Smt. Rachna Sachin Jain, Ahmedabad V. The Income Tax Officer, Ward-10(3), Ahmedabad

ITA 502/AHD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9067 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RICHHA RASTOGI
• Keywords: Bogus purchase; Income from undisclosed sources; Principle of natural justice; Accommodation entries; Reason to believe; Borrowed satisfaction; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 501 & 502/AHD/2016 (ASSESSMENT YEAR: 2008-09) SMT. SUNITA JAIN, 30, PRARTHNA VIHAR BUNGLOWS, NR. AMBAWADI POST VISTAR, AMBAWADI, AHMEDABAD PAN NO.ABFPJ5435N & SMT. RACHNA SACHIN JAIN 30, PRARTHNA VIHAR BUNGLOWS, NR. AMBAWADI POST VISTAR, AMBAWADI, AHMEDABAD PAN NO.AEJPJ8706R V/S INCOME TAX OFFICER, WARD- 10 (3), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.P. HEMANI, AR RESPONDENT BY : MS. RICHHA RASTOGI, SR. D.R. ( )/ ORDER DATE OF HEARING : 07 -03-201 7 DATE OF PRONOUNCEMENT : 09 -03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 2 1. ITA NOS. 501 & 502/AHD/2016 ARE APPEALS BY TWO DIFF ERENT APPELLANTS PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CI T(A)-5, AHMEDABAD DATED 11.12.2015 PERTAINING TO A.Y. 2008-09. 2. SINCE THE FACTS INVOLVED IN BOTH THE APPEALS ARE ID ENTICAL, THEREFORE, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COM MON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BOTH THE APPEALS ARE LATE BY 12 DAYS. THE APPELLANT S HAVE FILED AFFIDAVIT STATING THE FACTS CAUSING THE DELAY IN FILING OF TH E APPEAL. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE FACTS MENTIONED IN THE RESPECTIVE AFFIDAVITS, WE ARE OF THE OPINION THAT THE APPELLANTS WERE PREV ENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NOT FILING THE APPEALS ON TIME. THE DELAY IS CONDONED. 4. AS MENTIONED ELSEWHERE, SINCE THE FACTS ARE IDENTIC AL, WE HEARD THE REPRESENTATIVES OF BOTH SIDES ON THE FACTS OF ITA N O. 501/AHD/2016. WITH GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE JURIS DICTION OF THE A.O. FOR RE- OPENING THE ASSESSMENT U/S. 147 OF THE ACT. THE OTH ER GROUNDS ARE ON MERITS OF THE CASE WHICH RELATE TO THE TREATMENT OF GAINS ARISING OUT OF THE SALE OF SHARES AS INCOME FROM UNDISCLOSED SOURCES. 5. BRIEFLY STATED, ON THE BASIS OF THE INFORMATION REC EIVED BY THE A.O. IN RESPECT OF SOME SEARCH OPERATION CONDUCTED IN THE C ASE OF M/S MAHASAGAR SECURITIES PVT. LTD. THE A.O. CAME TO KNOW THAT THE ASSESSEE HAS PURCHASED ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 3 CERTAIN SHARES FROM MAHASAGAR SECURITIES GROUP WHIC H WAS ENGAGED IN ISSUE OF BOGUS PURCHASE BILLS FOR ACCOMMODATION. THE A.O. ACCORDINGLY RE-OPENED THE ASSESSMENT U/S. 147 OF THE ACT BY ISSUING NOTIC E U/S. 148 OF THE ACT AFTER RECORDING THE REASONS AND OPENING THE NECESSA RY APPROVAL U/S. 151 OF THE ACT. 6. THE REASONS RECORDED BY THE A.O. READ AS UNDER:- AS PER THE INFORMATION RECEIVED FROM INVESTIGATION WING, MUMBA I, THE ASSESSEE HAS INVOLVED PURCHASE OF CERTAIN SHARES AMOUNTING TO RS.2,30 F 059/- FROM M/S. MAHASAGAR SECURITIES GROUP CO. WHICH WAS REVEALED THAT MAHASAGAR GROUP IS ENGAGED IN ISSUE OF BOGUS PURCHASE BILLS FOR ACCOMMODATION. THEREFORE, I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT TO THE EXT ENT OF BOGUS PURCHASES EXCEEDING RS.ONE LAC FOR THE PERIOD RELEVANT TO A.Y . 2008-09. 3. YOU ARE, THEREFORE, REQUESTED TO CO-OPERATE IN T HE PROCEEDINGS AND PRODUCE OR CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE AT ABOV E MENTIONED ADDRESS ON 11/11/2013 THE ACCOUNTS AND/OR DOCUMENTS AS THAT MA Y BE NECESSARY TO PRODUCE IN SUPPORT OF YOUR EXPLANATION. 7. A CAREFUL READING OF THE AFORE-STATED REASONS FOR R EOPENING OF THE ASSESSMENT SHOWS THAT THE ASSESSMENT HAS BEEN REOPE NED MERELY ON THE INFORMATION RECEIVED FROM INVESTIGATION WING. 8. THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT HA D THE OCCASION TO CONSIDER AN IDENTICAL ISSUE IN THE CASE OF HARIKISH AN SUNDERLAL VIRMANI VS. DEPUTY COMMISSIONER OF INCOME TAX-CIRCLE-2(1) IN SP ECIAL CIVIL APPLICATION ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 4 NO. 16204 OF 2016. THE SIMILARITY OF THE FACTS CAN BE SEEN FROM THE FOLLOWING:- 2 . REASONS FOR REOPENING OF THE ASSESSMENT - A.Y. 20 09 REG. ASSESSEE HAD E-FILED HIS RETURN OF INCOME FOR THE A SSTT. YEAR 2009-2010 ON 30.09.2010 DECLARING THEREIN TOTAL INCOME OF RS. 2, 09,39,600/-. SUBSEQUENTLY, THE CASE WAS SELECTED IN CASS WITHIN THE MEANING OF SECTION 143(3) OF THE ACT. ASSESSMENT PROCEEDINGS WAS COMPLETED U/S. 143(3) OF THE ACT ON 30/11/2010 DETERMINING THE ASSESSED INCOME AT RS. 2, 09,60,910 /-. 2. THEREAFTER, INFORMATION HAS BEEN RECEIVED FROM T HE PRINCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION), AHMEDABAD VIDE CONFIDEN TIAL LETTER NO.PDIT (LNV)/AHD/CCM/DISSEMINATION/15-16 DATED 08.03.2016. ON PERUSAL FO THE DATA SUPPLIED BY THE OFFICE OF TH E PR. DIRECTOR OF INCOME TAX (INVESTIGATION), AHMEDABAD IT IS NOTICED THAT ASSES SEE CARRIED OUT SHARE TRADING THROUGH THE BROKER, GUINESS SECURITIES LIMITED. AND AS PER THE GUIDELINES OF THE SEBI THE CLIENT CODE OF THE ASSESSEE WITH THE AFORESAID BROKER WAS WW/2647. IN ORDER TO VERIFY THE GENUINENESS OF THE MODIFICATION OF CLIENT CODE IN THE CASE OF THE ASSESSEE, BY APPLYING LAVENSHTEIN DISTANCE ANAL YSIS OR DIGIT EDIT ANALYSIS UTILITY, IN THOSE CASES WHERE THE ASSESSEE IS ORIGI NAL CLIENT AND TRANSACTIONS WERE CARRIED OUT FROM ASSESSEE'S CLIENT CODE THEN S UBSEQUENTLY CLIENT CODE WAS MODIFIED TO OTHER CLIENT THE DETAILS OF SUCH CASE A RE AS UNDER :- OC OCC MC MCC DISTANCE AS PER LAVENSHTEIN DISTANCE ANALYSIS NET REDUCTION IN INCOME DUE TO CCM HARIKISHAN SUNDERLAL VIRMANI WW/2647 BINAY R. CHATURVEDI WW/2108 3 RS. 1,19,848/- IN ORDER TO VERIFY THE GENUINENESS OF THE ERROR, TH E LAVENSHTEIN DISTANCE ANALYSIS OR DIGIT EDIT ANALYSIS UTILITY IS ALSO PRO VIDED BY THE INVESTIGATION WING. THIS UTILITY GIVES A CLEAR INDICATION AS TO WHETHER THE CODE IS WRONGLY TYPED OR IS COMPLETELY REPLACED. IF THE NUMBER OF DIGITS CHANGE D FROM ORIGINAL CODE TO ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 5 MODIFIED CODE IS 1, THEN IT CAN BE REASONABLY ARGUE D THAT THE OCC (ORIGINAL CLIENT CODE) MAY HAVE BEEN TYPED WRONGLY BY MISTAKE . SIMILARLY, IF THE NUMBER OF DIGITS CHANGED IS MORE SAY 4 OR 5,IT CANNOT BE G ENUINE MISTAKE BUT A DELIBERATE CHANGE. TO THIS EXTENT, LEVENSHTEIN DIST ANCE ANALYSIS OR DIGIT EDIT ANALYSIS ACT AS A CLEAR INDICATOR FOR GENUINENESS I N CLIENT CODE MODIFICATION. IN SHORT, THE LONGER THE DISTANCE (I.E. NUMBER OF DIGI TS CHANGED), THE LESSER THE CHANCE OF GENUINENESS. HENCE, THE EDITING OF CLIENT CODE ABOVE IT IS TERMED AS DELIBERATE CHANGE AND ESTABLISHES THE NON-GENUINENE SS AND CONTRIVED NATURE OF THE CODE CHANGE. 4. IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BEL IEVE THAT THE INCOME TO THE EXTENT OF RS.1,19,848/- HAS ESCAPED ASSESSMENT, WHI CH REQUIRED TO BROUGHT UNDER TAX. THEREFORE, THIS CASE IS A FIT THE PROCEE DING U/S. 147 OF THE ACT.' 9. AND ON THE AFOREMENTIONED REASONS, THE HONBLE HIGH COURT OBSERVED AS UNDER:- 5.03. THUS FROM THE REASONS RECORDED, THE REOPENING OF THE ASSESSMENT IS ON THE INFORMATION / DATA SUPPLIED BY THE OFFICE OF THE PR INCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION), AHMEDABAD AND THE INFORMATION RECE IVED FROM THE PRINCIPAL DIRECTOR OF INCOME TAX (INVESTIGATION), AHMEDABAD V IDE HIS CONFIDENTIAL LETTER DATED 8/3/2016. FROM THE INFORMATION RECEIVED, IT A PPEARS THAT THOUGH THE CLIENT CODE OF THE ASSESSEE WITH THE BROKER - GUINNESS SEC URITIES LIMITED WAS WW/2647, MODIFIED CLIENT CODE WAS FOUND TO BE WW/2108 AND TH EREFORE, TO VERIFY THE GENUINENESS OF THE MODIFICATION OF THE CLIENT CODE, BY APPLYING LAVENSHTEIN DISTANCE ANALYSIS OR DIGIT EDIT ANALYSIS UTILITY, D ISTANCE WAS FOUND TO BE 3 AND THEREFORE, IT IS BELIEVED THAT THE CODE IS NOT WRON GLY TYPED AND IT IS TERMED AS DELIBERATE CHANGE AND ESTABLISHING NON-GENUINENESS AND CONTRIVED NATURE OF THE CODE CHANGE. FROM THE REASONS RECORDED, IT DOES NOT APPEAR THAT VERIFICATION OF THE MATERIAL ON RECORD THERE IS INDEPENDENT FORMATI ON OF OPINION BY THE A.O. AND THAT ANY INCOME HAS ESCAPED ASSESSMENT DUE TO ANY F AILURE ON THE PART OF THE ASSESSEE IN NOT DISCLOSING TRULY AND CORRECT FACTS/ MATERIAL NECESSARY FOR ASSESSMENT. FROM THE REASONS RECORDED, IT APPEARS T HAT THE IMPUGNED REOPENING PROCEEDINGS ARE ON THE BORROWED SATISFACTION. NO IN DEPENDENT OPINION IS FORMED. ON THE PLAIN READING OF THE REASONS RECORDED WHAT E MERGES IS THAT THE A.O. ON CONSIDERING THE INFORMATION RECEIVED FROM THE PRINC IPAL DIRECTOR OF INCOME TAX ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 6 (INVESTIGATION), AHMEDABAD, REASSESSMENT PROCEEDING S HAVE BEEN INITIATED ON THE GROUND THAT THE INCOME ESCAPED ASSESSMENT. HOWE VER, THERE IS NO ASSERTION REGARDING THE BASIS ON WHICH MATERIAL ON RECORD, HE HAS COME TO SUCH CONCLUSION. THEREFORE, THE MATERIAL ON THE BASIS OF WHICH THE A .O. SEEKS TO ASSUME THE JURISDICTION UNDER SECTION 147 IF THE ACT IS THE IN FORMATION RECEIVED FROM THE EXTERNAL SOURCE VIZ. THE PRINCIPAL DIRECTOR OF INCO ME TAX (INVESTIGATION), AHMEDABAD. IT CANNOT BE DISPUTED THAT ON THE BASIS OF THE INFORMATION RECEIVED FROM ANOTHER AGENCY, THERE CANNOT BE ANY REASSESSME NT PROCEEDINGS. HOWEVER, AFTER CONSIDERING THE INFORMATION / MATERIAL RECEIV ED FROM OTHER SOURCE, A.O. IS REQUIRED TO CONSIDER THE MATERIAL ON RECORD IN CASE OF THE ASSESSEE AND THEREAFTER IS REQUIRED TO FORM AN INDEPENDENT OPINION ON THE B ASIS OF THE MATERIAL ON RECORD THAT THE INCOME HAS ESCAPED ASSESSMENT. WITHOUT FOR MING SUCH AN OPINION, SOLELY AND MECHANICALLY RELYING UPON THE INFORMATIO N RECEIVED FROM OTHER SOURCE, THERE CANNOT BE ANY REASSESSMENT FOR THE VERIFICATI ON. 10. CONSIDERING THE SIMILARITY OF THE FACTS OF THE CASE IN HAND, THE ASSUMPTION OF THE JURISDICTION TO REOPEN THE ASSESSMENT IN EXE RCISE OF POWER U/S. 147 OF THE ACT IS BAD IN LAW AND CONTRARY TO THE PROVIS IONS OF SECTION 147 OF THE ACT. THE IMPUGNED RE-ASSESSMENT PROCEEDINGS DESERVE TO BE QUASHED AND SET ASIDE. ACCORDINGLY, THE IMPUGNED NOTICE ISSUED U/S. 148 OF THE ACT AND REOPENING OF THE PROCEEDINGS FOR A.Y. 2008-09 CANNO T SUSTAIN AND THE SAME DESERVE TO BE QUASHED AND SET ASIDE AND ARE HEREBY QUASHED AND SET ASIDE. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 11. FOR THE SAKE OF COMPLETENESS OF THE ADJUDICATION, E VEN ON MERITS OF THE CASE, THE ADDITIONS DO NOT SURVIVE. A PERUSAL OF TH E ORDERS OF THE AUTHORITIES BELOW SHOWS THAT THE CLAIM OF CAPITAL GAINS WAS DEN IED BY THE REVENUE AUTHORITIES ON THE STRENGTH OF THE STATEMENT OF SHR I MUKESH M. CHOKSI AND THE MATERIALS FOUND FROM THE THIRD PARTY I.E. BOOKS ETC. IN THE CASE OF M/S. MAHASAGAR SECURITIES GROUP AND MUKESH M. CHOKSI. TH E REVENUE ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 7 AUTHORITIES WERE OF THE STRONG BELIEF SHRI MUKESH M . CHOKSI WAS PROVIDING ACCOMMODATIONS ENTRIES BY ISSUING BOGUS BILLS OF SH ARE PURCHASES OF COMPANIES WHICH WERE NOT LISTED ON THE STOCK EXCHAN GES AND, THEREFORE, THE CAPITAL GAINS DISCUSSED BY THE ASSESSEE ARE THE OUTCOME OF FRAUDULENT TRANSACTIONS AND CANNOT BE ACCEPTED AS SUCH. ACCORD INGLY, THE GAINS WERE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. 12. THE LD. COUNSEL FOR THE ASSESSEE(S) VEHEMENTLY STAT ED THAT DENIAL OF CROSS- EXAMINATION AND RELYING ON A THIRD PARTYS STATEMEN T WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE(S) AND ALSO BY NOT PROV IDING THE COPY OF THE STATEMENT HAS VITIATED THE ENTIRE ASSESSMENT ORDER. IT IS THE SAY OF THE COUNSEL THAT DENIAL OF NATURAL JUSTICE CANNOT BE CO NSIDERED IN FRAMING THE ASSESSMENT ORDER. THE COUNSEL FOR THE ASSESSEE CON TINUED BY STATING THAT THE SHARES WERE PURCHASED THROUGH BROKERS AND THE S AME WERE ALSO SOLD THROUGH BROKERS. IF THE BROKERS TURNED OUT TO BE SC AMSTER, THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THE SAME. 13. PER CONTRA, THE DR STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. IT IS THE SAY OF THE DR THAT THE ASSE SSMENT IS NOT MERELY BASED UPON THE STATEMENT OF SHRI MUKESH CHOKSI, BUT ALSO ON THE FACT THAT THE ENTIRE TRANSACTIONS OF THE ASSESSEE WERE BOGUS. 14. THE ENTIRE ASSESSMENT IS BASED UPON THE STATEMENT O F SHRI MUKESH CHOKSI. IT IS AN UNDISPUTED FACT THAT NEITHER A COPY OF THE STATEMENT WAS SUPPLIED TO THE ASSESSEE NOR ANY OPPORTUNITY OF CROSS-EXAMINATI ON WAS GIVEN BY THE ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 8 ASSESSING OFFICER/CIT(A). THE HONBLE SUPREME COUR T IN THE 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 TH E DEALERS WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT BE IN THE POSSESSION O F THE APPELLANT THEMSELVES TO EXPLAIN AS TO WHY THEIR EX FACTORY PRICES REMAIN ST ATIC. 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), WE FIND NO R EASON TO DISTURB THE COMMISSIONERS ORDERS. 15. THE HONBLE 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 THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 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 STATEM ENTS GIVEN BY THE AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDIC ATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT 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 TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FR OM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N THE PRICE LIST AS MAINTAINED AT THE DEPOT TO DETERMINE THE PRICE FOR THE PURPOSE OF LEVY OF EXCISE DUTY. WHETHER THE GOODS WERE, IN FACT, SOLD TO THE SAID D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD B E THE SUBJECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING AUTHORITY TO PRESUPPOSE ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 9 AS TO WHAT COULD BE THE SUBJECT MATTER OF THE CROSS -EXAMINATION AND MAKE THE REMARKS AS MENTIONED ABOVE. WE MAY ALSO POINT OUT T HAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S 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 WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEM ENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL. 16. ON THE STRENGTH OF THE AFOREMENTIONED DECISION OF T HE HONBLE SUPREME COURT, THE ASSESSMENT ORDER HAS TO BE QUASHED. 17. EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AUTHOR ITIES BELOW CANNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION W AS PAID WHEN THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE COMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHAR ES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COULD S UGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WIT H THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF T HE 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 TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI M AY HAVE BEEN ITA NOS. 501 & 502/AHD/2016 . A.Y. 2008-0 9 10 PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS W ERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 18. IN THE LIGHT OF THE DECISIONS OF THE HONBLE SUPREM E COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING T HE FACTS IN TOTALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PURCHASE TRANSACTIONS I N SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE DEMAT ACCOUNT. 19. ACCORDINGLY, WE DIRECT THE A.O. TO TREAT THE GAINS ARISING OUT OF THE SALE OF SHARES UNDER THE HEAD CAPITAL GAINS- SHORT TERM O R LONG TERM AS THE CASE MAY BE. THE OTHER GRIEVANCE OF THE ASSESSEE BE COMES INFRUCTUOUS. 20. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09 - 03- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 09 /03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT.