ACIT 20(2), MUMBAI V. POOJA ARORA, MUMBAI

ITA 2788/MUM/2009

• Counselvise Citation: 278819914 RSA 2009
• Duration Of Justice: 3 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: SATISH MODI
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Share purchase agreement; Principle of natural justice; Source of fund; Penny stocks
• Section: 131; 68; 143(3); 153A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 2788/MUM/2009 ASSESSMENT YEAR 2004-05 ITA NO. 2790/MUM/2009 ASSESSMENT YEAR 2006-07 ASST. COMMISSIONER OF INCOME TAX, 20(2), 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012. VS. SMT. POOJA ARORA, C/002, RISHIKESH BUILDING, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI-400 058 PAN: ABKPA 7933 P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A.C. TEJPAL, DR ASSESSEE BY : SHRI SATISH MODI DATE OF HEARING : 07-06-2012 DATE OF PRONOUNCEMENT : 20-06-2012 ORDER PER BENCH, FOLLOWING COMMON GROUNDS OF APPEAL, FOR BOTH THE AS SESSMENT YEARS, WERE FILED BY THE ASSESSING OFFICER (AO) CHA LLENGING THE ORDER DATED 23.01.2009 OF THE CIT(A) XX, MUMBAI - 1. THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN DIRECTING TO ASSESS TH E INCOME GENERATED THROUGH SALE OF SHARES UNDER THE HEAD CA PITAL GAIN AND ALLOW THE VARIOUS DEDUCTION/EXEMPTION ON THE SA ME AS PER PROVISIONS OF THE ACT AS AGAINST THE ADDITIONS MADE BY THE A.O. AS UNEXPLAINED CASH CREDITS ULS.68 OF THE ACT. ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 2 2. THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO DE LETE THE ADDITION IN RESPECT OF HOUSEHOLD WITHDRAWAL. 3. THE LEARNED CLT(A) HAS ERRED IN FACTS AND IN LA W AND IN CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE F ACTS THAT ENTIRE TRANSACTION GIVING RISE TO CAPITAL GAIN ARE MERELY AN ACCOMMODATION ROUTE, THROUGH WHICH THE UNACCOUNTED MONEY OF THE ASSESSEE HAS CONVERTED INTO ACCOUNTED MONEY IN THE GRAB OF LONG TERM CAPITAL GAIN ARISING ON ACCOUNT OF PURCHA SES AND SALE OF SHARES. 4. THE LEARNED CIT(A) HAS ERRED IN FACTS AND IN LA W AND IN CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE SUPREME COURT DECISION IN THE FOLLOWING CASES - MACDOWELLS AND COMPANY LTD VS ITO 154 ITR 148, CIT VS. SRI MEENAKSHI MILLS LTD. 63 ITR 609, CIT VS DURGAPRASAD MORE - 82 ITR 540 AND JUGGILAL KAMAPAT VS CIT 73 ITR 702 (SC). 5. THE LEARNED CIT(A) HAS ERRED EARRED IN HOLDING THE DETAILS FILED BEFORE THE A.O. PROVED THE GENUINENES S OF THE TRANSACTION WITHOUT VERIFYING THE DETAILS HIMSELF A S THERE IS NO FINDING IN HIS ORDER THAT THE DETAILS FILED WERE DU LY VERIFIED BY HIM AND FOUND TO BE CORRECT. 6. THE LEARNED CIT(A) HAS ERRED EARRED IN NOT APPR ECIATING THE FACT THAT AFTER VERIFICATION AND FROM COPY OF I NVOICES OF EXPENDITURE FOUND FROM THE PREMISES OF THE ASSESSEE , IT IS QUITE CLEAR THAT THE ASSESEE IS HAVING A LAVISH LIFE STYL E AND HOUSEHOLD DRAWING SHOWN BY THE ASSESSEE WERE INCREDIBLY LOW. 7.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(AP PEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 8.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NEC ESSARY. THOUGH THERE ARE EIGHT GROUNDS OF APPEAL IN THE APP EAL MEMOS, YET MAIN GROUND ARE ONLY TWO- FIRST IS ABOUT DELETION O F ADDITION MADE BY THE AO U/S. 68 OF THE INCOME-TAX ACT,1961 (ACT) AND THE SECOND ONE IS ABOUT LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. 2. AS PER BRIEF FACTS OF THE CASE, A SEARCH U/S. 132(1 ) OF THE ACT WAS CARRIED OUT ON 01. 09. 2005 IN THE GROUP CASES OF D ILBAGH RAJ ARORA BASED AT KANPUR, MUMBAI, DELHI ETC. THE APPELLANT, ONE OF THE MEMBERS OF THE SAID GROUP, IS RESIDING AT MUMBAI. D URING THE SEARCH AND SEIZURE PROCEEDINGS IT WAS FOUND THAT THE APPEL LANT GROUP- CONSISTING OF SHRI DILBAGH RAI ARORA, HIS SONS S/SH RI SOM ARORA, ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 3 ARUNKUMAR ARORA, PRAVEEN KUMAR ARORA NIRMAL ARORA, THEIR FAMILY MEMBERS AND HUFS.- HAD SHOWN LONG TERM CAPITAL GAIN (LTCG) IN THEIR RESPECTIVE RETURNS ON SALE OF SHARES OF VARIO US LISTED COMPANIES THAT WAS SET OFF AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS OF EARLIER YEARS. IN THE ASSESSMENT ORDERS PASSED U/S 153A OF THE ACT, THE AO HELD THAT SHARE TRANSACTIONS MENTIONED ABOVE WERE SHAM/ ARRANGED TRANSACTIONS AND THAT THE ENTIRE SALE PROC EEDS RECORDED IN BOOKS OF ACCOUNTS OF THE ASSESSEE GROUP, INCLUDING THE ASSESSEE, REPRESENTED UNEXPLAINED CASH CREDITS. DATE WISE PAR TICULARS OF RETURNS OF INCOME FILED AND ASSESSED U/S 153A OF THE ACT, I N RESPECT TO APPEALS FILED BY THE ASSESSEE ARE AS UNDER : AY RETURNED INCOME DT. OF FILING RETURN DT.SERVICE OF NOTICE ASSESSED INCOME DT.OF ORDER 2004-05 1.08 CRORES 31.8.2000 14.11.2007 L.11 CRORES 31.12. 07 2006-07 74.8LAKHS 31.8.2000 10.09.2007 143(2)NOTICE 1.01 CRORES 31.12.07 2.1. AS MENTIONED EARLIER DURING THE ASSESSMENT PROCEEDI NGS AO MADE ADDITION TO THE INCOME OF APPELLANT ON TWO ACC OUNTS-FIRST ON ACCOUNT OF SALE PROCEED OF EQUITY SHARES OF VARIOUS COMPANIES AND SECOND ON ACCOUNT OF LOW HOUSEHOLD DRAWINGS. THE YE AR-WISE DETAILS OF ADDITIONS MADE ARE AS UNDER : AY ADDITION ON A/C. OF UNEXPLAINED INVESTMENT ADDITION ON A/C. OF LOW WITHDRAWAL TOTAL 2004-05 95.26 LAKHS 1.2 LAKHS 96.46 LAKHS 2006-07 82.86 LAKHS 3 LAKHS 85.86 LAKHS TOTAL 1.78 CRORES 4.2 LAKHS 1.82CRORES 2.2. AO FOUND THAT THE ASSESSEE HAD SOLD SHARES OF VARIO US COMPANIES ON WHICH SHE HAD CLAIMED LTCG IN THE A.YS . 2004-05 AND 2006-07.SHE HAD CLAIMED THAT SAID SHARES WERE SOLD THROUGH DIFFERENT REGISTERED SHARE BROKERS OF VARIOUS STOCK EXCHANGES AND THAT SHE WAS ENTITLED TO BENEFITS OF LTCG, WHEREAS AS PER THE AO , SAME WERE BOGUS TRANSACTIONS. HE TREATED THE ENTIRE SALE PROCEEDS A S UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. FOR ARRIVING AT THIS CON CLUSION THE AO RELIED UPON THE STATEMENT OF SHRI MANOJ AGARWAL PROPRIETOR OF M/S FRIDENDS PORTFOLIO (P) LTD., DELHI RECORDED ON OATH BY THE D DIT(INV.)UNIT-II(4) DELHI, INQUIRIES CONDUCTED THROUGH INVESTIGATION WI NG AND DISCLOSURE MADE BY THE GROUP. ACCORDING TO THE AO, FROM THE S TATEMENT OF SHRI MANOJ AGARWAL (DTD. 8.1.2001) IT TRANSPIRED TH AT THE APPELLANT HAD SYSTEMATICALLY ROUTED HER UNACCOUNTED CASH GENE RATED OUT OF UNACCOUNTED SALE OF DILBAGH RAI GUTKHA GROUP IN TH E GRAB OF LTCG BY WAY OF A SERIES OF ENTRIES OF SALES AND PURCHASE S OF PENNY STOCKS. AO HELD THAT ENQUIRY LETTERS ISSUED U/S. 133(6) OF THE ACT TO VARIOUS SHARE HOLDERS THROUGH WHOM THE APPELLANT HAD CARRIE D OUT HER SHARE TRANSACTIONS REMAINED UNATTENDED. THE AO ALSO RELI ED UPON THE ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 4 REPORT OF DDIT(INV) UNIT IV(5) KOLKATA. IN THE SAID REPORT THE DDIT HAD NOTED THAT THE SHARES OF M/S GAUTAM RESOURCES LTD., TRANSACTED BY VARIOUS MEMBERS OF THE APPELLANT GROUP WERE NOT TRA DED THROUGH CALCUTTA STOCK EXCHANGE. ACCORDING TO THE REPORT O F THE DDIT, KOLKATA THESE SHARES WERE TRANSFERRED IN PHYSICAL F ORM OUTSIDE THE STOCK EXCHANGE AND ACCORDINGLY THE LTCG CLAIMED-WIT H THE CONNIVANCE OF BROKERS INVOLVED-WAS HELD TO BE TAINT ED OR BOGUS TRANSACTIONS. ON THE BASIS OF THE ABOVE REFERRED R EPORT AO HELD THAT THE SALE PROCEEDS OF SHARES SOLD THROUGH BROKER M/S STANLY SECURITIES LTD. WERE NOT FULLY EXPLAINED. ACCORDING TO THE AO, FURTHER ENQUIRIES MADE IN THIS REGARD REVEALED THAT THE CORRESPONDING CREDIT ENTRIES IN THE SAID BANK ACCOUNT WERE OF DIFFERENT PARTIES. AC CORDING TO THE AO CASH WAS DEPOSITED IN THE BANK ACCOUNT OF CERTAIN T HIRD PARTIES I.E. APNAPAN VYAPAR PVT. LTD. AND PARIJAN TRADING AND CO MMERCE LTD. WHICH WAS ULTIMATELY ROUTED TO THE BANK ACCOUNT OF M/S STANLY SECURITIES LTD. CONSIDERING THESE FACTS AO HELD THA T SHARE TRADING TRANSACTIONS WERE MANIPULATED AND THAT THE ULTIMATE SOURCE OF FUNDS CREDITED IN THE ACCOUNT OF THE APPELLANT WAS UNEXPL AINED. AO ALSO HELD THAT THE CASH DEPOSITS AT DIFFERENT STAGES IN BROKE RS ACCOUNT AND OTHER ACCOUNTS, FROM WHICH CHEQUES HAD BEEN RECEIVED BY T HE APPE1LANT, CONCLUSIVELY PROVED THE AUTHENTICITY OF THE STATEME NT OF SHRI MANOJ AGARWAL. AO ALSO RELIED ON THE DISCLOSURE OF RS.31 CRORES MADE BY SHRI DILBAGH RAI ARORA, FATHER-IN-LAW OF THE APPELL ANT. FINALLY AO HELD THAT THE UNACCOUNTED MONEY GENERATED THROUGH THE SA LE OF PAN- MASALA / GUTKHA WAS ROUTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE FORM OF ENTRIES OF LTCG . 2.3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).HE DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE. WHILE DECIDING THE APPEAL HE RELIED UPON THE ORDERS OF TH E CIT(A) -I, KANPUR (DATED 16.06.2008) PASSED IN THE CASES OF THE OTHER GROUP MEMBERS AND THEIR HUFS. FAA HELD THAT THE ENQUIRY REPORT CA LLED FOR U/S 133(6) OF THE ACT NOWHERE PROVED THAT THE CASH DEPOSITED I N THE BANK ACCOUNTS OF CERTAIN THIRD PARTIES BELONGED TO THE A PPELLANT. REGARDING THE SECOND ENQUIRY REPORTS OF THE INVESTIGATION WIN G, KOLKATA, FORWARDED TO THE OFFICE OF THE FAA BY THE AO, HE F OUND THAT THE AO HAD NOT BROUGHT ON RECORD ANY MATERIAL TO SUGGEST T HAT CASH INTRODUCED IN THE BANK A/C OF M/S PARIJAN TRADING A ND COMMERCE P LTD. AND M/S APNAPAN VYAPAAR LTD. PERTAINED TO THE APPELLANT. HE FOUND THAT NO INDEPENDENT ENQUIRIES WERE MADE BY TH E AO WITH RESPECT TO THESE CONCERNS AND THAT THE PAYMENT RECE IVED AGAINST THE SALE OF SHARES FROM THE BROKER THROUGH A/C PAYEE CH EQUES WERE DULY CONFIRMED BY THE SAID BROKER I.E. M/S STANLY SECURI TIES LTD. HE HELD THAT THE APPELLANT WAS ONLY AN INVESTOR BEING SHARE HOLDER OF THE RESPECTIVE COMPANIES, THAT THE APPELLANT HAD NEVER BEEN A DIRECTOR OR A PERSON HAVING CONTROLLING STAKE IN THE COMPANIES INVOLVED, THAT THERE WAS NO EVIDENCE AVAILABLE ON RECORD TO ESTABL ISH THAT THE SHARE PRICES WERE MANAGED OR RIGGED OR MANIPULATED BY THE APPELLANT. HE ALSO HELD THAT ALL THE COMPANIES IN WHICH THE APPEL LANT HAD MADE ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 5 INVESTMENT WERE REGISTERED WITH THE REGISTRAR OF CO MPANIES, THAT THEY WERE NOT FOUND TO BE BOGUS ENTITIES, THAT GENUINENE SS OF PURCHASE AND SALE OF SHARES OF ALL THESE COMPANIES WAS ESTABLISH ED AND ACCORDINGLY THE APPELLANT HAD DISCHARGED HER ONUS, THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL IN SUPPORT OF HIS ALLEGATION THAT THE TRANSACTIONS WERE NOT GENUINE. 2.3.1. FAA HELD THAT THE CIT(A)-I, KANPUR HAD DISCUSSED TH E FACTS OF THE CASE,APPELLANTS ARGUMENTS AND SUBMISSIONS IN D ETAILS AND THEREAFTER HAD RECORDED HIS FINDINGS WITH REGARD TO THE APPEALS FILED BY THE OTHER MEMBERS OF THE ASSESSEE GROUP, SO THERE W AS NO NEED TO DISAGREE WITH THE SAID FINDINGS. HE ALSO RELIED UPO N THE ORDERS PASSED BY THE ITAT A BENCH, LUCKNOW I.E. ITA NO.603 AND 604/LUC/05 FOR A.Y.2004-05, ITA NO.605 AND 606/LUC/08 FOR A. YRS. 2002-03 AND 2005-06 ITA NOS.607 608 AND 609/LUC/08/, FOR A. YRS .200102, 2003- 03 AND 2004-05, ITA NOS,551, 552 AND 553/LUC/08 FOR A.YRS,200L02 2002-03 AND 2005-06, ITA NO.665 AND 657/LUC/08 FOR A.YRS,2000-01 AND 2004-05 AND ITA NOS,659, 660 AND 662/LUC/08 FOR A.YRS,2000- 01 2002-03 AND 2005-06 (DATED 22.10.2008). ITAT VID E ABOVE REFERRED ORDERS HAD CONFIRMED THE ORDERS OF THE CIT(A)-I, KA NPUR.FAA FURTHER RELIED UPON THE CASES OF ANUPAM KAPOOR (299 ITR179) , RAJIV AGRARWAL (139TAXMAN170-ITAT,DELHI), MUKESH R MAROLIA (6 SOT 247), ATUL JAIN AND VINITA JAIN(299ITR338) AND KISHANCHAND CHE LARAM (125 ITR 713).FINALLY HE DELETED THE ADDITIONS MADE BY THE A O. 2.4. BEFORE US, DR RELIED UPON THE ORDERS OF THE AO. AR RELYING UPON THE ORDER OF THE FAA SUBMITTED THAT ALL THE FA CTS AND CIRCUMSTANCES WERE IDENTICAL IN ALL THE GROUP CASES SO FAR AS GROUND OF APPEAL NO.1 WAS CONCERNED, THAT THE SHARES OF VARIO US COMPANIES, BROKERS, BANKS AND STOCK EXCHANGES THOROUGH WHICH T RANSACTIONS HAD TAKEN PLACE WERE COMMON IN ALMOST ALL THE OTHER GRO UP CASES, THAT ENTIRE ADDITION WAS PRIMARILY MADE ON THE BASIS OF STATEMENTS OF SHRI MANOJ AGARWAL OR SHRI R.N. AGARWAL RECORDED U/ S 131 OF THE ACT BY THE DDIT (INV.),UNIT- II (4) NEW DELHI, THAT APP ELLANT HAD FILED ALL THE NECESSARY DOCUMENTARY EVIDENCES TO ESTABLISH HE R CLAIM OF LTCG AVAILABLE WITH HER, THAT CONTRACT NOTES, BILLS FOR PURCHASES AND SALES OF SHARES, STATEMENTS OF ACCOUNT BY MOST OF THE BROKER S, TRANSFER CONFIRMATION LETTERS RECEIVED FROM THE COMPANIES, QUOTATIONS OF SHARE PRICES AT THE STOCK EXCHANGE, DEMAT ACCOUNT SHOWING THE HOLDING OF THE SHARES ETC. WERE PRODUCED BY THE APPELLANT, THA T ALL THE TRANSACTIONS UNDERTAKEN BY THE APPELLANT WITH THE R ESPECTIVE BROKERS FOR THIS PURPOSE WERE THROUGH REGULAR BANKING CHANN ELS AND BY WAY OF ACCOUNT PAYEE CHEQUES ONLY, THAT THE AO WITHOUT EXA MINING /APPRECIATING THESE FACTS OF THE CASE AND SUBMISSIO NS HAD PRESUMED THE SHARE TRANSACTIONS TO BE STAGE MANAGED/BOGUS AN D HAD ADDED THE ENTIRE AMOUNT OF SALE CONSIDERATION AS INCOME F ROM UNDISCLOSED SOURCES U/S.68 OF THE ACT. IT WAS FURTHER SUBMITTE D THAT SINCE, THE ISSUE AS WELL AS THE FACTS AND CIRCUMSTANCES WERE I DENTICAL IN ALL THE GROUP CASES MATTER SHOULD BE DECIDED IN LIGHT OF TH E DECISIONS OF ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 6 LUCKNOW BENCH OF THE ITAT(SUPRA). 2.5. WE HAVE CONSIDERED THE SUBMISSIONS AND ARGUMENTS OF THE AR AS WELL AS THE FACTS AND FINDINGS OF THE AO AS MENT IONED IN THE ASSESSMENT ORDER. WE FIND THAT PURCHASE OF SHARES, SOLD DURING THE RESPECTIVE ASSESSMENT YEARS COVERED U/S. 153A OF TH E ACT, WAS ALREADY DISCLOSED BY THE ASSESSEE IN HER REGULAR BOOKS OF A CCOUNT AS WELL AS IN THE RETURNS OF INCOME FILED. AO MADE THE ADDITION MAINLY RELYING ON THE STATEMENT OF A BROKER I.E. SHRI MANOJ AGARWAL, RECORDED BY THE DDIT(INV.),DELHI. WE FIND THAT NO COGNIZANCE OF TH E SAID STATEMENTS OF SH. AGARWAL WAS TAKEN IMMEDIATELY AFTER THE RECORDI NG OF THE STATEMENT FOR THE COMPLETION OF VARIOUS ASSESSMENTS OF THE APPELLANT. IT IS ALSO FOUND THAT NO CROSS-EXAMINATION OF THE S AID BROKER WAS PROVIDED BY THE AO TO THE ASSESSEE, IN SPITE OF THE FACT THAT SUCH A REQUEST WAS MADE BY THE ASSESSEE. IN THESE CIRCUMS TANCES AND ON ACCOUNT OF THE AFORESAID FACTS OF THE CASE, WE FIND OURSELVES COMPLETELY IN AGREEMENT WITH THE DECISION OF THE FAA, SO FAR A S THE ISSUE UNDER CONSIDERATION IS CONCERNED. FROM THE FACTS, IT IS E VIDENT THAT THE APPELLANT HAS DISCHARGED HER ONUS BY FILING THE NEC ESSARY EVIDENCES IN SUPPORT OF HER CLAIM. THE VARIOUS DOCUMENTARY EVIDE NCES PRODUCED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCE EDINGS VIZ, BILLS / INVOICES /CONTRACT NOTES FOR THE PURCHASE AND SALE OF SHARES, SHARE TRANSFER LETTERS ISSUED BY THE RESPECTIVE COMPANIES , SHARE CERTIFICATES ISSUED BY THE SAID COMPANIES, DISTINCTIVE NUMBERS M ENTIONED THEREIN OF SHARES PURCHASED AND SOLD, QUOTATION OF SHARES O N THE DATE OF PURCHASE AND SALE WERE NOT DISPUTED OR HELD INGENUI NE BY THE AO. THERE IS NO MATERIAL AVAILABLE ON RECORD TO ESTABLI SH THAT THE EVIDENCES FURNISHED BY THE APPELLANT WERE BOGUS OR INGENUINE. IT IS FURTHER NOTED THAT ON ALL THESE DOCUMENTS, THE NAMES AND ADDRESSE S OF EACH AND EVERY PERSON INVOLVED IN THE TRANSACTION WAS RECORD ED. THE PURCHASE OF SHARES WERE MADE IN THE YEARS PRECEDING TO THE A SSESSMENT YEARS IN APPEAL. THE SAID ASSESSMENT WAS DULY ACCEPTED BY T HE AO AND AS SUCH THERE IS NO CHALLENGE TO THE PURCHASE OF THE S HARES. ALL THESE SHARES HAD BEEN SOLD THROUGH THE BROKERS WHO WERE R EGISTERED MEMBERS OF STOCK EXCHANGE AND AT THE PRICE PREVAILI NG IN THE MARKET ON THAT PARTICULAR POINT OF TIME. THE PAYMENTS FOR PURCHASE AND SALE MADE ARE THROUGH NORMAL BANKING CHANNELS WHICH ARE FOUND TO BE RECORDED IN HER REGULAR BOOKS OF ACCOUNT. WE ARE O F THE OPINION THAT SOURCE OF SOURCE IS NOT REQUIRED TO BE PROVED BY TH E APPELLANT. BOTH THE BROKER CONCERNS WERE EXISTING ENTITIES WHO HAD REGULARLY TRANSACTED WITH THE BROKER NAMELY M/S STANLY SECURI TIES LTD. THE TRANSACTIONS REGARDING SALE OF SHARES AS NOTED ABOV E WERE DULY CONFIRMED BY THE SAID BROKER. THEREFORE, WE FULLY AGREE WITH THE VIEWS OF THE FAA THAT UNDER THE GIVEN FACTS AND CIRCUMSTA NCES, THE APPELLANT HAS DULY DISCHARGED THE ONUS CAST ON HER. IN THIS REGARD A BENCH OF LUCKNOW ITAT(SUPRA) HAS HELD AS UNDER : WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TILE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON R ECORD. IN ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 7 THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASS ESSEE MADE THE PURCHASE IN THE FINANCIAL YEAR 1998-99 AND THOS E PURCHASES WERE DISCLOSED IN THE BOOKS OF ACCOUNTS W HICH HAD BEEN ACCEPTED BY TILE DEPARTMENT WHILE FRAMING TILE ASSESSMENT UNDER SECTION 143(3) FOR THE ASSESSMENT YEAR 1999-2000. THOSE SHARES WERE PURCHASED BY THE ASSES SEE AND GOT TRANSFERRED IN HER NAME. THE ASSESSEE FINIS HED TRANSFER LETTER / CONFIRMATORY LETTER RECEIVED FROM THE COMPANY ON ALLOTMENT / TRANSFER OF THE SHARE IN THE ASSESSEES NAME. IN THE SAID ORDER, NAME AND ADDRE SS OF THE COMPANY WAS THERE. THE ASSESSING OFFICER ALSO A CCEPTED THE DATE OF TRANSFER OF SHARES IN ASSESSEES NAME W HICH COULD HAVE BEEN KNOWN ONLY AFTER EXAMINING THE SHAR E TRANSFER LETTER. IF THE ASSESSING OFFICER WAS HAVIN G ANY DOUBT, HE COULD HAVE ENQUIRED FROM THE SAID COMPANY BUT NO SUCH EFFORTS HAS BEEN MADE. MOREOVER, THE TRANSA CTION WAS RELATING TO TILE EARLIER YEAR WHICH HAD BEEN AC CEPTED BY THE DEPARTMENT IN THE ASSESSMENT OF THE SAID YEAR T O THERE WAS NO OCCASION TO DOUBT THE PURCHASE FOR THE YEAR UNDER CONSIDERATION. AS REGARDS TO THE SALE OF THE SHARES IS CONCERNED, IT IS NOTICED THAT THE ORIGINAL ASSESSME NT OF THE ASSESSEE WAS FRAMED UNDER SECTION 143(3) OF THE I. T.ACT- 1961 VIDE ORDER DATED 29.03.2004 AND WHILE FRAMING THE ASSESSMENT THE SALE HAD BEEN ACCEPTED SINCE NO EYEB ROW WAS RAISED REGARDING THE GENUINENESS OF THE SALE OF THE SHARES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE WAS NEITHER THE DIRECTOR NOR A PERSON HAVING CONTROL ON THE COMPANY, SO IT CANNOT BE PRESUMED THAT THE SALE PRICES WERE MANIPULATED BY THE ASSESSEE. THE ASSESSEE FURN ISHED ALL THE DOCUMENTS WHICH WERE NECESSARY TO SUBSTANTI ATE THE SALE. THOSE DOCUMENTS INCLUDED THE CONTRACT NOTE, B ROKERS SALE BILL, CONFIRMATION OF TRANSACTION FROM BROKER, BANK STATEMENT, PAN OF BROKER, ADDRESS OF BROKER, TRANSF ER LETTERS RECEIVED FROM THE COMPANY AND IT HAS NOT BEEN CLAIM ED AT ANY STAGE THAT THOSE DOCUMENTS WERE NOT FURNISHED B EFORE THE ASSESSING OFFICER BY THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER, WHILE DOUBTING THE SALE TRANSACT ION, RELIED UPON THE STATEMENT GIVEN AT TILE BUCK OF THE ASSESS EE BY SHRI R.N.AGARWAL WHO WENT TO CONTRADICT THE CONFIRM ATORY LETTER GIVEN BY HIM EARLIER DURING THE COURSE OF AS SESSMENT PROCEEDINGS COMPLETED BY THE ASSESSING OFFICER ON 29.03.2004. IT IS NOTICED THAT NO OPPORTUNITY TO CR OSS EXAMINE SHRI R.N.AGARWAL WAS GIVEN TO THE ASESSEE I N SPITE OF SPECIFIC REQUEST MADE AND EVEN THE ASSESSEE WENT TO DELHI AMID KANPUR FOR CROSS EXAMINING SHRI R.N.AGAR WA, HOWEVER, NO SUCH OPPORTUNITY WAS PROVIDED FOR THE R EASONS BEST KNOWN TO THE ASSESSING OFFICER. FURTHERMORE, T HE ASSESSING OFFICER DID NOT RECORD THE STATEMENT OF S HRI R.N AGARWAL HIMSELF, THE SAID STATEMENT WAS RECORDED BY THE ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 8 INVESTIGATION WING BUT IT WAS NOT BROUGHT ON RECORD IN WHICH CIRCUMSTANCES THE STATEMENT WAS RECORDED AT THE BAC K OF THE ASSESSEE AND WAS USED AGAINST ASSESSEE WITHOUT PROVIDING ANY OPPORTUNITY TO REBUT OR TO CROSS EXAM INE SHRI R.N. AGARWAL. IT IS WELL SETTLED THAT NOBODY S HOULD BE CONDEMNED UNHEARD AS PER TILE DICTUM AUDI ALTERRAIN PORTEM, HOWEVER IN THE INSTANCE CASE THE STATEMENT HAS BEEN USED AGAINST THE ASSESSEE WITHOUT AFFORDING OPPORTUNITY TO CROSS EXAMINE THE PERSON, WHO MADE T HE STATEMENT, WHICH, IN OUR OPINION, IS AGAINST THE PR INCIPLES OF NATURAL JUSTICE AND IS NOT JUSTIFIED. IN THE INSTAN CE CASE, IT HAS NOT BEEN REBUTTED AT ANY STAGE THAT THE SALE PR OCEEDS OF THE SHARES HAD NOT BEEN DULY ACCOUNTED FOR IN THE B OOKS OF ACCOUNTS AND THOSE SALE PROCEEDS WERE NOT RECEIVED THROUGH BANKING CHANNELS. THE ASSESSING OFFICER DID NOT EXA MINE OR QUESTION THE BANK ACCOUNT FROM WHERE THOSE SALE PRO CEEDS WERE TRANSFERRED TO THE ASSESSEES ACCOUNT, SO THER E WAS NO OCCASION TO DOUBT THE SALE TRANSACTIONS. IT IS NOT THE CASE OF THE DEPARTMENT THAT THE COMPANY, WHOSE SHARES WERE SOLD BY THE ASSESSEE, WAS NOT IN EXISTENT OR WAS A FLUKE COMPANY, THEREFORE, THERE WAS NO REASON TO DISBELIE VE THE TRANSACTION ENTERED BY THE ASSESSEE. IT APPEARS THA T THE ASSESSING OFFICER, ONLY ON THE BASIS OF THE STATEME NT OF SHRI R.N. AGARWAL, THE SHARE BROKER, WHICH, WAS REC ORDED AT THE BACK OF THE ASSESSEE BY THE OFFICER OTHER THAN THE ASSESSING OFFICER, PRESUMED THAT THE SALE TRANSACTI ON WAS NOT A GENUINE TRANSACTION. IN OUR OPINION, THIS ACT ION OF THE ASSESSING OFFICER IN DOUBTING THE TRANSACTION WAS N OT JUSTIFIED PARTICULARLY WHEN IN THE TRANSFER LETTER OF THE COMPANY THE NAMES AND ADDRESSES OF THE EACH PERSON DULY BEEN MENTIONED AND WHILE FRAMING THE ORIGINAL ASSES SMENT ON 29.03.2004, THOSE DOCUMENTS WERE ACCEPTED BY THE THEN ASSESSING OFFICER AND NOTHING ADVERSE HAS BEEN STAT ED ABOUT THOSE DOCUMENTS IN THE ORIGINAL ASSESSMENT OR DER. IN OUR OPINION, WHEN THE ASSESSING OFFICER WAS RELYING ON THE STATEMENT OF A PERSON, THE ONUS WAS ON THE ASSESSIN G OFFICER TO ENFORCE THE ATTENDANCE OF THAT PERSON FO R CROSS EXAMINATION OF THE ASSESSEE BUT NO SUCH OPPORTUNITY WAS PROVIDED IN SPITE OF THE FACT THAT THE ASSESSEE REQ UESTED TO CROSS EXAMINE THE SHARE BROKER WHO EARLIER HAD CONF IRMED BUT LATER ON CONTRADICTED THE CONFIRMATORY LETTER. IN THAT VIEW OF THE MATTER, WE ARE OF THE OPINION THAT THE LEARN ED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 2.6. WE FIND THAT THE PRESENT CASE IS NOW COMPLETELY COV ERED BY THE DECISION OF ITAT, LUCKNOW, (SUPRA) IN THE CASE OF OTHER GROUP MEMBERS. WE HAVE FOUND THAT ON IDENTICAL FACTS AND CIRCUMSTANCES THIS ISSUE WAS DECIDED IN FAVOUR OF THE APPELLANT G ROUP. SINCE ALL THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDE NTICAL TO THE FACTS ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 9 OF THE CASES OF OTHER GROUP MEMBERS, SO ON ACCOUNT OF THE ABOVE MENTIONED DISCUSSION, AND SPECIFIC ORDER OF ITAT, LUCKNOW, WE UPHOLD THE ORDER OF THE FAA FOR THE AY 2004-05 AND AY 2006-07 WITH REGARD TO DELETION MADE BY HIM ON ACCOUNT OF SALE O F SHARES BY THE APPELLANT. GROUNDS OF APPEAL NOS.1 AND 3 TO 5 STAND DISMISSED. 3. SECOND EFFECTIVE GROUND OF APPEAL IS ABOUT ADDITIO N ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS IN ALL THE APPEALS MEN TIONED ABOVE. THE BRIEF FACTS RELATING TO THIS ISSUE IS THAT THE AO H AD NOTED THAT CERTAIN INVOICES OF EXPENDITURE WERE FOUND FROM THE PREMISE S OF THE APPELLANT DURING THE SEARCH WHICH ACCORDING TO THE AO REVEALE D THE LAVISH LIFE STYLE OF THE APPELLANT. THE AO FURTHER NOTED THAT T HE APPELLANT HAD SHOWN INSUFFICIENT HOUSEHOLD DRAWINGS CONSIDERING T HE LIFE STYLE OF THE APPELLANT AND THE PROPERTIES HELD BY HER. AO HELD THAT THE APPELLANT WAS HAVING A HIGH STANDARD OF LIVING AND THE DRAWIN GS DISCLOSED IN HER RETURNS OF INCOME FILED FOR THE AYS. UNDER APPEAL W ERE INADEQUATE AND ACCORDINGLY MADE ESTIMATED ADDITIONS AS MENTIONED A T PARAGRAPH NO 2.1 OF THE PAGE 3 OF THE ORDER . 3.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA WHO HEL D THE APPELLANT FAMILY HAS SHOWN HOUSEHOLD WITHDRAWALS OF RS.55.65LAKHS FOR THE VARIOUS ASSESSMENT YEARS UNDER APPEAL, THAT THE APPELLANTS FAMILY CONSISTED OF THREE PERSONS FOR THE INITIAL T WO ASSESSMENT YEARS AND THEREAFTER OF FOUR PERSONS, THAT SEARCH ACTION DID NOT ESTABLISH THAT THE VARIOUS MEMBERS OF APPELLANT HAD INCURRED HOUSEHOLD EXPENSES WHICH WERE NOT REFLECTED IN THEIR REGULAR BOOKS OF ACCOUNTS, THAT ADDITION MADE BY THE AO WAS PURELY ON ESTIMATE D BASIS, THAT NO DETAILS, EVIDENCE OR BASIS FOR THE SAME WERE BROUGH T ON RECORD BY THE AO, THAT PRIMARILY THE HOUSEHOLD DRAWINGS WERE FOUN D TO BE MET OUT OF THE DRAWINGS AND DISCLOSED IN THE HANDS OF THE H USBAND OF THE ASSESSEE-SHRI PRAVEENKUMAR ARORA. SO, IN THE ABSEN CE OF ANY EVIDENCE AD HOC ADDITION MADE BY THE AO WAS HELD UN WARRANTED AND WAS DELETED.FAA FOUND THAT FOLLOWING WERE THE WITHD RAWALS BY THE FAMILY MEMBERS/ HUF FOR THE ASSESSMENT YEARS UNDER CONSIDERATION - AY DRAWINGS BY PRAVEEN KUMAR ARORA (IND.) DRAWINGS BY ASSESSEE DRAWINGS BY PRAVEEN KUMAR ARORA (HUF.) TOTAL 2000-01 2,58,438/- 2,40,000/- -- 4,98,438/- 2001-02 3,96,817/- 1,20,000/- -- 5,16,817/- 2002-03 1,98,899/- 1,70,000/- -- 3,68,899/- 2003-04 7,43,000/- 4,50,000/- -- 11,93,000/- 2004 - 05 6,11,250/ - 3,60,878/ - 60,348/ - 10,32,476/ - 2005-06 7,45,750/- 3,05,640/- -- 10,51,390/- 2006-07 6,04,700/- 3,00,000/- -- 9,04,700/- TOTAL 35,58,854/- 19,46,518/- 60,348/- 55,65,720/- ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 10 3.2. BEFORE US, DR RELIED ON THE ORDER OF THE AO WHERE A S AR SUPPORTED THE ORDER OF THE FAA. HE SUBMITTED THAT THE ADDITION MADE BY THE AO WERE PURELY ON AD HOC BASIS THAT THE APPE LLANT WAS HAVING A FAMILY OF THREE PERSONS FOR THE A.YRS.2000-OL AND 2 001-02 AND FOUR PERSONS FOR THE A.YRS.2002-03 TO 2006-07 CONSISTING OF HERSELF, HER HUSBAND AND TWO MINOR CHILDREN, THAT ALL THE EXPENS ES RELATING TO PURCHASE OF HOUSEHOLD GADGETS, MAINTENANCE OF PROPE RTIES, EXPENDITURE INCURRED ON TRAVELING, SERVANTS, ELECTR ICITY, WATER AND CONVEYANCE WERE MET OUT OF THE WITHDRAWALS SHOWN IN THE RESPECTIVE HANDS OF VARIOUS MEMBERS OF THE FAMILY-PARTICULARLY IN THE HANDS OF HER HUSBAND SHRI PRAVEENKURNAR ARORA, THAT THE EXPE NDITURE INCURRED ON ACCOUNT OF WATER TAX AND HOUSEHOLD TAX WAS SEPAR ATELY SHOWN IN THEIR RESPECTIVE RETURNS OF INCOME, THAT THE AO HAD COMPLETELY IGNORED THE WITHDRAWALS MADE BY THE VARIOUS MEMBERS OF THE APPELLANT AND HUF, WHO WERE SEPARATELY ASSESSED WITH THE SAME AO, THAT EXPENDITURE INCURRED BY THE APPELLANT WAS MORE THAN THE EXPENDITURE DISCLOSED IN HER REGULAR BOOKS ACCOUNT OF THE VARIO US ASSESSMENT YEARS UNDER APPEAL, THAT ON ACCOUNT OF THE ABOVE NO TED FACTS OF THE CASE, NO SUCH ADDITION WAS MADE IN THE CASES OF OTH ER MEMBERS OF THE GROUP ASSESSED AT KANPUR. FOR THIS PURPOSE, THE AR RELIED UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS OF PRADEEP C.PATEL (58 TTJ 409- AHD.),M.P. MALLAIWAL(10SOT319-HYD), BRIJIAL (TTJ 37 4-JODH),C.L. KHATRI (147 TAXMAN 652) (MP). 3.3. WE HAVE HEARD RIVAL SUBMISSIONS. IT IS FOUND THAT W HILE MAKING ADDITIONS TO THE INCOME OF THE ASSESSEE AO H AD CONSIDERED WITHDRAWAL MADE BY THE ASSESSEE ONLY-HE COMPLETELY IGNORED THE WITHDRAWALS MADE BY THE HUSBAND OF THE APPELLANT. F ROM THE CHART PREPARED BY THE FAA (PARA-3.1)IT IS CLEAR THAT THE ASSESSEE, HER HUSBAND AND HUF WERE WITHDRAWING SUFFICIENT AMOUNTS IN ALL THE FIVE ASSESSMENT YEARS UNDER CONSIDERATION. CASES RELIED UPON BY THE AR ALSO SUPPORT THE STAND TAKEN BY THE FAA. IN OUR OP INION WITHDRAWAL AMOUNTING TO RS.19.36 LAKHS(RS.10.32 FOR AY 2003-04 AND RS.9.04 LAKHS FOR AY 2006-07)FOR A FAMILY OF THREE/FOUR MEM BERS FOR THE PERIOD UNDER CONSIDERATION IS SUFFICIENT. AS THE ADDITION MADE BY THE AO ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWAL ARE ON AD HOC B ASIS AND THE DELETION OF THE SAME BY THE FAA IS ON SOUND FOOTING S, WE UPHOLD THE ORDER OF THE FAA IN THIS REGARD. GROUND NOS. 2 AND 6 ARE ALSO DECIDED AGAINST THE AO . ITA NO. 2788/MUM/2009 ITA NO. 2790/MUM/2009 SMT. POOJA ARORA, 11 AS, A RESULT APPEAL FILED BY THE AO STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2012. SD/- SD/- (D.K. AGARWAL) ( RAJENDRA) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, DATE 20 TH JUNE, 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI.