PARAS KUMAR JAIN, Jaipur V. ITO, Kota

ITA 279/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3564 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Assessee Lawyers: N KATARIA
• Keywords: Reopening of assessment; Unexplained investment; Income from undisclosed sources; Tangible material; Wrong claim; Accommodation entries; Reason to believe; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 143(3); 143(1); 205; 195; 147; 68; 148; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,OA JH FOE FLAG ;K NO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA NO. 279/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. SHRI PARAS KUMAR JAIN, 65, NEW GRAIN MANDI, KOTA. CUKE VS. THE INCOME TAX OFFICER, WARD 1(3), KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABKPJ 1406 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N. KATARIA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 10.12.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13/12/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19 TH JANUARY, 2017 OF LD. CIT (A), KOTA FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1.1. THE ASSESSMENT ORDER PASSED U/S 148 IS BAD I N LAW AS WELL AS ON FACTS AND HENCE, THE SAME MAY PLEASE BE QUASHED. 1.2. THE REASONS RECORDED BY THE LD. AO DID NOT FOR M ANY REASON TO BELIEVE THAT ANY INCOME ESCAPED FROM ASSESSMENT AND HENCE THE CONSEQUENT REOPENING OF ASSESSMENT IS ALSO BAD IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE AND THE LD . CIT (A) ERRED IN SUSTAINING THE SAME. WITHOUT PREJUDICE TO ABOVE 3. RS. 17,00,180/-: THE LD. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN TREATING INCOME FROM LONG TE RM CAPITAL 2 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. GAIN AS INCOME FROM UNDISCLOSED SOURCES AND THE LD. CIT (A) ERRED IN SUSTAINING THE SAME AND HENCE, THE ENTIRE ADDITION MAY PLEASE BE DELETED. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. PARAS NAMKEEN BHANDAR. THE ASSESSEE FILED RETURN OF INCOME ON 10 TH MARCH, 2009 DECLARING INCOME OF RS. 6,23,510/-. SUBSEQUENTLY, THE AO RECEIVED INFORMAT ION FROM THE INVESTIGATION WING, MUMBAI REGARDING ACCOMMODATION ENTRIES IN THE SHAPE OF LONG TERM CAPITAL GAIN FROM THE CONCERNS OF SHRI MUKESH CHOKSI. ACCORDING LY, THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF T HE IT ACT ON 26 TH MARCH, 2015. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148, TH E ASSESSEE VIDE LETTER DATED 16.04.2015 SUBMITTED THAT THE RETURN OF INCOME FILE D ON 10 TH MARCH, 2009 MAY BE TREATED AS RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE UNDER SECTION 148. THE AO CONSEQUENTLY COMPLETED THE RE-ASSESSMENT UNDER SECT ION 143(3) READ WITH SECTION 147 OF THE ACT ON 11.01.2016 WHEREBY LONG TERM CAPI TAL GAIN ON SALE OF SHARES WERE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE AND T HE AMOUNT OF RS. 17,00,180/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) BUT COULD NOT SUCCE ED. GROUND NO. 1 IS REGARDING CHALLENGING THE VALIDITY OF THE ORDER PASSED UNDER SECTION 148 OF THE IT ACT. 3. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT T HE AO HAS REOPENED THE ASSESSMENT BASED ON THE INFORMATION/REPORT OF THE I NVESTIGATION WING, MUMBAI WITHOUT CONDUCTING A SEPARATE AND INDEPENDENT ENQUI RY ABOUT THE FACT WHETHER THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL GAIN IS GENUINE OR BOGUS. HENCE THE 3 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. REOPENING IS NOT SUSTAINABLE IN LAW AS THE SAME IS BASED ON THE BORROWED SATISFACTION AND NOT ON INDEPENDENT APPLICATION OF MIND. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE ASSESSEE HAS SHOWN THE PURCHASE AND SALE OF 32,000 SHARES OF M/S. AXON INFOTECH LTD. THROUGH BROKER M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WH ICH IS A GROUP CONCERN OF SHRI MUKESH CHOKSI AND IN THE INVESTIGATION PROCEEDINGS IN CASE OF SHRI MUKESH CHOKSI IT WAS DETECTED THAT ALL THE CONCERNS INCLUDING M/S. A LLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WERE ENGAGED IN PROVIDING ACCOMMODATION / BOGUS ENTRIES OF LONG TERM CAPITAL GAINS ETC. ON RECEIPT OF MONEY. THUS ONCE THE AO HAS RECEIVED THE INFORMATION ALONG WITH THE STATEMENT OF SHRI MUKESH CHOKSI WHEREIN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES THROUGH THE GROUP CONCERN OF SHRI MUKESH CHOKSI WERE FOUND TO BE BOGUS AND ACCOMMODAT ION ENTRIES TO AVOID THE TAX LIABILITY, THEN THE AO WAS HAVING REASON TO BELIEVE THAT THE INCOME ASSESSABLE TO TAX IN THE SHAPE OF LONG TERM CAPITAL GAIN OF RS. 21,00 ,720/- HAS ESCAPED ASSESSMENT. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE RETURN OF INC OME FILED BY THE ASSESSEE UNDER SECTION 139 OF THE IT ACT WAS NOT TAKEN UP FOR SCRU TINY ASSESSMENT. SUBSEQUENTLY, THE AO RECEIVED THE INFORMATION FROM INVESTIGATION WING, MUMBAI REGARDING THE DISCOVERY OF THE FACT THAT SHRI MUKESH CHOKSI THROU GH HIS VARIOUS CONCERNS INCLUDING M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. HA S INDULGED IN PROVIDING ACCOMMODATION AND BOGUS ENTRIES OF LONG TERM CAPITA L GAIN ETC. AGAINST RECEIPT OF CASH FROM THE PERSONS. THIS INFORMATION ALONG WITH THE STATEMENT OF SHRI MUKESH CHOKSI CONSTITUTES A TANGIBLE MATERIAL TO FORM THE BELIEF THAT THE INCOME ASSESSABLE 4 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. TO TAX AND CLAIMED AS EXEMPT FROM TAX HAS ESCAPED A SSESSMENT. THEREFORE, ONCE THE ORIGINAL RETURN OF INCOME WAS NOT TAKEN UP FOR SCRUTINY ASSESSMENT, THEN THE SAID INFORMATION AND FACTS DISCOVERED BY THE INVEST IGATION WING MUMBAI ALONG WITH THE STATEMENT OF SHRI MUKESH CHOKSI CONSTITUTES A M ATERIAL ON THE BASIS OF WHICH THE AO CAN REASONABLY FORM A BELIEF THAT THE INCOME IN THE SHAPE OF LONG TERM CAPITAL GAIN CLAIMED AS EXEMPT HAS ESCAPED ASSESSMENT. AT THE STAGE OF REOPENING OF THE ASSESSMENT WHAT IS REQUIRED IS PRIMA FACIE REASON T O BELIEVE THAT INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT AND THE AO IS NOT REQ UIRED TO ESTABLISH THE FACT BY LEGAL EVIDENCE OR CONCLUSION. ACCORDINGLY WE DO NO T FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF LD. CIT (A) QUA THIS ISSUE. GROUND NO. 3 IS REGARDING THE ADDITION MADE BY THE AO BY TREATING THE LONG TERM CAPITAL GAIN AS INCOME FROM UNDISCLOS ED SOURCES. 6. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT T HE ASSESSEE PURCHASED 4000 SHARES OF M/S. AXON INFOTECH LTD. ON 5 TH JULY, 2006 FOR A CONSIDERATION OF RS. 2,08,540/- AND AGAIN PURCHASED 4000 SHARES OF THE S AME COMPANY ON 10 TH JULY, 2006 FOR A CONSIDERATION OF RS. 2,02,000/-. THESE SHARES WERE PURCHASED THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. AS PER THE CONTRACT NOTE DATED 10 TH JULY, 2006. SUBSEQUENTLY, THE SAID COMPANY ISSUED BONUS SHARES IN THE RATIO 3:1 IN THE MONTH OF SEPTEMBER, 2007, HENCE 8000 SHARES HEL D BY THE ASSESSEE WERE CONVERTED TO 32000 SHARES. THE ASSESSEE FINALLY SO LD 16,000 SHARES ON 16.01.2008 AND BALANCE 16,000 SHARES ON 08.02.2008 FOR A TOTAL CONSIDERATION OF RS. 21,10,720/-. THE LD. A/R HAS THUS SUBMITTED THAT WH EN THE ASSESSEE HELD THESE SHARES FOR MORE THAN ONE YEAR AS THESE SHARES WERE ACQUIRED IN THE MONTH OF JULY, 2006 AND SOLD IN THE MONTH OF JANUARY AND FEBRUARY, 2008 THEN THE GAIN ARISING 5 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. FROM SALE OF SHARES IS A LONG TERM CAPITAL GAIN. F URTHER, THE SALE OF SHARES WERE NOT THROUGH BROKER M/S. ALLIANCE INTERMEDIARIES & NETWO RK PVT. LTD. BUT THESE SHARES WERE SOLD THROUGH A DIFFERENT BROKER WHICH IS NOT R ELATED TO SHRI MUKESH CHOKSI OR HIS CONCERNS. HE HAS REFERRED TO THE SALE BILL/BRO KERS NOTE AT PAGES 33 AND 34 OF THE PAPER BOOK AND SUBMITTED THAT THE SHARES WERE S OLD THROUGH M/S. A.C. CHOKSI SHARE BROKERS PVT. LTD. WHICH IS NOT A GROUP CONCER N OF SHRI MUKESH CHOKSI. HENCE, ONCE THE SHARES WERE SOLD BY THE ASSESSEE NOT THROU GH THE GROUP CONCERN OF SHRI MUKESH CHOKSI, THE CAPITAL GAIN ON SALE OF THE SHAR ES CANNOT BE TREATED AS BOGUS CLAIM. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE CBDT CIRCULAR NO. 704 DATED 28 TH APRIL, 1995 AND SUBMITTED THAT THE CBDT HAS CLARIF IED THAT IN CASE OF SECURITIES TRANSACTED THROUGH STOCK EXCHANGES, THE DATE OF BROKERS NOTE SHOULD BE TREATED AS THE DATE OF TRANSFER IN CASES OF SALE AN D PURCHASE OF SHARES. THE LD. A/R THEN SUBMITTED THAT SHRI MUKESH CHOKSI IN HIS STATE MENT HAS NOT MENTIONED THE NAME OF THE ASSESSEE AS THE BENEFICIARY OF THE ALLE GED ACCOMMODATION ENTRIES PROVIDED BY HIS GROUP CONCERN. FURTHER, THE SHARES WERE SOLD THROUGH A DIFFERENT BROKER AND, THEREFORE, THERE IS NO QUESTION OF GIVI NG ANY CASH FOR OBTAINING THE LONG TERM CAPITAL GAIN IN QUESTION. ONCE THE ASSESSEE H AS PLACED THE RELEVANT RECORD SHOWING THE PURCHASE OF SHARES THROUGH THE BROKERS NOTE, SALE OF SHARES THROUGH A DIFFERENT BROKER AND RECEIPT OF SALE CONSIDERATION THROUGH BANKING CHANNEL, THEN THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES CANNOT BE HELD AS BOGUS AND CONSEQUENTLY THE CLAIM OF CAPITAL GAIN CANNOT BE TR EATED AS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE. THE LD. A/R HAS RELIED UP ON THE FOLLOWING DECISION IN SUPPORT OF HIS CONTENTION :- 6 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. (1) ORDER DATED 4 TH SEPTEMBER, 2015 OF HYDERABAD BENCH OF THE TRIBUNAL IN CASE OF DCIT VS. VINAY KUMAR AGARWAL IN ITA NO. 153/HYD/2015 & C.O. NO. 16/H/2015 AND SUBMITTED THAT THE TRIBUNAL AFTER CONSIDERING THE CBDT CIRCULAR NO. 407 DATED 28 TH APRIL, 1995 HAS HELD THAT THE DATE OF PURCHASE OF SHARES SHALL BE TAKEN AS THE DATE OF BROKERS NO TE AND NOT THE ACTUAL DATE OF TRANSFER OF SHARES. HE HAS THEN RELIED UPON THE DECISION OF MUMBAI BENC H OF THE TRIBUNAL IN CASE OF KAMLA DEVI S. DOSHI VS. ITO, (2017) 50 CCH 72 (MUMB AI TRIB.) AS WELL AS THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CA SE OF CIT VS. POOJA AGARWAL DATED 11 TH SEPTEMBER, 2017 IN DBIT APPEAL NO. 385/2011. THUS THE LD. A/R HAS SUBMITTED THAT ONCE THE ASSEESSEE HAS PRODUCED THE RECORD SHO WING THE PURCHASE AND SALE TRANSACTIONS MADE ON-LINE AND IDENTITY OF SELLER AN D PURCHASERS ARE UNKNOWN THEN THE TRANSACTIONS CANNOT BE HELD AS BOGUS TRANSACTIO NS. HE HAS FURTHER CONTENDED THAT AS THE ASSESSEE HAS SHOWN THE PURCHASE OF 8000 SHARES OF M/S. AXON INFOTECH LTD. IN THE BALANCE SHEET AS ON 31 ST MARCH, 2007 AND THE AO HAS ACCEPTED THAT FACT FOR THE ASSESSMENT YEAR 2007-08, THEN THE SAID TRAN SACTION CANNOT BE HELD AS BOGUS ONLY WHEN THE SHARES WERE SOLD BY THE ASSESSEE IN T HE SUBSEQUENT YEAR. HE HAS FURTHER CONTENDED THAT THE TRANSACTIONS OF PURCHASE AND SALE HAS SUFFERED STT AND CARRIED OUT THROUGH STOCK EXCHANGE, THEREFORE, THE QUESTION OF GENUINENESS OF THE TRANSACTION CANNOT BE RAISED. HENCE THE LD. A/R HA S SUBMITTED THAT THE AO HAS TREATED THE TRANSACTION AS BOGUS BASED ON THE STATE MENT OF SHRI MUKESH CHOKSI WHICH IS NOT A CONCLUSIVE EVIDENCE TO TAKE A DECISI ON WHEN THE ASSESSEE WAS NOT STATED AS THE BENEFICIARY OF THE TRANSACTION PROVID ED BY SHRI MUKESH CHOKSI AND HIS GROUP CONCERNS. 7. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THIS IS A CLEAR CASE OF TAKING THE ACCOMMODATION ENTRIES WHEN THE ASSESSEE CLAIMED TO HAVE PURCHASED THE 7 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. SHARES IN THE MONTH OF JULY, 2006 THROUGH STOCK BRO KER M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WHICH IS A GROUP CONCERN OF SHR I MUKESH CHOKSI. HOWEVER, THE SHARES WERE NOT TRANSFERRED IN THE NAME OF THE ASSE SSEE TILL THE MONTH OF JANUARY, 2008 WHEN THE SHARES WERE FINALLY SOLD BY THE ASSES SEE. THEREFORE, JUST FEW DAYS BEFORE THE SALE OF SHARES THE SHARES WERE TRANSFERR ED IN THE ACCOUNT OF THE ASSESSEE AND PRIOR TO THAT THERE WAS NO RECORD TO SHOW THAT THESE SHARES WERE ACTUALLY TRANSFERRED IN THE NAME OF THE ASSESSEE OR IN THE A CCOUNT OF THE ASSESSEE. THEREFORE, THE CLAIM OF PURCHASE OF SHARES IN THE M ONTH OF JULY, 2006 ITSELF IS BOGUS CLAIM AND NOT PROVED BY THE ASSESSEE EXCEPT PRODUCI NG A CONTRACT NOTE OF A TAINTED COMPANY FOR WHICH THE INVESTIGATION WING FOUND IT I NDULGED IN PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF THE FACTS AS BRO UGHT BY THE AO THAT THE SAID COMPANY M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. IS ONE OF THE GROUP CONCERNS OF SHRI MUKESH CHOKSI AND ENGAGED IN PROVI DING ACCOMMODATION /BOGUS ENTRIES IN CAPITAL GAIN, THEN THE CLAIM OF THE ASSE SSEE SOLELY BASED ON THE CONTRACT NOTE WAS FOUND TO BE BOGUS. HE HAS RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LD. CIT (A) HAS DISCUSSED TH IS ISSUE IN DETAIL AND AFTER RELYING UPON VARIOUS DECISIONS HAS CONFIRMED THE FINDING OF THE AO THAT THE CLAIM OF LONG TERM CAPITAL GAIN EXEMPT FROM INCOME-TAX IS NOTHING BUT A BOGUS CLAIM. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE CLAIMED TO HAVE PURCHASED 400 0 SHARES OF M/S. AXON INFOTECH LTD. ON 5 TH JULY, 2006 AND AGAIN 4000 SHARES OF THE SAME COMPA NY ON 10 TH JULY, 2006 FOR A TOTAL CONSIDERATION OF RS. 4,10,540/-. IT IS PERTINENT TO NOTE THAT AS PER CONTRACT NOTE DATED 10 TH JULY, 2006 THERE IS NO TRANSFER OF PURCHASE CONSID ERATION BY THE ASSESSEE EITHER IN FAVOUR OF THE BROKER OR IN F AVOUR OF ANY OTHER PARTY. THUS THE 8 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. SAID BROKERS NOTE RELIED UPON BY THE ASSESSEE DOES NOT PROVE THE TRANSACTION OF PURCHASE OF SHARES BY THE BROKER ON BEHALF OF THE A SSESSEE AGAINST CONSIDERATION. THE ASSESSEE HAS NOT PLACED ANY RECORD REGARDING PA YMENT OF PURCHASE CONSIDERATION, THEREFORE, IN THE ABSENCE OF ANY REC ORD OR MATERIAL TO SHOW PAYMENT OF PURCHASE CONSIDERATION BY THE ASSESSEE, THE BROK ERS NOTE ITSELF CANNOT BE CONSIDERED A CONCLUSIVE PROOF OF PURCHASE OF SHARES WHEN THE ACTUAL HOLDING OF THE SHARES TAKEN PLACE ONLY IN THE MONTH OF JANUARY, 20 08 ITSELF. WE NOTE THAT IN THE MONTH OF SEPTEMBER, 2007 THE COMPANY M/S. AXON INFO TECH LTD. ISSUED BONUS SHARES 3:1 AND THEREBY THE ASSESSEE CLAIMED THAT TH E 8000 SHARES WERE CONVERTED INTO 32000 SHARES BY VIRTUE OF BONUS SHARES. EVEN AFTER THE ISSUANCE OF BONUS SHARES, THERE IS NO RECORD TO SHOW THAT EITHER THE ORIGINAL SHARES OR THE BONUS SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE PRIOR TO 11 TH JANUARY, 2008 WHEN THE SHARES WERE FINALLY CREDITED TO THE DEMAT ACCOUNT O F THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE PURCHASE AND SALE OF THE SHARES ARE C LAIMED TO HAVE BEEN MADE ON- LINE AND, THEREFORE, THERE IS NO PHYSICAL TRANSFER OF SHARES AND ONCE THE SHARES ARE PURCHASED ON-LINE AND IN THE DIGITAL FORM THEN IMME DIATELY AFTER PURCHASE THE SHARES ARE TO BE CREDITED INTO THE DEMAT ACCOUNT OF THE AS SESSEE. HOWEVER, THE ONLY EXPLANATION OF THE ASSESSEE IN THIS RESPECT IS THAT THE SHARES WERE IN THE COMMON POOL OF THE BROKERS ACCOUNT THOUGH PURCHASED ON BE HALF OF THE ASSESSEE. WE DO NOT ACCEPT THIS EXPLANATION OF THE ASSESSEE IN THE ABSE NCE OF ANY RECORD TO SHOW THAT THE SHARES WERE PURCHASED BY THE BROKER IN THE NAME OF THE ASSESSEE. IT APPEARS THAT THE SHARES WERE HELD BY THE BROKER M/S. ALLIAN CE INTERMEDIARIES & NETWORK PVT. LTD. AND ONLY IN THE MONTH OF JANUARY, 2008 THESE S HARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE AND FINALLY CREDITED IN THE DE MAT ACCOUNT OF THE ASSESSEE ON 9 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. 11 TH JANUARY, 2008. THEREFORE, PRIOR TO 11.01.2008 THE RE IS NO MATERIAL OR RECORD TO SHOW THAT THE ASSESSEE HAD EVER HELD THESE SHARES. THE LD. A/R OF THE ASSESSEE THOUGH CONTENDED THAT THE ASSESSEE HAS SHOWN THE SH ARES IN HIS BALANCE SHEET AS ON 31 ST MARCH, 2007, HOWEVER, WE FIND THAT THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2007-08 WAS FILED BY THE ASSESSEE ONLY ON 27 TH MARCH, 2008 WHICH IS SUBSEQUENT TO THE SALE OF THE SHARES IN THE MONTHS OF JANUARY AND FEBRUARY, 2008. THUS FILING OF THE RETURN FOR THE ASSESSMENT YEAR 2 007-08 WILL NOT HELP THE ASSESSEE TO CLAIM THAT THESE SHARES WERE DECLARED BY THE ASS ESSEE IN THE BALANCE SHEET WHEN THE RETURN WAS FILED BELATEDLY AND THAT TOO AFTER T HE SALE OF THE SHARES. ACCORDINGLY, THE PURCHASE TRANSACTION OF THE SHARES REMAINED UNS UBSTANTIATED. THE LD. A/R HAS RELIED UPON THE VARIOUS DECISIONS ON THE POINT THAT THE DATE OF BROKERS NOTE SHOULD BE CONSIDERED AS DATE OF PURCHASE OF SHARES. HOWEV ER, WE FIND THAT ONLY IN CASE OF DISPUTE ABOUT THE DATE OF PURCHASE WHEN THERE IS A REASONABLE TIME GAP BETWEEN THE CONTRACT NOTE AND ACTUAL TRANSFER OF THE SHARES IN THE NAME OF THE ASSESSEE THEN SUBJECT TO THE CONDITION THAT THE SHARES ARE ACTUAL LY TRANSFERRED IN THE NAME OF THE ASSESSEE, THE DATE OF PURCHASE SHALL BE CONSIDERED AS THE DATE OF BROKERS NOTE. IN THE CASE IN HAND, THE BROKERS NOTE AS RELIED UPON BY THE ASSESSEE WAS NOT FOUND TO BE A GENUINE DOCUMENT AS THERE IS NO OTHER SUPPORTI NG EVIDENCE TO PROVE THE TRANSACTION OF PURCHASE AND PARTICULARLY THE PAYMEN T OF PURCHASE CONSIDERATION IS NOT PROVED BY THE ASSESSEE. THEREFORE, THE DECISIO NS RELIED UPON BY THE ASSESSEE ARE NOT IN HELP TO THE CASE OF THE ASSESSEE. ONCE THE FACTS ON RECORD HAVE ESTABLISHED THAT THE SHARES IN QUESTION WERE TRANSF ERRED IN THE NAME OF THE ASSESSEE ONLY ON 11.01.2008, THEN PRIOR TO THE SAID DATE THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED AS A GENUINE CLAIM. THE ENTIRE CLAIM OF T HE ASSESSEE IS BASED ON THE 10 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. CONTRACT NOTE DATED 10 TH JULY, 2006 WHICH ITSELF DOES NOT ESTABLISH THE FAC T OF PURCHASE IN THE ABSENCE OF ANY PURCHASE CONSIDERATI ON AND ANY OTHER RECORD SHOWING THE TRANSFER OF THE SHARES IN THE NAME OF T HE ASSESSEE. HENCE, WE FIND THAT THE LD. CIT (A) HAS DECIDED THIS ISSUE AS UNDER :- AS REGARDS GROUND OF APPEAL NO. 2, IT IS SEEN THA T THE SHARES OF SO-CALLED COMPANIES WERE NEVER WITH THE ASSESSEE IN THE PHYSI CAL FORMAT (DEMAT) SINCE HIS DEMAT ACCOUNT WAS OPENED MUCH AFTER THE ALLEGED PUR CHASE IN 2006 ITSELF. SECONDLY, THE VERY BROKERAGE FIRM WHICH HAD ARRANG ED THE CAPITAL GAINS RECEIPT FOR THE ASSESSEE WAS FIGURING IN THE LIST OF CONTROLLE D BROKERS OF SH. MUKESH CHOKSHI, THE PERSON BEHIND ARRANGING SUCH BOGUS CAPITAL GA INS ENTRIES IN EXCHANGE OF CASH AS IS VERY CLEAR FROM HIS STATEMENTS GIVEN IN THE C OURSE OF SEARCH PROCEEDINGS ELSEWHERE IN WHICH HE HAD LISTED THE BENEFICIARIES OF SUCH BOGUS CAPITAL GAINS RECEIPTS, AND THE APPELLANT FIGURED IN THAT LIST. THE ASSESSEE APPELLANT ON HIS PART HAS PRODUCED NO DOCUMENTARY EVIDENCES IN HIS SUPPORT LIKE CONFIRMATIONS OF LEDGER ACCOUNTS OF TH E BROKER SHOWING HIS TRANSACTION, EVIDENCE OF HOLDING POSSESSION OF THE SHARES IN QUE STION AT ANY TIME PHYSICALLY ETC. THIRDLY, ONCE THE ACTIVITIES OF THE BROKER COMPANY BEING SUSPECT, AND IT WAS ALSO BLACKLISTED BY SEBI, THE REGULATORY BODY FOR THE STOCK & SHARE DEALINGS, THE BENEFICIARIES ATTACHED TO HIS TRANSACTED BUSINESS, IN THE LIGHT OF HIS OWN ADMISSIONS COULD NOT BE HELD TO HAVE HAD GENUINE CAPITAL GAINS INCOME ON WHICH THEY COULD BE GIVEN BENEFIT OF TAX EXEMPTIONS. HIGH COURT OF DELH I IN THE CASE OF COMMISSIONER OF INCOME-TAX V. NOVA PROMOTERS & FINL EASE (P) LTD. 18 TAXMANN.COM 217 (DELHI) HELD THAT SECTION 68 OF THE INCOME-TAX ACT, 1961 CASH CREDI TS ASSESSMENT YEAR 2000-01 FOR RELEVANT ASSESSMENT YEAR, ASSESSEE FILED ITS RE TURN DECLARING LOSS SAID RETURN WAS PROCESSED UNDER SECTION 143(1) SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM INVESTIGATION WING THAT ASSESSEE H AD OBTAINED ACCOMMODATION ENTRIES IN GARB OF SHARE APPLICATION MONIES IN OR DER TO EXAMINE GENUINENESS AND CREDITWORTHINESS OF COMPANIES WHICH GAVE ENTRIES TO ASSESSEE, ASSESSING OFFICER 11 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. ISSUED SUMMONS TO TWO PERSONS NAMELY, M AND R W HO DID NOT APPEAR BEFORE HIM SUBSEQUENTLY, ASSESSEE FILED A LETTER WITH ASSESSIN G OFFICER ALONG WITH AFFIDAVITS OF R AND M IN WHICH BOTH OF THEM HAD STATED THAT TRANS ACTIONS WITH ASSESSEE WERE GENUINE AND EARLIER STATEMENTS RECORDED FROM THEM B Y INVESTIGATION WING WERE GIVEN UNDER PRESSURE ASSESSING OFFICER DID NOT ACCEPT T HOSE AFFIDAVITS AND MADE CERTAIN ADDITION TO ASSESSEES INCOME UNDER SECTION 68 TR IBUNAL, HOWEVER, TAKING A VIEW THAT THERE WAS NO DISPUTE ABOUT IDENTITY OF FHSARE HOLDERS NAMELY M AND R, DELETED ADDITION MADE BY ASSESSING OFFICER ON REVENUES A PPEAL, IT WAS NOTED THAT BOTH .M. AND R HAD ADMITTED BEFORE ADDITIONAL COMMISSIONER (INVESTIGATION) THAT THEY WERE ACTING AS ACCOMMODATION ENTRY PROVIDERS THEY HAD ALSO GIVEN A LIST OF 22 COMPANIES IN WHICH THEY WERE OPERATING ACCOUNTS I T WAS ALSO APPARENT THAT OUT OF 22 COMPANIES WHOSE NAMES FIGURED IN INFORMATION GIV EN BY THEM TO INVESTIGATION WING, 15 COMPANIES HAD PROVIDED SO-CALLED SHARE SU BSCRIPTION MONIES TO ASSESSEE WHETHER ON FACTS, THERE WAS SPECIFIC INVOLVEMENT OF ASSESSEE COMPANY IN MODUS OPERANDI FOLLOWED BY M AND R. HELD, YES WHETH ER, THEREFORE, IMPUGNED ORDER PASSED BY TRIBUNAL DELETING ADDITION WAS TO BE SET ASIDE HELD, YES (IN FAVOUR OF REVENUE). SECTION 148 OF THE INCOME-TAX ACT, 1961 INCOME ES CAPING ASSESSMENT ISSUE OF NOTICE FOR ASSESSMENT YEAR 2000-01 WHETHER AT S TAGE OF ISSUING NOTICE UNDER SECTION1 48 MERITS OF MATTER ARE NOT RELEVANT AND A SSESSING OFFICER AT THAT STAGE IS REQUIRED TO FORM ONLY A PRIMA FACIE BELIEF OR OPINI ON THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT HELD, YES WHETHER HOWEVE R, ONCE THAT STAGE IS CROSSED AND REASSESSMENT PROCEEDINGS ARE SET IN MOTION, MAT ERIAL ON BASIS OF WHICH REQUISITE BELIEF WAS FORMED BY ASSESSING OFFICER HAS TO BE AP PRAISED AND EXAMINED HELD, YES .. THE COURT CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTA BLISHES THE LINK BETWEEN SELF- CONFESSED ACCOMMODATION ENTRY PROVIDERS, WHOSE BU SINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE AS SESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICTED BY VALID MATERIAL MADE AVAILABL E TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHOR ITIES INTO THE ACTIVITIES OF SUCH 12 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. ENTRY PROVIDERS. THE EXISTENCE WITH THE ASSESSIN G OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN A SMOKESCREEN CONCEIVED AND EXECUTED WITH THE CONNI VANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESS EE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SECTION 68 TO PROVE AND ESTAB LISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSES SION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VE RIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE INSTANT CASE DOES N OT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. THUS WHEN VIEWED IN THE CONTEXT OF THE MODUS OPERAN DI INVOLVED IN THE PRESENT CASE AS WELL, THE BONAFIDES GET OBLITERATED IN THE BACKG ROUND OF THE FINDINGS RECORDED FROM THE ALLEGED ENTRY PROVIDER SH. MUKESH CHOKSHI. THOUGH THE ADDITION IN THIS CASE HAS NOT BEEN MADE U/S 68, BUT THE PRINCIPLE BEHIND INTRODUCING ENTRIES ON THE RECEIPT SIDE OF THE BOOKS OF ACCOUNTS IS GUIDED BY THE PRIN CIPLE OF GENUINENESS OF THE SOURCE OF SUCH RECEIPTS. IN A SIMILAR CONTEXT, THE SPECIAL BENCH IN THE CASE OF CIT V. SOPHIA FINANCE LTD. (1994) 205 ITR 98/70 TAXMAN 69 (DELHI) OPINED THAT SECTION 68 IS VERY WIDELY WORDED AND AN INCOME-TAX OFFICER IS NOT PRECLUDED F ROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SOURCE THEREOF EVEN IF THE SAME IS CREDITED AS RECEIPT OF SHARE APPLICATION MONEY. MERE FACT THAT THEPAYMENT WAS R ECEIVED BY CHEQUE OR THAT THE APPLICANTS WERE COMPANIES, BORNE ON THE FILE OF REG ISTRAR OF COMPANIES WERE HELD TO BE NEUTRAL FACTS AND DID NOT PROVE THAT THE TRANSAC TION WAS GENUINE. HIGH COURT OF DELHI IN SARITA AGGARWAL V. INCOME-TA X OFFICER, 56 TAXMANN.COM 195 (DELHI) REFERRED TO CERTAIN OTHER LEGAL PRECEDE NTS WHILE DECIDING ON THE ISSUE OF SECTION 68 THAT REFERENCE CAN BE MADE TO CIT V. DUR GA PRASAD MORE (1971) 82 ITR 540 (SC), CIT V. DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SC) AND OTHER CASES REFERRED TO IN CIT V. NOVA PROMOTERS AND FINLEASE ( P) LTD. (2012) 342 ITR 169 (DELHI). IN THESE CASES, IT HAS BEEN OBSERVED THAT WHAT IS APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO BELIEVE THAT THE APPARENT IS NOT REAL. CAUTION MUST BE EXERCISED ON SELF-SERVING STATEMENTS MADE IN THE 13 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. DOCUMENTS AS THEY ARE EASY TO MAKE AND RELY UPON IN CASE AN ASSESSEE WANTS TO EVADE TAXES. PROOF IS REQUIRED AND THE ASSESSING AU THORITIES SHOULD NOT PUT BLINKERS WHILE LOOKING AT THE DOCUMENTS BEFORE THEM. SURROU NDING CIRCUMSTANCES ARE EQUALLY IMPORTANT. (EMPHASIS SUPPLIED). SINCE THE APPELLANT, IN THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS, HAS FAILED TO BRING ANY EVIDENCES ON RECORD TO JUST IFY THAT THESE WERE GENUINE TRANSACTIONS, AND ON THE CONTRARY LOOKING TO LACK O F EVIDENCES, BACKGROUND & NATURE OF DUBIOUS ACTIVITIES ADMITTED CLEARLY BY THE BROKE R PROVIDING SUCH BOGUS CAPITAL GAINS, I AM OF THE VIEW THAT THE ADDITION OF RS. 17 ,00,180/- HAS RIGHTLY BEEN MADE IN THIS CASE BY THE AO AS INCOME FROM UNDISCLOSED SOUR CES AND THE SAME DESERVES TO BE CONFIRMED. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. THEREFORE, WE CONCUR WITH THE VIEW TO THE EXTENT TH AT THE CLAIM OF PURCHASE OF SHARES IN QUESTION IN THE MONTH OF JULY, 2006 IS NO T PROVED BY THE ASSESSEE. HOWEVER, ONCE THE SHARES WERE FINALLY CREDITED IN T HE DEMAT ACCOUNT OF THE ASSESSEE ON 11.01.2008, THEN THE SAID FACT OF HOLDING THE SH ARES AS ON 11 TH JANUARY, 2008 CANNOT BE DENIED. THE SHARES WERE THEN SOLD ON 16 TH JANUARY, 2008 AND 8 TH FEBRUARY, 2008 CONSEQUENTLY THE GAIN, IF ANY, IN TH E TRANSACTION WOULD BE ONLY SHORT TERM CAPITAL GAIN. HOWEVER, THERE IS ANOTHER ASPEC T IN THIS TRANSACTION WHICH IS THE PURCHASE PRICE AS ON 11.01.2008. SINCE THE TRANSAC TION IS ON-LINE AND THROUGH STOCK EXCHANGE, THEREFORE, THE PREVAILING PRICE OF THE SH ARES IN QUESTION CAN BE ASCERTAINED FROM THE STOCK EXCHANGE AND, THEREFORE, THE DIFFERENCE OF PREVAILING PRICE AND THE COST OF PURCHASE CLAIMED BY THE ASSES SEE CAN BE TREATED AS UNEXPLAINED INVESTMENT. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE AO 14 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA. TO RECONSIDER THE SAME IN THE LIGHT OF ABOVE OBSERV ATION AND AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13/12/ 2018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 13/12/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI PARAS KUMAR JAIN, KOTA. 2. THE RESPONDENT THE ITO WARD 1(3), KOTA. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 279/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 15 ITA NO. 279/JP/2017 SHRI PARAS KUMAR JAIN, KOTA.