Sh. Ram Lubhaya, Jalandhar V. The Additional Commissioner of Income Tax, Jalandhar

ITA 269/ASR/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0568 (ITAT-AMRITSAR)
• Duration Of Justice: 6 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 21-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: J S BHASIN
• Keywords: Unexplained investment; Income from undisclosed sources; Share purchase agreement; Question of law
• Section: 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.269(ASR)/2010 ASSESSMENT YEAR: 2003-04 SH. RAM LUBHYA, C/O M/S S.V. ENGG. WORKS, SODAL SAIPUR ROAD, JALANDHAR. PAN:AADPL6866E VS. ADDL. CIT, RANGE-II JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KALIA (CA. ) & SH. J.S. BHASIN (ADV.) RESPONDENT BY: SH. A.N. MISRA (DR.) DATE OF HEARING: 25.05.2016 DATE OF PRONO UNCEMENT: 11.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF CIT(A), JALANDHAR, DATED 25.03.2010 FOR ASST. YEAR:2003-04. 2. THE ASSESSEE IS AGGRIEVED WITH THE ACTION OF LEA RNED CIT(A), BY WHICH HE HAD CONFIRMED AN ADDITION OF RS.8,47,900/- WHICH THE ASSESSING OFFICER HAD MADE U/S 69 OF THE ACT. 3. THE BRIEF FACTS AS NOTED IN THE ASSESSMENT ORDER ARE THAT ASSESSEE DECLARED A LONG TERM CAPITAL GAIN ON SALE OF SHARES OF M/S HUNT COMMERCIAL LTD. THE ASSESSEE WAS REQUIRED TO PRODUC E BROKERS M/S VIKAS HOLDING (P) LTD THROUGH WHOM SUCH SHARES WERE SOLD. THE ASSESSEE EXPRESSED HIS INABILITY TO COMPEL THE BROKER TO APP EAR BEFORE THE ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 2 ASSESSING OFFICER AND SUBMITTED THAT WHATEVER DOCUM ENTS WERE RECEIVED FROM BROKER HAS ALREADY BEEN FILED WITH ASSESSING O FFICER. HE FURTHER FILED A CERTIFICATE OF M/S VIKAS HOLDINGS (P) LTD. CERTIF YING THE PAYMENTS MADE TO ASSESSEE FOR 10,000/- SHARES OF M/S HUNT COMMERC IAL LTD. @ 95 PER SHARE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND THEREFORE, IN VIEW TO VERIFY THE GENUI NENESS OF TRANSACTION APPOINTED COMMISSION U/S 131 (1) (D) OF THE ACT IN THE NAME OF SH. V.K. ABROL, ITO, WARD 2(1), JALANDHAR. THE COMMISSION WA S REQUESTED TO VISIT THE PREMISES OF M/S VIKAS HOLDING PVT. LTD. AT DELH I AND TO MAKE SPOT INQUIRIES. MR. V.K. ABROL, ITO, WARD 2(1), JALANDHA R VISITED THE PREMISES OF BOTH M/S VIKAS HOLDING PVT. LTD. AND M/S HUNT CO MMERCIAL LTD. AND ALSO OBTAINED BANK ACCOUNTS OF THE DIFFERENT PARTIE S FROM WHERE MONEY WAS BEING TRANSFERRED TO THE ACCOUNT OF M/S VIKAS H OLDING LTD.. HE ALSO RECORDED THE STATEMENT OF SH. PARVEEN KUMAR, THE AU THORIZED SIGNATORY OF M/S VIKAS HOLDINGS PVT. LTD. ON COMPLETION OF EN QUIRY THE ASSESSING OFFICER SUBMITTED THE FOLLOWING REPORT. 'FROM THE STATEMENT OF SH. PARVEEN KUMAR, IT CAN BE EASILY CONCLUDED THAT KABRA FAMILY HAS FLOATED SO MANY COMPANIES OF WHICH THEIR FAMILY MEMBERS ARE THE DIRECTORS. MONEY IS BEING TRANSFERRED FROM ONE ACCO UNT TO ANOTHER ACCOUNT WHEREAS NEITHER OF THESE COMPANIES HAS BEEN ENGAGED IN ANY TYPE OF MANUFACTURING OR TRADING (BUSINESS) ACTIVITIES. FUR THER ENQUIRIES IF MADE IN THE CASE OF THIS FAMILY WOULD DEFINITELY RESULT INTO UN EARTHING OF BLACK MONEY TO A LARGE EXTENT. FURTHER THAT WITH THIS APPREHENSION I N MIND , SH. PARVEEN KUMAR WHO IS AUTHORISED SIGNATORY IN MOST OF THESE COMPAN IES, DOES NOT WANT TO COOPERATE AND TO AVOID TO PRODUCE THE BOOKS OF ACCO UNT OF THE COMPANY M/S. VIKAS HOLDING PVT. LTD. ON THE ONE HAND HE HAS STAT ED THAT THE SHARES OF M/S. ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 3 HUNT COMMERCIAL LIMITED WERE TRADED AT MAGHAD STOCK EXCHANGE WHEREAS ON THE OTHER HAND HE HAS STATED THAT HIS COMPANY DID N OT TRADE THE SHARES OF THIS COMPANY AT MAGHAD STOCK EXCHANGE NOR THESE SHARES W ERE TRADED THROUGH ANY OTHER MEMBER OF MAGHAD STOCK EXCHANGE. AT THE SAME TIME, HE HAS ISSUED ACCOUNT STATEMENT TO THE ABOVE PARTY FOR HAVING TRA DED SHARES OF M/S. HUNT COMMERCIAL LIMITED. AS SUCH THE EVIDENCE SO FAR COL LECTED SOES TO SUGGEST THAT THERE WAS.NOT MADE ANY TRADING OF SHARES OF M/S. HU NT COMMERCIAL LIMITED IN ANY OF THE STOCK EXCHANGE ANDTRADING OF SHARES HAS BEEN SHOWN BY THESE ASSESSEES TO CAPITALIZE THE MONEY AND TO AVOID PAYM ENT OF TAXES ON THEIR UNDISCLOSED INCOME. :M/S. ANKUR COMMERCIAL ADDRESS:1388, S.B. SARAFA MA RKET, CHANDNI :CHOWK, DELHI (THE PREMISES OF THIS COMPANY ARE JUS T ADJACENT TO THAT OF HUNT COMMERCIAL LIMITED) :AUTHORISED SIGNATORY OF BOTH THESE COMPANIES IS NO NE ELSE BUT PARVEEN KUMAR ONLY. HE IS ALSO AUTHORISED SIGNATORY OF VARIOUS CO MPANIES FROM WEHOSE ACCOUNTS, MONEY HAS BEEN TRANSFERRED TO THE ACCOUNT S OF M/S. VIKAS HOLDING PVT. LTD.' 5.1 REGARDING HIS VISIT TO M/S. HUNT COMMERCIAL LTD . 39/1386, S.B. SARAF MKT, 3RD FLOOR, DELHI, HE HAS REPORTED AS UNDER: 'ON VISIT AT THE ABOVE ADDRESS, IT WAS GATHERED THA T NO SUCH COMPANY IS OPERATIVE FROM THIS PLACE. THERE IS A ROOM AT 3RD FLOOR OF TH E BUILDING TAKEN ON RENT, BUT NO BODY VISITS THAT PLACE EXCEPT FOR AN EMPLOYEE (ATTE NDANT) WHO OFF AND ON COMES TO THAT PLACE AND SWEEPS THE FLOOR AND SITS THERE FOR 2/3 HOURS ONLY. FROM THE NEIGHBORS, IT WAS GATHERED THAT NO OFFICE IS BEING RUN FROM THERE. 4. THE ABOVE REPORT OF THE COMMISSION WAS CONFRONTE D TO THE ASSESSEE AND ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY THE MONEY RECEIVED AGAINST SALE OF 10,000/- SHARE SHOULD NOT BE TREATE D AS INCOME FROM UNDISCLOSED SOURCES. 5. THE ASSESSEE IN HIS REPLY STATED THAT HE NEVER C LAIMED TO HAVE TRADED HIS SHARES AT MAGADH STOCK EXCHANGE AND REIT ERATED THAT THE ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 4 EXISTENCE OF M/S HUNT COMMERCIAL LTD. WAS PROVED O N THE BASIS OF THE FACT THAT 100 SHARES WERE TRADED AT THE FLOOR OF TH E MAGADH STOCK EXCHANGE. THE ASSESSING OFFICER WAS NOT SATISFIED W ITH THE REPLY AND THEREFORE, HE MADE THE ADDITION AS INCOME FROM UNDI SCLOSED SOURCE. 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LEARN ED CIT(A) AND FILED VARIOUS SUBMISSIONS AND ALSO RELIED UPON THE CASE L AW OF SH. AVINASH CHANDER GHAI, HUF, IN ITA NO.73(ASR)/2006 FOR ASST. YEAR: 2002-03 DATED 22.2.2008. IT WAS ARGUED BEFORE LEARNED CIT(A) THAT FACTS OF T HE CASE LAW RELIED UPON BY HIM ARE PARI MATERIA TO THE FACTS OF THE PRESENT CASE AND THEREFORE, THE APPEAL OF THE ASSESSEE SHOU LD BE ALLOWED. THE LEARNED CIT(A) THOUGH ADMITTED THAT FACTS OF THE CA SE LAW RELIED UPON BY ASSESSEE WERE SOME WHAT SIMILAR TO THE PRESENT CASE BUT HE DISMISSED THE APPEAL OF THE ASSESSEE BY DISTINGUISHING THE FA CTS FROM THE CASE LAW OF SH. AVINASH CHANDER GHAI, (HUF) (SUPRA) BY HOLDI NG AS UNDER: 4.1 IN THE PRESENT CASE THE FACTS ARE SOMEWHAT SI MILAR TO THE CASE OF SH. ABHINASH CHANDER GHAI (HUF). THE ASSESSEE PURCHASED 10,000 SHARES ON 12-12-2001 ON DIRECT ALLOTMENT BY THE COMPANY. THE SALE OF SHARES WAS TO A REGISTERED STOCK BROKER ON ACTUAL DELIVERY BASIS AND PROCEEDS WERE RECEIVED THROUGH BANK DRAFTS. SH. V.K. ABROLS REPO RT HAS NOT FOUND ANYTHING DIRECTLY INCRIMINATING EVIDENCE AGAINST M/ S VIKAS HOLDING (P) LTD. THE BROKER WAS DULY FOUND AT HIS ADDRESS AND CONFIR MED THE TRANSACTION. THE FACT THAT THE SHARES OF HE COMPANY WERE TRADED ON THE MAGADH STOCK EXCHANGE ESTABLISHES THE .GENUINENESS OF THE COMPAN Y, AT LEAST IN THE RELEVANT PERIOD. THE SHARES WERE ISSUED BY THE COMP ANY TO THE ASSESSEE DIRECTLY ON PAYMENT OF APPLICATION MONEY AND THE CO MPANY /WAS LISTED ON THE MAUADH STOCK EXCHANGE. THE ASSESSEE SOLD THE SH ARES TO M/S VIKAS HOLDING (P) LTD AND RECEIVED THE PAYMENT FOR THE SH ARES FROM THE BROKER. IT IS NOT NECESSARY THAT SALE OF SHARES SHOULD TAKE PL ACE ONLY THROUGH THE STOCK EXCHANGE. THUS, FROM THE ASSESSEES POINT OF VIEW THE TRANSACTION IS STRAIGHT FORWARD AND VERIFIABLE. 4.2. HOWEVER, THERE ARE POINTS OF DIFFERENCE IN THE ASSESSEES CASE ARID THE CASE OF SH. AVINASH CHANDER GHAI (HUF) (SUPRA) IN AS MUCH AS IN THE ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 5 CASE OF SH. AVINASH CHANDER (HUF) THE TRANSACTIONS HAD TAKEN PLACE THROUGH THE STOCK EXCHANGE AND M/S ANKUR COMMERCIAL LTD HAD CONFIRMED THE TRANSFER OF SHARES WHICH IS NOT SO IN THE PRESE NT CASE. IN THE PRESENT CASE THERE IS AN ADDITIONAL FINDING THAT SH. PARVEE N KUMAR WAS FOUND TO BE THE AUTHORIZED SIGNATORY OF BOTH M/S HUNT COMMER CIAL LTD AND M/S VIKAS HOLDING (P) LTD. THESE FACTORS RAISE A STRONG SUSPICION THAT THE COMPANY HUNT COMMERCIAL LTD WAS PROMOTED BY SH. PAR VEEN KUMAI TO FACILITATE THE TASK OF PROVIDING INCOME TO ASSESSEE S IN THE FORM OF CAPITAL GAINS. THE FACT THAT SH. PAVEEN KUMAR WAS THE AUTHO RIZED SIGNATORY IN THE CASE OF ANKUR COMMERCIAL LTD WAS NOT BROUGHT TO THE NOTICE OF THE HONBLE ITAT IN THE CASE OF SH. AVINASH CHANDER GHAI (HUF). WHEN THE SAME PERSON IS FOUND TO BE BEHIND THE COMPANY WHOSE SHAR ES HAVE BEEN ISSUED AND THE BROKER WHO IS PURCHASING SHARES FROM THE AS SESSEE, THE PURCHASE AND THE SALE TRANSACTIONS BOTH GET LINKED. THE HON BLE ITAT IN THE CASE OF AVINASH CHANDER GHAI (HUF) NOTED IN PARA 11 OF THEI R ORDER THAT THE BROKER M/S VIKAS HOLDING (P) LTD WAS NOWHERE IN THE PICTURE WHEN THE SHARES WERE DIRECTLY ALLOTTED BY ANKUR COMMERCIAL L TD. THE FRESH FINDINGS IN THIS CASE SHOW THAT THE FACTS WERE ACTUALLY OTHE RWISE AND IT WAS SH. PARVEEN KUMAR WHO WAS INVOLVED IN ISSUE OF SHARES A S WELL AS IN PURCHASE BACK OF SHARES. ON TOP OF THIS, SH. PARVEE N KUMAR DID NOT PRODUCE THE BOOKS OF ACCOUNTS OF M/S VIKAS HOLDING (P) LTD ON THE PRETEXT THT THE RECORDS WERE NOT READILY AVAILABLE. SH. PAR VEEN KUMAR IN HIS STATEMENT COULD NOT GAVE PARTICULARS ABOUT THE PERS ONS WHO PURCHASED THE SHARES SOLD BY THE ASSESSEE SINCE THE BOOKS OF ACCO UNTS AND RELEVANT RECORDS OF M/S VIKAS HOLDINGS (P) LTD WAS NOT PRODU CED. NEITHER THE PURCHASER OF SHARES SOLD BY THE ASSESSEE WERE FOUND NOR WAS THE SOURCE OF THE PAYMENT MADE BY THE ASSESSEE AS SALE CONSIDE RATION OF SHARES ESTABLISHED. SH. PARVEEN KUMAR INITIALLY STATED THA T THE SHARES WERE TRADED ON THE MAGADH STOCK EXCHANGE BUT SUBSEQUENTL Y STATED THAT THEY HAD NOT TRADED THE SHARES ON THE FLOOR OF MAGADH ST OCK EXCHANGE OR THROUGH ANY MEMBER OF ANY MAGADH STOCK EXCHANGE. TH E OFFICE OF M/S - COMMERCIAL LTD WAS FOUND TO BE NON FUNCTIONAL ONE. IN VIEW OF THESE NEW FINDINGS OF FACT WERE EITHER NOT BEFORE THE HONBL E ITAT IN THE CASE SH. AVINASH CHANDER GHAI (HUF) OR ENTIRELY DIFFERENT FI NDINGS OF FACT WERE NOTED IN THAT CASE BY THE HONBLE ITAT, I AM OF THE HUMBLE OPINION THAT THE DECISION IN THE CASE OF SH. AVINASH CHANDEER GHAI ( HUF) (SUPRA) DO NOT APPLY TO THE FACTS OF THE PRESENT CASE. 7. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT LEA RNED CIT(A) SHOULD HAVE ACCEPTED THE APPEAL OF ASSESSEE ON THE BASIS O F CASE LAW OF SH. AVINASH CHANDER GHAI (HUF), WHERE THE FACTS ARE SIMILAR. IT WAS SUBMITTED THAT IN THE CASE OF M/S AVINASH CHANDER G HAI (HUF) SHARES OF ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 6 THE COMPANY NAMELY ANKUR COMMERCIAL LTD. WERE SOLD THROUGH SAME BROKER M/S VIKAS HOLDING PVT. LTD. HE SUBMITTED THA T INSTEAD OF ANKUR COMMERCIAL LTD. THE COMPANY IN THE PRESENT CASE IS M/S HUNT COMMERCIAL LTD. THE LEARNED AR FURTHER SUBMITTED TH AT LEARNED CIT(A) HAS WRONGLY DISTINGUISHED THE FACTS OF THE PRESENT CASE WITH THE CASE LAW OF SH. AVINASH CHANDER GHAI BY HOLDING THAT SH. PAR VEEN KUMAR THE DIRECTOR OF M/S VIKAS HOLDING PVT. LTD. WAS INVOLVE D IN THE ISSUE OF SHARES AS WELL AS PURCHASE BACK OF SHARES. THE LEAR NED AR SUBMITTED THAT SH. PARVEEN KUMAR WAS ONLY AN AUTHORIZED PERSO N AND THE SHARES WERE SOLD TO MS. VIKAS HOLDING PVT. LTD. WHICH IS A SEPARATE LEGAL ENTITY AND FURTHER THE SHARES WERE NOT ISSUED BY SH. PRAVE EN KUMAR BUT WERE ISSUED M/S HUNT COMMERCIAL LTD. AND IN THIS RESPECT OUR ATTENTION WAS INVOLVED TO (PB PAGE-4) WHERE A COPY OF ALLOTMENT A DVICE ISSUED BY M/S HUNT COMMERCIAL LTD. WAS PLACED. THE LEARNED AR FUR THER SUBMITTED THAT M/S VIKAS HOLDING PVT. LTD. IN THEIR CONTRACT NOTE PLACED AT (PB- PAGE-5) HAD CONFIRMED TO HAVE SOLD ON BEHALF OF ASS ESSEE 10,000 SHARES OF M/S HUNT COMMERCIAL LTD. @ RS.95 PER SHARES AND FURTHER OUR ATTENTION WAS INVITED TO PB PAGE-8 WHERE A COPY OF STATEMENT OF ACCOUNT OF ASSESSEE IN THE BOOKS OF ACCOUNTS OF M/S VIKAS H OLDING PVT. LTD. WAS PLACED. THE LEARNED AR FURTHER SUBMITTED THAT M/S V IKAS HOLDING PVT. LTD. HAD ISSUED DRAFT TO THE ASSESSEE AND MONEY WAS TRANSFERRED TO THE ASSESSEE THROUGH PROPER BANKING CHANNELS AND THEREF ORE, THE ADDITION ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 7 AS SUSTAINED BY LEARNED CIT(A), WAS ONLY ON THE BAS IS OF SURMISES AND CONJECTURES. 9. THE LEARNED DR, ON THE OTHER HAND, PLACED HIS RE LIANCE ON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE HA D PURCHASED 10,000 SHARES OF M/S HUNT COMMERCIAL LTD. ON 12.12.2001, W HICH IS APPARENT FROM THE COPY OF ALLOTMENT ADVICE PLACED AT PB-PAGE -4. THE SAID ALLOTTED SHARE HAD DISTINCTIVE NUMBERS FROM 1501501 TO 15115 00. THE REVENUE AUTHORITIES DID NOT DOUBTED THE PURCHASE OF THESE S HARES DURING THE ASST. YEAR 2002-03 IN WHICH THESE WERE PURCHASED AN D THE SAID SHARES WERE SOLD TO M/S VIKAS HOLDING PVT. LTD. IN THE ASS T. YEAR 2003-04 THE GENUINENESS OF WHICH HAS BEEN DOUBTED BY THE AUTHOR ITIES BELOW. HOWEVER, THE FACT REMAINS THAT M/S VIKAS HOLDING PV T. LTD. HAS CERTIFIED TO HAVE SOLD 10,000 SHARES OF M/S HUNT COMMERCIAL L TD. FROM ASSESSEE AND FURTHER THE SAID COMPANY HAS MADE PAYMENTS TO T HE ASSESSEE THROUGH DEMAND DRAFTS WHICH IS APPARENT FROM PB PAG E-8 WHERE A COPY OF STATEMENT OF ACCOUNT OF ASSESSEE IS PLACED. THE INCOME TAX OFFICER RECORDED THE STATEMENT OF SH. PRAVEEN KUMAR WHO HAS ADMITTED OF BEING DIRECTOR OF M/S VIKAS HOLDING PVT. LTD. AND HAS ALS O ADMITTED THAT THE COMPANY WAS REGISTERED AS A BROKER WITH DELHI STOCK EXCHANGE. THIS FACT IS APPARENT FROM COPY OF STATEMENT OF BY SH. PRAVEE N KUMAR PLACED AT PB PAGE-10. DURING FURTHER INVESTIGATION BY COMMISS ION MR. PRAVEEN ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 8 KUMAR, DIRECTOR OF M/S VIKAS HOLDING PVT. LTD. COUL D NOT FURNISH NAME AND ADDRESS OF THE PARTIES WHO HAD PURCHASED SHARES SOLD BY ASSESSEE. HOWEVER, THE FACT REMAINS THAT M/S VIKAS HOLDING PV T. LTD. HAD CERTIFIED TO HAVE PURCHASED SHARES FROM THE ASSESSEE AND HAD ALSO GIVEN A STATEMENT OF ACCOUNT OF ASSESSEE WHEREIN THE PAYMEN TS FOR SALE CONSIDERATION HAS BEEN SHOWN TO HAVE BEEN MADE THRO UGH BANK DRAFTS. THEREFORE, ASSESSEE HAD PROVIDED ALL THE REQUISITE EVIDENCES IN SUPPORT OF TRANSACTIONS AND THEREFORE, THE AUTHORITIES BELOW C ANNOT MAKE AND SUSTAIN THE ADDITION BECAUSE OF THE FACT THAT MR. P RAVEEN KUMAR, THE DIRECTOR OF M/S VIKAS HOLDING PVT. LTD. COULD NOT P RODUCE HIS BOOKS OF ACCOUNTS OR REQUISITE INFORMATION. THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ANUPAM KAPOOR, RECORD AT 299 ITR 179 (P&H) HAS HELD AS UNDER : THE TRIBUNAL ON THE BASIS OF THE MATERIAL ON RECOR D, HELD THAT PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SALES, DISTINCTIVE NUMBERS OF SHARES PURCHASED AND SOLD, COPY SHARE CERTIFICATES AND THE QUOTATION OF SHARES ON THE DATE OF PURCHASE AND SALE WERE SUFFICIENT MA TERIAL TO SHOW THAT THE TRANSACTION WAS NOT BOGUS BUT A GENUINE TRANSACTION . THE PURCHASE OF SHARES WAS MADE ON 28 TH APRIL, 1993 I.E., ASST. YEAR 1993-94 AND THAT ASSESSMENT WAS ACCEPTED BY THE DEPARTMENT AND THERE WAS NO CHALLENGE TO THE PURCHASE - OF SHARES IN THAT YEAR. IT WAS ALSO PLACED BEFORE T HE RELEVANT AO AS WELL AS BEFORE THE TRIBUNAL THAT THE SALE PROCEEDS HAVE BEEN ACCOUNTED FOR IR THE ACCOUNTS OF THE ASSESSEE AND WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE TRIBUNAL WAS RIGH T IN REJECTING THE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE VAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE VAS NEITHER A DIRECTOR NOR WAS HE IN CONTR OL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHAR ES WERE LISTED AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BRO KER OF THE STOCK EXCHANGE. T HERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD HAV E LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITER A D EVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUET, PRESUM PTION COULD BE DRAWN BY THE AO MERELY ON SURMISES AND CONJECTURES. IN TH E ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 9 NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. THE REFORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH V AS RIGHTLY DELETED B Y THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUSPICION, HOW SOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. CONSEQUENTLY, NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW, ARISES FOR ADJUDICATIO N.- C. VASANTLAL & CO. VS. CIT (1962), 45 ITR 206 (SC), M.O. THAMAKUTTY VS. CI T (1958) 34 ITR 501 (KER) AND KUKAND SINGH VS. SALES TAX TRIBUNAL (199 8) 107 STC 300 9PUNJAB) RELIED ON; UMACHARAN SHAW & BROS. VS. CIT (1959) 37 ITR 271 (SC0 APPLIED; JASPAL SINGH VS. CIT (2006) 205 CTR ( P&H) 624 DISTINGUISHED. MOREOVER, WE FIND THAT UNDER SIMILAR FACTS AND CIRC UMSTANCES THE HONBLE ITAT IN THE CASE OF AVINASH CHANDER GHAI (H UF) HAD DECIDED SIMILAR ISSUE IN FAVOUR OF ASSESSEE A FACT WHICH LE ARNED CIT(A) ALSO AGREED IN HIS ORDER BUT HE TRIED TO DISTINGUISH THE SAID CASE LAWS BY CERTAIN FACTS IGNORING RATIO OF THE SAID JUDGMENT W HICH SAYS THAT ONCE THE PURCHASE OF SALES SHARES IN AN EARLIER YEAR IS NOT DOUBTED AND THE AMOUNT FOR SALE OF SHARES IS RECEIVED THROUGH BANKI NG CHANNELS, THE BURDENT OF PROOF ON THE PART OF ASSESSEE WAS DISCHA RGED. FURTHER, WE FIND THAT ASSESSING OFFICER HAD MADE ADDITION U/S 69 OF THE ACT WHICH DEALS WITH THE UNACCOUNTED INVESTMENTS NOT RECORDED IN TH E BOOKS OF ACCOUNTS OF ASSESSEE. FOR THE SAKE OF COMPLETENESS THE PROVI SIONS OF SEC. 69 ARE REPRODUCED BELOW. 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT REC ORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE O F INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NO T, 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 FIN ANCIAL YEAR. IN THE PRESENT CASE, WE FIND THAT THE INVESTMENT WA S MADE BY ASSESSEE IN EARLIER YEAR AND IN THE PRESENT YEAR THE ASSESSEE H AD RECEIVED ONLY SALE ITA NO.269 (ASR)/2010 ASST. YEAR : 2003-04 10 CONSIDERATION FOR HIS INVESTMENT WHICH WAS MADE IN EARLIER YEAR. THERE IS NO ALLEGATION OF THE REVENUE THAT THIS INVESTMENT W AS OUT OF UNEXPLAINED SOURCES AND RATHER THE AUTHORITIES BELOW HAS GIVEN CREDIT FOR THE COST OF SHARES AND THEREFORE, THERE IS NO UNEXPLAINED INVES TMENT AND THEREFORE, ALSO THE ADDITION U/S 69 COULD NOT HAVE BEEN MADE. IN VIEW OF THE ABOVE, WE ACCEPT THE GROUNDS OF APPEAL OF ASSESSEE. 11. IN NUTSHELL, THE APPEAL FILED BY ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 .07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:11.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY