Rajeev Agarwal & Sons , New Delhi V. ITO, Ward- 31(1), New Delhi

ITA 6087/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6638 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Unexplained cash credit; Principle of natural justice; Application of stay; Accommodation entries; Sham transactions; Penny stocks; Capital Gains; Bogus
• Section: 131; 68; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER STAY APPLICATION NO.872/DEL/2018 AND ITA NO.6087/DEL/2018 ASSESSMENT YEAR: 2015-16 SHRI RAJEEV AGARWAL & SONS, C-756, GROUND FLOOR, NEW FRIENDS COLONY , JD, DELHI. PAN: AAAH3624M VS INCOME-TAX OFFICER, WARD - 31(1), NEW DELHI APPELLANT RESPONDENT ASSESSEE BY MS GUNJAN JAIN, CA REVENUE BY SHRI SURENDER PAL, SR. DR ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 3 RD AUGUST 2018 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-11, NEW DELHI (FOR SHORT LD. CIT(A)) IN APPEAL NO. 143/17-18, SUSTAINING THE ADDITION OF RS.21,85,891/- ADDED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 (FOR SHORT THE ACT), ASSESSEE PREFERRED THIS APPEAL BEING ITA NO.6087/DEL/2018. ASSESSEE HAS ALSO VIDE STAY APPLICATION NO.872/DEL/2018 REQUESTED THE ITAT TO KEEP THE DEMAND IN ABEYANCE TILL DISPOSAL OF THE APPEAL AS HE HAS ALREADY DEPOSITED APPROXIMATELY 41% OF THE TOTAL DEMAND. DATE OF HEARING 06.12.2018 DATE OF PRONOUNCEMENT 21.01.2019 2 WE HAVE HEARD BOTH THE PARTIES ON STAY APPLICATION. SINCE BOTH THE PARTIES HAS NO OBJECTION IN DISPOSING THE STAY APPLICATION ALONG WITH THE APPEAL, WE PROCEED TO DECIDE THE APPEAL AND STAY APPLICATION TOGETHER. 3. BRIEF FACTS OF THE CASE RELEVANT FOR THE DISPOSAL OF THIS APPEAL ARE THAT THE ASSESSEE FILED THEIR RETURN OF INCOME ON 03/08/2015 DECLARING A TOTAL INCOME OF RS.20,060/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LEARNED ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD SHOWN THE LONG-TERM CAPITAL GAIN OF RS.19,85,891/- FROM THE SALE OF SHARES AND HAS CLAIMED THE SAME AS EXEMPTION UNDER SECTION 10(38) OF THE ACT. ASSESSEE FURNISHED THE REQUISITE INFORMATION SOUGHT BY THE LEARNED ASSESSING OFFICER AND IT WAS FOUND THAT INITIALLY ASSESSEE PURCHASED 200 SHARES OF M/S BAVISCON VINCOM PRIVATE LIMITED AT THE RATE OF RS.1000 PER SHARE ON 22/06/2011 AND PAID RS. 2 LACS FOR ACQUISITION OF SHARES ON 7 TH OF MARCH 2012. SUBSEQUENTLY THE COMPANY M/S BAVISCON VINCOM PRIVATE LIMITED WAS ALLOTTED BONUS SHARES TO ITS SHAREHOLDERS IN THE RATIO OF 79:1 ON 23/03/2012 AND ACCORDINGLY THE ASSESSEE GOT 15,800 MORE SHARES OF M/S BAVISCON VINCOM PRIVATE LIMITED AND THE TOTAL NUMBER OF SHARES IN THE POSSESSION OF THE ASSESSEE HAD BECOME 16,000 SHARES. AFTER AMALGAMATION ORDER PASSED BY THE HONBLE MUMBAI HIGH COURT, M/S BAVISCON VINCOM PRIVATE LIMITED GOT AMALGAMATED WITH THE M/S UNNO INDUSTRIES LTD W.E.F. 31/03/2013 AND M/S UNNO INDUSTRIES LTD ALLOTTED 10 SHARES TO EACH SHAREHOLDER OF M/S BAVISCON VINCOM PRIVATE LIMITED FOR EACH SHARE HELD OF M/S BAVISCON VINCOM PRIVATE LIMITED AND ACCORDINGLY THE ASSESSEE GOT 1,60,000 SHARES OF M/S UNNO INDUSTRIES LTD. THE ASSESSEE SOLD THESE SHARES ON 18/08/2014 AND 19/12/2014 RESPECTIVELY FOR A CONSIDERATION OF RS.21,85,891/-AND COMPUTED THE CAPITAL GAINS EXEMPT UNDER SECTION 10(38) OF THE ACT TO THE TUNE OF RS.19,85,891/-. 3 4. AFTER EXAMINING THE ASSESSEE, IN THE LIGHT OF THE FACTS THAT ARE UNEARTHED DURING THE SEARCH AND SURVEY OPERATIONS CARRIED OUT BY THE DEPARTMENT ON SOME SHARE BROKING ENTITIES AND MORE THAN 20 ENTRY OPERATORS IN THE PROCESS OF WHICH THE STATEMENTS OF ONE PAWAN DALMIA AND ALOK HARLALKA WERE RECORDED, LEARNED ASSESSING OFFICER FOUND THAT ALL THAT IS APPARENT IS NOT REAL IN THIS CASE AND THE TRANSACTION OF PURCHASE AND SALE THAN BY THE ASSESSEE IS NOTHING BUT SHAM TRANSACTION AND AIMED ONLY TO BRING UNACCOUNTED MONEY OF THE ASSESSEE IN THE GUISE OF EXEMPTED LONG TERM CAPITAL GAINS WITH THE PAPER WORK DONE MERELY TO GIVE A COLOUR OF AUTHENTICITY TO THE TRANSACTION TO CREATE A FACADE OF LEGITIMATED TRANSACTIONS. RECORD REVEALS THAT THE ASSESSEE REQUESTED FOR THE COPY OF STATEMENT OF MR PAWAN DALMIA, MANAGING DIRECTOR OF M/S UNNO INDUSTRIES LTD RECORDED ON BOTH UNDER SECTION 131 OF THE ACT AND ALSO FOR AN OPPORTUNITY TO CROSS EXAMINE HIM, BUT THE LEARNED ASSESSING OFFICER REJECTED THE SAME HOLDING THAT SUCH A REQUEST WAS ADJUSTED TO LINGER THE ASSESSMENT PROCEEDINGS AND THE STATEMENT OF MR PAWAN DALMIA WAS NOT DIRECTLY MENTIONING THE ASSESSEES NAME BUT WAS JUST COLLATERAL IN NATURE AND THE PURPOSE OF MENTIONING THE STATEMENT OF MRS DALMIA WAS ADJUSTED TO NARRATE THE PURPOSE OF AMALGAMATION AND TO TELL THE BUSINESS AFFAIRS OF THE AMALGAMATED COMPANY. ON THIS PREMISE LEARNED ASSESSING OFFICER BROUGHT ALL THE SALE CONSIDERATION OF THE SHARES TO THE TUNE OF RS.21,85,891/-TO TAX UNDER SECTION 68 OF THE ACT. 5. LD. CIT(A) DISMISSED THE APPEAL PREFERRED BY THE ASSESSEE WHILE CONCURRING WITH THE FINDINGS OF THE LEARNED ASSESSING OFFICER AND SPECIFICALLY HOLDING THAT MR PAWAN DALMIA, MD OF THE COMPANY ADMITTED THAT THE COMPANY WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES; THAT THE SHARES WERE INCREASED BY LEAPS AND BOUNDS IN SHORT SPAN OF TIME; THAT THE INVESTIGATION DEPARTMENT HAD LISTED THE COMPANIES NAME AS ACCOMMODATION 4 ENTRY PROVIDER; THAT THE TEST OF HUMAN PROBABILITIES IS NOT SATISFIED IN THIS MATTER; AND THAT SINCE IT IS CONSIDERED TO BE A SHAM TRANSACTION, EXEMPTION UNDER SECTION 10(38) OF THE ACT SHALL NOT BE GRANTED. 6. THE ASSESSEE IS, THEREFORE, BEFORE US IN THIS APPEAL CHALLENGING THE IMPUGNED ORDER MAINLY ON TWO GROUNDS. FIRSTLY, THAT THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN REFERRING TO THE STATEMENTS OF MR PAWAN DALMIA AND MR ALOK WITHOUT FURNISHING A COPY THEREOF TO THE ASSESSEE AND WITHOUT AFFORDING HIM AN OPPORTUNITY TO CROSS EXAMINE THEM. SECONDLY IT IS STATED THAT THE SHARES OF M/S UNNO INDUSTRIES LTD LISTED AT BOMBAY STOCK EXCHANGE, THE PURCHASE AND SHARES WERE THROUGH THE BROKER M/S RUDRA SHARES AND STOCKBROKERS LTD AND THE MONEY IS PROCESSED THROUGH BANKING CHANNELS. FURTHER, THERE IS NO ALLEGATION OF MANIPULATION BY EITHER SEBI OR BSE AND THE DOCUMENTATION IS PROPER. 7. SECONDLY, IT IS SUBMITTED THAT THE SHARES ARE PURCHASED AND SOLD THROUGH THE SHARE BROKER AND THE MONEY WAS PAID AND RECEIVED THROUGH BANKING CHANNELS. IN THE CIRCUMSTANCES IT IS SUBMITTED THAT MERE SUSPICION OF THE LEARNED ASSESSING OFFICER SHOULD NOT LEAD TO THE ADDITION OF THE SALE CONSIDERATION UNDER SECTION 68 OF THE ACT, THAT TOO, WHEN LEARNED ASSESSING OFFICER HIMSELF ADMITTED THAT THERE IS NO MENTION OF ASSESSEES NAME IN THE STATEMENT OF MR PAWAN DALMIA. 8. PER CONTRA, IT IS THE ARGUMENT OF LD. DR THAT THE DEMAT ACCOUNT OF THE ASSESSEE DOES NOT CONTAIN THE DATE OF CREDIT OF THE SHARES; THAT M/S UNNO INDUSTRIES WAS SUSPENDED TWICE ON 31 ST OF MARCH 2016 AND 26 TH MAY 2016 DUE TO SURVEILLANCE MEASURES AND PENAL REASONS RESPECTIVELY BY SEBI AS COULD BE SEEN FROM THE SCREENSHOT OF THE BSE INCORPORATED BY THE LEARNED ASSESSING OFFICER IN HIS ORDER. SHE FURTHER ARGUED THAT THE LEARNED ASSESSING OFFICER 5 NOTED THAT THE FINANCIALS OF THE COMPANIES SHOW THAT THE MOVEMENT OF PRICE WAS ABRUPT, UNREALISTIC AND NOT BASED UPON ANY REALISTIC PARAMETERS; THAT THE HISTORY OF INVESTMENT IN SHARES MADE BY THE ASSESSEE ALSO GENERALLY REVEALS THAT HE HAS NOT BEEN DEALING IN SHARES IN SUCH A HUGE QUANTITY ON A REGULAR BASIS BUT IT WAS FOUND THAT THE ENTRIES OF LTCG WERE TAKEN BY OTHER MEMBERS OF THE ASSESSEE FAMILY. HE SUBMITS THAT THE APPELLANT IS DISPROVED TO BE REAL IN THIS MATTER IN VIEW OF THE STATEMENT OF MR PAWAN DALMIA, WHO CATEGORICALLY STATED THAT THEY INVOLVED THEMSELVES IN PROVIDING ACCOMMODATION ENTRIES RECORDING SALE AND PURCHASE OF SHARES THROUGH THEIR COMPANIES AND WHEN IT IS APPLIED TO THE FACTS OF THE CASE IN THE LIGHT OF THE HUMAN PROBABILITIES, IT IS CLEAR THAT THE APPELLANT IS NOT TRUE. SHE FURTHER SUBMITS THAT THE LEARNED ASSESSING OFFICER FURTHER NOTED THAT THE SHARES WERE CLAIMED TO HAVE BEEN PURCHASED AND 22/06/2011 BUT THE PAYMENT WAS MADE ONLY ON 07/03/2012 AND IF IT IS A REAL TRANSACTION THERE WAS NO NEED TO WAIT FOR MORE THAN 9 MONTHS FOR PAYMENT OF THE SALE CONSIDERATION WHEN SUCH SHARES WERE PURCHASED. LD. DR PRAYED THE TRIBUNAL TO CONSIDER THE HUMAN PROBABILITIES INVOLVED IN THIS MATTER IN THE LIGHT OF THE DECISION OF THE HONBLE APEX COURT IN THE CASES OF SUMATHI DAYAL AND DURGA PRASAD MORE AND TO DISMISS THE APPEAL. 9. WE HAVE GONE THROUGH THE RECORD. IT IS SUBMITTED THAT THE SHARES OF M/S BAVISCON VINCOM PRIVATE LIMITED WERE PURCHASED ON 22 ND JUNE, 2011, BONUS SHARES WERE ALLOTTED AT THE RATIO OF 79:1 ON 23/03/2012, SHARES WERE DEPOSITED IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH M/S RELIGARE SECURITIES LTD ON 10/09/2012, THE AMALGAMATION TOOK PLACE ON 30 TH MARCH 2013 PURSUANT TO THE ORDERS DATED 18/01/2013 ISSUED BY THE HONBLE BOMBAY HIGH COURT, AND THE ASSESSEE SOLD THEM AWAY ON 18 TH AUGUST 2014 AND 19 TH DECEMBER 2014 AFTER HOLDING THEM FOR A PERIOD OF MORE THAN 12 MONTHS. THE DEMATERIALISATION REQUEST FORM INCORPORATED AT PAGE NO. 57 OF THE PAPER BOOK SHOWS THAT THE 6 REQUEST WAS MADE BY THE ASSESSEE ON 10/09/2012 TO DEMATERIALISE THE SHARES THAT WERE ENCLOSED, TO THEIR ACCOUNT. THE STATEMENT OF TRANSACTIONS FOR THE PERIOD BETWEEN 1 ST OF DECEMBER 2013 AND 31 ST OF DECEMBER 2013 INCORPORATED AT PAGE NO. 53 OF THE PAPER BOOK MAINTAINED BY M/S. RELIGARE SECURITIES LTD CLEARLY SHOW THAT DURING THAT PERIOD THE ASSESSEE HELD 1,60,000 SHARES OF UNNO INDUSTRIES LTD AND THEIR VALUE WAS RS. 58,80,000/-. FURTHER THE SHARE TRANSFER ADVICE DATED 23 RD OF FEBRUARY 2012 ISSUED BY THE M/S BAVISCON VINCOM PRIVATE LIMITED, THE COPY OF WHICH IS INCORPORATED AT PAGE NO. 58 OF THE PAPER BOOK SHOWS THAT 200 SHARES WERE RETURNED AFTER REGISTERING THEM IN THE NAME OF THE ASSESSEE AND IT ALSO TOOK PLACE ON 22 ND FEBRUARY 2012. THE CONFIRMATION OF ACCOUNTS DATED 27 TH MARCH 2012 ISSUED BY OASIS TRADEWINGS PRIVATE LIMITED ESTABLISHES THAT TOWARDS THE COST OF 200 EQUITY SHARES OF BVPL SOLD BY THEM TO THE ASSESSEE THEY HAVE RECEIVED THE BANK CHEQUE NO. 199304 ON 22 ND JUNE, 2011. THE MONEY RECEIPT, COPY OF WHICH IS TO BE FOUND AT PAGE NO. 59 SHOWS THAT IT IS ONLY AFTER RECEIPT OF SUCH SHARE TRANSFER, THE AMOUNT WAS PAID. 10. LD. ASSESSING OFFICER REFERRED TO THE SAID SURVEY OPERATIONS AND THE RECORDING OF THE STATEMENTS OF VARIOUS SHARE BROKERS AND ENTRY OPERATORS INCLUDING THE MANAGING DIRECTOR/DIRECTOR/PROMOTOR OF M/S UNNO INDUSTRIES LTD WHEREIN THERE WAS AN ADMISSION ON THE PART OF THE MANAGING DIRECTOR OF THE SAID ENTITY BY NAME MR PAWAN DALMIA AND MR PAWAN DALMIA ADMITTED THAT THE COMPANY WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IT IS NOT THE CASE OF THE REVENUE THAT MR PAWAN DALMIA REFERRED TO ANY INVOLVEMENT OF THE ASSESSEE IN THE AFFAIRS OF THIS COMPANY OR KNOWLEDGE OF THE ASSESSEE ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY THEM. 11. ASSESSEE PRODUCED BEFORE THE LEARNED ASSESSING OFFICER THAT THE DOCUMENTS SUBMITTED BY HIM, NAMELY, THE CONTRACT NOTE DATED 18/08/2014 FOR 7 SALE OF SHARES OF M/S UNNO INDUSTRIES LTD IN BSE THROUGH REGISTERED STOCK BROKER M/S RUDRA SHARES AND STOCKBROKERS, BANK STATEMENT OF THE ASSESSEE FROM 01/08/2014 TO 31/08/2014 AND 01 ST DECEMBER, 2014 TO 31 ST DECEMBER 2014 SHOWING THAT THE CONSIDERATION OF SALE OF SHARES WAS RECEIVED, TRANSACTION STATEMENT ISSUED BY M/S RELIGARE SECURITIES, LETTER ISSUED BY M/S UNNO INDUSTRIES LTD ON 12/02/2013, DEMATERIALISATION REQUEST FORM DATED 10/09/2012, SHARE TRANSFER ADVICE DATED 23/02/2012, MONEY RECEIPT DATED 16 TH FEBRUARY 2012 ISSUED BY OASIS TRADEWINGS PRIVATE LIMITED, CONFIRMATION BY VARIOUS TRADE LINKS PRIVATE LIMITED ON 27 TH MARCH 2012 AND THE SHARE BILL DATED 22 ND JUNE, 2011 - WOULD PROVE THE GENUINENESS OF THE TRANSACTION. THE IDENTITY OF THE PARTIES IS NOT UNDER CLOUD AND GENUINENESS OF THE TRANSACTION IS EXPLAINED BY WAY OF ABOVE DOCUMENTS. LEARNED ASSESSING OFFICER NEVER SUSPECTED THE CAPACITY OF THE ASSESSEE FOR PURCHASE OF THE SHARES. AS A MATTER OF FACT, THE STATEMENT OF TRANSACTIONS ISSUED BY M/S RELIGARE SECURITIES LTD CLEARLY ESTABLISHES THAT THE ASSESSEE WAS HOLDING A SIZEABLE PORTFOLIO AND IT IS NOT THE STRAY INCIDENT OF PURCHASING ONE SCRIP FOR THIS PURPOSE ONLY. THERE IS NO ALLEGATION AS TO THE INCORRECTNESS OF THE DOCUMENTS OR MANIPULATION BY SEBI OR BSE. 12. IN THE CASE OF ANJALI PANDIT VS. ACIT (2017) 88 TAXMANN.COM 657 (MUMBAI-TRIB), THE MUMBAI BENCH OF THE TRIBUNAL HELD THAT WHEN ALL THE TRANSACTIONS OF PURCHASES AND SALES OF SHARES WERE EVIDENCED AND SUPPORTED WITH BILLS AND VOUCHERS OF THE BROKERS AND CONFIRMATIONS FROM THE BROKERS, ACKNOWLEDGEMENT OF PAYMENTS AND RECEIVING THE SALE PROCEEDS BY ACCOUNT PAYEE CHEQUES, IN THE ABSENCE OF ANY EVIDENCE ON RECORD TO PROVE OR REBUT THE EVIDENCES PRODUCED BY THE ASSESSEE, THE TRANSACTIONS HAVE TO BE CONSIDERED AS A GENUINE AND ADDITION MADE UNDER SECTION 68 HAS TO BE DELETED. 8 13. IN THE CASE OF MS FERREH MARKER VS. ITO (ITA NO. 3801/MUM/2011) IT WAS HELD THAT THE LONG TERM CAPITAL GAINS ON THE SALE OF PENNY STOCKS CANNOT BE TREATED AS BOGUS AND UNEXPLAINED CASH CREDIT IF THE DOCUMENTATION IS IN ORDER AND THERE IS NO ALLEGATION OF MANIPULATION BY SEBI OR BSE AND THE DENIAL OF RIGHT OF CROSS-EXAMINATION IS A FACTUAL FLOWER WHICH RENDERS THE ASSESSMENT ORDER A NULLITY. 14. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PCIT VS. RUNGTA PROPERTIES PRIVATE LIMITED (2017) 83 TAXMAN.COM 106 (CALCUTTA) HELD THAT WHEN THE AO HAS NOT DOUBTED THE GENUINENESS OF THE DOCUMENTS BASED ON THE INFORMATION ON RECORD BY THE ASSESSEE, NO DISALLOWANCE CAN BE MADE. 15. FURTHER RELIANCE IS PLACED ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT REPORTED IN PCIT VS PREM PAL GANDHI IN ITA NO.95/2017 WHERE THE HONBLE HIGH COURT HELD THAT THE APPRECIATION IN VALUE OF SHARES IS HIGH, DOES NOT JUSTIFY THE TRANSACTION BEING TREATED AS A FICTITIOUS AND THE CAPITAL GAINS BEING ASSESSED AS UNDISCLOSED INCOME IF (A) THE SHARES ARE TRADED ON THE STOCK EXCHANGE, (B) THE PAYMENTS AND RECEIPTS ARE ROUTED THROUGH THE BANK, (C) THERE IS NO EVIDENCE TO INDICATE IT IS A CLOSELY HELD COMPANY AND (D) THE TRADING ON THE STOCK EXCHANGE WAS MANIPULATED IN ANY MANNER. 16. FURTHER, BASING ON THE STATEMENTS OF MR PAWAN DALMIA AND ALOK HARLALKA, THE DIRECTOR/PROMOTERS OF M/S UNNO INDUSTRIES LTD RECORDED U/S 132(1) OF THE ACT BEFORE THE DIT (INV) , KOLKATA AT PARA NO. 8.2 OF THE ASSESSMENT ORDER, LEARNED ASSESSING OFFICER REACHED A CONCLUSION THAT THE TRANSACTIONS MADE BY THE ASSESSEE WERE NOT GENUINE TRANSACTIONS BUT SHAM TRANSACTIONS. HOWEVER, IT IS AN ADMITTED FACT THAT NO OPPORTUNITY OF CROSS- EXAMINATION WAS GIVEN TO THE ASSESSEE ON THE GROUND THAT SUCH A REQUEST WAS JUST TO LINGER ON THE ASSESSMENT PROCEEDINGS AND FURTHER THAT THE STATEMENT OF 9 PAWAN DALMIA WAS NOT DIRECTLY MENTIONING THE ASSESSEES NAME BUT WAS JUST COLLATERAL IN NATURE AND THE PURPOSE OF MENTIONING THE STATEMENT OF MR PAWAN DALMIA WAS JUST TO NARRATE THE PURPOSE OF AMALGAMATION AND TO TELL THE BUSINESS AFFAIRS OF THE AMALGAMATED COMPANY. 17. ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M/S ANDAMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRAL EXCISE 2016 (15) SCC 785 FOR THE PRINCIPLE THAT THE FAILURE TO PROVIDE THE ASSESSEE THE RIGHT TO CROSS EXAMINE THE WITNESS WHOSE STATEMENT ARE RELIED UPON, RESULTS IN BREACH OF PRINCIPLES OF NATURAL JUSTICE AND IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULLITY. IN THIS CASE ALSO AN OPPORTUNITY FOR THE CROSS EXAMINATION OF THE PERSONS, ON WHOSE STATEMENTS THE LEARNED AO BASED HIS SUSPICION WAS NOT ALLOWED TO THE ASSESSEE, SO THAT THE ASSESSEE COULD HAVE DEFENDED HIMSELF FROM THE ALLEGATIONS, IF ANY, MADE AGAINST HIM. IN THESE CIRCUMSTANCES, MERE SUSPICION OF THE LEARNED ASSESSING OFFICER DOES NOT TAKE THE PLACE OF LEGAL PROOF OF ANY BOGUS TRANSACTION. IT SHALL BE KEPT IN MIND THAT THE ASSESSEE HELD THE SHARES QUITE FOR A LONG TIME BETWEEN 22 ND OF JUNE 2011 TILL 23RE MARCH, 2012 BONUS SHARES WERE ALLOTTED AND SUBSEQUENTLY DEPOSITED THEM IN THE DEMAT ACCOUNT ON 10/09/2012. 18. IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION, WE FIND IT DIFFICULT TO SUSTAIN THE IMPUGNED ORDER. WE, ACCORDINGLY, WHILE AGREEING WITH THE CONTENTIONS OF THE ASSESSEE DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION OF RS.21,85,891/- MADE UNDER SECTION 68 OF THE ACT. 19. SINCE WE HAVE DISPOSED OF THE ASSESSEES APPEAL, STAY APPLICATION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND DISMISSED AS SUCH. 10 20. IN THE RESULT WHEREAS APPEAL OF THE ASSESSEE STANDS ALLOWED, STAY APPLICATION IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JANUARY, 2019. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21 ST JANUARY, 2019 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 14.01.2019 DRAFT PLACED BEFORE AUTHOR 17.01.2019 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. 11