Ketulkumar D. Jaiswal, Sabarkantha V. The Income Tax Officer, S.K. Ward-4, Modasa

ITA 546/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8448 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Unexplained cash credit; Search and seizure; Share purchase agreement; Earning of tax free income; Period of limitation; Accommodation entries
• Section: 68; 69; 148

Judgement Text

, ,LK ,LK,LK ,LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.546/AHD/2015 ( / ASSESSMENT YEAR : 2007-08) KETULKUMAR D. JAISWAL 58, GITANJALI SOCIETY, MALPUR ROAD, AT & POST : MODASA, DIST. SABARKANTHA - 383430 # VS. INCOME TAX OFFICER S.K. WARD 4, MODASA-383315 $ # % & # PAN/GIR NO. : AFZPJ 8563 P ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI D.K. PARIKH, A.R. ($'*) / RESPONDENT BY : SHRI JAMES KURIAN, SR.D.R. + ,*-. / DATE OF HEARING 31/08/2017 /012*-. / DATE OF PRONOUNCEMENT 28/09/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, AHMEDABAD, D ATED 05/01/2015 FOR THE ASSESSMENT YEAR (AY) 2007-08, ON THE FOLLOWING GROUNDS: I. THE LEARNED COMMISSIONER OF APPEALS-II, HAS ERRED I N FACTS AND IN LAW, IN CONFIRMED ADDITION AMT. OF RS.5,26,782/- AS A INCOME FROM OTHER SOURCES, WHICH LEARNED INCOME TAX OFFICE R HAS ADDED AS A UNEXPLAINED CREDIT U/S. 68 OF INCOME TAX ACT. THE LEARNED ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 2 - INCOME TAX OFFICER HAS ALSO NOT GRANTED LONG TERM C APITAL GAIN U/S.10(38) OF I. T. ACT. II. THE ASSESSMENT MADE U/S.143.(3) R.W.S.147 IS INVALI D, AS IT WAS MADE BEYOND THE PERIOD OF LIMITATION LAID DOWN IN S ECTION 153 OF THE ACT. III. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, T O AMEND, TO MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR AN Y OF THE GROUNDS OF APPEALS ON OR BEFORE THE FINAL HEARING, IF NECESSARY SO ARISES. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- ON VERIFICATION OF THE STATEMENT OF INCOME FILED, IT IS SEEN THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAIN OF RS.5 ,26,782/- ON SALE OF SHARES OF TALENT INFOWAYS, THE TRANSACTION OF WHICH WAS ENTERED INTO THROUGH MAHASAGAR GROUP OF CASES. IN THE CASE OF MA HASAGAR GROUP, A SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT, 1961 WAS UNDERTAKEN IN THE CASE OF M/S. MAHASAGAR SECURITIES PRIVATE LIMITED (NOW KNOWN AS M/S ALAG SECURITIES PVT. LTD.) AND IT S GROUP COMPANIES, MAINLY WHICH ARE M/S MIHIR AGENCIES PRIVATE LIMITED , M/S GOLD STAR FINVEST PRIVATE LIMITED AND M/S ALLIANCE INTERMEDIA TORIES & 'NETWORK PRIVATE LIMITED ON 25-11-2009. DURING THE COURSE OF SEARCH, IT WAS DISCOVERED THAT SHRI MUKESH M CHOKSI, A CHARTERED A CCOUNTANT BY PROFESSION HAD FLOATED SOME 34 COMPANIES FROM HIS O FFICE AT SHREE SADASHIV CHS, SANTA CRUZ EAST, MUMBAI. TWO OF THESE COMPANIES M/S TALENT INFO WAY LIMITED AND M/S BUNIYAD CHEMICALS LIMITED WERE ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 3 - COMPANIES LISTED ON THE AHMEDABAD AND PUNE STOCK EX CHANGES RESPECTIVELY. THERE WAS NO GENUINE BUSINESS BEING C ARRIED ON BY ANY OF THESE CONCERNS, AND THEY WERE ALL ENGAGED IN THE BUSINESS OF ISSUI NG BOGUS BILLS FOR PROVIDING LONG TERM CAPITAL GAINS/L OSS, SPECULATION PROFIT OR LOSS. 2.1 ON PERUSAL OF THE RETURN OF THE INCOME SHOWS TH AT THE ASSESSEE HAS SOLD SHARES OF TALENT INFOWAYS ON 05/05/2006 FOR TO TAL CONSIDERATION OF RS.5,35,510/- AND THE GAIN ARISING THEREON IS SHOWN UNDER THE HEAD LONG TERM CAPITAL GAINS AND INTEREST CLAIMED U/S.10(38) OF THE ACT. 2.2 DURING THE COURSE OF SEARCH IN THE ABOVE-MENTIO NED GROUP, A LIST OF BENEFICIARIES WAS FOUND. FROM THE DETAILS, AS FO RWARDED TO THIS OFFICE, IT IS SEEN THAT THE ASSESSEE HAS OBTAINED FAKE SHAR E TRANSACTION BILLS FROM THE GROUP AS MENTIONED ABOVE. THUS IT IS SEEN THAT THE ASSESSEE HAS SHOWN BOGUS LONG TERM CAPITAL GAIN WHICH HAS BEEN SHOWN A S EXEMPT U/S.10(38) OF THE ACT. IN VIEW OF THE FACT THAT THE ASSESSEE W AS ONE OF THE BENEFICIARIES OF THE FRAUDULENT TRANSACTIONS CARRIE D ON BY MAHASAGAR GROUP, THE ASSESSMENT WAS REOPENED AFTER DULY RECOR DING THE REASONS AND OBTAINING THE APPROVAL OF THE APPROPRIATE AUTHORITY AS PER THE PROVISIONS OF SECTION 151 OF THE ACT. ACCORDINGLY A NOTICE UND ER SECTION 148 OF THE ACT WAS ISSUED ON 30/03/2013. 2.3 THE RELEVANT PORTION OF THE SHOW-CAUSE IS REPRO DUCED AS UNDER: ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 4 - 'ON VERIFICATION OF THE STATEMENT OF INCOME FILED B Y YOU, IT IS NOTICED THAT YOU HAVE CLAIMED LONG TERM CAPITAL GAIN OF RS. 5,26,782/- ON SALE OF 5700 SHARES OF TALENT INFOWAY LTD. ON VERIFICATION OF DETAILS FILED BY YOU DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS SEEN THAT YOU HAVE MADE TRANSACTIONS OF PURCHASE AND SALE OF SHAR ES THROUGH MAHASAGAR SECURITIES PVT. LTD. AND ALLIANCE INTERME DIATERIS NETWORK PVT. LTD. RESPECTIVELY AND DURING THE YEAR YOU HAVE SHOWN SALE CONSIDERATION OF RS.5,35,510/- RECEIVED FROM ALLIAN CE INTERMEDIATERIS NETWORK PVT. LTD. IT IS FURTHER SEEN THAT YOU HAVE CLAIMED EXEMPTION U/S.10(38) OF THE I.T. ACT, FOR AN AMOUNT OF RS.5,3 6,782/-. IN THIS CONNECTION, YOU ARE REQUESTED TO EXPLAIN THE FOLLOW ING; 1. A SEARCH OPERATION WAS CARRIED OUT IN THE CASE O F MAHASAGAR SECURITIES PVT. LTD. GROUP ON 25/11/2009. ONE OF TH E COMPANY INCLUDED IN THE SAID GROUP WAS ALLIANCE INTERMEDIATERIS NETW ORK PVT. LTD. THROUGH WHOM YOU HAVE STATED TO BE CARRIED ON THE S AID TRANSACTION RESULTING INTO EXEMPTED CAPITAL GAIN. DURING THE CO URSE OF SEARCH STATEMENT OF SHRI MUKESH CHOKSI, DIRECTOR OF THE CO MPANIES WAS RECORDED ON 26/11/2009. IN ANSWER TO QUESTION NO.4, SHRI MUKESH CHOKSI, DEPOSED THAT HE IS ENGAGED IN FRAUDULENT BU ILDING ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROF IT/LOSS, STCG/LTCG/LOSS, SHARE APPLICATION MONEY ETC. IN VIE W OF THE ABOVE, THE PURCHASE AND SALE OF SHARES OF TALENT INFOWAY F ROM MAHASAGAR SECURITIES PVT. LTD. AND ALLIANCE INTERMEDIATERIS N ETWORK PVT. LTD. RESPECTIVELY IS FOUND TO BE SHAM AND BOGUS ONE. YOU ARE THEREFORE, REQUIRED TO SHOW CAUSE AS TO WHY THE SALE CONSIDERA TION OF RS.5,26,782/- RECEIVED BY YOU SHOULD NOT BE TREATED AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT AND THE SAME SHOULD NOT B E ADDED TO YOUR TOTAL INCOME'. 2.5 THE ASSESSEE VIDE LETTER DATED 04/12/2013 SUBMI TTED AS UNDER; 'DURING THE F.Y.2006-07 I HAVE SOLD EQUITY SHARES A MOUNT OF RS.5,26,782/- AND EARN LONG TERM CAPITAL GAIN WHICH IS EXEMPT U/S.10(38) OF THE IT ACT WHICH WAS CLEARLY MENTION ON FILLING MY IT RETURNS AS EXEMPTED INCOME. I HAVE PHYSICAL SHARES WHICH WERE TRANSFER TO D-MAT ACCOUNT AND SOLD THROUGH AUTHORIZ ED MEMBER OF STOCK EXCHANGE AND RECEIVED INVOICE AND CHARGING AL SO NECESSARY ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 5 - SERVICE TAX AND SECURITY TRANSACTION TAX ON INVOICE . I AM ENCLOSING HEREWITH PHOTOCOPY OF SALES OF EQUITY SHARES. THE S HARES WERE SOLD THROUGH D-MAT ACCOUNT. UNDER SECTION 10(38) OF IT A CT, CAPITAL GAIN ON SALE OF SHARES HELD FOR MORE THAN 12 MONTHS IS E XEMPT IF THEY ARE LISTED ON A STOCK EXCHANGE AND SECURITY TRANSACTION TAX IS PAID ON THEM. THE TRANSACTION IN SHARES BEING GENUINE AND S UFFICIENT EVIDENCE PRODUCE, THE LONG TERM CAPITAL GAIN SHOWN BY THE AS SESSEE AS EXEMPTED UNDER SECTION 10(38) OF IT ACT SO I REQUEST TO CONS IDER MY LONG TERM CAPITAL AS MY EXEMPT INCOME. ONCE THE ASSESSEE BELI EVES THAT THE PURCHASE SHARES ALONGWITH THE BROKER NOTES AND BILL ARE SUFFICIENT EVIDENCE THE TRANSACTION IS COMPLETED. IN VIEW OF M AGNITUDE TRANSACTION AND LOOKING OF THE SPRITE OF THE LAW IT IS HUMBLE S UBMITTED THE CAPITAL GAIN MAY BE CONSIDERED AS LONG TERM CAPITAL GAIN U/ S.10(38) OF THE ACT ON WHICH STT PAID AND BROKER INVOICE ALSO ATTAC H HEREWITH. 2.4 BEFORE DISCUSSING THE SUBMISSION OF THE ASSESSE E BY THE LD. AO, IT WAS VERY APT TO LOOK INTO THE SO CALLED TRANSACTION OF PURCHASE AND SALE OF SHARES CARRIED OUT BY THE ASSESSEE THROUGH MAHASAGA R GROUP. FROM THE DETAILS FILED, IT CAN BE SEEN THAT THE ASSESSEE HAS STATED TO BE PAID AN AMOUNT OF RS.8,728/- IN CASH MAHASAGAR SECURITIES P VT. LTD. THE FACTS OF THE CASE, IN SHORT, ARE THAT THE ASSESSEE HAS SOLD 5700 SHARES OF TALENT INFOWAY LTD. @ 61.35 THROUGH ALLIANCE INTERMEDIATER IS NETWORK PVT. LTD. ON 05/05/2006 AND SHOWN TO HAVE EARNED LTCG OF RS.5,26,782/- AND THE ASSESSEE CLAIMED THE SAID LTCG U/S.10(38) O F THE I. T. ACT. AS STATED ABOVE, A SEARCH OPERATION WAS CARRIED OUT IN THE GROUP CASES CONTROLLED BY SHRI MUKESH CHOKSHI, GOLD STAR FINVES T PVT. LTD. WAS ONE OF THE COMPANY SUBJECTED TO SEARCH, AND STATEMENT O F SHRI MUKESH CHOKSHI, DIRECTOR OF GOLD STAR FINVEST PVT. LTD., W AS ALSO RECORDED U/S.132(4) OF THE I.T. ACT, ON 26/11/2009. SHRI MUK ESH CHOKSHI, HAS ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 6 - DEPOSED THAT THE COMPANIES IN WHICH HE IS ONE OF TH E DIRECTORS ARE ENGAGED IN ISSUING SHARE ADJUSTMENT ENTRIES AND THE COMPANY USED TO RECEIVE AMOUNT EITHER IN CASH OR THROUGH CHEQUES FR OM ENTRY SEEKERS FOR A MEAGER COMMISSION OF 0.15%. AS THE ASSESSEE HAS SHO WN LTCG ON SALE OF SHARES, THE TRANSACTION OF WHICH WAS ENTERED INT O WITH ALLIANCE INTERMEDIATERIS NETWORK PVT. LTD., THE ASSESSEE WAS GIVEN A SHOW CAUSE NOTICE FOR EXPLANATION. HOWEVER, THE ASSESSEE FAILE D TO OFFER ANY EXPLANATION ABOUT THE SO CALLED TRANSACTIONS EXCEPT SAYING THAT TRANSACTIONS FOR PURCHASE AND SALE OF SHARES ARE GE NUINE. IN THE STATEMENT OF SHRI MUKESH CHOKSHI HE CATEGORICALLY STATED THAT THE COMPANIES CONTROLLED BY HIM ARE INDULGING IN ACCOMMODATION EN TRIES AND THEY USED TO RECEIVE EITHER IN CASH OR THROUGH CHEQUES FROM E NTRY SEEKERS. THE ASSESSEE DID NOT CONTROVERT THE STATEMENT OF SHRI M UKESH CHOKSHI, DIRECTOR OF THE ALLIANCE INTERMEDIATERIS NETWORK PV T. LTD. BUT SIMPLY STATED THAT THE TRANSACTION IS GENUINE WITHOUT ADDU CING ANY VALID PROOF. ON THE CONTRARY IT IS EVIDENT FROM THE RECORD THAT THE ASSESSEE HAS SHOWN TO HAVE PURCHASED THE SAID SHARES OF TALENT INFOWAY LTD. RANGING BETWEEN RS. 1.50 TO 1.55 FROM MAHASAGAR SECURITIES PVT. LTD. ON 15/04/2004, VIDE CONTRACT NOTE FORM A NO N/NN/0 8/-3 STATING THAT THE TRANSACTION HAS BEEN ENTERED IN NATIONAL STOCK EXCHANGE. AS PER THE GUIDELINES OF SEBI THE DELIVERY FROM NSE IS TO BE D ONE IN DMAT FORM WITHIN WEEK, IF THE TRANSACTION IS GENUINELY CARRIE D OUT. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAS RECEIVED THE SHARE IN PH YSICAL FORM IN THE MONTH OF MAY 2006. THUS, PRESUMING FOR WHILE THAT A NY GENUINE ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 7 - TRANSACTION IS DONE, SUCH TRANSACTION WOULD BE SAID TO BE ENTERED INTO IN THE MONTH OF MAY 2006 AND NOT ON 15/04/2004, AS CLA IMED BY THE ASSESSEE. 2.5 IN VIEW OF THE ABOVE, THE ASSESSEES SUBMISSION S THAT HE HAS RECEIVED SALE CONSIDERATION OF RS.5,26,782/- FROM A LLIANCE INTERMEDIATERIS NETWORK PVT. LTD. IS REJECTED AND T HE SAME IS TREATED AS UNEXPLAINED CREDIT U/S.68 OF THE ACT AND ADDED TO T HE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED FI RST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. LEARNED AR STATED THAT THE ASSESSEE, IN HIS REPLY, TO THE SHOW-CAUSE NOTICE BEARING NO.ITO/SK/WD.4/SC-F. NO.40/2013-14 D ATED 12/12/2013, REQUESTED FOR CROSS EXAMINATION OF SHRI MUKESH CHOKSHI AND SAME IS MENTIONED IN THE PAPER BOOK AT PAGE NO. 2. SAME WAS GRANTED BY THE LD. AO. 4.2 LD. AR ALSO CITED A JUDGMENT OF OUR COORDINATE BENCH IN ITA NO.810/AHD/2015 FOR ASST. YEAR 2006-07, IN THE CASE OF SHRI PRATIK SURYAKANT SHAH, WHERE HONBLE BENCH IS HELD AS UNDE R: ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 8 - 17. FOR THE SAKE OF THE COMPLETENESS OF THE ADJUDI CATION, EVEN ON FACTS OF THE CASE, THE ORDERS OF THE AUTHORITIES BELOW CA NNOT BE ACCEPTED. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHE N THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE C OMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARE S IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COULD SU GGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE AS SESSEE. THERE IS ALSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE N EVER WITH THE ASSESSEE. ON THE CONTRARY, THE SHARES WERE THEREAFT ER TRANSFERRED TO DEMAT ACCOUNT. THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHARES WERE SOLD. IN OUR UNDERSTANDI NG OF THE FACTS, IF THE SHARES WERE OF SOME FICTITIOUS COMPANY WHICH WA S NOT LISTED IN THE BOMBAY STOCK EXCHANGE/NATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFERRED TO DEMAT ACCOUNT. SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMODATION ENTRIES TO VARIOU S PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT T HE TRANSACTIONS WERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. IN THE LIGHT OF THE DECISIONS OF THE HON'BLE SUPREM E COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) AND CONSIDERING T HE FACTS IN TOTALITY THE CLAIM OF THE ASSESSEE CANNOT BE DENIED ON THE B ASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARD ING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PURCHASE T RANSACTIONS IN SHARES SUPPORTED BY BROKER'S CONTRACT NOTES, CONFIRMATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE D EMAT ACCOUNT. 19. AS MENTIONED ELSEWHERE AND AS AGREED BY THE REP RESENTATIVES OF BOTH THE SIDES; SINCE THE FACTS ARE COMMON IN ALL T HE IMPUGNED APPEALS, ALL THE APPEALS BY THE ASSESSEES ARE ALLOWED. THE A SSESSING OFFICER IS DIRECTED TO TREAT THE SURPLUS AS LONG TERM CAPITAL GAINS AND ALLOW THE EXEMPTION A CLAIMED BY THE ASSESSEES. 20. IN THE RESULT, ALL THE APPEALS FILED BY TH E ASSESSEES ARE ALLOWED. 4.3 LEARNED AR ALSO CITED AN ORDER OF MUMBAI BENCH IN ITA NO.7859/M/2011 FOR ASST. YEAR 2003-04, IN THE MATTE R OF SHRI JATIN P. AJMERA VS. ITO, RELEVANT PARA IS REPRODUCED HEREUND ER: ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 9 - 3. BEFORE THE LD. C1T(A), IT HAD BEEN CONTENDED TH AT THE 14200 SHARES OF BUNIYAD CHEMICALS LTD WERE PURCHASED IN CASH FOR RS.8,520/- ON 05/06/2001 THROUGH SUB-BROKER M/S.GOLD STAR FINVEST PVT. LTD AND THEY WERE TRANSFERRED IN NAME OF ASSESSEE IN THE COMPANI ES RECORDS ON 30/06/2001 AND THEN SOLD THROUGH THE SAME SUB-BROKE R M/S. GOLD STAR FINVEST PVT. LTD. ON 27/01/2003 FOR RS.12,00,610/- I.E. AFTER HOLDING THEM FOR MORE THAN 1 YEAR. THE SHARES PURCHASED AND SOLD WERE BACKED BY THE CONTRACT NOTES ISSUED BY SUB-BROKER M/S. GOL D STAR LINVEST PVT. LTD. WHO WAS REGISTERED MEMBER OF STOCK EXCHANGE AN D HAVING SEBI REGISTRATION NUMBER AND THAT THE SALE PROCEEDS WERE RECEIVED THROUGH CHEQUES ONLY. IT HAD ALSO BEEN CONTENDED THAT THE S HARES WERE OF LISTED COMPANIES AND TRADED AT THE RATES APPEARING IN NEWS PAPERS AND THE ASSESSEE HAD NO DOUBTS ON THE GENUINENESS AS THE SH ARES WERE RECEIVED BY ASSESSEE IN PHYSICAL FORM AND EVEN THE SALE PROC EEDS WERE RECEIVED BY CHEQUES. IT WAS THEREFORE CLAIMED BY THE ASSESSE E THAT THE TRANSACTIONS ARE GENUINE TRANSACTIONS ONLY. IT IS F URTHER CONTENDED THAT U/S 14(2)SCRA, IF THE PURCHASER AND SELLER DOES NOT HAVE KNOWLEDGE ABOUT THE RULES AND REGULATIONS OF SHARE TRADING TR ANSACTIONS, HIS INTEREST ARE PROTECTED AND SHOULD NOT BE FOUND FAUL T WITH ANY ACT OF COMMISSION OR OMISSION BY THE MEMBER OF THE STOCK E XCHANGE THROUGH WHOM THE SAID PERSON BUYS OR SELLS THE SHARES. THE REASONS AS TO WHY THE TRANSACTIONS WERE NOT REFLECTING IN THE STOCK E XCHANGE WERE BEST KNOWN TO THE BROKER ON WHOM ASSESSEE BELIEVED AS TH EY WERE REGISTERED BROKER AND ASSESSEE HAD NO CONTROL ON THE MANNER OF TRANSACTIONS WHICH THE BROKER ENTERED INTO. THE LD. CIT(A) HOWEV ER WAS NOT SATISFIED WITH THE CONTENTIONS RAISED BY THE ASSESSEE AND HEL D THAT THE TRANSACTIONS WERE NOT GENUINE. HE THEREFORE CONFIRM ED THE ADDITIONS MADE BY THE AO. THE ASSESSEE IS THUS IN APPEAL BEFO RE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. THE LD. AR AT THE OUTSET HAS STATED THAT TH E CASE OF THE ASSESSEE IS COVERED BY A SERIES OF TRIBUNAL DECISIONS IN VAR IOUS CASES WHEREIN ON SIMILAR STATEMENT OF SHRI MUKESH CHOKSHI, THE CASES WERE REOPENED AND ADDITIONS WERE MADE. IN ALL THESE CASES, THE TRIBUN AL HAS DECIDED THE ISSUE OF LONG TERM CAPITAL GAIN IN FAVOUR OF THE AS SESSEE AS THE SAID STATEMENT OF SHRI MUKESH CHOKSHI WAS A GENERAL STAT EMENT AND COULD NOT BE CORROBORATED BY ANY MATERIAL EVIDENCE. HE RE LIED UPON THE FOLLOWING DECISIONS IN THIS RESPECT: ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 10 - 1. KATARIA KETAN ISHWARLAL VS. ITO ITA NO.4304/M /2007 DECIDED ON 30/04/2010. 2. ACIT VS. SHRI RAVINDRAKUMAR TOSHNIWAL ITA NO.5302/M/2008 DECIDED ON 24/02/2010. 3. ITO VS. TRUPTIC SHAH ITA NO.1442/M/2010 DECIDE D ON 29/04/2011. 4. SMT. MANJULABEN L. SHAH VS. ITO ITA NO.3112/M/ 2014 DECIDED ON 31/10/2014 5. WE FIND THAT THE FACTS OF THE ABOVE STATED CASES WERE ALL MOST IDENTICAL TO THAT OF THE ASSESSEE. IN THE CASE OF KATARIA KETAN ISHWARLAL VS. ITO (SUPRA), THE TRANSACTIONS WERE CARRIED OUT THROUGH THE SAME BROKER I.E. M/S. GOLD STAR FINVEST PVT. LTD. THE TR IBUNAL ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING AS UNDER: '6.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM THE COPY OF THE SHARE CERTIFICATE, DEMAT ACCOUNT, SHARE TRANSFER FORM FILED IN THE PAPER BOOK, WE FIND THE ASSESSEE HAS P URCHASED 9500 SHARES OF KUSHAL SOFTWARE LTD. FROM M/S. HANDFUL IN VESTORS PVT. LTD. WE FIND THE ASSESSING OFFICER TREATED THE SALE OF SUCH SHARES BY THE ASSESSEE THROUGH M/S. GOLD STAR FINVEST PVT. LTD. AS BOGUS ON THE GROUND THAT MR. CHOKSI AND HIS BROKING COMPANY WERE ENGAGED IN GIVING FALSE SHARE TRANSACTION BILL S. HOWEVER, FROM THE COPY OF THE STATEMENT OF MR. CHOKSI, A COP Y OF WHICH IS FILED IN THE PAPER BOOK, WE FIND MR. CHOKSI HAS NOT SPECIFICALLY MENTIONED THE NAME OF THE ASSESSEE FOR OBTAINING BE NEFIT ON SALE OF SUCH BOGUS SHARES. THE LEARNED DR ALSO COULD NOT POINT OUT FROM THE STATEMENT OF SHRI CHOKSI THAT HE HAS TAKEN THE NAME OF THE ASSESSEE FOR OBTAINING ANY BENEFIT ON ISSUE OF SUCH BOGUS BILLS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE FACT THAT THE ASSESSEE HAD PURCHASE D THE SHARES WHICH WERE DULY TRANSFERRED TO THE DEMAT ACCOUNT, A ND, IN ABSENCE OF ANY ALLEGATION AGAINST THE ASSESSEE BY M R. CHOKSI IT CANNOT BE SAID THAT THE SALE OF THE SHARES IS BOGUS . IN THIS VIEW OF THE MATTER, WE HOLD THAT THE SALE TRANSACTION ENTER ED INTO BY THE ASSESSEE IS GENUINE TRANSACTION. SINCE THE ASSESSIN G OFFICER HAS NOT DISPUTED REGARDING THE PURCHASE OF HOUSE PROPER TY AND SINCE ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 11 - THE ASSESSEE FULFILS THE CONDITIONS FOR TREATING TH E PROFIT ON SALE OF SUCH SHARES AS LONG TERM CAPITAL GAIN AND FULFILLED THE CONDITIONS FOR ALLOWABILITY OF DEDUCTION U/S. 54F, THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO ALLOW THE CLAIM OF THE ASSESSEE. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED.' 6. FURTHER IN THE CASE OF 'ACIT VS. SHRI RAV INDRAKUMAR TOSHNIWAL' (SUPRA), THE SHARE PROFIT WAS EARNED FROM THE SALE OF SHARES OF 'M/S BUNIYAD CHEMICALS LTD. I.E. THE SAME ENTITY AS IN THE CASE OF THE ASSESSEE. THE TRIBUNAL HAS ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: 11. HAVING HEARD BOTH THE PARTIES AND HAVING CONSI DERED THEIR RIVAL CONTENTIONS, WE FIND THAT THE AO HAS TREATED THE SAID TRANSACTIONS AS BOGUS TRANSACTIONS ON THE GROUND TH AT- A) THE SALE TRANSACTIONS WERE NOT ON THE FLOOR OF T HE ASEL BUT WERE OFF MARKET TRANSACTIONS; B) THE ADDRESS OF THE M/S BUNIYAD CHEMICAL LTD. AND M/S TALENT INFOWAY LTD. WAS THE SAME AND THE CONTACT PERSON FOR M/S BUNIYAD CHEMICAL LTD. ON THE FLOOR OF ASEL WAS SHRI MUKESH CHOKSHI. C) MR. MUKESH CHOKSHI HAD STATED THAT THE SALE PROCEEDS HAVE BEEN PAID TO THE ASSESSEE THROUGH THE FUNDS PROVIDED BY THE ASSESSEE. 12. AS REGARDS POINT (A) ABOVE, WE FIND THAT THE IS SUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF MUKE SH R. MAROLIA WHEREIN IT HAS BEEN HELD THAT OFF MARKET TRANSACTIO N IS NOT A UNLAWFUL ACTIVITY AND THERE IS NO RELEVANCE IN SEEK ING DETAILS OF SHARE TRANSACTION FROM STOCK EXCHANGE WHEN THE SALE WAS NOT ON STOCK EXCHANGE AND RELYING UPON IT FOR MAKING ADDIT ION. 13. AS REGARDS POINTS (B) & (C) ABOVE, WE FIND THAT THE ASSESSEE HAS FILED RELEVANT DOCUMENTARY EVIDENCE BEFORE THE AO BUT THE AO HAS FAILED TO CONSIDER THE SAME. THE CIT[A] IN H IS ORDER HAS ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 12 - CONSIDERED THE SAID EVIDENCE AND HAS COME TO THE CO NCLUSION THAT THE SHARE TRANSACTIONS ARE GENUINE. HOWEVER, AS HEL D BY THE TRIBUNAL IN THE CASE OF RAJINIDEVI A. CHOWDHARY [CI TED SUPRA], WHICH IS ON SIMILAR SET OF FACTS, THE AO COULD HAVE VERIFIED FROM THE REGISTRAR OF COMPANIES AS TO WHETHER THE SHARES HAVE BEEN TRANSFERRED AND THE NAMES OF THE SHAREHOLDERS IN WH OSE NAMES SHARES HAVE BEEN TRANSFERRED. THE DECISION OF THE T RIBUNAL IN THE CASE OF RAJINIDEVI A. CHOWDHARY HAS ALSO BEEN UPHEL D BY THE JURISDICTIONAL HIGH COURT AS TAKEN NOTE OF BY THIS TRIBUNAL IN THE CASE OF SHRI PINAKIN L. SHAH [CITED SUPRA], TO WHIC H ONE OF US I.E. THE JUDICIAL MEMBER, IS A PARTY. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT[A] AND THE SAME IS UPHELD. 14 IN THE RESULT, REVENUE'S APPEAL IS DISMISS ED.' 7. THE FACTS OF THE CASE IN HAND BEING IDENTICAL AN D THERE BEING NO DIRECT OR MATERIAL EVIDENCE AGAINST THE ASSESSEE TO HOLD THAT THE SHARE TRANSACTIONS WERE NOT GENUINE, WE RESPECTFULLY FOLL OWING THE ABOVE DECISIONS OF THE TRIBUNAL, HOLD THAT ADDITIONS MADE BY THE AO U/S.68 ARE NOT WARRANTED AND ARE ACCORDINGLY DELETED. SINCE WE HAVE SET-ASIDE THE FINDINGS OF THE LOWER AUTHORITIES THAT THE TRANSACT IONS IN QUESTION WERE NOT GENUINE, HENCE THE CONSEQUENTIAL ADDITIONS MADE BY THE AO U/S 69 OBSERVING THAT THE ASSESSEE MIGHT HAVE PAID COMMISS ION FOR THE BOGUS TRANSACTIONS HAVE NO LEGS TO STAND. THE SAME ARE AL SO ACCORDINGLY ORDERED TO BE DELETED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE I S ALLOWED. 5. IN THIS CASE, SAME ARE MADE FOR THE D-MAT ACCOUN T AND STT HAS ALSO BEEN PAID. ASSESSEE HAS SOLD HIS SHARES TO AUT HORIZED STOCK EXCHANGE AND RECEIVED INVOICE DULY PAID STT ON HIS SELLING S HARES. ITA NO.546/AHD/ 2015 KETULKUMAR D. JAISWAL VS. ITO ASST.YEAR 2007-08 - 13 - 6. IN OUR OPINION, THE ORDER OF THE CIT(A) IS NOT S USTAINABLE. SO FAR GROUND NO.2 IS CONCERNED WITH REGARD TO ASSESSMENT MADE U/S.143(3) R.W.S. 147 IS INVALID, AS IT WAS MADE BEYOND THE PE RIOD OF LIMITATION. SAME IS NOT PRESSED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28/09/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/09/2017 PRITI YADAV, SR.PS !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-2, AHMEDABAD 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY // '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD