PRIVATE LIMITED), CONFIRMATION LETT ERS, COPY OF AUDITED BALANCE SHEET, COPIES OF BILLS AND CONTR ACT NOTE ISSUED BY M/S. MKM FINSEC PRIVATE LIMITED, ETC. THE BOOKS OF ACCOUNT OF THE APPELLANT HAD BEEN MAINTAINED AND AU DITED AS PER THE COMPANIES ACT. THE ASSESSEE HAS ALSO FURNIS HED SUFFICIENT MATERIAL TO ESTABLISH THAT SHARES AS SOL D BY THE APPELLANT THROUGH M/S. MKM FINSEC PRIVATE LIMITED W ERE ULTIMATELY TRANSFERRED IN THE FAVOUR OF ULTIMATE BU YER IN THE STATUTORY RECORD OF M/S YOUNG BUILDERS (P) LTD & M/ S. YOUTH CONSTRUCTION (P) LTD. AND PROPER INTIMATION TO THE REGISTRAR OF COMPANIES WAS SUBMITTED IN THIS REGARD. THE ASSESSI NG OFFICER HAS NOT DISPUTED THE AFORESAID FACTS BUT PROCEEDED ON THE BASIS OF STATEMENT RECORDED U/S 131 ON 23-01-2004 OF MR. MAHESH CHAND BATRA, DIRECTOR OF M/S. MKM FINSEC (WHICH WAS RECORDED AT THE BACK OF THE ASSESSEE IN ANOTHER PRO CEEDING) AND MADE ADDITION U/S 68 & 69C OF I.T. ACT, 1961. THE S AID STATEMENT OF MR. MAHESH CHAND BATRA HAS BEEN DENIED BY ANOTHER DIRECTOR OF M/S. MKM FINSEC PRIVATE LIMITED (MR. PREM CHAND BATRA) IN THE STATEMENT RECORDED BY THE A.O. ON ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 11 26/11/2007, 10/12/2009 AND 16/12/2009 IN THE CASE O F THE SAID CONCERN FOR THE A.Y. 2000-01 & 2002-03. IT IS ALSO POINTED OUT THAT THE APPELLANT HAD REPEATEDLY ASKED FOR THE OPP ORTUNITY TO CROSS EXAMINE MR. MAHESH CHAND BATRA, DIRECTOR OF M /S. MKM FINSEC PRIVATE LIMITED BUT NO SUCH OPPORTUNITY WAS ALLOWED. IT IS THE SETTLED LAW THAT WHERE MATERIAL IS COLLECTED ON THE BACK OF THE ASSESSEE BY EXAMINING A WITNESS, IT IS NECESSAR Y THAT RIGHT OF CROSS EXAMINATION IS GIVEN BEFORE USING THE SAID EV IDENCE. THE HON'BLE JURISDICTIONAL DELHI COURT IN THE CASE OF C IT VS SMC SHARE BROKER LTD. [2007] 288 ITR 345 & CIT VIS ASHW ANI GUPTA [2010] 322 ITR 396 HAS CONFIRMED THE ORDER OF ITAT WHICH HAS HELD THAT ENTIRE ADDITION MADE BY THE AO. IS INVALID. ASSESSMENT HAS BEEN MADE IN THE HANDS OF THE APPELL ANT MERELY ON THE WORD OF THE THIRD PARTY WITHOUT ANY CORROBOR ATIVE EVIDENCE OR DOCUMENTARY PROOF. RELIANCE WAS PLACED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL CO. PVT. LTD., 258 ITR 317 AND CIT VS. SMC SHARE BR OKERS LTD.(SUPRA) AND CIT VIS ASHWANI GUPTA(SUPRA). 8.5 MOREOVER, THE APPELLANT HAD ALSO SUBMITTED A CO PY OF APPELLATE ORDER IN THE CASE OF M/S MKM FINSEC PVT. LTD. FOR THE AY. 2000-01, PASSED BY MY PREDECESSOR WHEREIN IT HA S BEEN HELD THAT THE AO HAD FAILED TO PROVE ON THE BASIS O F ANY DOCUMENTARY EVIDENCE OR INQUIRIES THAT M/S MKM FINS EC PVT. LTD. HAD INDULGED IN PROVING ACCOMMODATION ENTRY. U NDER THESE CIRCUMSTANCES, THE ADDITION MADE BY THE AO. C ANNOT BE SUSTAINED. 8.6 THE ASSESSING OFFICER HAS INVOKED PROVISIONS OF SECTION 68 FOR MAKING THE ADDITION WHICH DOES NOT APPEAR TO BE CORRECT APPROACH. THE GENUINENESS OF TRANSACTION STAND PROV ED BY THE CONFIRMATION LETTER, COPY OF CHEQUE ISSUED TO THE A PPELLANT BY THE SHARE BROKER AND ITS AUDITED BALANCE SHEET. FUR THER, IN THE PRESENT CASE NO SPADEWORK WAS DONE BY ASSESSING OFF ICER TO FIND OUT ANY TANGIBLE EVIDENCES TO FALSIFY VARIOUS EVIDENCES FILED BY THE APPELLANT. IT IS A SETTLED LAW THAT SU SPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PRO OF. THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WITH RES PECT TO ABOVE EVIDENCES SO AS TO PROVE THAT THE SAID EVIDEN CES WERE FALSE OR WRONG. IT IS WELL ESTABLISHED THAT ONCE TH E INITIAL BURDEN ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 12 OF PROVING THE GENUINENESS OF TRANSACTION AND CREDI T WORTHINESS OF CREDITORS WAS DISCHARGED BY ASSESSEE BY WAY OF P RODUCING VARIOUS EVIDENCES, THE ONUS SHIFTED TO THE ASSESSIN G OFFICER TO DISAPPROVE IT. WHEN A PARTICULAR EXPLANATION FURNIS HED BY THE ASSESSEE AND EVIDENCE IN SUPPORT THEREOF IS ADDUCED , THE ONUS SHIFTS TO THE ASSESSING OFFICER TO FALSIFY THE SAID MATERIAL OR BRING NEW MATERIAL ON RECORD. MERE REJECTION OF GOO D EXPLANATION DOES NOT CONVERT GOOD PROOF INTO NO PRO OF AND THE AO CANNOT MAKE GOOD EVIDENCE INTO BAD EVIDENCE. IN FACT THE AO. HAS HIMSELF ADMITTED THAT THE DETAIL FURNISHED BY THE APPELLANT WERE INDEED COMPLETE AND EXHAUSTIVE AND H E HAS SHOWN HIS INABILITY TO CARRY OUT ELABORATE INVESTIG ATION WITH HIS LIMITED RESOURCE VERIFYING THE GENUINENESS OF THE B USINESS ACTIVITY OF M/S. MKM FINSEC PRIVATE LIMITED. THE A. O. DID NOT VERIFY THE EVIDENCE SUBMITTED BY THE APPELLANT. THE PURCHASE OF SHARES IN EARLIER YEAR HAS NOT BEEN DOUBTED. AS IN THE CASE OF M/S. VISHAL HOLDING CAPITAL PRIVATE LIMITED [ITA 1030/DE1/2010], HE PROCEEDED TO MAKE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FURNISHED BY THE APPELLANT. T HEREFORE, THE RATIO OF THE ABOVE SAID CASE AS HELD BY HON'BLE DEL HI HIGH COURT VIDE ORDER DATED 09/08/2010 IS APPLICABLE TO THE FACTS OF THIS CASE. THEREFORE, NO ADDITION CAN BE SUSTAINED IN SUCH CIRCUMSTANCES. 8.7 FURTHER, IT WAS NOTICED THAT THERE WAS NO DISPU TE ABOUT THE INVESTMENT OF RS. 50;00,000/- MADE BY THE APPELLANT COMPANY IN THE SHARES OF M/S. YOUNG BUILDERS PVT. LTD. AND M/S. YOUTH CONSTRUCTION PVT. LTD. IN THE EARLIER YEAR. THE AFO RESAID INVESTMENT WAS AVAILABLE IN THE OPENING STOCK OF TH IS YEAR. THE SAME WERE NOT SHOWN TO THE EXTENT SALE HAS BEEN CLA IMED BY THE APPELLANT IN ITS BOOKS OF ACCOUNT AS CLOSING STOCK AT THE END OF THE YEAR. THE APPELLANT HAS FILED COPIES OF CONTRAC T NOTE BILLS, CONFIRMATION FROM THE M/S. MKM FINSEC PRIVATE LIMIT ED WITH OTHER CORROBORATIVE EVIDENCE SUCH AS COPY OF SHARE CERTIFICATE, CERTIFICATE FROM THE COMPANIES IN WHOM INVESTMENT W ERE MADE (M/S. YOUNG BUILDERS PVT. LTD. AND M/S. YOUTH CONST RUCTION PVT. LTD), DETAILS OF SALE PROCEEDS RECEIVED BY IT THROUGH BANKING CHANNEL AND THE EVIDENCE INDICATING THAT NO CAPITAL GAINS OR LOSS ARISES TO THE APPELLANT. THE STOCK TO THE EXTENT OF ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 13 SALE HAS EXTINGUISHED FROM THE BOOKS OF ACCOUNTS OF THE APPELLANT. IN SUCH SITUATION THE ASSESSING OFFICER WOULD GIVE THE TREATMENT OF NON AVAILABILITY OF INVESTMENT IN THE BOOKS OF ASSESSEE TO THE EXTENT SALES HAS BEEN CLAIMED. BOTH THIS WOULD SET OFF WITH EACH OTHER AND NO ADDITION ULTIMATELY COULD BE MADE BECAUSE THE MOMENT SALE IS DOUBTED THE STATUS OF THE SHARES HAS TO BE RESTORED IN THE BOOKS OF APPELLANT BECAUSE IT HAS COME FROM THE OPENING STOCK. BUT IN FACT WHEN T HE SHARES WERE NOT AVAILABLE WITH THE ASSESSEE, NO ADDITION B Y DOUBTING THE SALES IN THIS YEAR COULD BE MADE, THAT TOO ONLY ON THE BASIS OF SURMISES AND APPREHENSION. DURING THE COURSE OF APPELLANT PROCEEDING, THE APPELLANT SUBMITTED A COPY OF ORDER DATED 11- 12-2009 OF HON'BLE ITAT, 'I' BENCH, NEW DELHI IN TH E CASE OF ITO VIS. M/S. VAISHALI FINANCIAL SERVICES PRIVATE L IMITED IN ITA NO. 138/DE1/2009. IT IS SEEN THAT THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE FACTS IN THE CASE OF THE AP PELLANT. THE HON'BLE ITAT CONFIRMED THE ORDER OF CIT(A) FOR DELE TION OF ADDITION MADE U/S 68 OF I.T. ACT. 8.8 UNDER THESE CIRCUMSTANCES AND THE FACTS OF THE CASE, THE ADDITION OF RS. 40 LAKHS IS DELETED AND AS A LOGICA L CONSEQUENCE THE ADDITION OF RS.80,OOO/- IS ALSO DEL ETED. THE GROUND NOS. 4 TO 7 AND 9 ARE ACCORDINGLY ALLOWED TO THE APPELLANT. 8. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AN D ASSESSEE IS IN APPEAL FOR RE-OPENING OF THE CASE. AT THE OUTSET, T HE LD. AR INVITED OUR ATTENTION TO REASONS RECORDED AS CONTAINED IN PAPER BOOK PAGE 59 AND 60 HIGHLIGHTED ITEM 1, 2, 3 & 4 AND INVITED OUR ATTENT ION TO THE FACT THAT THESE ITEMS WERE WRITTEN TWICE. AS THE REASONS RECORDED C ONTAIND DUPLICATE AMOUNTS, THE LD. AR ARGUED THAT THE ASSESSING OFFIC ER ISSUED NOTICE U/S 148 WITHOUT APPLICATION OF MIND AND MECHANICALLY ISSUED NOTICE WITHOUT GOING ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 14 INTO THE INVESTIGATION REPORT AND DID NOT BOTHER TO SEE THAT THERE WAS DUPLICATION OF AMOUNTS. THEREFORE, ASSESSING OFFICE R DID NOT APPLY HIS MIND. CITING THE DECISION OF DELHI HIGH COURT IN THE CASE OF KAMDHENU THE LD. AR ARGUED THAT HONBLE HIGH COURT HAD HELD THAT IN THE CASES OF TABULAR INFORMATION IT CANNOT BE SAID THAT ASSESSING OFFICE R HAD APPLIED HIS MIND BEFORE ISSUING NOTICE U/S 148. 9. THE LD. AR FURTHER SUBMITTED THAT M/S MKM FINSE C PRIVATE LIMITED WAS THE ASSESSEE OF THE SAME ASSESSING OFFICER AND OUR ATTENTION WAS INVITED TO ASSESSMENT ORDER OF THIS COMPANY PLACED AT PAPER BOOK PAGE 185 TO 203 AND IN VIEW OF THE ABOVE FACTS. IT WAS ARGUED THAT THE FACTS REGARDING OPERATIONS OF M/S MKM FINSEC PRIVATE LIMITED WERE A LREADY BEFORE ASSESSING OFFICER AND, THEREFORE, ON THE BASIS OF F INDINGS OF ASSESSING OFFICER ON PAGE 3 OF ASSESSMENT ORDER, IT WAS ARGUE D THAT SINCE INFORMATION WAS ALREADY WITH ASSESSING OFFICER THEREFORE, HE CO ULD HAVE ISSUED NOTICE FOR SCRUTINY IN THE CASE OF ASSESSEE ALSO WHICH HE DID NOT DO AND, THEREFORE, IN VIEW OF ALL CIRCUMSTANCES IT WAS ARGUED THAT REO PENING WAS NOT LEGALLY JUSTIFIED. 10. HE FURTHER ARGUED THAT IN THE CASE OF VISHAL HO LDING AND CAPITAL PVT. LTD. WHICH WAS ALSO REOPENED BECAUSE OF CERTAIN TRA NSACTIONS WITH M/S MKM FINSEC PRIVATE LIMITED, THE HONBLE DELHI HIGH COURT HAS HELD THAT ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 15 SINCE, THE COMPANY M/S MKM FINSEC PRIVATE LIMITED H AD BEEN MAINTAINING BOOKS OF ACCOUNTS AS PER COMPANIES ACT AND ASSESSEE HAD ALSO DEMONSTRATED THE PURCHASE AND SALE OF SHARES OVER A PERIOD OF TI ME, THEREFORE, THE APPEAL OF THE DEPARTMENT WAS DISMISSED AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 2 TO 3 WHERE A COPY OF HONBLE DELHI HIGH COUR T ORDER WAS PLACED. IN VIEW OF THE ABOVE ORDER, IT WAS ARGUED THAT FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE ARE SAME. THEREFORE, THE APPEAL OF REV ENUE SHOULD BE DISMISSED. REGARDING MERITS OF THE CASE, THE LD. AR RELIED UPON THE ORDER OF LD. CIT (A). 11. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUBMITTED THAT FOR REOPENING OF THE CASES EXISTENCE OF REASONS SHO ULD BE THERE AND SUFFICIENCY OF REASONS IS NOT REQUIRED AT THE TIME OF ISSUING OF NOTICE U/S 148. THERE WAS A CLEAR CUT INFORMATION FROM INVESTIGATIO N WING AND, THEREFORE, ASSESSING OFFICER HAD SUFFICIENT REASONS TO REOPEN THE CASE. THE SUBSEQUENT EVENTS THE CASE OF M/S MKM FINSEC PRIVATE LIMITED D OES NOT BAR THE REOPENING OF THE CASE AS THE EARLIER ASSESSMENT WAS DONE U/S 143(1) OF THE ACT. RELIANCE IN THIS RESPECT WERE PLACED ON THE CA SE OF RAJESH JHAWERI VS. N. R PORTFOLIO DECIDED BY DELHI HIGH COURT WHEREIN THE HONBLE COURT HAD HELD THAT SUFFICIENCY OF REASONS WAS NOT RELEVANT. REGARDING MERITS OF THE CASE, LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER O F ASSESSING OFFICER. ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 16 12. WE HAVE HEARD THE RIVAL PARTIES. AS THE ASSESSE E HAS TAKEN IN ITS GROUNDS OF CROSS OBJECTIONS THE LEGAL ISSUE OF REOP ENING, WE FIRST PROCEED TO DECIDE AS TO WHETHER THE REOPENING WAS LEGAL OR NOT . WE FIND THAT ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BASIS OF SPE CIFIC INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT. AT THE STAGE OF ISSUE OF NOTICE THE ONLY QUESTION TO BE DECIDED BY ASSESSING OFFICER IS AS TO WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REAS ONABLE PERSON COULD HAVE FORMED REQUISITE BELIEF THAT INCOME HAD ESCAPE D ASSESSMENT AND TO CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCER N AT THIS STAGE. IT IS SO BECAUSE FORMATION OF BELIEF IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. THE HONBLE SUPREME COURT IN THE CASE OF REVAN WOOL EN MILLS PVT. LTD. VS. 236 ITR 34 (SC) HAS HELD THAT WHILE CONSIDERING WHE THER RE ASSESSMENT PROCEEDINGS WERE VALID IT IS ONLY TO BE SEEN THAT W HETHER THERE WAS SOME PRIMA-FACIE MATERIAL ON THE BASIS OF WHICH THE DEPA RTMENT COULD RE OPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF MATERIAL IS NOT A THING TO BE CONSIDERED AT THAT STAGE AND IT WILL BE OPEN TO TH E ASSESSEE TO PROVE THAT ASSUMPTION OF FACTS MADE IN THE NOTICE WERE ERRONEO US. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE HOLD THAT REOPENING WAS LEGAL AND MERELY THERE WERE CERTAIN MISTAKES OR DUPLICATION OF FIGURES IN THE REASONS RECORDED THE REASSESSMENT PROCEEDINGS CANNOT BE HELD TO BE NULL AND VOID. THE SECOND ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 17 ASPECT OF ARGUMENT OF LD. AR THAT SINCE ASSESSING O FFICER IN BOTH CASES WERE SAME THEREFORE, ASSESSING OFFICER WAS HAVING K NOWLEDGE OF FACTS OF M/S MKM FINSEC PVT. LTD. DOES NOT CARRY MUCH WEIGHT AS WITHOUT ANY REPORT OR DOCUMENT TO THE CONTRARY ASSESSING OFFICE R CANNOT DISBELIEVE THE SUBMISSIONS OF ASSESSSEE. THEREFORE, HE INITIATED T HE REOPENING ONLY ON RECEIPT OF REPORT OF INVESTIGATION WINGS. IN VIEW O F THE ABOVE, THE CROSS OBJECTIONS FILED BY ASSESSEE ARE DISMISSED. 13. AS REGARDS MERITS OF THE CASE, WE OBSERVE THAT ASSESSEE MADE INVESTMENTS OF RS.50 LACS IN SHARES OF M/S YOUNG BU ILDERS PVT. LTD. AND M/S YOUTH CONSTRUCTION PVT. LTD. DURING THE FINANCIAL Y EAR 1999-2000 AND WAS ORIGINAL ALLOTEE OF THESE SHARES. A COPY OF BALANCE SHEET OF THE ASSESSEE FOR THE YEAR ENDING 2001 IS PLACED AT PAPER BOOK PAGE 1 11 TO 113. A PERUSAL OF SCHEDULE 3 PLACED AT PAPER BOOK PAGE 112 REVEALS TH AT 3500 EQUITY SHARES OF M/S YOUNG BUILDERS PVT. LTD. AND 1500 EQUITY SHARES ARE REFLECTED IN THE BALANCE SHEET AT A COST OF RS. 35 LACS AND RS.15 LA CS RESPECTIVELY. THE SAME FIGURES ARE FOR THE PREVIOUS YEARS ENDING ON 31 MAR CH, 2000. FROM THE ABOVE BALANCE SHEET ONE THING BECOMES CLEAR THAT ASSESSEE HAD MADE INVESTMENTS IN THESE COMPANIES WHICH WERE REFLECTED AT COST PRICE. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD 2500 EQUITY SHA RES OF M/S YOUNG BUILDERS PVT. LTD. FOR RS.25 LACS AND 1500 EQUITY S HARES OF M/S YOUTH ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 18 CONSTRUCTION PVT. LTD. FOR RS.15 LACS, WHICH IS THE COST PRICE OF THE SHARES, WHICH MEANS THAT ASSESSEE DID NOT EARN ANY LONG TER M PROFIT ON THE SALE OF THE SHARES. WE FURTHER OBSERVE THAT ASSESSEE HAD SO LD 1000 EQUITY SHARES OF M/S YOUNG BUILDERS PVT. LTD. FOR RS.10 LACS THROUGH ANOTHER BROKER, WHICH WAS ALSO AT COST PRICE AND ASSESSING OFFICER HAD NO T DOUBTED ON THAT TRANSACTION. THE ADDITION WAS ONLY MADE IN RESPECT OF SALE OF SHARES MADE THROUGH M/S MKM FINSEC PVT. LTD. ON THE BASIS OF IN VESTIGATION REPORT. THE INVESTMENTS WERE NOT DOUBTED BECAUSE HAD IT BEEN TH E CASE OF DOUBT ON INVESTMENTS THEN 1000 EQUITY SHARE SOLD THROUGH ANO THER BROKER SHOULD ALSO HAVE BEEN ADDED TO THE INCOME OF ASSESSEE. 14. MOREOVER THESE INVESTMENTS WERE DECLARED IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE. WE FURTHER OBSERVE FROM THE SALE V ALUE AND PURCHASE VALUE OF THESE SHARES THAT ASSESSEE DID NOT EARN ANY CAPI TAL GAIN NOR INCURRED ANY CAPITAL LOSS. THEREFORE, THE REASON TO ENTER INTO B OGUS TRANSACTIONS IS NOT THERE. THE ASSESSEE GOT ONLY ITS MONEY BACK THROUGH BANKING CHANNELS WHICH IT HAD INVESTED EARLIER THROUGH BANKING CHANNELS. T HEREFORE, THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION. MOREOVER THE HONBLE DELHI HIGH COURT IN THE CASE OF VISHAL HOLDING CAPITAL PVT. LTD. HAS DISMISSED THE APPEAL OF REVENUE. IN THAT CASE ALSO THE TRANSACTIONS WITH M/ S MKM FINSEC PRIVATE LIMITED WERE DOUBTED AND ADDITIONS WERE MADE TO THE INCOME OF VISHAL ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 19 HOLDING AND CAPITAL PVT. LTD. BUT HONBLE DELHI HIG H COURT DISMISSD THE APPEAL OF REVENUE BY HOLDING AS UNDER: WE ARE OF THE VIEW THAT ASSESSEE HAD PRODUCED COP IES OF ACCOUNTS, BILLS AND CONTRACT NOTES ISSUED BY M/S MK M FINSEC PRIVATE LIMITED AND HAD BEEN MAINTAINING BOOKS OF A CCOUNTS AS PER COMPANY ACT. THE ASSESSEE HAD ALSO DEMONSTRATED THE PURCHASE AND SALE OF SHARES OVER A PERIOD OF TIME A S SEEN FROM THE BALANCE SHEET. IN OUR OPINION, THE ASSESSING OF FICER SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIG ATION WING WITHOUT VERIFYING THE DOCUMENTS FURNISHED BY THE AS SESSEE. THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE T O SUPPORT ITS CLAIM. CONSEQUENTLY THE ADDITION MADE BY ASSESSING OFFICER CANNOT BE SUSTAINED. WE FIND THAT FACTS OF THE ABOVE SAID CASE ARE IDENT ICAL TO THE PRESENT CASE BECAUSE OF THE FOLLOWING FACTS: (I) SHARES IN QUESTION WERE HELD BY BOTH THE ASSES SEE COMPANIES (I.E. M/S VISHAL HOLDING AND CAPITAL PVT. LTD. AND M/S M. S. PORTFOLIO PVT. LTD.) SINCE EARLIER YEARS AND DULY REFLECTED IN THEIR AUDITED BALANCE SHEET. (I) SHARES WERE SOLD BY BOTH THE ASSESSES THROUGH M /S MKM FINSEC PRIVATE LIMITED. (II) SALES OF SHARES WERE REFLECTED IN THE AUDITED BOOKS OF ACCOUNTS AND AUDITED ANNUAL ACCOUNTS OF BOTH THE AS SESSEE(S). (III) COPY OF SALE BILLS AND CONTRACT NOTES AND BRO KERS CONFIRMATION WERE FILED BY BOTH THE ASSESSEE BEFORE THE ASSESSING OFFICER I.E. BOTH THE ASSESSEE HAD FURNIS HED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. (IV) ADDITION WERE MADE BY THE ASSESSING OFFICER IN BOTH THE CASES ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FU RNISHED BY THE ASSESSEE. ITA NO. 1866 /DEL/2011 & CO.NO.192/ DEL/ 2011 20 15. THEREFORE, FOLLOWING THE HONBLE HIGH COURT, AN D ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ASS ESSEE HAD SUFFICIENT MATERIAL TO PROVE THE GENUINENESS OF THE TRANSACTIO NS AND IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A). THE APPEAL FILED BY REVENUE IS DISMISSED. IN VIEW OF THE ABOVE, BOTH THE APPEAL OF REVENUE AND CROSS OBJECTIONS OF ASSES SEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08 TH /08/ 2013. SD/- SD/- (RAJPAL YADAV) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 8 TH DAY OF AUGUST, 2013 S.SINHA COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITA NEW DELHI.