MOHAN GURNANI, NAVI MUMBAI V. DCIT Central Cirle - 5(2), Mumbai

ITA 2089/MUM/2021

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0532 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 15-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deduction for capital gain; Gift; Income from undisclosed sources; Document seized; Principle of natural justice; Cost of acquisition; Accommodation entries; Retraction; Bogus loan; Documents seized; Capital Gains
• Section: 131; 68; 132; 10; 139; 153A; 234B; 143(1); 195; 292BB; 139(1); 64; 43; 48; 73; 72; 13; 153; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI PAVAN KUMAR GADALE, JM ITA No. 2089/Mum/2021 (Assessment Year 2010-11) ITA No. 710/Mum/2021 (Assessment Year 2011-12) ITA No. 711/Mum/2021 (Assessment Year 2012-13) ITA No. 712/Mum/2021 (Assessment Year 2013-14) ITA No. 709/Mum/2021 (Assessment Year 2014-15) ITA No. 713/Mum/2021 (Assessment Year 2015-16) ITA No. 718/Mum/2021 (Assessment Year 2016-17) Shri Mohan Gu rnani 2101, Mora j Ca sa Grande, Plot No. 57, Secto r 17, Koperkhai rne, Maharash tra-400709 Vs. The Deputy Commissioner of Income tax CC-5(2) 1908, 19 th Floor, Air India Building, Nariman Point, Mumbai-400021 (Appellant) (Respondent) PAN No. AACPG8827D Assessee by : Shri Pradip Kapasi CA Revenue by : Shri Mahesh Akhade CIT DR O R D E R Date of hearing: 25.08.2023 Date of pronouncement : 17.11.2023 Page | 2 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Per bench :- 01. These are seven appeals filed by the assessee from assessment year 2010 – 11 to 2016 – 17 against appellate order passed by The Commissioner Of Income Tax (A) – 46, Mumbai (the learned CIT – A) wherein appeal filed by assessee against assessment order passed by The Deputy Commissioner Of Income Tax, Mumbai (the learned AO) is dismissed confirming the addition of income from house property for all these seven years, disallowance of exemption under section 10 (38) of The Income Tax Act , 1961 [ The Act] for assessment year 2014 – 15 and 2015 – 16 and further confirming undisclosed income for assessment year 2010 – 11. 02. Both parties before us stated facts that all these seven appeals involve common issues on identical facts and circumstances; therefore, they argued it together taking lead year as assessment year 2015 – 16. Therefore, we dispose of all these seven appeals by this common order. 03. Assessee is an individual and is assessed to income tax showing income derived from salaries, house property, capital gain and other sources. Assessee has filed his return of income under section 139 (1) for all these years. Subsequently search and seizure action under section 132 of the Act was carried out on 4/2/2016 in-group case. Assessee is one of the person covered in those searches. During the course of search assessee’s statement were recorded on 4/2/2016, 5/2/2016, 7/2/2016 under section 132 (4) of the Page | 3 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani act. Further, he was also examined during assessment proceedings also on 20/12/2018. 04. Assessee had filed an application before The Income Tax Settlement Commission [ITSC] on 28/12/2017, assessee wanted to revise the same as per application dated 10/1/2018, which was rejected, and accordingly settlement petition of the assessee stood dismissed as per order dated 11/1/2018. 05. Pursuant to such order of ITSC, notices under section 153A of the act were issued to the assessee on 6/2/2016. 06. For assessment year 2010 – 11 in response to notice u/s 153A dated 6/12/2016, assessee filed his return of income and 6/1/2017 at a total income of ₹ 7,896,470/–. The notice under section 143 (2) was issued on 24/1/2017. During assessment proceedings, the assessee was found to have been owner of several properties, which was found on the basis of the balance sheet unearthed during the course of search. Also on the basis of page number 56 from the seized documents, having an undisclosed income of ₹ 198,000 was found. With respect to the undisclosed income addition of ₹ 198,000/– it was found that from the seized documents based on page number 56, which contained draft position of availability of funds and payments made along with the imprest cash. The assessee explained that this paper does not disclose any income and there is no reason for the assessee to maintain such an old financial transaction. However, the assessee could not substantiate the same but refused to accept that it has any component of taxable income. The learned assessing officer disbelieved the explanation of the Page | 4 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani assessee and made an addition of ₹ 198,000. The assessee was also found to be owner of four properties. With respect to property at 39/103 the AO estimated the income of the property at 5% of the total cost of property and for other three properties based on the income disclosed by the assessee for assessment year 2016 – 17, respectively he determined annual value of ₹ 56,899/– ₹ 56,899 and ₹ 73,722 of all these properties. Accordingly two additions were made to the total income of the assessee (1) undisclosed income of ₹ 198,000 and {2} income from property of ₹ 203,727/–. Total income was determined at ₹ 8,298,197/–. 07. For assessment year 2011 – 12, as assessee was found to be owner of all the four properties as were stated in assessment year 2010 – 11, annual value of the same were computed at RS 2,15,107 and total income was assessed at ₹ 8,950,047/–. Except the income from house property there was no other additions for this assessment year. 08. For assessment year 2012 – 13 the income from house property with respect to the same 4 properties were added to the total income of the assessee computed at ₹ 227,625/– and total income was computed at ₹ 2,17,99,055/–. Thus, the total income was increased only by income from property. 09. For assessment year 2012 – 13 income from house property with respect to the same four properties owned by the assessee as well as one more property at big splash was computed and added to the total income of the assessee. Income from HOUSE property with respect to 5 properties was added at ₹ 429,223/– and total income was computed at ₹ Page | 5 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 25,267,303/–. Thus, except the income from property the total income of the assessee was accepted as it is. 010. For assessment year 2014 – 15, return of income was filed on 6/1/2017 in response to notice and section 153A of the income tax act at ₹ 28,394,060/– for which notice under section 143 (2) was issued on 24/1/2017. During the year a) Assessee was found to be owner of five properties for which no income was offered; therefore, the learned assessing officer estimated an income of ₹ 504,475/– as its income under the head income from property. (1) property is 39/103 at FAM cooperative housing society, the income from property was estimated at ₹ 16,207/– at the rate of 5% of the total cost of property, (2) and (3) shop number 7, 10 was considered on the basis of the deemed rent offered by the assessee for assessment year 2016 – 17 at ₹ 83,306/– for each of the property, (4) C – 7 and C – 8 big splash house property was taxed at ₹ 73,722/– based on the property tax bill and (5) the flat number 16 was taxed at ₹ 247,934/– on the basis of deemed rent of ₹ 3 lakhs offered by the assessee in assessment year 2016 – 17. b) The assessee claimed long-term capital gain on sale of the shares as exempt under section 10 (38) of the act. The fact shows that assessee has acquired 5 lakh shares on 31/1/2012 at the cost of ₹ 100 lakhs which was sold by the assessee during the year in the month of October – March and also in subsequent year for ₹ 260,503,336/- . As per paragraph number 6, the learned AO has extracted a table wherein total shares purchased were 5,05,000 whereas the total sales sold by the assessee Page | 6 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani has shown to be 5,07,018. On sale of these shares, assessee has claimed long-term capital gain exempt under section 1038) of the act for this year of ₹ 109,174,422/–. The learned assessing officer found that the assessee has acquired the shares in preferential allotment of shares in case of Santoshima trade links private limited which was later on amalgamated with sunrise Asian limited. This company was operated by accommodation entry provider Mr. Vipul Bhatt and Mr. Kalpesh Manharlal Jani who confessed that long-term capital gain earned by the assessee is bogus and stage- managed by them by arranging preferential allotment, exit providers, repayment of loan by the assessee in an orchestrated manner to give the sale of the shares colour of genuine long-term capital gain. This was based on the statement of the parties in the search of assessee resulting to consequential search on Mr. Bhatt and Mr. Jani. During assessment proceedings, assessee tried to explain by producing several documents and judicial precedents to state that the long-term capital gain earned by the assessee is genuine. The learned AO on the basis of the statement of Mr. Vipul, Mr. Kalpesh, Mr. Piyush, CA of the assessee, assessee himself, daughter of the assessee Ms Priya, found that the long-term capital gain is bogus. He also noted that the assessee as well as his family members do not have any knowledge about the company but has earned long-term capital gain in the same script of huge amount (₹ 37 crores). He also enquired about the company sunrise Asian limited and found that the company does not have any substance of business as well as any reason for unusual rise in the Page | 7 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani share price, which is confirmed by the parties that they have rigged share price of that company with a view to give exit to many beneficiaries, the learned assessing officer treated the long-term capital gain as bogus and made an addition of ₹ 109,174,422/–. 011. For assessment year 2015 – 16, learned AO found that a) Assessee is owner of six properties for which assessee has not offered income from property. The assessee was found to be owner of [1] 501/601 Crosica plot for which the deemed rent as per property tax bill was estimated at ₹ 16,878, [2] for property at 39/103 navi Mumbai 5% of total cost of the property was deemed to be annual income estimated of ₹ 16,207, [3] for shop 7 Casa Blanca navi Mumbai deemed annual value was estimated at ₹ 91,636 based on the computation for assessment year 2016 – 17 where the deemed rent was taken at ₹ 108,000 offered by the assessee, [4] for shop No 10 in casa blanca navi Mumbai based on the income offered by the assessee the total income was determined at ₹ 91,636, [5] for Property at c-7 and c-8 Big Spalsh , navi Mumbai based on the property tax bill the deemed annual value was estimated at ₹ 73,722/– and [6] property flat number 16 Model House sion annual value was determined at ₹ 272,727/– based on income offered as deemed rent of ₹ 3 lakhs in assessment year 2016 – 17. Accordingly income from house property was added to the total income of ₹ 562807/–. b) For this year also, as in assessment year 2014 – 15, assessee has shown long-term capital gain in the same company as exempt income under section 10 (38) Page | 8 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani amounting to ₹ 31,04,85,020/-. The learned assessing officer for reasons given by him in assessment order for assessment year 2014 – 15 denied the exemption and treated it as a bogus long-term capital gain earned by the assessee. 012. For assessment year 2016 – 17, there was no addition except income from house property similar to the earlier assessment years. 013. Consequent to the assessment proceedings revived on dismissal of ITSC application of the Assessee, assessment orders were framed by the learned AO under section 143 (3) read with section 153A of the act on 16/12/2018 for all these assessment years. In short, the assessing officer has made addition under section 153A the act on account of income from house property, disallowance of exemption under section 10 (38) of the act and addition on account of undisclosed income. 014. Assessment proceedings can be summarized as under:- Assessment year Date of filing of return of income under section 139 (1) Returned income (in Rupees) Return filed under section 153A of the act Income returned under section 153A of the act (in Rupees) Income assessed as per assessment order (in Rupees) 2010 – 11 9/3/2011 7,896,470 6/1/2017 78,96,470 82,98,197 2011 – 12 18/05/2012 8,734,940 12/1/2017 8,742,530 89,50,047 2012 – 13 8/9/2012 21,571,430 6/1/2017 21,571,430 2,17,99,055 2013 – 14 31/7/2013 24,838,080 6/1/2017 2,48,38,080 2,52,67,303 2014 – 15 28/7/2014 28,394,060 6/1/2017 2,83,94,060 13,80,72,957 2015 – 16 31/8/2015 24,430,590 6/1/2017 24,438,590 33,54,86,417 Page | 9 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 2016 – 17 5/8/2016 24,685,690 2,47,75,619 015. The learned assessing officer has made following additions to the respective income for respective assessment years as under:- Assessment year Returned income (in Rupees) Additions made under section 143 (3) read with section 153a for assessment orders dated 26/12/2018 (in rupees) Assessed income (in rupees) Income from house property (in Rupees) Disallowance of exemption under section 10 (38) of the act on account of allegedly bogus long- term capital gain (in Rupees) Undisclosed income (in Rupees) 2010 – 11 78,96,470 203,727 198,000 82,98,197 2011 – 12 87,34,940 215,107 89,50,047 2012 – 13 2,15,71,430 227,625 2,17,99,055 2013 – 14 2,48,38,080 429,223 2,52,67,303 2014 – 15 2,83,94,060 504,475 10,91,74,422 13,80,72,957 2015 – 16 2,44,38,590 562,807 31,40,85,020 33,54,86,417 2016 – 17 2,46,85,690 89,929 2,47,75,619 016. Against addition in assessment orders, assessee preferred an appeal before the learned CIT (A). The learned CIT – A on submissions made by the assessee, called for remand report from learned AO. Remand report was submitted on 3/10/2020, 2/3/2020 and 1/2/2021. The rejoinders of the assessee were also taken on record. Based on submissions made, remand report and rejoinders, he passed up appellate order for assessment year 2010 – 11 on 26/10/2021, on 15/3/2021 for assessment year 2011-12, 2012 – 13 and 2016 – 17 and on 31/3/2021 for assessment year 2013 – 14 to 2015 – 16. He Page | 10 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani confirmed the order of the learned AO in toto. Therefore, assessee is in appeal before us. 017. Therefore all these appeals are preferred by the Assessee challenging :- i. No incriminating material found in search so no addition could be made in case of concluded assessments ii. The Assessment where the intimation is passed u/s 143 (1), despite time limit available for issuance of notice u/s 143 (2), such are concluded assessments and cannot result in to any addition even in such assessment years without any incriminating material iii. Income from house property cannot be added to the total income is absence of any incriminating material iv. Even if the balance sheet found is an incriminating material, property disclosed there in are all accounted , therefore no addition u/s 22 can be made as such balance sheet cannot be treated as incriminating material v. Even in the computation of Income from house property there is a dispute with respect to annual value, deduction of municipal taxes, availability of vacancy allowance and standard deduction @ 30 % vi. Disallowance of exemption u/s 10 (38) of The Act is unjustified as assessee discharged his onus, violation of principles of natural justice, .large number of judicial precedents in favour of assessee, denial of cross examination of accommodation entry provider Mr. Vipul Page | 11 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Bhatt, Mr. kalpesh jani and Mr. Piyush rasiklal Shah CA of the assessee vii. Non issue of notice u/s 143 (2) of the act by a new incumbent acquiring charge over assessee pursuant to order us/ 127 of the Act , though such notice was issued timely by the original AO, and that too within time allowed for issue of notice u/s 143 (2) of the Act viii. In the end violation of principles of natural justice 018. The learned authorized representative has taken assessment year 2015 – 16 as lead assessment year and therefore the ground raised therein as summarized under:- i. invalid application of section 153A and additions made by exceeding scope of section 153A with respect to concluded assessment years in absence of any incriminating material ii. additions as notional income from house property under section 22 of the income tax act in concluded assessment without any incriminating material and in case of abated assessment years and concluded assessment year making the addition without determining annual value in accordance with the law, not deduction maintenance charges, vacancy allowance and percent deduction under section 24 (1) of the act. iii. Denial Of exemption Under section 10 (38) of the act for assessment year 2013 – 14 of ₹ 109,174,422/- and ₹ 3,185,020/– for assessment year 2015 – 16 Page | 12 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani iv. changing jurisdiction under section 127 of the act without passing any order and also giving a copy of such order to the assessee v. passing of the order without issue of Notice U/s 143 (2) of the act by the new incumbent assessing officer i.e. deputy Commissioner of income tax 5 (2), Mumbai within the permitted time vi. levy of interest under section 234B of the act vii. Violation of the principles of natural justice. 019. Fact shows that search took place on 4/2/2016 in case of assessee. As on the dates of search assessment years up to assessment year 2014 – 15 [From AY 2010-11 to AY 2014-15] were concluded assessment. The assessment year 2015 – 16 was abated assessment. Therefore, it is apparent that assessment up to assessment year 2014 – 15 can only be disturbed, if there is any incriminating material found during the course of search qua that AY. If for assessment year 2010 – 11 till 2014 – 15, there is no incriminating material found during search, then the assessing officer is empowered to make the total income assessment of the assessee taking into consideration incriminating material found as well as other material available with him. 020. In response to notice under section 153A of the act issued to the assessee on 6/12/2016 the return of income was filed on 6/1/2017 reiterating the return of income already filed under section 139 (1) of the act filed on 31/8/2015 wherein the total income was returned at ₹ 2,44,38,590/-. Thereafter the case of the assessee was centralized by The Principal Commissioner of Page | 13 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Income Tax – 15 by an order dated 15/11/2016 under section 127 of the act. It is the claim of the assessee that such order was passed without giving any opportunity of hearing to assessee and further copy of the order was also not given to the assessee despite several request made. 021. The learned assessing officer made addition in respect of annual value of properties as income from house property and addition of sale proceeds on sale of shares denying exemption under section 10 (38) of the act. The claim of the assessee is that there is no incriminating material belonging to the assessee that was found during the course of search under section 132 of the act relating to the additions made. It is also the claim that statement under section 132 (4) was also not recorded during the course of search with respect to the above two incomes. Therefore, the addition made by the learned AO is in excess of the provisions of section 153A of the act. 022. The learned CIT – A, when confronted with this argument, he held that the return of income of the assessee for assessment year 2015 – 16 shows that assessee has declared only one property and the other two properties were not disclosed to the revenue. The existence of these properties in the name of appellant itself is the incriminating evidence found during the course of search based on the balance sheet, which was not filed by the assessee before the learned assessing officer. It is held by him that there is incriminating evidence with respect to the income from house property; therefore, the annual value of such property is chargeable to tax in the hands of the assessee under section 22 of the income tax act by applying provision of section 153A of the Act. Accordingly, he upheld the applicability of provisions of section 153A of the act holding that there is Page | 14 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani incriminating material available with the Department unearthed during the course of search in the form of the balance sheet of the assessee where he is found to be owner of three properties, of which assessee has declared annual value of only one property and therefore with respect to income from house property, the learned AO has incriminating material available with him. Therefore, there is no infirmity in making the addition so far as incriminating material is concerned. 023. Before us, assessee has submitted [1] three paper books, [2] one compilation of various judicial precedents wherein 11 judicial precedents were relied upon and [3] 69-page fact sheet to support the case of the assessee. During the course of hearing, several legal as well as factual arguments were advanced. Several judicial precedents were cited on the issue of incriminating material, challenging additions on merits and violation of principles of natural justice. We have carefully considered all the evidences and judicial precedents placed before us. Judicial precedents would be dealt with at appropriate grounds of appeal, if found relevant. 024. As per ground number 1, assessee has challenged the invalid application of section 153A of the income tax and the additions made by the learned assessing officer were also challenged stating that the learned assessing officer has exceeded his jurisdiction to make an addition to the total income of the assessee without there being any incriminating material found during the course of search. The assessee has also raised the several issue with respect to, which assessment year is a concluded assessment and shall not abate on issue of intimation under section 143 (1) of the act. Page | 15 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 025. Before us, the assessee challenges stating that the additions were made without having any incriminating material found during the course of search. Ld AR submits that :- i. These assessments are framed in pursuance of notice under section 153A for all these years without there being any incriminating material found, seized relied upon. He referred to the statement recorded of the assessee, placed at page number 830 of the paper book, assessment order, various notices issued to support his case that there is no incriminating material found during the course of search. ii. He specifically referred to paragraph number 6.2 of the assessment order stating that the assessing officer does not have any material with respect to the long-term capital gain exemptions claimed by the assessee. iii. He also referred to paragraph number 4.1 of the appellate order stating that though assessee argued before him that there is an absence of incriminating material, which was not contradicted by the first appellate authority. iv. He submits that except assessment year 2016 – 17, despite search taking place on 4/2/2016, all the assessment years are concluded assessment. v. He submits that there is no issue in holding that up to assessment year 2014 – 15 all the assessment years are concluded. vi. He goes a step further and submits that even assessment year 2015 – 16 is also a concluded Page | 16 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani assessment year. He states that assessment year 2015 – 16 on filing of return by the assessee, intimation was issued under section 143 (1) of the act on 19/1/2016. As the search took place on 4/2/2016, the assessment was completed by virtue of issue of intimation dated 19/1/2016. vii. He therefore submitted that relying upon the decision of coordinate bench in case of Arihant universal reality Ltd 141 taxmann.com 249 and Agrawal entertainment Ltd 72 taxmann.com 340, assessment year 2015 – 16 is also a concluded assessment year. viii. Thus, the claim of the learned authorized representative is that all the assessment years up to assessment year 2015 – 16 are unabated assessment years, which could have been disturbed only on the basis of incriminating material found during the course of search. He extensively referred to page number 65 of the fact sheet wherein several judicial precedents are relied upon. ix. The assessee mainly relied on judicial precedents including of the honourable jurisdictional High Court in CIT versus continental warehouse Corporation (2015) 374 ITR 645, Murli Agro products Ltd 49 taxmann.com 172 and of the honourable Delhi High Court in case of Kabul Chawla 380 ITR 573 and lata Jain 384 ITR 543 as well as several other judicial precedents laying the same principle. 026. The learned departmental representative vehemently opposed argument of the assessee and stated that Page | 17 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani a) there was a balance sheet, which was found during the course of search which was not at all disclosed earlier to assessing officer, from which it was found that assessee is owner of several properties other than the property for which annual value has been disclosed by the assessee, and therefore the revenue came to know only during the course of search that there are some other properties, whose annual value is subject to taxation under section 22 of the income tax act. Thus, there is incriminating material available with respect to addition under head of income from house property. He submits that whether the property is acquired from known sources or not is not relevant for taxation u/s 22 of the Act. Had those properties found unaccounted those additions would have been under other sections. b) With respect to addition in case of long-term capital gain exemption u/s 10 (38) of the Act, he submits that there was a search on assessee on 4/2/2016. During search, it was found that assessee and his family has taken huge long-term capital gain in case of sunrise Asian Limited, a company that does not support prices on its own strength by any parameters. Therefore, Sunrise Asian Limited was searched and his director Mr. Kalpesh Manharlal Jani. Mr. Jani Stated that he is dummy director and real person is Mr. Vipul Vidhur Bhatt. Income tax immediately searched Mr. Vipul Vidhur Bhatt. In his statement of 90 questions, huge material was found in several annexure where complete money trail of funds for obtaining bogus long-term capital gain, details of exit providers, was found. From Statement of Vipul Bhatt not only documents were found, of not less than 7000 pages, Page | 18 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani but name of CA of the Assessee, who was instrumental in the whole process of conversion of unaccounted income was also named i.e. Shri Piyush Rasiklal Shah, who also confirmed the evidences found from possession of Mr. Vipul Bhatt. Statements of Assessee were also recorded along with his daughter who is also beneficiary of LTCG, which is in complete sync with evidences and statements. Therefore, there is huge incriminating material unearthed during search, which is further corroborated with the statements of all concerned persons, supports the case of revenue. c) He submits that LTCG exemption claim by assessee and his family in this company is to the tune of more than Rs 50- 60 Crs. It is not necessary that incriminating material should be found from the possession of the assessee always. He submits that in such a huge LTCG bogus claim, it is always found from the accomplices of the scheme. It is found in this case also. Only requirement is that it should be found from the search on the assessee. In this case, search was on assessee, which resulted in to consequential searches and material is found. It is in accordance with provision of section 153 A of the act. Therefore, claim of assessee about absence of incriminating material is false. d) He completely read the statement of assessee, Mr. Bhatt, Mr. Kalpesh, Mr. Piyush and also referred to several documents found from Mr. Bhatt, which clearly proves according to him that claim of long-term capital gain of the assessee, is false. He submits that on holistic reading of the statements of all the persons, clinching evidences Page | 19 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani found from Mr. Bhatt, corroborative statement of Mr. Kalpesh and Mr. Piyush clearly shows that there is not only an incriminating material but also corroborative statement of many persons. e) He further referred to Q 37 of statement of Mr. Kalpesh Manharlal jani where 12 folders were found. He referred to Statement of Mr. Vipul Bhatt where in Q 58 he referred to 17 files of 3400 pages where in annexure 14 of 284 pages is completely about Moraj Group including assessee and his family members. He referred to Q 77 of his statements, which has 325 annexure of more than 7000 pages, which includes exit providers including exit providers in case of assessee. All these incriminating material is found during the course of search. f) He further submits that incriminating material is unearthed during search is related to penny stock and Income from House property in the form of balance sheet also where it is recorded and found that assessee has not disclosed income from house property and made an incorrect claim of exemption u/s 10 (38 ) of the Act. g) He submits that it is of no consequences if the same are referred to in assessment order or not. The only issue to be tested is whether there is any incriminating material or not found during search for making addition. It is there in this case. h) Thus, He further stated that the claim of the assessee that there is no incriminating material found during the course of search is devoid of any merit. Page | 20 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 027. The bench during the course of hearing pointed out the latest decision of the honourable Supreme Court in case of Abhisar Buildwell private limited [2023] 149 taxmann.com 399 (SC) dealing the same issue. Both the parties stated that the same decision is supporting their own case. 028. We find that identical issue has been dealt with by us in the case of the daughter of the assessee Ms. Priya Mohan Gurnani, [ITA No. 715/Mum/2021 & Other Appeals dated 8/11/2023] wherein similar seven appeals for the same assessment years on identical facts existed subject to the change in the amount. This ground was also raised therein. While deciding those appeals by order dated 8/11/2023 we have dealt with this ground as under:- “024. We have carefully considered the rival contentions and perused the orders of the lower authorities. All the decision cited by the parties are perused, but now culminated and subsumed in the decision of Honourable Supreme court in case of Abhisar Buildwell Pvt Ltd, [supra] therefore, now none of them is required to be further discussed. If in a concluded assessment, there is an incriminating material LD AO is authorized to make addition on account of incriminating material and other income to compute total income. In absence of any incriminating material, the concluded assessment cannot be disturbed. 025. In this case, search took place on 4/2/2016. Assessee filed return of Income u/s 139(1) of the Act on 25/3/2011 at ₹ 996,620/-. This return was Page | 21 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani not assessed. Therefore, on the date of search, i.e. on 4/2/2016, the assessment for assessment year 2010 – 11 was concluded. Therefore, according to the binding judicial precedents, such income could have been enhanced only based on incriminating material found during the course of search related to such enhancement. If there is no incriminating material found during the course of search, no addition could have been made by the learned assessing officer. The only material referred by the learned AO is the balance sheet of the assessee where certain properties are shown. Further, when this issue was raised before the learned CIT – A, he held that the existence of immovable properties in the name of the assessee itself is an incriminating evidence. It is stated by the learned departmental representative before us that those immovable properties are disclosed in the balance sheet of the assessee and the assessee before the lower authorities never disclosed such balance sheet and therefore, unearthing balance sheet of the assessee, during the course of search itself is the incriminating evidence. Thus, there is reference of material found during the course of search, which suggests that the income of the assessee is required to be adjusted upwardly. It is the case of the revenue that assessee did file return of income for earlier years as well as for this year, prior to search and these properties or the balance sheet were not disclosed by the assessee for earlier years. The assessee does not deny these facts that Page | 22 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani balance sheet was found during the course of search and it was earlier not disclosed to the LD AO prior to search. 026. The honourable Supreme court in Abhisar Buildwell Pvt Ltd [ Supra] has held that [ 1] in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns and [2] in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition could be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act. 027. As in the present case there is an incriminating material in the form of balance sheet where certain properties are stated l to be owned by assessee with respect to the addition made by the AO of notional income from house property u/s 22 of The Income Tax Act, the addition deserves to be upheld holding that assumption of jurisdiction u/s 153A is Page | 23 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani valid. Accordingly, ground number 1 of the appeal of the assessee is dismissed.” 029. Further for assessment year 2010 – 11 there is an addition of undisclosed income of ₹ 198,000 based on the paper found during the course of search, therefore for that assessment year itself the issue is squarely covered by the decision of the honourable Supreme Court that the learned assessing officer is empowered to make the addition based on the incriminating material as well as any other material/information available with him even in a concluded assessment year. 030. Therefore it is apparent that during the course of search for assessment year 2010 – 11 there is an incriminating material with respect to the undisclosed income of cash expenditure, balance sheet found during the course of search which was not disclosed by the assessee to the learned assessing officer from which it has been gathered that assessee is owner of the various properties, income from which is not disclosed under the head income from house property. For assessment year 2011 – 12 to 2014 – 15 identical facts are emerging where incriminating material in the form of balance sheet is found by the learned assessing officer. 031. For assessment year 2014-15 and 2015 – 16, the assessee has also earned long-term capital gain claiming exemption under section 10 (38) of the act. For that assessment year, identical addition on account of income from house property on the basis of the balance sheet found during the course of search is made. The issue that also arises is that whether with respect to the claim of the exemption of capital gain under section 10 (38) is there any incriminating material found during the course of Page | 24 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani search. The fact shows that the search took place on the assessee wherein it was found that assessee has earned huge tax-free capital gain in trading of sunrise Asian limited. Based on this information the search took place on the director of that company Mr. Kalpesh Manharlal Jani, which resulted into a consequential search on Mr. Vipul Bhatt wherein huge evidences were found that the total capital gain earned by the assessee as well as the family members are completely orchestrated to give the colour of genuineness. From statement of Mr. Vipul Bhatt, name of CA of the assessee was found i.e. Mr. Piyush Rasiklal Shah, who also confirmed the material as well as scheme. With respect to the long-term capital gain exemptions claimed by the assessee there is incriminating material found during the course of search itself, which is coupled with the evidences found from Mr. Bhatt, statement of CA of the assessee, statement of Mr. Bhatt himself, which is also corroborated by the assessee, and his daughter. It is not always necessary that such document should be found from the possession and in the premises of the assessee in case of situations described above. Many times documents are found from the accomplices in case of simultaneous searches such as employees, other persons as it happened in this case. It is not the case of the assessee that there is no document found from the search. Therefore we also found that incriminating material during the course of search was found based on which the income of the assessee in the concluded assessment proceedings are disturbed with respect to claim of exemption u/s 10 (38) of the Act. 032. Thus the issue is squarely covered against the assessee by the decision of Abhisar Buildwell private limited (supra) wherein it has been held that the total income is required to be computed Page | 25 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani including the incriminating material and other material available with the assessing officer. Even otherwise, independently the documents seized from the consequential search of Mr. Vipul Bhatt show 17 annexure which are mentioned in his 90 questions statement recorded by the revenue authority in case of search on the assessee that clearly proves that independently there are incriminating material found during the course of the same search. 033. Thus we hold that there is independent incriminating material for each of addition i.e. Income from house property, denial of claim of exemption u/s 10 (38) of the act on account of sale of penny stock and unaccounted income was unearthed during the course of search. Thus we do not find any infirmity in the order of the learned assessing officer in assuming jurisdiction under section 153A of the act for all those assessment years and making addition on account of income from house property, undisclosed income and disallowance of exemption under section 10 (38) of the act for all these assessment years so far as jurisdiction is concerned. 034. Of course, merits of each of the addition would be decided separately as per separate grounds raised. 035. With respect to the argument of the assessee that for assessment year 2015 – 16 an intimation was issued on 19/1/2016 which is prior to date of search on 4/2/2016 and therefore assessment year 2015 – 16 is also a concluded assessment year and does not abate. For this proposition, he has relied upon the two decisions of the coordinate benches. A question was specifically raised to learned AR that despite time limit available for issue of notice under section 143 (2) of the act Page | 26 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani on the date of search, can it be said that merely issue of an intimation prior to the date of search makes the assessment for that year as concluded assessment year which shall not abate. The learned authorized representative argued that on the basis of the above two decisions of the coordinate benches it can be considered as concluded assessment which does not abate. 036. We find that the claim made by the learned authorized representative is based in paragraph number 6.1 of the decision of the coordinate bench in case of Arihant reality Ltd [2022] 141 taxmann.com 249 (Mumbai - Trib.)[05-04-2022] wherein it has been held that “The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was originally completed u/s 143(1) of the Act and hence it falls under concluded proceeding, as on the date of search.” We find that the reliance placed by the learned authorized representative on this decision is incorrect for the reason that the search took place in that case on 18/10/ 2010 and the time limit for issue of notice under section 143 (2) of the act already expired on 30/9/2010. Therefore it is apparent that in that case on the date of search the time for issue of notice under section 143 (2) was over. However, in the present case the search took place on 4/2/2016 whereas the intimation was issued on 19/1/2016 for assessment year 2015 – 16 wherein the time limit for issue of notice under section 143 (2) of the act was still not expired. 037. The learned authorized representative further relied on the second decision of the coordinate bench in case of other Agarwal entertainment Ltd 72 taxmann.com 340 (Delhi) and drawn our attention to the head note which reads as :- “Assessment in respect of which return has been processed under section Page | 27 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 143(1), cannot be regarded as pending for purpose of section 153A as Assessing Officer is not required to do anything further about such a return and, thus, said assessment cannot be reopened in exercise of power of section 153A.” On careful reading of that decision, it is also evident that in that particular case after issue of intimation under section 143 (1) of the act, there was no issuance of notice under section 143 (2) for that assessment year and therefore it was taken as a concluded assessment. Even otherwise, in that decision, impugned assessment year was 2004-2005, date of search is 20/8/2009. Therefore, as such, assessment year 2004 – 05 was a concluded assessment. 038. The learned authorized representative’s attention was drawn to the decision of the honourable Delhi High Court in case of Chintels India Ltd. V DCIT [2017] 84 taxmann.com 57 (Delhi)/[2017] 249 Taxman 630 (Delhi) wherein in paragraph number 21 it has been held that till the date of expiry of time limit for issuance of notice under section 143 (2) of the act, the assessment despite intimation under section 143 (1) issued to the assessee, the assessment does not stands concluded assessment and will abate. The learned authorized representative rests his case on the above to tribunal decisions. 039. In view of the above discussion, we reject the contention of the assessee that even the assessment year 2015 – 16 is also a concluded assessment and shall not abate merely because the intimation is issued on 19/1/2016 and search took place on 4/2/2016 despite time limit available as on the date of search for issuance of notice under section 143 (2) of the act. Page | 28 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 040. Accordingly, we hold that assessment year 2010 – 11 to assessment year 2014 – 15 are unabated assessment years, which has been disturbed by the learned assessing officer, based on the incriminating material found during the course of search. For all these unabated assessment years, the addition is made with respect to the undisclosed income, income from house property and bogus long-term capital gain which are all based on the independent incriminating material found during the course of search relevant to those assessment years. Assessment year 2015 – 16 is not a concluded assessment year and therefore shall abate and assessing officer can make addition even in absence of incriminating material found during the course of search. Accordingly, we dismiss ground no 1 of the appeal. 041. Now coming to the second issue of change of jurisdiction, which is raised as per ground number 4 of the appeal, the learned authorized representative referred to page number 43 – 44 of his fact sheet. It is specifically argued by the learned authorized representative that no order was passed under section 127 of the income tax act ignoring the fact that the original jurisdiction was with the income tax officer Ward 4 (3) (1) Mumbai who has jurisdiction to assess and proceed with the assessment proceedings. It was further claimed by him that the assessee objected, as per letter dated 13/2/2017 and despite this the copy of the order under section 127 was not given to the assessee. Only during the course of remand proceedings, such order was provided to the assessee. He relied upon the several judicial precedents to support his case that order passed under section 143 (3) read with section 153A without complying with the provisions of section 1/27 for transfer of case is bad in law and that such order should be quashed. He further stated that the provisions of section 292BB should not be applicable as Page | 29 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani these are fundamental changes in the procedure midway though cooperation of the appellant should not be construed as a validation of the procedure. He further submitted that the proceedings giving rise to the order passed under section 143 (3) should be declared invalid and bad in law and accordingly the said order deserves to be quashed and set-aside. He submits that no opportunity was given to the assessee to contest the transfer of jurisdiction and the honourable Bombay High Court has held that granting of a reasonable opportunity of being heard is a mandatory condition relying upon the decision of 25 taxmann.com 299 in case of Sahar Hospitality Ltd. 042. The learned departmental representative vehemently opposed the above submission of the assessee and stated that the order of the learned CIT – A in this case is absolutely clear. There is a transfer of case in the same city. The order passed under section 127 of the act is also available. If there is a transfer of case from one assessing officer to another assessing officer in the same city there is no requirement of giving any notice to the assessee or any opportunity of hearing. He submits that the decision in case of Sahar hospitality Ltd does not apply to the facts of the case as in that case the transfer was from one state to another i.e. from Delhi to Mumbai. Here the transfer is within same city. He extensively referred to the provisions of section 127 of the act. 043. On careful perusal of the argument of the both the parties and the orders of the lower authorities, we do not find any merit in the argument of the learned authorized representative. In this case, the transfer is within one city and there is no requirement of giving any opportunity of hearing to the assessee in such circumstances. There is an administrative order passed under Page | 30 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani section 127 of the act therefore the claim of the learned authorized representative that there is no such order passed is not correct. Further the copy of the order was already given to the assessee, irrespective of the legal argument whether such order is required to be provided or not, during the course of remand proceedings. The assessee raised several arguments, which have been dealt with by the learned CIT – A we do not find any merit in argument of the assessee that prior to the change of jurisdiction within the same stating, the assessee should have been granted an opportunity of hearing. That is not the mandate of the law. Thus, we dismiss Ground no 4 of the appeal. 044. Per Ground no 5, assessee has also raised an issue that no notice under section 143 (2) was issued by the new incumbent. This was raised as per ground number 5 of the appeal memo. The learned authorized representative specifically referred to page number 45 of his fact sheet. The claim of the learned authorized representative further notice was not issued under section 143 (2) by the new incumbent assessing officer i.e. Deputy Commissioner of Income Tax Central Circle – 5 (2) within the permitted time. He argues that a notice under section 143 (2) was issued by The Deputy Commissioner of Income Tax, Central Circle (5) (2) Mumbai and subsequently on application to settlement commission the proceedings were in abeyance. When the application was rejected on 11/1/2018 there was a change in the assessing officer (not the jurisdiction) and therefore such assessing officer who joined as Deputy Commissioner Of Income Tax Central Circle (5) (2) should have issued a fresh notice under section 143 (2) of the act. As the assessment proceedings were conducted without issue of fresh notice, such assessment order is invalid. According to him the proceedings under section Page | 31 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 143 (2) before the old assessing officer lapsed in any case on filing of settlement application and also on transfer of jurisdiction when there is new officer, necessary notice u/s 143 (2) should have been issued. He specifically referred to the decision of the Hotel blue moon 321 ITR 362 (Supreme Court), Virendra Dev Dixit 331 ITR 483, Pavan Gupta 318 ITR 322 and several other decisions. 045. The learned departmental representative vehemently submitted that notices issued under section 143 (2) of the act to the assessee which is recorded in the assessment order itself and not denied by the assessee. The claim of the assessee is that if there is a change in the person who was earlier occupying the post of deputy Commissioner of income tax Central Circle 5 (2) Mumbai and therefore the claim of the assessee that such new person should also issue a notice under section 143 (2) of the act. He submits that all the judgments relied upon by the assessee are with respect to the issue of notice under section 143 (2) in time and are not dealing with any issue that in case Mr. X assumes the charge at the same post in place of Mr. Y, both should have issued notice under section 143 (2) of the act. He submits that such is not the mandate of the law and the argument of the learned authorized representative is devoid of any merit. 046. We have carefully considered the rival contention and perused the order of the learned lower authorities. The claim of the assessee is that that notice is required to be issued every time under section 143 (2) of the act if there is change in person holding that post and that too within the time permitted, when different persons has assumed charge on transfers etc. Thus simply speaking the claim of the assessee is that if the assessing Page | 32 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani officer is Mr. X, after issuing notice under section 143 (2) of the act within time, he is later on transferred and Mr. Y assumes the charge, Mr. Y should also issue a fresh 143 (2) notice to the assessee and that too within the time permitted. On query, no provision of law was shown to us by the learned authorized representative. We drew attention of the learned authorized representative to the provisions of section 129 of the income tax act which provided that Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor. The learned authorized representative referred to his written submission and the various judicial precedents cited. We find that the provisions of section 129 of the act is clear in this case and there is no scope for taking the interpretation as pointed out before us by the learned authorized representative. It is not the case of the assessee that he has not been heard by the new incumbent prior to making the assessment order. Therefore, the argument of the learned authorized representative is in clear violation of the provisions of section 129 of the income tax act and therefore it is dismissed. Accordingly, ground number 5 of the appeal is dismissed. 047. Ground number 6 is with respect to the levy of interest under section 234B wherein the claim of the learned authorized representative is that no continuity of hearing was given by the assessing officer before the levy of interest and no interest can be levied in special assessment proceedings under section 153A of the income tax act. He referred to several judicial precedents. Page | 33 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 048. The learned departmental representative vehemently stated that there is no requirement of giving an opportunity of hearing as the provisions of interest under section 234B of the income tax act is automatic and consequential. 049. We have carefully considered the contention of the learned authorized representative and state that the levy of interest under section 234B of the income tax act is chargeable in special assessment under section 153A of the act, as no judicial precedents are shown that in such proceedings, no interest is chargeable. Further, there is no provision in the income tax act to grant an opportunity of hearing before charging of interest under section 234B of the income tax act. It is not the case of the assessee that no interest can be charged under section 234B of the income tax act or no opportunity is given for hearing during assessment proceedings. Accordingly, ground number 6 of the appeal of the assessee is dismissed. 050. Ground number 7 of appeal is with respect to the determination of the total income. The argument of the assessee is that assessee was assessed at ₹ 335,486,417/– against the returned income of ₹ 24,438,590 by making an addition of ₹ 311,047,827. We find that this ground is general, no arguments were advanced by the learned authorized representative, and hence, it is dismissed. 051. Ground number 8 of the appeal of the assessee is against the serious violation of the natural justice. The claim of the learned authorized representative is mentioned at page number 49 of his fact sheet. The learned authorized representative states that the appellant has requested for issue of summons under section 131 or notices under section 133 (6) to the various persons whose Page | 34 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani alleged statements were relied upon or were required to be relied upon by the learned assessing officer in assessing the total income. The assessee has also asked for an opportunity of cross- examination as per letter dated 18/11/2017. It was categorically stated that the addition with respect to the denial of exemption of long-term capital gain under section 10 (38) of the act has been denied on the stated statement of Mr. Vipul Bhatt who has retracted the statement on 9/2/2016 by filing an affidavit dated 2/9/2016 and 8/9/2017. He therefore submitted that the statement of Mr. Vipul Bhatt cannot be relied upon by the learned assessing officer. However, the learned assessing officer has relied on that statement. It was further stated that the AO has also relied upon the appraisal report for making an addition and that too without making any enquiry whatsoever to ascertain the reliability or veracity of such a report and to examine the evidences produced by the assessee. The copy of the appraisal report was not furnished to the assessee in spite of the specific request made. He further stated that the learned assessing officer has categorically refused by letter dated 11/6/2019 to furnish the copies of such a report. Accordingly, there is a serious violation of the principles of the natural justice and the assessment order framed in violation of such right of the assessee is invalid and should be quashed. He referred to several judicial precedents. 052. The learned departmental representative imminently submitted that there is no violation of the principles of the natural justice. At each stage of proceedings, assessee has been confronted with the information available. The learned assessing officer has made addition on account of income from house property based on the information available on record and after questioning the assessee and after giving a complete opportunity to the Page | 35 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani assessee to show the standard rent, claim of deduction. Each of the ground decided against the assessee has been after confronting the material available on record. With respect to the statement of Mr. Vipul Bhatt and other parties it was stated that all these are accomplices of the assessee. The assessee himself has produced the affidavit and the retraction statement of Mr. Vipul Bhatt and therefore the assessee was completely aware about what statement Mr. Vipul Bhatt has made. Otherwise how assessee could have submitted the affidavit and retraction statement. He submits that the statement of Mr. Piyush Rasiklal Shah has also been obtained by the learned assessing officer who is the chartered accountant of the assessee. The statement of Mr. Kalpesh Manharlal Jani is the person who is the director of sunrise Asian limited and who is known to the assessee because the assessee has traded in that script and earned a huge long- term capital gain. With respect to the claim of the assessee that an appraisal report copy should be given to the assessee, there is no provision in the law of such information and internal document required to be given to the assessee. It is not the claim of the assessee that not all the evidences are placed before him for confrontation. He submitted that assessee could have produced all these persons before the learned AO has all these persons are known to the assessee which assessee has done by producing the affidavit of Mr. Vipul Bhatt along with his retraction statement. Therefore, there is no violation of any of the principles of natural justice by the learned assessing officer. 053. We have carefully considered the rival contention and perused the orders of the lower authorities. With respect to the claim of the assessee that assessee requested for issue of summons under section 131 or notices under section 133 (6) to the various parties whose statements have been relied upon by the Page | 36 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani learned assessing officer, fact clearly shows that the assessing officer has referred to the statement of Mr. Bhatt, which was in the knowledge of the assessee. Therefore, the assessee produced the retraction statement and affidavit of the same person. Therefore so far as the cross examination of Mr. Bhatt is concerned, when assessee is aware about his retraction statement and his statement originally given implicating the assessee, the assessee could have himself produced Mr. Bhatt. Even otherwise, there is a statement recorded of that person during the course of assessment proceedings, which is also known to the assessee. The assessee does not make any request for cross-examination when his statement was recorded. Later on assessee makes a request for his cross-examination. Therefore there is no violation of principle of natural justice in not giving the cross examination of Mr. Vipul Bhatt. Even the decision of the honourable Calcutta High Court in case of Swati Bajaj deals with the same issue, which has been dealt with by us while dealing with the addition on merit. There is no provision in the income tax act to give an internal communication to the assessee such as appraisal report. Therefore, we reject this argument also. However while deciding the issue on the merits of the case; we will deal the same once again. Accordingly ground number 8 of the appeal to that extent stated above, is dismissed. 054. Ground number 2 of the appeal of the assessee is with respect to the addition of annual value with respect to the house properties. The fact shows that assessee is an owner of six premises of which it is claimed that 2 premises were self occupied. The rest of the premises remained vacant. The claim of the assessee is those were held for sale and could not be let out during the year. It is also the claim that the assessee has Page | 37 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani paid regular municipal taxation and maintenance charges for the same and therefore there is no liability to pay any income tax on annual value of such property. The learned assessing officer without looking at the provisions of the law made an addition to the extent of ₹ 562,807 as annual value of the house properties. He further states that the learned AO has not granted deduction of vacancy allowance, as well as deduction of men shipping taxation and maintenance charges and also standard deduction under section 24 of 30% of the annual value. The arguments of the assessee are stated that page number 8-12 of fact sheet filed before us. The learned authorized representative reiterated the same arguments. 055. The learned departmental representative supported the order of the learned assessing officer and CIT – A. He submitted that the standard rent has not been determined in respect of the properties and therefore the learned assessing officer has taken the rate of return on the cost of acquisition of such properties which is supported by the decision of the honourable Punjab and Haryana High Court. He further stated that as the properties are not let out during the year, vacancy allowance could not be granted which is in accordance with the law. He submits that the deduction for Municipal taxation and maintenance charges are already inbuilt when the rate of return of the cost of acquisition of the property is chargeable to tax. 056. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the identical issue including the arguments of the both the parties arose in the case of the daughter of the assessee Mrs. Priya Gurnani wherein as per order dated 8/11/2023 the issue is dealt with as under:- Page | 38 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani “029. Fact shows that assessee is owner of various premises. Those premises are required to be taxed under the head income from house property as per the scheme of the act. The claim of the assessee is that the assessee is owner of 3 premises of which 2 premises are self occupied. Further, the remaining premises remained vacant as the same were held for letting out or sale and could not be let out during the year. The assessee has paid regular municipal taxes and maintenance thereon. The claim of the assessee is that there was no liability to any notional income under section 22 under the head income from house property. The learned assessing officer disregarded the explanation of the assessee and held that those properties shall be chargeable under the income from house property as annual value is taxable. . According to assessee, the income is not chargeable to tax under the head income from house property is of those properties. The AO made an addition of ₹ 227,625/–. The main contention of the learned assessing officer is that the assessee is holding house properties however; no income has been shown from these properties. Therefore, he estimated the income under the head income from house property. When the matter reached before the learned CIT – A he confirmed the action of the learned assessing officer. The learned CIT – A also did not allow vacancy allowance. Therefore the claim of the assessee is Page | 39 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani i. that the annual value of the above property cannot exceed the lower of the municipal rateable value and standard rent, ii. in respect of the property, the fair rent value of an earlier year with 10% increase cannot be taken as annual value taxable of that property, iii. the assessee should be granted the deduction for municipal taxes and maintenance charges, iv. Assessee must be allowed deduction of standard deduction at the rate of 30% under section 24 (1). 030. We have carefully considered all the above claims of the assessee and adjudicate as under. i. On the first claim with respect to the standard rent or rateable value should be taken to arrive at the annual let out value of the property, the learned CIT – A has held that that appellant is owner of flat number 13 and flat number 14 of model House operating housing society, Sion, Mumbai. Assessee provided the working of the deemed rental income of the above 2 properties as per property tax levied by the Mumbai municipal Corporation which was not accepted by the AO. The learned assessing officer took 5% of the cost of acquisition of the property to determine standard rate. Undisputedly the Maharashtra rent control Act 1999 is applicable to the properties, however; the Page | 40 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani standard rent of the area in which the properties are situated has not been fixed under that act. Therefore, standard rent is not available of those properties. Assessee has also not produced any evidence about the standard rent of those properties according to that act. Therefore, there is no point in stating that the learned assessing officer has not attempted to determine the standard rent. Even assessee could also not do that despite being the owner of the property. Therefore, now the option left is to determine the annual value of the property. The claim of the assessee is that in view of the decision of the honourable Bombay High Court in case of Tiptop Typography [48 taxmann.com 19], the LD AO should have determined on standard rent. In the present case, the standard rent has not at all been determined by the BMC and therefore no fault can be found with the assessing officer to determine the so. Further in case of Tiptop Typography in paragraph number 33 the honourable High Court has noted that “However, in all the appeals before us, the factual position is that the property or part thereof is let or given on leave and license basis.”, Fact was that the properties were let out during the year. This is not the case of the properties owned by the assessee. Thus the property Page | 41 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani was not let, therefore the provisions of section 23 (1) (b) and (c) does not apply. The case of the assessee falls under section 23 (1) (a). Therefore, the annual value of the property would be the sum for which the property might reasonably be expected to let from year to year. The learned assessing officer has considered 5% of the cost of acquisition of the property by which the property can be expected to be let out. Assessee has not made any attempt to justify what is the sum for which the property might reasonably be expected to let from year to year, therefore it is for the AO to estimate the income. It cannot be said that return on the acquisition cost of the property cannot be considered as return on such property and it is not fair method. The learned assessing officer has estimated 5% of the cost of acquisition as the income from the same. There is no whisper from the side of the assessee that whether 5% rate of return, which is expected to be annual value for the property maintenance also, is excessive or unreasonable. The learned CIT – A has given the decision of the honourable High Court in case of Radha Devi Dalamia [4 taxman 183] [All] wherein the 7% of the investment was considered to be the fair and just return of income on such investment. The learned CIT – A also Page | 42 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani relied on the decision of the coordinate bench in case of [58 TTJ 27] wherein 8% return on such cost was also held to be the annual value of a property for taxation under the head income from house property. Therefore, we do not find any infirmity in the order of the learned lower authorities in assuming 5% of the cost of the investment as the annual value of the property which can be taxed under section 23 (1) of the act under the head income from house property. ii. With respect to the deduction of Municipal taxes, there is no requirement for reducing the income of the assessee where the learned assessing officer has estimated the percentage of the cost of the equity as rate of return on the investment. In fact, the deduction of municipal taxes is inbuilt in the taxability of 5% estimated by the learned assessing officer. iii. With respect to granting deduction of 30 % we find that such deduction is available u/s 24 (a) of the Act. This deduction is unqualified and assessee is eligible for the same. No reasons are shown to us why assessee is same. We direct the LD AO to grant deduction of 30% of annual value to the assessee in terms of provision of section 24 (a) of the Act. Page | 43 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani iv. With respect to the vacancy allowance, the facts are clear that those properties are not let out during the whole of the year and therefore there is no question of granting any vacancy allowance to the assessee. This is the mandate of the decision of honorable Punjab and Haryana High Court in 76 taxmann.com 349. The SLP filed by the assessee against that decision has also been dismissed. In view of that precedent, we do not find any merit in the claim of the assessee for allowability of vacancy allowance. 031. In view of the above facts, ground number 2, is allowed partly.” 057. As there is no change in the facts and circumstances of the case of the assessee and the daughter of the assessee except the amount of taxation determined with respect to each of the property, we following the decision in case of Mrs. Priya Gurnani direct the learned assessing officer to grant deduction of standard deduction at the rate of 30% of annual value under section 24 of the act and upheld the action of the learned assessing officer in taxing the income of the above properties on all other issues. Accordingly, ground number 2 of the appeal of the assessee is partly allowed. 058. Ground number 3 is with respect to the addition on account of sale proceeds of ₹ 109,174,422/– for assessment year 2014 – 15 and ₹ 314,085,020/– for assessment year 2015 – 16 and by Page | 44 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani the assessee on sale of shares of sunrise Asia Ltd in claiming exemption under section 10(38) of the income tax act. 059. The learned authorized representative has raised the argument as per page number 12 – 43 of the fact sheet furnished before us. The same arguments are repeated orally also. Same are as under :- a) Ld AR submitted facts of the transaction stating that In the Calendar Year 2011 the assessee had applied and acquired 500000 equity shares of Santoshima Lease Finance & Investment (India) Ltd On allotment to the company on payment of entire cost by account payee cheques. The said company was amalgamated in the calendar year 2013 with Sunrise Trade links Ltd under the order of the High Court dt. 22.03.2013 passed under the Companies Act 1956 (Pg. 785 to 790 of PB). On amalgamation, the appellant was allotted 500000 equity shares of Sunrise Asian Ltd. The equity shares of said Sunrise Asian Ltd. were listed on the Recognized Stock Exchange and were regularly traded in the Stock Exchange since then. The assessee had also acquired 10,000 equity shares by way of gift from his daughter Ms. Priya Gurnani. The appellant had made payments on 04.10.2011, 10.10.2011 and 11.10.2011 aggregating to payment in full on application of shares itself. The payment by appellant was credited to the bank account of Santoshima Lease Finance Ltd. on 28.09.2011, on 04.10.2011, on 10.10.2011 and on 11.10.2011. Page | 45 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Shares had been allotted to the appellant on 31.01.2012 by way of preferential allotment. (Pg. 323 of PB). The appellant continues to hold substantial shares of Santoshima Asian Limited till date. The appellant had purchased some shares in the year 2014 at a price of Rs. 500 per share which price was less than the average selling price. A scheme of Amalgamation had been entered into between Santoshima Trade links Limited. Conart Traders Limited being Transferor Co. and a listed company Sunrise Asian Limited. Transferee Co. and was approved by Honorable Bombay High Court by an order dt. 22.03.2013. In pursuance of scheme of amalgamation, new equity shares were allotted to on 24.05.2013. The said shares were De-materialized with depository on 24.05.2013. (Pg. 446 to 449 of PB). Active trading of shares of Sunrise Asian Limited on Stock Exchange started on 17.08.2011 and for the shares held by appellant started on 30.01.2013 (Active Trading-Large volume). (Pg. 471 to 485 of PB) Said shares were then sold by your appellant through Registered Stock Brokers -Anand Rathi Share & Stock Brokers Ltd.. F6 Finserve Pvt. Ltd. on various days during the period from 18.11.2013 to 25.02.2015 on issue of electronically generated contract notes by Exchange. (Pg. 490 to 508 of PB) . Contract notes evidencing sale of shares, brokerage and demat charges and STT paid by assessee. Notice dt. 09.05.2018 had been issued Page | 46 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani by BSE wherein a list of companies had been delisted. The said notice contained the name of Sunrise Asian Limited. Affidavit of Issuing Company dt. 17.06.2019 for confirmation of purchase of shares by the appellant and other details. (Pg. 440 to 445 of PB). Appellant vide letters dt. 20.01.2017, 23.11.2017 and 18.12.2018 and to DDI vide letters dt. 18 02.2016 and 27.06.2016 during the course of assessment proceedings had furnished direct evidence available in his possession to the Ld. AO in support of the fact of the genuineness of the sales proceeds. (Pg. 28-30, 31, 35 to 40 of PB). The appellant during the year out of own funds had invested in shares of Santoshima amounting to Rs. 10000000 for purchase of 5,00,000 shares by issue of account payee cheques. Sale proceeds of shares were received through brokers by account payee cheques. b) assessee submits that it has furnished following evidences before the lower authorities to prove the genuineness of the transaction:- i. Share Application Forms, (Pg. 317 of PB) ii. Bank Statements of appellant reflecting payment for investment made. (Pg. 339 to 344 of PB) iii. Source of payments with proof for purchase of shares by appellant (Pg. 345 to 346 of PB) Page | 47 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani iv. Bank statements of Santoshima reflecting receipt on issue of share (Pg. 339 to 344 of PB) v. Ledger accounts of share purchase (Pg. 584 of PB) vi. Allotment Letter and allotment of shares to appellant. (Pg. 317 to 323 of PB) vii. Details of Board Resolutions passed by appellant for issue of shares of Santoshima (Pg. 326 of PB) viii. Affidavit of Santoshima (Pg. 440 to 445 of PB) ix. -ITR-V and Assessment orders of Santoshima (Pg. 617 &799-80 of PB) x. COL, MOA, AOA and name, address of seller (Pg. 347 to 401 of PB) xi. Application of funds by appellant on sale of shares (Pg. 690 to 713 of PB) xii. Certificate of Incorporation of company to Santoshima. (Pg. 347 to 401 of PB) xiii. Return of Allotment. (Pg. 327 to 338 of PB) xiv. Contract notes at time of sale of share (Pg. 486 to 583 of PB) Page | 48 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani xv. Copy of Demat a/c. (Pg. 446 to 449 of PB) xvi. Brokers ledger A/c.. (Pg. 605 to 615 of PB) xvii. -Rate list of daily quotations (Pg. 471 to 485 of PB) xviii. Proof of brokerage and demat charges paid (Pg. 450 to 470 of PB) xix. Proofs of payment of STT. stamp duty, brokerage and other charges (Pg. 486 to 583 & 450 to 470 of PB) c) he further submitted that the learned assessing officer as well as the learned Commissioner of income tax (A) has accepted the above evidences and has not disputed the same by making any independent enquiry. d) He further referred to the several judicial precedent wherein assessee prove the genuineness of said transaction by producing contract for sale and purchases, bank statement of broker, Demat account showing transfer in and out of share and also the abstract of transaction furnished by stock exchange, there is no justification for making an addition. e) He further referred that in several judicial precedents involving Sri Vipul Bhatt and sunrise Asia Ltd it has been held that the assessee has discharged onus by filing evidence in support of genuineness of transaction of purchase and sale no addition could be made on the basis of statement of Shri Vipul Bhatt. Page | 49 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani f) He further submitted that the assessee has discharged onus of proof by submitting the plethora of evidences, which has not been thrown back to the assessee by the learned assessing officer. To support his case, he referred to several judicial precedents wherein the learned assessing officer failed to throw the onus back on the assessee, addition was not sustained. g) With respect to the price rise is submitted that the shares were quoted at a price of about ₹ 500 since financial year 2012 – 13 which rose to 565 in the following year and then to ₹ 615 in the next following area year and ₹ 608 in the year thereafter. Therefore, the shares had good price in the stock exchange and higher than the selling price of the assessee. h) He submitted that the shares were dematerialized and held in that form for a fairly long period that also proves that genuineness of the transaction. i) It was also the claim that the shares were transacted on recognized stock exchange through registered broker approved by securities and board of India and therefore it cannot be said to be non-genuine transaction. 060. The learned departmental representative a) Extensively referred to the statement of Mr. Vipul Bhatt by reading all 90 questions, his reply and also referring to all the annexure seized during the course of search. He also referred to the statement of Shri Piyush Rasiklal Shah who is a chartered accountant of the assessee and read each question raised therein. He further referred to Page | 50 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani the statement of the assessee and also statement of assessee in the group assessment of Moraj. He specifically referred that long-term capital gain earned by the assessee and his family members is stage- managed orchestrated scheme of converting unaccounted money into exempt long-term capital gain under section 10 (38) of the act. b) He further submitted that price rigging by Mr. Vipul and his accomplices are proved By the order of securities and exchange board of India order. c) He submits that the name of the brokers who are working with Mr. Bhatt for this are also stated, all these brokers are also the brokers of the assessee. d) In the statement of Mr. Bhatt the names of exit providers are given, those exit providers are merely lenders, the shares sold by the assessee are purchased by them to be bogus. e) The whole scheme has been explained by Mr. Vipul but with respect to the assessee of repayment of loan by Moraj group converted into allegedly exempt long-term capital gain. Therefore, the claim of the assessee that it has been acquired out of its own money is devoid of any merit. f) He submits that even the Demat agencies stated by Mr. Bhatt are used by the assessee. Thus the broker who sold the shares, the Demat agencies, the exit providers are all stooge of Mr. Vipul Bhatt. In each of the explanation of the assessee the names of the same persons appears for Page | 51 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani purchase of shares, for sale of shares for dematerialization of shares and for exit providers who are part of the income price of Mr. Vipul Bhatt. g) The evidence produced by the assessee does not have any credential in view of above facts. Even otherwise these evidences are necessary for the claim of exemption under section 10 (38) of the act. h) He submits that there is no answer available with the assessee that how he came to know about the preferential offer of that company and whether he has attended any of the meetings of the above company at the time of amalgamation, allotment, annual general meetings etc. when the assessee has invested along with his other family members such a huge amount in a company, and assessee is not aware or could not show any of the notices of the meeting or his attendance, the transaction is proved to be stage-managed. i) Claim of the assessee that investment was paid by the assessee out of business receipts is devoid of any merit because the sources of the funds are out of the memorandum of understanding of land purchased by the Moraj group. This is evident from the statement of Mr. Bhatt Mr. Shah and also the books of accounts of the various companies. j) He submits that assessee has produced many evidence with respect to the existence of Santoshima Tradelink private limited but when the learned assessing officer sent notices under section 133 (6) of the act, this company was not found. He further referred to SEBI Page | 52 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani order paragraph number 4 point 1 wherein the sunrise Asian limited was mentioned at serial number 1 wherein it has been stated that hearing notices issued by the SEBI also failed to get any response from that company. Therefore, even the securities and Exchange board of India could not find that company in existence, but the assessee is saying that it was in existence. This fact was made known to the assessee. Therefore, all these evidences are mere paper trail/evidences without any substance. k) He referred to his paper book filed wherein the statements of various persons were submitted along with the order of the securities and exchange board of India dated 6 September 2021. He submits that the order itself says that how the price of the shares were rigged. He further referred to the table wherein there is a sudden spot in the volume of the share in patch – three – four – five and also in post investigation period. He also referred to the prices mentioned therein where it is clear that the price of that company was opened at ₹ 63 registered high of ₹ 615 and closed at ₹ 88.80. He submits that what else is the proof of the price rigging required. l) The learned assessing officer has not relied on merely the statement of Mr. Vipul but has also looked into the evidences, which are stated in the statement of Mr. Vipul. The assessee has not uttered a word about those evidences. m) Assessee has also not made any submission with respect to the chartered accountant involved in the whole Page | 53 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani transaction Mr. Piyush Shah who acted on behalf of the assessee with Mr. Vipul. n) In six years, the assessee has not shown earning of long- term capital gain on any of the shares. Therefore, the assessee cannot be said to be a regular trader. o) He further states that the decision in case of Swati Bajaj of honourable Calcutta High Court squarely covered the issue against the assessee so far as the issue of cross- examination is concerned. p) He further submits that none of the decisions relied upon by the assessee of either the tribunal on the high courts dealing with the facts, which are in the case of the assessee. q) He further states that the assessee has relied upon the several judicial decisions of the coordinate benches wherein the name of Mr. Bhatt and sunrise Asian Ltd appears and the additions are deleted, all those decisions does not apply to the facts of the case because in those cases the statement of Mr. Vipul but specifically recorded in the search of the assessee himself has been used along with the evidences found. r) He in the end submitted that more than 10000 pages of incriminating documents are found, special annexure 14 relates to transaction of Moraj Group only. Details of Exit providers are also found. If that is not enough to prove that transaction is not genuine, no tons of material can help the case of revenue. Page | 54 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani s) He said what inquiry ld AO is required to carry of fake and non-genuine evidences. He submits that all the evidences, statements, preponderance of probabilities, failure to discharges onus; everything is against the assessee in this case. t) He submitted that the bogus long-term capital gain transactions are also carried out only at the stock exchange and therefore it does not have any credence when the exit providers are identified and confessed that the beneficiaries are provided exit through the gate of stock exchange. u) Payment of shares by cheque and receipt of sale consideration by cheque neither helps the case of the assessee nor is a proof of the genuineness of the transaction. v) It is undisputed that the price rise in the shares of the company is devoid of any merit specially when financial records of that company does not support the price as well as are not corroborated by any corporate announcement. Even otherwise in the statement Mr. Vipul has agreed and confessed that the price of the above company were rigged at the stock exchange platform with 86 entities for which SEBI has passed an order implicating all of them. w) He further submits that earning the long-term capital gain of ₹ 50- 60 crores by a family in a non-descript company clearly shows the whole stage-managed transaction to give a legal colour to sloughing back unaccounted income. Page | 55 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani x) None of the family member of the assessee are aware about the whereabouts of the company, nature of business of the company in which they have invested, how did they come to know about this company, how did they come to know about the time of sale of this company, why did they put demat shares in a particular agency and it cannot be a coincidence that all of them are due to Mr. Vipul Bhatt we provided exit to 1079 beneficiaries by giving the bogus entry of long-term capital gain. y) He submits that the case of the assessee is squarely covered by the decision of the honourable Calcutta High Court in case of Mrs. Swati Bajaj. Therefore, he submitted that lower authorities are justified in making the addition of bogus long-term capital gain for both the years. 061. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that identical issue has been dealt with by the coordinate bench in case of the daughter of the assessee Mrs. Priya Gurnani as per order dated 8/11/2023 wherein the whole issue has been dealt with as under:- “085. Ground number 2 of the appeal is with respect to the addition of ₹ 40 lakhs/– under section 68 of the income tax act and ground number 4 is with respect to the addition of sale proceeds of ₹ 61,405,822 claimed exempt under section 10 (38) of the act which is stated to be an accommodation Page | 56 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani entry obtained by the assessee from the accommodation entry provider Mr. Vipul Bhatt. 086. With respect to denial of exemption under section 10 (38) of the act main argument of the assessee is as under:- i. Assessee has provided the details of the company, the brokers, proof and evidence of the transaction of purchase and sales of the shares before the assessing officer and no infirmity is found in this details. The assessee submitted all the details with respect to the acquisition of the shares and sale of those shares at each of the stage of the process of acquisition and sale. The assessee further relied upon the plethora of judicial precedents, wherein it has been held that where assessee proves genuineness of the said transaction by producing contract for sale and purchase of the shares, bank statement of the brokers, Demat account showing transfer in and out of the shares and also the transaction is at the stock exchange, no addition can be made in the hands of the assessee. ii. Assessee further relied upon several judicial precedents showing where Sri Vipul Bhatt and the same company in which the assessee has Page | 57 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani earned long-term capital gain, the addition is deleted. iii. The onus of proof is discharged by the assessee and therefore, no addition should have been made in the hence, of the assessee, where the learned AO has not thrown back the onus on the assessee. iv. Share price of that company was ₹ 500 approximately in financial year 2012 – 13 which rose to Rs. 565 in the subsequent year and then to ₹ 615 in the later year. Therefore, shares commanded good price which was higher than the selling price of the appellant and therefore there is no unusual appreciation by the assessee. v. The shares are properly dematerialized and those were transacted in and out from that account. The assessee further relied upon the decision of coordinate bench that has been upheld by the honourable Bombay High Court. vi. Shares are traded on recognized stock exchange through registered broker approved by the Security and exchange board of India therefore, it cannot be said to be non genuine. vii. The learned assessing officer has recorded incorrect facts about the exit providers, which Page | 58 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani are not at all into any business and are only the paper companies. viii. it was submitted that the receipt and payment through banking channels, no material found seized during the course of search relevant to the addition, entries for purchase and sale of shares made in the books of accounts of the assessee and merely the sole reliance on the statement of third party as well as the report of investigation wing without making any further enquiry and issuing any summons and also without affording any opportunity of cross examination to the assessee of those parties who made the statement, the addition cannot be made under section 68 of the act. ix. He further stated that the learned assessing officer has failed to make an independent enquiry with registered brokers, bankers as well as the depositories and other parties mentioned. 087. With respect to the addition under section 68 of the income tax act the main submission of the assessee are as under:- i. The loan received by the assessee from sunrise Asian Ltd of ₹ 40 lakhs on 30/9/2013 is a genuine loan and out of the accounted source of the lender company. Page | 59 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani ii. The loan was given by the lenders out of the lawful sources being fund received by the banking channel and the details of the source of loans of lender together with loan confirmation giving name, address, permanent account number, bank statement of the source party was also produced. iii. Lenders are assessed to tax having regular sources of income which is established by explaining the source of lending as well as the bank statement iv. Assessee has discharged its onus cast upon the her of disclosing the identity, creditworthiness and genuineness of the transaction which has not been proved incorrect by the assessing officer v. He further stated that in some of the cases involving Mr. Bhatt, wherein this company is directly involved in giving the loan, the coordinate benches have held that no addition could have been made. Further loans advanced by the group companies on the basis of unsubstantiated statement and report,Where the borrower has discharged its burden by filing adequate evidences. addition deserves to be deleted. Page | 60 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 088. The learned departmental representative vehemently submitted that :- a. statement of the assessee, the statement of Mr. Bhatt, statement of Father of the assessee, the manner of earning of the capital gain, huge capital gain of ₹ 37 crores earned by the assessee and her family in the single company shares, none of the family members are aware about what the company is doing, Shabby share knowledge of the assessee and her family members, clearly proves that the capital gain earned by the assessee is bogus. With respect to the addition, it was submitted that the issue is squarely covered against the assessee by the decision of the honourable Calcutta High Court in case of Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta)/[2022] 288 Taxman 403 and of the honourable Supreme Court in case of CIT V Suman Poddar [2019] 112 taxmann.com 330 (SC)/[2020] 268 Taxman 320 (SC) . Ld DR Submitted that all these decision, which have been cited by the LD AR, are all considered in that decision and therefore, no more decisions can be stated to be in favour of the assessee in such a bad facts of the case. b. On the issue of cross-examination, he referred to Para No 59, 60,65,88 and 90 of decision of Page | 61 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Honourable Kolkata High court in case of Swati Bajaj. Even otherwise it is submitted that Shri Vipul Bhatt has retracted the statement is known to assessee, he has given an affidavit in assessee‟s case, then now where is the question of cross examination of Vipul Bhatt. He submits that it is not the case of the assessee that Mr. Bhatt is not an accommodation entry provider, not known to assessee and its group of people. He referred to the statements of Mr. Vipul Bhatt, which has the complete linkage of the transactions of penny stock in case of assessee and her family members. c. He even otherwise submitted that even without the statement of Mr. Vipul Bhatt , Assessee has failed to discharge her onus of showing genuineness of the claim of exemption u/s 10 (38) of the Act. d. He submits that it is unheard of the persons in family earning Rs 37 crores and more as exempt gain u/s 10 (38) of the Act despite the fact that assessee‟s people are involved in obtaining such accommodation entry from a known accommodation entry providers, Assessee does not know anything about the share transactions. Page | 62 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani e. In this case, even exit providers are identified, operated by the same accommodation entry providers. Those parties also do not have any credentials. f. Documentary evidences are bound to be there in case of bogus arranged transactions. In view of the persons statement, those documents loses their credibility. Then AO is not requested to carry out any further inquiry on those none genuine documents. What purposes of making an inquiry, when the parties itself say that those are bogus . Then, AO is not required to carry out any further inquiry on those non genuine documents, no purpose could have been served g. Persons who purchased, the shares, (assessee) does not know anything about the company, mode of acquisitions, mode of sales, when the shares were split and when the shares were sold at what price those shares are sold, despite assessee and her family earning bogus exempt gains of Rs 37 crores. It is a fit case that preponderance of probability shows that the claim of the assessee is bogus. h. He further stated that annual average income of the assessee is Rs 10 lakhs Per Annum. The assessee has earned Rs 10 Crores as Long- Page | 63 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani term capital gain. How it is possible that assessee does not know, how these income is earned. He referred to the statement of the assessee recorded u/s 132 (4) of the Act and stated that assessee does not know anything about the company; She even could not answer who is Mrs. Rukhsana and her role in the transactions. i. He submits that there are many orders of ITAT where in the addition based on the statement of Mr. Vipul Vidhur Bhatt of Penny stock of same company is upheld. Therefore, the claim of the AR that there are decisions in case of several assessees where same entry operator is referred , is of no consequences. j. He also submitted that SEBI has levied fine of Rs 1 Crore on 86 entities for fraudulent trading for the same period. Thus, it proves that trading of the assessee is bogus and manipulated. The Trading period is 16 October 2012 to 30 September 2015. This is available in public domain. SEBI had conducted an investigation in the scrip of Sunrise Asian Ltd. from October 16, 2012, to September 30, 2015, based on a reference received from the Principal Director of Income Tax (Investigation), Kolkata. The probe was meant to ascertain whether there was any violation of Page | 64 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations 2003 by certain entities while trading. In the investigation, SEBI discovered that pursuant to allotment of shares under the scheme of amalgamation, Sunrise Asian and its then directors had devised an arrangement whereby 83 connected entities had manipulated the price of the scrip in four patches of trading during the investigation period, violating PFUTP norms. The regulator found that 77 out of the 83 connected entities were counterparties to the sale of shares by 1,059 entities/allottees at the artificially inflated or manipulated price, thereby violating rules. Of the 83 entities, instant proceeding initiated against four entities has been disposed of. Of the four entities, two have passed away and one has settled the case with SEBI under settlement mechanism. He submitted that these information are available on website of SEBI. Therefore, the whole case stated by the assessee is full of manipulations as assessee also traded during same period and is part of those 1059 entities.. Thus according to him there is no infirmity in the orders passed by lower authorities. Page | 65 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 089. We have carefully considered the rival contentions and perused the orders of the lower authorities. First we deal with denial of the claim of exemption u/s 10 (38) of the Act. Assessee has claimed the exemption for i. Rs 61405822/- for Ay 2014-15, ii. Rs 27593986/- for AY 2015-16 and iii. Rs 14587601/- for Ay 2016-17. It is the claim of the LD AO that family of the assessee has shown long-term exempt capital gain of Rs 37 Crores in the same company. The LD AR has not denied this fact. 090. Similarly, is the case of an unsecured loan of ₹ 40 lakhs received from the same company i.e. Santoshima Trade link Ltd added under section 68 of the Income Tax Act by the AO and confirmed by the CIT[A]. 091. Both the accommodation entries of unsecured loan as well as long-term capital gain are stated to be arranged through Mr. Vipul Vidhur Bhatt. Therefore, it is necessary to analyze what he says on these transactions. Assessee has not furnished the complete statement of Mr. Vipul Vidhur Bhatt in its paper book but has submitted complete affidavit of retraction statements. Ld DR has placed before us the complete statement of Mr. Bhatt which runs in to several pages containing 90 questions and most of Page | 66 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani questions are answered stating how Moraj Group has used accommodation entries in the form of loans, capital gains etc through him. 092. Statement of Mr. Vipul Vidhur Bhatt is recorded on 9 February 2016 under section 132 (4) of the income tax act. We have carefully perused the statement. In answer to question number 12, he replied that he is maintaining the books of accounts of all the bogus entities, which are managed and controlled by him. In response to question number 14, he categorically states that he is an entry operator and bogus accommodation entry provider. In response to question number 15, he categorically states that sunrise Asian limited is a listed company, which is a paper/bogus company, and he is using this entity for providing bogus accommodation entries to the various beneficiaries. He controls the entire activities/affairs of this company and all the directors of the company are dummy directors. These directors are appointed by him and are controlled by him. He submits that he is an entry operator of share of this company and he manages the entire affair/activities of this company and is in absolute control of Sunrise Asian Limited. He further submits that the share price of this company was artificially rigged up at the Bombay stock exchange with an objective to provide bogus long-term capital gain/accommodation entries to various beneficiaries, Page | 67 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani for which he charges a commission on cash between 4 -5% for long-term capital gain. He also refers to Santoshima Trade link Ltd stating that this is a bogus paper company, which is being used for providing bogus accommodation entries to the various beneficiaries. He is the director in that company and all other directors are dummy directors. He further stated that initially preferential shares of this company were allotted to the bogus long-term capital gain beneficiaries. Thereafter, this company was amalgamated with sunrise Asian limited and the shareholders of this company were allotted the shares of sunrise Asian limited in the swap ratio of 1:1. He further states that after amalgamation, share price of sunrise Asian limited was artificially rigged up in the Bombay stock exchange and once the share price of the company reached at the desired level, the shares of the preferential allottees were sold through stock exchange with the help of bogus buyers (exit providers) which are also controlled by him. He further states that he has given a bogus unsecured loan entry to M/s Moraj building concept private limited from this company. He mentions the functioning of 347 different such entities. He further referred/the nature of accommodation entries provided by him in answer to question number 18. In answer to question number 21, he categorically says that in his capacity as the managing director of the above company he uses Page | 68 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani sunrise Asian limited for providing bogus long-term accommodation entries and he is the operator of the scheme and have managed the affairs of that company. In answer to question number 22, he once again gave the detailed modus operandi of how bogus long-term accommodation entry in the above script was provided. In response to that question, he also referred to Santoshima Trade link Ltd. He explains that for providing the bogus long-term capital gain accommodation entries unaccounted cash was taken from the beneficiaries and the same was routed into the accounts of some companies/firms/individuals managed and controlled by him and thereafter the routed funds were used to purchase the shares of sunrise Asia Ltd held by the beneficiaries of bogus long-term capital gain. His answers to question number 23 – 29 explain his modus operandi. In response to question number 29, he also mentions the name of several other persons who are with him for providing this entry. In answer to question number 30, he also refers to a chartered accountants Mr. Sandeep Maroo and other chartered accountants giving the mobile numbers. In response to question number 31, he refers to the name of Mr. Piyush rasiklal Shah who introduced Mr. Mohan Gurnani family to him for providing bogus long-term capital gain. He also gave the date -wise reference in question number 34, how the share prices of sunrise Asian limited were rigged up after preferential Page | 69 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani allotment in Santoshima Trade link Ltd. In response to question number 35, he referred to being in control of several entities, which are used for routing, and layering of funds for purchasing the shares of the beneficiaries of long-term capital gain. In reference to question number 39, whether he knows Mr. Mohan Thakurdas Gurnani, he replied that yes, he knows him and he is a director/promoter of Moraj group of companies. He and his family members have taken accommodation entry of loans, long-term capital gain in the books through the shares of sunrise Asian limited. In response to question number 40, he stated that Sri Gurnani was introduced to him by Shri Piyush rasiklal Shah. In response to question number 41, he says that Piyush Shah informed him about Sri Mohan Gurnani and told him that Shri Mohan Gurnani wants to book bogus long-term accommodation entries in his personal files and the files of his family members. In response to question number 42, he explained that Shri Piyush Rasiklal Shah explained scheme of bogus longterm capital gain accommodation entry to Sri Mohan Gurnani. Mr. Gurnani also wanted accommodation entry of short-term capital loss in the books of his companies and wanted entry of long-term capital gain in the personal file of his family members. In response to question number 43, explains that how the entry of short-term capital loss was given to Moraj group. In response to question number 44, he Page | 70 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani explained that how the bogus long-term unsecured loans of ₹ 50 crores were given to Moraj building concept private limited. In response to that question, he also gives the name of nine different companies, which were used by him for providing the above loan. In response to question number 48, it was asked to explain how the bogus longterm capital gain entries were given to Gurnani group family members, he answers:- “Sir, during FY 2011 – 12, the entries of unsecured loans were given. At the same time, 5 (five) members of Gurnani family were also allotted shares of Santoshima Trade link Ltd on preferential basis. The plan was to give entry of short-term capital loss entry in Moraj group of companies during 2011 – 12 and subsequently, bogus longterm capital gain accommodation entry in the personal files of Gurnani family. Subsequently, Gurnani family received the shares of sunrise Asian limited against the shares of Santoshima Trade link Ltd. after the amalgamation of later with the former. Thereafter, the share prices of M/s sunrise Asian limited was artificially rigged up by me. When the share price of sunrise Asia Ltd reached up to a desired level, Mr. Piyush Shah after consulting Mr. Mohan Gurnani and Ms Priya Gurnani asked me to sell the shares. I Page | 71 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani used to receive RTGS/ cash which was used to purchase the shares of Gurnani family through my controlled entities.” 093. Further, in response to question number 49, he explained that what is the amount of cash that has been received by him for giving accommodation entry of long-term capital gain to Gurnani family members. He explains that he used to get cash picked up from the office of Moraj group and many times received RTGS [ reversal of loan repayment of old accommodation entries provided to the group] in bank account of the entities controlled and managed by him. Usually, he received RTGS which were actually the reversal of the entry of unsecured loans and it was used to purchase the shares of sunrise Asian limited. Sometimes, the shares were sold and the unsecured loans were returned after the sale of shares. This was done as per the mutual convenience. Further, in response to question number 50, he gives the name of the various persons of the Gurnani family, how many shares allotted to them, what is the sale price and what is the total amount of money received by him for allotment of the shares of Santoshima Trade link Ltd. However, he mentions the five names of Gurnani family, but he tells that the shares were sold only from the account of Mr. Mohan Gurnani, Ms Priya Mohan Gurnani and Ms. Deepa Gurnani. He also Page | 72 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani submits that bogus capital gain could not be arranged in the name of other entities because of cash crunch. In response to question number 51, whether he has ever met Mr. Mohan Gurnani/ Priya Gurnani and Deepa Gurnani, his categorical answer was that he did not meet them personally at any time however the entire deal was done through Shri Piyush Rasiklal Shah (chartered accountant) and he has spoken to Priya Gurnani once or twice about 4 – 5 months back. In response to question number 52, that who used to decide about the quantity and the rate for the sale of shares of the Gurnani group, it was explained that the quantity of shares to be sold and rate dependent on the RTGS received by him. He used to communicate the same to Mrs. Rukhsana [Accountant] in the office of Moraj group and she used to place order. Sometimes he himself used to place share sale orders on behalf of Gurnani group. In response to question number 53 about the authorization to place orders for the Gurnani group, he explains that entire scheme was finalized in consultation with Shri Piyush Rasiklal Shah for opening of Demat account of the individual family members with various share, the trading accounts were opened at Anand Rathi, DJS stock Brokers, F8 Finserve, JHP Securities, SMC Global. As he is the entry operator all the brokers knew him and hence they accepted his orders on behalf of Gurnani family members. These transactions were always confirmed Page | 73 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani with Mr. Piyush rasiklal Shah. Next orders were always confirmed after confirmation and receipt of RTGS. In answer to question number 54, he also referred to the commission income received by him and how he shared this commission with others. In response to question number 58, there were 17 annexure seized from his possession, which contains the details of bogus accommodation entries, details of RTGS received, and paid for bogus long-term capital gain accommodation entries. In response to question number 16 while explaining annexure A – 14 the name of Mr. Piyush Rasiklal Shah was also mentioned. At page number 175 onwards the papers were impounded wherein it is mentioned that “ Piyushbhai c/o Moraj”. Similar entries were found at page number 195 where a sum of Rs 2.46 cores were received in the name of same persons were Mentioned. The total annexure A – 14 was explained that these sums were received as RTGS from Moraj group which were used to purchase shares of the Gurnani family. In response to question number 61, he further mentioned the details of several intermediaries used by him. In this question, he refers to the name of PiyushBhai who is a chartered accountant and who has taken the unsecured loan from Gurnani group and introduced him with the Gurnani group family members. After that in his reply to several questions, he explains each and every exit providers for providing accommodation Page | 74 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani entries. In response to question number 77, he refers to 343 entities, which are related to various bogus accommodation entry entities to various beneficiaries are shown. In response to question number 78 – 88, he explains the various exit providers. In question number 87, he also gives the names of various entities, which have the several trades from assessment year 2009 – 10 to the date of his statement. He submits their permanent account number and to what extent they have provided accommodation entries to the various beneficiaries. The name of sunrise Asian Ltd appears there prominently and in huge volume. His statement continued for 90 questions. On perusal of his statement, it is apparent that he refers to the assessee, her family, her chartered accountant, her office accountant, the manner of receiving cash, the manner of transaction of sale etc. To say it succinctly , it is a complete modus operandi of an accommodation entry provider that how bogus loans are shown the color of genuineness and how the bogus long term exempt capital gain is arranged by managing from the stage of acquisition till the stage of disposal by misuse of platform of stock exchange. It shows how he manages demat agencies , exit providers, routing of cash or RTGS in various bank accounts, settlement of share sold on exchange and receipt of cash / RTGS from beneficiaries to give the Page | 75 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani color of genuineness to bogus long term capital gain to beneficiaries. 094. The statement of Shri Piyush Rasiklal Shah dated 6 February 2016 also categorically confirms the statement made by Mr. Vipul Bhatt. In answer to question number 15 – 36 clearly shows that Mr. Shah reiterates whatever Mr. Bhatt stated. In response to question number 29, he categorically says that he has arranged bogus long-term capital gain accommodation entries in the name of Mr. Mohan, Ms. Priya and Ms. Deepa through Mr. Bhatt in the shares of sunrise Asian limited. In response to question number 31, he also explained the entire modus operandi of obtaining the bogus long-term capital gain of Gurnani family. He further stated that the transaction in the case of other two family members could not be completed because of some payment issues. He is stated himself very well known to the Gurnani family and the auditor of his companies of Moraj group. He also explained what is the business of Mr. Gurnani. He names 11 entities where he is the auditor of Gurnani family -controlled companies. He also submits that he is a director in Granada Chem Pharma Limited where Mr. Mohan is also a director. Page | 76 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 095. Statement of Mr. Mohan Gurnani was taken under section 132 (4) of the act on 4 February 2016 wherein he could not provide the details of Demat account and stated he does not have any details of his Demat account. In response to question number 23, he refused stating that he does not know Shri Vipul Bhatt and he has never met him. In response to question number 8, he categorically states that though he does not have any direct relation with Mr. Vipul Bhatt but his CA Mr. Piyush Shah has arranged the loans and advances. In response to question, number 15, he submits that he came to know about sunrise Asian India Ltd through his broker and chartered accountants advise of Shri Piyush Shah. In response to question number 16 about the business activity of sunrise Asian limited, he submits that he does not remember exactly however the investment was based on advice of Mr. Piyush Shah. In response to question number 17, he explains that the brokers through whom he sold the shares, these same brokers appeared in the statement of Mr. Vipul Bhatt also. It is this details at question number 18. In response to question number 21, he says that he does not know anything about the penny stock and he has never heard these words. However in question number 22, he says that CA Piyush Shah who is known to him for the last two decades but now he has been withdrawn from the work. He was also questioned about the petition filed before Page | 77 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani settlement commission and why it was withdrawn. He did not answer what is manner of disclosure and how unaccounted income was earned..Assessee did not bring those facts on record till date. 096. Statement of Assessee Ms Priya Mohan Gurnani was recorded on 20/12/2018 wherein in answer to question number 8, she has categorically stated that she does not have any direct relationship with Mr. Vipul Bhatt however her CA Mr. Piyush Shah has arranged an investor for the plots of land purchased by Moraj group of companies. She replied in negative about the several land deals. With respect to the investment in sunrise Asian limited, she stated that her father had decided about the investment in these companies. In response to question number 14, she referred to certain brokers, which were also referred to in the statement of Mr. Bhatt. The name of Ms Rukhsana (accountant) also appeared in the statement of assessee, which also referred to in the statement of Mr. Bhatt. Further in response to question number 6, a statement was recorded during the search and the post search proceedings, she has given that her statement was also recorded on 4/2/2016, 5/2016, 7/2/2016. The statements clearly indicated that those are in complete corroboration with the statement of Mr. Bhatt, Mr. Shah and Mr. Gurnani. Page | 78 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 097. Further Mr. Vipul Bhatt was issued summons and examined on 20/12/2018 wherein a statement was recorded. He stated that he has filed his retraction statement on 2/9/2016 and letter dated 20/9/2017. He submitted that his statements given earlier on 4/2/2016 to 12/2 /2016 were not in the sound state of mind and health. He also furnished the statement along with an affidavit that the earlier statement given by him was patently false and therefore retracted. However, in the retraction statement there was no evidences produced before any authorities about his modus operandi, various names he has given for Demat accounts, various exit providers, various accomplices, shri Piyush Shah, loan entries of Moraj group for land acquisitions, various documentary evidences found in several annexure, 343 dummy entities controlled by him , business of sunrise Asian Limited, its directors and many more things. His only statement was that his earlier statement is patently false. 098. In view of i. statement of the accommodation entry provider Mr. Vipul Bhatt Page | 79 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani ii. Statement of assessee‟s chartered accountant shri Piyush Shah iii. Confirmation of statement of Mr. Mohan and Priya about Shri Piyush Shah iv. ignorance of the assessee and her father about the company its working or even where about of the company x. non service of 133 (6) notices to companies xi. pending information from BSE xii. association with the chartered accountant who operated and worked as link between Assessee group and Accommodation entry providers, xiii. approaching settlement commission and withdrawal of application later xiv. Acquisition of shares of company through private places held to be part of scheme explained by Mr. Bhatt xv. Holding shares in Demat account by the assessee and same parties for demat mentioned in the statement of Mr. Bhatt xvi. Transaction of transferring share from one demat account to another where shares could have been sold from any demat Page | 80 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani account particularly when those demat agencies were mentioned as part of scheme by Mr. Bhatt xvii. Synchronized trade pattern of putting order on stock exchange platform and in seconds trade takes place in a non descript company xviii. Identification of exit providers controlled by Mr. Bhatt xix. Trail of money and commission in several annexure found where name of the assessee, her CA, cash / RTGS receipt were mentioned along with commission of Mr. Bhatt coupled with the RTGS and Cash from assessee matching with sale of shares of assessee or her family xx. Bald retraction of Mr. Vipul Bhatt by affidavit without any evidences and not denying any documents found Documentary evidences of purchase, sales confirmation etc provided by the assessee loses its sanctity. Even otherwise, in case of loan of accommodation entry, confirmation bank statement and annual accounts, return of income etc loses its significance the moment it is shown to be an orchestrated Page | 81 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani arrangement of camouflage of the real transaction. Similarly, in case of allegedly bogus long-term capital gain, the details of sale, bank payments, trading at the stock exchange platform, payment of STT etc are merely make-believe arrangement of the documents as those are necessary ingredient to claim exemption. All other circumstances and facts a surrounding those documents shows whether the transaction is genuine or not. 099. Grievance of assessee about not giving an opportunity to cross examination of several parties, in the decision of Swati Bajaj, the honourable High Court has answered that as under :- “73. It is very rare and difficult to get direct information or evidence with regard to the prior meeting of minds of the persons involved in the manipulative activities of price rigging and insider trading. We can draw a parallel in cases of adulteration of food stuff, more than often action is initiated under the relevant Act after the adulteration takes place, the users of adulterated products get affected etc. Therefore, a holistic approach is required to be made and the test of preponderance of probabilities have to be applied and while doing so, we cannot lose sight of the fact that the shares of very little known companies with insignificant business had a steep rise in the Page | 82 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani share prices within the period of little over a year. The Income-tax department was not privy to such peculiar trading activities as they appear to have been done through the various stock exchanges and it is only when the assesses made claim for a LTCG/STCL, the investigation commenced. As pointed out the investigation did not commence from the assessee but had commenced from the companies and the persons who were involved in the trading of the shares of these companies, which are all classified as penny stocks companies. Therefore, the argument of the assessee that the copy of the investigation report has not been furnished, the persons from whom statements have been recorded have not been produced for cross examination are all contention which has to necessarily fail for several reasons which we have set out in the proceedings paragraphs. To reiterate, the assessee we not named in the report and when the assessee makes the claim for exemption the onus of proof is on the assessee to prove the genuinity. Unfortunately, the assesses have been harping upon the transactions done by them and by relying upon the documents in their hands to contend that the transactions done were genuine. Unfortunately, the test of genuinity needs to be established otherwise, Page | 83 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani the assesses are lawfully bound to prove the huge LTCG claims to be genuine. In other words if there is information and data available of unreasonable rise in the price of the shares of these penny stock companies over a short period of time of little more than one year, the genuinity of such steep rise in the prices of shares needs to be established and the onus is on the assessee to do so as mandated in Section 68 of the Act. Thus, the assesses cannot be permitted to contend that the assessments were based on surmises and conjectures or presumptions or assumptions. The assessee does not and cannot dispute the fact that the shares of the companies which they have dealt with were insignificant in value prior to their trading. If such is the situation, the assessee has to establish that the price rise was genuine and consequently they are entitled to claim LTCG on their transaction. Until and unless the initial burden cast upon the assessee is discharged, the onus does not shift to the revenue to prove otherwise. It is incorrect to argue that the assesses have been called upon to prove the negative in fact, it is the assesses duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled Page | 84 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani with genuinity and identity. The assesses cannot be heard to say that their claim has to be examined only based upon the documents produced by them namely bank details, the purchase/sell documents, the details of the D- Mat Account etc. The assesses have lost sight of an important fact that when a claim is made for LTCG or STCL, the onus is on the assessee to prove that credit worthiness of the companies whose shares the assessee has dealt with, the genuineness of the price rise which is undoubtedly alarming that to within a short span of time. The revenue had placed heavy reliance on the decision in MCDowell & Co. Ltd. to show that the claim of the assessee is not case of tax planning to be one of the tax avoidance by indulging in dubious methods. Mr. Bagaria had argued the rule in MCDowell & Co. Ltd. (supra) was considered in Azadi Bachao Andolan (supra) and Vodafone International Holdings (supra) and it is in the manner explained in these decisions the rule in McDowell & Co. Ltd. (supra) needs to be applied. From paragraph 138 onwards the Hon'ble Supreme Court considered in detail as to why McDowell and what it says and what it does not say. The argument of Mr. Bagaria would primarily rests on as to what would mean by a sham transaction as a legal one and it is Page | 85 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani pointed out that all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. Further by referring to the decision in Vodafone International Holdings (supra), it is submitted that the revenue cannot start with the question as to whether the transaction was a tax deferment/avoidance but the revenue should apply the "look at" test to ascertain its true legal nature and that genuine strategic planning had not been abandoned. Further the revenue has to establish on the basis of facts and circumstances surrounding the transactions that the impugned transaction is a sham or tax avoidance. In this regard Mr. Bagaria also referred to the decision in the case of Hill Country Properties Ltd. (supra) and also the decision Duke of Westminster (supra).” 0100. It is surprising to note that assessee wants a cross examination of Mr. Vipul Bhatt, accommodation entry provider. Assessee is not aware about the statement of Mr. Bhatt confessing everything, but in possession of his retraction affidavit completely. He appeared before LD AO also till that time assessee would never wanted to question him. Assessee never attempted to produce Shri Piyush Shah or Rukhsana. She never wanted to dispute the factum of loan Page | 86 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani taken as accommodation entries and trail of repayment of loan to bogus entities of Mr. Bhatt and simultaneous sale of shares by family members. 0101. Despite all the above stated facts , Proof of purchases and sales and its reliability is required to be tested. The assessee has made an application form for issue of equity shares of Santoshima lease finance and investments India Ltd by applying for 1,50,000 shares by paying a consideration of ₹ 30 lakhs on 27 September 2011 and 3,50,000 shares on 3 October 2011 by paying Rs. 70 lakhs . The assessee was allotted 5 lakh shares by allotment letter dated 31 January 2012 the physical share certificate number 440 , 5 lakh shares were issued to the assessee on 31 January 2012. The shares were credited in the Demat account of the assessee with DJS stock and shares Ltd. 1 lakh shares were credited on 3/10/2013 in Demat account of Mr. Mohan Gurnani, which were immediately transferred. This was the Demat statement provided by the assessee at page number 528 of the paper book. It page number 619 – 631 the Demat account with the same broker of the assessee was stated. On 4/5/2013, the assessee received 5 lakh shares. On 2/9/2013 and 3/9/2013 cumulatively 20,000 shares were transferred. On 18/11/2013 shares were debited in the Demat account. The shares were transferred in the another Demat account of the Page | 87 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani assessee with SMC Global Limited. Immediately thereafter, assessee started selling shares by debiting this Demat account. On 28/2/2015 3,67,000 shares were transferred from the Demat account of the assessee therefore, thus all the shares were transferred to another Demat account JHP securities Private Limited. Therefore, all these Demat accounts mentioned in the documentary evidences produced by the assessee are exactly the parties, which were mentioned in the statement of Mr. Bhatt. Assessee has transferred shares of one demat account to another demat account of her own for which there is no reason. All the depositories are mentioned as his associate in these penny stock transactions by Mr. Bhatt. 0102. Naturally, the transaction of penny stock happens at the regulated stock exchange only where time and date stamp and securities transaction tax are paid. This is the necessary conditions of claiming exemption under section 10 (38) of the act. Further, the pay-in and payout at the stock exchange always happens through the banking channel and therefore it is a mandatory condition. It is nobody‟s case that that the shares can be sold at the exchange and the brokers will pay seller cash. Therefore as these are the mandatory conditions, those does not weigh Page | 88 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani much in deciding whether the transaction is genuine or not. 0103. Price rise of shares of Sunrise Asian Limited Mr. Vipul Bhatt in his original statement has already stated how he has arranged the price rigging in the shares of the above company starting from ₹ 62 to ₹ 600 plus. There was no corporate announcement supporting the price or profitability of Sunrise Asian Ltd. Till date nobody except Mr. Vipul Bhatt knows what is the business of this company! 0104. So far as the issue of independent enquiry is concerned, when all the documents are proved to be a make-believe evidences for claiming the exemption under section 10 (38) of the act or section 68 of the Act , we do not find that any inquiry is required, despite everything coming out in the statement of Mr. Vipul Bhatt , Piyush Shah, Mohan Gurnani, and Priya Gurnani. If assessee wants to dispute them, it is for her to show that transaction is not non- genuine. 0105. SEBI order relied up on by the ld DR clearly speaks about the involvement of all 86 entities controlled by Mr. Bhatt that are held to be involved in price rigging of the shares of Sunrise Asian Page | 89 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani Limited. Therefore, there is no credence in the argument of the assessee that shares of that company are not rigged by Mr. Vipul Bhatt and assessee is not a beneficiary. Same persons are named in his statement also. 0106. Assessee has relied on many decisions of coordinate benches where addition on account of penny stock were deleted. Assessee also submitted many decisions where penny stock addition were deleted and Alleged accommodation entry provider is same i.e. Mr. Vipul Vidhur Bhatt and company is also same i.e. Sunrise Asian Limited. Indeed that is the fact. We have closely analyzed all those decisions where LD AO has made addition on the basis of statement of Mr. Vipul Vidhur Bhatt and company alleged rigged is Sunrise Asian Limited, but addition is deleted by ITAT. However, we find that in none of those decisions, statements of Mr. Vipul Bhatt, which is placed before us, is analyzed. In this statement of Mr. Bhatt , most of f the questions out of 90 questions are with respect to Moraj Group transactions, including penny stock. It does not begin with the penny stock accommodation entries and does not end with it. It goes prior to that how for purchase of land services of Mr. Bhatt were utilized for financing land purchase transaction, what is the sources of money for acquiring shares of Sunrise Asian Limited, how the bogus capital gain was Page | 90 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani arranged, who were the part of depositories for opening Demat accounts for penny stock gain generation , who are the exit providers who will buy the shares of beneficiaries, how the pay in and pay out would be sourced, how, who and when the money is provided in cash or RTGS for arranged sale at stock exchange etc. Ld AR could not show us single decision out of those decisions relied, where these facts exits/considered. Hence, we reject reliance on those decisions. 0107. Reliance on the Decision of honourable Bombay High court in case of PRINCIPAL COMMISSIONER OF INCOME TAX – 31, MUMBAI VERSUS INDRAVADAN JAIN, HUF INCOME TAX APPEAL NO. 454 OF 2018 July 12, 2023 was misplaced for the reason that in that case the assessee purchased the shares on stock exchange platform and not through preferential allotment. “The tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of stock Exchange.’ However in the present case it was Page | 91 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani acquired in preferential allotment that too was investigated by SEBI and found to be Fraudulent. 0108. Decision of Honourable Bombay high court in case of Shyam Pawar [Income Tax Appeal No. 1568 of 2012, Income Tax Appeal No. 1569 of 2012, Income Tax Appeal No. 1570 of 2012], Income Tax Appeal No. 1571 of 2012 dated December 10, 2014 was also relied up on. In that case it was held that “The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. “In this case the statement of Mr. Vipul Vidhur Bhatt specifically names the assessee family and order of SEBI on preferential allotment makes the case distinguishable on facts. In this case, search, itself resulted in to complete investigation and it is for the assessee to rebut evidences found from accommodation entry provider. 0109. We find it relevant to rely on Para no 77 and 78 of decision of Swati Bajaj {supra}. In Para no 77 the Honourable high court held that Page | 92 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani “77. While on the issue regarding the onus of proof, it would be beneficial to refer to the decisions which were relied on. In Durga Prasad More, the Hon‟ble Supreme Court pointed out that on the question of onus that law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not and it depends on the facts and circumstances of each case. It was further held that in some cases, the onus may be heavy whereas in others, it may be nominal. In the said case the assessee was receiving some income which he stated that it is not his income but that of his wife. On facts, it was found that the assessee‟s wife is supposed to have had Rs. 2 lakhs neither deposited in bank, nor advanced to others but safely kept in a safe. The assessee was unable to show from what source she built up the amount and Rs. 2 lakhs before the year 1940 which was a big sum during the relevant time. The Tribunal disbelieved the story of the assessee and held it to prima facie be a fantastic story, a story that does not accord with human probabilities. It was further held that the Courts and Tribunals have to judge the evidence before it by applying the test of human probabilities, human minds may differ as to the reliability of a piece of evidence but in that sphere, the decision of Page | 93 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani the final fact finding authority is made conclusive by law.” 0110. Our reason for referring it is that what should be onus on the assessee. Firstly assessee in her family as stated to have received Rs 37 crores of exempt capital gain in a non descript listed company operated by the accommodation entry provider, who has confessed that he has provided accommodations entries to the beneficiaries , including assessee, Confirmed by SEBI in adjudication order for same time in which assessee has sold these shares. In our view, a wanderer who does not know anything about the shares, did not attend any meetings of the companies , even do not know the nature of the business of the company, company is not found at the place where notices issued u/s 133 (6) , invest Rs 1 Cr in 2012 and earns Rs. 10 crores in 2015- 16 [ her family earns whopping Rs 37 Crores] is really a fantastic story. This needs to be rejected at threshold itself not only because preponderance of probability is against the assessee but also the facts found form Vipul Bhatt [ documentary evidences i.e. various annexure] proves that story is fake . 0111. Now we come to Para no 78 of that decision where the decision of Honourable supreme court in Page | 94 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani case of Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) was considered. Honourable court held that :- “78. In Sumati Dayal, the appeals were filed by the assessee against the order passed by the Income Tax Settlement Commission. On the aspect of burden of proof, it was pointed out that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department 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 taxable because it falls within exemption provided by the Act, lies upon the assessee. With regard to the effect of Section 68 of the Act, it was held that where any sum is found credited in the books of the assessee in previous year, the sum may be charged 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. It was further held that in such a case, the prima facie evidence against the assessee namely, the receipt of money and if he fails to Page | 95 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani rebut, the said evidence being unrebuted, can be used against him by holding that it was a receipt of an income nature. The Hon‟ble Supreme Court proceeds to discuss the facts of the case where the dispute was whether the winnings of the assessee therein were from horse races. Pointing out as to how this matter has to be examined, it was held that the matter has to be considered in the light of human probabilities and by applying the said test it was held that the assessee‟s claim therein about the amount being her winnings from horse races was not genuine.” 0112. In present times, whopping gain earned by a wanderer who does not have any knowledge about the company earns Rs 10 Crores [in whole family Rs 37 Crores] is more surprising than winning in a horse race, Especially when the accommodation entry provider also says that, it is an arranged gain in the hands of family members of the assessee. 0113. An interesting aspect emerges of the contract notes submitted by the assessee for the sale of shares, it is apparent that moment assessee orders for the sale of shares, at the same time, those shares offloaded and sold. Thus, the order time and trade time are almost same or with a difference of Page | 96 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani split seconds. This is unusual when it happens in one-company shares, on the same date and in multiple trades on a single day where the trading is thin. SEBI order is relevant in case of 89 entities passed in this case for such synchronized trading. 0114. We have also noticed fact that Mr. Vipul Vidhur Bhatt has retracted his statement by filing an affidavit dated 2 November 2016 and further on 9 June 2017, he has stated that whatever he stated in the statement earlier is patently false. However while retracting the statement originally given, he did not give any evidence that those annexure which are found from his place wherein the name of the assessee and the full transaction is recorded is incorrect. Reading of statement of Mr. Vipul Bhatt clearly gives an idea how closely and how long he is associated with the group providing accommodation entries. He names the concern of the assessee and her family members as if he is associated with the group for a long time. 0115. In view of this, even if we ignore the original statement given by the accommodation entry provider and his retraction later on, those evidences still remain which needs to be examined, now, independently to ascertain whether the amount of loan taken by the assessee and the amount of long- Page | 97 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani term capital gain earned by the assessee is genuine or non genuine. 0116. In view of the above facts, we set-aside ground number 2 and 4 of the appeal back to the file of the learned assessing officer with a direction to the assessee to show the genuineness of the trade and unsecured loan with respect to the documents found as stated in the statement of various parties, exit entry providers details, Demat agencies and the cash trail found. It is also the duty of the assessee to produce before the AO of her chartered accountant (who statement is not retracted), Ms. Rukhsana who is stated to have been involved in transferring the cash for the long-term capital gain and conversion of loan entries, for further examination. It is also the duty of assessee to produce Mr. Vipul Bhatt before the ld AO to be examined specifically with respect to documents in annexure 1 to 17 , his each of the reference in 90 questions referring to Moraj Group. The learned assessing officer on appraisal of all the details furnished by the assessee may carry out further enquiry with respect to the observation made above and decide the issue afresh considering the standard operating procedure of investigation of penny stock. The LD AO may also consider the inquiry pending before him from BSE etc. LD AO may carry out the inquiries with respect to exit providers Page | 98 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani looking at date and time stamp of trades executed and sources of the fund of the exit providers tearing the layering where it is stated that in some of the case funds are out of RTGS made by assessee for repayment of loan. Ld AO is directed to make meaningful and relevant inquires in accordance with law. It is also made absolute that, it is for the assessee to show that transactions are genuine, but Needless to say, assessee must be confronted with all evidences and there should not be any violation of principles of natural justice in accordance with the law. Accordingly, ground number 2 and 4 of the appeal of the assessee are allowed for statistical purposes.” 062. As there is no change in the facts and circumstances of the case, except the amount of Capital gain claimed as exempt u/s 10 (38) of the Act with facts and circumstances of case of Mrs. Priya Gurnani, Therefore, with similar directions to the Assessee as well as learned assessing officer to decide the issue in case of the assessee afresh. Accordingly, ground number 3 of the appeal of the assessee is allowed for statistical purposes as indicated above. 063. In the result, appeal of the assessee for assessment year 2015 – 16 in ITA number 713/M/2021 is partly allowed. 064. ITA number 2089/M/2021 is filed by the assessee for assessment year 2010 – 11. Page | 99 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani a) Ground number 1 is with respect to the challenge to jurisdiction under section 153A which is identical to ground number 1 of the appeal for assessment year 2015 – 16 which has been dismissed by us, accordingly there is ground is dismissed. b) Ground number 2 is with respect to the addition of ₹ 203,727/– as income from house property, which is identical to ground number 2 of the appeal of the assessee for assessment year 2015 – 16, which is partly allowed. Accordingly, this ground of appeal is also partly allowed. c) Ground number 3 is with respect to the addition of ₹ 198,000 is income from undisclosed sources. We find that as per paragraph number 5 of assessment order the learned assessing officer has discussed this issue that on the basis of page number 56 there is an unaccounted income of ₹ 198,000 based on the loose paper found during the course of search. The assessee explained that as those pages does not have any dates but merely because the tax recorded in that seized documents has some dates, the cash is also related to that accounting. In addition, that accounting is 1998-99 financial year and accordingly there cannot be any addition for assessment year 2010 – 11. The learned assessing officer held that assessee has not been able to corroborate any wooden is in support of his claim and there was no reason for the assessee to maintain such document for an old financial transaction which was assessee not able to substantiate. Accordingly, the addition was made. When the matter reached before the learned CIT – A, ground number three Page | 100 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani was decided as per paragraph number 5.3 of the order he held that during the appellate proceedings also the assessee could not provide any supporting documents that the amount is mentioned in the seized documents at page number 56 were pertaining to financial year 1998 – 1999. Therefore, the addition made by the learned assessing officer was sustained. He further held that the loose papers mentioned in the amounts are with narration, which was not reflected in regular books of accounts, which is an important piece of evidence. d) The learned authorized representative reiterated the submission before the learned and CIT – A. The learned departmental representative relied upon the orders of the lower authorities. e) We have carefully considered the rival contentions and perused the orders of the lower authorities. In this case, the page number 56 was found and seized during the course of search wherein certain noting is were found related to the amount and with narration is. The assessee could not correlate this information with the books of accounts of the assessee. Therefore, the lower authorities have paid the addition as undisclosed income of the assessee. Before us no further explanation was provided to choral eight that this information pertained to the different financial year, therefore we confirm the order of the lower authorities and dismiss ground number three of the appeal. f) Ground number four is identical to ground number four of the appeal of the assessee for assessment year 2015 – 16 with respect to the change of jurisdiction. This ground Page | 101 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani of appeal for assessment year 15 – 16 has been dismissed by us and for the similar reasons we also dismiss ground number four of the appeal for this year. g) Ground number 5 is identical to ground number 5 of the appeal of the assessee for assessment year 2015 – 16 challenging that when there is a change in the incumbent assessing officer, there should be a fresh notice under section 143 (2) of the act. This ground is been dismissed by us for assessment year 2015 – 16, therefore we also dismiss ground number 5 with similar reasons. h) Ground number 6 is against the levy of interest under section 234A, 234B and 234C. This is identical to ground number six in appeal of the assessee for assessment year 2015 – 16 except the interest charged under section 234A and 234B. We have dismissed that ground stating that interest charged is mandatory and consequential in nature. For the same reason we also dismiss ground number six of the appeal. i) Ground number seven is general in nature wherein specific arguments have been raised, therefore it is dismissed. j) Ground number eight is against the violation of natural justice principles by the learned assessing officer, same is identical to ground number eight of the appeal of the assessee for assessment year 2015 – 16 which we have partly allowed and covered in our decision for ground number 3 of the appeal of the assessee for assessment year 2015 – 16. However, for this year there is no such Page | 102 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani issue of taxation of capital gain on penny stock, therefore this ground of appeal is dismissed. k) In the result ITA number 2089/M/2021 for assessment year 2010 – 11 is partly allowed. 065. ITA number 710/M/2021 is filed by the assessee for assessment year 2011 – 12. This appeal has identical grounds except ground number 3 in the appeal for assessment year 2010 – 11 where there is an undisclosed income addition of ₹ 198,000/–. a) Ground number 1 is with respect to the application of provisions of section 153A of the income tax act which is identical to ground number 1 of the appeal for assessment year 2015 – 16 which is been dismissed by us. For similar reasons we dismiss ground number one of the appeal. b) Ground number 2 of the appeal is with respect to the addition of ₹ 215,107/– as income from house property which is identical to ground number 2 of the appeal of the assessee for assessment year 2015 – 16 which has been partly allowed by us, accordingly we also allow ground number 2 of the appeal of the assessee with similar direction partly. c) Ground number 3 is with respect to the change of jurisdiction which is identical to ground number four of the appeal for assessment year 2015 – 16 which is been dismissed by us. For the similar reasons we also dismiss ground number 3 of the appeal. d) Ground number 4 of the appeal is identical to ground number five of the appeal for the assessment year 2015 Page | 103 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani – 16 challenging the assessment order passed without the issue of notice under section 143 (2) of the act by the new incumbent. We have dismissed similar ground for assessment year 2015 – 16 and therefore this ground of appeal is also dismissed. e) Ground number 5 is with respect to the levy of interest under section 234A, 234B and 234C which is identical to ground number 6 of the appeal for assessment year 2015 – 16 which is been dismissed by us, therefore, for similar reasons we also dismiss ground number five. f) Ground number six of the appeal is with respect to the assessment of total income, which is general in nature, and therefore in absence of any further argument by the learned authorized representative, it is dismissed. g) Ground number seven is with respect to the violation of the principles of natural justice which is been dealt with by us as per ground number eight of the appeal for assessment year 2015 – 16, therefore with similar direction we dispose of this ground of appeal. h) Accordingly, ITA number 710/M/2021 for assessment year 2011 – 12 is partly allowed. 066. ITA number 711/M/2021 is filed by assessee for assessment year 2012 – 13 and ITA number 712/M/2021 for assessment year 2013 – 14 are having the identical grounds as raised in assessment year 2011 – 12. For the reason stated therein while disposing the appeal of the assessee for assessment year 2011 – 12, we also dispose of all the grounds of the appeal for assessment year 2012 – 13 and 2013 – 14 with identical Page | 104 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani reasoning. Accordingly, ITA number 711/M/2021 and ITA number 712/M/2021 of the assessee for assessment year 2012 – 13 and 2013 – 14 are partly allowed. 067. ITA number 709/M/2021 is filed by the assessee for assessment year 2014 – 15 having identical grounds in the appeal of the assessee compared to appeal for assessment year 2015 – 16. We have already disposed of appeal of the assessee for assessment year 2015 – 16 partly allowing the same. Therefore, for the reasons given in the appellate order for assessment year 2015 – 16, the appeal of the assessee is partly allowed for assessment year 2014 – 15 also. 068. ITA number 718/M/2021 is filed by the assessee for assessment year 2016 – 17 raising identical grounds as raised in appeal of the assessee for assessment year 2010 – 11, 11 – 12, 12 – 13 and 13 – 14, those have been disposed of by us by partly allowing the appeal. Therefore, for the reasons given by us in disposal of those appeals, for similar reasons we partly allow the appeal of the assessee for assessment year 2016-17 also. 069. Accordingly, all the seven appeals filed by the assessee are disposed of accordingly. Pronounced in the open court on 17.11. 2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 17.11.2023 Dragon Copy of the Order forwarded to: BY ORDER, Page | 105 ITA No. 2089, 709 to 713 & 718 Mum/2023 A.Y. 2010-11, 14-15, 11-12, 12-13, 13-14, 15-16, 16-17 Mohan Thakurdas Guranani 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai