Dholadhar Investments Pvt. Ltd., H.P. V. ACIT, New Delhi

ITA 4487/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2914 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-05-2017
• Assessment Year: 1998-1999
• Appeal Filed On: 22-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; Wrong claim; Accommodation entries
• Section: 147; 68; 148

Judgement Text

ITA NO S . 4487 & 4488 /DEL./201 2 ASSESSMENT Y EAR: 1998 - 99, 1999 - 2000 PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B BENCH NEW DELHI) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO S . 4487 & 4488 /DEL./201 2 ASSESSMENT YEAR S : 1998 - 99 & 1999 - 200 0 DHOLADHAR INVESTMENTS PVT. LTD. MANN FILLING STATION COMPOUND, KOTWALI BAZAR, DHARMASHALA, DISTT. KANGRA, H.P. VS. ACIT CENTRAL CIRCLE - 19 , NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AA A C D3573A ) ASSESSEE BY: SHRI RAKESH GUPTA, ADVOCATE SHRI SOMIL AGGARWAL, ADVOCATE REVENUE BY: SHRI ANIL KUMAR SHARMA, SR. DR DATE OF HEARING 2 3 /0 5 /2017 DATE OF PRONOUNCEMENT 2 9 /0 5 /2017 ORDER PER AMIT SHUKLA, JUDICIAL MEMBER : TH E AFORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE AGAINST SEPARATE IMPUGNED ORDER DATE D 1 9 . 06 .201 2 , PASSED BY LEARNED CIT (APPEALS) - 33 , IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEARS 1998 - 99 AND 1999 - 2000. SINCE THE FACTS AND ISSUES INVOLVED IN BOTH THE APPEALS ARE COMMON ARISING OUT OF THE IDENTICAL SET OF FACTS AND MATERIALS , THEREFORE , SAME WERE HEARD TO GETHER ARE BEING DISPOSED OF F BY WAY THIS CONSOLIDATED ORDER. IN THE PAGE 2 OF 14 A.Y. 1998 - 99 THE ASSES SEE IS AGGRIEVED BY THE LEVY OF PENALTY OF RS. 1,75,637/ - , WHEREAS IN THE A.Y. 1999 - 2000 FOR RS. 4,94,3223/ - . 2. TO UNDERSTAND THE FACTS AND IMPLICATION THEREOF , WE ARE TAKING THE APPEAL FOR THE A.Y. 1998 - 99 FIRST AND THE FINDING GIVEN THERE IN WILL APPLY I N THE A.Y. 1999 - 2000 ALSO. 3. THE BRIEF FACTS AND BACKGROUND OF THE CASE ARE THAT , DURING THE COURSE OF SOME INVESTIGATION CARRIED BY DDIT (INV.) IN CASE OF A BROKER, M/S. R.K. AGGRAWAL & COMPANY IT WAS GATHERED THAT THE ASSESSEE COMPANY WAS ONE OF THE BE NEFICIARIES OF BOGUS CLAIM OF LONG TERM CAPITAL GAIN ON SALE/PURCHASE OF SHARES. DURING THE COURSE OF INVESTIGATION , STATEMENT OF SH RI SATISH GOEL, PROPRIETOR M/S. R.K. AGGRAWAL & COMPANY WAS RECORDED , WHEREIN HE HAS STATED THAT TRANSACTION THROUGH HIS BANK ACCOUNT NO. 3097 WITH CORPORATION BANK, KAROL BAGH, NEW DELHI , WAS MERELY A PAPER TRANSACTION S AND HE USE TO TAKE CASH AND ISSUE BILLS, IN LIEU THERE OF , HE USE TO GIVE CHEQUES/DRAFTS OF THE SAME AMOUNTS. FOR SUCH A N ACCOMMODATION ENTRY , HE WAS CHARGING COMMISSION @ 0.25 TO 0.50 % OF THE TOTAL TRANSACTION . O N THE BASIS OF SUCH INFORMATION , THE ASSESSEE S CASE WAS REOPENED U/S 147 BY ISSUANCE OF NOTICE U/S 148 AND REASS ESS MENT WAS FRAMED , WHEREIN T HE PROCEEDS FROM SAL E OF SHARE OF RS. 4,99,325/ - WAS ADD ED AND TAXED U/S 68 AS INCOME FROM OTHER SOURCES , ALONG WITH SOME MINOR ADDITION OF COMMISSION AMOUNT THAT MIGHT HAVE BEEN PAID TO THE BROKER ON SUCH ENTRY. SUCH AN ADDITION AGGREGATING TO RS. 5,01,821/ - MADE ON THE QU ANTUM SIDE STANDS CONFIRMED FROM THE STAGE OF THE TRIBUNAL ALSO . THE RELEVANT OBSERVATION AND FINDING OF TRIBUNAL IN THIS REGARD IS REPRODUCED HEREUNDER: - PAGE 3 OF 14 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE FACT THAT SHRI SATISH KUMAR GOEL, PROPRIETOR OF R.K. AGGARWAL & COMPANY BEING AN ENTRY OPERATOR IS UNDISPUTED. IN HIS STATEMENT DATED 14.2.2000, HE HAD UNEQUIVOCALLY ACCEPTED THAT HE INDULGED IN PROVIDING BOGUS CONTRACT NOTES IN ACCOMMODATION ENTRIES OF SALE/PURCHASE OF SHARES FOR A COMMISSION, HE WAS NEITHER MANAGING BOOKS OF ACCOUNTS NOR THE SERVICE CHARGES ETC. CHARGED IN THE CONTRACT NOTES WERE BEING PAID TO ANY GOVERNMENT AGENCIES. THE BANK ACCOUNT WAS OPERATED AS A FACILITY FOR CARRYING ON SUCH BOGUS OPERATIONS AND ALL THE DEPOSITS IN THE BANK ACCOUNT OF RK. AGGARWAL & COMPANY WERE CASH AMOUNTS GIVEN BY PARTIES FOR ONWARD RETURN, THEREFORE, THE FACT THAT THESE CONTRACT NOTES AND - THE BUSINESS DEALINGS OF R.K. AGGARWAL & COMPANY WERE BOGUS, REMAIN UNDISPUTED FACT ON RE CORD. 11. APROPOS ASSESSEE S CONTENTION ABOUT GENUINENESS OF CHEQUES RECEIVED BY HIM FROM SHRI SATISH KUMAR GOEL, WE ARE UNABLE TO SEE ANY MERIT IN THIS ARGUMENT. LEARNED COUNSEL HAS ACCEPTED THE FACT THAT THERE WAS NEVER ANY ACTUAL DELIVERY OF SHARES ON PURCHASE OR SALE AND THE CHEQUE AMOUNTS REPRESENTED DIFFERENCE OF PROFIT ON ACCOUNT OF SALE AND PURCHASE OF - SHARES BY THE ASSESSEE FROM HIM. IN VIEW OF THESE FACTS, WE ARE UNABLE TO ACCEPT THE GENUINENESS OF CONTRACT NOTES. THEREFORE, WE SEE NO INFIRMITY I N THE ORDERS OF LOWER AUTHORITIES IN MAKING ABOVE ADDITIONS. 12. AS FAR AS PAYMENT OF COMMISSION IS CONCERNED, THE STATEMENT OF SHRI SATISH KUMAR GOEL CLEARLY IMPLICATES THE ASSESSEE THAT HE WAS TO CHARGE COMMISSION IN FACILITATING THESE BOGUS TRANSACTION S. THEREFORE, THE ESTIMATE OF COMMISSION AS MADE BY LOWER AUTHORITIES CANNOT BE FOUND FAULT WITH AS THE SAME FITS INTO THE SCHEME OF BOGUS TRANSACTIONS. AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT (1995) 214 ITR 801 (SC), THE TRANSA CTIONS ARE TO BE VIEWED ON THE BASIS OF SURROUNDING CIRCUMSTANCES AND HUMAN CONDUCT, WHICH ARE AGAINST THE ASSESSEE. THEREFORE, THE ADDITIONS ON ACCOUNT OF COMMISSION ARE ALSO UPHELD. PAGE 4 OF 14 4. DURING THE COURSE OF THE PENALTY PROCEEDINGS , THE ASSESSEE BESI DES VARIOUS EXPLANATIONS, HAD STRONGLY URGED AND SUBMITTED THAT , NO OPPORTUNIT Y TO CROSS EXAMINE SH RI SATISH GOEL , WAS EVER GIVEN TO THE ASSESSEE ON THE BASIS OF WHICH SAID ADDITION HAS BEEN MADE. ADMITTEDLY, D ESPITE REQUESTS MADE DURING THE COURSE OF QUANTUM AND PENALTY PROCEEDINGS NO OPPORTUNITY TO CROSS EXAMINE OF THE SAID PERSON WAS ALLOWED. T HE LD . ASSESSING OFFICER HAS REJECTED THE ASSESSEE S CONTENTION ON THE GROUND THAT , FIRSTLY, THE ADDITION MADE ON ACCOUNT OF SALE OF BOGUS SHARES HAS BEEN UPHE LD FROM THE STAGE OF TRIBUNAL ; AND SECONDLY, HE HAD MADE ALL THE EFFORTS TO TRACE SHRI SATISH GOEL BUT OF NO AVAIL AND IF ASSESSEE WANTED TO CROSS EXAMINE THEN ASSESSEE SHOULD HAVE PRODUCED THE SAID BROKER ON ITS OWN BECAUSE IT WAS ASSESSEE S BROKER . ACCOR DINGLY, HE HAS LEVIED THE PENALTY OF RS. 1,75,637/ - ON ADDITION OF RS. 5,01,821/ - 5. BEFORE THE LD. CIT (A), THE ASSESSEE S EXPLANATION, BESIDES RAISING LEGAL ISSUE OF FAILURE TO RECORD SATISFACTION BY THE AO, HAD BEEN AS UNDER: - WE SUBMIT THE FOLLOWING FACTS/ARGUMENTS: (A) STATEMENT OF TAXABLE INCOME IN THE ORIGINAL RETURN FILED IS PLACED AT PAGE 1 OF THE PAPER BOOKLET. KINDLY NOTE THAT IN THE INCOME FROM BUSINESS & PROFESSION, LOSS AS PER PROFIT & LOSS ACCOUNT OF RS. 12,183.15 HAVE BEEN DISCL OSED BY THE ASSESSEE. (B) COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET WAS ALSO FILED ALONG WITH RETURN OF INCOME, WHEREIN THE DETAILS OF THIS LOSS OF RS.12,183.15 WAS DISCLOSED. COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT IS PLACED AT PAGE NO.2 TO 8 OF THE PAPER BOOKLET. PAGE 5 OF 14 (C) UNDER SCHEDULE 8 OF THE PROFIT & LOSS ACCOUNT, INCOME OF RS. 2,75,758.05 WAS DISCLOSED AS 'PROFIT ON DEALING IN SHARES (NET) . (D) DURING THE ASSESSMENT PROCEEDINGS, DETAILS OF RS.2, 75,758.05 OF 'PROFIT ON DEALING IN SHARES AS REFERRED IN (C) ABOVE WAS FILED. COPY OF SUCH DETAILS IS PLACED AT PAGE 9 OF THE PAPER BOOKLET. KINDLY NOTE AND SEE THAT THE DETAILS OF PURCHASE AND SALE OF SHARES FROM M/S R.K. AGGARWAL & CO. HAS BEEN GIVEN IN THE DETAILS FILED AMOUNTING TO PROFIT OF RS. 6,24,198.05. (E) DURING THE ASSESSMENT PROCEEDINGS, COPY OF VOUCHERS EVIDENCING PROFIT EARNED FROM SALE AND PURCHASE OF SHARES FROM M/S R.K. AGGARWAL & CO. OF RS. 6,24,198.05 WERE FILED. COPIES OF SUCH VOUCHERS ARE PLACED AT PAGE 10 TO 27 OF THE PAPER BOOKLET. (F) IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER MADE ADDITION OF RS.4,99,325/ - IN THE HANDS OF THE ASSESSEE ONLY ON THE BASIS OF STATEMENT RECORDED OF SHRI SATISH GOEL. PLEASE REFER TO PARA 3 AND 4 AT PAGE 2 OF THE ASSESSMENT ORDER. COPY OF A SSESSMENT ORDER IS PLACED AT PAGE 28 AND 29 OF THE PAPER BOOKLET. PERUSAL OF THE FACTS MENTIONED ABOVE REVEALS THAT THE ASSESSEE DISCLOSED ALL THE MATERIAL FACTS RELATING TO HIS INCOME AND RETURN AND ALSO SUBSTANTIATE HIS CLAIM OF RECEIVING INCOME FROM M/S R.K. AGGARWAL & CO. IN THE FORM OF PROFIT FROM SALE OF SHARES . NO ADVERSE INFERENCE IS LIABLE TO BE DRAWN AGAINST THE ASSESSEE IN RESPECT OF PENAL PROCEEDINGS DUE TO ADDITION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER SINCE THE ONLY REASON OF MAKING THE ADDITION IS THE STATEMENT OF THIRD PARTY WHO IS LIABLE TO CROSS - EXAMINATION BY THE ASSESSEE. IN SPITE OF THE REQUEST FOR CROSS EXAMINATION EVEN IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER COULD NOT PROVIDE THE OPPORTUNITY OF CROSS EXAMI NATION OF ITS WITNESS TO THE ASSESSEE. IN RESPECT OF CHARGE OF CONCEALMENT OF INCOME BY THE ASSESSEE LEVIED BY YOUR GOODS ELF IN THE NOTICE ISSUED U/S 27I(L)(C) WE RESPECTFULLY SUBMIT TO YOUR GOODSELF THAT THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF HIS INCOME WITHIN THE MAIN PROVISION OF SECTION 271(L)(C) AND ALSO WITHIN THE MEANING OF EXPLANATION (I) OF THE SAID SECTION SINCE IN RESPECT OF THE ADDITION IN THE TOTAL INCOME OF THE ASSESSEE A COMPLETE EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE WHICH HAS ALSO BEEN SUBSTANTIATED BY HIM AND THE PAGE 6 OF 14 EXPLANATION IS BONAFIDE SINCE EVEN IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT PRODUCED ANY MATERIAL ON RECORD EXCEPT RELYING ON THE STATEMENT OF SHRI SATISH GOEL WHILE. MAKING THE ADDITION. FURT HER, IN THE ABSENCE OF CROSS EXAMINATION, WHICH THE ASSESSING OFFICER FAILED TO PROVIDE AND IN THE CIRCUMSTANCE THAT THE ADDITION IN ASSESSMENT BEING MADE SOLELY ON THE BASIS OF THE STATEMENT OF THE THIRD PARTY WITH NO OTHER ADVERSE MATERIAL AVAILABLE ON R ECORD, THE PENALTY ON ACCOUNT OF CONCEALMENT U/S 271 (I) (C) IS UNLAWFUL AND IS LIABLE TO BE DELETED. HOWEVER , THE LD. CIT (A) HAS CONFIRMED THE PENALTY BY AND LARGE ON THE SAME REASONING AS GIVEN BY THE AO, THAT SHRI SATISH GOEL WAS ASSESSEE S BROKER AN D ASSESSEE SHOULD HAVE PRODUCED HIM AND IN THE QUANTUM PROCEEDINGS ADDITION HAS BEEN CONFIRMED. 6. BEFORE US THE LEARNED COUNSEL , DR. RAKESH GUPTA S UBMITTED THAT HERE IN THIS CASE, RIGHT FROM THE STAGE REOPENING THE ASSESSMENT TILL THE COMPLETION OF ASSESSMENT , THE REVENUE HAS HEAVILY RELIED UPON THE INFORMATION RECEIVED FROM THE I NVESTIGATION WING AND UNCORROBORATED STATEMENT OF THE BROKER. AT NO STAGE THE ASSESSEE WAS PROVIDE WITH SUCH INFORMATION OR WAS ALLOWED CROSS EXAMINATION OF THE WITNESS , ESP ECIALLY WHEN THERE WAS NO SPECIFIC MENTION ABOUT THE ASSESSEE OR ABOUT TRANSACTION OF SALE IN PURCHASE OF SHARES UNDERTAKEN BY THE ASSESSEE IN HIS STATEMENT . ON THE OTHER HAND ASSESSEE HAD DISCLOSED ALL THE PARTICULARS OF SHARE TRANSACTION IN ITS RETURN OF INCOME AND HAD SHOWN IT AS BUSINESS INCOME AND IN SUPPORT H E DREW OUR ATTENTION TO THE DETAILS OF THE SALES AND PURCHASE OF SHARES TRANSACTION THROUGH THIS BROKER AND SUBMITTED THAT ALL THESE TRANSACTIONS HAVE BEEN DULY BACKED BY PROPER SALE BILL S, PURCHA SE BILL S , CONTRACT NOTES, ETC. IN FACT THE ASSESSEE HAD PAGE 7 OF 14 UNDERTAKEN THE TRANSACTION IN THREE SCRIPS NAMELY , L&T, SBI AND ACC. OUT OF THE SAID THREE TRANSACTIONS ONLY TWO TRANSACTIONS OF SALE OF SHARES OF L&T AND SBI HAS BEEN HELD TO BE BOGUS AND NO ADVERSE INFERENCE HAS BEEN DRAWN ON THE SALE OF SHARES OF ACC UNDER TAKEN THROUGH THE SAME BROKER. IN SUPPORT OF HIS CONTENTION AND EVIDENCES FILED DURING THE COURSE OF THE QUANTUM AS WELL AS PENALTY PROCEEDINGS , HE FURTHER DREW OUR ATTENTION TO THE DOCUMENTS AND EVIDENCES PLACED AT PAGES 9 TO 27 OF THE PAPER BOOK. APART FROM THAT , HE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED THE SALE OF SHARES AS ITS BUSINESS INCOME AND NOT AS LONG TERM CAPITAL GAIN AS STATED BY INVESTIGATION WING . THIS FACT IS EVIDENT FROM THE PROFIT AND LOSS ACCOUNT AND ALSO THE RELEVANT SCHEDULES ANNEXED WITH THE PROFIT AND LOSS ACCOUNT PLACED AT PAGES 3 TO 7 OF THE PAPER BOOK. THUS , HE SUBMITTED THAT WHEN ALL THE DOCUMENTS RELATING TO PURCHASE AND SALES OF SHARES HAVE BEEN F URNISHED AND THE PROFIT FROM SALE OF SHARES HAS BEEN SHOWN AS BUSINESS INCOME , THEN WHERE IS THE QUESTION OF LEVYING THE PENALTY U/S 271(1)(C) . SIMPLY THE ADDITION HAS BEEN MADE UNDER THE HEAD INCOME FROM OTHER SOURCES , IT DOES NOT NECESSARILY LEAD TO CONCLUSION THAT PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME HAS TO BE LEVIED. HE SUBMITTED THAT PENALTY PROCEEDINGS IS SEPARATE AND DISTINCT FROM ASSESSMENT PROCEEDINGS AND THEREFORE , ALL THE PROBABLE FACTORS IN FAVO UR OF THE ASSESSEE SHOULD BE TAKEN INTO CONSIDERATION BECAUSE , WHATEVER MATERIAL HAS BEEN RELIED UPON BY THE DEPARTMENT FOR TR EATING THE SALE OF SHARES AS INCOME FROM OTHER SOURCES , INSTEAD OF BUSINESS INCOME IS WITHOUT PROVIDING OPPORTUNITY TO THE ASS ESSEE TO REBUT THE MATERIAL OR ALLOWING THE CROSS EXAMINATION OF THE WITNESS. LASTLY, REGARDING THE OBSERVATIONS OF LD. AO AND LD. CIT (A) THAT ASSESSEE SHOULD HAVE PRODUCED THE BROKER; HE SUBMITTED PAGE 8 OF 14 THAT HE WAS DEPARTMENT S WITNESS AND IF DEPARTMENT IS RELYING UPON THE STATEMENT OF THE BROKER AGAINST THE ASSESSEE, THEN PRINCIPLES OF NATURAL JUSTICE PROVIDE THAT THE ONUS IS ON THE DEPARTMENT TO PRODUCE ITS WITNESS FOR CROSS - EXA MINATION. HENCE ON THIS GROUND ALONE THE PENALTY SHOULD BE DELETED. 7 . ON TH E OTHER HAND THE LD. DR STRONGLY RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND LEARNED CIT (APPEALS) AND SUBMITTED THAT WHEN THE ASSESSEE S SIMILAR PLEA HAS BEEN REJECTED IN THE QUANTUM PROCEEDINGS RIGHT UP TO THE STAGE OF TRIBUNAL , THEREFORE , SUCH A PLEA CANNOT BE ACCEPTED FOR THE PURPOSE OF PENALTY PROCEEDINGS ALSO . THUS , HE SUBMITTED THAT THE ORDER OF THE LEARNED CIT (APPEALS) CONFIRMING THE PENALTY SHOULD BE CONFIRMED. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDING GIVEN I N THE IMPUGNED ORDER AS WELL AS THE MATERIAL REFERRED TO BEFORE US. FROM THE RECORDS IT IS SEEN THAT THE ASSESSEE COMPANY HAS PURCHASED CERTAIN SHARES FROM M/S. R.K. AGGARWAL & COMPANY PROPRIETOR SHIP CONCERN OF SH RI SATISH GOEL , MAINLY IN THREE SCRIPS VIZ. , L&T; SBI; AND ACC DURING THE RELEVANT ASSESSMENT YEAR 1998 - 99. THE DETAILS OF SCRIPS PURCHASED AND SOLD THROUGH R.K. AGGARWAL & COMPANY ARE REPRODUCED HERE UNDER: - COM PANY NO. OF SHARE S DATE OF PURCHASE PURCHASE VALUE (RS.) DATE OF SALE SALE VALUE (RS.) PROFIT/ LOSS (RS.) NET GAIN/LOSS L&T 1500 5.12.97 266901.75 9.3.98 424350.90 157449.15 2600 5.12.97 463929.70 9.3.98 543376.15 79446.45 236895.60 SBI 2300 5.12.97 478587.45 9.3.98 537165.00 58577.55 2200 5.12.97 416163.00 9.3.98 620015.60 203852.60 262430.15 PAGE 9 OF 14 ACC 200 27.2.98 237849.90 16.3.98 301082.90 63233.00 200 27.2.98 236647.80 16.3.98 298287.10 61639.30 124872.30 IN SUPPORT OF AFORESAID PURCHASE AND SALES OF SHARES , OUR ATTENTION HAD BEEN DRAWN TO VARIOUS PURCHASES AND SALES BILLS ISSUED FOR THESE SCRIPS BY M/S. R.K. AG G ARWAL & COMPANY ALONG WITH THE DETAILS OF SCRIPS AND DISTINCTIVE NUMBERS . IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS DECLARED PROFIT FROM SALE OF SUCH SHARES AND IT HA S BEEN TREATED AS BUSINESS INCOME RATHER THAN ANY LONG TERM CAPITAL GAIN . AFTER HAVING DISCLOS ED THE SAID TRANSACTION IN THE RETURN OF INCOME, THE ASSESSEE S CASE WAS REOPENED U/S 148 IN THE WAKE OF INFORMATION RECEIVED FROM INVESTIGATION WING THAT , M/ S. R.K. AGARWAL & COMPANY, THROUGH PROPRIETOR , SHRI SATISH GOEL, WAS FOUND TO BE INVOLVED IN GIVING ACCOMMODATION ENTRIES AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARIES OF BOGUS CLAIM OF LONG TERM CAPITAL GAIN . NO WHERE THERE IS ANY WHISPER OR REFERENCE IN THE QUANTUM PROCEEDINGS OR MATERIAL ON RECORD THAT IN HIS STATEMENT, SATISH GOEL HAS SPECIFICALLY STATED THAT HE HAS UNDERTAKEN BOGUS TRANSACTION IN THE CASE OF ASSESSEE OR HAD STATED ANYTHING SPECIFIC ABOUT THE TRANSACTION IN THESE SCRIPS. IN HIS STATE MENT , SHRI SATISH GOEL HAS STATED THAT THE TRANSACTION S ROOTED THROUGH HIS PARTICULAR BANK ACCOUNT WERE ONLY THE PAPER TRANSACTION AND HE USED TO ISSUE BILLS AND CHEQUES IN LIEU OF CASH FOR WHICH HE WAS CHARGING THE COMMISSION RANGING 0.25% TO 0.50%. BASED ON TH ESE INFORMATION AND STATEMENT , ADDITION ON SALE OF SHARES OF RS. 4,99,325/ - HAS BEEN MADE AS UNEXPL AINED THE CASH CREDITS. THIS ADDITION HAS BEEN CONFIRMED O N THE QUANTUM SIDE UP TO THE STAGE OF THE TRIBUNAL MAINLY ON THE GROUND THAT ASSESSEE WAS ONE OF THE BENEFICIARIES OF PAGE 10 OF 14 SUCH ACCOMMODATION AND M/S. R.K. AG G ARWAL & COMPANY WAS INVOLVED IN ISSUING BOGUS TRANSACTIONS . T HE PENALTY TOO HAS BEEN CONFIRMED BASED ON THE SE FINDINGS ARRIVED IN THE QUANTUM PROCEEDINGS. EVEN BEFORE THE LEARNED CIT (APPEALS) TH E ASSESSEE HAD MADE DETAILED SUBMISSIONS AS TO WHY THE PENALTY SHOULD NOT BE LEVIED ON MERITS AS WELL AS LEGAL GROUNDS , HOWEVER THE LD . CIT (APPEALS) HAS TOO GONE O N THE FINDINGS AND CONCLUSIONS DRAWN IN THE QUANTUM PROCEEDINGS. 9 . IT IS A TRITE LAW THAT FINDING GIVEN IN THE QUANTUM PROCEEDINGS MAY HAVE PERSUASIVE AND PROBATIVE VALUE BUT SUCH FINDINGS AND MATERIAL ALONE AND MAY NOT JUSTIFY THE IMPOSITION OF PENALTY IN A CASE, BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE IN ASSESSMENT PROCEEDINGS. THE REGULAR ASSESSMENT ORDER IS NOT THE FINAL WORD IN PENALTY PROCEEDINGS UPON THE PLEAS WHICH CAN BE TAKEN AT THE PENALTY STAGE AND HOWSOEVER RELEVANT AND GOOD THE FINDINGS IN THE QUANTUM PROCEEDINGS MAY BE, BUT THEY ARE NOT CONCLUSIVE SO FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED. IN ADJUDGING AS TO WHETHER THE ASSESSEE IS GUILTY OF CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS THEREOF, THE MATTER HAS TO BE EXAMINED AFRESH AND ONE CAN NOT BE GUIDED SOLE LY BY THE FINDINGS GIVEN ON THE QUANTUM SIDE . THE PENALTY PROCEEDINGS BEING SEPARATE AND DISTINCT OF ASSESSMENT PROCEEDINGS, THE ASSESSEE IS ALWAYS AT LIBERTY TO DEMONSTRATE EITHER FROM THE SAME SET OF MATERIAL PLACED ON RECORD OR BRING ANY FRESH EVIDENCE TO SUBSTANTIATE THAT HE IS NOT GUILTY OF FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. HERE IN THIS CASE, THE ASSESSEE AT THE TIME OF FILING OF RETURN OF INCOME HAD DISCLOSED THE INCOME FROM SALE OF SHARES AS BUSINESS INCOME CHARGEABLE TO TAX AND HAS DULY PAGE 11 OF 14 DISCLOSED ALL THE MATERIAL FACTS IN THE FORM OF WHATEVER EVIDENCES AND MATERIAL AVAILABLE WITH IT. LATER ON , WHEN ADVERSE INFORMATION WAS RECEIVED FROM THE I NVESTIGATIO N WING BASED ON STATEMENT OF SHRI SATISH GOEL THAT ASSE SSEE WAS BENEFICIARY OF BOGUS TRANSACTION, THEN IT WAS AN INCUMBENT UPON THE REVENUE TO ENSURE THAT ALL THE SUCH MATERIAL AND INFORMATION SHOULD HAVE BEEN MADE AVAILABLE TO THE ASSESSEE SO AS TO CONTROVERT THE SAME AND IF THE ASSESSEE HAD MADE REQUEST FOR CROSS EXAMINATION OF THE SAID WITNESS OF THE DEPARTMENT, THEN THE SAME SHOULD HAVE BEEN ALLOWED AS MATTER OF PRINCIPLE OF NATURAL JUSTICE . MORE PARTICULARLY HERE IN THIS CASE , WHEN NOTHING IS BORNE OUT FROM THE RECORD THAT THE BROKER , SH RI SATISH GOEL HAS EITHER MENTIONED SPECIFICALLY ABOUT THE ASSESSEE OR ANY ADVERSE MATERIAL HAS BEEN STATED BY HIM THAT THE TRANSACTION OF SHARES UNDERTAKEN BY THE ASSESSEE THROUGH HIM IS SHAM OR BOGUS. THE SAID PERSON MAY HAVE BEEN INVOLVED IN BOGUS AND SHAM TRANSACTIO N , HOWEVER IF THE ASSESSEE HAS PRODUCED ALL THE RELEVANT MATERIAL BELONGING TO THE SAME BROKER AND OUT OF THE TRANSACTIONS UNDERTAKEN FOR THREE SCRIPS , ONE HAS BEEN ACCEPTED BY THE DEPARTMENT THEN NO ADVERSE INFERENCE CAN BE DRAWN FOR OTHER TWO SCRIPS SANS ANY SPECIFIC MATERIAL FOUND OR STATED BY THE SAME BROKER. PRESUMPTION IN SUCH CIRCUMSTANCES GOES IN FAVOUR OF THE ASSESSEE AND SO ALSO THE PROBABLE FACTORS. HERE AS STATED ABOVE, IT IS NOT THE CASE THAT ASSESSEE HAS CLAIMED ANY EXEMPTION OF LONG TERM CAPI TAL GAIN ON SALE OF SHARES AS ALLEGED IN THE INFORMATION RECEIVED, ALBEIT ASSESSEE HAS SHOWN IT AS TAXABLE INCOME UNDER THE HEAD BUSINESS INCOME . THE REVENUE ONLY WANTS TO TAX AS INCOME FROM OTHER SOURCES . SUCH TAXABILITY UNDER DIFFERENT HEAD CANNOT BE RECKONED AS FIT CASE FOR LEVY OF PENALTY. PAGE 12 OF 14 10. FURTHER , WE DO NOT FIND ANY SUBSTANCE IN THE OBSERVATION AND FINDING OF THE AUTHORITIES BELOW THAT, SATISH GOEL WAS ASSESSEE S BROKER; THEREFORE, ONUS WAS UPON THE ASSESSEE TO PRODUCE HIM FOR THE CROSS EX AMINATION. THIS IS ABSOLUTELY AGAINST THE TENETS OF LAW, BECAUSE , WHEN THE REVENUE IS HEAVILY RELYING UPON THE STATE MENT OF A WITNESS CONDUCTED BY THEM , ON THE BASIS OF WHICH IT HAS TAXED THE ASSESSEE AND ALSO INITIATED PENAL PROVISIONS , THEN THE ONUS TO PRODUCE THE WITNESS LIES HEAVILY UPON THE REVENUE. THIS ONUS CANNOT BE RELEGATED OR SHIFTED TO THE ASSESSEE, MORE SO, IN THE CASES WHERE REOPENING HAS BEEN DONE U/S 147 BASED ON CERTAIN STATEMENT OR INFORMATION COLLECTED/CONDUCTED GIVEN THROUGH ANY WITNESS BY THE REVENUE, THEN IT IS THE REVENUE WHO HAS DEMONSTRATE AND PROVE THAT THE SUCH INFORMATION OR STATEMENT OF THE WITNESS IS CORRECT AND CONSTITUTES A RELEVANT MATERIAL AGAINST ASSESSEE, ESPECIALLY WHEN ASSESSEE POINTS OUT ANY DEFICIEN CY OR REBUTS THE STATEMENT/MATERIAL. IN ABSENCE OF ANY CROSS EXAMINATION PROVIDED TO THE ASSESSEE DESPITE SEVERAL REQUESTS EVEN IN THE PENALTY PROCEEDINGS, IT WOULD BE VERY DIFFICULT TO HOLD THAT SUCH MATERIAL ALONE IS SUFFICIENT TO CHARGE THE ASSESSEE BEI NG GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALING ANY PARTICULARS OF INCOME. UNDER THESE CIRCUMSTANCES, WE HOLD THAT IN ABSENCE OF PROVIDING CROSS EXAMINATION OF THE WITNESS AS REQUESTED BY THE ASSESSEE NOT ONLY DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT ALSO DURING THE COURSE OF PENALTY PROCEEDINGS , NO ADVERSE INFERENCE CAN BE DRAWN ESPECIALLY FOR THE PURPOSE OF LEVYING OF PENALTY U/S 271(1)(C) . ACCORDINGLY, THE PENALTY LEVIED BY THE ASSESSING OFFICER AND AS CONFIRMED BY TH E LEARNED CIT (APPEALS) IS DELETED. PAGE 13 OF 14 11. IT IS AN ADMITTED FACT THAT IN THE A.Y. 1999 - 2000 ALSO , SIMILAR PENALTY HAS BEEN LEVIED ON SALE OF SHARES AND AGAIN NO CROSS EXAMINATION OF THE WITNESS HAS BEEN ALLOWED BY THE REVENUE TO THE ASSESSEE, THEREFORE , OUR FINDING GIVEN ABOVE, WILL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO . THUS , THE PENALTY LEVIED IN THIS YEAR ALSO IS DELETED. 12 . I N THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 2 9 . 0 5 .201 7. S D / - S D / - ( PRASHANT MAHARSHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 9 . 0 5 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR PAGE 14 OF 14 DATE DRAFT DICTATED ON 2 3 .0 5 .2017 DRAFT PLACED BEFORE AUTHOR 2 4 .0 5 .2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 2 9 . 5 .2017 KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK 2 9 . 5 .2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.