Kishore Kaya, Kanpur V. DCIT, Kanpur

ITA 248/LKW/2010

• Counselvise Citation: 24823714 RSA 2010
• Duration Of Justice: 4 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-07-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K KAPOOR C A SHRI ALOK MITRA
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Additional evidence; Accommodation entries; Reassessment proceedings; Borrowed satisfaction
• Section: 142(1); 147; 131; 69; 148; 144; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.248/LKW/2010 ASSESSMENT YEAR:2002 - 03 SHRI KISHORE KAYA, 53/10, NAYAGANJ, KANPUR. PAN:AAXPK3655N VS. DY.C.I.T. - 1, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.255/LKW/2010 ASSESSMENT YEAR:2002 - 03 DY.C.I.T. - 1, KANPUR. VS. SHRI KISHORE KAYA, 53/10, NAYAGANJ, KANPUR. PAN:AAXPK3655N (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - I, KANPUR DATED 03/02/2010 FOR ASSESSMENT YEAR 2002 - 2003. 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE I.E. I.T.A. NO.248/LKW/2010 FOR ASSESSMENT YEAR 2002 - 2003. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ASSESSEE BY SHRI P. K. KAPOOR, C.A. REVENUE BY SHRI ALOK MITRA, D.R. DATE OF HEARING 22/07/2014 DATE OF PRONOUNCEMENT 0 9 /09/2014 2 1. BECAUSE ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT THE ASSESSING OFFICER WAS NOT EVEN AWARE OF THE 'RETURN' THAT HAD BEEN FILED BY THE 'APPELLANT' UNDER SECTION 139 ON 9 TH AUGUST, 2002, HE (THE ASSESSING OFFICER) COULD NOT HAVE ENTERTAINED THE 'REASONS TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT, NECESSITATING INITIATION OF REASSESSMENT PROCEEDINGS THEREUNDER. 2. BECAUSE IN ANY CASE, THE 'REASONS RECORDED', AS HAVE BEEN COMMUNICATED TO THE 'APPELLANT' CANNOT BE SAID TO BE BASED ON 'GOOD FAITH' AND 'RELEVANT MATERIAL' WHICH CONSTITUTE BASIC INGREDIENTS FOR INITIATING PROCEEDINGS UNDER SECTION 147 AND ACCORDINGLY THE ENTIRE PROCEEDINGS ARE VITIATED IN LAW. 3. BECAUSE THE 'APPELLANT' HAD OBJECTED TO THE INITIATION OF PROCEEDINGS UNDER SECTION 147, ON VERY COGENT AND VALID GROUNDS, AFTER HE HAD BEEN COMMUNICATED WITH THE 'REASONS RECORDED' AND IN VIEW OF THE UNCONTROVE RTED FACT, THAT THE SAID OBJECTIONS REMAINED UN - DECIDED AND UNDISPOSED OFF, THE ASSESSING OFFICER COULD NOT HAVE MADE THE ASSESSMENT ORDER DATED 11.09.2007. 4. BECAUSE 'NON - DISPOSAL' OF THE APPELLANT'S OBJECTION TO THE VALIDITY OF INITIATION OF PROCEEDING S UNDER SECTION 147 HAD A VITAL BEARING ON THE VERY MAINTAINABILITY OF THE ASSESSMENT ORDER DATED 11.09.2007 AND THE 'CIT(APPEALS)' WAS NOT JUSTIFIED, EITHER ON FACTS OR IN LAW, IN HOLDING THAT THE 'ARGUMENTS OF THE APPELLANT ON BOTH THE ACCOUNTS ARE LACKI NG IN MERIT' AND IN DISMISSING THE SAME. 5. BECAUSE RELIANCE ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF RAYMOND WOOLEN MILLS VS. ITO REPORTED IN (1999) 236 ITR 34 BY THE 'CIT(APPEALS)' IS WHOLLY MISPLACED AS THE SAID JUDGMENT HAD BEEN DELIVE RED ON ALTOGETHER DIFFERENT FACTS AND CONTEXT. 3 6. BECAUSE ON A DUE AND CONSIDERATION OF THE SUBMISSIONS MADE BY THE APPELLANT, THE 'CIT(APPEALS)' SHOULD HAVE HELD THAT THE ASSESSMENT ORDER DATED 11.09.2007 WAS NONEST AND INVALID IN THE EYES OF LAW. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS/ LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. LEARNED A.R. OF THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS AND FOR DECIDING THE APPEAL OF THE ASSESSEE, PARA 10 TO 14 OF THE WRITTEN SUBMISSIONS ARE RELEVANT AND HENCE, THE SAME ARE REPRODUCED BELOW: 10. IN THE AFORESAID BACKGROUND, THE APPELLANT BEGS TO CONTEND THAT THE 'REASONS RECORDED' ARE BASED ON BORROWED SATISFACTION AND NOT ON AN INDEPENDENT APPLICATI ON OF MIND BY THE ASSESSING OFFICER, WHICH DOES NOT CONFER JURISDICTION OF THE ASSESSING OFFICER TO INITIATE REASSESSMENT PROCEEDINGS UNDER SECTION 147. 11. A SIMILAR MATTER WHEREIN REASSESSMENT PROCEEDINGS WERE BASED ON THE INFORMATION COLLECTED BY THE I NVESTIGATION WING CAME UP FOR CONSIDERATION BEFORE DELHI BENCH 'E' OF THE HON'BLE ITAT, NEW DELHI IN THE CASE OF ITO VS. MRS. MAYA GUPTA. AFTER REFERRING TO VARIOUS CASE LAWS THE HON'BLE TRIBUNAL VIDE HIS ORDER DATED 13.12.2013 HAVE HELD THAT THE 'REASONS RECORDED' DO NOT MEET THE REQUIREMENT OF LAW. KIND ATTENTION IS INVITED TO PARA 3 OF THE SAID JUDGMENT (WHEREIN REASONS RECORDED HAVE BEEN REPRODUCED) AND PARA 9 WHEREOF FINDINGS HAVE BEEN GIVEN. COPY OF THE SAID JUDGMENT IS ENCLOSED HEREWITH AND THE SAME APPEARS AT PAGES 10 TO 15 OF THIS COMPILATION. 12. WHILE DECIDING THE SAID ISSUE THE HON'BLE IT AT HAS REFERRED TO THE DECISIONS OF HON'BLE DELHI HIGH COURT I N THE CASE OF : ( I ) SIGNATURE HOTELS PVT. LTD, VS. ITO REPORTED IN (2011) 338 ITR 51 ( II ) CIT VS. INSECTICIDES (INDIA) LTD. REPORTED IN (2013) 357 ITR 330 4 COPIES OF THE SAID JUDGMENTS ARE ENCLOSED HEREWITH AND THE SAME APPEARS AT PAGES 16 TO 22 & 23 TO 27 OF THIS COMPILATION. 13. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER DATED 11.09 . 2007, WITHOUT DECIDING THE OBJECTIONS RAISED BY THE ASSESSEE, THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147. THIS IS IN GROSS VIOLATION OF THE PRINCIPLES LAID DOWN BY HON'BLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). SUCH A VIOLATION IS FATAL TO THE VERY VALIDITY OF THE ASSESSMENT PROCEEDINGS, IN VIEW OF THE PRINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF ALLANA COLD STORAGE LTD. VS. ITO REPORTED IN (2006) 287 ITR 1 WHEREIN THEIR LORDSHIPS HAVE OBSERVED AND HELD AS UNDER: - 'WE HAVE NOTED THE SUBMISSIONS OF BOTH COUNSEL. THE LAW AS LAID DOWN BY THE APEX COURT IS BINDING ON THIS COURT AS W ELL AS ON THE AUTHORITIES FUNCTIONING UNDER THE STATUTE. THIS BEING THE POSITION, WE FAIL TO UNDERSTAND AS TO WHY THE FIRST RESPONDENT DID NOT DECIDE THE OBJECTIONS SEPARATELY WHICH HE IS DUTY BOUND TO DECIDE. THE WHOLE IDEA IN LAYING DOWN THE LAW IN THE A BOVE REFERRED JUDGMENT OF THE APEX COURT IS TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO KNOW AS TO WHAT IS THE DECISION ON HIS OBJECTIONS, WHICH DECISION HAS ALSO TO BE ARRIVED AT AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS BEEN DENIED THIS OPPORTUNITY. NOR ONLY THAT BUT IN THE FIRST THREE WRIT PETITIONS WHAT WE FIND IS THAT A COMMON ORDER HAS BEEN PASSED ON THE OBJECTIONS AS WELL AS FOR THE REASSESSMENT. IN THE FOURTH MATTER, THE ASSESSMENT ORDER DOES NOT DISCLOSE ANY D ECISION ON THE OBJECTIONS AT ALL THE UNDOUBTEDLY NO SUCH DECISION HAS BEEN GIVEN SEPARATELY ON THE OBJECTIONS. HAVING NOTED THIS SCENARIO, IN OUR VIEW THE PROPER COURSE WILL BE TO INTERFERE WITH THE ASSESSMENT ORDERS PASSED IN ALL FOUR MATTERS BY THE CONC ERNED OFFICER. WE ARE AWARE THAT WHEN AN ALTERNATIVE REMEDY IS RESORTED TO, THE WRIT JURISDICTION IS NOT TO BE EXERCISED, BUT THAT IS A RULE OF SELL - LIMITATION. THE ORDERS CHALLENGED IN THE PRESENT MATTER ARE CLEARLY AGAINST THE LAW LAID DOWN BY THE APEX C OURT AND, THEREFORE, THE EXERCISE OF WRIT 5 JURISDICTION IS CALLED FOR. THAT BEING SO, WE ALLOW ALL THESE PETITIONS AND QUASH AND SET ASIDE THE ORDERS OF ASSESSMENT PASSED IN ALL THESE FOUR PETITIONS. INASMUCH AS THE ASSESSMENT ORDERS ARE SET ASIDE, THE APPE ALS FILED BY THE PETITIONERS NO LONGER REQUIRE TO BE PROSECUTED. THE SAME WILL STAND DISPOSED OF.' 14. IN VIEW OF THE SUBMISSIONS MADE ABOVE, IT IS RESPECTFULLY PRAYED THAT YOUR HONOURS BE PLEASED TO HOLD THAT INITIATION OF PROCEEDINGS UNDER SECTION 147, ON THE FACTS OF THE PRESENT CASE ARE NOT VALID AND IN CONSEQUENCE QUASH THE ASSESSMENT ORDER DATED 11.09.2007 AS A NULLITY. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS THE FIRST OBJECTION OF THE LEARNED A.R. OF THE ASSESSEE THAT THE REASONS RECORDED ARE BASED ON BORROWED SATISFACTION AND NOT INDEPENDENT APPLICATION OF MIND BY THE A.O. . HE PLACED RELIANCE ON THE TRIBUNAL DECISION IN I.T.A. NO.3435/DEL/13 DATED 13/12/2013. COPY OF THIS DECISION IS AVAILABLE ON PAGE NO. 10 TO 15 OF THE WRITTEN SUBMISSIONS. WE FIND THAT IN THIS CASE , THE REASONS RECORDED BY THE ASSESSING OFFICER WERE REPRODUCED BY THE TRIBUNAL IN PARA NO. 3 OF THE TRIBUNAL DECISION AND THER EAFTER , IT WAS NOTED BY THE TRIBUNAL IN PARA NO. 9 THAT IN THAT CASE, INVESTIGATION WING INFORMED THE ASSESSING OFFICER THAT THEY HAVE CARRIED OUT LARGE SCALE INVESTIGATION TO UNEARTH A HUGE RACKET INCLUDING ACCOMMODATION ENTRY PROVIDERS. IN THE SAME PARA OF THE TRIBUNAL ORDER, IT IS NOTED BY THE TRIBUNAL THAT THE LIST OF BENEFICIARIES WHO HAVE TAKEN ACCOMMODATION ENTRIES FROM SUCH PERSON/FIRM INCLUDING THE NAME OF BIMLA DEVI BUT THE PRESENT ASSESSEE IS MAYA GUPTA AND NOT BIMLA DEVI. IT IS ALSO NOTED BY T HE TRIBUNAL THAT IN THE CHART, ONLY THE VALUE OF ENTRY TAKEN IS MENTIONED BUT THE NATURE OF ENTRY WHETHER IT IS A BOGUS GIFT, LOAN OR SHARE CAPITAL MONEY IS NOT MENTIONED. IT IS ALSO NOTED BY THE TRIBUNAL THAT ON WHAT BASIS THE ABOVE PRESUMPTION IS DRAWN THAT THE 6 ASSESSEE HAS TAKEN ANY ACCOMMODATION ENTRY IS ALSO NOT MENTIONED. THE TRIBUNAL FURTHER NOTED THAT NO FURTHER REFERENCE IS MADE TO ANY STATEMENT GIVEN BY ANY ACCOMMODATION ENTRY PROVIDER OR ANY DOCUMENTARY EVIDENCE FOUND FROM THEIR PREMISES WHICH INDICATED ANY ACCOMMODATION ENTRY BEING TAKEN BY THE ASSESSEE. NOW IN THE LIGHT OF THESE FACTS OF THAT CASE , WE ANALYZE THE FACTS OF THE PRESENT CASE. IN THE PRESENT CASE, THE REASONS RECORDED BY THE ASSESSING OFFICER FOR ISSUING NOTICE U/S 148 ARE AVAIL ABLE ON PAGE NO. 1 TO 4 OF THE PAPER BOOK . 5.1 FROM THE REASONS RECORDED BY THE ASSESSING OFFICER IN THE PRESENT CASE, IT IS SEEN THAT FULL DETAILS ARE AVAILABLE REGARDING DD NO, DATE AND AMOUNT ISSUED IN FAVOUR OF THE ASSESSEE. IT IS ALSO MENTIONED IN PARA NO. 3 OF THE REASONS THAT THE INVESTIGATING AUTHORITY HAS ALSO EXAMINED AND RECORDED THE STATEMENT OF SHRI MUKESH KUMAR GUPTA, DIRECTOR OF THE COMPANY AND HIS WIFE SMT. SUSHILA GUPTA. IT IS ALSO MENTIONED THAT THE COPY OF THE STATEMENTS ARE AVAILABLE ON RECORD AND DURING THE COURSE OF STATEMENT , SHRI MUKESH KUMAR GUPTA CONFESSED THAT HE HAD BEEN PROVIDING ENTRIES TO VARIOUS INDIVIDUALS AND USED TO CHARGE COMMISSION APPROXIMATELY @0.25%. THE ASSESSING OFFICER FURTHER NOTED THAT SHRI MUKESH KUMAR GUPTA STATED THAT HE USED TO RECEIVE CASH AMOUNT FROM THE PERSONS WHO USED TO SEEK ENTRIES FROM HIM AND AGAINST THESE CASH RECEIPTS , HE USED TO GIVE THEM CHEQUE/DD. IN THE SAME REASONS, IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT SMT. SUSHILA GUPTA HAS S TATED THAT THE MEMBERSHIP OF M/S C.M.S. SECURITIES LTD. WAS SUSPENDED BY NATIONAL STOCK EXCHANGE DUE TO SALE OF BOGUS SHARES AND THEREAFTER , THEY STARTED ISSUING DRAFTS TO VARIOUS PARTIES BY TAKING CASH FROM THEM IN LIEU OF COMMISSION TAKEN @0.25%. SH E CO NFIRMED THE STATEMENT GIVEN BY HER HUSBAND SHRI MUKESH KUMAR GUPTA . THE ASSESSING OFFICER ALSO NOTED THAT THE INVESTIGATION OFFICER ISSUED SUMMONS U/S 131 OF THE ACT TO THE ASSESSEE SHRI KISHORE 7 KUMAR KAYA REQUIRING HIM TO EXPLAIN THE CREDIT OF THE ABOVE MENTIONED ENTRIES IN HIS BANK ACCOUNT AND VARIOUS OTHER INFORMATION WERE ASKED FOR. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE AVOIDED TO ATTEND IN PERSON AND ALSO TO MAKE THE OTHER REQUISITE COMPLIANCE. THEREAFTER, IN PARA 7, IT IS NOTED BY THE ASSESSING OFFICER THAT ON PERUSAL OF THE DETAILS AVAILABLE ON RECORD, IT IS FOUND THAT THE DEPOSITS WERE MADE IN THE ASSESSEES BANK ACCOUNT IN THE FINANCIAL YEAR 2001 - 02 RELEVANT TO ASSESSMENT YEAR 2002 - 03 BUT NO INCOME FROM CAPITAL GAINS WAS DECLARED IN HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2002 - 03. HENCE, IT IS SEEN THAT IN THE PRESENT CASE , AS PER THE REASONS RECORDED BY THE ASSESSING OFFICER, NOT ONLY THE STATEMENT OF PERSONS INVOLVED IN THE RACKET OF BOGUS ENTRY PROVIDERS WERE OBTAINED BY INVESTIG ATION WING OF THE DEPARTMENT WHEREIN THEY ADMITTED REGARDING PROVIDING BOGUS ENTRY BUT THE COMPLETE LIST IS AVAILABLE ALONG WITH THE DD NO., DATE AND AMOUNT ETC. AND THEREAFTER , THE ASSESSING OFFICER HAS EXAMINED THIS ASPECT ALSO THAT THESE DRAFTS ARE IN F ACT DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTED THAT ALTHOUGH THE DRAFTS WERE DEPOSITED IN THE BANK ACCOUNT IN THE PRESENT YEAR BUT NO INCOME HAS BEEN DECLARED BY THE ASSESSEE ON ACCOUNT OF CAPITAL GAIN IN RESPECT OF T HESE SALE OF SHARES FOR WHICH DRAFTS WERE DEPOSITED. HENCE, IT IS SEEN THAT THE FACTS OF THE PRESENT CASE ARE TOTALLY DIFFERENT AS COMPARED TO THE FACTS IN THE CASE OF INCOME TAX OFFICER VS. MAYA GUPTA (SUPRA) AND THEREFORE, THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 6. LEARNED A.R. OF THE ASSESSEE ALSO PLACED RELIANCE ON TWO JUDGMENTS OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF SIGNATURE HOTELS P. LTD. VS INCOME - TAX OFFICER [2011] 338 ITR 51 (DEL) AND COMMISSIONER OF INCOME - TAX VS INSECTICIDES (INDIA) LTD. [2013] 357 ITR 330 (DEL) . IN FACT , BOTH THESE JUDGMENTS WERE THE BASIS OF THE DECISION OF I.T.A.T. IN THE CASE 8 OF MAYA GUPTA (SUPRA). IN THE CASE OF SIGNATURE HOTELS P. LTD. (SUPRA), IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM DIRECTOR OF INCOME - TAX (INV.) THAT THE ASSESSEE HAS INTRODUCED UNACCOUNTED MONEY BEING EXTREMELY SCANTY AND VAGUE AND CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA F ACIE SHOWS OR ESTABLISHES ESCAPEMENT OF INCOME MORE SO AS THE ASSESSING OFFICER DID NOT APPLY HIS MIND TO THE INFORMATION AND EXAMINE THE BASIS OF THE INFORMATION AND THEREFORE, THE PROCEEDINGS U/S 147 ARE NOT MAINTAINABLE. THE FACTS IN THE PRESENT CASE A RE DIFFERENT. IN THE PRESENT CASE, THE INFORMATION RECEIVED IS NOT SCANTY AND VAGUE BUT THE INFORMATION IS VERY SPECIFIC ALONG WITH THE DD NO., DATE AND AMOUNT ETC. AND THE ASSESSING OFFICER HAS NOT ACTED MERELY ON THE BASIS OF INFORMATION BUT HE HAS EXAM INED THE RECORDS OF THE ASSESSEE AND GIVEN AN OBSERVATION IN THE REASONS RECORDED ITSELF THAT THESE DRAFTS WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE IN THE PRESENT YEAR BUT NO INCOME ON ACCOUNT OF CAPITAL INCOME HAS BEEN DISCLOSED BY THE ASSESSEE. HENCE, IN THE LIGHT OF THESE SPECIFIC FACTS AND FINDINGS, THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. 7. SIMILARLY THE SECOND JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF INSECTICIDES (INDIA) LTD. (SUPRA) IS A LSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE , IT WAS HELD THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER AND NO SUBSTITUTION OR DELETION WAS PERMISSIBLE. THERE IS NO QUARREL ON THIS ASPECT BUT IN THE PRESENT CASE, THE REASONS RECORDED BY ASSESSING OFFICER, AS REPRODUCED ABOVE, ARE VERY SPECIFIC AND ARE AFTER DUE APPLICATION OF MIND BY THE ASSESSING OFFICER AND THEREFORE, NO ADDITION OR DELETION IS REQUIRED IN THE REASONS TO H OLD THAT PROPER REASONS WERE RECORDED BY THE ASSESSING OFFICER FOR INITIATING THE PROCEEDINGS U/S 147 OF THE ACT AND 9 THEREFORE, THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 8. THE NEXT CONTENTION RAISED BY LEARNED A.R. OF THE ASSESSEE IS THAT AS PER THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS INCOME - TAX OFFICER [2003] 259 ITR 19 (SC) AND AS PER THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF ALLANA COLD STORAGE LTD. VS INCOME - TAX OFFICER [2006] 287 ITR 1 (BOM) , THE PRESENT ASSESSMENT IS NOT VALID BECAUSE THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER AGAINST THE VALIDITY OF REASSESSMENT PROCEEDINGS W ERE NOT SEPARATELY DISPOSED OF BY THE ASSESSING OFFICER. IN THIS REGARD, WE FIND THAT IT IS NOTED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT ON 14/08/2007, THE ASSESSEE FILED LETTER DATED NIL CH ALLENGING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS AND VIDE ORDER SHEET ENTRY DATED 14/08/2007, THE ASSESSEE WAS TOLD THAT IN VIEW OF THE REASONS RECORDED, THE ASSESSMENT PROCEEDINGS WAS VALIDLY INITIATED. THESE FACTS GO TO SHOW THAT SEPARAT E ORDER REGARDING THE OBJECTIONS OF THE ASSESSEE IN RESPECT OF VALIDITY OF REASSESSMENT PROCEEDINGS WAS PASSED BY THE ASSESSING OFFICER IN ORDER SHEET ON 14/08/2007 AND THE SAME WAS BROUGHT TO THE NOTICE OF THE ASSESSEE ALSO AND THEREFORE, THIS OBJECTION O F LEARNED A.R. OF THE ASSESSEE IS FACTUALLY INCORRECT THAT THE OBJECTIONS OF THE ASSESSEE REGARDING VALIDITY OF REASSESSMENT PROCEEDINGS WERE NOT SEPARATELY DISPOSED OF. THE ASSESSING OFFICER HAS ALSO NOTED ON PAGE NO. 8 OF THE ASSESSMENT ORDER THAT THIS ORDER SHEET ENTRY DATED 14/08/2007 WAS DULY NOTED BY LEARNED A.R. OF THE ASSESSEE. UNDER THESE FACTS, THESE JUDGMENTS ARE NOT APPLICABLE IN THE PRESENT CASE. 9. THERE IS NO OTHER OBJECTION OF THE ASSESSEE REGARDING VALIDITY OF THE REASSESSMENT PROCEEDING S AND HENCE, ON THIS ISSUE , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 10 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 11. NOW WE TAKE UP THE APPEAL OF THE REVENUE I.E. I.T.A. NO.255/LKW/2010 FOR ASSESSMENT YEAR 2002 - 03. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL IN FAVOUR OF THE ASSESSEE AND DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION AND TREAT THE AMOUNT OF RS. 32,40,265/ - AS LONG TERM CAPITAL GAIN INSTEAD OF INCOME FROM UNDISCLOSED SOURCES ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES WITHOUT APPRECIATING THE FACTS OF THE CASE AND MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2. THE CIT(A) HAS FAILE D TO APPRECIATE THAT THE ASSESSMENT ORDER WAS PASSED U/S 144/147 OF THE INCOME TAX ACT AS THE ASSESSEE FAILED TO ATTEND BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS CONSIDERED ADDITIONAL EVIDENCES FROM THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE ASSESS ING OFFICER AS PROVIDED UNDER RULE 46A OF THE INCOME TAX RULES, 1962. 12. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 13. HE ALSO SUBMITTED THAT PARA 15 TO 20 OF THE WRITTEN SUBMISSIONS ARE RELEVANT FOR DECIDING THE APPEAL OF THE REVENUE AND HENCE , THE SAME ARE REPRODUCED BELOW: 15. THE REVENUE FELT AGGRIEVED BY DELETION OF ADDITION OF RS.32,40,265/ - , AS HAD BEEN MADE IN THE ASSESSMENT UNDER THE HEAD 'ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BANK' AND ADDITION OF ANOTHER SUM OF RS.17,835/ - AS HAD BEEN MADE ON ACCOUNT OF 'BANK CHARGES'. THE ASSESSEE'S CONTENTION WAS THAT THE DEPOSITS OF SUMS AGGREGATING RS.32,40,265/ - IN HIS BANK ACCOUNT WAS ON ACCOUNT OF SALE OF 1 LAC EQUITY SHARES IN B.T. TECHNET LTD. AS HAD BEEN ACQUIRED BY HIM BY WAY OF ALLOTMENT OUT OF PREFERENTIAL ISSUE MADE BY THE SAID COMPANY 11 ON 04.10.1999 (RELEVANT TO THE ASSESSMENT YEAR 2000 - 01) WHEREIN THE SAME STOOD DULY DISCLOSED ALSO IN THE STATEMENT OF 'INCOMING AND OUTGOING' FOR THAT YEAR, ACCOMPANYING THE 'RETURN' ITSELF. THE ASSESSING OFFICER DISPUTED THE SAME MAINLY BY RELYING ON THE STATEMENTS OF SRI MUKESH KUMAR GUPTA AND HIS WIFE SMT. SUSHILA GUPTA. COPIES OF THE STATE MENT OF INCOMING AND OUTGOING FOR THE ASSESSMENT YEARS 2000 - 01 & 2001 - 02 ARE APPEARING AT PAGES 34 TO 38 AND 55 TO 61 RESPECTIVELY OF THE PAPER BOOK AND THE STATEMENTS APPEARING AT PAGES 64 TO 67 AND 68 TO 77. THE ASSESSEE REPEATEDLY REQUESTED THE ASSES SING OFFICER FOR PRODUCTION OF SRI MUKESH KUMAR GUPTA AND SMT. SUSHILA GUPTA FOR 'CROSS EXAMINATION' WHOSE STATEMENTS MADE BEFORE THE INVESTIGATION WING (WHICH ARE CULPABLE IN NATURE) WERE MADE THE BASIS OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF TH E ACT IN THE CASE OF THE APPELLANT VIDE LETTERS DATED 14.08.2007 AND 10.09.2007 (COPIES APPEARING AT PAGES 83 TO 86 OF THE PAPER BOOK). HOWEVER, THE SAME WAS NOT DONE AND ADVERSE INFERENCE HAS BEEN DRAWN AGAINST THE APPELLANT. 16. IN SUPPORT OF HIS CLAIM OF PURCHASE AND SALE OF SHARES VARIOUS DOCUMENTS HAD BEEN FILED BEFORE THE ASSESSING OFFICER AND LATER ON BEFORE THE CIT(A) ALSO, COPIES OF WHICH MADE PART OF THE PAPER BOOK AS PER PARTICULARS GIVEN HEREIN BELOW: - SI. NO. PARTICULARS PAGE NO. OF THE PAPER BOOK FILED BEFORE THE HON'BLE ITAT IN THE AFOREMENTIONED APPEAL 1. COPY OF LETTER OF ALLOTMENT AND DELIVERY OF SHARES BT TECHNET LIMITED FILED ALONGWITH THE RETURN FOR THE ASSESSMENT YEAR 2001 - 02 39 - 40 2. COPY OF CHART SHOWING DETAILS OF SHARES SOLD THROUGH VARIOUS BROKERS DURING THE ASSESSMENT YEAR 2001 - 02 41 3. COPY OF CONTRACT NOTE/ SALE BILL FOR SALE OF SHARES OF BT TECHNET LTD. FILED ALONG WITH THE RETURN FOR THE ASSESSMENT YEAR 2001 - 02 42 - 46 4. COPY OF STATEMENT/ CONFIRMATION OF ACCOUNT BY THE BROKERS M/S DILIP KUMAR BHANDARI AND M/S BHUTANI & ASSOCIATES. 47 - 51 5. COPY OF CORRESPONDING BANK STATEMENT. 52 - 54 12 17. IN APPEAL NOT ONLY COPIES OF THE SAID DOCUMENTS HAD BEEN PLACED BEFORE THE CIT(A) IT WAS ALSO SUBMITTED THAT ASSESSMENT MADE ON THE BASIS OF STATEMENTS SAID TO BE OF CULPABLE NATURE AS GIVEN BY THE OTHER PARTIES, WITHOUT GIVING THE APPELLANT AN OPPORTUNITY OF CROSS EXAMINING THEM, IS VITIATED AND IN SUPPORT OF THE SAID CONTENTION VARIOUS D ECISIONS WERE REFERRED TO AND RELIED UPON, WHICH INCLUDE THE FOLLOWING JUDGMENTS: - ( I ) KISHINCHAND CHELLARAM VS. CIT REPORTED IN (1980) 125 ITR PAGE 713 (SC) ( II ) CIT VS. DHARAM PAL PREM CHAND LTD. REPORTED IN (2007) 295 ITR 105 ( III ) CIT VS. PRADEEP KUMAR GUPTA REPORTED IN (2008) 303 ITR 95 (DEL) APPEARING AT PAGE 27A TO 27C OF THIS COMPILATION. 18. IN THE PROCEEDINGS BEFORE YOUR HONOURS, RELIANCE IS FURTHER PLACED ON THE DECISION OF SPECIAL BENCH (HYDERABAD) OF THE HON'BLE IT AT IN THE CASE OF COLONIZER VS. ACIT REPORTED IN 41 ITD 57 WHEREIN THE HON'BLE MEMBERS HELD AS UNDER: - 'IN REGARD TO THE SECOND POINT OF DIFFERENCE, TWO SEGMENTS OF IT EXISTED. THE FIRST SEGMENT WAS AS TO WHETHER THE ADDITIONS MADE IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE SHOULD BE SET ASIDE AS VOID AB INITIO. THE SECOND SEGMENT WAS AS TO WHETHER T HE ADDITION SHOULD BE DELETED OR SHOULD THE CASE BE RESTORED TO THE 1TO WITH A DIRECTION FOR RE - DOING. THE RULES OF NATURAL JUSTICE OPERATE AS IMPLIED MANDATORY REQUIREMENT, NON - OBSERVANCE OF WHICH AMOUNTS TO ARBITRARINESS AND DISCRIMINATION. THE PRINCIPLE S OF NATURAL JUSTICE HAVE BEEN ELEVATED TO THE STATUS OF FUNDAMENTAL RIGHTS GUARANTEED IN THE CONSTITUTION AS IS EVIDENT FROM THE DECISION OF THE FULL BENCH OF THE SUPREME COURT IN THE CASE OF UNION OF INDIA V. TULSIRAM PATEL AIR 1985 SC 1416 AT P.1416, HO LDING THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE THUS COME TO BE RECOGNIZED AS BEING A PART OF THE GUARANTEE CONTAINED IN ARTICLE 14 OF THE CONSTITUTION BECAUSE OF THE NEW AND DYNAMIC INTERPRETATION GIVEN BY THE SUPREME COURT TO THE CONCEPT OF EQUALITY WH ICH IS THE SUBJECT MATTER OF THAT 13 ARTICLE AND THAT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY A STATE ACTION IS A VIOLATION OF ARTICLE 14. IN FACT, THE PRINCIPLES OF NATURAL JUSTICE, IN THE REALM OF LIFE AND LIBERTY, WOULD IPSO FACTO EVEN BE READ INTO ARTICLE 21 BECAUSE ANY PROCEDURE WHICH AFFECTED LIFE OR LIBERTY HAD TO BE A JUST, FAIR AND REASONABLE PROCEDURE WHICH NECESSARILY MEANT THE OBSERVANCE OF THE PRINCIPLES OF NATURAL JUSTICE. THAT IS WHY THESE PRINCIPLES HAVE BEEN CALLED AS PART OF THE UNIVER SAL LAW, AS PART OF THE RULE OF LAW AND HAVE ALSO BEEN TERMED AS FAIR PLAY IN ACTION. AU D I ALTERAM P O RTE M IS ONE OF THE FUNDAMENTAL PRINCIPLES OF NATURAL JUSTICE. A QUASI - JUDICIAL OR ADMINISTRATIVE DECISION RENDERED OR AN ORDER MADE IN VIOLATION OF THE RU LE OF AUDI ALTERAM P O RTEM IS NULL AND VOID AND THE ORDER MADE IN SUCH A CASE CAN BE STRUCK DOWN AS INVALID ON THAT SCORE ALONE - MANEKA GANDHI V UNION OF INDIA AIR 1978 SC 597, GANGADHARAN FILIAL V AGED (1980) 126 ITR 256 AT PP 365 TO 367 (KER). IN OTHER W ORDS, THE ORDER WHICH INFRINGES THE FUNDAMENTAL PRINCIPLE, PASSED IN VIOLATION OF AUDI ALTERAM PARTEM RULE, IS A NULLITY WHEN A COMPETENT COURT OF AUTHORITY HOLD SUCH AN ORDER AS INVALID OR SETS IT ASIDE, THE IMPUGNED ORDER BECOMES NULL AND VOID - NOWABKHA N ABBASKHAN V STATE OF GUJARAT AIR 1974 AT P 1479. IN THE LIGHT OF THESE DECISIONS, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE HAD TO BE SET ASIDE AS VOID ONLY INSOFAR AS THE ADDITIONS BY WAY OF CASH CREDI TS ALONE WERE CONCERNED, WHICH WERE SEPARABLE FROM THE OTHER ADDITIONS IN THE ORDER THAT WERE NOT CHALLENGED . ' 19. IN VIEW OF THE DOCUMENTARY EVIDENCES PLACED ON RECORD, FOR PURCHASE OF SHARES (WHICH WERE OUT OF PREFERENTIAL ALLOTMENT OF SHARES IN THE COMPANY CONCERN) AND SALES THEREOF AS SUPPORTED BY THE CONTRACT NOTES ISSUED BY THE BROKERS WHO ARE DULY REGISTERED WITH STOCK EXCHANGE AND DECISION OF VARIOUS BENCHES OF IT AT AS ALSO OF THE HON'BLE HIGH COURT THE CIT(A) HAS HELD THAT DEPOSIT IN THE BANK ACCOUNT OF THE APPELLANT WAS ON ACCOUNT OF SALE OF SHARES (THAT HAD BEEN ACQUIRED OUT OF PREFERENTIAL ALLOTMENT) AND NO ADDITION ON THAT SCORE 14 COULD BE MADE. THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A) EITHER ON FACTS OR IN LAW, PARTICULARLY FOR THE REASON THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER, WHICH COULD GO TO REBUT THE PURCHASE OF SHARES (OUT OF PREFERENTIAL ALLOTMENT) AND SALE OF SHARES, CONSIDERATION OF WHICH HAD BEEN RECEIVED THROUGH BANKING CHANNEL AND FROM THE B ROKERS DULY REGISTERED WITH THE STOCK EXCHANGE. IN SUPPORT OF ITS CONTENTION ON MERITS THE ASSESSEE HAD PLACED ON RECORD A COMPILATION OF CASE LAWS ON 5.1.2011 AS PER FOLLOWING INDEX: - SI. NO. PARTICULARS PAGE NO. 1 COPY OF ORDER DATED 29 TH JUNE 2007 IN THE CASE OF ITO VS. PRAMOD KUMAR REPORTED IN 2008 (11) MTC 323 (TRIB) 1 - 6 2 COPY OF ITAT ORDER, LUCKNOW BENCH, LUCKNOW DATED 23.2.2010 IN ITA NO.662/LUC/2009 AND OTHERS IN THE CASE OF DY. CIT - 1, KANPUR VS. M/S PUSHPA KAYA, KANPUR. 7 - 32 3 COPY OF DELHI HIGH COURT JUDGMENT DATED 23.5.2005 IN THE CASE OF CIT VS. ATUL JAIN; SMT VINITA JAIN REPORTED IN (2008) 299 ITR 383 (DELHI) 33 - 38 4 COPY OF PUNJAB & HARYANA HIGH COURT JUDGMENT DATED 1.2.2007 IN THE CASE OF CIT VS. ANUPAM KAPOOR REPORTED IN (2008) 299 ITR 179 (P&H) 39 - 43 5 XXXX XXXX XXXX XXXX 6 COPY OF ITAT ORDER, LUCKNOW BENCH, LUCKNOW DATED 29.09.2010 IN ITA NO.508/LUC/2010 IN THE CASE OF ITO WARD 6(2) KANPUR VS. M/S RICH CAPITAL & FINANCIAL SERVICES LTD., KANPUR 50 - 61 AND UMPTEEN NUMBER OF CASE LAWS AS HAVE BEEN REFERRED TO THEREIN. IN ADDITION, FOLLOWING CASE LAWS ARE ALSO REFERRED TO AND RELIED UPON. ( I ) ASHOK KUMAR ARORA VS. ITO (ITA NO.84 & 85/ALLD/2013 PASSED BY ALLAHABAD BENCH OF THE 15 HON'BLE ITAT DATED 13.5.2013, APPEARING AT PAGES 28 TO 41 OF THIS COMPILATION); ( II ) ASHOK KUMAR JALAN VS. ACIT (ITA NO.310/ALLD/2014 PASSED BY ALLAHABAD BENCH OF THE HON'BLE ITAT DATED 09.7.2014, APPEARING AT PAGES 42 TO 71 OF THIS COM PILATION); ( III ) ACIT VS. RAM PRAKASH GARG (IN ITA NO.237/AGRA/LL PASSED BY AGRA BENCH OF THE HON'BLE ITAT DATED 18.1.2013, APPEARING AT PAGES 72 TO 80 OF THIS COMPILATION) ( IV ) CIT VS. NEERAJ KUMAR JAIN (ITA NO.295 OF 2010 PASSED BY HON'BLE ALLAHABAD HIGH COURT VIDE JUDGMENT AND ORDER DATED 02.01.2013, APPEARING AT PAGES 81 TO 82 OF THIS COMPILATION); ( V ) CIT VS. UDIT NARAIN AGARWAL (ITA NO.560 OF 2009 PASSED BY HON'BLE ALLAHABAD HIGH COURT VIDE JUDGMENT AND ORDER DATED 12.12.2012, APPEARING AT PAGES 83 TO 87 OF THIS COMPILATION); ( VI ) CIT VS. SHYAM SUNDER AGARWAL (ITA NO.533 OF 2009 PASSED BY HON'BLE ALLAHABAD HIGH COURT VIDE JUDGMENT AND ORDER DATED 29.11.2012, APPEARING AT PAGES 88 TO 89 OF THIS COMPILATION); ( VII ) CIT VS. SUBODH KUMAR JAIN (ITA NO.474 OF 2009 PASSED BY HON'B LE ALLAHABAD HIGH COURT VIDE JUDGMENT AND ORDER DATED 19.11.2012, APPEARING AT PAGES 90 TO 91 OF THIS COMPILATION); ( VIII ) CIT VS. SMT. JAMNADEVI AGARWAL REPORTED IN (2010) 328 ITR 656 (BOM.), APPEARING AT PAGES 92 TO 97 OF THIS COMPILATION). 20. IN VIEW OF THE S UBMISSIONS MADE ABOVE, IT IS RESPECTFULLY PRAYED THAT YOUR HONOURS BE PLEASED TO UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE REVENUE'S APPEAL. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN PARA NO. 4 OF THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 144 READ WITH SECTION 142(1) OF THE ACT ON 27/08/2007,, THE ASSESSING OFFICER SPECIFICALLY ASKED THE ASSESSEE TO FURNISH DISTINCTIVE NUMBERS OF THE SHARE CERTIFICATES PURCHASED AND SOLD AND NAME AND ADDRESS OF THE COMPANY. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO FURNISH COPY OF TRANSFER MEMO. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO FURNISH THE NAME AND ADDRESS 16 OF THE PERSONS FROM WHOM THE SHARES WERE PURCHASED AND SOLD. THE ASSESS ING OFFICER ALSO ASKED WHETHER THE SHARES WERE GOT TRANSFERRED IN THE ASSESSEES NAME AFTER PURCHASE. THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF PAYMENTS MADE ALONG WITH THE COPY OF BANK ACCOUNT IN SUPPORT THEREOF. THE ASSESS ING OFFICER ALSO ASKED TO FURNISH THE QUOTED RATE OF SHARES ON THE DATE OF PURCHASE AND SALE. NO COMPLIANCE WAS MADE BY THE ASSESSEE FOR THESE SPECIFIC REQUIREMENTS OF THE ASSESSING OFFICER. IT IS ALSO RELEVANT TO MENTION HERE THAT IT WAS CATEGORICALLY A DMITTED BY SHRI MUKESH KUMAR GUPTA AND HIS WIFE THAT LICENCE OF THE COMPANY M/S C.M.S. SECURITIES FOR MEMBERSHIP WAS CANCELLED IN 1998 AND THEREAFTER , THEY WERE ENGAGED IN GIVING ACCOMMODATION ENTRIES FOR PURCHASE AND SALE OF SHARES BY CHARGING COMMISSION @0.25%. NOW IN THE LIGHT OF THESE FACTS, WE EXAMINE THE DECISION OF CIT(A) ON THIS ISSUE. THE CIT(A) HAS DECIDED THE PRESENT ISSUE AS PER PARA 12 TO 19 OF HIS ORDER AND THESE PARAS ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 12. THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONTENTION OF THE APPELLANT SHOW THAT ( I ) SHARES WHICH WERE SUBJECT MATTER OF TRANSACTIO N OF CAPITAL GAIN, WERE ACQUIRED BY THE APPELLANT BY WAY OF ALLOTMENT OUT O F PREFERENTIAL ISSUED MADE BY THE COMPANY M/S B.T. TECHNET ON 4.10.1999 BY ORIGINAL SUBSCRIPTION. ( II ) THE TRANSACTION OF SALE OF S HARES WAS MADE THROUGH DIFFERENT BROKERS AND M/S CMS SECURITIES LTD. HAPPENS TO BE ONE OF SUCH BROKERS. THE TRANSACTION OF SALE IS SUPPORTED BY CONTRACT NOTE/SALE BILL CORRESPONDING BANK STAT EMENT AND CONFIRMATION OF ACCOUNT BY BROKER - 3 BROKERS IN THIS CASE . ( III ) ALL THE TRANSACTIONS OF SALE OF SHARES HAS TAKEN PLACE THROUGH BANKING CHANNELS. 17 ( IV ) WHILE COMPLETING THE ASSESSMENT, THE AO HAS RELIED ON THE STATEMENT OF SHRI MUKESH KUMAR GUPTA, THE DIREC TOR IN M/S ANU SECURITIES LTD., ONE OF THE ASSOCIATE COMPANIES M/S CMS SECURITIES LTD. THROUGH WHICH SHARES WERE SOLD. THE COPY OF THE STATEMENT OF MR. MUKESH KUMAR GUPTA HAS BEEN FILED IN PAPER BOOK BEFORE ME (PAGE 29). FROM THE SAID STATEMENT OF MR. MUK ESH KUMAR GUPTA. IT IS CLEAR THAT NO SPECIFIC TRANSACTION RELATING TO THE APPELLANT HAS BEEN STATED TO BE CARRIED OUT IN EXCHANGE OF ROTATION OF THE FUNDS OF THE APPELLANT. IT IS ALSO STATED BY MR. GUPTA IN THE SAID STATEMENT THAT 'MAINE APKE DWARA DIKHAI GAI LIST KO DEKHA AUR USKI APNE A/C NO. 81 SE MILAN KIYA. IS SAMBANDH ME MUJHE YEH KAHA NAHI KI IN DD KE TITHI VA AMOUNT TO MILAN KARNE HAI PARANTU JAHAN TAQ VYAKTIYO KE NAM OF STATION KA SWAL HAI YEH MAI ABHI BATA NAHI PAWOONGA KINTU MERE APNE BANK SE MAGAYA HAI VAH SAHI HI HOGA. ' (IN ROMAN SCRIPT) 13. IT HAS FURTHER BEEN STATED THAT 'YEH KI JO BHI PARTI MERE PAS CASH LEKHAR DD AYI USNE MUJHE YAHA BATAYA KI MAINE KHARIDNE VA BECHNE SAUDA KISI ANYA VYAKTI SE SAMAJHKAR LIYA HAI CHUNKI MUJHE LIKHA KE I.TAX DEPARTMENT HAMARE TRANSACTIONKO GENUINE NAHI MANEGA ATAH AAP RHUJHECASH KE DADLE ME KARKE APNDBILL DE DEJIYE. CHUNKI MUJHE UNKI VISHWASHNIYA KDBHI SELLER BUYER DONO KI BATEIN HI KAR RAHI HAI TO MUJHE ISME KYA APATTI HO SAKTI - HAI . APKE DWARA LIKHAI GAI PURI LIST KO MANE DEKHA HI UNME IN LONGO KE NAM HAI JAISA KI MAINE PAHLE KAH CHUKA HOON KI NA TO MAINE SHARE CERTIFICATES DEKHE HAI AUR NAHI HAME KOI SHARE TRANSFER DEED HI MILL THI. NAHI MUJHE KISI BUYER SE SAMPARK KARNA PADA THA. AD HIKANSH MAMLO ME ANIL BANSAL KE ADMI KE SATH ATI THI YA ANIL BANSAL KA ADMI SWYAM ATA THA. LINE LOGO ME SE MUJHE KISI KA NAM DHYAN ME NAHI H& KINTU SHARE KI MAINE VASTAVIK KHARID KARKE 18 NAHI KI HAI KEWAL MUJHE 0.25% COMMISSION HIPRAPT HUA HAI'. 14. FROM TH E ABOVE EXTRACTS, IT SEEMS THAT THE ROLE OF MR. GUPTA AND CMS SECURITIES LTD. IS CONFINED TO CHARGING COMMISSION ON THE TRANSACTIONS WHERE BUYERS AND SELLERS OF THE SHARES WERE NOT TRANSACTING WITH SHRI GUPTA AND CMS SECURITIES LTD. HOWEVER, THE STATEMENT OF MR. GUPTA FOR CMS SECURITIES LTD. (BROKER) DOES NOT RULE OUT THE POSSIBILITY TRANSACTION OF SALE AND PURCHASE OF SHARE BY INVOLVED PERSONS WHO WERE KEEN TO EFFECT THE TRANSACTION THROUGH CMS SECURITIES LTD. FOR CREDENTIALS OF THE TRANSACTION. IN ANY CAS E, THE TRANSACTION OF SHARES CANNOT BE RULED OUT IN A CASE WHERE SUCH SHARES ARE EXISTING AS A MATTER OF FACT, WHICH ARE ON RECORD AND WHICH ARE STATED TO BE SOLD SUBSEQUENTLY. EXISTENCE OF THE SCRIPT/SHARES OF M/S B.T. TECHNET LTD. IS NOT DOUBTED BY EITHE R AO OR ELSE, AND IT IS FULLY PROVED THAT SUCH SHARES WERE IN THE OWNERSHIP OF THE APPELLANT AS PER THE BALANCE SHEET FROM EARLIER YEARS. THE SALE OF SUCH SCRIPS TO THE SUBSEQUENT BUYER FOR THE SALE AMOUNT IS AN IMPORTANT EVIDENCE IN RESPECT OF SALE TRANSA CTION OF THESE SHARES. THE SUBSEQUENT OWNER OF THESE SHARES OF A LIMITED COMPANY COULD HAVE BEEN EASILY VERIFIED FOR ASCERTAINING AS TO WHETHER THEY HAD BEEN ACTUALLY PURCHASED BY SUCH BUYERS OR NOT. NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD WHICH COULD SHOW THAT THE SALE AND PURCHASE OF SHARES/TRANSACTION OF SHARES DID NOT TAKE PLACE AS CLAIMED BY THE APPELLANT. EVEN IF ASSUMING THAT MONEY OF THE SELLER AND BUYER BOTH HAS PASSED THROUGH THE ACCOUNT OF CMS SECURITIES LTD., (BROKER), IT DOES NOT LEAD TO AN Y CONCLUSION THAT THE TRANSACTION OF SALE AND PURCHASE OF SHARE DID NOT TAKE PLACE AS RECORDED IN THE BOOKS OF THE APPELLANT. 15. THE ASSESSMENT HAS BEEN COMPLETED BY THE AO U/S 144 OF THE I.T. ACT WHERE HE WAS DUTY BOUND TO CONSIDER THE RELEVANT MATERIAL IN THIS BEHALF. SUMMARY REJECTION OF EXPLANATIONS OF THE APPELLANT AND BRINGING THE CASE OF APPELLANT IN THE AMBIT OF BOGUS TRANSACTION OF THE CAPITAL GAINS OF CMS SECURITIES LTD., WITHOUT SPECIFIC EVIDENCE AND MATERIAL RELATING TO THE APPELLANT WAS NOT J USTIFIED. IT IS ALSO TRUE THAT THE CROSS EXAMINATION OF MR. GUPTA OF CMS SECURITIES LTD. AND THE RELEVANT BASIS FOR QUESTIONING THE TRANSACTION WAS NOT OFFERED TO THE APPELLANT AT THE ASSESSMENT STAGE. EVEN IF, IT WAS NOT REQUIRED IN AN ORDER U/S 144 TO PR OVIDE OPPORTUNITY TO 19 THE APPELLANT, THE AO WAS REQUIRED AND DUTY BOUND TO SATISFY HIMSELF SEPARATELY. 16. LOOKING AT THE GENERAL, VAGUE AND AMBIGUOUS MATERIAL RELIED BY AO IN THIS BEHALF, AS NOTED ABOVE, THE ARGUMENTS OF THE APPELLANT ON THE VARIOUS ISSU ES OF THE ASSESSMENT MADE, (AS ENUMERATED ABOVE FROM POINT NO. 1 TO 26 ABOVE) HAVE MERIT WITH REFERENCE TO THE ORDER OF AS SESS MENT PASSED BY THE AO AND FACTS AND CIRCUMSTANCES OF THIS CASE. 17. FINALLY, RELYING ON THE DECISIONS IN VARIOUS CASES CITED ABOV E, I FIND THAT THE ASSESSMENT MADE BY AO IS ERRONEOUS AND BASED ON PRESUMPTION. IT IS ALSO NOTICED THAT THE AO HAS MADE THE ADDITION OF RS.32,40,265 / - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT U/S 69 OF THE I.T. ACT. SECTION 69 APPLIES ONLY 'WHERE IN THE FINANCIAL V EAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE N ATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR'. 18. I FIND NONE OF ELEMENTS OF IN THE ABOVE CASE WHERE SECTION 69 OF THE I.T. ACT IS APPLICABLE. IF AO MEANT THE AMOUNT OF INVESTMENT IN THE ALLEGED SHARES OF M/S B.T. TECHNET LTD., THE SAME WAS REQUIRED TO BE CONSIDERED IN ASSESSMENT YEAR 2000 - 01 WHEN SHARES WERE ACQUIRED, AS ORIGINAL, SUBSCRIPTION. IF AO MEANS TO CONSIDER THE CREDITS OF THE APPELLANT, IT WAS SECTION 68 WHICH COULD HAVE BEEN CONSIDERED. THE WHOLE DISCUSSION OF THE AO MADE IN THE ASSESSMENT ORDER DOES NOT LEAD TO THE CONCLUSION THAT THE RECEIPTS OF THE APPELL ANT ARE UNEXPLAINED. FINALLY, IF AO WANTED TO TREAT THE TRANSACTION OF SALE AND PURCHASE OF SHARES AS BOGUS, IT WAS NECESSARY THAT THE SELLER AND BUYER BOTH SHOULD HAVE BEEN INQUIRED AND VERIFIED AND DISCREPANCY AT THE END OF THE BROKER SHOULD HAVE BEEN LI NKED TO THE TRANSACTION OF THE APPELLANT. I FIND THAT THERE IS NO NEXUS OF THE MATERIAL AND DOCUMENTS NARRATED BY AO TO THE CONCLUSION DRAWN BY AO THAT THE SALE TRANSACTION OF SHARES WAS BOGUS. THE DISCREPANCIES AND MIS - UTILIZATION OF THE ACCOUNT OF THE M/ S CMS, SECURITIES 20 LTD. IN ITSELF DOES NOT DISPROVE THE TRANSACTION OF THE SALE AND PURCHASE OF THE SHARES AS ARE APPEARING IN THE BOOKS OF ACCOUNT AND RECORDS OF THE APPELLANT. THERE IS NO INDICATION THAT ANY AMOUNTS OF THE APPELLANT HAVE BEEN ROUTED OR UT ILIZED FOR THE PURPOSE OF DISGUISED PURCHASE OF THESE SHARES FOR GENERATING CAPITAL GAINS FOR HIS CREDITS DURING THE YEAR. THE ONUS OF DISPROVING THE DECLARED TRANSACTION OF CAPITAL GAINS HAS NOT BEEN DISCHARGED AT ALL BY AO AS IT WAS ON HIM TO DISPROVE TH E TRANSACTION. 19. FROM THE ABOVE, IT IS CLEAR THAT THE ADDITION MADE BY AO VIDE ORDER U/S 144 OF THE I.T. ACT IS ERRONEOUS, WITHOUT BASIS BY IGNORING THE MATERIAL AND EXPLANATION AVAILABLE ON THE RECORD IN RESPECT OF RETURN OF INCOME OF THE APPELLANT ORI GINALLY FILED ON 9.8.2002. IN VIEW OF THESE DISCUSSIONS, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.32,40,265 / - . THUS, GROUNDS NO. 2, 4, 5, 6 AND 7 OF APPEAL ARE ALLOWED. 14.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT IT IS STATED BY CIT(A) IN PARA 12(II) OF HIS ORDER AS REPRODUCED ABOVE THAT THE TRANSACTION OF SALE OF SHARES WAS MADE THROUGH DIFFERENT BROKERS AND M/S CMS SECURITIES LTD. HAPPENS TO BE ONE OF SU CH BROKERS. THE TRANSACTION OF SALE IS SUPPORTED BY CONTRACT NOTE/SALE BILL CORRESPONDING BANK STATEMENT AND CONFIRMATION OF ACCOUNT BY BROKER - 3 BROKERS IN THIS CASE. WE FAIL TO UNDERSTAND THAT WITHOUT GIVING A F INDING THAT M/S CMS SECURITIES L TD. WAS S TILL BROKER INSPITE OF STATEMENT OF SHRI MUKESH KUMAR GUPTA THAT THE LICENCE OF M/S CMS SECURITIES WAS CANCELLED IN THE YEAR 1998, HOW THE CIT(A) CAN SAY THAT THE TRANSACTION OF SALE OF SHARES WAS MADE THROUGH BROKER. THERE IS NO MENTION IN THE ORDER OF C IT(A) THAT THE DISTINCTIVE NUMBERS OF THE SHARES PURCHASED AND SOLD WERE MADE AVAILABLE BEFORE HIM. IT IS STATED BY CIT(A) IN PARA 18 OF HIS ORDER THAT THE ALLEGED SHARES OF M/S B.T. TECHNET LTD. WERE PURCHASED BY THE ASSESSEE IN ASSESSMENT YEAR 2000 - 2001 BUT STILL HE HAS NOT MENTIONED THE DISTINCTIVE NUMBERS OF THE SHARES. IT IS ALSO NOT MENTIONED AS TO WHETHER THE SHARES WERE STANDING IN THE NAME OF THE ASSESSEE OR NOT. THE ADDRESS OF THE COMP ANY IS ALSO NOT 21 AVAILABLE IN THE ORDER OF CIT(A). SINCE THERE WAS NO COMPLIANCE MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAD NO OPTION BUT TO COMPLETE THE ASSESSMENT U/S 144, EVEN IF SOME NEW INFORMATION WAS MADE AVAILAB LE BEFORE THE CIT(A), THE CIT(A) WAS DUTY BOUND TO OBTAIN REMAND REPORT FROM THE ASSESSING OFFICER BUT NO REMAND REPORT HAS BEEN OBTAINED BY CIT(A). IT IS ALSO NOT COMING OUT AS TO WHETHER THE DELIVERY OF SHARES WAS GIVEN BY THE ASSESSEE AT THE TIME OF SA LE IN PHYSICAL FORM OR THROUGH DEMAT ACCOUNT. NO ENQUIRY WAS MADE FROM THE CONCERNED COMPANY AS TO WHETHER ANY SHARES WERE STANDING IN THE NAME OF THE ASSESSEE DURING ASSESSMENT YEAR 2000 - 01 TO PRESENT ASSESSMENT YEAR I.E. 2002 - 03 AND WHETHER THE SHARES W ERE TRANSFERRED IN SOME OTHER NAME AFTER THE DATE OF STATED SALE AND WHEN THE SHARES WERE SO TRANSFERRED AND IN WHOSE NAME. HENCE, WE FIND THAT EVEN BEFORE CIT(A) OR BEFORE US, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE FACTUM OF SHARES SOLD BY THE A SSESSEE. IT IS ALSO NOT COMING OUT THAT THE SHARES OF THIS COMPANY W ERE LISTED SHARE OR NOT AND WHAT WAS THE LISTED PRICE ON THE DATE OF PURCHASE AND SALE. 15. IN THE LIGHT OF THESE FACTS, AS DISCUSSED ABOVE, NOW WE EXAMINE THE VERACITY OF VARIOUS ARGUMENTS IN WRITTEN SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE. 16. ONE OF THE MAIN ARGUMENTS OF THE ASSESSEE IS THAT THE ASSESSING OFFICER HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE FOR CROSS EXAMINATION OF SHRI MUKESH KUMAR GUPTA AND SMT. SUSHI LA GUPTA. IN THIS REGARD, WE FIND THAT EVEN IF THE STATEMENT OF THESE PERSONS I.E. SHRI MUKESH KUMAR GUPTA AND HIS WIFE SMT. SUSHILA GUPTA ARE IGNORED THEN ALSO THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THIS AMOUNT WAS RECEIVED BY THE ASSESSEE FROM THESE PERSONS AGAINST SALE OF SHARES BECAUSE THE ASSESSEE HAS NEITHER PROVIDED THE DISTINCTIVE NUMBERS OF SHARES NOR 22 PROVIDED THE ADDRESS OF THE COMPANY IN WHICH SHARES ARE STATED TO BE ACQUIRED AND SOLD. THE MARKET PRICE OF SHARES ON THE DATE OF PURCHAS E AND SALE IS ALSO NOT PROVIDED. THE ADDRESS IS ALSO NOT PROVIDED. NO INFORMATION IS PROVIDED AS TO WHETHER THE SHARES WERE TRANSFERRED IN ANY OTHER NAME AFTER THE STATED DATE OF SALE OF SHARES AND SINCE THE ADDRESS OF THE COMPANY WAS NOT PROVIDED, THE A SSESSING OFFICER WAS NOT IN A POSITION TO GATHER THIS INFORMATION. WE ARE OF THE CONSIDERED OPINION THAT EVEN AFTER IGNORING THIS STATEMENT, THE ADDITION MADE BY THE ASSESSING OFFICER IS JUSTIFIED. REGARDING THE SALE OF SHARES, THE ONLY ARGUMENT IS THAT IT IS SUPPORTED BY CONTRACT NOTE AND BANK TRANSACTIONS. WHEN THE ASSESSEE IS NOT PROVIDING DETAILS OF DISTINCTIVE NUMBERS, MARKET RATE, ADDRESS OF THE CONCERNED COMPANY AND THE FACT OF TRANSFER HAVING PLACED IN THE RECORDS OF THE CONCERNED COMPANY AFTER T HE STATED DATE OF SALE, IT CANNOT BE SAID THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THIS AMOUNT WAS RECEIVED AGAINST SALE OF SHARES. IN THE LIGHT OF THESE FACTS WHERE THE ASSESSEE IS NOT ABLE TO ESTABLISH THE CLAIM THAT THIS AMOUNT WAS RECEIVED AG AINST SALE OF SHARES, VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE ARE NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. EVEN BEFORE US, THE ASSESSEE HAS FURNISHED THE CONTRACT NOTE BILL ETC. BUT THERE ALSO , THE DISTINCTIVE NUMBERS OF SHARES ARE NOT AVAILABLE. ON PAGE NO. 43 OF THE PAPER BOOK IS BILL OF PURCHASE OF SHARES DATED 09/02/2001 AND THERE IS SPECIFIC COLUMN ( D ISTINCTIVE NUMBERS), BUT NO SUCH NUMBERS ARE MENTIONED IN THE BILL. THIS BILL IS DATED 09/02/2001 FOR PURCHASE OF 25,000 SHARES AT RS.36,65,287.50. IN THE PAPER BOOK OF 89 PAGES, EVEN THE COPY OF CONTRACT NOTE ETC. FOR STATED SALE OF SHARES IN THE PRESENT YEAR ALONG WITH THE DISTINCTIVE NUMBER ETC. IS NOT AVAILABLE ALTHOUGH SUCH DOCUMENTS ARE AVAILABLE FOR ASSESSMENT YEAR 2001 - 02 ON PAGE NO. 39 TO 51 OF THE PAPER BOOK AND WE HAVE ALREADY MENTIONED THAT ON PAGE NO. 43 OF THE PAPER BOOK BEING BILL OF CMS SECURITIES, DISTINCTIVE NUMBERS ARE NOT MENTIONED AND THE COLUMN OF 23 DISTINCTIVE NUMBER IS LEFT BLANK. WHEN THE ASSESSEE IS NOT FU RNISHING ANY EVIDENCE BEFORE US ALSO REGARDING THE CONTRACT NOTE IN RESPECT OF STATED SALE OF SHARES ALONG WITH THE DISTINCTIVE NUMBERS ETC., THE ORDER OF CIT(A) IS NOT SUSTAINABLE WHEN SUCH DETAILS WERE NOT FURNISHED BEFORE THE AUTHORITIES BELOW ALSO. HE NCE, ON THIS ISSUE , WE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 17. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED. 18. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED AND THE APPEAL OF THE REVENUE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 9 /09/2014 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR