KISHORE N. PATEL, NAVI MUMBAI V. ACIT CEN CIR 13, MUMBAI

ITA 4818/MUM/2009

• Counselvise Citation: 481819914 RSA 2009
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GOLI SRINIVASAN
• Keywords: Search and seizure; Cost of acquisition
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, G BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.4818/ MUM/2009 ASSESSMENT YEAR: 2005-06 KISHORE N PATEL, .. APPELLANT A-22/02, SAI PRIDE CO.OP. HSG SOCIETY, PLOT NO.5, SECTOR-18, PALM BEACH ROAD, SANAPADA, NAVI MUMBAI-400 705 PA NO.ABPAPP 6629 G VS ACIT, CENTRAL CIRCLE 13 ,. RESPONDEN T 11 TH FLOOR, OLD CGO BUILDING, ANNEXE, M.K. ROAD, MUMBAI. APPEARANCES: SANJAY PARIKH, FOR THE APPELLANT GOLI SRINIVASAN,, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 30 TH MARCH, 2009, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1. THE LD CIT (A) ERRED IN LAW AND FACTS IN CONFIRM ING THE ACTION OF THE AO IN DISALLOWING THE AMOUNT OF ` .5,32,331 BEING COST OF SHARES PURCHASED ON WHICH CAPITAL GAINS HAD ARISEN, ONLY ON THE GROUND T HAT CAPITAL GAINS WAS OFFERED TO TAX AS INCOME FROM OTHER SOURCES AS PER STATE MENT MADE DURING THE COURSE OF SEARCH, IGNORING THE FACT THAT THE SAID COST WAS DULY EXPLAINED AND ACCEPTED AS PER THE STATEMENT OF ACCOUNTS FILED ALONGW ITH RETURN OF INCOME FOR I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 2 A.Y. 2004-05 AND NO ADVERSE INFERENCE WAS DRAWN ABOUT THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS PERTAINING TO THE YEAR I N WHICH THE SAID SHARES WERE ACTUALLY ACQUIRED. 2(A) THE LD CIT (A) ERRED IN LAW AND FACTS IN CONFIR MING THE ACTION OF THE AO IN ADDING ` .4,13,494 AS UNEXPLAINED MONEYS IN POSSESSION OF THE ASSES SEE, ATTRIBUTABLE TO REMUNERATION, ETC PAID AT AN ESTIMA TED RATE OF 5% OF GROSS SALES PROCEEDS OF ` .82,69,875 TOWARDS ALLEGEDLY PURCHASING BOGUS LONG TER M CAPITAL GAINS. (B) THE LD CIT (A) ERRED IN LAW AND FACTS IN TREATIN G THE SAID ADDITION OF ` . 4,13,494 MADE BY THE AO AS UNEXPLAINED MONEYS, AS UNEX PLAINED EXPENDITURE U/S.69C AND MODIFYING THE ASSESSMENT ORDER TO THAT EXTEN T, WITHOUT APPRECIATING THAT THE APPELLANT WAS NOT FOUND TO HAV E INCREASED ANY SUCH EXPENDITURE AND THE ADDITION WAS MADE PURELY ON THE BASIS OF CONJECTURES AND SURMISES BASED ON INFORMATION IN SOME OTHER CASES NOT RELA TED TO THE APPELLANT AND WITHOUT AFFORDING ANY OPPORTUNITY TO THE APPELLANT TO REFUTE OR REBUT THE SAME. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. A SEARCH AND SEIZURE OPERATIONS IN THE RESIDENTIAL PREMISES OF SHRI HARESH N. PATEL AND ALSO HIS FAMILY MEMBERS WAS CONDUCTED ON 10.01.2007. DURING THE SEARC H PROCEEDINGS SHRI HARESH N. PATEL, ON BEHALF OF THE FAMILY DECLARED THAT THE CAPITAL GAINS OBTAINED IN ASSESSMENT YEAR 2005-06, 2006-07 AND 2007-08 ON SALE OF SHARES AND CONSEQUENT DECLARATION AS LONG TERM CAPITAL COULD NOT BE PROVED AND ACCORDINGLY OFFERED TO TAX BY DECLARING THE AMOUNTS SHOWN AS CAPITAL GAINS IN RESP ECTIVE HANDS. THE ASSESSEE, SHRI KISHORE N. PATEL, IN RESPONSE TO NOTICE UNDER SECT ION 153A, HAD RETURNED INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN OF R S.77,37,644 ON GROSS SALE PROCEEDS OF RS.82,69,875. THE ASSESSING OFFICER NOTICED THAT THE GAINS OFFERED BY THE ASSESSEE PROVED BOGUS. SINCE THE ASSESSEE HAD ADMITTED RS.77,37,544 ONLY AS UNDISCLOSED INCOME, THE DIFFERENCE OF RS.5,32,331 (RS.8 2,69,875 RS.77,37,544) WAS DISALLOWED BY THE AO REPRESENTING BY COST OF PURCHA SE CLAIMED BY THE ASSESSEE. IN ADDITION TO THE ABOVE AMOUNT THE A.O. ALSO OF THE VIEW THAT GENERALLY AMOUNT OF 5% WAS PAID FOR ARRANGING BOGUS TRANSACTIONS AND ACCORD INGLY AN AMOUNT OF 5,32,331/- WAS BROUGHT TO TAX AS UNEXPLAINED EXPENDIT URE AT 5% OF THE GROSS VALUE OF SALE PROCEEDS. THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE CIT(A) BUT WITHOUT SUCCESS. BEING AGGRIEVED, THE ASSESSEE IS IN FURTH ER APPEAL BEFORE US. I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 3 3. AT THE TIME OF HEARING, LEARNED REPRESENTATIVES OF THE PARTIES AGREE THAT THE ISSUE IS COVERED BY THE DECISION OF A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. CHAMPABEN K PATEL VS ACIT IN ITA NO.4817/M/2009 FOR THE ASSESSMENT YEAR 2005-06 ORDER DATED 19.1.2011, FAMILY MEMBER OF THE ASSESSEE. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, MAKES ELABORATE ARGUMENTS IN SUPPORT OF THE STAND OF THE AUTHORITIES BELOW AND REITERATES THE STAND TAKEN BY THE AUTHORITIES BELOW. 4. THE ISSUE IS NO LONGER RES INTEGRA. A CO-ORDINATE B ENCH HAS ALREADY DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE WHICH HAS ALSO BEEN FO LLOWED BY OTHER CO- ORDINATE BENCHES. ON MATERIALLY IDENTICAL FACTS, THE CO-ORDINATE BENCH IN THE CASE OF SMT. CHAMPABEN K. PATEL (SUPRA) HELD AS FOLLOWS: 7. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE STATEM ENTS GIVEN BY SHRI HARESH N. PATEL THE ADMISSION OF LONG TERM CAPITAL GAI NS IS AS UNDER: - Q.15 DURING THE A.Y. 2005-06, YOUR WIFE SMT. KEJAL PATEL HAS PROFIT ON SALE OF OF RS.11,96,917/-, AND FOR THE A.Y. 2006-07, YOU HAV E RECEIVED CAPITAL GAINS OF RS.33,64,457/- ON THE SALE OF THE SHARES OF INTERLINK F INANCIAL SERVICES WHICH WERE REQUIRED IN THE YEAR 17.12.03. PLEASE PROVIDE T HE COPIES OF BROKERS NOTES AND DETAILS OF PERSON FROM WHOM YOU HAVE PURCHASE D THE SHARES OF INTERLINK FINANCIAL SERVICE AND TO WHOM YOU HAVE SOL D THESE SHARES ANS 15: RIGHT NOW, I DO NOT HAVE ALL THESE DETAILS BUT THESE TRANSACTIONS WERE OUT THROUGH ONE MR. MIRANI WHO IS A CHARTERED ACCOUN TANT AND HAVING OFFICE AT NAVJIVAN SOCIETY, LAMINGTON ROAD. .16 PLEASE PROVIDE THE EXACT NAME & COMPLETE ADDRESS O F MR. MIRANI? 16: I SHALL PROVIDE THESE DETAILS LATER ON. TO THIS, A STATEMENT WAS RECORDED OF SHRI HARESH PATEL , OF THE ASSESSEE, ON 9- 3- AT A-1202, 12 TH FLOOR, PRESIDENT PARK, SECTOR -29, NAVI MUMBAI DURIN G THE COURSE OF SEARCH & SEIZURE (P.O. OPERATIONS), BY INVEST IGATION AUTHORITIES, AND THE RELEVANT EXTRACT THEREOF IS REPRODUCED HERE BELOW: - .1 PLEASE IDENTIFY YOURSELF AND CONFIRM THAT THE OAT H HAS BEEN ON YOU AND YOU HAVE BEEN MADE AWARE ABOUT THE CONSEQUENCES OF GIVING FALSE STATEMENTS ON OATH. 1: I AM SHRI HARESH N. AGED 37 YEARS SON OF SHRI NANJI SHIVJI PATEL, RESIDING AT A-1202, PRESIDENT PATH, SECTOR -29, NAVI MUMBAI. I C ONFIRM THAT THE OATH HAS BEEN STATEMENT ON OATH. I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 4 Q.2 PLEASE STATE THE AMOUNT OF CAPITAL GAIN ON ACCOU NT OF SHARES SHOWN BY YOU YOUR FAMILY MEMBERS AND SUBMIT YOUR EXPLANATION IN THIS REGARD. ANS2: MYSELF, MY WIFE KEJAL H. PATEL, MY BROTHER KISHO RE N. PATEL, HIS WIFE PATEL, BY BROTHER IN LAW SHRI JETHALALBHAI D. PATEL AND MY PARTNER IN CERAMICS SHRI KERSHAN RS. PATEL HAVE SHOWN CAPITAL GA INS ON ACCOUNT OF TRANSACTIONS IN SHARES OF RS.1.91 CRORES. WE CONSIDER THA T THE SAID TRANSACTIONS ARE GENUINE. HOWEVER, WE DO NOT HAVE THE NECESSARY EVIDENCE AND DETAILS TO SUBSTANTIATE YOUR CLAIM. IN ORDER TO B UY PEACE OF MIND AND AVOID PENAL CONSEQUENCES AND LONG TERM LITIGATION WE ARE WILLING TO DECLARE THE SAID CAPITAL GAINS SHOWN, AS INCOME FROM OTHER SOUR CES IN THE RESPECTIVE A.YS AND PAY TAXES ACCORDINGLY. I REQUEST THE DEPARTME NT NOT TO INITIATE PENAL AND PERSECUTION PROCEEDINGS AGAINST ME AND MY FAMILY M EMBERS, IN VIEW OF THE COOPERATION VOLUNTARILY OFFERED BY ME. AFTER EXTRACTING THE ABOVE STATEMENTS IN THE ORDER TH E AO OPINED AS UNDER: 9. THUS, THE ASSESSEE HIMSELF HAD ADMITTED THAT ALONG WIT H HIM OTHER MEMBERS THE GROUP AS DETAILED EARLIER IN HIS ORDER, HAD OBTAINED BOGUS LONG TERM CAPITAL GAINS AMOUNTING TO RS.1,91,60,443/-. 8. AS CAN BE SEEN FROM THE EXTRACTS OF THE STATEMENTS IN ORDER TO BUY PEACE OF AND PENAL CONSEQUENCES OF LONG TERM LITIGATION, THEY DECLARED THE SAID CAPITAL GAIN SHOWN AS INCOME FROM OTHER SOURCES VIDE STATEMENT D ATED 09.03.2007 EVENTHOUGH UNDER SECTION 132(4) STATEMENT ON 10.01.20 07 THERE WAS NO DISCLOSURE AND ASSESSEE HAS PROMISED TO FURNISH THE DETAILS O F TRANSACTIONS AND IN FACT INCLUDED NAME OF ONE SHRI MIRANI. THERE IS NOTHING ON RECORD TO SHOW THAT THE DEPARTMENT HAS FOLLOWED UP THE ISSUE TO I TS LOGICAL CONCLUSION BY EXAMINING THE SAID SHRI MIRANI OR PROVING THE PUR CHASES/ SALES AS BOGUS. IT IS TRUE THAT ASSESSEE AS PART OF THE DECLARATION GIVEN BY THE FAMILY MEMBER FILED THE RETURN DECLARING THE CAPITAL GAINS ALONE AS INCOME FROM OTHER SOURCES. IF THE DEPARTMENT HAS TO PROVE THE TRANSACTION AS BOGUS THEN THEY SHOULD VERIFY THE PURCHASES, SALES EXPENSES ETC BY A SUSTAIN ED INVESTIGATION. NOTHING HAS BEEN DONE IN THIS CASE EXCEPT DISALLOWING THE COST OF PURCHASE AND BRINGING IT TO TAX AS THE ASSESSEE ADMITTED THE LONG TERM CAPITAL GAINS AS INCOME UNDER OTHER SOURCES. THE CIT(A) ALSO, FURTHER A NALYSING THE STATEMENT GIVEN, WAS OF THE OPINION THAT ASSESSEE HAS CONTRADICTED HERSELF. PARA 5 OF THE CIT(A)S ORDER IS AS UNDER: - 5. ON CAREFUL CONSIDERATION OF THE FACTS AND THE CIR CUMSTANCES OF THE CASE, I DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE APPE LLANT WHICH IN FACT, IS SELF- CONTRADICTORY, TO SAY THE LEAST. ON ONE HAND, THE APP ELLANT CLAIMS THAT THE ENTIRE TRANSACTION WAS GENUINE AND ABOVE BOARD AS THE SAME WAS DULY REFLECTED IN THE RETURNS FILED FOR THE RELEVANT YEAR S, ON THE OTHER, THE SAME TRANSACTIONS HAVE BEEN ADMITTED TO BE UNDISCLOSED INCOM E BEFORE THE AUTHORITIES ON MORE THAN ONE OCCASION. SRI HARESH PATE L, ON BEHALF OF ALL THE FAMILY MEMBERS ETC IN THE COURSE OF SEARCH HAD CATEGOR ICALLY ADMITTED THE SAID TRANSACTION AS UNDISCLOSED INCOME IN THE STATEMENT U/S 132(4) ON THE PLEA OF NON-AVAILA BILITY OF EVIDENCE AND ALSO IN TO CO-OPERATE WITH DEPARTMENT AND TO BUY PE ACE AND ONCE AGAIN THE I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 5 SAME HAS BEEN DISCLOSED IN THE RETURN FILED IN RESPONSE T O NOTICE U/S 153A AS INCOME FROM OTHER SOURCES. IF AT ALL THE APPELLANT O R SRI HARESH PATEL WAS SO SURE OF THE GENUINENESS OF THE WHOLE TRANSACTION, THERE WAS NO NEED FOR SURRENDERING THE SAME AS UNDISCLOSED INCOME. IT MAY ALSO BE STATED HERE THAT THE APPELLANT, AT NO POINT OF TIME BEFORE FILING OF THE RETURN CHOSE TO RETRACT THE STATEMENT GIVEN U/S 132(4) AND EVEN TAXES WERE DUL Y PAID ON THE SURRENDERED SUM. THUS, THE ENTIRE STORY OF A GENUINE TR ANSACTION IS IRRELEVANT AT THIS POINT OF TIME IN THE LIGHT OF ABOVE FACTS AND THE AO WAS JUSTIFIED IN NOT RE-EXAMINING THE SAME IN THE LIGHT OF THE ARGUMENTS P LACED BEFORE HIM DURING ASSESSMENT PROCEEDINGS. 9. PARA 5.1 AND 5.2 ARE WITH REFERENCE TO VARIOUS JU DICIAL PRINCIPLES ABOUT NATURE OF STATEMENT AND ITS EFFECTIVENESS, WHICH ARE NO T MATERIAL IN THE FACTS OF THE CASE AS ASSESSEE HAS ADMITTED LONG TERM CAPITAL GA INS AND FILED RETURN FOR THE LONG TERM CAPITAL GAINS AS INCOME FROM OTHER SOURCES, CONSEQUENT TO THE ADMISSION. HOWEVER, THE ISSUE IS WHETHER THE AMOUNT THAT HAS TO BE BROUGHT TO TAX IS THE GROSS AMOUNT OF SALE PROCEEDS OR ONLY THE LONG TERM CAPITAL GAINS. THIS WAS DECIDED BY THE CIT(A) IN PARA 5.3 AS UNDER: - 5.3 IN SO FAR AS THE GRIEVANCE REGARDING THE ADDITION MADE BY THE AO ON THE GROSS AMOUNT OF SO-CALLED CAPITAL GAINS IS CONCERNED, I T IS EVIDENT FROM THE ABOVE FACTS THE APPELLANT HAS ALL ALONG ADMITTED SUCH GAINS TO THE UNDISCLOSED INCOME LIABLE TO ASSESSED AS INCOME FROM OTHE R SOURCES. AS SUCH, THERE IS ABSOLUTELY NO MERIT FOR TAXING THE NET AMOUN T AND THE BALANCE AMOUNT BE TREATED AS COST OF SUCH TRANSACTION. IT IS A PURE AND SIMPLE CASE OF MONEY LAUNDERING EXERCISE GOING INTO VAIN AS A CONSEQU ENCE OF SEARCH OPERATION. THE APPELLANT HAD MADE A CASH PAYMENT EQU IVALENT TO THE GROSS AMOUNT AND IN TURN RECEIVED THE AMOUNT IN THE FORM OF CHEQUE. THEREFORE, WHAT IS TAXABLE AS UNDISCLOSED INCOME IS THE GROSS AMOUNT AND NOT THE NET AMOUNT, ONCE THE ENTIRE TRANSACTION IS FOUND TO BE BO GUS AND ENGINEERED. THERE IS ABSOLUTELY NO QUESTION OF TAXING THE CAPITAL GAINS WHICH HAS BEEN ADMITTED TO BE NON-GENUINE EVEN BY THE APPELLANT. A CCORDINGLY, THE ADDITION MADE ON THIS COUNT HAS SUFFICIENT JUSTIFICATION AND IS, THEREFORE, UPHELD. 10. WE ARE UNABLE TO SUBSCRIBE TO THE ABOVE OPINION AS THERE IS NOTHING ON RECORD THAT ASSESSEE HAS MADE CASH PAYMENT EQUIVALENT TO THE GROSS AMOUNT AS ALLEGED BY THE CIT(A). MOREOVER ASSESSEE HAS FILED RET URN FOR EARLIER YEAR ADMITTING THE PURCHASE OF SHARES MUCH BEFORE THE SEARCH ACTION AND THE A.O. ACCEPTED THE RETURN FILED UNDER SECTION 153A ALSO FOR A.Y. 2004-05 WITHOUT DISTURBING THE PURCHASE OF SHARES. IN CASE IT IS THE AL LEGATION THAT ASSESSEE HAS PURCHASED SHARES FROM UNDISCLOSED INCOME THE SAME SHOULD HAVE BEEN BROUGHT TO TAX IN A.Y. 2004-05 AS THE PURCHASE OF SHAR ES WAS SUPPOSED TO HAVE BEEN TAKEN PLACE IN THAT YEAR. THE A.O. HAS AC CEPTED THE NIL RETURN FILED FOR THAT ASSESSMENT YEAR WITHOUT CONSIDERING THE PURCHASE OF SHARES IN THAT YEAR AS OUTSIDE THE BOOKS OF ACCOUNT. SINCE THE INCOME DISCLOSED BY THE ASSESSEE WAS ONLY LONG TERM CAPITAL GAINS AND THERE IS NO OTHER EVIDENCE BROUGHT ON RECORD BY THE A.O. ABOUT THE OF THE PU RCHASE OF SHARE OR SALE OF SHARES (IN FACT NO INVESTIGATION WAS ON RECORD TO EXAMI NE THIS ASPECT) THE I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 6 ASSESSING OFFICERS ACTION IN DENYING THE BENEFIT OF PUR CHASE CANNOT BE UPHELD. THE FAMILY MEMBERS OF ASSESSEE HAVE ADMITTED TH E LONG TERM CAPITAL GAINS OF VARIOUS FAMILY PERSONS NAMES IN RESPECTIVE ASSESSME NT YEARS AND HONOURED THE DISCLOSURE BY FILING RETURNS ACCORDINGLY. IN CASE THE A.O. WANTS TO PROVE THAT THE TRANSACTION IS BOGUS THEN NECESSARY IN VESTIGATIONS CONDUCTED POST SEARCH COULD HAVE BEEN PLACED ON RECOR D SO AS TO UNDERSTAND WHETHER THE TRANSACTION IS REALLY A BOGUS ONE AS STATED BY THE A.O. IN PARA 9 OF TRANSACTION OR NOT. WHATEVER MAY BE THE CONSIDERATION S, SRI HARESH PATEL HAS ADMITTED LONG TERM CAPITAL GAINS IN THE STATEMENT RE CORDED ON 09.03.2007 AND ACCORDINGLY, ASSESSEE FILED THE LONG TERM CAPITAL G AINS AS UNDISCLOSED INCOME. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE ENTIRE SALE PROCEEDS CANNOT BE BROUGHT TO TAX AS UNDISCLOSED INCOME AND ASSESSE E IS ENTITLED TO CLAIM SET OFF OF THE PURCHASE COST. A.O. IS DIRECTED TO DELETE THE ADDITION OF RS. 2,68,165/-. GROUND NO. 1 IS ALLOWED. 5. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDI NATE BENCH, WE ALLOW GROUND NO.1. 6. IN REGARD TO GROUND NO.2, WE ALSO FIND THAT THE I SSUE IS COVERED BY THE SAID DECISION, WHEREIN, IT HAS BEEN OBSERVED BY THE CO-ORDI NATE BENCH AS FOLLOWS: 5. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNE D D.R. AND ALSO EXAMINED THE RECORD. THERE IS NO IOTA OF EVIDENCE IN THE COURSE OF SEARCH THAT THE ASSESSEE HAS PAID ANY AMOUNT TOWARDS BROKERAGE OR CO MMISSION OR INCIDENTAL EXPENDITURE FOR EARNING THE LONG TERM CA PITAL GAIN. IN THE COURSE OF SEARCH THE ASSESSEE HAS COME FORWARD AND OFFERED THAT TH E LONG TERM CAPITAL GAIN REFLECTED BY THE SALE IS IN FACT NOT GENUINE TR ANSACTION AND ULTIMATELY OFFERED THE ENTIRE SALE PROCEEDS RECORDED AS INCOME, W ITHOUT EVEN CLAIMING THE PURCHASE COST WHICH RESULTED IN CAPITAL GAIN. NEIT HER DURING THE STATEMENT NOR DURING THE ENQUIRY THERE WAS ANY EVIDEN CE OR ADMISSION WITH REFERENCE TO PAYMENT OF 5% OF AMOUNT FOR THE SERVICE S. THERE IS NO ENQUIRY WITH REFERENCE TO THE BROKERS ALSO. EVEN THOUGH THE C IT(A)S ORDER INDICATES THAT ONE M/S. G.R. PANDYA SHARE BROKING LTD. AND IT S DIRECTOR SHRI. NARENDRA SHAH HAS ADMITTED PROVIDING SUCH SERVICES AT 5%, IT IS N OT ON CIT(A) IN FACT ADMITS THAT THE NAMES OF SUCH PARTIES HAVE NOT BEEN STA TED IN THE ASSESSMENT ORDER BUT THIS IS ONLY A PRESUMPTION OF THE CIT(A) THA T SIMILAR AMOUNTS WOULD HAVE BEEN PAID WHILE CONFIRMING THE AMOUNT. T HERE IS NO EVIDENCE BEFORE THE A.O. AT THE TIME OF MAKING THE ADDITION. THE ADDITION CAN ONLY MADE ON EITHER ADMISSION OR ON EVIDENCE WHICH IS NOT T HE CASE HERE. SINCE THERE IS NEITHER ANY ADMISSION BY THE ASSESSEE NOR ADMISSION BY ANY BROKER NOR THERE IS EVIDENCE DURING THE SEARCH, ADDITION OF 5% CANNOT BE MADE ON PRESUMPTIONS. IN VIEW OF THIS, ASSESSEES GROUNDS ARE ALLOWE D AND A.O. IS DIRECTED TO DELETE THE ADDITION MADE. RESPECTFULLY FOLLOWING THE ABOVE, SINCE ADDITION IS MADE ON THE BASIS OF PRESUMPTIONS THE SAME CA NNOT BE SUSTAINED. GROUND NO. 2 IS ALLOWED. I .T.A NO.4818/ MUM/2009 KISHORE N PATEL, 7 7. WE SEE NO REASON TO TAKE ANY CONTRARY VIEW THAN TH E VIEW TAKEN BY THE CO- ORDINATE BENCH. WE, ACCORDINGLY ALLOW GROUND NO.2. 8. IN DEFERENCE TO THE VIEW SO TAKEN BY CO-ORDINATE BENCHES, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO DELETE IMPUGNED ADDITION OF ` .4,13,494. 9. GROUND NO.2 IS THUS ALLOWED. 10. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2011. SD/- (D.MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 31 ST MAY, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),VII, MUMBAI 4. COMMISSIONER OF INCOME TAX, C-IV , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH G, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI