Ms.Malti Ghanshaymbhai Patadia, Ahmedabad V. Income Tax Officer,Ward-10(2), Ahmedabad

ITA 3400/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9252 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S CHAUDHARY
• Assessee Lawyers: DIPEN SHAH
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Accommodation entries
• Section: 143(3); 142(1); 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO.3400/AHD/2015 ASST. YEAR: 2006-07 MS. MALTI GHANSHYAMBHAI PATADIA, G-2, TULSIDHAM DUPLEX, 14, PATEL SOCIETY, GULBAI TEKDRA VS. ITO, WD-10(2), AHMEDABAD. APPELLANT RESPONDENT PAN AFNPS 8792 R APPELLANT BY SHRI DIPEN SHAH, AR RESPONDENT BY SHRI P. S. CHAUDHARY, SR.DR DATE OF HEARING: 16.01.2017 DATE OF PRONOUNCEMENT: 06/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5, AHMEDABAD, DATED 27.10.2015 VIDE APPEAL NO.CIT(A)-5/WD-10(2)/534/2014-15 ARISING OUT OF ORDER U/S 143(3) R.W.S. 147 OF THE IT ACT, 1961 (IN SHORT THE ACT), FRAMED ON 18.03.2014 BY ITO, WD-10(3), AHMEDABAD. FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S.148 OF T HE I.T. ACT, 1961 WHICH IS ILLEGAL AND BAD IN LAW AND HENCE THE SAME SHOULD BE QUASHED . ITA NO. 3400/A/2015 ASST. YEAR 2006-07 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE IN PASSING ASSESSMENT ORDER U/S. 143( 3) R.W.S.147 OF THE I.T.ACT,1961 WHICH IS ILLEGAL AND BAD IN LAW. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN FRAMING THE ASSESSME NT IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND EQUITY BY NOT PROVIDING THE STATEMENT OF SHRI MUKESH CHOKSI AND OTHER MATERIAL AND RECORDS ON WHICH RELIANCE HA S BEEN PLACED AND THEREFORE THE SAME DESERVES TO BE QUASHED. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN COMPUTING THE TO TAL INCOME OF THE APPELLANT AT RS.2,78,820/- TREATING THE LONG TERM CAPITAL GAIN O F RS. 1,56,7097- AS UNDISCLOED INCOME WHICH HAS BEEN CLAIMED AS EXEMPT IN THE ORIG INAL RETURN OF INCOME FILED BY THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT PASSING A SEPARATE & SPEAKING ORDER DISPOSING OF THE OBJECTIONS RAISED AGAINST THE REAS SESSMENT PROCEEDINGS. 6. THE LEARNED COMMISISONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 1,56,709/- MADE BY THE ASESSING OFFICER AS ALLEGED UNDISCLOSED INCOME OF THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS APPEAL ON OR BEFORE THE DATE OF HEARING. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND SHE FILE D HER RETURN OF INCOME ON 3.11.2006 DECLARING TOTAL INCOME OF RS.1, 22,110/-. THE RETURN WAS DULY PROCESSED U/S 143(1) OF THE ACT. SU BSEQUENTLY LD. ASSESSING OFFICER RECEIVED INFORMATION RELATING TO SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT CARRIED OUT IN THE CASE O F M/S MAHASAGAR SECURITIES PVT. LTD. ITS GROUP COMPANIES WHICH WER E CONTROLLED BY ONE MR. MUKESH M. CHOKSHI, AT MUMBAH. IN HIS STATEM ENT MR. MUKESH M. CHOKSHI ADMITTED THAT ALL HIS GROUP COMPA NIES WERE PROVIDING ENTRY FOR TAKING PROFIT OR LOSS BY SHOWIN G PURCHASE OR SALE OF SHARES AND SECURITIES TO VARIOUS PARTIES ACROSS IND IA ON WHICH HE ITA NO. 3400/A/2015 ASST. YEAR 2006-07 3 CHARGED CERTAIN COMMISSION FROM THE BENEFICIARY PAR TIES. THIS INFORMATION ALSO CONTAINED NAME OF THE ASSESSEE AMO NGST OTHERS AND IT WAS SEEN THAT ASSESSEE HAS BEEN INVOLVED IN TAKI NG ACCOMMODATION ENTRY BY WAY OF SALE OF CERTAIN SHARE S AMOUNTING TO RS.1,56,925/- BY TAKING FICTITIOUS ENTRIES OF PURCH ASE OF SHARES AND SECURITIES. LD. ASSESSING OFFICER WAS OF THE VIEW T HAT INCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT AND THEREFORE, REOPENED THE ASSESSMENT U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT AFTER RECORDING REASONS AND OBTAINING NECESSARY APP ROVAL. ASSESSEE WAS PROVIDED WITH THE REASONS RECORDED FOR REOPENIN G THE ASSESSMENT. AS INFORMED BY ASSESSEE RETURN OF INCOM E FILED ON 3.11.2006 WAS TO BE CONSIDERED AS A RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. AGAINST THE SHOW CAUSE NOTICE U /S 142(1) OF THE ACT ASSESSEE FILED WRITTEN SUBMISSIONS OBJECTING TO THE REOPENING OF THE ASSESSMENT AND ALSO DENYING ALLEGATIONS THAT IT HAS AVAILED ANY ACCOMMODATION ENTRY FROM MAHASAGAR GROUP. DURING TH E COURSE OF REASSESSMENT ASSESSEES REQUEST FOR PROVIDING COPY OF STATEMENT OF MUKESH M. CHOKSHI AND OPPORTUNITY TO CROSS-EXAMINE HIM WAS DECLINED BY LD. ASSESSING OFFICER. 3. LD. ASSESSING OFFICER AFTER OBSERVING ALL THE SE QUENCES OF EVENTS AND IN THE ABSENCE OF EVIDENCES OF NATURE AN D SOURCE OF PURCHASES AND SALES OF SHARES AS WELL AS ADMISSION MADE BY MUKESH CHOKSHI OF ASSESSEE BEING INVOLVED IN FICTIT IOUS TRANSACTIONS, WAS OF THE VIEW THAT ASSESSEE HAS BEEN UNABLE TO PR OVE THE GENUINENESS OF THE TRANSACTIONS AND HAS NOT DISCHAR GED THE ONUS OF ITA NO. 3400/A/2015 ASST. YEAR 2006-07 4 BURDEN PRIMARILY CASTED UPON HER AND ACCORDINGLY DE NIED THE CLAIM OF LONG TERM CAPITAL GAIN BEING EXEMPT U/S 10(38) OF T HE ACT AND ADDED IT BACK TO THE INCOME OF ASSESSEE AND ASSESSED THE INC OME AT RS.2,78,815/-. 4. ASSESSEES APPEAL BEFORE LD. CIT(A) COULD NOT BR ING ANY RELIEF AND THE SAME WAS DISMISSED CONFIRMING THE ADDITION MADE BY LD. ASSESSING OFFICER. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. AT THE OUTSET LD. AUTHORISED REPRESENTATIVE (AR) SUBM ITTED THAT THE ISSUES RAISED IN THIS APPEAL ARE SQUARELY COVERED B Y THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF DWANI MAHENDRA SHAH VS. ITO, WD-10(3), IN ITA NO.922/AHD/2015 FOR ASST. YEAR 20 08-09 AND OTHERS. ON GOING THROUGH VARIOUS GROUNDS RAISED B Y ASSESSEE AND IN THE LIGHT OF DECISION OF THE CO-ORDINATE BENCH, AHM EDABAD IN THE CASE OF DHWANI MAHENDRA SHAH (SUPRA) WE FIND IT PER TINENT TO FIRST ADJUDICATE GROUND NO.3 WHICH READS AS FOLLOWS :- 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN FRAMING THE ASSESSME NT IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND EQUITY BY NOT PROVIDING THE STATEMENT OF SHRI MUKESH CHOKSI AND OTHER MATERIAL AND RECORDS ON WHICH RELIANCE HA S BEEN PLACED AND THEREFORE THE SAME DESERVES TO BE QUASHED. 6. LD. AUTHORISED REPRESENTATIVE (AR) SUBMITTED THA T SIMILAR ISSUE IN THE CASE OF ANOTHER ASSESSEE WHEREIN NOTICE U/S 148 OF THE ACT WAS ISSUED TO INITIATE RE-ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION RECEIVED RELATING TO SEARCH AND SEIZURE ACTION CARRIED OUT ITA NO. 3400/A/2015 ASST. YEAR 2006-07 5 IN THE CASE OF MAHASAGAR SECURITIES PVT. LTD. AND T HE CLAIM OF LONG TERM CAPITAL GAIN WAS DENIED TREATING IT TO BE FICT ITIOUS. ANOTHER COMMON ISSUE WAS THAT COPY OF STATEMENT OF MUKESH M . CHOKSHI WAS NOT PROVIDED TO THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN THEREBY MAKING A GROSS VIOLATION OF PRINC IPLES OF NATURAL JUSTICE AND EQUITY. LD. AR RELYING ON THE DECISION IN THE CASE OF DHWANI M. SHAH REQUESTED FOR QUASHING THE RE-ASSESS MENT PROCEEDINGS. 7. LD. AR ALSO REFERRED AND RELIED ON THE DECISION OF THE CO- ORDINATE BENCH, AHMEDABAD IN THE CASE OF CHARTERED MOTORS PVT. LTD. VS. ACIT AND ANOTHER IN IT(SS)A NO.26/AHD/2012 VIDE ORDER DATED 28.08.2014 IN WHICH THE ISSUE RELATING TO NOT PROVIDING OPPORTUNITY OF CROSS-EXAMINATION WAS DEALT AND DECI DED IN FAVOUR OF ASSESSEE AND THIS DECISION OF THE CO-ORDINATE BENCH WAS CONFIRMED BY HON. JURISDICTIONAL HIGH COURT IN TAX APPEAL NO. 124 OF 2015 WITH TAX APPEAL NO.127 OF 2015, DATED 03/03/2015. 8. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT ASSESSEE HAS FILED R EGULAR RETURN OF INCOME FOR ASST. YEAR 2006-07 SHOWING INCOME OF RS. 1,22,110/- AND ALSO CLAIMED EXEMPTION U/S 10(38) OF THE ACT FOR LO NG TERM CAPITAL GAIN OF RS.1,56,709/-. THIS LONG TERM CAPITAL GAIN AROSE ON ACCOUNT OF SALE OF SHARES OF TALENT INFORWAY THROUGH THE BROKE R COMPANY OF M/S ITA NO. 3400/A/2015 ASST. YEAR 2006-07 6 ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD. WAS A MONGST THE GROUP COMPANIES OF 36 ODD COMPANIES FLOATED BY SHRI MUKES H M. CHOKSHI IN THE NAME OF MAHASAGAR SECURITIES PVT. LTD. FURTH ER DURING THE COURSE OF SEARCH MR. MUKESH M. CHOKSHI IN HIS STATE MENT ON OATH HAS ADMITTED THAT THEY ARE ENGAGED IN PROVIDING ENT RIES FOR TAKING PROFIT OR LOSS BY SHOWING PURCHASE OR SALE OF THE S HARES AND SECURITIES TO VARIOUS PARTIES ACROSS INDIA ON WHICH THEY CHARGED CERTAIN COMMISSION FROM THE BENEFICIARY PARTIES. WE FURTHER OBSERVE THAT ASSESSEE HAS DENIED ALLEGED ALLEGATION OF BEIN G INVOLVED IN TAKING ACCOMMODATION ENTRIES AND ALSO MADE A REQUE ST FOR PROVIDING A COPY OF STATEMENT OF MUKESH M. CHOKSHI AND OPPORT UNITY OF CROSS EXAMINATION. IT IS UNDISPUTED FACT REVEALED FROM TH E REASSESSMENT ORDER THAT THE REQUEST OF ASSESSEE FOR PROVIDING CO PY OF STATEMENT AN OPPORTUNITY TO CROSS EXAMINE WAS DECLINED BY THE AS SESSING OFFICER. ASSESSEE HAS RAISED GROUND NO.3 AGAINST THE ACTION OF LD. ASSESSING OFFICER FOR NOT PROVIDING A COPY OF STATEMENT OF MU KESH M. CHOKSHI AND AN OPPORTUNITY TO CROSS EXAMINE HIM. 10. WE FURTHER FIND THAT SIMILAR GROUND AS DISCUSSE D IN ABOVE PARAGRAPHS CAME UP BEFORE THE CO-ORDINATE BENCH IN THE CASE OF DHWANI M. SHAH (SUPRA) WHEREIN CO-ORDINATE BENCH RE LYING ON THE JUDGMENT OF HON. SUPREME COURT IN THE CASE OF ANDAM AN TIMBER INDUSTRIES IN CIVIL APPEAL NO.4228 OF 2006, DECIDED IN FAVOUR OF ASSESSEE AND ALLOWED THE CLAIM OF LONG TERM CAPITAL GAIN BY OBSERVING AS FOLLOWS :- ITA NO. 3400/A/2015 ASST. YEAR 2006-07 7 13. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAR EFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. AS MENTIONED ELSEWHERE, WE HAVE CONSIDERED THE FACTS IN ITA NO.810/AHD/2015. WE FIND THAT THE ASSESSEE HAD PURC HASED 3000 SHARES OF TELANT INFO LTD FROM M/S. MAHASAGAR SECURITIES PVT LTD ON APRIL 2004. THE CONSIDERATION WAS PAID AND THE PAYMENT OF CONSIDERATION IS NOT IN DISPUTE. THE SHARES OF TELANT INFO LTD WERE LISTED IN THE BOMBAY STOCK EXCHANGE AT THAT POINT O F TIME. THE SHARES SO PURCHASED WERE SOLD THROUGH M/S. ALLIANCE INTERMEDIATERIES & NETWO RK PVT LTD AND THE CONSIDERATION WAS RECEIVED BY CHEQUE. IT WOULD BE PERTINENT TO ME NTION HERE THAT THOUGH THE SHARES WERE PURCHASED IN PHYSICAL FORM, THE SAME WERE SENT TO THE COMPANY WITH SHARE APPLICATION FORM AND THE SHARES WERE TRANSFERRED BY THE COMPANY IN THE NAME OF THE PURCHASER. THEREAFTER, THE SHARES WERE TRANSFERRED IN THE DEMAT ACCOUNT, FROM WHERE THEY WERE SOLD. IT IS NOT THE CASE OF THE REVENUE THAT T HE CONSIDERATION PAID BY THE ASSESSEE AT THE TIME OF PURCHASE OF SHARES WAS RECEIVED BACK IN CASH, NOR IT IS THE CASE OF THE REVENUE THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSE E WAS RETURNED BACK IN CASH. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES IN QUES TION 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 ASSESSE E. 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEME NT OF SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMEN T WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER/CIT(A). THE HON'BLE SUPREME COURT IN THE ITA NOS. 810 TO 815, 9 22 TO 926/AHD/2OI5 SHRI PRATIK SURYAKANT SHAH & OTHERS - TOTAL 11 APPLS AYS 2006-0 7 & 2008-09 CASE OF ANDAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006 WAS SEIZED WITH THE FOLLOWING ACTION OF THE TRIBUNAL:- '6. THE PLEA OF NO CROSS EXAMINATION GRANTED TO THE VARIOUS DEALERS WOULD NOT HELP THE APPELLANT CASE SINCE THE EXAMINATION OF THE DEA LERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION OF TH E APPELLANT THEMSELVES TO EXPLAIN AS TO WHY .THEIR EX FACTORY PRICES REMAIN S TATIC. SINCE WE ARE NOT UPHOLDING AND APPLYING THE EX-FACTORY PRICES, AS WE FIND THEM CONTRAVENED AND NOT NORMAL PRICE AS ENVISAGED UNDER SECTION 4(1), W E FIND NO REASON TO DISTURB THE COMMISSIONERS ORDERS.' 15. THE HON'BLE APEX COURT HELD AS UNDER:- 'ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROS S-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THO SE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES TH E ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAID TWO WITN ESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANT ED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASS ESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AU THORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH ITA NO. 3400/A/2015 ASST. YEAR 2006-07 8 OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS N OT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SIMPLY STATED THAT CROS S-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX- FACTORY PRICE?, REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS- EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPEL LANT WANTED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DISCREDIT THEIR T ESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPON THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS W ERE, IN FACT, SOLD TO THE SAID DEALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED I N THE PRICE LIST ITSELF COULD BE THE SUBJECT MATTER OF CROSS-EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICATING AUTHORITY TO PRESUPPOSE AS TO WHAT COULD BE THE SUBJECT MATTE R ITA NOS. 810 TO 815, 922 TO 926/AHD/20I5 SHRI PRATIK SURYAKANT SHAH & OTHERS - TOTAL 11 APPLS AYS 2006-07 & 2008-09 OF THE CROSS-EXAMINATION AND MAKE THE REMAR KS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT THAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APPEAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPE AL ON MERITS GIVING ITS REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WITH THE DEPARTM ENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEMENT OF THE AFORESA ID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CAUSE WE, THUS, SET ASIDE THE IMPU GNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL.' 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISION OF THE HON'BLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED. 17. FOR THE SAKE OF THE COMPLETENESS OF THE ADJUDIC ATION, EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AUTHORITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHEN THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANS FERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COULD SU GGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS A LSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSEE. ON THE CONTRAR Y, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DERNAT ACCOUNT WA S IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMB AY STOCK EXCHANGE/NATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFER RED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIE S TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRAN SACTIONS WERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. ITA NO. 3400/A/2015 ASST. YEAR 2006-07 9 ITA NOS. 810 TO 815, 922 TO 926/AHD/2015 SHRI PRATI K SURYAKANT SHAH & OTHERS - TOTAL 11 APPLS AYS 2006-07 & 2008-09 18. IN THE LIGHT OF THE DECISIONS OF THE HON'BLE SU PREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING THE FACTS IN TOTALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SU RMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATIN G TO THE SALE/PURCHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKER'S CONTRACT NOTES, CONFIR MATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCO UNT. 19. AS MENTIONED ELSEWHERE AND AS AGREED BY THE REP RESENTATIVES OF BOTH THE SIDES; SINCE THE FACTS ARE COMMON IN ALL THE IMPUGNED APPEALS, A LL THE APPEALS BY THE ASSESSEES ARE ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO TREAT THE SURPLUS AS LONG TERM CAPITAL GAINS AND ALLOW THE EXEMPTION AS CLAIMED BY THE ASS ESSEES. 20. IN THE RESULT, ALL THE APPEALS FILED BY THE ASS ESSEES ARE ALLOWED. 11. WE FURTHER OBSERVE THAT IN ANOTHER CASE OF CHAR TERED MOTORS PVT. LTD. VS. ACIT IN IT(SS)A NO.26/AHD/2012 AND CH ARTERED SPEED PVT. LTD. VS. ACIT IN IT(SS)A NO.25/AHD/2012 FOR AS ST. YEAR 2008-09 VIDE ORDER DATED 28.08.2014 THE CO-ORDINATE BENCH D EALT WITH THE ISSUE WHEREIN OPPORTUNITY FOR CROSS EXAMINATION WAS NOT PROVIDED TO THE ASSESSEE AND ACCORDINGLY ADDITION U/S 68 OF THE ACT WAS DELETED BY OBSERVING AS UNDER :- 17. WE FIND THAT IN THE INSTANT CASE, THE ADDITION IS MADE U/S. 68 OF THE ACT ON THE GROUND OF UNEXPLAINED CASH CREDIT. AS PER THE PROVISIONS OF S ECTION 68, THE INITIAL ONUS LIES UPON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF AMOUNT CREDITED IN H IS BOOKS OF ACCOUNT. WE FIND THAT THIS INITIAL ONUS WAS DISCHARGED IN THE INSTANT CASE BY THE ASSESSEE BY FURNISHING DOCUMENTS LIKE MOA, AOA, SHARE APPLICATION & BOARD RESOLUTION, CERTIFICATE OF INCO RPORATION, CERTIFICATE OF COMMENCEMENT, ACKNOWLEDGEMENTS OF ITRS, AUDITED ACCOUNTS ETC. OF CONCERNE COMPANIES. THEREAFTER, IN OUR VIEW, THE ONUS SHIFTED UPON THE DEPARTMENT AND IT WAS FOR THE DEPARTMENT TO BRING ON RECORD RELEVANT MATERIAL TO SHOW THAT WHY INSPITE OF THE ABOVE STAT ED DOCUMENTS, THE ADDITION IS STILL TO BE MADE IN T HE HANDS OF THE ASSESSEE. IN THE INSTANT CASE, THE DEP ARTMENT HAS ENDEAVOURED TO DISCHARGE ITS BURDEN ON THE BASIS OF STATEMENTS RECORDED BY IT OF THE PE RSONS MENTIONED ABOVE. 18. WE FIND THAT THE ASSESSEE REQUESTED FOR CROSS-O BJECTION OF THE MAKER OF THE STATEMENT. FURTHER, WE FIND THAT THE ASSESSING OFFICER ALSO MA DE AN AUNPT TO ALLOW THE ASSESSEE OPPORTUNITY TO CROSS-EXAMINE THE MAKERS OF THE STATEMENT BY ISSUIN G SUMMONS TO THEM. HOWEVER, THE CROSS- EXAMINATION COULD NOT TAKE PLACE BECAUSE OF FAILURE ON THE PART OF THE MAKERS OF THE STATEMENTS TO APPEAR ON THE APPOINTED DATE. BUT STRANGELY, THEREA FTER, THE ASSESSING OFFICER DID OT TAKE ANY STEP T O ALLOW EFFECTIVE OPPORTUNITY TO THE ASSESSEE TO CROS S-EXAMINE THE MAKERS OF THE STATEMENTS. THE ASSESSING OFFICER DID NOT PURSUE THE MATTER FURTHER . THUS, WE FIND THAT THE ASSESSEE WAS NOT ALLOWED ANY REAL OPPORTUNITY TO CROSS-EXAMINE THE PERSONS W HO MADE THE STATEMENT AT THE BACK OF THE ITA NO. 3400/A/2015 ASST. YEAR 2006-07 10 ASSESSEE. IN OUR CONSIDERED VIEW, IN THE CIRCUMSTAN CES, THE STATEMENT OF THOSE PERSONS CANNOT BE READ AGAINST THE ASSESSEE. OUR ABOVE VIEW FINDS SUP PORT FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF (I) HEIRS AND LEL REPRESENTATIVES OF LATE LAXMANBH AI S. PATEL VS. COMMISSIONER OF INCOME TAX (SUPRA) (II) CIT VS. INDRAJIT SINGH SURI (SUPRA) (III) DCIT VS. MAHENDRA AMBALAL PATEL (SUPRA) (IV) CIT VS. KANTIBHAI REVIDAS PATEL (SUPRA) IN VIEW OF THE ABOVE SETTLED POSITION OF LAW, WE FI ND FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE STATEMENTS OF THE PERSONS MENTIONED ABOVE ARE NOT A DMISSIBLE EVIDENCE AGAINST THE ASSESSEE. IN ABSENCE OF THESE STATEMENTS, WE FIND THAT NO OTHER MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT WHY STILL THE AMOUNT IN QUESTI ON SHOULD BE TREATED AS INCOME OF THE ASSESSEE WHEN THE ASSESSEE FURNISHED ALL THE DOCUMENTS WHICH WERE AVAILABLE WITH IT TO DISCHARGE THE ONUS WHICH WAS UPON IT U/S. 68 OF THE ACT. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE ADDITION WAS MADE SOLELY BASED ON THE INADMISSIBLE AND UNREL IABLE MATERIAL AND THEREFORE ADDITION SO MADE CANNOT BE SUSTAINED. WE, THEREFORE, DELETE THE ADDI TION OF RS 2,00,00,000/- MADE IN THE CASE OF M/S CHARTED MOTORS PVT. LTD. AS WELL AS ADDITION OF RS. 70,00,000/- MADE IN THE CASE OF M/S, CHARTER ED SPEED PRIVATE LIMITED. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSES SEE ARE ALLOWED. 12. THE ABOVE DECISION OF THE CO-ORDINATE BENCH WAS CONFIRMED BY HON. JURISDICTIONAL HIGH COURT IN THE CASE OF PRINC IPAL CIT VS. CHARTERED SPEED PVT. LTD. IN TAX APPEAL NO.126 OF 2 015 WITH TAX APPEAL NO.127 OF 2015 VIDE ORDER DATED 3/3/2016 OBS ERVING AS UNDER:- 4. MR. BHATT, LEARNED COUNSEL APPEARING FOR THE REV ENUE CONTENDED THAT THREE ASPECTS WERE REQUIRED TO BE PR OVED. ONE WAS THE IDENTITY OF THE PERSON CONCERNED FROM W HOM THE SOURCE OF MONEY IS DISCLOSED. THE ANOTHER WAS T HE CREDITWORTHINESS OF THE PERSON CONCERNED AND THE TH IRD WAS THE GENUINENESS OF THE TRANSACTION. HE SUBMITTE D THAT IN THE PRESENT CASE, THE TRIBUNAL HAS COMMITTED ERR OR IN NOT CONSIDERING THAT THE CREDITWORTHINESS AS WELL A S GENUINENESS OF THE TRANSACTION WERE NOT PROVED AND THEREFORE, IRRESPECTIVE OF THE FACT THAT THE PERSON S WHO HAD GIVEN STATEMENTS WERE NOT MADE AVAILABLE FOR CR OSS- EXAMINATION, THE TRIBUNAL HAS COMMITTED ERROR IN ACCEPTING THE EXPLANATION AS SUFFICIENT AND THEREBY DELETING THE AMOUNT AS INCOME OF THE ASSESSEE CONCE RNED. HE ALSO RELIED UPON THE DECISION OF THIS COURT IN T HE CASE OF UMESH KRISHNANI VS. ITO IN TAX APPEAL NO.80 0/12 DECIDED ON 15.12.2013 AND HE CONTENDED THAT AS THE ITA NO. 3400/A/2015 ASST. YEAR 2006-07 11 PRELIMINARY BURDEN WAS NOT DISCHARGED BY THE ASSESS EE, THE TRIBUNAL HAS NOT CONSIDERED THE SAID ASPECT AND HENCE, THE MATTER DESERVES CONSIDERATION ON THE QUESTION RAISED. 5. AS RECORDED BY THE TRIBUNAL, THE TRIBUNAL FOUND THAT THE INITIAL BURDEN WAS DISCHARGED BY THE ASSESSEE. IN OUR VIEW, ONCE THE TRIBUNAL UPON THE APPRECIATION O F THE MATERIAL FOUND AND RECORDED THE FINDING OF THE FACT THAT THE ASSESSEE HAD DISCHARGED INITIAL BURDEN, SUCH A FINDING OF FACT WOULD BE OUTSIDE THE JUDICIAL SCRUTINY IN THE APPEAL BEFORE THIS COURT UNLESS THE FINDING OF FACT IS PERVERSE TO THE RECORD. IT IS AN UNDISPUTED POSITIO N THAT THE STATEMENT OF THE PERSONS CONCERNED WHICH W ERE RECORDED BY THE DEPARTMENT, THOSE PERSONS WERE NOT MADE AVAILABLE FOR CROSS-EXAMINATION, MAY BE FOR ONE REA SON OR ANOTHER IN SPITE OF THE ATTEMPTS MADE BY THE DEPARTMENT. THEREFORE THE TRIBUNAL HAS RIGHTLY FOUN D THAT THE STATEMENT OF THOSE PERSONS CANNOT BE READ AGAINST THE ASSESSEE. 6. THE ATTEMPT MADE TO CONTEND THAT THE BURDEN IS U PON THE ASSESSEE TO PROVE THE IDENTITY OF THE PERSON, CREDITWORTHINESS OF THE PERSON AND THE GENUINENESS OF THE TRANSACTION ARE TO BE EXAMINED IN CONTEXT TO TH E EXISTENCE OF THE PERSON CONCERNED, THE FACTUM OF AC TUAL MONEY IN POSSESSION OF THE PERSON AND HAVING PAID T O THE ASSESSEE AND THE MODE OF PAYMENT. THEREAFTER, IF THE PERSON CONCERNED IS IN EXISTENCE AND HAS ACT UALLY PAID THE AMOUNT FROM HIS ACCOUNT BY CHEQUE, IT CAN BE SAID THAT THE INITIAL BURDEN IS DISCHARGED SO FAR A S EXPLANATION TO BE CONSIDERED UNDER SECTION 68 OF TH E ACT. THEREAFTER, THE BURDEN WOULD BE UPON THE REVENUE TO SHOW THAT EITHER THE PERSON WAS BOGUS OR THERE WAS NO FINANCIAL CAPACITY TO MAKE THE PAYMENT AND THE ARRANGEMENT OF MONEY WAS ARTIFICIAL OR THAT THE MON EY HAS NOT PASSED OVER AND IT WAS ONLY BY WAY OF AN EYE WASH. SUCH COULD BE PROVED BY THE REVENUE IN THE PRESENT CASE THROUGH THE STATEMENT OF THE PERSONS, BUT UNFORTUNA TELY, THEY WERE NOT MADE AVAILABLE FOR CROSS-EXAMINATION AND THEREFORE, THE STATEMENTS COULD BE USED AS AN EVIDE NCE ITA NO. 3400/A/2015 ASST. YEAR 2006-07 12 AGAINST THE ASSESSEE. NO OTHER EVIDENCE WAS AVAILAB LE WITH THE REVENUE. &; 7 . UNDER THESE CIRCUMSTANCES, IF THE TRIBUNAL HAS FOUN D THAT THE EXPLANATION UNDER SECTION 68 OF THE ACT WA S ACCEPTABLE IN ABSENCE OF NON- DISCHARGE OF THE BURDEN UPON THE REVENUE, SUCH A FINDING OF FACT WOULD NOT CALL FOR INTERFERENCE WHEN THE APPEAL BEFORE THIS COURT IS LIMITED TO THE SUBSTANTIAL QUESTIONS OF LAW. THE DE CISION UPON WHICH THE RELIANCE HAS BEEN PLACED BY MR.BHATT IN TAX APPEAL NO. 800/12 (SUPRA) IS OF NO HELP TO THE REVENUE BECAUSE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE CANNOT BE EQUATED WITH THE FACTS OF TH E SAID CASE CONSIDERED BY THIS COURT. IT IS HARDLY REQUIRE D TO BE STATED THAT WHETHER THE EXPLANATION IS SUFFICIEN T OR NOT WOULD ESSENTIALLY DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. BUT THE PRINCIPLE REMAI NS THAT ONCE THE INITIAL BURDEN IS DISCHARGED BY THE ASSESSEE, IT WOULD BE FOR THE REVENUE TO SHOW THAT THE TRANSACTION WAS BOGUS LEADING TO CONCLUSION FOR DISCARDING OF THE EXPLANATION. IN THE PRESENT CASE, AS OBSERVED BY US HEREINABOVE, THE BURDEN WAS NOT DISC HARGED AND THEREFORE THE TRIBUNAL HAS HELD IN FAVOUR OF TH E ASSESSEE. WE DO NOT FIND THAT ANY SUBSTANTIAL QUEST ION OF LAW WOULD ARISE FOR CONSIDERATION IN THE PRESENT AP PEALS, AS CANVASSED. 8. HENCE, THE APPEALS ARE MERITLESS AND THEREFORE, DISMISSED. 13. WE ARE OF THE VIEW THAT CLAIM OF ASSESSEE U/S 1 0(38) OF THE ACT RELATING TO LONG TERM CAPITAL GAIN CANNOT BE JUST D ENIED ON THE BASIS OF PRESUMPTION THAT THEY ARE IN RESPECT OF FICTITIOUS AND NOT GENUINE WITHOUT ALLOWING THE ASSESSEE TO GO THROUGH THE STA TEMENT OF MUKESH M. CHOKSHI USED AGAINST HER AND ALSO NOT ALL OWING TO CROSS EXAMINE HIM. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. SUPREME COURT, IN THE CASE OF ANDAMAN TIMBER INDUST RIES (SUPRA) THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT IN T HE CASE OF CHARTERED SPEED PVT. LTD. (SUPRA) AND THE DECISIONS OF THE CO- ITA NO. 3400/A/2015 ASST. YEAR 2006-07 13 ORDINATE BENCH IN THE CASE OF DHWANI MAHENDRA SHAH (SUPRA) AND CHARTERED MOTORS PVT. LTD. (SUPRA) WE ALLOW THIS GR OUND OF ASSESSEE AND QUASH THE RE-ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 147 OF THE ACT DATED 18.3.2014. 14. AS REGARDS GROUND NOS.1,2,4,5,6 & 7 IT WILL BE ACADEMIC TO DEAL WITH THEM AS WE HAVE ALREADY QUASHED THE ORDER U/S 143(3) R.W.S. 147 OF THE ACT. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH FEBRUARY, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 06/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 3400/A/2015 ASST. YEAR 2006-07 14 1. DATE OF DICTATION: 01/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 01/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 07/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: