ANJALI PANDIT, MUMBAI V. ASST CIT CEN CIR 12, MUMBAI

ITA 3028/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1747 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-12-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA D SHUKLA
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Gift; Business income; Search and seizure; Share purchase agreement; Source of fund; Question of law; Cost of acquisition; Reasonable cause; Corroborative evidences; Accommodation entries; Non compliance; Assessment record; Penny stocks; Reason to believe
• Section: 69C; 143(3); 54F; 153A; 133(6); 147; 68; 148; 263; 132; 15; 139; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 3028 TO 3032 / MUM/20 1 1 ( / ASSESSMENT YEA R : 200 2 - 03 TO 2006 - 07 ) SMT.ANJLI PANDIT, GAJANAN BUILDING NO.8, 178, JAWAHAR NAGAR, GOREGAON (W), MUMBAI - 400062 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 12, CGO BUILDING, M K MARG, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AFUPP3435R ./ I.T.A. NO .3033 TO 3037/ MUM/20 11 ( / ASSESSMENT YEAR : 2002 - 03 TO 2006 - 07 ) SHRI DHARMESH PANDIT, GAJANAN BUILDING NO.8, 178, JAWAHAR NAGAR, GOREGAON (W), MUMBAI - 400062 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 12, CGO BUILDING, M K MARG, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AFUPP343 3K ./ I.T.A. NO . 303 8 TO 30 42 / MUM/20 11 ( / ASSESSMENT YEAR : 2002 - 03 TO 2006 - 07 ) SHRI DHARMESH PANDIT (HUF) , GAJANAN BUILDING NO.8, 178, JAWAHAR NAGAR, GOREGAON (W), MUMBAI - 400062 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 12, CGO BUILDING, M K MARG, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AADHD1766K ANJLIGROUP 2 ./ I.T.A. NO .3043/ MUM/20 11 ( / ASSESSMENT YEAR : 2003 - 04 ) SHRI RAJENDRA PANDIT , GAJANAN BUILDING NO.8, 178, JAWAHAR NAGAR, GOREGAON (W), MUMBAI - 400062 / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 12, CGO BUILDING, M K MARG, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AAHPP7031P / A SSESSEE S BY: SHRI JIGNESH SHAH / RE VENUE BY MS.ANUPAMA D SHUKLA / DATE OF HEARING : 18.8.2016 / DATE OF PRONOUNCEM ENT : 17.11.2016 / O R D E R PER BENCH : THESE ARE THE SIXTEEN APPEALS FILED BY THE FOUR DIFFERENT ASSESSEES PARTIES. I.T.A. NO .3028 TO 30 42 / MUM/ 20 11 FOR THE ASSESSMENT YEARS ASSESSMENT YEAR S 2002 - 03 TO 2006 - 07 ARE FILED BY THE ASSESSEE S AGAINST THE SEPARATE ORDER S DATED 14.1.2011 PASSED BY THE LD.CIT(A) . APPEAL BEARING ITA NO.3043/MUM/2011 FOR THE ASSESSMENT YEAR 2003 - 04 IS ALSO FILED BY THE ASSESSEE AGAINST THE ORDER DATED 14.1.2011. SINCE ISSUES RAISED IN ALL THESE APPEALS ARE IDENTICAL EXCEP T FIGURES, THESE APPEALS CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ANJLIGROUP 3 2. THE ASSESSEE S HA VE CHALLENGED THE ORDER OF CIT(A) - 37 MUMBAI DATED 14.01.2011.THE ASSESSMENT IN TH ESE CASES HAVE BEEN FRA MED VIDE ASSESSMENT ORDER DATED 31.12.2007 PASSED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT , 1961 (HEREINAFTER CALLED THE ACT). WE WILL FIRST TAKE UP THE APPEAL IN ITA NO 3028/MUM/2011 ( A Y: 2002 - 03 ) IN WHICH THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1) A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED AO ERRED IN TREATING THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AT RS.15,06,271 / - AS INCOME FROM OTHER SOURCES. B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT (A) WHILE CONFIRMING THE ADDITION ERRED IN HOLDING THAT THE ENTIRE SALE PROCEEDS OF SHARES CREDITED IN THE BOOKS OF THE APPELLANT AT RS. 15,84,736/- ON ACCOUNT OF ALLEGED CAPITAL GAIN CHARGEABLE TO TAX U/S 68 OF THE IT ACT AND CONSE QUENTLY ENHANCING THE ADDITION FROM RS.15,06,2711 - TO RS.15,84,736/ - . 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE A O U/S.69 C OF THE I.T ACT AT RS.78,4651 - BEING UNEXPLA INED EXPENDITURE INCURRED FOR PURCHASE OF SHARES. HE FAILED TO APPRECIATE THAT THE SAID SHARES WERE PURCHASED IN THE EARLIER ASSESSMENT YEAR OUT OF EXPLAINED SOURCES. 3) A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT(A) E RRED IN CONFIRMING THE ADDITION MADE BY THE A O U/S.69 C OF THE I. T ACT AT RS.79,237 / - BEING UNEXPLAINED EXPENDITURE INCURRED FOR PAYMENT OF COMMISSION / SERVICE CHARGES FOR ARRANGING THE CAPITAL GAIN. B. WHILE SUSTAINING THE ADDITION OF RS. 79,2371 - THE L EARNED C IT (A) FAILED TO APPRECIATE THAT THE A O MADE THE SAID ADDITION WITHOUT HAVING ANY EVIDENCE ON RECORDS BUT ONLY ON THE BASIS OF SUSPICION , SURMISE AND CONJECTURE. 4) APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR MODIFY THE GROUNDS OF APPEAL ON OR B EFORE THE DATE OF HEARINGS OF THE ANNEAL. ANJLIGROUP 4 THE ASSESSEE HAS ALSO RAISED SOME ADDITIONAL GROUNDS WHICH READ AS UNDER : ADDITIONAL GROUNDS OF APPEAL THE APPELLANT SUBMITS THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE AN OTHER AND W ITHOUT PREJUDICE TO THE ORIGINAL GROUNDS OF APPEAL SUBMITTED EARLIER WITH THE APPEAL: 1 (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE HON'BLE CIT(A) ERRED IN CONFIRMING THE TREATMENT OF THE E NTIRE LONG - TERM CAPITAL GAIN OF RS . 15,06,271 ON SALE OF SHARES AS INC OME FROM OTHER SOURCES FOR TAX PURPOSES BY THE LEARNED A O BY HOLD ING IT AS NON - GENUINE, WITHOUT THERE BEING ANY INCRIMINATING MAT ERIAL FOUND DURING SEARCH ON THIS ISSUE AT ALL. THE APPELLANT PRAYS THAT SINCE IN THE ABS ENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH SUCH A TREATME NT IS OUTSIDE THE JURISDICTION OF THE A O UNDER SECTION 153A, THE SAID AMOUNT OF RS. 15,06,271 BE TREATED AS LONG - TERM CAPITAL GAIN INS TEAD OF AS INCOME FROM OTHER SOURCES AND B E TAXED ACCORDINGLY. 1 (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A), WHILE CONFIRMING THE ABOVE TREATMENT, ERRED IN ENHANCING THE ADDITION BY HOLDING THAT THE ENTIRE SALE PROCEED ON SALE OF SHARES AMOUNTING TO RS.15, 84,736 ARE TAXABLE AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 INSTEAD OF ONLY WAS LONG TERM CAPITAL GAIN OF RS.15, 06 271 / - WHEN NO INCRIMINATING MATERIAL WAS FOUND DURING SEARCH ON THIS ISSUE AT ALL. THE APPELLANT PRAYS THAT SINCE IN THE ABSENCE OF AN Y CRIMINATING MATERIAL FOUND DURING SEARCH THE ACTION OF THE LEA RNED CIT(A) IN MAKING THIS ENHANCEMENT IS OUTSIDE THE JURISDICTION U/S 153A, THE SAME BE QUASHED AND THE ADDITION MADE BE D ELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN T HE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 78 ,465/ - MADE UNDER SECTION 69C BY THE LEARNED CAT(A) , BEING ALLEGED UNEXPLAINED EXPENDITURE ON PURCHASE OF SHARES, WITHOUT THERE B EING ANY INCRIMINATING MATERIAL FOUND DURING SEARCH ON THIS ISSU E AT A LL. THE APPELLANT PRAYS THAT SINCE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH SUCH ADDITION U NDER SECTION 69C IS OUTSIDE THE JURISDICTION OF THE AO UNDER SECTION 153A THIS ADDITION OF RS. 78,465 BE DELETED. ANJLIGROUP 5 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 79 ,237 MADE UNDER SECTION 69C BY THE LEARNED A O , BEING ALL EGED UNEXPLAINED EXPENDITURE ON PAYMENT OF COMMISSION/SER VICE CHARGES, WITHOUT THERE BEING ANY INCRIMINATING MATERIAL FOUND DURING SEARCH ON THIS ISSUE AT ALL. THE APPELLANT PRAYS THAT SINCE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH SUCH ADDITION UNDER SECTION 69C IS OUTSIDE THE JURISDICTION OF THE A O UNDER SECTION 1 53A, T HIS ADDITION OF RS. 79,237 BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR WITH DRAW ALL OR ANY OF THE ABOVE GROUNDS AT OR BEFORE THE HEARING OF THIS APPEAL. 3 . AT THE OUTSET, THE LD AR SUBMITTED BEFORE US BY REFERRING TO THE APPLICA TION FOR ADMISSION OF ADDITIONAL GROUNDS DATED 10 TH DECEMBER, 2012 THAT THE ASSESSEE HAS RAISED SOME ADDITIONAL GROUNDS IN WHICH THE ISSUE OF JURISDICTION WAS PROPOSED TO BE RAISED. THE LD AR SUBMITTED THAT THE SAID ISSUE OF JURISDICTION WAS NOT RAISED BEF ORE THE AUTHORITIES BELOW NOR BEFORE THE HONBLE TRIBUNAL AS THE SAME WAS NOT ADVISED BY THE EARLIER COUNSEL OF THE ASSESSEE WHICH WAS PURELY OF LEGAL NATURE . I T WAS FOR THE FIRST TIME RAISED BEFORE THE T RIBUNAL WHICH AROSE OUT OF FACTS AND ASSESSMENT RECO RDS BEFORE THE AUTHORITIES BELOW . IT WAS ARGUED BEFORE US THAT SINCE THESE GROUNDS WERE OF PURELY OF LEGAL NATURE CONCERNING THE JURISDICTION OF THE AO MAKE THE ADDITIONS AND THUS GO TO THE VERY ROOT OF THE MATTER . THE LD AR WAS PRAYED FOR THE ADMISSIO N OF THESE GROUNDS IN INTEREST OF JUSTICE . IN DEFENCE OF HIS ARGUMENTS THE LD AR RELIED UPON THE DECISION OF NATIONA L THERMAL POWER CO LTD VS CIT(1998) 229 ITR 383(SC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DY. CIT (2012)137 ITD26 (MUM)(SB). ANJLIGROUP 6 4 . WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND CASE LAWS CITED ABOVE AND FIND THAT THE ISSUE OF JURISDICTION WAS NOT RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW BECAUSE THE ASSESSEE WAS NOT ADVISED BY THE CHARTERED ACCOUNTANTS OF THE ASSESSEE T O RAISE THE ISSUE OF JURISDICTION. WE FIND THE ISSUE CHALLENGING THE JURISDICTION OF THE AO TO MAKE ADDITIONS IN THE ASSESSMENT FRAME D U/S 153A OF THE ACT IS A CORE ISSUE WHICH AFFECTS THE VERY BASIS OF THE ASSESSMENT AND IS LEGAL ONE EMANAT ING FROM T HE FACTS AND ASSESSMENT RECORDS BEFORE THE AUTHORITIES BELOW . IN OUR VIEW NON RAKING UP THE SAID ISSUE BEFORE THE LOWER AUTHORITIES DUE TO LACK OF ADVI C E FROM THE CHARTERED ACCOUNTANTS OF THE ASSESSEE IS A REASONABLE CAUSE . THE ISSUE OF JURISDICTION RAISED BY THE ASSESSEE BY TAKING ADDITIONAL GROUNDS DOES NOT REQUIRE ANY VERIFICATION OR EXAMINATION OF RECORDS BY THE LOWER AUTHORITIES BELOW . WE ALSO FIND THAT THE ISSUE IS SQUARELY COVERED BY THE PROPOSITION LAID DOWN IN ABOVE DECISIONS IN FAVOUR OF THE ASSESSEE AND WE THEREFORE , RESPECTFULLY FOLLOWING THE RATIO LAID DOWN INCLINED TO ADMIT THE ADDITIONAL GROUNDS FOR ADJUDICATION. 5 . THE AR VEHEMENTLY SUBMITTED BEFORE US THAT THE AO HAS NO JURISDICTION TO ASSESS THE LONG TERM CAPITAL GAIN OF RS.15,06,27 1/ - AS INCOME FROM OTHER SOURCES BY HOLDING THE SAME AS NON GENUINE AS NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ON THIS ISSUE. THE LD AR SUBMITTED THAT THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 21.03.2003 DEC LARING AN INCOME OF RS.12,34,485/ - . NO NOTICE U/S 143(2) OF THE ACT WAS ISSUED BY THE AO AND THE TIME PERIOD FOR ISSUING SUCH NOTICE UNDER THE ANJLIGROUP 7 STATUTE WAS 12 MONTHS FROM 31ST MARCH 2003 MEANING THEREBY THE DEADLINE FOR ISSUANCE OF NOTICE U/S 143(2) WAS EX PIRED ON 31 ST MARCH 2004. THUS THE RETURN OF INCOME STANDS ASSESSED AND ASSESSMENT ATTAINED FINALITY. THEREAFTER S EARCH AND SEIZURE U/S 132 OF THE ACT WAS CONDUCTED AND CARRIED OUT ON 24.1.2006. THE LD AR SUBMITTED THAT THE INCOME RETURNED AS PER THE ORIG INAL RETURN ATTAINED FINALITY AS THE ASSESSMENT HAS ATTAINED FINALITY ON THE DATE OF SEARCH AND THE AO HAS NO JURISDICTION TO ASSESS THE INCOME WHICH IS NOT BASED ON THE SEARCH MATERIALS/INCRIMINATING MATERIALS FOUND DURING THE SEARCH . THE AR REFERRING T O THE PROVISIONS OF SECTION 153A OF THE ACT SUBMITTED THAT THE ASSESSMENTS WHICH HAVE ATTAINED FINALITY COULD NOT BE DISTURBED UNLESS SOME INCRIMINATING MATERIAL WAS FOUND DURING SEARCH. THE LD COUNSEL OF THE ASSESSEE PRAYED THAT IN TERMS OF SECTION 153A OF THE ACT THE AO HAS NO JURISDICTION TO TREAT THE LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES AS NO INCRIMINATING MATERIAL WAS QUA THE SAID INCOME DURING THE SEARCH . T HEREFORE ADDITION MADE IN THE ASSESSMENT FRAMED BY THE AO WAS WITHOUT JURISDICTI ON AND THEREFORE BAD IN LAW. ACCORDING TO THE AR THE ADDITION MADE IN THE ASSESSMENT SO FRAMED U/S 143(3) R.W.S. 153A OF THE ACT WAS BAD IN LAW AS THE AO HAS NO JURISDICTION UNDER STATUTE AND REQUIRED TO BE DELETED . IN DEFENCE OF HIS ARGUMENTS AND SUBMISS IONS THE LD AR RELIED ON THE FOLLOWING DECISIONS: - A ) ALL CARGO GLOBAL LOGISTICS LTD V/S DCIT (2012) 137 ITD 287(MUM)(SB) B ) ATITHI N PATEL V ACIT (ORDER DATED 22.8.2012 (ITA NO.43 TO 45 /MUM/2010 C ) HIREN N PATEL V ACIT (ORDER D ATED 12.10.2012 ANJLIGROUP 8 (ITA NO.39 TO 41/MUM/2010 D ) GURINDER SINGH BAWA V DCIT (ORDER DATED 16.11.2012 (ITA NO.S 2075/MUM/2010 6 . ON THE OTHER HAND THE LD DR RELIED HEAVILY ON THE ORDERS OF AUTHORITIES BELOW. 7 . AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE RELEVANT MATERIALS PLACED BEFORE US, WE FIND THAT THE ASSESSMENT IN THE YEAR UNDER CONSIDERATION WAS NOT PENDING ON THE DATE OF SEARCH. THE RETURN OF INCOME WAS FILED ON 21.03.2003 AND NO NOTICE U/S 143(2) OF THE ACT WAS ISS UED TILL 31.3.2004 AND THUS THE ASSESSMENT FOR THE YEAR UNDER REFERENCE ATTAINED FINALITY ON THE INCOME RETURNED BY THE ASSESSEE AT RS 12,34,485/ - . THE SEARCH ACTION ON THE ASSESSEE WAS CARRIED OUT ON 24.1.2006 AND ON THAT DATE THE ASSESSMENT FOR THE INS TANT YEAR WAS NOT PENDING AND THE AO COULD HAVE DISTURBED THE ASSESSMENT PROVIDED THE ADDITION ARE MADE ON THE BASIS OF SEARCH MATERIALS IN TERM OF PROVISIONS OF SECTION 153A OF THE ACT . T HE PROVISIONS OF SECTION 153A OF THE ACT PROVIDES THAT IN CASE OF SE ARCH AFTER 31.5.2003, THE AO SHALL ISSUE NOTICE TO THE ASSESSEE U/S 153A OF THE ACT REQUIRING TO FURNISH THE RETURN S OF INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH AND THEREAFTER THE AO SHALL ASSESS OR RE - ASSESS THE TOTAL INCOM E FOR SIX YEARS. THE SECTION FURTHER PROVIDES THAT ALL PENDING ASSESSMENT OR RE - ASSESSMENT ON THE DATE OF SEARCH SHALL ABATE AND AO SHALL ASSESS THE INCOME U/S 153A(1)(B) AND FIRST PROVISO THERETO . BUT THE ASSESSMENTS IN THE PERIOD OF SIX YEAR S IN RESPECT OF WHICH NOTICE U/S 153A WAS ISSUED BUT WHICH ARE NOT PENDING AND ATTAINED FINALITY ON THE DATE OF ANJLIGROUP 9 SEARCH CANNOT BE DISTURBED BY THE AO UNLESS SOME INCRIMINATING MATERIAL IN RESPECT OF THE COMPLETED ASSESSMENTS WERE FOUND DURING THE SEARCH BY THE SEARCH TE AM. IN THE CASE AT HAND, WE FIND THAT THE ASSESSMENT WAS NOT PENDING ON THE DATE OF SEARCH AND NO INCRIMINATING MATERIAL QUA LONG TERM CAPITAL GAIN OF RS. 15,06,271/ - WAS FOUND DURING SEARCH. WE FIND MERIT IN THE ARGUMENTS OF THE LD AR THAT AO HAS NO JURISD ICTION IN ASSESSING THE LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES. IN THE CASE OF ALL CARGO LOGISTICS LTD DY . CIT (SUPRA ) THE SPECIAL BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE WHICH HAS ALSO AFFIRMED BY THE HONBLE BOMBAY HI GH COURT . I N THE CASE OF CIT V/S CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. IN INCOME TAX APPEAL NO.523 OF 2013 WITH CIT V/S ALL CARGO GLOBAL LOGISTICS LTD IN INCOME TAX APPEAL NO.1969 OF 2013 DATED 21.4.2015 , THE HONBLE JURISDICTIONAL HIGH C OURT HAS DECIDED THE ISSUE OF SECTION 153A IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER( PARA S 21,22,23 ,31 AND 37 ): 21. FOR PROPERLY APPRECIATING THE RIVAL CONTENTIONS, A REFERENCE WILL HAVE TO BE MADE TO SECTION 153A OF THE INCOME TAX ACT, 1961. THAT READS AS UNDER : 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RESPECT OF EA CH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ANJLIGROUP 10 ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS; PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, IF ANY, RE LATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS REFERRED TO IN THIS SUBSECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE : PROVIDED ALSO THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSIN G OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. (2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF ASSESSMENT OR REASSESSMENT MADE UNDER SUB - SECTION (1) HAS BEEN ANNULLED IN APPEAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATING TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO SUB - SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER. PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE. EXPLANATION. - FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SECTION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMEN T MADE UNDER THIS SECTION. ANJLIGROUP 11 (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPECT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABLE AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR. 22. A BARE PERUSAL THEREOF WOULD INDICATE A S TO HOW A NON OBSTANTE CLAUSE HAS BEEN INSERTED AND WITH A DEFINED INTENT. ONE WOULD FIND THAT IN SECTION 139 OF THE IT ACT, THE RETURN OF INCOME IS CONTEMPLATED. THESE PROVISIONS FALL IN CHAPTER XIV ENTITLED PROCEDURE FOR ASSESSMENT. SECTION 139 DEALS WITH RETURN OF INCOME WHEREAS SECTION 140 STATES THAT SUCH RETURN HAS TO BE VERIFIED. SECTION 147 WHICH ALSO FALLS WITHIN THIS CHAPTER DEALS WITH INCOME ESCAPING ASSESSMENT AND SECTION 148 PROVIDES FOR ISSUANCE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSME NT. SECTION 149 SETS OUT A TIME LIMIT FOR NOTICE. THEN, APPEAR SECTIONS 149, 151 AND 153 WHICH, INTER - ALIA, DEAL WITH TIME LIMIT, SANCTION FOR ISSUE AND TIME LIMIT FOR COMPLETION OF ASSESSMENTS AND REASSESSMENTS. ALL THESE ARE BROUGHT IN SECTION 153AAND SPECIFICALLY MENTIONED WITH AN INTENT TO BRING THEM WITHIN THE NON OBSTANTE CLAUSE. NOTWITHSTANDING ANYTHING CONTAINED IN THESE PROVISIONS WHERE SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UN DER SECTION132A AFTER 31ST DAY OF MAY, 2003, THAT THE ASSESSING OFFICER IS IN A POSITION TO AND MANDATED TO ISSUE NOTICE WITHIN THE MEANING OF SUBSECTION (1) OF SECTION 153A. THAT IS BECAUSE THE PRECEDING CHAPTER, NAMELY, CHAPTER XIII WITHIN WHICH THE POW ERS OF SEARCH AND SEIZURE AND POWERS TO REQUISITION BOOKS OF ACCOUNT ARE SPELT OUT ENABLE THE REVENUE TO TAKE CARE OF CASES WHERE IT EFFECTS A SEARCH AND SEIZURE. THAT SEARCH AND SEIZURE IS EFFECTED AND AFTER THE SAME IS EFFECTED BOOKS OF ACCOUNT, OTHER DO CUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING IS FOUND AS A RESULT THEREOF THAT NOTWITHSTANDING ANYTHING AND WITHIN THE MEANING OF THE ABOVE PROVISIONS HAVING BEEN CONCLUDED, IT IS OPEN FOR THE REVENUE TO MAKE AN ASSESSMENT. IT IS ALSO OPEN TO THE REVENUE TO MAKE A REASSESSMENT IN CASES WHERE IT EXERCISES THE POWERS TO REQUISITION BOOKS OF ACCOUNT ETC. THIS IS BECAUSE IT IS OF THE VIEW THAT THE BOOKS OF ACCOUNT ARE REQUIRED TO BE SUMMONED OR TAKEN INTO CUSTODY. IT, THEREFORE, ISSU ES A SUMMONS IN THAT REGARD. IT MAY ALSO REQUISITION THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOR THAT MIGHT BE USEFUL AND OR ANY ASSETS REPRESENTING WITHHOLDING OR PART INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOS E OF THE INDIAN INCOME TAX ACT, 1922 OR THE INCOME TAX ACT OF 1961 BY ANY PERSON FROM WHOSE POSSESSION OR CONTROL THEY HAVE BEEN TAKEN INTO CUSTODY. THIS IS WHEN THE AUTHORITIES HAVE REASON TO BELIEVE THAT SUCH POWERS NEED TO BE EXERCISED. THEREFORE, THE FETTERS AND WHICH ARE TO BE FOUND IN OTHER PROVISIONS ARE REMOVED AND A NOTICE OF ASSESSMENT IN SUCH CASES IS THEN ISSUED. THAT IS MANDATED BY SUB - SECTION (1) OF SECTION153A. IT IS NOT ONLY THE ANJLIGROUP 12 ISSUANCE OF THE NOTICE BUT ASSESSMENT OR REASSESSMENT OF TOT AL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION HAS TO BE MADE. 23. WE ARE OF THE VIEW THAT THERE IS MUCH SUBSTANCE IN THE CONTENTIONS OF MR. DASTUR THAT THE PROVISIONS SUCH AS SECTION 153A ENABLING ASSESSMENT IN CASE OF SEARCH OR REQUISITION MAKING SPECIFIC REFERENCE TO THE PROVISIONS WHICH ENABLE CARRYING OUT OF SEARCH OR EXERCISE OF POWER OF REQUISITION THAT THE ASSESSMENT IN FURTHERANCE THEREOF IS CONTEMPLATED. . 31. WE, THEREFORE, HOLD THAT THE SPECIAL BENCH'S UNDERSTANDING OF THE LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD. THE SPECIAL BENCH IN THAT REGARD HELD AS UNDER : 48. T HE PROVISION UNDER SECTION 153A IS APPLICABLE WHERE A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. IN SUCH A CASE THE AO IS OBLIGED TO ISSUE NOTICE U/S 153A IN RESPECT OF 6 PRECEDING YEARS, PRECEDING THE YEAR IN WHICH SEARCH ETC. HAS BEEN INITIATED. THEREAFTER HE HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. IT IS OBLIGATORY ON THE PART OF THE AO TO ASSESS OR REASSESS TOTAL INCOME OF THE SIX YEARS AS PROVIDED IN SECTION 153A(1)(B) AND REITERATED IN THE 1ST PROVISO TO THIS SECTION. TH E SECOND PROVISO STATES THAT THE ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR REQUISITION SHALL ABATE. WE FIND THAT THERE IS NO DIVERGENCE OF VIEWS IN SO FAR AS THE PROVISION CONTAINED IN SECTION 153A TILL THE 1ST PROVISO. THE DIVERGENCE STARTS FROM THE SECOND PROVISO WHICH STATES THAT PENDING ASSESSMENT OR REASSESSMENT ON THE DATE OF INITIATION OF SEARCH SHALL ABATE. THIS MEANS THAT AN ASSESSMENT OR REASSESSMENT PENDING ON THE DATE OF INITIATION OF SEARCH SHALL CEASE TO EXI ST AND NO FURTHER ACTION SHALL BE TAKEN THEREON. THE ASSESSMENT SHALL NOW BE MADE U/S 153A. THE CASE OF LD. COUNSEL FOR THE ASSESSEE IS THAT NECESSARY COROLLARY TO THIS PROVISION IS THAT COMPLETED ASSESSMENT SHALL NOT ABATE. THESE ASSESSMENTS BECOME FINAL EXCEPT IN SO FAR AND TO THE EXTENT AS UNDISCLOSED INCOME IS FOUND IN THE COURSE OF SEARCH. ON THE OTHER HAND, IT HAS BEEN ARGUED BY THE LD. STANDING COUNSEL THAT ABATEMENT OF PENDING ASSESSMENT IS ONLY FOR THE PURPOSE OF AVOIDING TWO ASSESSMENTS FOR THE SA ME YEAR, ONE BEING REGULAR ASSESSMENT AND THE OTHER BEING ASSESSMENT U/S 153A. IN OTHER WORDS THESE TWO ASSESSMENTS COALESCE INTO ONE ASSESSMENT. THE ANJLIGROUP 13 SECOND PROVISO DOES NOT CONTAIN ANY WORD OR WORDS TO THE EFFECT THAT NO REASSESSMENT SHALL BE MADE IN RESP ECT OF A COMPLETED ASSESSMENT. THE LANGUAGE IS CLEAR IN THIS BEHALF AND THEREFORE LITERAL INTERPRETATION SHOULD BE FOLLOWED. SUCH INTERPRETATION DOES NOT PRODUCE MANIFESTLY ABSURD OR UNJUST RESULTS AS SECTION 153A (I)(B) AND THE FIRST PROVISO CLEARLY PROVI DE FOR ASSESSMENT OR REASSESSMENT OF ALL SIX YEARS. IT MAY CAUSE HARDSHIP TO SOME ASSESSES WHERE ONE OR MORE OF SUCH ASSESSMENTS HAS OR HAVE BEEN COMPLETED BEFORE THE DATE OF INITIATION OF SEARCH. THIS IS HARDLY OF ANY RELEVANCE IN VIEW OF CLEAR AND UNAMBI GUOUS WORDS USED BY THE LEGISLATURE. THIS INTERPRETATION DOES NOT CAUSE ANY ABSURD ETC. RESULTS. THERE IS NO CASUS OMISSUS AND SUPPLYING ANY WOULD BE AGAINST THE LEGISLATIVE INTENT AND AGAINST THE VERY RULE IN THIS BEHALF THAT IT SHOULD BE SUPPLIED FOR THE PURPOSE OF ACHIEVING LEGISLATIVE INTENT. THE SUBMISSIONS OF THE LD. COUNSELS ARE MANIFOLD, THE FOREMOST BEING THAT THE PROVISION U/S 153A SHOULD BE READ IN CONJUNCTION WITH THE PROVISION CONTAINED IN SECTION 132(1), THE REASON BEING THAT THE LATTER DEALS WITH SEARCH AND SEIZURE AND THE FORMER DEALS WITH ASSESSMENT IN CASE OF SEARCH ETC, THUS, THE TWO ARE INEXTRICABLY LINKED WITH EACH OTHER. 49. BEFORE PROCEEDING FURTHER, WE MAY NOW EXAMINE THE PROVISION CONTAINED IN SUB - SECTION (2) OF SECTION 153, WHICH HAS BEEN DEALT WITH BY LD. COUNSEL. IT PROVIDES THAT IF ANY ASSESSMENT MADE UNDER SUBSECTION (1) IS ANNULLED IN APPEAL ETC., THEN THE ABATED ASSESSMENT REVIVES. HOWEVER, IF SUCH ANNULMENT IS FURTHER NULLIFIED, THE ASSESSMENT AGAIN ABATES. THE CASE OF THE L D. COUNSEL IS THAT THIS PROVISION FURTHER SHOWS THAT COMPLETED ASSESSMENTS STAND ON A DIFFERENT FOOTING FROM THE PENDING ASSESSMENTS BECAUSE APPEALS ETC. PROCEEDINGS CONTINUE TO REMAIN IN FORCE IN CASE OF COMPLETED ASSESSMENTS AND THEIR FATE DEPENDS UPON S UBSEQUENT ORDERS IN APPEAL. ON CONSIDERATION OF THE PROVISION AND THE SUBMISSIONS, WE FIND THAT THIS PROVISION ALSO MAKES IT CLEAR THAT THE ABATEMENT OF PENDING PROCEEDINGS IS NOT OF SUCH PERMANENT NATURE THAT THEY CEASE TO EXIST FOR ALL TIMES TO COME. THE INTERPRETATION OF THE LD. COUNSEL, THOUGH NOT SPECIFICALLY STATED, WOULD BE THAT ON ANNULMENT OF THE ASSESSMENT MADE U/S 153(1), THE AO GETS THE JURISDICTION TO ASSESS THE TOTAL INCOME WHICH WAS VESTED IN HIM EARLIER INDEPENDENT OF THE SEARCH AND WHICH CA ME TO AN END DUE TO INITIATION OF THE SEARCH. 50. THE PROVISION CONTAINED IN SECTION 132 (1) EMPOWERS THE OFFICER TO ISSUE A WARRANT OF SEARCH OF THE PREMISES OF A PERSON WHERE ANY ONE OR MORE OF CONDITIONS MENTIONED THEREIN IS OR ARE ANJLIGROUP 14 SATISFIED, I.E. - A ) SUMMONS OR NOTICE HAS BEEN ISSUED TO PRODUCE BOOKS OF ACCOUNT OR OTHER DOCUMENTS BUT SUCH BOOKS OF ACCOUNT OR DOCUMENTS HAVE NOT BEEN PRODUCED, B) SUMMONS OR NOTICE HAS BEEN OR MIGHT BE ISSUED, HE WILL NOT PRODUCE THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MENTIONED THEREIN, OR C) HE IS IN POSSESSION OF ANY MONEY OR BULLION ETC. WHICH REPRESENTS WHOLLY OR PARTLY THE INCOME OR PROPERTY WHICH HAS NOT BEEN AND WHICH WOULD NOT BE DISCLOSED FOR THE PURPOSE OF ASSESSMENT, CALLED AS UNDISCLOSED INCOME OR PROPERTY. WE FIND THAT THE PROVISION IN SECTION 132 (1) DOES NOT USE THE WORD 'INCRIMINATING DOCUMENT'. CLAUSES (A) AND (B) OF SECTION 132(1) EMPLOY THE WORDS 'BOOKS OF ACCOUNT OR OTHER DOCUMENTS'. FOR HARMONIOUS INTERPRETATION OF THIS PROVISION WITH PROVISION CONTA INED IN SECTION 153A, ALL THE THREE CONDITIONS ON SATISFACTION OF WHICH A WARRANT OF SEARCH CAN BE ISSUED WILL HAVE TO BE TAKEN INTO ACCOUNT. 51. HAVING HELD SO, AN ASSESSMENT OR REASSESSMENT U/S 153A ARISES ONLY WHEN A SEARCH HAS BEEN INITIATED AND CONDU CTED. THEREFORE, SUCH AN ASSESSMENT HAS A VITAL LINK WITH THE INITIATION AND CONDUCT OF THE SEARCH. WE HAVE MENTIONED THAT A SEARCH CAN BE AUTHORISED ON SATISFACTION OF ONE OF THE THREE CONDITIONS ENUMERATED EARLIER. THEREFORE, WHILE INTERPRETING THE PROVI SION CONTAINED IN SECTION 153A, ALL THESE CONDITIONS WILL HAVE TO BE TAKEN INTO ACCOUNT. WITH THIS, WE PROCEED TO LITERALLY INTERPRET TO PROVISION IN 153A AS IT EXISTS AND READ IT ALONGSIDE THE PROVISION CONTAINED IN SECTION 132(1). 52. THE PROVISION COME S INTO OPERATION IF A SEARCH OR REQUISITION IS INITIATED AFTER 31.5.2003. ON SATISFACTION OF THIS CONDITION, THE AO IS UNDER OBLIGATION TO ISSUE NOTICE TO THE PERSON REQUIRING HIM TO FURNISH THE RETURN OF INCOME OF SIX YEARS IMMEDIATELY PRECEDING THE YEAR OF SEARCH. THE WORD USED IS 'SHALL' AND, THUS, THERE IS NO OPTION BUT TO ISSUE SUCH A NOTICE. THEREAFTER HE HAS TO ASSESS OR REASSESS TOTAL INCOME OF THESE SIX YEARS. IN THIS RESPECT ALSO, THE WORD USED IS 'SHALL' AND, THEREFORE, THE AO HAS NO OPTION BUT T O ASSESS OR REASSESS THE TOTAL INCOME OF THESE SIX YEARS. THE PENDING PROCEEDINGS SHALL ABATE. THIS MEANS THAT OUT OF SIX YEARS, IF ANY ASSESSMENT OR REASSESSMENT IS PENDING ON THE DATE OF INITIATION OF THE SEARCH, IT SHALL ABATE. IN OTHER WORDS PENDING PR OCEEDINGS WILL NOT BE PROCEEDED WITH THEREAFTER. THE ASSESSMENT HAS NOW TO BE MADE U/S 153A (1)(B) AND THE FIRST PROVISO. IT ALSO MEANS THAT ONLY ONE ASSESSMENT WILL BE MADE UNDER THE AFORESAID PROVISIONS AS THE TWO PROCEEDINGS I.E. ASSESSMENT OR REASSESSM ENT PROCEEDINGS AND PROCEEDINGS UNDER THIS PROVISION MERGE INTO ONE. IF ASSESSMENT MADE UNDER SUB - ANJLIGROUP 15 SECTION (1) IS ANNULLED IN APPEAL OR OTHER LEGAL PROCEEDINGS, THEN THE ABATED ASSESSMENT OR REASSESSMENT SHALL REVIVE. THIS MEANS THAT THE ASSESSMENT OR REASS ESSMENT, WHICH HAD ABATED, SHALL BE MADE, FOR WHICH EXTENSION OF TIME HAS BEEN PROVIDED UNDER SECTION 153B. 53. THE QUESTION NOW IS - WHAT IS THE SCOPE OF ASSESSMENT OR REASSESSMENT OF TOTAL INCOME U/S 153A (1) (B) AND THE FIRST PROVISO ? WE ARE OF THE V IEW THAT FOR ANSWERING THIS QUESTION, GUIDANCE WILL HAVE TO BE SOUGHT FROM SECTION 132(1). IF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS RELEVANT TO THE ASSESSMENT HAD NOT BEEN PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT AND FOUND IN THE COURSE OF SEARCH IN OUR HUMBLE OPINION SUCH BOOKS OF ACCOUNT OR OTHER DOCUMENTS HAVE TO BE TAKEN INTO ACCOUNT WHILE MAKING ASSESSMENT OR REASSESSMENT OF TOTAL INCOME UNDER THE AFORESAID PROVISION. SIMILAR POSITION WILL OBTAIN IN A CASE WHERE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY HAS BEEN FOUND AS A CONSEQUENCE OF SEARCH. IN OTHER WORDS, HARMONIOUS INTERPRETATION WILL PRODUCE THE FOLLOWING RESULTS : - A) IN SO FAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE ORIGINAL ASSESSMENT AND ASSESSMENT U/S 153A MER GE INTO ONE AND ONLY ONE ASSESSMENT FOR EACH ASSESSMENT YEAR SHALL BE MADE SEPARATELY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO, (B) IN RESPECT OF NON - ABATED ASSESSMENTS, THE ASSESSMENT WI LL BE MADE ON THE BASIS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH, AND UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF SEARCH. 54. IT MAY BE MENTIONED HERE THAT LD. COUNSEL FOR ALL CARGO GLOBAL LOGISTICS LTD. WAS QUESTIONED ABOUT THE SCOPE OF PENDING ASSESSMENTS AS IT WAS HIS CONTENTION THAT ALL SIX ASSESSMENTS ARE TO BE MADE, IF NECESSARY, ON THE BASIS OF UNDISCLOSED INCOME DISCOVERED IN THE COURSE OF S EARCH. HE WAS SPECIFICALLY QUESTIONED ABOUT THE JURISDICTION OF THE AO TO MAKE ORIGINAL ASSESSMENT ALONG WITH ASSESSMENT U/S 153A, MERGING INTO ONE. HOWEVER HE TOOK AN EVASIVE VIEW SUBMITTING THAT THIS QUESTION NEED NOT BE DECIDED IN HIS CASE ALTHOUGH THE QUESTION OF JURISDICTION U/S 153A WAS VEHEMENTLY PRESSED ON ACCOUNT OF WHICH GROUND NO.1 IN THE APPEAL FOR ASSESSMENT YEAR 2004 - 05 WAS ADMITTED AS ADDITIONAL GROUND. HE ALSO WANTED THE ADDITIONAL GROUND TO BE RETAINED IN CASE OF ANY FUTURE CONTINGENCY. ANJLIGROUP 16 3 7. WE DO NOT SEE AS TO HOW WHILE ALLOWING THE APPEAL OF THE ASSESSEE AND SETTING ASIDE THE ORDER OF THE COMMISSIONER UNDER SECTION 263 COULD THE JUDGMENT BE SAID TO BE LAYING DOWN A PROPOSITION AND AS CANVASSED BY MR. PINTO. TRUE IT IS THAT THE ASSESSMENT WHICH HAS TO BE MADE IN PURSUANCE OF THE NOTICE IS IN RELATION TO THE SIX YEARS. AN ORDER WILL HAVE TO BE MADE IN THAT REGARD. WHILE MAKING THE ORDER THE INCOME OR THE RETURN OF INCOME FILED FOR ALL THESE ASSESSMENT YEARS IS TO BE TAKEN INTO ACCOUNT. A REFERENCE WILL HAVE TO BE MADE TO THE INCOME DISCLOSED THEREIN. HOWEVER, THE SCOPE OF ENQUIRY, THOUGH NOT CONFINED AS HELD BY THE HIGH COURT OF KARNATAKA, IT ESSENTIALLY REVOLVES AROUND THE SEARCH OR THE REQUISITION UNDER SECTION 132A AS THE CASE MAY BE. WE DO NOT FIND ANYTHING IN THESE OBSERVATIONS AND REPRODUCED ABOVE WHICH WOULD ENABLE US TO CONCLUDE THAT THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF MURLI AGRO REQUIRES RECONSIDERATION OR DOES NOT LAY DOWN A CORRECT PRINCIPLE OF LAW. WE CAN NOT, THEREFORE, ACCEDE TO THE SUBMISSIONS OF MR. PINTO AND REVISIT ANY OF THE CONCLUSIONS RENDERED BY THE DIVISION BENCH OF THIS COURT. IN THE CASE OF ATITHI N PATEL VS ACIT(SUPRA) THE COORDINATE BENCH HAS HELD AS UNDER: - 4. AS REGARDS OTHER YEARS I.E. ASSESSMENT YEARS 2005 - 2006 & 2006 - 2007, THE ASSESSMENT PROCEEDINGS WERE STILL PENDING, AND, HENCE, FOR THE PURPOSE OF SECTION 153A, THE ASSESSMENT FOR THESE YEARS WILL GET ABATED. ON THESE ADDITIONAL GROUNDS, LEARNED COUNSEL HAS RELIED UPON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF M/S ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT, PASSED IN ITA NOS.5108 TO 5022 & 5059/M/2010, VIDE DATED 06 - 07 - 2012 AND DREW OUR ATTENTION TO PARAS 57 & 58 OF THE SAID DECISION, WHEREIN THE SPECIAL BENCH HAS CONCLUDED THE SCOPE OF ASSESSMENT AND ABATEMENT OF ASSESSMENT UNDER SECTION 153A IN THE FOLLOWING MANNER : - '58. THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER : A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONF ERRED ON HIM U/S 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY ; B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MAT ERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND ANJLIGROUP 17 IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH .' 5. FROM THE ABOVE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SPECIAL BENCH, SO FAR AS THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2004 - 2005 IS CONCERNED, WE FIND THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2004 - 2005 HAD ATTAINED FINALITY AND THE SAME WILL NOT GET ABATED. THE ADDITION IN SUCH A CASE CAN ONLY BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND IN THE INSTANT CASE, FROM THE PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A), IT IS SEEN THAT THE DISALLO WANCE ON INTEREST, WHICH HAS BEEN MADE, IS NOT BASED ON ANY SEIZED MATERIAL OR DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND SEIZURE. THEREFORE, SUCH A DISALLOWANCE MADE ON INTEREST OF RS. 5,14,953/ - FOR THE ASSESSMENT YEAR 2004 - 2005 STANDS DELETED ON THE GROUND THAT THE SAME IS BEYOND THE SCOPE AND PURVIEW OF ASSESSMENT UNDER SECTION 153A. IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 2004 - 2005 (I.E. ITA NO.43/M/2010) STANDS ALLOWED. 8 . FROM THE PROPOSITIONS IN THE ABOVE MENTIONED DECISIONS, WE FIND THA T THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN IN THE DECISIONS CITED SUPRA. WE THEREFORE RESPECTFULLY FOLLOWING THE SAME HOLD THAT THE AO HAS NO JURISDICTION TO ASSESS THE LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES AS THE S AME IS NOT BASED UPON THE SEIZED OR INCRIMINATING MATERIALS FOUND DURING THE SEARCH PROCEEDINGS QUA THE LONG TERM CAPITAL GAIN . SIMILARLY THE CIT(A) ENHANCING THE ASSESSMENT IS ALSO NOT BASED UPON ANY SEIZED OR INCRIMINATING MATERIALS FOUND DURING THE SEA RCH AND THEREFORE THE ENHANCEMENT IS ALSO WITHOUT JURISDICTION U/S 153A . ACCOR DINGLY THE ADDITIONAL GROUND S NO 1A AND 1B RAISED BY THE ASSESSEE STAND ALLOWED IN FAVOUR OF THE ASSESSEE AND AO IS DIRECTED ACCORDIN G LY . ANJLIGROUP 18 9. THE ISSUES RAISED IN ADDITIONAL GROUND NO 2 AND 3 ARE QUA THE ADDITIONS OF RS. 78,465/ - AND RS. 79,237/ - RESPECTIVELY MADE U/S 69C OF THE ACT BY THE AO A S UPHELD BY THE CIT(A). 10 . WE FIND FROM THE ORDERS OF AO AS WELL AS CIT(A) THAT THESE ADDITIONS ARE NOT BASED UPON THE SEIZED OR INC RIMINATING MATERIAL FOUND DURING SEARCH PROCEEDINGS ON THE ASSESSEE AND THEREFORE ADDITIONS ARE BEYOND THE SCOPE OF ASSESSMENT U/S 153A. THE ADDITIONAL GROUND NO 3 AND 4 ARE ALSO ALLOWED. 11 . IN VIEW OF THE OUR FINDINGS GIVEN HEREINABOVE , WE ARE NOT G OING INTO THE MERITS OF THE ADDITIONS AS DISCUSSED BY T HE AO AS WELL AS BY THE CIT(A) AS THEY BECOME PURELY ACADEMIC. ITA NO 3029/MUM/2011 ASSESSMENT YEAR 2003 - 04 . 1 2 . THE ISSUES RAISED BY THE ASSESSEE IN T H IS APPEAL ARE IDENTICAL TO THE ONES RAISED BY THE ASSESSEE IN ITA NO . 3028/M/2011 ( AY 2002 - 03 ) DECIDED BY US IN FAVOUR OF THE ASSESSEE HEREINABOVE . THEREFORE OUR FINDINGS IN ITA NO 3028/M/2011 WOULD , MUTATIS MUTANDIS, APPLY TO TH IS APPEAL AS WELL. ACCORDINGLY AO IS DIRECTED TO DELETE THE ADDITIONS. THE APPEAL S OF THE ASSESSEE STAND ALLOWED . 1 3 . ITA NO 30 30 /MUM/2011 ASSESSMENT YEAR 200 4 - 05 . 1 4 . GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : 1) A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED AO ERRED IN TREATI NG THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AT RS. 69,35,295/ - AS INCOME FROM OTHER SOURCES. ANJLIGROUP 19 B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT (A) WHILE CONFIRMING THE ADDITION ERRED IN HOLDING THAT THE ENTIRE SALE PROCEE DS OF SHARES CREDITED IN THE BOOKS OF THE APPELLANT AT RS. 70,93,594 /- ON ACCOUNT OF ALLEGED CAPITAL GAIN CHARGEABLE TO TAX U/S 68 OF THE IT ACT AND CONSEQUENTLY ENHANCING THE ADDITION FROM RS. 69,35,295 - TO RS. 70,93,594 / - . 2) ON THE FACTS AND CIRCUMSTANC ES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE A O U/S.69 C OF THE I.T ACT AT RS. 1,58,299/ - BEING UNEXPLAINED EXPENDITURE INCURRED FOR PURCHASE OF SHARES. HE FAILED TO APPRECIATE THAT THE SAID SHARES WERE PUR CHASED IN THE EARLIER ASSESSMENT YEAR OUT OF EXPLAINED SOURCES. 3) A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED C IT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE A O U/S.69 C OF THE I. T ACT AT RS. 3,54,680/ - BEING UNEXPLAI NED EXPENDITURE INCURRED FOR PAYMENT OF COMMISSION / SERVICE CHARGES FOR ARRANGING THE CAPITAL GAIN. B. WHILE SUSTAINING THE ADDITION OF RS. 3,54,680/ - THE LEARNED C IT (A) FAILED TO APPRECIATE THAT THE A O MADE THE SAID ADDITION WITHOUT HAVING ANY EVIDENCE ON RECORDS BUT ONLY ON THE BASIS OF SUSPICION , SURMISE AND CONJECTURE. 4) APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR MODIFY THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARINGS OF THE ANNEAL. 1 5 . THE ASSESSEE HAS ALSO TAKE N AN ADDITIONAL GROUNDS BUT AT THE TIME OF HEARING THE LD AR SUBMITTED THAT THE SAME WAS NOT PRESS ED AND HENCE DISMISSED. 1 6 . THE ISSUE RAISED IN THE GROUND NO 1 IS AGAINST THE ENHANCEMENT OF ASSESSMENT BY TREATING THE ENTIRE SALES PROCEEDS OF SHARES 70,93,594/ - AS UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT BY HOLDING THAT THE LONG TERM CAPITAL GAIN WAS NOT GENUINE AS AGAINST THE ADDITIONS OF RS. 69,35,295/ - U/S 68 OF THE ACT BY THE AO IN RESPECT OF LONG TERM CAPITAL GAIN ON EQUITY SHARES . ANJLIGROUP 20 1 7. THE FACTS IN BRIEF ARE THAT HE ASSESSEE FILED HER RETURN OF INCOME ON 31.03.2005 DECLARING AN INCOME OF RS. 4,88,102/ - . THEREAFTER A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON THE ASSESSEE AND OTHER ASSOCIATED PERSONS ON 24.01.2006. DURING THE COURSE OF SEARCH SOME JEWELLARY OF RS. 9,58,090/ - AND CASH RS. 1,69,800/ - WERE FOUND WHEREAS THE JEWELLARY WORTH RS. 6,65,400/ - WAS ONLY SEIZED. THE SEARCH WAS CONDUCTED ON THE INFORMATION THAT THE ASSESSEE AND OTHER CONNECTED PERSONS WERE ENGAGED IN OBTAINING FICTITIOUS ENTRIES OF PURCHASE O F SHARES BY BACK DATED PURCHASE BILLS WHICH WERE BOGUS THEREBY RECEIVING SHARES IN PHYSICAL FORMS AND THEREAFTER SELLING THE SAME GENERATING HUGE LONG TERM CAPITAL G AI N BY MANIPULATING THE SHARE TRANSACTIONS. NOTICE ISSUED U/S 153A OF THE ACT DATED 13. 09.2006 WAS SERVED UPON THE ASSESSEE WHICH WAS COMP LI ED BY THE ASSESSING BY FILING THE RETURN OF INCOME ON 23.01.2007 DECLARING AN INCOME OF RS. 74,23,570/ - COMPRISING INCOME FROM BUSINESS , HOUSE PROPERTY, CAPITAL GAIN AND OTHER SOURCES. THE ASSESSEE ALS O DECLARED LONG TERM CAPITAL GAIN ON SHARES RS. 69,35,295/ - FROM THE SALE OF SHARES OF G SOFT TECH LTD AND HIGH LAND LTD. THE SHARES OF THESE COMPANIES WERE STATED TO BE PURCHASED IN FY 2002 - 03 FOR RS. 1,58,299/ - . THE ENTIRE PURCHASE COST WAS STATED TO B E MET OUT OF SPECULATION INCOME OF RS. 1,49,916/ - WHICH WAS WRONGLY DECLARED AS SHORT TERM CAPITAL GAIN IN AY 2003 - 04 AND THE BALANCE OF RS. 8,383/ - WAS PAID IN CASH. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE LONG TERM CAPITAL GAIN WAS NOT SHOWN IN THE ORIGINAL RETURN OF INCOME AND WHY IT SHOULD NOT BE TREATED ANJLIGROUP 21 AS CONCEALED INCOME OF THE ASSESSEE . THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE SAID LONG TERM CAPITAL GAIN WAS CLAIMED EXEMPT U/S 54F OF THE ACT AND HENCE NOT SHOWN IN THE RET URN OF INCOME. THE AO NOTED THAT THE ASSESSEE DID NOT SUBMIT THE COMPUTATION OF SPECULATION INCOME USED FOR THE PURCHASE OF SHARES, BROKER BILL FOR PURCHASE AND SALE OF SHARES EARNING SPECULATIVE INCOME, NO EVIDENCE QUA PURCHASE OF SHARES OF G TECH SOFT L TD AND HIGH LAND IND. LTD AND NON SUBMISSION OF D - MAT A/C AND ULTIMATELY TREATED THE LONG TERM CAPITAL ON SALE OF SHARES AS INCOME FROM OTHER SOURCES BY REJECTING THE SUBMISSIONS AND REPLIES OF THE ASSESSEE THAT THE SHARES OF TWO COMPANIES ON WHICH THE ASSESSEE EARNED LONG TERM CAPITAL GAIN WAS SHOWN AS INVESTMENTS I N THE BALANCE SHEET OF THE EARLIER YEAR I.E. AY 2003 - 04 AND THE SAME SHOULD NOT BE ADDED U/S 69C OF THE ACT. THE AO ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE SHARES WERE ACTUALLY PURCHASED AND IN THE FORM OF PHYSICAL DELIVERY AND WERE TRANSFERRED IN THE NAME OF THE ASSESSEE AT THE TIME OF BOOK CLOSURE BY THE COMPANIES CONCERNED . THE LD AR SUBMISSIONS BEFORE THE AO THAT T HE ASSESSEE DID NOT HAVE A D - MAT A/C AND THEREFORE THE SHAR ES WERE NOT TRANSFERRED INTO D - MAT A/C WERE ALSO BRUSHED ASIDE BY THE AO . THE AO REJECTED THE CONTENTION OF THE ASSESSEE OF LONG TERM CAPITAL GAIN AND ADDED THE SAME AS INCOME OF OTHER SOURCES AS NON GENUINE. 1 8 . IN THE APPEAL PROCEEDINGS THE LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE ARGUMENTS AND SUBMISSIONS OF THE ASSESSEE ANJLIGROUP 22 AS INCORPORATED IN PARA 2.2 OF THE APPEAL ORDER BY OBSERVING AND HOLDING AS UNDER: - 2.3 .24 HAVING REGARD TO THE AFORESAID FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, IT IS HELD THAT SECTION 68 IS SQUARELY APPLICABLE IN THIS CASE AND SINCE THE APPELLANT NEITHER SATISFACTORILY EXPLAINED THE PURCHASES OF P ENNY STOCK NOR' THE SALES THEREOF, THE NATURE AND SOURCES OF THE INCOME CREDIT ED TO THE BOOK S OF ACCOUNT REMAIN NOT PROPERLY EXPLAINED. THEREFORE, THE PROCEEDS CREDITED IN THE BOOKS OF THE APPELLANT ON ACCOUNT OF ALLEGED CA PITAL GAIN AS PER PARTICULARS GIVEN BELOW ARE CHARGEABLE TO TAX U/S.68 OF THE AC S NO AY AMOUNT CREDITED IN THE BOOKS OF A PPELLANT (RS.) 1 2002 - 03 RS.15,84,736/ - 2 2003 - 04 RS.11,38,317/ - 3 2004 - 05 RS.70,93,594/ - 4 2005 - 06 RS.49 ,83,050/ - 5 2006 - 07 RS.7,25,513/ - THEREFORE, THE ADDITIONS MADE BY THE LD. ASSESSING OFF ICER AS INCOME OTHER SOURCES ARE ENHANCED AS UNDER: S NO AY ADDITION MADE BY THE AO ENHANCED TO 1 2002 - 03 RS.15,06,271/ - RS.15,84,736/ - 2 2003 - 04 RS.10,88,547 RS.11,38,317/ - 3 2004 - 05 RS.69.35.295/ - RS.70,93,594/ - 4 2005 - 06 RS.49 ,99,180/ - RS.49,83,050/ - 5 2006 - 07 RS.6,54, 961/ - RS.7,25,513/ - LD.AR WAS SPECIFICALLY CONFRONTED ON THE ABOVE PROPOSITION VIDE NOTE SHEET ENTRY DATED 4.10.2010. HE HAS NOT FURNISHED ANY OBJECTIONS SO FAR. IN VIEW OF THE ABOVE, ADDITIONS MADE BY AO ARE ENHANCED AS DISCUSSED ABOVE. GROUND NO.2 I S THEREFORE DISMISSED AND THE DISPUTED ADDITIONS ARE ENHANCED FROM RS. 15,06,271/ - TO RS.15,84,736/ - FOR AY. 2002 - 03, RS.10,88,547/ - TO RS.11,38,317/ - FOR AY. 2003 - 04, RS.69 ,35,295/ - TO RS.70,93,594/ - FOR AY. 2004 - 05, RS.47,99.180/ - TO RS.49,83 ,050/ - FOR AY 2005 - 06 AND RS.6,54,961/ - TO RS.7,25,513/ - FOR AY. 2006 - 07. PENALTY 271(1)(C) AS ALREADY INITIATED BY THE ASSESSING OFFICER WILL NOW COVER THE ENHANCED INCOME. ANJLIGROUP 23 4. GROUND NO.2 OF AY 2002 - 03 TO AY 2005 - 06 AND GROUND NO.3 OF AY 2006 - 07 4.1 AS DISCUSSE D IN EARLIER PARA 2.3.24 GROUND NO.2 OF AY 2002 - 03 TO AY 2005 - 06 AND GROUND NO.3 OF AY 2006 - 07 ARE DISMISSED AND THE DISPUTED ADDITIONS ARE ENHANCED AS UNDER : S NO AY ADDITION MADE BY THE AO ENHANCED TO 1 2002 - 03 RS.15,06,271/ - RS.15,84,736/ - 2 20 03 - 04 RS.10,88,547 RS.11,38,317/ - 3 2004 - 05 RS.69.35.295/ - RS.70,93,594/ - 4 2005 - 06 RS.49 ,99,180/ - RS.49,83,050/ - 5 2006 - 07 RS.6,54,961/ - RS.7,25,513/ - PENALTY PROCEEDINGS ALREADY INITIATED BY THE AO WILL NOW COVER THE ENHANCED INCOME ON ACCOUNT OF FURNISH ING INACCURATE PARTICULARS OF INCOME AND ON ACCOUNT OF CONCEALING PARTICULARS OF INCOME. 1 9 . THE LD AR VEHEMENTLY ARGUED THAT THE ORDER OF FAA WAS TOTALLY WRONG AND AGAINST THE FACTS ON RECORDS , JUDICIAL PRECEDENCE AND WAS BASED ON HYPOTHESIS BY IGNORING ALL THE EVIDENCES ON RECORDS. THE LD AR SUBMITTED THAT ALL THE TRANSACTIONS OF SALES AND PURCHASE OF SHARES ON WHICH THE LTGC OF RS. 69,35,295 WAS EARNED WERE GENUINE AND FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCES WHICH WERE AV AILABLE BEFORE THE LOWER AUTHORITIES . THE LD COUNSEL OF THE ASSESSEE WHILE ARGUING DREW OUR TO THE STATEMENT OF LONG TERM CAPITAL GAIN GIVING THE COMPLETE DETAILS AS TO PURCHASE AND SALES OF SHARES WITH DATE OF PURCHASE , QUANTITY PURCHASE AND PURCHASE PR ICE AND SIMILAR DETAILS AS TO SALES ALSO AS FILED AT PAGE 54 OF THE PAPER BOOK AND ALSO THE BILLS FOR PURCHASE OF SHARES OF REGISTERED SEBI BROKERS AS FILED AT PAGE NO 55 TO 61 OF THE PAPER BOOK . THE LD AR ALSO SUBMITTED THAT THE ANJLIGROUP 24 SOURCES OF PURCHASE OF THESE SHARES WERE FULLY EXPLAINED TO THE LOWER AUTHORITIES TO BE OUT OF SPECULATION PROFITS OF RS.1,49,917/ - AND OUT OF CASH OF RS. 8,383/ - FILED AT PAGE NO 67 OF THE PB. THE LD COUNSEL FURTHER SUBMITTED THAT THE SPECULATION GAIN WERE DULY SHOWN IN THE RETURN OF INCOME FOR THE AY 2003 - 04 BUT WRONGLY AS SHORT TERM CAPITAL GAIN AND ALSO DULY SHOWN IN THE STATEMENT OF TOTAL INCOME, CAPITAL ACCOUNT AND BALANCE SHEET OF ASSESSEE FOR AY 2003 - 04 PLACED AT 1, 3 AND 4 OF PB. SIMILARLY THE DETAILS OF SA LES AND PURCHASE OF SHARES ON WHICH THE ASSESSEE MADE SPECULATIVE PROFITS WERE FILED AT PAGE NO 68 WITH DETAILS OF SHARES PURCHASED, DATE OF PURCHASE AND SALE , QUANTITY PURCHASED AND SOLD WITH ALL SUPPORTIVE BILLS AND VOUCHERS ISSUED BY THE BROKERS COPIE S OF WHICH WERE PLACED FROM PAGE NO 68 TO 78 OF PB. THE LD AR ALSO SUBMITTED THAT THE SAID SPECULATION INCOME WAS ALSO ACCEPTED BY THE AO AS STCG WHILE FRAMING THE ASSESSMENT ORDER FOR AY 2003 - 04 A COPY OF WHICH IS PLACED AT PAGE NO 5 TO 11 OF PB. SIMILA RLY THE OTHER DOCUMENTARY EVIDENCES QUA CASH PAYMENT OF RS. 8,383/ - ( PAGE NO 81), COPIES OF SHARE CERTIFICATE ( PAGE NO 82 TO 90) , CONFIRMATIONS FROM BROKERS QUA PURCHASE OF SHARES (PAGE NO 97 TO 100) , COPIES OF BILLS FOR SALES OF SHARES ISSUED BY SE B REGISTERED BROKERS (PAGE NO 62 TO 66) AND BANK STATEMENTS OF THE ASSESSEE IN WHICH THE SALES PROCEEDS WERE DEPOSITED BY ACCOUNT PAYEE C H EQUES (PAGE NO 91 TO 96 OF PB) WERE BROUGHT TO OUR NOTICE. THE LD AR ARGUED THAT ALL THE ABOVE EVIDENCES AND RECORDS W ERE BEFORE THE LOWER AUTHORITIES AND THE LOWER AUTHORITIES HAVE DOUBTED THE GENUINENESS OF THE TRANSACTIONS WHILE ACCEPTING THE DOCUMENTS AS IT WAS NOT THE CASE THAT ALL ANJLIGROUP 25 THESE DOCUMENTS WERE FAKE, FORGED AND FALSE. ALL THE ABOVE DOCUMENTS PROVED THAT THESE SHARES WERE ACTUALLY PURCHASED IN AY 2003 - 04 AND THE SOURCE OF INVESTMENTS IN THESE SHARE WERE ALSO DULY EXPLAINED AND SHOWN IN THE RETURN OF INCOME AND ANNUAL ACCOUNT OF THE ASSESSEE FOR AY 2003 - 04 AND ALSO ACCEPTED BY THE AO WHILE FRAMING THE ASSESSME NT FOR AY 2003 - 04 VIDE ORDER DATED 31.12.2007 PASSED U/S 143(3) R.W.S. 153A OF THE ACT. IN DEFENCE OF HIS ARGUMENTS THE LD RELIED ON THE FOLLOWING DECISIONS : - F) CIT V/S V. MUKESH RATILAL MAROLIA (BOMBAY HIGH COURT) (ORDER DATED 7.9.2011) (LTXA NO. 456 OF 2007) G) MUKESH R. MAROLIA V. ADDL. CIT [2006] 6 SOT 247 (MUM) H) CIT V. J AMNADEVI AGRAWAL [2010]328 ITR 656(BO M ) I) ITO V. MRS. RASILA N. GADA & OTHERS (MUM) ( ORDER DATED 8/8/2012) (ITA NO.1773/MUM/2010) J) ASSTT. CIT V. POOJA ARORA (MUM) (ORDER DATED 20.6.2012) (ITA NOS. 2788 & 2790/MUM/2009) K) ASSTT. CIT V. L. J AIPAL REDDY (MUM) (ORDER DATED 20.L.2012) (ITA NOS. 3607 & 3608/MUM/2009) L) DURQADEVI MUNDRA V. ITO (MUM) (ORDER DATED L.6.2012) (ITA NO. 1175/MUM/2012) M) ARVIN M. KARIYA & OTHERS V. ASSTT. CIT (MUM) (ORDER DATED 30.12.2011) (ITA NO. 787 TO 791/MUM/2010 ) N) ASSTT CIT V. UTTARA S. SHOREWALA (MUM) (ORDER DATED 25.5.2011) (ITA NOS. 5506 & 5507/MUM/2010) O) CHANDRAKANT BABULAL SHAH V. ITO (MUM) ORDER DATED 15.12.2010) (ITA NO.6108/MUM/2009) P) RAMESH MATKAR V . ASSTT. CIT (MUM) (ORDER DATED 24.9.2010) (ITA NOS. 6302 & 6 303/MUM/2009) Q) KRISHNADEVI KEJIRWAL V. ITO (MUM) (ORDER DATED 25.6.2010) (ITA NO. 93/MUM/2009) R) ITO V. ANIL R. NAHATA (MU M) (ORDER DATED 24.2.2010) (ITA NO. 1626/MUM/2007) S) ACCHYALAL SHAW V. ITO [2009] 19 DTR (KOL) ( TRIB) T) SUNITA OBEROI V. ITO [2009] 30 DTR (AGRA) TM(TRIB) 474 ANJLIGROUP 26 20 . FINALLY THE LD AR PRAYED THAT IN VIEWS OF THE FACTS AND RATIO LAID DOWN BY THE VARIOUS COURT AND THE COORDINATE BENCHES , THE ADDITION OF RS. 70,93,594 BE DELETED. 2 1 . PER CONTRA LD DR RELIED HEAVILY ON THE ORDER OF FIRST APPELLATE AUTHORITY WHILE OPPOSED THE ARGUMENTS OF THE LD AR. THE LD DR ARGUED THAT THE SHARE TRANSACTIONS WERE CARRIED OUT BY THE ASSESSEE IN THE COMPANIES WHICH WERE SUSPENDED BY BSE FOR NON COMPLIANCE WITH LISTING AGREEMENTS CLAUSES AS PER DETAILS BELOW: - SAMPLAST LEATHER W.E.F. 27.02.2003 PUSHPANJALI FLORICUTURE W.E.F. 03.02.2003 HIGH LAND IND LTD W.E.F. 11.02.2004 TRANSNATION SECURITIES LTD W.E.F. 21.12.2004 SHUKUN CONSTRUCTION W.E.F. 30.08.2006 2 2 . IT WAS ALSO SUBMITTED THAT THE SHARE TRANSACTIONS WERE CARRIED OUT THROUGH BROKERS WHO WERE NOT TRACEABLE AS NOTED BY THE AO AFTER ISSUING NOTICE S U/S 133(6) OF THE ACT TO THESE BROKERS. THE BSE IN REPLY TO NOTICE U/S 133(6) OF THE ACT STATED THAT MANY OF BROKERS DID NOT EXECUTE ANY SHARE TRANSACTIONS ON THE SAID DATES AS STATED BY THE ASSESSEE AS OBSERVED BY THE CIT(A) IN PARA 2.3.2 OF APPEAL ORDE R. THE SHARES PRICES IN WHICH THE ASSESSEE CLAIMED TO HAVE MADE GAINS SHOT UP EXORBITANTLY AND ASTOUNDINGLY IN A VERY SHORT PERIOD WITHOUT CORRESPONDING INCREASE IN THE WORTH OR INTRINSIC VALUE AS NOTED BY THE CIT(A) IN PARA NO 2.3.5 OF THE APPEAL ORDER . THE LD DR ANJLIGROUP 27 SUBMITTED THAT THE SEBI INVESTIGATED SOME OF THE BROKERS AND EVEN IMPOSED PENALTIES AS OBSERVED BY THE CIT(A) IN PARA 2.3.7 OF APPEAL ORDER. A SEARCH ON SHRI NARINDER SHAH PROVED THAT HE WAS ENGAGED IN PROVIDING BOGUS ENTRIES OF PENNY STOCKS AT HIGH PRICES AND HE GAVE DETAILED ACCOUNT OF MODUS OPERANDI DURING HIS OWN APPELLATE PROCEEDINGS WHICH IS NOTED BY CIT(A) IN PARA 2.3.7 AND 2.3.9 OF THE APPEAL ORDER. THE LD CIT(A) ALSO CARRIED OUT ENQUIRIES FROM G. R. PANDYA SHARE BROKERS PVT LTD DURING THE COURSE OF HEARING OF THE ASSESSEE GROUP OF CASES THE OUTCOME OF WHICH WAS DULY BROUGHT TO THE NOTICE OF ASSESSEE AS NOTED BY THE CIT(A) IN PARA 2.3.15, 7.4.3, 7.4.6 AND 7.4.9 OF THE APPEAL ORDER AND THE ASSESSEE DID NOT ASK FOR A NY CROSS EXAMINATION . THE LD D R RELIED ON SOME DECISIONS IN SUPPORT OF HER ARGUMENTS NAMELY CIT VS DURGA PRASAD MORE 82 ITR 540 SC, SUMATI DAYAL VS CIT 214 ITR 801 SC, HERSH WIN CHADDHA VS DDIT(INT. TAX)135 TTJ 513, ITO VS SHAMIN BHARWANI 170 TTJ 238 (MUM), SHRI ARVIND M KARI YA VS ACIT (ITA NO 7024/MUM/2010 DATED 30.1.2013 , ACIT VS SOM NATH MAINI(7SOT 202 CHD) AND ZIKRULLAH CHAUDHARY ITA NO 669/PN/2012 DATED 4.3.2014. THE LD DR FINALLY PRAYED BEFORE THE BENCH THAT IN VIEW OF THE RATIO LAID DOWN IN THE ABOVE DECISIONS THE ORDE R OF FAA BE UPHELD BY DISMISSING THE APPEAL OF THE ASSESSEE. 2 3 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE COUNSELS AND PERUSED THE RELEVANT MATERIALS PLACED BEFORE US INCLUDING THE IMPUGNED ORDER AND THE VARIOUS CASE LAWS RELIED UPON BY THE BOTH TH E PARTIES. WE FIND FROM THE FACTS BEFORE US THAT THE A SEARCH ACTION WAS CONDUCTED ON THE ASSESSEE AND HER ANJLIGROUP 28 RELATED PARTIES ON 24.1.2006 F OLLOWING A INFORMATION WITH THE DEPARTMENT THAT THAT ASSESSEE ALONG WITH OTHERS HAS INDULGED IN OBTAINING THE BOGUS PU RCHASES OF PENNY STOCKS AND THEREBY MAKING FICTITIOUS LONG TERM CAPITAL GAIN BY SELLING THOSE SHARES. T HE ASSESSEE FILED RETURN OF INCOME ON 23.1,2007 IN RESPONSE TO NOTICE ISSUED U/S 153 A OF THE ACT DATED 13.9.2006 DECLARING AN INCOME OF RS.74,23,570/ - WHICH COMPRISED OF INCOME FROM BUSINESS , HOUSE PROPERTY, CAPITAL GAIN AND OTHER SOURCES. IN THE SAID RETURN THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN ON SALE OF TWO SHARES NAMELY G TECH SOFT LTD AND HIGH LAND LTD OF RS. 69,35,295/ - WHICH WERE PURCHASE D BY THE ASSESSEE IN FY 2002 - 03 RELEVANT TO AY 2003 - 04 AT COST OF RS.1,58,299/ - .THE PAYMENT FOR SHARES WAS MADE OUT OF SPECULATIONS GAIN OF RS. 1,49,916/ - ON SALE OF SHARES WHICH WAS SHOWN IN THE RETURN OF INCOME FOR AY 2003 - 04 AND ACCEPTED BY THE AO W HILE FRAMING THE ASSESSMENT VIDE ORDER DATED 31.12.2007 PASSED U/S 143(3) R.W.S. 153A OF THE ACT THOUGH WRONGLY SHOWN AS SHORT TERM CAPITAL GAIN AND ASSESSED ACCORDINGLY AS IS CLEAR AND APPARENT FROM THE COPY OF THE ORDER PLACED AT PAGE NO 5 TO 11 OF THE P APER BOOK AND THE BALANCE OUT OF CASH RS. 8,383/ - . THE PAYMENTS WERE DULY ENTERED IN THE BOOKS OF THE ASSESSEE AND ACCORDINGLY INVESTMENTS IN SHARES WERE ALSO SHOWN IN THE BALANCE SHEET AS AT 31.3.2003 BESIDE SHOWING THE SHORT TERM GAIN OF RS. 1,49,916 / - AND CASH PAYMENTS WHICH WERE ALSO EXAMINED BY THE AO FRAMING THE ASSESSMENT FOR AY 2003 - 04 AND ACCEPTED WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT . HOWEVER , THE AO REJECTED THE CONTENTION OF THE ASSESSEE OF LONG TERM CAPITAL GAIN O N ANJLIGROUP 29 SALE OF SHARES OF RS. 69 35,295/ - AND ASSESSED THE SAME AS INCOME OF OTHER SOURCES FOR THE REASONS THA T THE ASSESSEE HAS TAKEN BOGUS ENTRIES OF PURCHASES AND SALES FROM THE BROKERS WHO WERE ENGAGED IN THE BUSINESS OF PROVIDING SUCH ENTRIES AND CONSEQUENT CAPITAL GAIN WAS ALSO BOGUS WITHOUT DOUBTING THE BILLS AND VOUCHERS OF SALES AND PURCHASE OF SHARES DESPITE THE FACT THE SOURCE S OF INVESTMENTS W ERE ACCEPTED BY THE AO IN AY 2003 - 04 AS STATED HEREINABOVE. THE FIRST APPELLATE AUTHORITY ENHANCED THE ASSESS MENT BY TREATING THE ENTIRE SALE CONSIDERATION OF RS. 70,93,594/ - AS INCOME FROM OTHER SOURCES U/S 68 OF THE ACT BY MAKING ENQUIRIES ON THE INTERNET QUA THE SAID BROKERS DESPITE ALL DOCUMENTARY EVIDENCES AVAILABLE BEFORE HIM . WE FIND THAT THE ASSESSEE HAS CARRIED OUT ALL THE SHARES TRANSACTIONS OF PURCHASE AND SALES THROUGH REGISTERED SEBI BROKERS THROUGH THE PURCHASES AND SHARES WERE MADE OFF MARKET AND PHYSICAL DELIVERIES OF SHARES WERE TAKEN WHICH WERE TRANSFERRED IN THE NAME OF THE ASSESSEE AT THE TIME BOOK CLOSURE BY THE RESPECTIVE COMPANIES . WE ALSO FIND THAT THE SHARES WERE NOT TRANSFERRED TO D - MAT A/C AS THE ASSESSEE WAS NO T HAVING ANY D - MAT A/C. THE AO HAS ACCEPTED THE PURCHASE OF SHARES IN AY 2003 - 04 DULY SHOWN AS INVESTMENTS IN THE BALANCE SHE ET AS ON 31.3.2003 WHILE DOUBT ED THE SALES OF THE SAID SHARES AND THE CONSEQUENT GAIN DESPITE THE FACT THAT THE ASSESSEE HAS FURNISHED ALL THE BILLS VOUCHERS PAYMENTS MADE AND RECEIVED , CONFIRMATION FROM THE BROKERS OF PURCHASES AND SALES OF SHARES BY T HE ASSESSEE WHO WERE ALSO SEBI REGISTERED BROKERS. IN OUR OPINION, THE FINDINGS OF FACTS AS RECORDED BY THE CIT(A) WERE CONTRARY TO THE DOCUMENTARY EVIDENCES ON THE ANJLIGROUP 30 RECORDS ESPECIALLY WHEN NOTHING INCRIMINATING WAS FOUND DURING THE SEARCH TO PROVE TO THE CONTRARY AS CLAIMED BY THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S CIT VS MUKESH RATILAL MAROLIA(SUPRA) DISMISSED THE APPEAL OF THE REVENUE BY FINDING MERITS IN ITS CASE THEREBY UPHOLDING THE ORDER OF THE TRIBUNAL. THE HONBLE SUPREM E COURT ALSO DISMISSED THE SPECIAL LEAVE TO APPEAL (CIVIL NO (S). 20146/2012 VIDE ORDER DATED 27.01.2014 WHICH WAS FILED BY THE REVENUE AGAINST THE HIGH COURT ORDER. IN THE CASE OF MUKESH R. MAROLIA VS CIT (SUPRA) THE ASSESSEE SOLD SOME SHARES AND DEPOSIT ED THE SALES PROCEEDS IN HIS BANK ACCOUNT. THE AO ADDED THE SALES PROCEEDS FROM SHARES ON THE GROUND THAT THESE TRANSACTIONS WERE NOT REFLECTED IN THE BSE RECORDS AND HELD THAT THE TRANSACTIONS OF PURCHASE OF SHARES WERE BOGUS AS NO SHARES WERE IN FACT PUR CHASED BY THE ASSESSEE AND CONSEQUENTLY THE SALES OF SHARES WERE ALSO BOGUS. THE SALES PROCEEDS WERE ADDED TO THE INCOME OF THE ASSESSEE U/S 69 OF THE INCOME TAX ACT AS UNEXPLAINED INVESTMENTS WHICH WAS ALSO CONFIRMED BY THE FAA ON THE GROUNDS THAT THE SHA RES TRANSACTIONS WERE MADE OFF MARKET AND THAT TOO NOT THROUGH REGISTERED BROKERS. THE TRIBUNAL REVERSED THE ORDER OF FAA BY HOLDING THE SHARES TRANSACTIONS AS GENUINE BY HOLDING THAT OFF MARKET SHARE TRANSACTIONS ARE NOT UNLAWFUL AND ARE NOT SHAM AS THE SHARES PURCHASES AND SALES WERE AS PER BOOKS OF THE ASSESSEE AND SUPPORTED WITH EVIDENCES ON RECORDS. 2 4 . IN THE CASE OF CIT VS JAMNADEVI AGARWAL(SUPRA) THE H ONBLE H IGH C OURT HAS HELD THAT MERELY THAT THE ASSESSEE HAS PURCHASED AND SOLD THE ANJLIGROUP 31 SHARES OF S IMILAR COMPANIES THROUGH SAME BROKER COULD NOT A GROUND FOR HOLDING THE TRANSACTIONS TO BE BOGUS AND SHAM WHEN THE DOCUMENTARY EVIDENCES WERE PRODUCED TO ESTABLISH THE GENUINENESS OF THE CLAIM. THE SHARES WERE PURCHASED AND CONFIRMED BY THE COMPANY TO HAVE HANDED OVER THE SHARES BOUGHT BY THE ASSESSEE SIMILARLY THE SALE OF SHARES WERE ALSO EVIDENCED BY THE DOCUMENTS THOUGH THE PURCHASES AND SALES WERE MADE OFF MARKET AT THE PREVAILING RATE IN THE MARKET. THE H ON BLE COURT HELD THAT THE MERE FACT THAT THESE TRANSACTIONS WERE OFF MARKET COULD NOT BE GROUND TO TREAT THE TRANSACTIONS AS BOGUS OR SHAM AND UPHELD THE FINDING OF FACTS BY THE TRIBUNAL THAT THE TRANSACTIONS WERE GENUINE. THE HO N BLE HIGH COURT WHILE UPHOLDING THE TRIBUNAL DECISION CONSIDERED AND DIS TINGUISHED THE DECISION OF THE HONBLE APEX CO URT IN CASE OF SUMATI DAYAL VS CIT (1995) 214 ITR 801(SC) BY OBSERVING THE IN THAT CASE THE ASSESSEE HAS CLAIMED THE INCOME FROM HORSE RACES AND A FINDING WAS RECORDED THAT THE ASSESSEE HAS NOT PARTICIPATED IN THE HORSE RACES BUT PURCHASED THE WINNING TICKETS AFTER THE RACE WITH UNACCOUNTED MONEY WHEREAS THE HIGH COURT HAS HELD THAT IN THE PRESENT CASE THE SHARES TRANSACTIONS WERE SUPPORTED WITH DOCUMENTARY EVIDENCES AND THERE IS NO QUESTION OF INTRODUCING UNAC COUNTED MONEY BY THE ASSESSEE. IT HAS BEEN HELD IN THE CASE OF MUKESH RATILAL MAROLIA (BOMBAY HIGH COURT) (ORDER DATED 7.9.2011) (LTXA NO. 456 OF 2007) 6 SIMILARLY, THE SALE OF THE SAID SHARES FOR RS.1,41,08,484/ - THROUGH TWO BROKERS NAMELY, M/ S RICHMOND SECURITIES PVT. LTD. AND M/S. SCORPIO MANAGEMENT CONSULTANTS PVT.LTD. ANJLIGROUP 32 CANNOT BE DISPUTED, BECAUSE THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THE SHARES IN QUESTIO N ARE STILL LYING WITH THE ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT THE AMOUNTS RECEIVED BY THE ASSESSEE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE STATEMENT OF THE DIRECTOR OF M/S. RICHMAND SECURITIES PVT. LTD. REGARDING THE SALE TRANSACTION WAS GENUINE. 7. IN THE CIRCUMSTANCES, THE DECISION OF ITAT IN HOLDING THE PURCHASE AND SALE OF SHARES ARE GENUINE AND THEREFORE, THE ASSESSING OFFICER W AS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS.1,41,08,484/ - REPRESENTED UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED. 8. IN THE RESULT, WE SEE NO MERIT IN THIS APPEAL AND THE SAME IS DISMISSED WITH NO ORDER AS TO COST S. THE DECISION OF THE COORDINATE BENCH IN THE CASE OF MUKESH R. MAROLIA (SUPRA) WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT AS STATED HEREINABOVE. IN THE SAID DECISION THE TRIBUNAL HAS HELD AS UNDER: SECTION 69 OF THE INCOME - TAX ACT, 1961 - UNEXPLAI NED INVESTMENTS - ASSESSMENT YEAR 2001 - 02 - ASSESSEE CLAIMED THAT HE HAD SOLD CERTAIN SHARES DURING RELEVANT PREVIOUS YEAR AND DEPOSITED SALE PROCEEDS OF SHARES IN HIS BANK ACCOUNT - ASSESSING OFFICER, OBSERVING THAT PURCHASE AND SALE OF SHARES WAS NOT REF LECTED IN RECORDS OF BOMBAY STOCK EXCHANGE, HELD THAT CLAIM OF ASSESSEE REGARDING PURCHASE OF SHARES WAS BOGUS AND NO SUCH SHARES WERE PURCHASED BY ASSESSEE AND, CONSEQUENTLY, SALE OF SHARES WAS ALSO BOGUS - ASSESSING OFFICER, THEREFORE, TREATED SALE PROCE EDS OF SHARES AS UNEXPLAINED INVESTMENT UNDER SECTION 69 AND ADDED SAME TO INCOME OF ASSESSEE - COMMISSIONER (APPEALS) CONFIRMED ADDITION HOLDING THAT SHARE TRANSACTIONS WERE CARRIED OUT BY ASSESSEE OUTSIDE STOCK EXCHANGE AND NOT THROUGH ANY REGISTERED BRO KER - ASSESSEES CLAIM WAS THAT THESE WERE OFF - MARKET TRANSACTIONS - WHETHER SINCE PURCHASE AND SALE OF SHARES OUTSIDE FLOOR OF STOCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY, IT WAS NOT POSSIBLE TO HOLD THAT TRANSACTIONS REPORTED BY ASSESSEE WERE QUITE SHAM - HELD, YES - WHETHER SINCE BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE CLEARLY REFLECTED PURCHASE OF THOSE SHARES AND SINCE EVIDENCE ON RECORD FULLY ESTABLISHED THAT ASSESSEE HAD PURCHASED SHARES AND ANJLIGROUP 33 HAD SOLD SHARES, SALE PROCEEDS OF SHARES STOOD EXPLAINED BY ASSESSEE - HELD, YES - WHETHER, THEREFORE, ADDITION IN QUESTION WAS UNJUSTIFIED - HELD, YES SECTION 69 OF THE INCOME - TAX ACT, 1961 - UNEXPLAINED INVESTMENTS - ASSESSMENT YEAR 2001 - 02 - ASSESSING OFFICER TREATED CERTAIN AMOUNT, CREDITED IN BANK ACCOUNT OF ASSESSEES MINOR SON, AS UNEXPLAINED INVESTMENT UNDER SECTION 69 AND ADDED SAME TO INCOME OF ASSESSEE - WHETHER SINCE SAID AMOUNT REPRESENTED REALIZATION OF LOAN OUTSTANDING WITH ONE R, ADDITION WAS NOT JUSTIFIED - HELD, YES SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDITS - ASSESSMENT YEAR 2001 - 02 - ASSESSING OFFICER TREATED CERTAIN AMOUNT, DEPOSITED IN BANK ACCOUNT OF ASSESSEES MINOR DAUGHTER, AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 AND ADDED SAME TO INCOME OF ASSESSEE - ASSESSING OFFICER REJ ECTED EXPLANATION OF ASSESSEE THAT SAID AMOUNT WAS GIFTED TO HIS DAUGHTER BY HIS BROTHER, WHO WAS A NON - RESIDENT, AND PAYMENT WAS ROUTED THROUGH NRE ACCOUNT - WHETHER SINCE REMITTANCE OF MONEY WAS SUPPORTED BY BANKING DOCUMENTS, THERE WAS NO REASON TO DISB ELIEVE VERSION OF ASSESSEE AND MAKE AN ADDITION THEREOF - HELD, YES - WHETHER, THEREFORE, SAID ADDITION WAS LIABLE TO BE DELETED - HELD, YES SECTION 54E OF THE INCOME - TAX ACT, 1961 - CAPITAL GAINS - NOT TO BE CHARGED IN CERTAIN CASES - ASSESSMENT YEAR 200 1 - 02 - ASSESSEE CLAIMED THAT DURING PREVIOUS YEAR, HE HAD SOLD CERTAIN SHARES AND DEPOSITED SALE PROCEEDS OF SHARES IN HIS BANK ACCOUNT - HE ALSO CLAIMED THAT DURING PREVIOUS YEAR HE PURCHASED A FLAT AND MADE INVESTMENT IN FLAT OUT OF SALE PROCEEDS OF SHAR ES - ASSESSEE FURTHER CLAIMED DEDUCTION UNDER SECTION 54E OF LONG - TERM CAPITAL GAINS, EARNED ON SALE OF SHARES AS AGAINST PURCHASE OF SAID FLAT - WHETHER SINCE SALE PROCEEDS OF SHARES HAD BEEN EXPLAINED BY ASSESSEE, HE WAS ENTITLED TO BENEFIT OF SECTION 54 E AGAINST PURCHASE OF FLAT - HELD, YES IN THE CASE OF J AMNADEVI AGRAWAL (SUPRA) THE COORDINATE BENCH HAS HELD AS UNDER: SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT - ASSESSMENT YEAR 2001 - 02 - FACT THAT ASSESSEES IN GROUP HAD PURCHASED AND SOL D SHARES OF SIMILAR COMPANIES THROUGH SAME BROKER COULD NOT BE A GROUND TO HOLD THAT TRANSACTIONS WERE SHAM AND BOGUS, ESPECIALLY WHEN DOCUMENTARY EVIDENCE WAS PRODUCED TO ESTABLISH GENUINENESS OF CLAIM [IN FAVOUR OF ASSESSEE] ANJLIGROUP 34 IT HAS BEEN HELD IN MRS. R ASILA N. GADA & OTHERS ( SUPRA ) : 5.1. AFTER PERUSING THE MATERIAL AVAILABLE WE ARE OF THE OPINION THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. HON'BLE BOMBAY HIGH COURT IN T HE CASE OF SHARADA CREDIT AND MUKESH R MAROLIA HAS UPHELD THE ORDERS OF THE ITAT, MUMBAI. IN THOSE CASES IT HAS BEEN HELD THAT SHARES PURCHASED/SOLD IN THE OFF MARKET CANNOT BE CONSIDERED ILLEGAL TRANSACTIONS. WE FIND THAT THE AO HAD NOT AFFORDED OPPORTUNI TY OF CROSS - EXAMINATION OF SHRI MUKESH CHOKSI TO THE ASSESSEE. IT IS NOTEWORTHY THAT SH. CHOKSI HAD NOT NAMED THE ASSESSEE IN HIS STATEMENTS AS THE BENEFICIARY WHO HAD AVAILED BOGUS ENTRIES. WE HAVE NOTICED THAT THE ASSESSEE HAD SHOWN THE INVESTMENT IN SHA RES IN THE BALANCE - SHEET OF THE EARLIER ASSESSMENT YEAR AND HER RETURN OF INCOME WAS ACCEPTED BY THE DEPARTMENT. WE ARE OF THE OPINION THAT ONCE SALES/PURCHASE OF SHARES IS ACCOMPANIED BY THIS KIND OF EVIDENCES THE GENUINENESS OF THE SAID TRANSACTIONS CAN NOT BE DOUBTED. NON - PAYMENT OF STT CANNOT BE AND SHOULD NOT BE BASIS FOR MAKING ADDITION OF THE SECTION 68 OF THE ACT. FAA HAS CATEGORICALLY HELD THAT ALL THE NECESSARY DETAILS ABOUT ITA NO. 1772/MUM/201 0 ITA NO. 1774/MUM/2010 ITA NO. 1775/MUM/2010 ITA NO. 1788/MUM/2010 ITA NO. 1789/MUM/2010 ITA NO. 4460/MUM/2009 ITA NO. 4792/MUM/2009 PURCHASE AND SALE OF SHARES WERE MADE AVAILABLE TO THE AO DURING ASSESSMENT PROCEEDINGS. WE HAVE PERUSED THE CASE LAWS REL IED UPON BY THE AR. IN THE CASE OF MUKESH R MAROLIA (SUPRA) HON'BLE JURISDICTIONAL HIGH COURT HAS HELD AS UNDER: ' ....ON FURTHER APPEAL, THE ITAT BY THE IMPUGNED ORDER ALLOWED THE CLAIM OF THE ASSESSEE BY RECORDING THAT THE PURCHASE OF SHARES DURING THE Y EAR 1999 - 2000 AND 2000 - 2001 WERE DULY RECORDED IN THE BOOKS MAINTAINED BY THE ASSESSEE. THE ITAT HAS RECORDED A FINDING THAT THE SOURCE OF FUNDS FOR ACQUISITION OF THE SHARES WAS THE AGRICULTURAL INCOME WHICH WAS DULY OFFERED AND ASSESSED TO TAX IN THOSE A SSESSMENT YEARS. THE ASSESSEE HAS PRODUCED CERTIFICATES FROM THE AFORESAID FOUR COMPANIES TO THE EFFECT THAT THE SHARES WERE IN - FACT TRANSFERRED TO THE NAME OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE ASSESSEE HAD PURCHASED SHARES OUT OF THE FUNDS DULY DISCLOSED BY THE ASSESSEE CANNOT BE FAULTED. SIMILARLY, THE SALE OF THE SAID SHARES FOR RS.1,41,08,484/ - THROUGH TWO BROKERS NAMELY, M/S RICHMOND SECURITIES PVT. LTD. AND M/S. SCORPIO MANAGEMENT CONSULTANTS PVT. LTD. CANNOT BE DISPUTED, BECAUSE THE FACT THAT THE ASSESSEE HAS RECEIVED THE SAID AMOUNT IS NOT IN DISPUTE. IT IS NEITHER THE CASE OF THE REVENUE THAT THE SHARES IN QUESTION ARE STILL LYING WITH THE ASSESSEE NOR IT IS THE CASE OF THE REVENUE THAT THE ANJLIGROUP 35 AMOUNTS R ECEIVED BY THE ASSESSEE ON SALE OF THE SHARES IS MORE THAN WHAT IS DECLARED BY THE ASSESSEE. THOUGH THERE IS SOME DISCREPANCY IN THE STATEMENT OF THE DIRECTOR OF M/S. RICHMAND SECURITIES PVT. LTD. REGARDING THE SALE TRANSACTION, THE TRIBUNAL RELYING ON THE STATEMENT OF THE EMPLOYEE OF M/S. RICHMAND SECURITIES PVT. LTD. HELD THAT THE SALE TRANSACTION WAS GENUINE. IN THESE CIRCUMSTANCES, THE DECISION OF THE ITAT IN HOLDING THAT THE PURCHASE AND SALE OF SHARES ARE GENUINE AND THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE AMOUNT OF RS. 1,41,08,484/ - REPRESENTED UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 CANNOT BE FAULTED.' WE ARE OF THE OPINION THAT THE FACTS O F THE CASE OF MUKESH R MAROLIA ARE SIMILAR TO THE FACTS OF THE CASES UNDER CONSIDERATION. RESPECTFULLY FOLLOWING THE ORDERS OF THE HON'BLE HIGH COURT AND THE COORDINATING BENCHES OF THE TRIBUNAL WE HOLD THAT PURCHASE AND SALE OF SHARES BY THE ASSESSEE WAS A GENUINE TRANSACTION, AND HENCE, ADDITION MADE BY THE AO CANNOT BE ENDORSED. UPHOLDING THE ORDERS OF THE FAA ,WE DISMISS THE APPEALS FILED BY THE AO . IN THE CASE CIT VS SHYAM R. PAWAR (2015) 229 TAXMANN 256 (BOM) HAS HELD AS UNDER: - IT WAS REVEALED DUR ING THE COURSE OF INQUIRY BY THE ASSESSING OFFICER THAT THE CALCUTTA STOCK EXCHANGE RECORDS SHOWED THAT THE SHARES WERE PURCHASED FOR CODE NUMBERS S003 AND R121 OF STPL AND RMPL RESPECTIVELY. OUT OF THESE TWO, ONLY RMPL IS LISTED IN THE APPRAISAL REPORT AN D IT IS STATED TO BE INVOLVED IN THE MODUS OPERANDI. IT IS ON THIS MATERIAL THAT THE ASSESSING OFFICER HOLDS THAT THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES ARE DOUBTFUL AND NOT GENUINE. IN RELATION TO ASSESSEE'S ROLE IN ALL THIS, ALL THAT THE COMMISS IONER OBSERVED IS THAT THE ASSESSEE TRANSACTED THROUGH BROKERS AT CALCUTTA, WHICH ITSELF RAISES DOUBT ABOUT THE GENUINENESS OF THE TRANSACTIONS AND THE FINANCIAL RESULT AND PERFORMANCE OF THE COMPANY WAS NOT SUCH AS WOULD JUSTIFY THE INCREASE IN THE SHARE PRICES. THEREFORE, HE REACHED THE CONCLUSION THAT CERTAIN OPERATORS AND BROKERS DEVISED THE SCHEME TO CONVERT THE UNACCOUNTED MONEY OF THE ASSESSEE TO THE ACCOUNTED INCOME AND THE ASSESSEE UTILIZED THE SCHEME. [PARA 5] ANJLIGROUP 36 THE TRIBUNAL CONCLUDED THAT THERE WA S SOMETHING MORE WHICH WAS REQUIRED, WHICH WOULD CONNECT THE ASSESSEE TO THE TRANSACTIONS AND WHICH ARE ATTRIBUTED TO THE PROMOTERS/DIRECTORS OF THE TWO COMPANIES. THE TRIBUNAL REFERRED TO THE ENTIRE MATERIAL AND FOUND THAT THE INVESTIGATION STOPPED AT A P ARTICULAR POINT AND WAS NOT CARRIED FORWARD BY THE REVENUE. A COPY OF THE DMAT ACCOUNT, PLACED BEFORE THE TRIBUNAL SHOWED THE CREDIT OF SHARE TRANSACTION. THE CONTRACT NOTES IN FORM - A WITH TWO BROKERS WERE AVAILABLE WHICH GAVE DETAILS OF THE TRANSACTIONS. THE CONTRACT NOTE IS A SYSTEM GENERATED AND PRESCRIBED BY THE STOCK EXCHANGE. FROM THIS MATERIAL, THE TRIBUNAL CONCLUDED THAT THIS WAS NOT MERE ACCOMMODATION OF CASH AND ENABLING IT TO BE CONVERTED INTO ACCOUNTED OR REGULAR PAYMENT. THE DISCREPANCY POINTED OUT BY THE CALCUTTA STOCK EXCHANGE REGARDING CLIENT CODE HAS BEEN REFERRED TO. BUT THE TRIBUNAL CONCLUDED THAT SAME, BY ITSELF, IS NOT ENOUGH TO PROVE THAT THE TRANSACTIONS IN THE IMPUGNED SHARES WERE BOGUS/SHAM. THE DETAILS RECEIVED FROM STOCK EXCHANGE H AVE BEEN RELIED UPON FOR THE PURPOSES OF FAULTING THE REVENUE IN FAILING TO DISCHARGE THE BASIC ONUS. IF THE TRIBUNAL PROCEEDS ON THIS LINE AND CONCLUDED THAT INQUIRY WAS NOT CARRIED FORWARD AND WITH A VIEW TO DISCHARGE THE INITIAL OR BASIC ONUS, THEN SUCH CONCLUSION OF THE TRIBUNAL CANNOT BE TERMED AS PERVERSE. THE CONCLUSIONS AS RECORDED IN THE TRIBUNAL'S ORDER ARE NOT VITIATED BY ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD EITHER. [PARA 6] THE APPEALS DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW . THEY ARE ACCORDINGLY DISMISSED. [PARA 7] IN ITO VS INDRAVADAN JAIN HUF( ITA NO. 4861/M/2014 ) ( SUPRA) HAS HELD AS UNDER: - 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND FROM THE RECORD TH AT THE AO HAS TREATED THE SHARE TRANSACTION AS BOGUS ON THE PLEA THAT SEBI HAS INITIATED INVESTIGATION IN RESPECT OF RAMKRISHNA FINCAP PVT. LTD. THE AO FURTHER STATED THAT INVESTIGATION REVEALED THAT TRANSACTION THROUGH M/S BASANT PERIWAL AND CO. ON THE FLO OR OF STOCK EXCHANGE WAS MORE THAN 83%. WE FOUND THAT AS FAR AS INITIATION OF INVESTIGATION OF BROKER IS CONCERNED, THE ASSESSEE IS NO WAY CONCERNED WITH THE ACTIVITY OF THE BROKER. DETAILED FINDING HAS BEEN RECORDED BY CIT(A) TO THE EFFECT THAT ASSESSEE H AS MADE INVESTMENT IN SHARES WHICH WAS PURCHASED ON THE FLOOR OF STOCK EXCHANGE AND NOT FROM M/S BASANT PERIWAL AND CO. AGAINST PURCHASES PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, DELIVERY OF SHARES WERE TAKEN, CONTRACT OF SALE WAS ALSO COMPLETE AS ANJLIGROUP 37 PE R THE CONTRACT ACT, THEREFORE, THE ASSESSEE IS NOT CONCERNED WITH ANY WAY OF THE BROKER. NOWHERE THE AO HAS ALLEGED THAT THE TRANSACTION BY THE ASSESSEE WITH THESE PARTICULAR BROKER OR SHARE WAS BOGUS, MERELY BECAUSE THE INVESTIGATION WAS DONE BY SEBI AGAI NST BROKER OR HIS ACTIVITY, ASSESSEE CANNOT BE SAID TO HAVE ENTERED INTO INGENUINE TRANSACTION, INSOFAR AS ASSESSEE IS NOT CONCERNED WITH THE ACTIVITY OF THE BROKER AND HAVE NO CONTROL OVER THE SAME. WE FOUND THAT M/S BASANT PERIWAL AND CO. NEVER STATED AN Y OF THE AUTHORITY THAT TRANSACTION IN M/S RAMKRISHNA FINCAP PVT. LTD. ON THE FLOOR OF THE STOCK EXCHANGE ARE INGENUINE OR MERE ACCOMMODATION ENTRIES. THE CIT(A) AFTER RELYING ON THE VARIOUS DECISION OF THE COORDINATE BENCH, WHEREIN ON SIMILAR FACTS AND CI RCUMSTANCES, ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE, CAME TO THE CONCLUSION THAT TRANSACTION ENTERED BY THE ASSESSEE WAS GENUINE. DETAILED FINDING RECORDED BY CIT(A) AT PARA 3 TO 5 HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINING ANY POSITIVE MA TERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF CIT(A). MOREOVER, ISSUE IS ALSO COVERED BY THE DECISION OFJURISDICTIONAL HIGH COURT IN THE CASE OF SHYAM R. PAWAR (SUPRA), WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCE S, TRANSACTIONS IN SHARES WERE HELD TO BE GENUINE AND ADDITION MADE BY AO WAS DELETED. RESPECTFULLY FOLLOWING THE SAME VIS - - VIS FINDINGS RECORDED BY CIT(A) WHICH ARE AS PER MATERIAL ON RECORD, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 9. IN THE RESULT, BOTH APPEALS OF THE REVENUE ARE DISMISSED . 2 5 . IN THE CASE OF THE ASSESSEE THE PURCHASE OF SHARES WERE MADE THROUGH SEBI REGISTERED BROKERS THOUGH OFF MARKET WHICH WERE ACCEPTED BY THE AO IN THE AY 2003 - 04 INCLUDING THE SOURCE O F PURCHASE OUT OF SPECULATION GAIN OF RS. 1,49,916/ - AND OUT OF CASH RS. 8,383/ - . SIMILARLY SALE OF SHARES WERE ALSO MADE THROUGH SEBI REGISTERED BROKERS. ALL THE TRANSACTIONS OF PURCHASE AND SALES OF SHARES WERE EVIDENCED AND SUPPORTED WITH BILLS AND VO UCHERS OF THE BROKERS AND CONFIRMATIONS FROM THE BROKERS, ACKNOWLEDGEMENTS OF PAYMENTS AND RECEIVING THE SALE PROCEEDS BY ACCOUNT PAYEE CHEQUES. THE LD CIT(A) OR AO COULD NOT BRING ANY EVIDENCE ON RECORDS ANJLIGROUP 38 TO PROVE OR REBUT THE EVIDENCES ON RECORDS EXCEP T THE SOME ENQUIRIES WHICH COULD NOT PROVE ANYTHING. WE ALSO FIND THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID DOWN IN VARIOUS THE DECISIONS(SUPRA). NOW COMING TO THE DECISIONS ON WHICH THE REVENUE PLACED RELIANCE WE FIND THAT TH E SAME ARE DISTINGUISHABLE ON FACTS. IN THE CASE OF CIT VS DURGA PRASAD (SUPRA) IT HAS BEEN HELD AS UNDER : 15. NOW COMING TO THE GROUNDS THAT COMMENDED THEMSELVES TO MUKHARJI J. (THE PRESENT CHIEF JUSTICE OF THE HIGH COURT OF CALCUTTA), WE ARE UNABLE TO FIND OUT HOW THE LEARNED JUDGE WAS ABLE TO COME TO THE CONCLUSION THAT THERE WAS NO PROOF OR CHARGE THAT THE ASSESSEE HAD CONCEALED ANY INCOME OF HIS. THE ORDERS OF THE INCOME - TAX OFFICER, APPELLATE ASSISTANT COMMISSIONER AND THE TRIBUNAL PROCEEDED ON THE BASIS THAT THE ASSESSEE WAS ATTEMPTING TO CONCEAL A PORTION OF HIS INCOME BY PUTTING FORWARD THE STORY THAT THE INCOME FROM THE PREMISES IS THE INCOME OF THE TRUST CREATED BY HIS WIFE. THE PROOF OF THAT CHARGE DEPENDS ON THE CORRECTNESS OF THE FINDING OF T HOSE AUTHORITIES. 16. IN STATING THAT THERE IS NO PROOF THAT THE CONSIDERATION FOR THE CONVEYANCE PASSED FROM THE ASSESSEE THE LEARNED JUDGE, IN OUR OPINION, LOOKED AT THE CASE FROM A WRONG ANGLE. THERE IS NO DISPUTE THAT THE CONSIDERATION FOR THE SALE WAS IN FACT PAID BY THE ASSESSEE. HE SAYS THAT HE PAID IT ON BEHALF OF THE TRUST ORALLY CREATED BY HIS WIFE. THEREFORE THE QUESTION IS WHETHER HE HAS SATISFACTORILY PROVED THAT CASE. IF HE HAS FAILED TO PROVE THAT CASE, AS WE THINK, IT TO BE SO AND IN THE ABS ENCE OF ANY OTHER ALTERNATIVE CASE PLEADED BY HIM, IT FOLLOWS AS A MATTER OF COURSE THAT THE CONSIDERATION FOR THE SALE PASSED FROM HIM. SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL, THEREFORE THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES. HUMAN MINDS MAY DIFFER AS TO THE RELIABILITY OF A PIECE OF EVIDENCE. BUT IN THAT SPHERE THE DECISION OF THE FINAL FACT FINDING AUTHORITY IS MADE CONCLUSIVE BY LAW. 17. THE FACT THAT THE ASSESSEE KEPT A SEPARATE ACCOUNT IN RESPECT OF THE INCOME AND EXPENDITURE RELATING TO THE PREMISES IN QUESTION IS OF LITTLE EVIDENTIARY VALUE IF ONE TAKES INTO CONSIDERATION THE PAST HISTORY OF THE CASE. AT ANY RATE WHAT VALUE SHOULD BE ATTACHED TO THAT CIRCUMSTANCE IS FOR THE FINAL FACT FINDING BODY. ANJLIGROUP 39 18. THE CIRCUMSTANCE THAT THE ASSESSEE HAD AT THE VERY OUTSET PRODUCED THE SALE DEED AND THE TRUST DEED BEFORE THE INCOME - TAX OFFICER IS OF NO SIGNIFICANCE. THO SE DOCUMENTS FORMED THE SHEET ANCHOR OF THE ASSESSEE'S CASE. THERE WAS NO PARTICULAR VIRTUE IN THE ASSESSEE'S PRODUCING THOSE DOCUMENTS BEFORE THE INCOME - TAX OFFICER. 19. IN OUR OPINION NO QUESTION OF LAW ARISE FROM THE ORDER OF THE TRIBUNAL AND THEREFORE THE HIGH COURT WAS NOT JUSTIFIED IN DIRECTING THE TRIBUNAL TO STATE A CASE AND WE ARE FURTHER OF OPINION THAT THE ANSWER GIVEN BY THE HIGH COURT TO THE QUESTION REFERRED TO IT IS UNSUSTAINABLE. WE ACCORDINGLY DISCHARGE THAT ANSWER AND ANSWER THAT QUESTION IN THE AFFIRMATIVE AND IN FAVOUR OF THE DEPARTMENT. THE ASSESSEE SHALL PAY THE COSTS OF THE DEPARTMENT BOTH IN THIS COURT AS WELL AS IN THE HIGH COURT - HEARING FEE ONE SET. 2 6 . IN THE CASE SUMATI DAYAL VS CIT(SUPRA) THE ASSESSEE HAS PURCHASED THE WINNING TICKETS IN THE HORSE RACES WITHOUT ACTUALLY PARTICIPATING IN THE RACE BY INTRODUCING THE ACCOUNTED MONEY TO PURCHASE THE TICKETS AND THEREFORE DISTINGUISHABLE ON FACTS. SIMILARY CIT VS DURGA PRASAD MORE(SUPRA) WAS ALSO DISTINGUISHABLE ON FACTS. IN THE CA SE OF SHAMIM M BHARWANI(SUPRA) THE DECISIONS OF THE APEX COURT AND JURISDICTION HIGH COURT IN THE CASE OF CIT VS MUKESH RATILAL MAROLIA(SUPRA) WERE NOT CONSIDERED. 2 7 . FROM THE FACTS OF THE ASSESSEE AS DISCUSSED ABOVE THE CASE OF THE ASSESSEE IS SQU ARELY COVERED BY RATIO LAID DOWN IN THE VARIOUS DECISIONS OF JURISDICTIONAL H IGH C OURT, SUPREME COURT AND COORDINATE BENCHES. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 70,93,594/ - . 2 8 . THE ISS UE RAISED IN THE SECOND GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 1,58,299/ - BY THE CIT(A) AS MADE BY THE AO ANJLIGROUP 40 TOWARDS THE COST OF PURCHASE OF SHARES U/S 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. 2 9 . THE FACTS IN BRIEF ARE THAT THE AS SESSEE PURCHASED SHARES OF TWO COMPANIES AS DISCUSSED ABOVE IN PARA NO S.4 TO 8 IN THE IMMEDIATELY PRECEDING YEAR FY 2002 - 03 RELEVANT TO AY 2003 - 04 AND NOT DURING THE YEAR UNDER CONSIDERATION. THE AO DID NOT ACCEPT THE SOURCES OF PURCHASE OF THESE SHARES AND TREATED THE SAME TO HAVE BEEN PURCHASED OUT OF UN ACCOUNTED INCOME A FEW DAYS BEFORE THEIR SALE AND NOT DURING AY 2003 - 04 AS SHOWN AND CLAIMED BY THE ASSESSEE AND ACCORDINGLY MADE ADDITION OF RS. 1,58,299/ - U/S 69 C OF THE ACT AS UNEXPLAINED EXPENDITUR E. 30 . THE LD CIT(A) DURING APPEAL PROCEEDINGS THE CIT ALSO UPHELD THE ORDER OF AO ON THIS ISSUE BY OBSERVING AND HOLDING AS UNDER: - 3.2 DECISION: 3.2.1 I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, RELEVANT A SSESSMENT ORDER, THE WRITTEN SUBMI SSIONS MADE AND THE ARGUMENTS MADE BY THE LD. AR. THE ASSESSING OFFICER HAS GIVEN DETAILED REASONS FOR COMING INTO CONCLUSION THAT THE COST OF PURCHASE OF SHARES OF RS.78,465/ - , RS.49,770/ - , RS.1,58,299/ - , RS.1,83,870 / - AN D RS.70,552/- FOR A.Y. 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06 AND 2006 - 07 RESPECTIVELY WERE UNEXPLAINED EXPENDITURE INCURRED IN THE A.YRS. 2002 - 03 TO 2006 - 07. THESE REASONS HAVE BEEN DISCUSSED IN PARA 8 OF THE RELEVANT ASSESSMENT ORDER AND INTER - ALIA, INCLUDED : (A) THE ALLEGED SPECULATION INCOME THROUGH WHICH TH E SAID PENNY STOCKS SHARES WERE PURCHASED, WERE NOT DISCLOSED IN THE ORIGINAL RE TURNS OF INCOME NOR IN RESPONSE TO THE RETURNS FILED U/S.153C, .. (B) REGARDING THE SPECULATION INCOME WHICH WAS STATED TO HAVE BEEN CREDITED TO THE P&L AC FOR A.Y. 2001 - 02, IT WAS NOTICED BY THE ASSESSING OFFICER, THAT NEITHER ANY BUSINESS INCOME WAS DECLARED IN THAT YEAR NOR ANY P&L ACCOUNT WAS PREP ARED (C) EQUITY SHARES WERE ALLEGEDLY PURCHASED IN CASH, HOWEVER, NEITHER TH E C OPIES OF SHARE BROKER BILLS NOR THE CASH RECEIPTS NOR THE SOURCE OF SUCH EXPEN DITURES ANJLIGROUP 41 NOR THE EXPLANATION, IF ANY, WERE OFFERED BY THE APPELLANT AND HENCE IN THE OPINION OF A SSESSING OFFICER WAS FOUND NOT SATISFACTORY, (D) THE COPI ES OF THE DEMAT STATE MENT WEE NOT FURNISHED BY THE APPELLANT BEFORE THE AO. THE PREDATED PURCHASE BILLS, RECEIPS OF SHARES ON PHYSICAL FORMAT, GETTING THE SHARES IN THE ASSESSEES NAME OF PENNY STOCK COMPANIES WERE EASILY MANAGEABLE AGAINST PAYMENT OF COMMISSION AS DISCUS SED IN THE MODUS OPERANE DI OF THIS CASE. THE SHARE BROKERS, WHO ARRANGED THE FICTITIOUS PURCHASE OF TH E SHARES DID NOT ATTEND IN RESPONSE TO THE SUMMONS ISSUED TO THEM, (G) THE BS E HAS CONFIRMED THAT THE SHARE BROKERS HAD NOT TRADED IN THE AFORESAID SHARE ON THOSE DAYS. THE ALLEGED SHARE TRANSACTIONS WERE NOT RECORDED IN BSE AN D HENCE THAT WERE NOT GENUINE TRANSACTIONS. IN VIEW OF THE 'AFORESAID REASON S THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE APPELLANT. LD. ASSESSING OFFICER CAME TO A CO NSIDERED CONCLUSION THAT THESE SHARES WE RE PURCHASED ONLY FEW DAYS BEFORE THEIR S91E IN THE F.YRS. CORRESPONDING TO TH E RELEVANT A.YRS. CONCERNED. HON BLE COURT OF ALLAHABAD IN THE CASE OF SMT.REENA JAIN AND OTHERS V.S CIT (2007) 210 CTR (ALL) 491 HAS H ELD THAT WHER E THE ALLEGED GIFT S WERE PURCHASED BY THE APPELLANT AFT ER PAYING COMMISSION, TH E A DDITION WERE RIGHTLY MADE U/S.69C OF THE ACT. HON BLE HIGH COURT OF MADR ASS IN THE CASE OF GRAND BAZZAR V/S ACIT (2007) 292 ITR 269 (MAD) HAS HELD THAT THE WH ERE CERTAIN CASH CREDIT APPEARING IN THE ASSESSEE'S BOOKS OF ACCOUNTS WERE FOUND TO BE BOGUS CREDITS. THEN, THE COST OF PURCHASE WAS RIGHTLY ADDED U/S.69C OF THE ACT, BECAUSE THE SOURCE OF UNACCOUNTED PURCHASE REMAINE D UNEXPLAINED. HON BLE HIGH COURT HAS FURTHER HELD THAT BARE READING OF SECTI ON 69C MAKES IT CLEAR THAT IF THE ASSESSEE INCURRED ANY EXPEN DITURE, BUT OFFER ED NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION SO OFFERED IS NOT SATISFACTORY, SUCH EXPENDITU RE M AY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. IN THE PRESENT APPEAL, THE APPELLANT HAD N OT EXPLAINED THE SOURCE OF PURCHASES AND THE ADDITION UNDER SECTION 69C ARE, THEREFORE, SUSTAINABLE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND ALSO RESPECTFULLY FOLLOWING THE DECISIONS OF HON'BLE HIG H COURT OF ALLAHABAD AND HON'BLE HIGH COURT OF MADRAS, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.78,465/ - FOR A.Y. 2002 - 03, RS.49,770 / - FOR A.Y.2003 - 04, RS.1,58,299/ - FOR A.Y. 2004 - 05, RS.1,83,8701 - FOR A.Y. 2005 - 06 AND RS.70,552/ - FOR A.Y. 2006 - 07 U/S.69C IS CONFIRMED. GROUND NO.1 IS ACCORDINGLY DISMISSED. 3 1 . THE LD AR VEHEMENTLY ARGUED THAT THE ORDER OF CIT(A) WAS AGAINST THE FACTS ON RECORDS AS THE ASSESSEE HAS PURCHASED THES E SHARES IN AY 2003 - 04 ANJLIGROUP 42 AND NOT IN THE CURRENT YEAR AND THEREFORE THE NO ADDITION COULD BE MADE U/S 69C OF THE ACT IN THE CURRENT YEAR WHEN THERE WAS NO IOTA EVIDENCE TO SUGGEST THAT THE THESE SHARES WERE PURCHASED IN THE CURRENT BY IGNORING THE BILLS IS SUED BY THE BROKERS AND SOURCE OF INVESTMENTS DULY EXPLAINED IN AY 2003 - 04 AND INVESTMENTS IN SHARES WERE DULY SHOWN IN THE AY 2003 - 04 AND SOURCES ALSO ACCEPTED BY THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) R W S 153A OF THE ACT . THEREFORE THE ADDITI ON WAS BAD IN LAW AND WITHOUT JURISDICTION. THE LD AR WITHOUT PREJUDICE TO THE FIRST ARGUMENTS SUBMITTED THAT THE INVESTMENT IN SHARES WAS NOT AN EXPENDITURE BUT AN INVESTMENTS THEREFORE INVOKING PROVISIONS OF SECTION 69 C OF THE ACT BY THE AO AND ITS UPHO LDING BY CIT(A) W ERE BAD IN LAW AS PROVISIONS OF SECTION 69C DEALS WITH THE UNEXPLAINED EXPENDITURE. ANOTHER WITHOUT PREJUDICE ARGUMENT BY THE AR WAS THAT THE SOURCES OF PURCHASE OF THESE SHARES WERE PROVED BEYOND ANY DOUBT BY FURNISHING DOCUMENTARY EVIDE NCES WHICH WERE SHOWN IN THE BALANCE SHEET AS AT 31.3.2003 TO BE OUT OF SPECULATION GAIN OF RS. 1,49,916/ - AND OUT OF CASH IN HAND OF RS.8,383/ - .THE LD AR FURTHER ARGUED THAT THE SPECULATION GAIN WAS SHOWN AS SHORT TERM CAPITAL GAIN IN THE RETURN OF INCOME WAS ACCEPTED BY THE AO WHILE FRAMING ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT FOR AY 2003 - 04 . LASTLY THE LD AR PRAYED THAT IN VIEW THESE FACTS AS DISCUSSED HEREINABOVE THE ADDITION OF RS. 1,58,299/ - DESERVED DELETION. IN THE LAST WITHOUT PREJUDICE ARG UMENT THE LD AR SUBMITTED THAT SINCE THE CIT(A) HAS ALREADY ADDED THE ENTIRE SALES CONSIDERATION AS UNEXPLAINED CASH CREDIT , ANJLIGROUP 43 THE ADDITION U/S 69C OF THE ACT OF RS. 1,58,299/ - ON A/C PURCHASE PRICE OF SHARES WOULD RESULT IN DOUBLE ADDITION AND PRAYED TO BE DELETED. 3 2 . THE LD.DR SUBMITTED THAT THE ARGUMENTS WERE SAME AS TAKEN WHILE ARGUING THE GROUND NO 1 AND PRAYED THAT ORDER OF CIT(A) BE CONFIRMED. 3 3 . AFTER CONSIDERING THE CONTENTIONS OF THE RIVAL PARTIES AND RELEVANT MATERIALS AS PLACED BEFORE INCLUDI NG IMPUGNED ORDER, WE FIND THAT THE ASSESSEE HAS PURCHASED THE SHARES FOR A CONSIDERATION OF RS.1,58,299/ - IN THE AY 2003 - 04 OUT OF SPECULATION INCOME OF RS.1,49,916/ - AND CASH OF RS. 8,383/ - AND THE INVESTMENT WAS SHOWN IN THE BALANCE SHEET AS ON 31.03.2003 AND ALSO THE SPECULATION INCOME WAS SHOWN BY THE ASSESSEE IN HER RETURN OF INCOME AS SHORT TERM CAPITAL GAIN AND ASSESSED AND ACCEPTED BY THE AO EVEN WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT FOR AY 2003 - 04. WE ALSO FIND THE NECESSARY EVIDENCES IN THE FORM OF BILLS OF SEBI REGISTERED BROKERS, SHARES DULY TRANSFERRED IN NAME OF THE ASSESSEE, CONFIRMATION OF BROKERS QUA THE SHARE TRANSACTIONS AND PAYMENTS RECEIPTS ETC WERE PRODUCED BEFORE THE AO AS WELL AS CIT(A) THOUGH THE SHARES PURCHASES WERE OFF MARKET. W E HAVE ALREADY DELETED THE ADDITION ON ACCOUNT OF TREATING THE ENTIRE SALES CONSIDERATION U/S 68 OF THE ACT IN PARA 8 OF THIS ORDER ABOVE. IN OUR OPINION THE INVESTMENTS IN THE SHARES WERE MADE IN THE AY 2003 - 04 AND A CCORDINGLY ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS. 1,58,299/ - CANNOT BE SUSTAINED. ACCORDINGLY WE DIRECT THE AO TO DELETE THE ADDITION. ANJLIGROUP 44 3 4 . THE ISSUE RAISED IN THE GROUND NO 3 IS AGAINST THE SUSTENANCE OF ADDITIONS OF RS. 3,54,580/ - BY CI T(A) BEING COMMISSION PAYMENTS TO BROKERS @ 5% OF SALES CONSIDERATION FROM SALES OF SHARES OF 70,93,594/ - MADE BY THE AO. 3 5 . ACCORDING TO THE AO THE INVESTIGATION WING OF THE DEPARTMENT HAS INFORMATION THAT THE OPERATOR USED TO CHARGE 5% COMMISSION OF THE TOTAL SALES PROCEEDS FOR ARRANGING THE BILLS, SHARES CERTIFICATE AND LETTER FROM THE COMPANY TRANSFERRING THE SHARES IN THE NAME OF BENEFICIARY. ACCORDINGLY THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE COMMISSION @ 5% SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE OF THE TOTAL SALES PROCEEDS OF RS.70,93,594/ - WHICH WAS REPLIED BY THE AR BY SUBMITTING THAT NO SUCH COMMISSION WAS PAID AND THE DEPARTMENT FOUND NO EVIDENCE TO THIS EFFECT DURING THE COURSE OF SEARCH . THE LD AO REJECTED THE C ONTENTION OF THE ASSESSEE AND ADDED A SUM OF RS.3,54,680/ - ON ACCOUNT OF COMMISSION ALLEGED PAID BY THE ASSESSEE TO THE BROKERS U/S 69C OF THE ACT AS UNEXPLAINED EXPENDITURE BY HOLDING THAT ALL THE TRANSACTIONS WERE BOGUS AND NOT GENUINE. 3 6 . THE FAA CONFI RMED THE ACTION OF THE AO BY HOLDING AND OBSERVING AS UNDER: - 5.3. DECISION: 5.3.1. I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE ALREADY CONFIRMED SUCH FINDINGS GIVEN BY THE LD. ASSESSING OFFICER WHILE DECIDING GROUND NO.1 VIDE PARA 3.2 AND ROUND NO.2 VIDE PARA NO.4 ABOVE. HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE SMT. REENA JAIN & ORS. VS. CIT (2007) 210 CTR (ALL) 491 HAS HELD THAT WHERE THE ALLEGED GIFTS WERE PURCHASED BY THE ANJLIGROUP 45 APPELLANT AFTER PAYING C OMMISSION, THE ADDITION ON ACCOUNT OF COMMISSION WAS RIGHTLY MADE U/S.69C OF THE ACT. HON'BLE HIGH COURT OF MADRAS IN THE CASE OF GRAND BAZZAR VS. ACIT (2007) 292 ITR 269 (MAD) HAS HELD THAT WHERE CERTAIN CASH CREDIT APPEARING IN THE ASSESSEE'S BOOKS OF AC COUNTS WERE FOUND TO BE BOGUS CREDITS. THEN, THE COST OF PURCHASE WAS RIGHTLY ADDED U/S 69C OF THE ACT, BECAUSE THE SOURCE OF UNACCOUNTED PURCHASE REMAINED UNEXPLAINED. HON'BLE HIGH CURT HAS FURTHER HELD THAT BARE READING OF SECTION 69C MAKES IT CLEAR THAT IF THE ASSESSEE INCURRED ANY EXPENDITURE, BUT OFFERED NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION SO OFFERED IS NOT SATISFACTORY, SUCH EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE. THE PRESENT APPELLANT HAD NOT EXPLAINED THE SOURCE OF COMMISSION AND THE ADDITION UNDER SEC.69C ARE, THEREFORE, SUSTAINABLE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND ALSO RESPECTFULLY FOLLOWING THE DECISIONS OF HON' BLE HIGH COURT OF ALLAHABAD AND HON' BLE HIGH COURT OF MADRAS, THE ADDITIONS OF RS.79 ,237/ - FOR A.Y. 2002 - 03, RS .4 ,03,042 / - FOR A.Y. 2003 - 04, RS.354 ,680/ - FOR A.Y. 2004 - 05, RS.2,49,153/ - FOR A.Y. 2005 - 06 AND RS.1,37,436/ - FOR A.Y. 2006 - 07 MADE BY THE ASSESSING OFFICER U /S.69C ARE CONFIRMED. CO RRESPONDING GROUNDS ARE THEREFORE DISMISSED . 37. THE LD AR ARGUED THAT SINCE THE PURCHASES AND SALES OF SHARES WERE DULY SUPPORTED WITH BILLS, VOUCHERS, REGISTRATION OF TRANSFER OF SHARES, PAYMENTS RECEIPTS AND OTHER EVIDENCES I N THE FORM OF CONFIRMATION OF BROKERS , THE CIT(A) HAS ERRED IN LAW IN UPHOLDING THE ADDITIONS OF RS. 3,54,680/ - OF SALES PROCEEDS TOWARDS THE COMMISSION PAYMENTS AS ALL THE TRANSACTIONS WERE GENUINE AND WERE FULLY SHOWN AND DISCLOSED IN THE BOOKS OF ACCOUN TS . THE LD AR ARGUED THAT NOT AN IOTA OF EVIDENCE WAS FOUND BY THE AO OR CIT(A) OF COMMISSION PAYMENTS. THE LD COUNSEL OF THE ASSESSEE RELIED ON DECISION OF THE COORDINATE BENCH IN THE CASE OF ASSESSEES FAMILY MEMBER SMT KAMLABEN PANDIT V/S ACIT IN ITA NO 822/MUM/2009 (AY - 2003 - 04) DATED 26.02.2010 AND PRAYED THAT THE ADDITION BE DELETED FOLLOWING THE DECISION ON ANJLIGROUP 46 SIMILAR FACTS . ON THE OTHER HAND THE LD DR RELIED ON THE AUTHORITIES BELOW AND SUBMITTED FOR UPHOLDING THE SAME. 3 8 . AFTER CONSIDERING THE ARGUMEN TS OF THE RIVAL SIDES AND TAKING INTO ACCOUNT THE MATERIALS ON RECORDS AS PLACED BEFORE US AS ALSO THE DECISION OF THE COORDINATE BENCH, WE FIND THAT THE ASSESSEE HAS PROVED THE GENUINENESS OF THE TRANSACTIONS OF SALES AND PURCHASE OF SHARES BY PRODUCING T HE SUPPORTING EVIDENCES AND THE REVENUE HAS NOT BROUGHT ANYTHING CONTRARY ON RECORDS EXCEPT GUESSING THE PRACTICE OF CHARGING COMMISSION @ 5% OF SALES PROCEEDS IN CASE OF BOGUS TRANSACTIONS. WE FIND MERIT THAT NOTHING INCRIMINATING WAS FOUND BY THE SEARCH TEAM QUA THE COMMISSION PAYMENTS AND THEREFORE ADDITION OF RS. 3,54,680/ - CAN NOT BE SUSTAINED WHICH IS JUST A GUESS AND HYPOTHESIS BY THE AO . THE CASE OF THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF SMT KAMLABEN PA NDIT VS ACIT (SUPRA) IN WHICH AN IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PART IN PARA NO 3 IS EXTRACTED BELOW: - 3. WE HAVE HEARD MR.BEHARILAL, LD.COUNSEL FOR THE ASSESSEE AND MR. LALCHAND, LEARNED DR. AS CAR AS TH E FIRST ADD I TION IS CONCERNED, THE ADDITION IS MADE U/S 69C ON THE GROUND THAT THE RATE OF COMM I SSION CHARGED BY THE BROKER/OPERATORS IS APPROXIMATELY 5%. NO EVIDE N CE WAS FOUND DURING THE COURSE OR SEARCH NOR WAS ANY EVIDENCE GATHERED THEREAFTER TO PROVE THAT THE ASSE SSEE HAD INCURRED THIS EXPENDITURE OF 5% . IN THE ABSENCE OR EVIDENCE OR HAVING INCURRED EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNT, IN OUR CO NSIDERED OPINION, NO ADDITION COULD BE MADE U/S 69C. THE ADDITION HAS BEEN MADE ON THE BASIS OF SURMISES AND CONJEC TURES. 4. IN THE RESULT, THE GROUND NO.1 IS ALLOWED ANJLIGROUP 47 3 9 . IN OUR OPINION THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THE ONE AS DECIDED BY THE COORDINATE BENCH AND WE THEREFORE RESPECTFULLY FOLLOWING THE SAME SET ASIDE THE ORDER OF CIT(A) AND DI RECT THE AO TO DELETE THE ADDITION OF RS. 3,54,680/ - ACCORDINGLY. 40 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO 3031/MUM/2011 AY 2005 - 06 4 1 . THE ISSUES RAISED IN THIS APPEAL ARE SAME AS DECIDED BY US IN ITA NO 3030/MUM/2011 (AY - 2004 - 05 ) WITH THE DIFFERENCE THAT SHARES WERE TRANSFERRED THROUGH D - MAT A/C. THEREFO R E OUR DECISION IN ITA NO. 3030/MUM/2011 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WELL. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE ADDITIONS MADE . 4 2 . IN THE RESULT, T HE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 3032/MUM/2011 AY 2006 - 07 4 3 . THE ISSUES RAISED IN THIS APPEAL IN GROUNDS 1,2 AND 4 ARE SAME AS DECIDED BY US IN ITA NO 303 0 /MUM/2011 (AY - 2004 - 05 ) . THEREFO R E OUR DECISION IN ITA NO. 3030/MUM/2011 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WELL. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE ADDITIONS . 4 4 . THE ISSUE RAISED IN THE GROUND NO 3 IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF SHORT TERM CAPITAL LOSS ON SALE OF SHARES OF KAILASH FICOM LTD. AMOUNT ING TO RS. 6,54,961/ - AND NOT ALLOWING THE SET OFF OF THE SAID SHORT TERM CAPITAL LOSS OF RS. 6,54,961/ - AGAINST THE LONG TERM CAPITAL GAIN OF RS. 18,43,236/ - . ANJLIGROUP 48 4 5 . THE BRIEF FACTS ARE THAT THE ASSESSEE PURCHASED SHARES OF KAILASH FICOM LTD THROUGH REGI STERED SHARES BROKER REGISTERED WITH BSE AND THE PURCHASE CONSIDERATION WAS DISCHARGED BY TWO ACCOUNTS CHEQUES OF RS. 5,00,000/ - DATED 19.10.2005 DRAWN ON CITI BANK AND RS. 3,34,924/ - DATED 2.12.2005 OF HDFC. THE ASSESSEE RECEIVED REFUND OF SHAR E MONEY APPLIED TO SUZLON ENERGY LTD ON 14.10.2005 RS. 19,39,530/ - IN CITI BANK AND RS. 11,64,720/ - FROM VASANT SHARE BROKER ON 22.10.2005 IN H D FC BANK AND IT WAS OUT OF THESE FUNDS THE PURCHASES OF SHARES WERE MADE. THE ASSESSEE PRODUCED BE FORE THE AO THE NECESSARY BILLS AND VOUCHERS, BANK STATEMENTS WHICH EVIDENCED THE PAYMENT S FOR THESE SHARES TO G.R. PANDYA SHARE BROKER. SIMILARLY THE SALES PROCEEDS WERE RECEIVED IN BY CHEQUE AND DEPOSITED INTO THE BANK ACCOUNT THE ASSESSEE AND BILLS AND VOUCHERS WERE ALSO PRODUCED BEFORE AO. THE AO HOWEVER NOT SATISFIED WITH THE SUBMISSION S OF THE ASSESSEE REJECTED THE CLAIM OF ASSESSEE OF SHORT TERM LOSS OF RS.6,54,961/ - BY HOLDING THAT BANK STATEMENT DID NOT STATE THE PAYMENT HAVING BEEN MAD E TO G R PANDYA SHARE BROKERING LTD THOUGH THERE A PAYMENT OF RS. 3,34,925/ - , HOWEVER, SAME COULD NOT BE VERIFIED THAT IT WAS MADE TO SAID BROKERING FIRM. SECOND PAYMENT OF RS.5,00,000/ - COULD NOT BE VERIFIED BY THE AO DUE TO NON SUBMISSION OF BANK S TATEMENT OF CITI BANK. THE AO ALSO NOTED THAT G R PANDYA BROKERING LTD DENIED THE TRANSACTIONS WITH THE ASSESSEE AS THE BUSINESS WAS CLOSED IN NOVEMBER, 2002.THE ASSESSEE ALSO OBJECTED BEFORE THE AO THE REPLY GIVEN BY THE G R ANJLIGROUP 49 PANDYA BROKERING LTD BY SUBM ITTING THAT THE PAYMENTS WERE CLEARED IN FAVOUR OF THE BROKERING FIRM FROM THE BANKS AND THEREFORE THE DENIAL BY THE BROKER WAS WRONG AND MISLEADING . ALL THESE TRANSACTIONS WERE OFF MARKET AND THERE WAS NO QUESTION OF REFLECTION IN THE RECORDS OF BSE. F INALLY THE AO DISALLOWED THE STL OF RS. 6,54,961/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE UNDER THE HEAD CAPITAL GAIN. 4 6 . THE CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND BY UPHOLDING THE ORDER OF AO BY OBSERVING THAT THE A SSESSEE COULD NOT SUBSTANTIATE THE PURCHASE AND SALES OF SHARES BY PROVING THE DOCUMENTARY EVIDENCES, BANK STATEMENT OF CITI BANK AND PARTICULARLY THE LETTER FROM G R PANDYA BROKERING LTD OF NOT HAVING ANY TRANSACTIONS WITH THE ASSESSEE OF ANY PURCHASES O R SALES SHARES . 4 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORDS. THE LD AR VEHEMENTLY ARGUED BEFORE US THAT AUTHORITIES BELOW DID NOT APPRECIATE THE FACTS AND DOCUMENTARY EVIDENCES CORRECTLY DESPITE THE ASSESSEE FURNISH ING ALL THE EVIDENCES BEFORE THE THESE AUTHORITIES . THE LD AR SUBMITTED BEFORE US THAT THE PAYMENT TO G R PANDYA BROKERING LTD WERE MADE BY ACCOUNT PAYEE CHEQUES BY REFERRING TO THE BANK STATEMENTS OF C ITI BANK AND HDFC BANK ATTACHED IN THE PAPER BOOK FROM PAGE NO. 113 TO 126. WE FIND FROM STATEMENT OF CITIBANK AT PAGE 113 THAT A PAYMENT WAS CLEARED IN FAVOUR OF G R PANDYA SHARE BROKERING LTD ON 19.10.2005 OF RS. 5,00,000/ - . SIMILARLY, A PAYMENT WAS CLEARED ON 2.12.2005 OF RS. 3,34,924/ - BY CLEARING ANJLIGROUP 50 BUT N AME IS NOT CLEAR FROM THE STATEMENT. THE AO HAS NOT MADE ANY ENQUIRY FROM THE BANK AND THUS FAILED TO VERIFY THE TRANSACTION DESPITE ASSESSEES FURNISHING THE BANK STATEMENT BEFORE HIM. HE PROCEEDED TO DISALLOW THE STL OF RS. 6,54,961/ - ONLY ON THE BASIS O F STATEMENT OF SHARE BROKER DENYING THE TRANSACTIONS. UNDER THESE CIRCUMSTANCES THE ADDITION AS MADE BY THE AO AND CONFIRMED BY THE CIT(A) CANNOT BE SUSTAINED. IN OUR OPINION THE AO HAS NOT MADE ANY ENQUIRIES FROM THE BANK EVEN AND HAS NOT CONSIDERED THE B ILLS VOUCHERS, D - MAT A/C CONFIRMING THE PURCHASE AND SALES OF SHARES BY THE ASSESSEE FURNISHED BY THE ASSESSEE, BSE RECORDS FOR SALE OF SHAKUN CONSTRUCTION LTD , PURCHASE OF KAILASH FICOM LTD. UNDER THESE CIRCUMSTANCES WE ARE INCLINED TO SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE DISALLOWANCE. 48. NOW WE SHALL TAKE UP THE APPEALS BEARING ITA NO.3033 TO 3 037 /MUM /2011. APPEAL NO. GROUND NO. DECISION 3033/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER. 2 AND 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3034/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 2 SEC.54F WHICH DEALT WITH SEPARATELY 3 & 4 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3035/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 ANJLIGROUP 51 AND 8 OF THIS ORDER. 2 SEC.54F DEALT WITH SEPARATELY 3 & 4 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3036/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER 2 & 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3037/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER 2 & 4 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3 ALLOWED AS PER ITA NO. 3032/MUM/2011 (AY - 2006 - 07) VIDE PARA 47 OF THIS ORDER. 49. NOW WE SHALL TAKE UP THE APPEALS BEARING ITA NO.303 8 TO 30 43 /MUM/2011. APPEAL NO. GROUND NO. DECISION 3038/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER. 2 AND 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3039/MUM/2011 1 ALLOWED AS PER DEC ISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 2 SEC.54F WHICH DEALT WITH SEPARATELY 3 & 4 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3040/MUM/2011 1 ALLOWED AS PER D ECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER. 2 & 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 ANJLIGROUP 52 AND 11 OF THIS ORDER. 4 SEC.54F DEALT WITH SEPARATELY 3041/MUM/2011 1 ALLOWED AS PER DECIS ION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER 2 & 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3042/MUM/2011 1 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03 ) VIDE PARA 7 AND 8 OF THIS ORDER 2 & 4 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 3 ALLOWED AS PER ITA NO. 3032/MUM/2011 (AY - 2006 - 07) VIDE PARA 47 OF THIS ORDER. 3043/MUM/2011 1 ALLOWED AS PER DEC ISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 7 AND 8 OF THIS ORDER 2 & 3 ALLOWED AS PER DECISION IN ITA NO. 3028/MUM/2011 (AY - 2002 - 03) VIDE PARA 10 AND 11 OF THIS ORDER 50. THE ISSUE RAISED IN THE GROUND NO. 2 IN ITA NO 3034/M/2011, 3035 /M/2011,3039/M/2011 AND GROUND NO 4 IN ITA NO 3040/M/2011 IS COMMON WITH DIFFERENCE AS TO FIGURES ONLY AND IS AGAINST NOT ALLOWING EXEMPTION U/S 54F OF THE ACT OUT OF LONG TERM CAPITA GAIN ON SALE OF SHARES. THE VARIOUS REASONS CITED BY THE AUTH O R ITI ES BELOW ARE THAT THE ASSESSEE DID NOT FURNISH THE AGREEMENTS WITH THE BUILDER QUA THE PURCHASE OF FLAT AND ALSO THAT THE INCOME BY WAY OF LONG TERM CAPITAL GAIN ON SALE OF SHARES WAS FOUND TO BE BOGUS . AS WE HAVE DECIDED THE ISSUE OF LONG T ERM CAPITAL GAIN ON THE SALE OF SHARES AS GENUINE AND DELETED THE ADDITIONS UNDER THE HEAD OF OTHER SOURCES, WE ARE OF CONSIDERED VIEW THAT IT WOULD BE FAIR AND REASONABLE ANJLIGROUP 53 TO RESTORE THE ISSUE BACK TO THE FILE OF AO TO DECIDE THE MATTER AFRESH AFTER AFFORD ING A REASONABLE HEARING TO THE ASSESSEE AND THE DECIDE THE ISSUE OF ALLOWABILITY OF EXEMPTION U/S 54F OF THE ACT ACCORDINGLY AS PER FACTS AND LAW. IN VIEW OF OUR DISCUSSION HEREINABOVE WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DE CIDE THE ISSUE AFRESH. 5 1 . IN SUM AND SUBSTANCE ITA NO.3028 AND 3029/MUM/2011 ARE ALLOWED; ITA NO.3030 & 3031/MUM/2011 ARE PARTLY ALLOWED; ITA NO.3032/MUM/2011 IS ALLOWED; ITA NO.3033, 3036 AND 3037/MUM/2011 ARE ALLOWED; ITA NO.3034 AND 30 3 5/MUM/2011 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE S; ITA NO.3038, 3041, 3042 AND 3043/MUM/2011 ARE ALLOWED AND ITA NO.3039 AND 3040/MUM/2011 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE S THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 7 TH NOV. 2016 . 1 7 TH NOV. 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMB ER ACCOUNTANT MEMBER MUMBAI: 1 7 TH NOV , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RES PONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI