Varsha Dudheria , Bangalore V. Deputy Commissioner of Income Tax Circle-7(1)(2), Bangalore

ITA 509/BANG/2019

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1155 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 12-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Revision of order; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Difference of opinion; Accommodation entries; Change of opinion; Reassessment proceedings; Set aside; Capital Gains
• Section: 147; 68; 148; 37; 263; 144; 69C; 143(3); 143(1); 143(2); 13

Judgement Text

ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA Nos.507 to 510/Bang/2019 Assessment Years: 2012-13 to 2015-16 Varsha Dudheria 66, Navniketan, K.R. Road Basavanagudi Bangalore 560 004 PAN NO : Vs. Deputy Commissioner of Income-tax Circle-7(1)(2) Bengaluru APPELLANT RESPONDENT Appellant by : Shri K.R. Pradeep, A.R. Miss Girija G.P., A.Rs Respondent by : Shri K.R. Narayana, D.R. Date of Hearing : 25.08.2022 Date of Pronouncement : 01.09.2022 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: These appeals filed by assessee are directed against different orders of CIT(A) dated 7.1.2019 for the assessment year 2012-13 to 2015-16. Since grounds in these appeals are common in nature, these are heard together and dispose of in common order for the sake of convenience. The assessee’s grounds are as follows:- 1. “That the order of the authorities below in so far as it is against the assessee is against the law, facts, circumstances, jurisdiction, natural justice, equity all other known principles of law. 2. That the total income and total tax computed is hereby disputed. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 2 of 17 3. The authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 4. That the notice, initiation and all subsequent proceedings u/s 148 is bad in law, is without jurisdiction, barred by limitation and requires to be cancelled. 5. The notice u/s 148 and service thereof is bad in law and the reassessment requires to be cancelled. 6. The overlapping issue of notices u/s 148 dt.30.03.2017 & dt.31.03.2017 renders the entire proceeding bad in law. 7. The conditions precedent to justify the reopening of the assessment u/s 147 of the Act being absent, the reopening of the assessment is bad in law and the reassessment requires to be cancelled. 8. That the authorities below erred in framing order under section 144 of the Act without following the prescribed procedure under law. • 9. That the order u/s 144 r.w.s.147 of the Act is bad in law, as the appellant had disclosed the material facts fully and truly necessary for assessment and there is no new or fresh information or evidence warranting reopening of the assessment. 10. That the entire reassessment proceedings violates the procedure prescribed by the Supreme Court in 259 ITR 19 for 148 proceedings. 11. The reassessment proceedings are bad as it is on a change of opinion on the same set of facts already disclosed without there being any new evidence or information. 12. The reasons / findings of the authorities below are unsustainable and untenable in law as the same is contrary to the facts emerging from the record. 13. That the Learned authorities below erred in relying on sworn statements provided alongwith show cause notice dt.26.09.2017 of persons namely Shri Arnit Saraogi, Shri Sajjan Kedia, Shri Soumen Sen, Shri Jagdish Prasad Purojit and Shri Dhruv Narayan Jha without providing opportunity of cross examination inspite of request by the assessee. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 3 of 17 14. That the Learned authorities below erred in not providing complete details before calling for objections from the assessee. 15. That the Learned authorities below erred in relying on statements without providing opportunity to cross examine. 16. That the Learned authorities below erred in relying on irrelevant material while ignoring the relevant material. 17. That the Learned authorities below erred in making addition of Rs.1,99,52,625/- u/s 68 of the Act. 18. That the Learned authorities below erred in treating the capital gains declared by the assessee from transfer of shares of M/s.Blue Circle Services Ltd of Rs. 1,99,52,625/- u/s 68 of the IT Act. 19. That the Learned authorities below erred in resorting to section 68 of the Act. 20. That the Learned authorities below erred in refusing to apply the beneficial treatment provided under the Act of the Capital gains earned by the assessee from the transfer of shares in M/s. Blue Circle Services Ltd of Rs. 1,99,52,625/-. 21. That the Learned authorities below erred in making addition of Rs.5,98,578/- u/s 69C of the Act without adducing any evidence in support of the same. 22. That the Learned authorities below erred in estimating 3% of capital gains as the commission paid u/s 69C of the Act merely on surmise. 23. The appellant denies the liabilities for interest u/s 234B, 234C & 234D of the Act. Further prays that the interest if any should be levied only on returned income. 24. The appellant denies the liability for interest u/s 234D of the Act. The levy of. interest u/s 234D is against the express provisions of law. 25. No opportunity has been given before levy of interest u/s 234B, 234C and 234D of the Act. 26. Without prejudice to the appellant's right of seeking waiver before appropriate authority, the appellant begs for consequential relief in the levy of interest u/s 234B, 234C and 234D of the Act. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 4 of 17 27. For the above and other grounds and reasons which may be submitted during the course of hearing of the appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered.” 2. Facts of the case are that the assessee filed its return of income for the Assessment Year 2012-13 on 30/07/2012 declaring total income of Rs. 33,17,770/-. The return of income was processed under section 143(1) of the Income-tax Act,1961 ['the Act' for short]. Based on the information and after recording the reasons, the case was reopened for scrutiny under section 147 of the Act and notice u/s 148 of the Act dated 31/03/ 2017 has been issued after getting approval from the Additional Commissioner of Income Tax, Range 7(1), Bangalore and properly served on the assessee on the same date. The assessee filed a letter dated 28/09/2017 stating that return filed on 30/07/2012 may be considered as return in response to notice u/ s 148 of the Act. The notice u/s 143(2) rws 147 of the Act was issued on 24/10/2017 and served on the assessee along with copy of reasons for reopening as assessee requested reasons for reopening in the year 2014-15 vide letter dated 10/10/2017. As the AO recorded consolidated reasons for reopening so providing reasons for one year will suffices for other years also. Even though assessee has not requested reasons same has been provided to assessee. In these cases, assessments were framed u/s 144 r.w.s. 147 of the Act by DCIT, Circle, 7(1)(2), Bengaluru for the assessment years 2012-13 to 2014-15. The details of assessment orders are as follows:- AYs Taxable Income Assessed Income by Demand raised Date of Order u/s Date of Service as Date of Filing of appeal Declared the AO 144 r.w.s per 147 Form-35 2012-13 33,17,770 2,38,68,968 1,07,66,490 27.12.2017 30.12.2017 24.01.2018 2013-14 19,77, 560 2,68,15,756 1,27,00,958 27.12 .2017 27.12.2017 24.01.2018 2014-15 26,78,350 .6,14,01,351 3,16,24,990 27.12.2017 30.12.2017 24.01.2018 ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 5 of 17 3. On appeal by the assessee before Ld. CIT(A), the Ld. CIT(A) observed that the AO has analyzed the entire chain of activities leading to generation of bogus LTCG and has discussed the same cogently in the assessment order. As already mentioned, the modus operandi adopted was purchase of shares at a very nominal price by the beneficiary of predetermined penny stock company where the price of the shares of the penny stock companies, are rigged and are raised subsequently through circular trading. These operators provide accommodation entries for bogus LTCG and arrange the same using the scrips of these penny stock companies. The AO has issued a detailed show cause notice to the assessee giving a complete picture of the modus operandi and giving reasons as to why the claim of capital gain by the assessee was not genuine. The response of the assessee to the show cause notice has been considered by the AO and the reasons for not accepting the same have been advanced in the order. The assessee has been confronted about the findings and observations by way of recording the statement of the father of the assessee u/s 131. The AO has recorded that the rise in share value of these companies is totally disproportionate to their financial profile and market standing. Therefore, the AO brought to tax LTCG claimed at Rs. 1,99,52,625/-, Rs 2,41,14,754/- and Rs 5,70,12,623/- respectively for AYs 2012-13, 2013-14 & 2014-15 u/s 68 of the Act. Considering all the aspects in the case, the decision of the AO was upheld by the Ld. CIT(A). 4. Against this assessee is in appeal before us. The Ld. A.R. relied on earlier order of the Tribunal in the case of Sarita Dudheria in ITA No.882/Bang/2020 dated 15.3.2022, wherein the Tribunal confirmed the reopening of assessment. However, on merit remitted the issue to the file of AO to re-examine the case of the assessee afresh. He submitted that similar direction may be given in these appeals also. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 6 of 17 4.1 On the other hand, Ld. D.R. submitted that issue may not be remitted to the AO for fresh consideration in view of the judgement of Hon’ble Kolkata High Court in the case of PCIT Vs. Swathi Bajaj and others in ITA Nos.6 of 2022 dated 14.6.2022 and submitted that the assessee has not shown any prejudice caused to the assessee for not giving opportunity of cross examination of the parties whose statements are relied upon and more so, all the documents relied by the AO are already in public domain and need not be confronted to the assessee. 5. We have heard the rival submissions and perused the materials available on record. The main contention of Ld. D.R. is that the issue may not be remitted back to the AO for fresh consideration in the light of earlier order of Tribunal in ITA No.380/Bang/2022 dated 15.3.2022. It was submitted by Ld. D.R. that on earlier occasion the Tribunal is not having the benefit of considering the judgement of Hon’ble Kolkata High Court in the case of Swathi Bajaj & Others cited (supra). Now there was a judgement in the case of Swathi Bajaj cited (supra). The appeals of the present assessee may not be set aside to AO for reconsideration. In our opinion, the issue involved in the case of Saritha Dudheria cited (supra) and the issue in the present appeals are the same i.e. claiming exemption u/s 10(38) of the Act in respect of profit earned from sale of shares in Blue Circle Services Ltd. and PSIT Infrastructure & Services Ltd. The Ld. D.R. sought for confirming the order of the AO placing reliance on the decision of Kolkata High Court in Principal CIT Vs. Swati Bajaj & Others cited (supra) and made elaborate reference to the portions of the judgement particularly in para 53 to para 73. The above judgement in the case of Swathi Bajaj cited (supra) is distinguishable as below:- ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 7 of 17 5.1(i) The subject matter in the matters before Calcutta High Court (Cal HC) did not involve the transactions in the case of the scrips Blue Circle Services Ltd and PSIT Infrastructure & Services Ltd, thus factually the case before Calcutta High Court and the impugned case are materially different. (ii) The Calcutta High Court in para 4 and para 63 has made elaborate reference to the report of the Directorate of Investigation Kolkata dated 27.04.2015 and 03.07.2015 whereas in the present case since reasons have not been furnished, it is not clear as to what was the material before AO for issue of notice u/s 148. (iii) The case before Calcutta High Court was regular assessment and revision u/s 263 whereas the case herein is reopening u/s 148 and non-adherance to the procedure prescribed by Hon’ble Supreme Court in GKN Driveshaft case. (iv) In the assessment order in para 3 it is mentioned that the AO had received information from Directorate of Income Tax (I&CI) and DGIT(Inv)-Kolkata based on which survey was conducted in the assessee's premises on 12.05.2015 and 20.09.2016. Ld. A.R. stated that the factual matrix obtaining in this case is different from that was before Calcutta High Court . Further there was nothing incriminating found against the assessee in the aforesaid survey. When the survey was conducted in the assessee's premises itself there is no need to rely on the general report of the DGIT(Inv),Kolkata. (v) The Calcutta High Court has said that the Investigation report need not be furnished to the assessee and further in para 63 page 100 made a reference to recommendation of SIT on Black money dt.27.04.2015, which was placed in the public domain. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 8 of 17 The conjoint reading of para 4 and para 63 gives rise to a confusion and overlapping reference to DGIT report and SIT Report. Even though the Calcutta High Court has said that copy of the report need not be furnished still in para 59 page 99 it is stated as extracted hereunder: "59. We are conscious of the fact that there may be exceptions however nothing has been brought before us to show that there was an exception in any of these appeals heard by us...." 5.2 Thus factually Calcutta High Court with the above observation has carved out the cases before it as separate from other cases and thus the decision of the Calcutta High Court has no value as a precedent being peculiar to the case before it. 5.3 The Calcutta High Court has said there is no need to furnish the material based on which the AO has made the addition and it has also held that there is no need for examination/cross examination. While doing so, the Calcutta High Court could not consider the decision of Hon’ble Supreme Court in Suraj Mall Mohta & Co. vs. Visvanatha Sastri & Anr. in 26 ITR 1: "When an assessment on escaped or evaded income is made under the provisions of s. 34 of the Indian IT Act, all the provisions for arriving at the assessment provided under s. 23(3) come into operation and the assessment has to be made on all relevant material and on evidence and the assessee ordinarily has the fullest right to inspect the records and all documents and materials that are to be used against him. Under the provisions of s. 37 of the Indian IT Act the proceedings before the ITO are judicial proceedings and all the incidents of such judicial proceedings have to be observed before the result is arrived at. In other words, the assessee would have a - right to inspect the record and all relevant documents before he is called upon to lead evidence in rebuttal." 5.4 Thus, the procedure outlined by the Hon’ble Supreme Court is binding on all Courts, Tribunals and authorities in India including Calcutta High Court as per Article 141 of the ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 9 of 17 Constitution, however it is seen that the said decision has not been considered by the Calcutta High Court and to that extent the decision of Calcutta High Court is at variance with decision of Hon’ble Supreme Court. Hence Calcutta High Court decision cannot be relied on. 5.5 The ratio laid down by the Hon’ble Supreme Court in Kishinchand chellaram (125 ITR 713) and Andaman Timber Industries (281 CTR 241) though reference has been made in page 50 para 23 of the Calcutta High Court , the Calcutta High Court has not discussed the binding ratio of the above decisions and has charted a ratio different from that of the Hon’ble Supreme court. 5.6 The Calcutta High Court was considering the decision of the ITAT wherein the entire addition was deleted and the assessment was thus vacated whereas in the 'present case the issue is about applicability of 148 of the Act, non-furnishing of reasons and also a case of best judgment assessment u/s 144 of the Act, wherein the assessee was not given an opportunity as required under law. 5.7 The Calcutta High Court decision being a non-jurisdictional one is not binding in the impugned case especially when it is contrary to the decision of the Hon’ble Supreme Court in GKN Driveshaft- 259 ITR 19 and Suraj Mall Mohta 26 ITR 1. Moreover, Calcutta High Court had no occasion to consider cases involving reopening/reassessment. 5.8 The Ld. A.R. stated that great prejudice is caused to the assessee by not following the established principles of law and fastening huge tax liability. If opportunity as required in law is not ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 10 of 17 given assessee will not be in a position to offer its objections and also discharge onus if any. 5.9 The Ld. A.R. lastly stated that the decision of Calcutta High Court is contrary to decision of jurisdictional High Court in Suresh Kumar Kothari (111.1F) vs ITO in WP' 39373/2014 dt. 29.01.2015. When the decision of jurisdictional High Court and non- jurisdictional High Court is staring on a given issue, the decision of the jurisdictional High Court would bind on the Tribunal and authorities in the state in which such a jurisdictional High Court decision is given. Hence, Ld. A.R. alleged that Calcutta High Court decision is not applicable. 6. Further, there is a binding decision of jurisdictional High Court in the case of Sri Suresh Kumar Kothari (HUF) in WP No.39373/2014 (T-IT) dated 29.1.2015 wherein it was held as under: 1. “Facts leading to this writ petition briefly stated are, that petitioner submitted his return of income for the assessment year 2007-08 on 22.05.2007 declaring his income at Rs.2,14,592/-. The said return was accepted. Subsequently, notice under Section 148 of the Act was issued on 30.06.2014 For re-opening the assessment. In response, petitioner requested the respondent that the return filed earlier could be treated as return in response to the notice. Thereafter, respondent concluded the assessment on 30.06.2014 by adding a sum of Rs.6,34,645/- which is stated to be the amount pertaining to certain shares purchased by the petitioner out of the income that had allegedly escaped assessment. Accordingly, tax and interest has been levied by the respondent. It is this order that is challenged in this writ petition. 3. Learned Counsel for the petitioner invites the attention of the court to the representation/application filed by him on 31.01.2014 before the respondent requesting to issue copy of the sworn statement of one Mr. Mukesh Choksi on the basis whereof, proceedings were re-opened. It transpires that a ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 11 of 17 search had been conducted by the income tax authorities at Mumbai on M /s. Mahasagar Securities and Mukesh Choksi Group. At that time,, Mr. Mukesh Choksi had admitted to have made accommodation entries in his books to enable the clients to declare speculation profit/loss, shorter gains, etc., and had identified the petitioner herein and certain others as some of the beneficiaries of the fraudulent entries/transactions by giving a sworn statement in that regard and it is based on the said sworn statement of Mukesh Choksi, respondent has re- opened the proceedings. It is in this background, petitioner had made a request to the respondent on 31.01.2014 to provide a copy of the sworn statement, so that petitioner could take further course of action. 4. It is not in dispute that petitioner was not furnished with the copy of the statement said to he.ve been made by Mukesh Choksi. Petitioner was not aware of the contents of the said statement. However, he filed objections contending inter alia that it was not known how a statement made by third party could be made applicable and made basis for the proceedings that were sought to be initiated. He also points out by way of objection that in dlr.: absence of specific allegations made against the petitioner in the so-called sworn statement, the same could not have been made basis to pass the assessment order against the petitioner. 5. Despite such objections raised, respondent has proceeded to pass the impugned order holding that an amount of Rs.6,34,645/- which reflected the sale proceeds of shares- was required to t)-, brought to tax under the head 'Other Sources of Income'. !t is this amount which according to the findings recorded by the respondent was attributed to the petitioner in the so-called sworn statement given by Mukesh Choksi. 6. T hu s , it is ap p ar e nt th at w i t h out f ur ni s hi ng a c o p y o f th e s t a t e m e n t s t at e d t o h a v e be e n gi v e n by M u k e sh C ho k s i an d w it ho u t n o t i fy i n g t h e pe t it i on e r r e g ar din g b as is of t h e transaction that petitioner is said to have entered into with Mukesh Choksi, respondent has passed the impugned order. The entire basis for the impugned order is the sworn statement of Mukesh Choksi. Unless petitioner is given opportunity to have his say in the matter with regard to the said statement and its contents, it cannot be said that petitioner was given an opportunity' of being heard in the matter. Hence, it has to ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 12 of 17 be held that the impugned order is passed without providing any fair and reasonable opportunity of being heard to the petitioner. 7. In fact, learned Counsel for the petitioner places reliance on the judgment of the Division Bench of the Delhi High Court in the case of Mr. Ashok Mittal Vs Assistant Commissioner of Income lax and another in WP(C) No.1452/2013, wherein also petitioner therein had specifically objected for the assessment proceedings stating that he had no transaction with either Mukesh Choksi or any other related companies, but the Assessing Officer had solely proceeded on the basis of the statement and the list provided without there being any other information or details furnished to the petitioner though petitioner therein had sought for such details. The High Court of Delhi has held that there was absence of fair and reasonable opportunity and s uch an as sess m ent or de r could not be sustained and could be interfer ed w ith un der Ar ticle 226 of the C6nstitution of India. 8 . In t h e l i gh t o f t he f ac t s an d c i r c um sta nc e s as a dv e r t e d t o a bo v e a nd as t h e pe t i t i o ne r ha s be e n d en i e d a n o pp o r t uni t y of f a ir he a r i n g, b y pr o v id ing c op y of t he s t a t e m e n t a nd r e la t e d d e t ai l s r e g ar d i ng t he al l e g e d s h ar e a m o un t , I am o f th e v ie w t ha t t h e m a tt e r r e qu i r e s to b e r e - c on s i d e r e d by t h e r e s po nd e n t by p r o vi di n g f ai r an d r e a s o na b le o p po rt u ni t y o f h e ar i ng t o t h e pe t i t i on e r ar i d b y f u r n i s hi ng t he d e tai l s / c o py o f th e s t a t em e n t b a se d o n w hi c h t he i m pu gn e d as s e s s m e nt o r d e r h as be e n p as s e d. 9. In the r esult, this writ petition is allowed. T he impugned or der is quashed. The matter is remitted for fresh cons ideration in accordance with law and in the light of the obser vations made above. 7. Further, in the case of Sarita Dudheria cited (supra), wherein held as under: “5.1. The Ld.AR challenged the issuance of notice under section 147 of the Act, on the ground that the reasons do not mention about any new/ tangible material/ information against the assessee based on which the Ld.AO had reason to believe to reopen the concluded assessment. It is argued that the materials based on which the assessment has been reopened does not contain the name of assessee and hence irrelevant. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 13 of 17 5.2. We note that no assessment under section 143(3) was passed in the case of assessee for assessment year 2013-14. Hence the argument of the Ld.AR that the issue of notice under section148 amounts to change of opinion cannot be accepted. Explanation 2 to Section 147 clarifies that, following shall be deemed to be cases where income chargeable to tax has escaped assessment namely: a. Where no return of income has been furnished by the assessee and no assessment has been made although: i. His total income, or ii. ithe total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax; b. where a return of income has been furnished by the assessee but no assessment (scrutiny/ best judgment assessment) has been made and it is noticed by the Assessing Officer that the assessee: i. has understated the income; or ii. has claimed excessive loss, deduction, allowance or relief in the return; 5.3. In the present facts of the case assessee falls under situation (b) above. We also place reliance on the decision of Hon'ble Supreme Court in case of ACTT vs. Rajesh Jhaveri Stock Brokers reported in (2007) 291 ITR 500, wherein Hon'ble court held that Section 147 authorises and permits the Ld.AO to assessee or reassess income chargeable to tax if he has reason to believe that income for assessment year has escaped assessment. The word 'reason' in the phrase, 'reason to believe', would mean cause or justification. If the Ld.AO has cause or justification to know or support that income had escaped assessment, it can be said to have reasons to believe that income had escaped assessment. The expression cannot be read to mean that the Ld.AO should have finally ascertained the fact by legal evidence or conclusion. The function of the Ld.AO is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayer. Hon'ble Delhi High Court in case of Central Manganese Ore Co.Ltd. Vs.ITO reported in (1991) 191 ITR 662, observed that, for initiation of action under section /471 - ara -. it stood at the relevant time}, fulfillment of two requisite conditions in that regard is essential as at that stage the final outcome of the proceedings is not relevant. 5.4. In other words, at the initiation stage, what is required is `reason to believe', but not the established fact of escapement of income. We also rely on the decisions of Hon'ble Supreme Court in case of ITO vs. Selected Dalutband Co.Pvt.Ltd., reported in (1996) 2171TR 597 and Raymond Wollen Mills Ltd. vs. ITO reported in (1999) 236 ITR 34. Hon'ble Supreme Court in these cases held that, so long as the ingredients of section 147 are fulfilled, the Ld.AO is free to initiate proceeding under section 147 and failure to take steps under 143(3) will not render the Ld.AO powerless ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 14 of 17 to initiate reassessment proceedings even when intimidation under section 143(1) had been issued. 5.5. In present facts of the case we note that, the Ld.AO received information from investigation wing regarding the company Blue Circles Services Ltd being penny stock. And it is an admitted fact that assessee had sold the shares in Blue Circles Services Ltd and had earned LTCG. Therefore in order to investigate regarding the purchase/sale of shares in Blue Circles Services Ltd., by assessee, the assessment was reopened by the Ld.AO. The decisions by Ld.AR by Hon’ble Courts on challenge of the validity of reopening in the paper book are distinguishable on facts based on the above discussions. We therefore do find any infirmity in the reopening of the assessment. Accordingly grounds 3 – 10 on legal issue stands dismissed. On Merits: 6. Both sides submit that the arguments advanced by both sides are common for all the assessment years under consideration. 6.1. Perusal of assessment order it is observed that Ld.AO carried out detailed investigation/verification in respect of scrips of alleged companies sold by assessee during the year under consideration and found them to be lacking sound financials. Various' queries raised by Icl.A0 has not been answered with supporting cogent and uncontrovertable documents by assessee. Enquiries carried out by Ld.AO reveal these companies to be mere paper companies, without having any activities/business. View taken by Ld.AO was upheld by Ld.CIT(A) against which assessee filed present appeal. 6.2. It is the submission of the Ld.AR that the LTCG earned by assessee on sale of shares in the alleged companies were through recognised stock exchange and banking channels. It is also submitted that both receipt and payments are done through account payee cheques. He thus submitted that the statement of third parties has been relied on for making addition in the hands of assessee. 6.3. Whereas the Ld.Sr.DR submits that the statements and materials are only circumstantial regarding the alleged companies to be shell companies and that these companies were,.-used in providing accommodation entries and that they were many by the persons whose statements were recorded by investigating wing. 6.4. In present facts of the case, the statements recorded of third parties only reveal that the alleged companies involved in providing bogus LTCG/STCG or LTCL/STCL and provide accommodation entries by beneficiaries. We note that the Ld.AO in para 7.11- for AY 2013-14 raised serious doubts on capacity of assessee to purchase shares of these companies in such huge volumes, which has not been satisfactorily/reasonably established by assessee to be genuine. ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 15 of 17 Assessee thus did not establish genuineness of purchase and source of investment of this company during the relevant period. 6.5. Ld.AO upon verifying credentials of these companies and other attending circumstances, observed that alleged companies were included in list of penny stock companies, in enquiries conducted by SEBI/BSE, as well as in Investigation Report issued by Investigation Wing, Kolkata. The Assessee having purchased shares of this company in huge volumes, should have possessed all required documents, as a prudent investor. The Assessee thus did not establish activities/business of companies, financial statements, annual income tax returns etc., in respect of alleged companies. 6.6. In the above list of decisions, relied by the Ld.AR, we note that the Hon'ble Mumbai Tribunal deleted the addition on the basis that the assessee therein established the sale of shares to be genuine and therefore the disallowance of LTCG is unwarranted for. However in the present facts of the case, the Ld. AO has doubted the capacity of assessee in making such huge investment in the alleged companies during the year in which they were purchased. 6.7. The decision of Hon'ble Delhi, Bombay and Madras High Courts is also on distinguishing facts. In those cases, the statements. of third person recorded were direct evidence against the assessed person and cross examination was denied by the revenue. Under such circumstances, Hon’ble Courts held that there was violation of natural justice. 6.8 Therefore in our view, none of the decisions are of any help to assessee on merits in the present facts of the case. The Ld.AR relied heavily on the decision of coordinate bench of this Tribunal in Shri.Lxmipat Dudheria Vs.ACIT in 1TA no.2373 to 2376/ Bang/ 2018 by order dated 09/ 04/ 2019, wherein investment in Bule circles Services Ltd by the assessee therein and the there assessment was reopened which was struck down by this Tribunal. We note that in the decision by this Tribunal nothing is decised on merits but the entire decision was on the validity of reopening where there the assessment order was passed under section144 of the Act. We therefore are of the opinion that the decision is of no rescue to assessee. 6.9. We are conscious of principle laid down by Hon'ble Supreme Court in case of M/s Andaman Timber Industries vs CCE, Kolkata-II, reported in (2015) 127 DTR 241, in support of his contention as well as decision of Hon'ble High Courts relied by the LdA.R. All these decisions lay down that, without opportunity of cross-examination, statements cannot be relied upon against any assessee. However, such right, as held in various decisions by Hon'ble Supreme Court, is not an absolute right and depends on circumstances of the case and the statute concerned, as held in State of J&K Vs. Bakshi Gulam Mohd. AIR 1967 (SC) ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 16 of 17 122, and Nath International Sales Vs. UOI reported in AIR 1992 D81 295. Similar is the view taken by Hon'ble Allahabad High Court in case of In case of Prem Castings Pvt.Ltd. Vs. CIT (Supra). 6.10. At this juncture we referred to decision of T.Devasahaya Nadar V. CIT reported in (1964) 51 I7'R 20 (Mad), wherein, it has been held that; "We are of opinion that it cannot be said as a general proposition of law that any evidence upon which the department might rely should have been subjected to cross-examination. The procedure for assessment is indicated in. section 23 (3) of the Act." 6.11. Further Hon'ble Murnbai Tribunal in case of GTC Industries Ltd. V. Asstt. CIT reported in (1998) 60 TTJ 308 , held that, where statement and report of third parties are only secondary and subordinate material which were used to buttress the main matter connected with the quantum of addition, denial of opportunity to cross examine third parties did not amount to violation of natural justice. 6.12. Therefore, each case has to be decided on facts and circumstances of that case. In our considered opinion, relevant f a c t o r s t o b e c o n s i d e r e d a r e s u r r o u n d i n g c i r c u m s t a n c e s , o b j e c t i v e f a c t s , e v i d e n ce a d d u c e d , p r e s u m p t i o n o f f a c t s b a s e d o n c o m m o n h u m a n e x p e r i e nc e i n l i f e a n d r e a s o n a b l e c o n c l u s i o n s . 6.13 Under such circumstances, the assessee was liable to discharge onus regarding purchase of shares by way of cogent documentary evidences. We note that assessee has not placed anything on record regarding the source of investments and capacity to invest such huge monies during the year in which the investments were made. Be that as it may, we also note that, the assessee having invested huge monies in these alleged companies, has not been able to provide any documents to establish sound financial of these companies and that, the fluctuation in price was market driven. Assessee is therefore directed to provide all relevant documents to establish source of investment and capacity to invest in the alleged companies in the year of investment. Ld.AO shall take all evidences into consideration and then decide the issue as per law. 6.14. A t the outset we also hold that the statements recorded are secondary and subordinate evidenc e, and therefore cross examination is not r elevant. Ld.AO is dir ected to r e-exam ine the case of assessee in the light of aforestated direction in accordance with law . Ne edles s to say that pr oper opportunity shall be granted to as sess ee to re present its cas e as per . A ccordingly we allow grounds on merits r ais ed by ass essee for statistical pu rposes for all the years u nder consideration. In the result, all the three appeals filed by as sessee stands partly allow ed for statistical pu rpos es for all the y ear s un der consideration.” ITA Nos.507 to 510/Bang/2022 Varsha Dudheria, Bangalore Page 17 of 17 7.1 In view of the above discussion, following the earlier order of Tribunal in the case of Sarita Dudheria cited (supra), the issue in dispute relating to the reopening is decided against the assessee. However, on merit, the issue is remitted to the file of AO for fresh consideration on similar directions as in the case of Sarita Dudheria cited (supra) 8. In the result, the appeals of the assessee are partly allowed for statistical purposes. Order pronounced in the open court on 1 st Sept, 2022. Sd/- (N.V. Vasudevan ) Vice President Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 1 st Sept, 2022. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.