ACIT, New Delhi V. Shri Sameer Gupta, New Delhi

ITA 515/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5055 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 30-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Search and seizure; Document seized; Principle of natural justice; Earning of tax free income; Cost of acquisition; Accommodation entries; Block assessment; Retraction; Documents seized
• Section: 143(3); 142(1); 133A; 153A; 133(6); 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MISS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 5 14,515/DEL./2017 ASSTT. YEAR : 2011-12, 2012-13 ACIT CENTRAL CIRCLE-04, ROOM NO. 331, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. SAMEER GUPTA R/O 19/49, PUNJABI BAGH NEW DELHI PAN : AADPG8131D APPELLANT RESPONDENT ASSESSEE BY : MS. RANO JAIN, ADV., SH. AASHISH GOYAL,CA RE VENUE BY : S H. S.S.RANA , CIT . D.R. DATE OF HEARING: 25 0 5 2017 DATE OF PRONOUNCEMENT: 23 0 8 2017 O R D E R PER R.K. PANDA, ACCOUNTANT MEMBER : THE ABOVE TWO APPEALS FILED BY THE REVENUE ARE DIR ECTED AGAINST THE COMMON ORDER DATED 23.11.2016 OF THE CIT(A)-23 NEW DELHI RELATING TO ASSESSMENT YEAR 2011-12 AND 2012-13 RESPECTIVELY. F OR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSE OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO. 514/DEL/2017 FOR AS SESSMENT YEAR 2011-12 AS THE LEAD CASE :- FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAD FILED HIS ORIGINAL RETURN OF INCOME ON 30 TH MARCH, 2012 DECLARING TOTAL INCOME OF RS. 3,92,11,220/-. THE ASSESSEE IS THE MA NAGING DIRECTOR OF M/S. ITA NO.514, 515/DEL/2017 2 JAKSON GROUP OF COMPANIES. A SEARCH AND SEIZURE OPER ATION U/S 132 OF THE IT ACT WAS CARRIED OUT IN JACSON GROUP OF CASES ON 3 RD OCTOBER, 2013. IN RESPONSE TO NOTICE U/S 153A OF THE I.T.ACT, 1961 THE ASSESSE E FILED THE RETURN OF INCOME ON 5 TH JANUARY, 2015 DECLARING TOTAL INCOME OF RS. 3,92,11 ,220/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE AO ASKED THE ASSESSED TO EXPLAIN THE HUGE CAPITAL GAINS FROM SALE OF SHARES AMOUNTING TO RS. 5,62,61,726/- WHICH WAS CLAIMED AS EXEMPT INCOME. H E REFERRED TO THE STATEMENT OF SHRI SUNDEEP GUPTA RECORDED DURING THE COURSE OF SEARCH AT HIS RESIDENCE WHEREIN HE FAILED TO GIVE THE DETAILS OF THESE SHARE PROFITS AND HAD STATED THAT HE HAS NO IDEA ABOUT ANY SHARES BOUGHT OR SOLD BY THEM IN THE LAST 5 TO 6 YEARS. THE ASSESSEE WAS NOT PRESENT IN INDIA DURING THE SEARCH AT HIS RESIDENCE. THE AO FURTHER NOTED THAT WHEN THE SAME QUESTIONS WERE PUT TO SHRI SUNDEEP GUPTA AGAIN DURING THE COURSE OF SEARC H AT THE CORPORATE OFFICE OF HIS GROUP, HIS ANSWERS WERE QUITE DIFFERENT. HE GA VE THE DETAILS OF THE VARIOUS SHARES WHICH HE AND HIS FAMILY MEMBERS HAVE INVESTE D IN LAST FEW YEARS. HE STATED THAT THESE SHARES WERE BOUGHT BY HIM AND HIS FAMILY MEMBERS THROUGH THEIR COMMON FRIEND MR. VIPIN JAIN ON HIS RECOMMENDA TION. HE ALSO GAVE THE ADDRESS OF SHRI VIPIN JAIN. THE ASSESSEE FILED THE DETAILS OF LONG TERM CAPITAL GAIN ON ACCOUNT OF PURCHASE SHARES. 3.1. THE AO NOTED THAT DURING THE SURVEY U/S 133A AT THE PREMISES OF SHRI VIPIN JAIN WITH RESPECT TO THE LONG TERM CAPITAL GAI N BY THE KEY MEMBERS OF THE JAKSON FAMILY, HIS STATEMENT WAS RECORDED U/S 131(1A ) WHICH CLEARLY ESTABLISHED THAT THE ASSESSEE AND JAKSON GROUP TOOK ACCOMMODATION ENTRY IN THE FORM OF LONG TERM CAPITAL GAIN IN SHARES THROUG H SHRI SANJAY JHUNJHUNWALA. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF LONG TERM CAPITAL GAIN SHOULD NOT BE HELD AS ACCOMMODATION EN TRY AND SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSE SSEE FURNISHED DOCUMENTS ITA NO.514, 515/DEL/2017 3 I.E. COPY OF ALLOTMENT LETTERS OF SHARES, COPY OF I NVOICES OF SALE OF SHARES AND DUPLICATE COPY OF CONTRACT NOTES ISSUED BY THE BRO KERS ETC. 4. THE AO REFERED TO THE NOTICES U/S 133(6) WHICH WERE ISSUED TO M/S CLARUS FINANCE & SECURITIES LTD. [NOW KNOWN AS M/S SCAN ST EELS LTD.] AND M/S S.V.ELECTRICALS LTD. [NOW KNOWN AS M/S NIVYAH INFRA STRUCTURE & TELECOM SERVICES LTD.] AND OBSERVED THAT NO REPLIES WERE RE CEIVED TILL DATE. FURTHER FIELD ENQUIRY WAS CONDUCTED BY HIS OFFICE TO CONFIRM THE GENUINENESS OF M/S. S.V. ELECTRICALS LTD. AND IT WAS FOUND THAT NO SUCH COM PANY EXISTED ON THE ADDRESS AVAILABLE ON RECORDS. HE THEREFORE DIRECTED THE ASS ESSEE TO PRODUCE THE DIRECTORS OF THE ABOVE SAID TWO COMPANIES BUT NO CO MPLIANCE HAS BEEN MADE IN THIS REGARD TILL DATE. HE FURTHER NOTED THAT IN RESPONSE TO NOTICE U/S 133(6) TO BSE ASKING FOR DETAILS SUCH AS NAME, ADDRESS, PAN A ND CONTACT NUMBERS OF THE PERSONS WHO HAVE PURCHASED THE SHARES SOLD BY THESE ASSESSES, THEY HAVE GIVEN PART REPLY. 5. THE AO ALSO REFERRED TO THE STATEMENT OF SHRI V IPIN JAIN RECORDED ON 14 TH MARCH, 2016 WHEREIN HE STATED THAT HE HAD NOT ARRAN GED ANY MEETING OF SHRI SANJAY JHUNJHUNWALA, KOLKATA. HE HAD NOT MADE ANY S UGGESTION THAT ANY KIND OF NEGOTIATION COULD BE MADE WITH SHRI JHUNJHUNWALA . THE AO REFERRED TO THE MODUS OPERANDI ADOPTED BY DIFFERENT PERSONS FOR CLA IMING BOGUS LONG TERM CAPITAL GAIN BY PRE-ARRANGED TRADING IN SHARES OF V ARIOUS NON DESCRIPT LISTED COMPANIES AIMING AT AVAILING INCOME TAX-EXEMPT LONG TERM CAPITAL GAINS ON TRADING IN SHARES OF VARIOUS LISTED SCRIPTS. HE OB SERVED THAT DURING THE COURSE OF SEARCH ON KEDIA GROUP OF CASES ON 13.06.2014 CON DUCTED BY DDIT (INV.) UNIT- 3(3), DELHI, STATEMENT OF SHRI R.K.KEDIA WAS RECORD ED WHO DEPOSED ON OATH THAT HE IS AN ENTRY OPERATOR WHO ARRANGES DIFFERENT TYPES OF ACCOMMODATION ENTRIES SUCH AS BOGUS LONG TERM CAPITAL GAINS (LTCG ), SHARE CAPITAL/PREMIUM ETC TO VARIOUS BENEFICIARIES THROUGH VARIOUS ENTRY OPERATORS IN ORDER TO HELP ITA NO.514, 515/DEL/2017 4 BRING UNACCOUNTED MONEY OF DIFFERENT BENEFICIARIES IN THEIR BOOKS IN A MANNER THAT THE BENEFICIARIES DONT HAVE TO PAY ANY TAX ON SUCH MONEY, WHICH THEY WERE OTHERWISE LEGALLY OBLIGED TO PAY. HE NOTED THA T IN THE CASE OF THE ASSESSEE THE TRANSACTIONS WERE CARRIED OUT THROUGH DB (INTERNATIONAL) STOCK BROKERS LIMITED. AS PER THE STATEMENT OF SH. R.K.KE DIA RECORDED DURING THE SEARCH OPERATION, HE HAD STATED THAT DB INTERNATIO NAL IS NOT DOING ANY ACTUAL WORK BUT IS BEING USED FOR PROVIDING LONG TERM (LT) ENTRIES TO VARIOUS BENEFICIARIES. THE COMPANY ARRANGES INVESTMENT IN T HE SHARES OF VARIOUS COMPANY ON BEHALF OF SOME OF THE BENEFICIARIES WHO WANTED TO REAP LTCG IN FUTURE OUT OF THE FUNDS RECEIVED FROM THEM FOR THE PURPOSE. THIS COMPANY IS CONTROLLED AND MANAGED BY TWO ENTRY OPERATORS SH. S .N. DAGA OPERATING FROM CONNAUGHT PLACE, NEW DELHI AND HIS NEPHEW SH. NATWA RLAL DAGA OPERATING FROM MUMBAI HAVING OFFICE AT ANDHERI WEST MUMBAI. 6. THE AO FURTHER OBSERVED THAT IN ITS ORDER VIDE WTM/RKA/ISD/162/2014 DATED 19.12.14, UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF M/S FIRST FINANCIAL SERVICES LTD. SEBI HAS FOUND AND HELD THAT THERE HAS BEEN MA NIPULATIVE TRADING IN THE SHARES/ SCRIPS OF FIRST FINANCIAL SERVICE S LTD. BASED ON HUGE RISE IN TRADED PRICE AND VOLUME OF THE SCRIPS, COMPARED TO THE FINANCIAL S OF THIS COMPANY, PRELIMINARY INVESTIGATIONS OF SEBI HAVE REVEALED TH AT THERE WERE CERTAIN PARTIES RELATED TO THIS ENTITY WHO HELPED IN CONSISTENT RIG GING IN ITS SHARES AND MANY RELATED PARTIES WITH NO CREDITWORTHINESS HAVE HELPE D MANY PREFERENTIAL ALLOTTEES (BENEFICIARIES) REAPING BOGUS LTCG TO HEL P THEM EVADING THEIR TAX LIABILITIES BY PURCHASING SHARES FROM IT AT MANIPUL ATIVELY ELEVATED PRICE AND PROVIDING THEM PROFITABLE EXIT. FURTHER VIDE ITS OR DER NO. WTM/RKA/ISD/31/2015 DATED 20.04.2015 UNDER SECTION 11 AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF M/S FIRST ITA NO.514, 515/DEL/2017 5 FINANCIAL SERVICES LIMITED SEBI CONFIRMED ITS EARLI ER ORDER THAT THERE HAS BEEN MANIPULATIVE TRADING IN THE SHARES / SCRIPS OF FIRS T FINANCIAL SERVICES LTD. IN VIEW OF THE ABOVE THE AO HELD THAT THERE WAS MANIPU LATIVE TRADING IN SHARES / SCRIPS OF M/S FIRST FINANCIAL LIMITED, IN ORDER TO PROVIDE BOGUS LTCG, LTCL, STCG, STCL ETC. TO VARIOUS BENEFICIARIES. THE INVES TMENT IN THE SHARES OF M/S CLARUS FINANCE & SECURITIES LTD. AND M/S S. V. ELEC TRICALS LTD. BY THE ASSESSEE IS A SIMILAR CASE WHERE BOGUS LTCG WAS EARNED BY MANIP ULATIVE TRADING IN THE SHARES OF M/S CLARUS FINANCE & SECURITIES LTD. AND M/S S. V. ELECTRICALS LTD. SERVICES LTD.]. APART FROM THE ABOVE, HE NOTED THA T THERE ARE OTHER INCRIMINATING FEATURES ALSO IN THESE LISTED SCRIPS WHICH FURTHER STRENGTHENS THE ALLEGATION AND OBSERVATION THAT THERE HAVE BEEN MAN IPULATIONS IN TRADING OF THESE SCRIPS IN ORDER TO PROVIDE BOGUS LTCG TO THE ASSESSEE. THE AO LISTED SOME OF SUCH INCRIMINATING FEATURES WHICH ARE AS UN DER : 1). THE TRADING VOLUME OF SHARES DURING THE PERIO D, IN WHICH MANIPULATIONS ARE DONE TO RAISE THE MARKET PRICE, I S EXTREMELY THIN. 2). THE VOLUME OF TRADE IN ALL THESE SCRIPS HAS JU MPED MANIFOLD IMMEDIATELY WHEN THE MARKET PRICES OF THEIR SHARES REACHED AT A MINIMUM THRESHOLD LEVEL SO AS TO RESULT IN LTCG A SSURED TO THE BENEFICIARIES/ASSESSEE. 6.1 HE FURTHER OBSERVED THAT THE FINANCIALS OF M/ S CLARUS FINANCE & SECURITIES LTD. AND M/S S. V. ELECTRICALS LTD. HAVE BEEN VERY WEAK. AS SEBI HAS OBSERVED IN THE CASE OF FIRST FINANCIAL, INVESTMENT IN A COMPANY HAVING SUCH POOR AND MEAGER FINANCIAL FUNDAMENTALS CANNOT PRIMA FACIE BE TERMED AS A RATIONAL INVESTMENT BEHAVIOR. HENCE ACCORDING TO TH E AO IT IS CLEAR THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS OF PROVIN G THE GENUINENESS OF EXEMPT LONG TERM CAPITAL GAIN. FURTHER, NO REGULAR BUSINESS ACTIVITY IS BEING CARRIED OUT BY M/S CLARUS FINANCE & SECURITIES LTD. AND M/S S. V. ELECTRICALS ITA NO.514, 515/DEL/2017 6 LTD. THE INVESTMENT IN THE SHARES OF THESE COMPANIE S BY THE ASSESSEE WAS ONLY WITH A VIEW TO EARN BOGUS EXEMPT LONG TERM CAP ITAL GAIN. ALSO, SH VIPIN JAIN DID NOT PROVIDE ANY BASIS FOR HIS RETRACTION ON THE QUESTION OF ARRANGING ACCOMMODATION ENTRY IN LONG TERM CAPITAL GAIN TO TH E ASSESSEE. HENCE, THE LONG TERM CAPITAL GAIN AMOUNTING TO RS.5,62,61,726/- CLAIMED AS EXEMPT INCOME DURING THE YEAR WAS TREATED BY THE AO AS BO GUS AND HE ACCORDINGLY DISALLOWED THE CLAIM. 7. BEFORE CIT(A) IT WAS SUBMITTED THAT DURING THE C OURSE OF SEARCH PROCEEDINGS NO INCRIMINATING MATERIAL, WHATSOEVER, WAS FOUND WHICH IS EVIDENT FROM THE PUNCHNAMA AND ASSESSMENT ORDER ITS ELF. IT WAS SUBMITTED THAT THE ASSESSEE IS FILING ITS RETURN OF INCOME RE GULARLY. THERE IS NO UNDISCLOSED MONEY, BULLION OR JEWELLERY FOUND DURIN G THE COURSE OF SEARCH. IT WAS SUBMITTED THAT THE ADDITION OF RS. 5,62,61,726/ - ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAIN WAS NOT BASED ON ANY INCRIMI NATING MATERIAL FOUND DURING THE COURSE OF SEARCH. RELYING ON THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 2015 (9) TMI 80 (DELHI HIGH COURT) IT WAS ARGUED THAT IN ABSENCE OF FINDIN G OF ANY INCRIMINATING MATERIAL NO ADDITION CAN BE MADE IN THE ORDER PASS ED U/S 153A / 143(3). 7.1 SO FAR AS THE MERIT OF THE CASE IS CONCERNED , IT WAS ARGUED THAT THE ASSESSEE HAS PROVIDED ALL DETAILS ALONG WITH DOCUME NTS TO ESTABLISH THE GENUINENESS OF SALE OF SHARES AND LONG TERM CAPITAL GAIN EARNED THEREON. IF THE AO WAS NOT SATISFIED WITH THE REPLY GIVEN BY TH E ASSESSED, HE COULD HAVE ASKED FOR OTHER DOCUMENTARY EVIDENCES. HOWEVER, THE AO NEITHER ASKED FOR ANY FURTHER DOCUMENTS NOR POINTED OUT ANY DISCREPAN CIES IN THE DOCUMENTARY EVIDENCES PROVIDED BY THE ASSESSEE IN S UPPORT OF ITS CONTENTION. IT WAS ARGUED THAT LONG TERM CAPITAL GA IN ON SALE OF MUTUAL FUNDS ITA NO.514, 515/DEL/2017 7 AMOUNTING TO RS. 13,13,062/- ADDED BY THE AO AS BOG US LONG TERM CAPITAL GAIN SHOWS THAT THE AO HAS COMPLETELY IGNORED THE B IFURCATION OF LONG TERM CAPITAL GAIN. IT WAS ARGUED THAT EVEN IF THE GENUIN ENESS OF THE SHARE TRANSACTION IS DOUBTED BY THE AO, HE COULD NOT HAVE ADDED THE LONG TERM CAPITAL GAIN ON SALE OF MUTUAL FUNDS. 8. SO FAR AS THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AMOUNTING TO RS. 5,49,48,664/- ON ACCOUNT OF SALE OF 30,000/- SHARES OF M/S. S.V.ELECTRICALS LTD. IS CONCERNED, IT WAS SUBMITTED THAT THE ASSESS EE HAS PURCHASED 30,000/- SHARES OF M/S S.V.ELECTRICALS LTD. ON 1 ST DECEMBER, 2009 AND 700,000/- SHARES CFSL ON 5.12.2009 RESPECTIVELY FOR RS. 30,00,000/-. THESE SHARES WERE SOLD DURING FINANCIAL YEAR 2010-11 FOR RS. 5,81,46,569.75 ON DIFFERENT DATES. ASSESSEE HAS PAID BROKERAGE, SERV ICE TAX, STT, TRANSACTION CHARGES ETC. AND THEREAFTER DETERMINED THE LONG TE RM CAPITAL GAIN AT RS. 5,,49,45,695.27/- AFTER DEDUCTING ALL THE ABOVE EXP ENSES. ASSESSEE SUBMITTED THAT EACH AND EVERY DETAILS OF THE SAID TRANSACTION WAS PROVIDED TO THE A.O. IN A VERY PRECISE MANNER. THE ASSESSEE ARGUED THAT IT HAS PROVIDED THE DETAILED TRANSACTION LEDGER ISSUED BY THE BROKER D.B. INTERNATIONAL STOCK BROKER LTD. REFLECTING THE DETA ILS OF TRANSACTION FROM 01/04/2010 TO 3 RD MARCH 2011. THE COPY OF CONTRACT NOTES ISSUED BY D B INTERNATIONAL STOCK BROKER LTD., BROKER OF THE ASSE SSEE, WHEREIN EACH TRANSACTION EXECUTED BY THE BROKER ON ORDER OF ASSE SSEE AT DIFFERENT DATES AND RATES WAS PROVIDED. THE ASSESSEE HAD ALSO PROVI DED THE COPY OF TRANSACTION STATEMENT ISSUED BY NSDL. IT WAS SUBMIT TED THAT THESE TRANSACTION OF SALE/PURCHASE OF SHARES IS CONFIRME D BY THE BROKER OF THE ASSESSEE VIDE EMAIL SENT BY THE BROKER TO THE A.O. IN THE SAID EMAIL IT WAS STATED THAT THE SALE OF SHARES WAS DONE IN THE NORM AL COURSE OF BUSINESS THROUGH RECOGNISED STOCK EXCHANGE. IT WAS CLARIFIE D THAT THE TRANSACTION WAS ITA NO.514, 515/DEL/2017 8 EXECUTED AT THE EXCHANGE LEVEL AND DETAILS OF BUY ER WHO HAS PURCHASED THE SHARES SOLD BY THE ASSESSEE WAS NOT AVAILABLE WITH THEM. 8.1 SO FAR AS NON-COMPLIANCE TO NOTICE U/S 133(6) BY S.V.ELECTRICALS LTD. IS CONCERNED IT WAS SUBMITTED THAT THE SAID NOTICE WAS DULY SERVED ON THAT COMPANY. THEREFORE, THE ASSESSEE CAN NOT PERSUADE O R FORCE THE 3 RD PARTY TO CO-OPERATE IN DEPARTMENTAL INQUIRIES. IT WAS SUBMIT TED THAT EVEN IF THERE WAS NO COMPLIANCE BY THE SAID PARTY, IT CANNOT BE C ONCLUDED THAT THE INVESTMENT IN SHARES OR TRADING IN SHARES BY THE A SSESSEE ARE BOGUS. RELYING ON VARIOUS DECISIONS, IT WAS SUBMITTED THAT WHEN TH E ASSESSEE HAS FULLY DISCHARGED HIS ONUS BY SUBMITTING THE NECESSARY PA RTICULARS / DOCUMENTARY EVIDENCES AND NOTHING ADVERSE HAS BEEN BROUGHT ON R ECORD BY THE AO, HE CANNOT DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE MERELY BECAUSE THERE WAS NO COMPLIANCE TO THE SAID NOTICE. THE ASSESSEE ALSO SUBMITTED REPLIES ON VARIOUS ALLEGATIONS OF THE AO SUCH AS STATEMENT OF SHRI VIPIN JAIN, MODUS OPERANDI ADOPTED IN CASE OF ACCOMMODATION ENTRIES, STATEMENT OF SHRI R.K.KEDIA, COMPARISON WITH FIRST FINANCIAL SERVICES PVT. LTD. ETC. IT WAS ACCORDINGLY ARGUED THAT THE ADDITION MADE BY THE AO IS UNCALLED FOR. 9. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , THE CIT(A) DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF S ALE OF SHARES ON THE GROUND THAT NO INCRIMINATING MATERIAL WAS FOUND DUR ING THE COURSE OF SEARCH. WHILE DOING SO HE RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT ON THE CASE OF CIT VS. KABUL CHAWLA AND VARIOUS OTH ER DECISIONS. THE RELEVANT OBSERVATION OF THE LD. CIT(A) FROM PARA 4.3 TO 4.3. 4 IS AS UNDER : ITA NO.514, 515/DEL/2017 9 4.3 IN GROUND NOS. 04 & 05 THE APPELLANT HAS CHALLENGED THE ASSESSMENT MADE U/S 153A OF THE ACT ON THE GROUND THAT THE REASSESSMENTS IN BOTH THE ASSESSMENT YEARS WERE CO MPLETED AND NOT ABATED AND THEREFORE REASSESSMENT U/S 153A OF T HE ACT COULD NOT HAVE BEEN MADE SINCE NO INCRIMINATING DOCUMENT/ INFORMATION BELONGING TO THE APPELLANT WAS FOUND FROM THE PREMI SES OF THE SEARCHED PERSON AT THE TIME OF SEARCH U/S 132 OF TH E ACT. IN VIEW OF THE FACT THAT THESE GROUNDS ARE THE LEGAL GROUNDS GOING TO THE ROOT OF THE CASE, THESE ARE TAKEN UP FOR CONSIDERATION A ND ADJUDICATION FIRST. 4.3.2 THE FACT OF THE CASES OF BOTH THE YEARS A RE THAT A SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THE JAKSON GROUP CASES INCLUDING THE ASSESSEE ON 03.10.2013. THE RETURNS O F INCOME OF BOTH THE RESPECTIVE YEARS WERE FILED ORIGINALLY U/S 139( 1) OF THE ACT ON 30.03.2012 & 30.03.2013 AT INCOME OF RS. 3,92,11,22 0/- & RS.7,39,92,640/- RESPECTIVELY. SINCE NO NOTICE U/S 143(2) OF THE ACT HAD BEEN ISSUED IN BOTH THE YEARS AND THE LIMITATIO N FOR ISSUANCE OF NOTICE IN BOTH THE YEARS HAD EXPIRED ON 30.09.2012 & 30.09.2013 RESPECTIVELY, THE ASSESSMENTS FOR THESE YEARS THERE FORE STOOD COMPLETED WITHIN THE MEANING OF THE 2 ND PROVISO TO S.153A(1) OF THE ACT. ON PERUSAL OF THE ASSESSMENT ORDER IT IS O BSERVED THAT THE AO HAS MADE REFERRED TO THE STATEMENTS OF SH. VIPIN JAIN AND SH. R.K KEDIA, THE LATTER RECORDED DURING THE SEARCH IN THE KEDIA GROUP SEPARATELY ON 13.06.2014, ENQUIRIES CONDUCTED U/S 1 33(6) OF THE ACT AND THE FINDINGS OF SEBI IN ANOTHER CASE, M/S FIRST FINANCIAL SERVICES LTD. (FFSL), AND HAS MADE ADDITION ON ACCOUNT OF PU RCHASES OF SHARES OF SV ELECTRICALS LTD.(SVEL) IN AY 2011-12 A ND OF CLARUS FINANCE & SECURITIES LTD. (CFSL) IN AY 2012-13 BUT THERE IS NO REFERENCE TO ANY SEIZED MATERIAL FOUND DURING THE S EARCH IN THE GROUP CASES ON 03.10.2013, LEAST ANY INCRIMINATING MATERIAL RELEVANT TO THE PURCHASES AND SALE OF SHARES MADE B Y THE APPELLANT ENQUIRED BY THE AO. 4.3.3 AS MENTIONED ABOVE, FROM THE REASSESSMENT ORDER IT IS OBSERVED THAT THERE IS NO REFERENCE OF ANY SEI ZED MATERIAL, LEAST INCRIMINATING DOCUMENTS, IN THE REASSESSMENT ORDER, AND THE ADDITIONS MADE ON ACCOUNT OF THE PURCHASE AND SALE OF SHARES IN THE ORDERS U/S 153A OF THE ACT WERE ALREADY DISCLOSED I N THE ORIGINAL RETURN OF INCOME AND ALREADY AVAILABLE IN THE FINAN CIAL STATEMENTS FILED WITH THE ORIGINAL RETURN OF, AND THE ADDITION IS NOT BASED ON ANY SEIZED MATERIAL, LEAST INCRIMINATING DOCUMENTS. IN CIT (C)- II VS. KABUL CHAWLA (DELHI) [2015] 61 TAXMANN.COM 412 (DELHI), 234 ITA NO.514, 515/DEL/2017 10 TAXMAN 300 THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI HAVE HELD THAT AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTIO N ONLY ON THE BASIS OF SEIZED MATERIAL AND IN ABSENCE OF ANY INCR IMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATE D AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE, AND THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON T HE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE CO URSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME O R PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT P RODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF OR IGINAL ASSESSMENT, AND CONCLUDED THAT SINCE NO INCRIMINATI NG MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAV E BEEN MADE TO THE INCOME ALREADY ASSESSED. THIS JUDGMENT HAS BEEN CONSIDERED IN ALL THE EXISTING JUDGMENTS ON THE MATTER, SOME OF W HICH HAVE BEEN REFERRED TO BY THE APPELLANT IN HIS SUBMISSIONS. 4.3.4 IN VIEW OF THE FACTS OF THE CASE DISCUSSE D ABOVE AND THE POSITION OF LAW ENUNCIATED BY THE JURISDICTIONAL HI GH COURT IN THE CASE OF KABUL CHAWLA (SUPRA), CIT (CENTRAL)-I VS JAKSON ENG INEERS LTD. 2015 TIOL 2789 HC DEL IT ORDER DATED 07.12.201 5 IN ITA NOS.910 TO 913/2015 AND PRAVEEN KUMAR JOLLY AND TJG HOLDING PVT. LTD. VS. DIRECTOR GENERAL OF INCOME TAX (LNVES TIGATION) DELHI & OTHERS 2016(3) TMI 976-DELHI HIGH COURT, AND THE JUDGMENTS OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. CONTINENTAL WAREHOUSING CORPORATION (374 ITR 645) (2015), (2015) 58 TAXMANN .COM 78 (BOM.) AND ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT IN ITA NO. 1969 OF 2013, AND OTHER JUDGMENTS RELIED UPON BY THE APPELLANTS AR MENTIONED IN HIS WRITTEN SUBMISSION, IT IS HELD THA T THE AO WAS NOT WITHIN THE JURISDICTION BESTOWED ON HIM BY LAW TO M AKE THE IMPUGNED ADDITIONS IN THE ASSESSMENT U/S 153A OF TH E ACT, AND THEREFORE THE IMPUGNED RE-ASSESSMENT ORDER CANNOT B E SUSTAINED. IT IS HELD ACCORDINGLY AND THE RE-ASSESSMENT ORDER IS QUASHED. 10. THE LD. CIT(A) FURTHER HELD THAT THE REASSE SSMENT ORDER IS NOT SUSTAINABLE SINCE THE STATEMENTS OF 3 RD PARTY, WHICH WERE THE BASIS FOR ADDITION, WERE NO T CONFRONTED TO THE ASSESSEE NOR ANY OPPORTUNITY TO C ROSS-EXAMINE THESE PERSONS WAS PROVIDED TO THE ASSESSED. ACCORDING TO HIM THE SAME IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THE RELEVANT OBS ERVATION OF LD. CIT(A) AT PARA ITA NO.514, 515/DEL/2017 11 4.4 OF THE ORDER READS AS UNDER : 4.4 IN GROUND NO. 09 THE APPELLANT HAS CONTENDED THAT THE STATEMENTS OF THIRD PARTY WERE NOT CONFRONTED TO TH E APPELLANT NOR WAS OPPORTUNITY TO CROSS-EXAMINE THESE PERSONS WAS PROVIDED TO THE APPELLANT THUS DENYING NECESSARY OPPORTUNITY AG AINST THE PRINCIPLE OF NATURAL JUSTICE. IT HAS BEEN SUBMITTED THAT COPIES OF THE STATEMENTS OF SH. VIPIN JAIN RECORDED U/S 1 31(1 A) OF THE ACT D URING SURVEY C ONDUCTED BV TH E J3 DIT(LNV.) NOIDA AT HIS PREMISES ON 16.12.2013 & AGAIN BY THE AO ON 14.03.2016, AND THA T OF SH.R K. KEDIA RECORDED ON 13.06.2014 DURING THE SEARCH ON K EDIA GROUP CONDUCTED BY THE DDIT(LNV.) UNIT-LLL(3) NEW DELHI W ERE NOT PROVIDED TO THE APPELLANT AND APPELLANT WAS NOT PROVIDED OPP ORTUNITY TO CROSS-EXAMINE THESE PERSONS. FROM THE ASSESSMENT OR DER IT IS OBSERVED THAT A QUESTIONNAIRE U/S 142(1) OF THE ACT WAS ISSUED ON 12.10.2015 REFERENCE TO SURVEY U/S 133A OF THE ACT AT THE PREMISES OF SH. VIPIN JAIN AND HIS STATEMENT HAS BEEN MADE ( REF. PAGE-03 OF ASSESSMENT ORDER) BUT THERE IS NO MENTION THAT THE STATEMENTS OF THESE PERSONS WERE CONFRONTED TO THE APPELLANT OR T HAT OPPORTUNITY TO CROSS-EXAMINE THESE PERSONS WERE PROVIDED TO THE APPELLANT. FROM THE ASSESSMENT ORDER IT IS ALSO OBSERVED THAT THE AO HAS REFERRED TO THE FINDINGS OF SEBI IN THE MATTER OF M /S FFSL REGARDING MANIPULATIVE TRADING IN SHARES OF FFSL BUT THERE IS NO MENTIONED THAT THESE FINDINGS WERE CONFRONTED TO THE APPELLAN T PROVIDING OPPORTUNITY FOR REBUTTAL OR COUNTER-COMMENTS. IT IS SETTLED LAW THAT FAILURE TO PROVIDE SUFFICIENT OPPORTUNITY TO THE AP PELLANT, CONFRONTATION OF MATERIAL & STATEMENTS UTILIZED FOR ARRIVING AT ADVERSE FINDING AGAINST THE ASSESSEE AND NON-PROVIS ION OF OPPORTUNITY TO CROSS-EXAMINE THE THIRD PARTIES WHOS E STATEMENTS OR INFORMATION IS UTILIZED TO ARRIVE AT FINDINGS ADVER SE TO THE ASSESSEE ARE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND I S FATAL TO THE ASSESSMENT AS HELD IN M/S ANDAMAN TIMBER INDUSTRIES V COMMISSIONER OF CENTRAL EXCISE KOLKATA-LL IN CIVIL APPEAL NO. 4228 OF 2006 (SC), R. B. SHREERAM DURGA PRASAD AND FATEC HAND NURSING DAS V/S SETTLEMENT COMMISSION (IT AND WT) AND ANOTH ER (1989) 43 TAXMAN 34 (SC), C.B.GAUTAM V. UNION OF INDIA (1992) 65 TAXMAN 440 (SC), BAGSU DEVI BAFNA V. CIT (1966) 62 ITR 506 (CAL.), KISNICHAND CHELLARAM V. CIT, BOMBAY CITY II (1980) 125 ITR 713 (SC)/(1980) 4 TAXMAN 29 (SC), COMMISSIONER OF INCOM E-TAX V. RAJESH KUMAR [2008] 172 TAXMAN 74 (DELHI), COMMISSIONER OF INCOME-TAX V. PRADEEP KUMAR GUPTA [2008] 303 ITR 95 (DELHI), ITA NO.514, 515/DEL/2017 12 COMMISSIONER OF INCOME-TAX, DELHI-IV, NEW DELHI V. DHARAM PAL PREM CHAND LTD.* [2008] 167 TAXMAN 168 (DELHI) AND CIT V EASTERN COMMERCIAL ENTERPRISES (1994) 210 ITR 103 (CAL), RA JESH KUMAR AND OTHERS V DEPUTY COMMISSIONER OF INCOME- TAX AND OTH ERS (2006) 157 TAXMAN 168 (SC), (1993) 1 SSC 78, COMMISSIONER OF INCOME TAX V. DHARAM PAL PREM CHAND LTD (2008) 167 TAXMAN 168 (DELHI)], PRAKASH CHAND NAHTA V. COMMISSIONER OF INCOME -TAX [(2008) 170 TAXMAN 520 (MP). THE RE-ASSESSMENT ORDER IS NOT SUSTAINABLE ON THIS GROUND TOO. I HOLD ACCORDINGLY. 11. SO FAR AS MERIT OF THE CASE IS CONCERNED, THE LD. CIT(A) ALSO DELETED THE SAME ON THE GROUND THAT THE ADDITION WAS MADE B Y THE AO IN BOTH THE YEARS ON PRESUMPTIONS AND SURMISES WITHOUT SANS ANY MATERIAL OR FACTS RELEVANT TO THE TRANSACTION INVOLVED. THE RELEVANT OBSERVATION OF LD. CIT(A) FROM PARA 4.5 TO PARA 4.5.4 READS AS UNDER : 4.5 GROUND NO. 08 IN BOTH THE YEARS RELATE TO ADDITION OF RS. 549,48,664/- AND RS.9,54,62,250/- U/S 68 IN THE AYS 2011-12 AND 2012-13 RESPECTIVELY ON ACCOUNT OF GAIN ON SALE OF SHARES. THE AO VIDE QUESTIONNAIRE U/S 142(1) OF THE ACT DT. 12.10. 2015 ASKED THE APPELLANT THAT IN VIEW OF THE DIVERGENCE IN THE STA TEMENT OF SH. SUNDEEP GUPTA, BROTHER OF THE APPELLANT, DURING THE SEARCH AND THE STATEMENT OF SH. VIPIN JIAN RECORDED DURING SURVEY AT HIS PREMISE WHY THE LONG TERM CAPITAL GAIN (LTCG) ON THE SALE O F SHARES OF SV ELECTRICALS LTD.(SVEL) IN AY 2011-12 AND OF CLARUS FINANCE & SECURITIES LTD. (CFSL) IN AY 2012-13 BE NOT HELD AS ACCOMMODATION ENTRY. THE APPELLANT HAD PURCHASED 3,00,000 SHARES OF SVEL ON 01.12.2009 AND 7,00,000 SHARES OF CFSL 05.12.2009 R ESPECTIVELY FOR THE ACQUISITION COST OF RS.30,00,000/- AND RS.70,00 ,000/- RESPECTIVELY THROUGH PREFERENTIAL ALLOTMENT PAYMENT FOR WHICH WAS MADE THROUGH CHEQUE NOS. 706973 AND CHEQUE NO.70696 9 RESPECTIVELY DRAWN ON HIS BANK ACCOUNT NO. 02781930 000250 WITH HDFC BANK NEW DELHI DEBITED ON 24.11.2009 AND 02.12 .2009 RESPECTIVELY. THESE SHARES ARE DULY REFLECTED IN TH E TRANSACTION STATEMENT OF NSDL FOR THE YEAR 2009-10, ALONGWITH 3 8,000 SHARES OF PSL FINANCIAL SERVICES LTD. BEING CARRY FORWARD SIN CE FY 2007-08. THE SHARES OF SVEL & CFSL WERE SOLD ON VARIOUS DATES IN FY 2010-11 & 2011-12 RESPECTIVELY, THAT OF SVEL BETWEEN 28.12.20 10 TO 19.01.2011 AND THAT OF CFSL BETWEEN 18.05.2011 AND 28.06.2011. ITA NO.514, 515/DEL/2017 13 DURING THE APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO SUBMIT A DETAILED STATEMENT IN EXCEL SHEET OF THE DATE-WIS E PURCHASE AND SALE OF THESE SHARES ALONGWITH THE RATE OF PURCHASE AND SALE AS ALSO THE PAYMENT DETAILS WITH COPY OF THE BANK STATEMENT . THE SAME HAVE BEEN SUBMITTED, AS ANNX.-2 WITH WS ON 09.11.20 16 FOR AY 2011-12 AND AT PAGES-161-164 OF PB FILED WITH WS FO R AY 2012-13 WHICH ARE ENCLOSED AS ANNX.1 AND ANNX. 2 TO THIS ORDER. ON PERUSAL OF THESE DETAILS IT IS OBSERVED THAT THE SHARES OF THE TWO COMPANIES WERE PURCHASED AT THE SAME RATE AT ONE GO WHILE THE SE HAVE BEEN SOLD ON DIFFERENT DATES AT VARYING RATES, THAT OF S VEL @ RS.189/- ON 28.12.2010 TO @ RS.194.90 ON 19.01.2011 AND THAT OF CFSL @ RS.148.00 ON 18.05.2011 TO @ RS.163.90 ON 28.06.201 1. IT IS ALSO NOTED THAT THE SALE RATE IS NOT CONSTANT AND WHILE THAT OF SVEL WAS SOLD @ RS.204/- ON 05.01.2011 IT WAS LATER SOLD EVE N @ RS. 187.50 ON 18.01.2011 AND SIMILARLY THOSE OF CFSL WERE SOLD EVEN @ RS.137.75 ON 25.05.2011, INCREASING TO RS.156/- ON 17.06.2011 AND AGAIN @ RS.140/- ON 22.06.2011. THE CORRESPONDING D ATE-WISE RECEIPTS HAVE ALSO BEEN CREDITED IN THE APPELLANTS BANK ACCOUNT NO. 13741000025854 WITH HDFC BANK NEW DELHI. THUS, IT C ANNOT BE SAID THAT THE APPELLANT INDULGED IN SALE AT MANIPUL ATIVE PRICES/RATES NOR IS THERE ANY EVIDENCE BROUGHT ON RECORD BY THE AO INCLUDING INFORMATION AVAILABLE IN THE SEIZED DOCUMENTS, IF A NY, AND THEREFORE THERE IS NO CASE OF MANIPULATION AND ACCOMMODATION ENTRY IN THIS REGARD. 4.5.2 ON PERUSAL OF THE ASSESSMENT ORDER OF BOT H YEARS IT IS OBSERVED THAT THERE IS NO DISCUSSION AT ALL ON THE FACTS RELATED TO THE TRANSACTIONS FOR PURCHASE AND SALE OF SHARES OF THE ABOVE COMPANIES AS WELL AS THE SOURCE OF PURCHASE OF SHAR ES AND NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT THE APPELLANT TOOK ACCOMMODATION ENTRIES ON SALE OF SHARES BY PAY MENT IN CASH TO SVEL AND CFSL, OR TO THE BROKERS M/S DB (INTERNA TIONAL) STOCK BROKERS LTD. GURGAON. THE AO HAS COMPLETELY CIRCUMV ENTED THE FACTS RELATED TO THE MATTER AND EVEN THERE IS NO EV IDENCE EMANATING FROM THE SEARCH/SURVEY AGAINST THE APPELLANT GROUP DISCERNIBLE FROM THE ASSESSMENT ORDER. THE APPELLANT HAS SUBMITTED C OPIES OF THE ONLINE CONTRACTS/BILLS OF EACH TRANSACTION RELATED TO THE SHARES SALE WHICH WERE ALSO SUBMITTED TO THE AO BUT THE AO HAS NOT GIVEN ANY CREDENCE TO THESE FACTS AND DOCUMENTS AND HAS COMPL ETELY IGNORED THEM. IN FACT THE AO ISSUED LETTER U/S133(6) TO THE BOMBAY STOCK EXCHANGE (BSE) ON 15.02.2016 ASKING FOR THE NAME, A DDRESS, PAN AND CONTACT NUMBERS OF THE PERSONS WHO PURCHASED TH E SHARES SOLD ITA NO.514, 515/DEL/2017 14 BY THE APPELLANT, MENTIONED AT PARA-4.4 OF THE ASSE SSMENT ORDER. THE APPELLANTS AR IN THE WS HAS SUBMITTED THAT THE BSE REPLIED TO THE AO THROUGH E-MAIL IN RESPONSE TO THE E-MAIL SEN T BY THE AO FROM HIS MAIL ID [e-mail] TO SH. RAJESH DUBEY ON THE MAIL ID [e-mail] ON 22.03.2016, COPIES OF THE E-MAILS HAS BEEN SUBMITTED AT PAGE-120-121 OF PB. B SE DULY REPLIED TO THE AO ON 23.03.2016 THROUGH THE E-MAIL SENT BY MS. LIPIKA MAHUNTA FROM MAIL ID [e-mail] ALONGWITH COPY MARKED ALSO AT [e-mail] WHEREIN THEY SENT THE TRADELOG DATA OF THE FOUR ENTITIES (SH. SU NDEEP GUPTA, SMT. ANITA GUPTA, SH. SAMEER GUPTA AND SMT. BHAWNA GUPTA ) IN THE SCRIPS OF CFSL (511672) AND SVEL (517534) FOR THE P ERIOD 01.04.2009 TO 31.03.2013 ALONGWITH THE COUNTER PARTY DETAILS A ND STATED THAT TRADES ARE EXECUTED ON THE EXCHANGE AS PER THE ORD ER MATCHING MECHANISM OF THE BSE ONLINE TRADING (BOLT) SYSTEM/B OLT PLUS SYSTEM WHEREIN THE IDENTITY/DETAILS OF THE COUNTER PARTY MEMBER/CLIENT ARE NOT REVEALED TO EACH OTHER. THE A PPELLANT ON BEING ASKED DURING THE APPELLATE PROCEEDINGS SUBMIT TED THAT ONLY COPY OF THE E-MAILS WERE PROVIDED TO THEM BY THE AO BUT THE TRADELOG DATA WAS NOT PROVIDED, BUT THE AO HAS NOT WILLFULLY MENTIONED IN THE ASSESSMENT ORDER THE REPLY OF BSE NOR WHAT WAS PROVIDED IN THE TRADELOG DATA AND HAS ONLY STATED T HAT PART REPLY WAS RECEIVED. IT IS TO BE NOTED THAT SVEL AND CFSL ARE LISTED COMPANIES AND ANYBODY CAN PURCHASE OR SALE THEIR SH ARES THROUGH DEMAT ACCOUNT THROUGH ANY REGISTERED BROKER. IN THI S CONTEXT IT IS PERTINENT TO MENTION THAT THE AO HAS ALSO MENTIONED AT PARA-4.3 OF THE ASSESSMENT ORDER THAT THE APPELLANT WAS ASKED T O PRODUCE THE DIR ECTORS OF THE ABOVE C OMPANIES. CFSL AND SVEL, BUT NO COMPLIANCE HAS BEEN MADE BY THE APPELLANT AND THE A PPELLANTS AR HAS SUBMITTED IN THIS REGARD THAT THESE COMPANIES A RE LIVE AND ACTIVE AS P ER INFORMATION AVAILABLE IN THE PUBLIC DOMAIN/MCA WEBSITE AND HAS SUBMITTED COPIES OR THE MASTER DATA OF THESE TWO COMPANIES AND FINANCIAL STATEMENTS OF SVEL AND CFSL AT PAGES-122- 153 OF PB IN AY 2011-12 AND PAGES-125-160 OF PB IN AY 2012-13 ACCORDING TO WHICH SVEL (WE INTERNET LTD.) HAS ITS REGISTERED ADDRESS AT SODANI COPLEX, 39, AB ROAD, PATWARDHAN M ARG, DEWAS, MADHYA PRADESH AND CFSL (SCAN STEELS LTD.) HAS ITS REGISTERED ADDRESS AT OFFICE NO. 104/105, E-SQUARE SUBHASH ROA D, OPP. HAVMORE ICE CREAM, VILE PARLE, MUMBAI AND THE OTHER DETAILS ARE ALSO AVAILABLE. IT HAS BEEN SUBMITTED THAT THESE CO MPANIES BEING LISTED COM PANIES IT WA S NOT POSSIBLE FOR THE APPELLANT TO PRODUCE ITA NO.514, 515/DEL/2017 15 THEIR DIRECTORS. IN MY OPINION ANYONE CAN INVEST IN THE SHARES OF LISTED COMPANIES AND IF ALL SUCH INVESTORS, IN THEI R RESPECTIVE ASSESSMENTS, ARE ASKED TO PRODUCE THE DIRECTORS OF SUCH LISTED COMPANIES IT WOULD NOT ONLY AMOUNT TO TR AVESTY OF INV ESTIGATION AND JUSTICE, IT WOULD LEAD TO CHAOS. THE AO HAD THE AUTHORITY TO SUMMON ANYBODY FOR THE PURPOSE OF INVESTIGATION AND ENQUIRY WHICH POWERS THE AO DID NOT EXERCISE. THE APPELLANT HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN CIT V. VICTOR ELECTRODES LTD. [2012] 20 TAXMANN.COM 680 (DELHI) WHEREIN IT HAS BEEN HELD AS UNDER: 9. THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLICANT-C OMPANIES BEFORE THE ASSESSING OFFICER. THEREFORE, FAILURE OF THE AS SESSEE TO PRODUCE THEM COULD NOT, BY ITSELF, HAVE JUSTIFIED THE ADDIT IONS MADE BY THE ASSESSING OFFICER, WHEN THE ASSESSEE HAD FURNISHED DOCUMENTS, ON THE BASIS OF WHICH, THE ASSESSING OFFICER, IF HE SO WANTED, COULD HAVE SUMMONED THEM FOR VERIFICATION. NO ATTEMPT WAS MADE BY THE ASSESSING OFFICER TO SUMMON THE DIRECTORS OF THE AP PLICANT- COMPANIES. THE ADDRESSES OF THESE COMPANIES MUST BE AVAILABLE ON THE SHARE APPLICATIONS, MEMORANDUM AND ARTICLES OF ASSOCIATION AND THEIR INCOME-TAX RETURNS. IF THE ASSESSING OFFI CER HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLICANTS, HE COULD HA VE SUMMONED THE DIRECTORS OF THE APPLICANT-COMPANIES. NO SUCH ATTEM PT WAS, HOWEVER, MADE BY HIM. THEREFORE, THE COMMISSIONER O F INCOME-TAX (APPEALS) AND THE INCOME-TAX APPELLATE TRIBUNAL, IN OUR VIEW, WERE JUSTIFIED IN HOLDING THAT THE IDENTITY OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS HAD BEEN ESTABLISHE D BY THE ASSESSEE. FURTHERMORE, IN THE MASTER DATA THE NAMES OF THE DI RECTORS OF THE TWO COMPANIES ARE ALSO AVAILABLE - THE DIRECTORS OF SVEL ARE SH. PARIND SUSHIL PAREKH, AJIT KUMAR SINGH, ASHISH KUMA R RAY, BHUSHAN SAGARMALJI PUNAMIYA, AND CAJETAN JEROME DSOUZA AND THOSE OF CFSL ARE RAJESH KUMAR GADODIA, RUNVIJAY SINGH, DEBJANI S AHU, PRABIR KUMAR DAS, ANKUR MADAAN, VINAY GOYAL, PUNIT KEDIA A ND GOBINDA CHANDRA NAYAK - WHO ARE APPARENTLY NOT RELATED TO T HE APPELLANT FAMILY, NOR IS THERE ANY EVIDENCE BROUGHT ON RECORD OF ANY INSIDER TRADING. IN THESE CIRCUMSTANCES IT CAN ONLY BE CONC LUDED THAT THE ADDITIONS ARE BASED ON PRESUMPTIONS AND SURMISES SA NS ANY MATERIAL EVIDENCE, WHICH I TAKE UP FOR CONSIDERATIO N NOW IN TERMS OF ITA NO.514, 515/DEL/2017 16 SUBMISSIONS OF THE APPELLANTS AR ON THE RESPECTIVE OBSERVATIONS OF THE AO WHICH WERE CONSIDERED BY THE AO FOR ARRIVING AT THE CONCLUSIONS HE DID FOR MAKING THE ADDITION. 4.5.2 THE AO IN THE ASSESSMENT ORDER HAS REFERRED TO THE STATEMENTS OF SH. VIPIN JAIN AND SH. R. K KEDIA. TH E STATEMENT OF SH. VIPIN JAIN WAS RECORDED ON 16.12.2013 BY THE DDIT(L NV.) NOIDA DURING THE SURVEY AT HIS PREMISES AND THE AO, IN TH E SHOW CAUSE NOTICE U/S 142(1) OF THE ACT DT. 12.10.2015 HAS MEN TIONED THAT THE APPELLANT/JAKSON GROUP TOOK ACCOMMODATION ENTRY IN THE FORM OF LONG TERM CAPITAL GAIN IN SHARES THROUGH SH. SANJAY JHUNJHUNWALA. THE APPELLANT HAS FILED COPY OF THIS STATEMENT AT P AGES-20 TO 27 OF PB FOR AY 2011-12 & PAGES-18 TO 25 OF PB FOR AY 201 2-13 (STARTING FROM Q.NO.06 TO THE LAST Q.NO.20) ON PERUSAL OF WHI CH IT IS OBSERVED THAT HE STATED THAT HE HAS NEVER DONE ANY SHARE TRA DING FOR ANY THIRD PARTY, THAT HE WAS NOT ASSOCIATED IN ANY MANN ER IN THE LTCG IN RESPECT OF SHARE OF SVEL AND CFSL, THAT HE WAS NOT INVOLVE IN ANY PURCHASE AND SALE OF ANY SHARE FOR ANY MEMBER OF TH E JAKSON GROUP, THAT HE HAD INTRODUCED THE MANAGING DIRECTOR OF JAK SON GROUP, SH. SAMEER GUPTA, TO ONE BROKER SH. SANJAY JHUNJHUNWALA OF KOLKATA (WHOM HE KNEW SINCE 2005/2006) DURING THE PROCESS O F BUYING OF ONE COMPANY, M/S GOOD VIEW TRADING PVT. LTD., BY JA KSON GROUP IN 2009 I HIS OFFICE AT DELHI AND HE PROVIDED THE ADDR ESS OF S. JHUNJHUNWALA & CO. OF KOLKATA, AND THAT HE DID NOT KNOW OF ANY DETAILS OF ANY TRANSACTION BETWEEN THE JAKSON GROUP AND SH. SANJAY JHUNJHUNWALA. THE STATEMENT OF SH. VIPIN JAIN WAS A GAIN RECORDED BY THE AO ON 14.03.2016 AND THE AO HAS OBSERVED AT PARA-4.5 OF THE ASSESSMENT ORDER THAT SH. VIPIN JAIN STATED THA T HE HAD NOT ARRANGED ANY MEETING WITH SH. SANJAY JHUNJHUNWALA W ITH A VIEW TO ASSIST ANYBODY IN GETTING ANY KIND OF ACCOMMODATION ENTRY IN THE FORM OF LTCG IN SHARES. THE AO HAS OBSERVED THAT SH . JAIN RETRACTED FROM HIS EARLIER STATEMENT BUT, AS MENTIONED ABOVE, I FIND THAT SH. JAIN HAD EV EN EARLIER STATED THAT HE HAD NOT ARRANGED ANY ACCOMMODATION ENTRY F OR THE APPELLANT/ JAKSO N GROUP NOR THAT HE HAD INTRODUCED SH. JHUNJHUNWALA FOR THIS PURPOSE? T HE AO HAS NOT MENTIONED THE STATEMENT RECORDED BY HIM IN DETAIL I N THE ASSESSMENT ORDER NOR HAD HE PROVIDED COPY OF THE ST ATEMENT TO THE APPELLANT, AND THEREFORE I AM UNABLE TO SEE AS TO H OW AND IN WHAT CONTEXT HE RETRACTED FROM EARLIER STATEMENT, IF AT ALL. IN ANY CASE, AS MENTIONED EARLIER AS WELL, COPY OF THE STATEMENTS W ERE NOT PROVIDED TO THE APPELLANT DURING THE ASSESSMENT STAGE NOR OP PORTUNITY TO ITA NO.514, 515/DEL/2017 17 CROSS-EXAMINE SH. JAIN WAS ALLOWED TO THE APPELLANT, AND THEREFORE SUCH DEPOSITION OF ANY THIRD PARTY CANNOT BE HELD A S EVIDENCE AGAINST THE APPELLANT. 4.5.3.2 THE AO HAS MENTIONED AT PARAS-4.8 AND 4.9 OF THE ASSESSMENT ORDER REGARDING THE STATEMENT OF SH. R.K KEDIA RECORDED DURING THE SEARCH IN THE KEDIA GROUP SEPARATELY ON 13.06.2014 AND HAS MENTIONED THAT SH. KEDIA IN HIS DEPOSITION STAT ED THAT M/S D B (INTERNATIONAL) STOCK BROKERS LTD. (DBISL) WAS NOT DOING ANY ACTUAL WORK BUT IS BEING USED FOR PROVIDING LONG TERM ENTR IES TO VARIOUS BENEFICIARIES AND THAT THE COMPANY IS CONTROLLED B Y TWO ENTRY OPERATORS, SH. S.N DAGA AND SH. NATWAR LAI DAGA, OP ERATING FROM CONNAUGHT PLACE IN NEW DELHI AND MUMBAI RESPECTIVEL Y. BESIDE THIS OBSERVATION THERE IS NO FURTHER FACT BROUGHT OUT IN THE ASSESSMENT ORDER INCLUDING AS TO WHETHER ANY ENQUIRY WAS CONDU CTED AGAINST DBISL OR AGAINST THE TWO DAGAS AND WHETHER ANY OR W HAT INFORMATION WAS COLLECTED/AVAILABLE LINKING THE TRA NSACTIONS OF THE APPELLANT WITH ANY SUCH ACCOMMODATION ENTRY OR THAT THE TRANSACTION ENTERED INTO BY THE APPELLANT FOR PURCH ASE OF SHARES OF SVEL AND CFSL THROUGH DBISL WERE IN FACT NOT GENUIN E TRANSACTIONS. THE OBSERVATION AND CONCLUSION OF THE AO IS SIMPLY BASED ON THE ALLEGED STATEMENT OF SH. KEDIA AGAINST DBISL WHICH IN ANY CASE IS AT BEST A GENERAL STATEMENT SANS ANY SPECIFIC CASE OR TRANSACTION CITED BY SH. KEDIA OR THE AO. BESIDES, EVEN THE STATEMENT OF SH. KEDIA, AS MENTIONED EARLIER, WAS N OT CONFRONTED TO TH E APPELLANT DURING THE ASSESSMENT STAGE NOR OPPORTUNITY TO CROSS-EXAMINE S H. JAIN WAS ALLOWED TO THE APPELLANT, AND THEREFORE SUCH DEPOSI TION OF ANY THIRD PARTY CANNOT BE HELD AS EVIDENCE AGAINST THE APPELL ANT. 4.5.3.3 THEREAFTER THE AO HAS REFERRED TO THE ORDE R DT. 19.12.2014 AND 20.04.2015 OF THE SEBI IN THE CASE OF M/S FIRST FINANCIAL SERVICES LTD. (FFSL) AND HAS AT PARA-4.10 OF THE ASSESSMENT ORDER STATED THAT SEBI HAS FOUND AND HELD THAT THERE HAS BEEN MANIPU LATIVE TRADING IN THE SHARES OF THE SCRIPS OF FFSL AND THAT BASE D ON HUGE RISE IN TRADED PRICE AND VOLUME OF THE SCRIPS COMPARED TO T HE FINANCIAL OF THIS COMPANY PRELIMINARY INVESTIGATIONS OF SEBI HAV E REVEALED THAT THERE WERE CERTAIN PARTIES RELATED TO THIS ENTITY W HO HELPED IN CONSISTENT RIGGING IN ITS SHARES AND MANY RELATED P ARTIES WITH NO CREDITWORTHINESS HAVE HELPED MANY PREFERENTIAL ALLO TTEES (BENEFICIARIES) REAPING BOGUS LTCG. BASED ON THIS FINDING OF SEBI IN RESPECT OF THE SHARES OF FFSL THE AO HAS PRESUMPTIV ELY CONCLUDED ITA NO.514, 515/DEL/2017 18 THAT THE SHARES OF SVEL AND CFSL HAD ALSO BEEN MANI PULATIVE WITHOUT BRINGING ON RECORD ANY EVIDENCE OF SUCH MAN IPULATION AND RIGGING IN THE SHARES OF THESE TWO COMPANIES, NOR D ID THE AO MAKE ANY ENQUIRY WITH SEBI, OR FOR THAT MATTER FROM ANY OTHER AUTHORITY OR SOURCE, TO GATHER NECESSARY INFORMATION RELATED TO THESE TWO COMPANIES, IF ANY. THERE IS NO INFORMATION OR ANY S HRED OF EVIDENCE BROUGHT ON RECORD OF SUC H MANIPULATION AND RIGGING IN THE SHARES SVEL AND CFSL AND THE AOS CONCLUSION IS AT BEST PR ESUMPTIVE SANS ANY EVIDE NCE. 4.5.3.4 THE AO HAS ALSO MENTIONED THAT LETTER U/S 1 33(6) OF THE ACT WERE ISSUED TO SVEL AND CFSL BUT THAT THEIR REPLIES WERE NOT RECEIVED AND THAT HE GOT ENQUIRY CONDUCTED AND FOUN D THAT THESE COMPANIES WERE NOT EXISTING AT THE GIVEN ADDRESSES. AS MENTIONED ABOVE EARLIER IN THIS ORDER THESE COMPANIES ARE LIS TED COMPANIES WHOSE SHARES WERE TRADED AT BSE WHICH EVEN BSE CONF IRMED IN REPLY TO THE AO. EVEN OTHERWISE THE ENQUIRIES WERE CONDUC TED AT THE BACK OF THE ASSESSEE AND HE WAS NOT CONFRONTED WITH SUCH ENQUIRY OR ITS RESULTS AS CONTENDED BY THE APPELLANTS AR, AND IS THEREFORE AGAINST THE PRINCIPLE OF NATURAL JUSTICE. SUCH CONCLUSION O F THE AO IS PRESUMPTIVE WITHOUT ANY BASIS AND AGAINST FACTS AVA ILABLE AS MENTIONED EARLIER IN THIS ORDER. 4.5.4 ON THE CONSPECTUS OF FACTS DISCUSSED HEREIN ABOVE I FIND THAT THE ADDITION HAS BEEN MADE IN BOTH THE YEARS ON PRE SUMPTIONS AND SURMISES SANS ANY MATERIAL EVIDENCE OR FACT RELEVAN T TO THE TRANSACTION INVOLVED, AND THEREFORE THE ADDITION IN BOTH THE YEARS ON THIS ACCOUNT IS NOT SUSTAINABLE EVEN ON MERITS. I HOLD ACCORDINGLY AND THE ADDITION IS THEREFORE DELETED. 12. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) DELE TING THE ADDITION MADE BY THE AO, THE REVENUE IS IN APPEAL BEFORE US WITH TH E FOLLOWING GROUNDS :- 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN L AW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 9,54,6 2,250/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GAIN ON SALE OF INVESTMENT. (IDENTICAL GROUNDS HAVE BEEN RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2012-13 :-) ITA NO.514, 515/DEL/2017 19 13. THE LD. DR HEAVILY RELIED ON THE ORDER OF THE AO. SO FAR AS THE ORDER OF THE CIT(A) DELETING THE ADDITION IN ABSENCE OF ANY INCR IMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH BY RELYING ON THE DECIS ION IN CASE OF KABUL CHAWLA (SUPRA) IS CONCERNED, THE LD. DR REFERRING TO THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SMT. DAYAWANTI VS. CIT RE PORTED IN 290 CTR 361 SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE INFERENCES DRAWN IN RESPECT OF UNDECLARED INC OME OF ASSESSEE WERE PREMISED ON MATERIALS FOUND AS WELL AS STATEMENTS RECORDED BY ASSESSEES SON IN COURSE OF SEARCH OPERATION AND THE ASSESSEE HAD NOT BEEN ABLE TO SHOW AS TO HOW ESTIMATION MADE BY THE AO WAS ARBITRARY OR UNREASONABLE, ADDITION WAS MADE BY AO BY REJECTING BOOKS OF ACCOUNTS WAS J USTIFIED. 14. REFERRING TO THE DECISION OF HONBLE KERALA HI GH COURT IN THE CASE OF E.N. GOPAKUMAR VS. CIT REPORTED IN [(2016) 75 TAXMANN.CO M 215 (KERALA)}], HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT ASSESSMENT PROCEEDINGS GENERATED BY ISSUANCE OF A N OTICE U/S 153A(1)(A) CAN BE CONCLUDED AGAINST INTEREST OF ASSESSEE INCLUDIN G MAKING ADDITIONS EVEN WITHOUT ANY INCRIMINATING MATERIAL BEING AVAILABLE AGAINST ASSESSEE IN SEARCH U/S 132 ON BASIS OF WHICH NOTICE WAS ISSUED U/S 153 (A)(1)(A). HE SUBMITTED THAT THE HONBLE KERALA HIGH COURT HAS PASSED THE O RDER AFTER CONSIDERING THE FOLLOWING CASES WHICH HAVE BEEN RELIED ON THE HONB LE CIT(A). (I) CIT VS. KABUL CHAWLA [2016] 380 ITR 573/[2015 ] 234 TAXMAN 300/61 TAXMANN. COM 412 (DELHI0 (PARA4). (II) CIT VS. CONTINENTAL WAREHOUSING CORPN. (NHAVA SHEVA) LTD. [2015]374ITR 645/232 TAXMAN 270/58 TAXMANN. COM 78 (BOM.) (PARA 4), (III) PRINCIPAL CIT V. KURELE PAPER MILLS (P) LTD. [2016] 380 ITR 571 (DELHI) (PARA 4), (IV) CIT V. LANCY CONSTRUCTIONS [2016] 383 ITR 168/ 237 TAXMAN 728/66 TAXMANN. COM 264 (KAR.) (PARA 4) (V) CIT V. ST. FRANCIES CLAY DCOR TILES [2016] 24 0 TAXMAN 168/70 TAXMAN.COM 234 (KER.) (PARA 5) AND ITA NO.514, 515/DEL/2017 20 (VI) CIT V. PROMY KURIAKOSE [2016] 386 ITR 597 (KE R.) (PARA 5). 15. REFERRING TO THE DECISIONS OF HONBLE ALLAHABAD HIGH COURT IN CASE OF CIT VS. RAJ KUMAR ARORA [2014] 52 REPORTED IN 367 ITR AND IN THE CASE OF CIT VS. KESARWANI ZARDA BHANDAR SAHSON ALLD. VIDE ITA NO. 2 70 OF 2014, HE SUBMITTED THAT THE HONBLE ALLAHABAD HIGH COURT IN THE ABOVE DECISIONS HAS HELD THAT ASSESSING OFFICER HAS POWER TO REASSESS RETURNS OF ASSESSEE NOT ONLY FOR THE UNDISCLOSED INCOME FOUND DURING THE SEARCH OPERATIO N BUT ALSO WITH REGARD TO MATERIAL AVAILABLE AT TIME OF ORIGINAL ASSESSMENT. 16. SO FAR AS MERIT OF THE CASE IS CONCERNED, THE LD. DR HEAVILY RELIED ON THE ORDER OF THE AO. HE SUBMITTED THAT DESPITE ISSUE OF NOTICE U/S. 133(6), NO REPLY WAS RECEIVED FROM THE TWO COMPANIES NAMELY M/S. CLA RUS FINANCE & SECURITIES LTD. (CFSL) AND M/S. SV ELECTRICALS LTD.(SVEL). FIL ED ENQUIRY SHOWED THAT M/S. S.V. ELECTRICALS LTD. DID NOT EXIST AT THE GIVEN AD DRESS. SHRI R.K.KEDIA IN HIS STATEMENT HAD STATED THAT HE IS AN ENTRY OPERATOR T HROUGH HIS COMPANY D.B.INTERNATIONAL. RELYING ON VARIOUS DECISIONS, HE SUBMITTED THAT THE ORDER OF LD. CIT(A) BE REVERSED AND THAT OF THE AO BE RESTOR ED. 17. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). SHE SUBMITTED THAT NO INCRIMIN ATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THEREFORE, NO ASSESSME NT U/S 153A COULD HAVE BEEN MADE. SO FAR AS THE SUBMISSION OF THE LD. DR T HAT STATEMENT OF VIPIN JAIN WAS RECORDED, SHE SUBMITTED THAT THE STATEMENT WAS RECORDED DURING THE COURSE OF SURVEY WHICH WAS CONDUCTED AFTER THE SEAR CH IN THE CASE OF THE ASSESSEE. SO FAR AS THE DECISION IN THE CASE OF M/S . DAYAWANTI (SUPRA) IS CONCERNED, SHE SUBMITTED THAT THE SAID DECISION IS DISTINGUISH ABLE ON FACTS AND NOT APPLICABLE ITA NO.514, 515/DEL/2017 21 TO THE PRESENT CASE. FURTHER IN THAT CASE, THERE WA S UNDER LINE MATERIAL AS PER PARA 14 OF THE SAID ORDER. REFERRING TO THE DECISIO N OF THE HONBLE HIGH COURT IN THE CASE OF M/S SMT. DAYAWANTI, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PARA 14 OF THE ORDER WHIC H READ AS UNDER :- MR. DILIP SHIVPURI JUSTIFIED THE IMPUGNED OR DER AND STATED THAT THE ADDITIONS WERE BASED ON THE SEARCHED MATERIALS. THE SE MATERIALS WERE IN THE FORM OF DOCUMENTS KUCHAPURCHA, SALE DEEDS AND OTHER MATERIALS, WHICH DISCLOSED THE EXTENT OF CONCEALED INCOME, AND MATER IALS TO JUSTIFY A BLOCK ASSESSMENT. THIS CLEARLY INDICATED THAT THE DECLARE D SALE CONSIDERATION WAS LOWER THAN THE ACTUAL SALE CONSIDERATION. 18. REFERRING TO THE REPLY GIVEN BY THE SON OF THE ASSESSEE TO QUESTION NO. 10 IN THE SAID DECISION, SHE SUBMITTED THAT THE SON HAD ALSO ADMITTED IN THE CASE OF SMT. DAWAMTI WHICH READ AS UNDER :- Q,. NO. 10-I AM SHOWING YOUR ANNEXURE A-3 (PAGE 60 AND 61) FOUND I SEIZED FROM YOUR RESIDENCE AT A-2/14-A, MODEL TOWN-I, DELH I ON 23.03.2006 DURING THE COURSE OF SEARCH, SEIZURE PLEASE EXPLAIN THE NATURE , CONTENTS AND DETAILS OF THESE SMALL HAND WRITTEN PAICHIES. ANS: THESE SMALL HAND WRITTEN ON UNACCOUNTED CASH P URCHASE/SALES OF VARIOUS ITEMS IN SUPARI WHICH WERE MADE BY FIRM M/S. ASOM S UPARI TRADERS AND M/S. BALAJI PERFUMES. ALSO PURCHASE DATED 19.10 ON PAGE NO. 60 OF THIS ANNEXURE REPRESENTED UNACCOUNTED AND CREDITED. 19. SHE ACCORDINGLY SUBMITTED THAT THE FACTS IN THE CASE OF SMT. DAYAWANTI (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE PRESE NT CASE. SO FAR AS THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. DR ARE CONCERN ED SHE SUBMITTED THAT ALL THOSE DECISIONS ARE ALSO DISTINGUISHABLE AND NOT AP PLICABLE TO THE FACTS OF THE PRESENT CASE. AS REGARDS THE DECISION OF HONBLE KE RALA HIGH COURT IN THE CASE OF E.N. GOPAKUMAR (SUPRA) IS CONCERNED, SHE SUBMI TTED THAT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF KABUL CHAWLA (SUPRA), THE SAME IS BINDING ON THE TRIBUNAL AT DELHI. SHE ACCORDINGLY SUBMITTED THAT IN ITA NO.514, 515/DEL/2017 22 ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH, NO ADDITION COULD HAVE BEEN IN THE HANDS OF THE ASSESS EE. 20. SO FAR AS THE STATEMENT OF VARIOUS PERSONS WHI CH HAVE BEEN RELIED ON BY THE LD. DR CONCERNED, SHE SUBMITTED THAT THE STATEM ENTS CANNOT BE CONSIDERED AS INCRIMINATING MATERIAL UNEARTHED DURI NG THE COURSE OF SEARCH. SHE SUBMITTED THAT THE PERIOD OF ISSUE OF NOTICE U/ S 143(2) HAD LAPSED. THE REVENUE WAS ALREADY HAVING THE INFORMATION WHICH WA S FILED ALONG WITH RETURN OF INCOME. THEREFORE BY MAKING FISHING AND ROVING I NQUIRIES, REVENUE CANNOT MAKE ANY ADDITION. 21. SO FAR AS THE MERIT OF THE CASE IS CONCERNED SHE SUBMITTED THAT THE ASSESSEE HAD PROVIDED ALL THE REQUISITE EVIDENCES A ND THE SAME WERE NOT PROVED TO BE FALSE. IF THE AO WAS NOT SATISFIED WIT H THE EVIDENCES FILED BEFORE HIM, HE COULD HAVE ASKED THE ASSESSEE TO PRODUCE SO ME FURTHER INFORMATION. SHE SUBMITTED THAT THE VARIOUS NOTICES ISSUED U/S 1 33(6) HAVE NEVER COME BACK TO THE AO WHICH PROVES THAT THEY WERE DULY SER VED ON THOSE PERSONS. THE AO HAS NEVER CONFRONTED THE ASSESSEE ABOUT THE ADDR ESS OF THOSE COMPANIES NOR HAS ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS . THE ASSESSEE WAS NOT AWARE ABOUT WHAT WAS ASKED AND WHAT WAS REPLIED. TH EREFORE, ASSESSEE CANNOT BE HELD RESPONSIBLE FOR NON-COMPLIANCE OF TH OSE PERSONS OR NON- SUBMISSION OF REPLY BY THOSE COMPANIES. SO FAR AS T HE ALLEGATION OF THE AO THAT SEBI HAD FOUND MANIPULATIVE TRADING IN THE SHARES AND DISCREPANCIES OF FFSL IS CONCERNED, SHE SUBMITTED THAT THE ASSESSEE IS NOT A WARE ABOUT THE NON- COMPLIANCE BY SHRI PAWAN KUMAR SHARMA UNDER THE SEB I ACT. SHE SUBMITTED ITA NO.514, 515/DEL/2017 23 THAT THE ASSESSEE IS NOT AWARE WHO IS MR. KEDIA, TH EREFORE, THE SAME CANNOT BE HELD AGAINST THE ASSESSEE. 22. SHE FURTHER SUBMITTED THAT THERE IS NO DIRECT ALLEGATION AGAINST THE ASSESSEE BY THE AO. THE AO HAS NOT POINTED OUT ANY MISTAKE IN THE VARIOUS EVIDENCES SUBMITTED BY THE ASSESSEE. FURTHER, THOSE STATEMENTS WERE NEVER CONFRONTED TO THE ASSESSEE NOR ASSESSEE WAS GIVEN A NY OPPORTUNITY TO CROSS EXAMINE THOSE PERSONS. REFERRING TO VARIOUS DECIS IONS, SHE SUBMITTED THAT THE AO CANNOT MAKE ANY ADDITION WITHOUT POINTING OUT AN Y MISTAKE IN THE DOCUMENTS FILED BY THE ASSESSEE. FURTHER WHEN ANY M ATERIAL IS COLLECTED BEHIND THE BACK OF THE ASSESSEE, ADDITION CANNOT BE MADE ON THE BASIS OF SUCH MATERIAL UNLESS THE SAME IS CONFRONTED TO THE ASSES SEE. SHE ALSO REFERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. LAKHAN INDUSTRIAL LTD. REPORTED IN 2017 (3) TMI 153 1. 23. THE LD. COUNSEL FOR THE ASSESSEE FINALLY REFE RRING TO THE GROUNDS OF APPEAL FILED BY THE REVENUE SUBMITTED THAT THEY HAVE CHALL ENGED THE ORDER OF THE CIT(A) IN DELETING THE ADDITION ON MERIT BUT HAVE N OT CHALLENGED THE ORDER OF THE CIT(A) IN DELETING THE ADDITION IN ABSENCE OF A NY INCRIMINATING MATERIAL. 24. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER B OOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECIS IONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTANT CASE HAS FILED HI S ORIGINAL RETURN OF INCOME ON 30 TH MARCH, 2012 DECLARING TOTAL INCOME OF RS. 3,92,11, 220/-. IN RESPONSE TO NOTICE U/S. 153A OF THE IT ACT, THE ASSESSEE FILED RETURN IN RESPONSE TO NOTICE U/S 153A ON 5 TH JANUARY, 2015 DECLARING THE SAME INCOME. THE ASSESS EE IN HIS ITA NO.514, 515/DEL/2017 24 RETURN OF INCOME HAD CLAIMED EXEMPTION OF LONG TERM CAPITAL GAIN OF RS. 5,62,61,726/-. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) READ WITH SECTION 153A BY MAKING ADDITION OF THE LONG TERM CAPITAL GA IN AS BOGUS. FROM THE ORDER OF THE ASSESSING OFFICER, WE FIND NOWHERE IT IS MENTIONED THAT ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THE ENTIRE ADDITION MADE BY THE AO IS BASED ON POST SEARCH INQ UIRIES. THERE IS ALSO NO GROUND BY THE REVENUE THAT ANY SUCH INCRIMINATING M ATERIAL WAS FOUND OTHER THAN THE STATEMENT OF SHRI SUNDEEP GUPTA AT THE TIM E OF SEARCH. UNDER THESE CIRCUMSTANCES, WE HAVE TO ADJUDICATE AS TO WHETHER THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO IN ABSENCE OF ANY INCRIMINATING MATERIAL. 25. WE FIND THE LD. CIT(A) WHILE DELETING THE AD DITION HAS RELIED ON VARIOUS DECISIONS INCLUDING THE DECISION OF THE HONBLE JUR ISIDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWALA REPORTED IN 21 TAXMAN .COM 412 (234 TAXMAN 300). FINDING OF THE CIT(A) ON THIS ISSUE HAS ALREA DY BEEN REPRODUCED IN THE PRESIDING PARAGRAPHS. SO FAR AS THE RELIANCE BY THE LD. DR IN THE CASE OF SMT. DAYAWANTI VS. CIT (SUPRA) IS CONCERNED, WE FIND THE FACTS OF THAT CASE ARE COMPLETELY DIFFERENT FROM THAT OF THE FACTS OF THE PRESENT CASE. IN THAT CASE THE SON OF THE ASSESSEE HAD CATEGORICALLY ADMITTED THAT THERE WERE UNACCOUNTED PURCHASE AND SALE OF VARIOUS ITEMS IN SUPARI FROM D IFFERENT PARTIES. HE HAD ALSO ADMITTED THAT CERTAIN PURCHASES ARE UNACCOUNTED AND ACCORDINGLY HE HAD SURRENDERED CERTAIN INCOME. HOWEVER, IN THE PRESENT CASE THERE IS NO UNACCOUNTED TRANSACTION FOUND DURING THE COURSE OF SEARCH. THE CAPITAL GAIN THAT AROSE FROM THE SALE OF SHARES ARE ALREADY RECO RDED IN THE BOOKS OF ACCOUNTS AND NO INCRIMINATING MATERIAL WHATSOEVER W AS FOUND DURING THE COURSE OF SEARCH . THEREFORE, THE SAID DECISION IN OUR OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ITA NO.514, 515/DEL/2017 25 26. IT HAS COME TO OUR NOTICE SUBSEQUENT TO THE H EARING THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. MEETA G UTGUTIA REPORTED IN 2017 (5) TMI 1224 HAS HELD THAT ADDITION CANNOT BE MADE IN A BSENCE OF ANY INCRIMINATING MATERIAL AND THE DECISION IN THE CASE OF SMT. DAYAWANTI GUPTA HAS BEEN DULY CONSIDERED. SO FAR AS THE DECISION O F HONBLE KERALA HIGH COURT IN THE CASE OF E. N. GOPAL KUMAR (SUPRA) RELIED BY THE LD. DR IS CONCERNED, WE FIND THE SAID DECISION IS OF A NON-JURISDICTIONAL H IGH COURT AND THE TRIBUNAL IS BOUND BY THE DECISION OF THE JURISDICTIONAL HIGH CO URT. SINCE THE HONBLE HIGH COURT IN A NUMBER OF CASES RECENTLY HAS HELD THAT A DDITION CANNOT BE MADE IN ORDER PASSED U/S. 153A R.W.S. 143(3) IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE CASE OF CO MPLETED ASSESSMENTS, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE CIT(A) DELETING THE ADDITION IN ABSENCE OF ANY INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH. 27. WE FURTHER FIND THE REVENUE HAS NOT CHALLENGED THE VITAL LEGAL GROUND ON WHICH THE LD. CIT(A) HAS DELETED THE ADDITION. SINC E THE HONBLE JURISDICTIONAL HIGH COURT HAS CLEARLY HELD THAT ADDITION IN ORDER PASSED U/S 143(3)/ 153A CANNOT BE MADE IN ABSENCE OF ANY INCRIMINATING MATE RIAL AND SINCE IN THE INSTANT CASE, THERE IS NO EVIDENCE WHATSOEVER ON RE CORD THAT ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND SINCE THE ADDITION WAS MADE ON THE BASIS OF CERTAIN INQUIRIES CONDUCTED SU BSEQUENT TO THE SEARCH ON THE BASIS OF RETURN ALREADY FILED, THEREFORE, ON TH IS ISSUE ITSELF ADDITION HAS TO BE DELETED. WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE. ITA NO. 515/DEL./2017 ITA NO.514, 515/DEL/2017 26 28. AFTER HEARING BOTH THE SIDES, WE FIND THE GRO UND RAISED BY THE REVENUE IS IDENTICAL TO THE GROUND RAISED BY THE REVENUE ITA N O. 514/DEL/2017. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. FOLLOWING THE SAME REASONINGS THIS GROU ND BY THE REVENUE IS ALSO DISMISSED. 29. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 23.8.201 7 SD/ - SD/ - ( SUCHITRA KAMBLE ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 .08.2017 *BINITA* COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.514, 515/DEL/2017 27 DATE INITIAL 1. DRAFT DICTATED ON 3 /0 8 /2017 2. DRAFT PLACED BEFORE AUTHOR 3 /0 8 /2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER /0 8 /2017 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. /0 8 /2017 5. APPROVED DRAFT COMES TO THE SR.PS/PS /0 8 /2017 6. KEPT FOR PRONOUNCEMENT ON /0 8 /2017 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. ITA NO.514, 515/DEL/2017 28