Rajni Jain, Bathinda V. DCIT, CC-1, Ludhiana

ITA 627/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6515 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTI
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Search and seizure; Salary income; Document seized; Principle of natural justice; Question of law; Accommodation entries; Block assessment; Right to appeal; Retraction; Sham transactions; Revised return; Penny stocks; Documents seized; Bonafide mistake; Capital Gains
• Section: 143(3); 133A; 153A; 143(1); 250; 251; 143(2); 64; 73; 72; 13; 119; 22; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 625 & 626/CHD/2019 / ASSESSMENT YEARS : 2013-14 & 2014-15 SHRI TARUN JAIN, C/O M/S ROYAL LIFESTYLE JEWELLERS PVT LIMITED, BHATINDA THE D CIT, CENTRAL CIRCLE-1, CHANDIGARH ./PAN NO: AHWPJ2158H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA DATE D 11.3.2018 / APPELLANT /RESPONDENT ./ ITA NOS. 627 & 628/CHD/2019 / ASSESSMENT YEARS : 2013-14 & 2014-15 SMT. RAJNI JAIN, C/O M/S ROYAL LIFESTYLE JEWELLERS PVT LIMITED, BHATINDA THE DCIT, CENTRAL CIRCLE-1, CHANDIGARH ./PAN NO: AANPJ0005H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA DATE D 11.3.2018 / APPELLANT /RESPONDENT ./ ITA NOS. 629 & 630/CHD/2019 / ASSESSMENT YEARS : 2013-14 & 2015-16 SANJAY JAIN & SONS, C/O M/S ROYAL LIFESTYLE JEWELLERS PVT LIMITED, BHATINDA THE DCIT, CENTRAL CIRCLE-1, CHANDIGARH ./PAN NO: AALHS3790N APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA DATE D 11.3.2018 / APPELLANT /RESPONDENT ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 2 ./ ITA NOS. 707 TO 708/CHD/2019 / ASSESSMENT YEARS : 2011-12 & 2012-13 SHRI SANJAY JAIN, C/O M/S ROYAL LIFESTYLE JEWELLERS PVT LIMITED, BHATINDA THE DCIT, CENTRAL CIRCLE-1, CHANDIGARH ./PAN NO: ABJPJ5318E APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA DATE D 12.3.2018 / APPELLANT /RESPONDENT & ./ ITA NOS. 709 TO 710/CHD/2019 / ASSESSMENT YEARS : 2013-14 & 2014-15 SHRI SANJAY JAIN, C/O M/S ROYAL LIFESTYLE JEWELLERS PVT LIMITED, BHATINDA THE DCIT, CENTRAL CIRCLE-1, CHANDIGARH ./PAN NO: AHWPJ2158H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA DATE D 11.3.2018 / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ' ! / REVENUE BY : SMT. MONA MOHANTI, CIT DR # $ % /DATE OF HEARING : 18.12.2019 &'() % / DATE OF PRONOUNCEMENT : 27.01.2020 (* / ORDER PER BENCH: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE DI FFERENT BUT RELATED ASSESSEES AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, LUDHIANA [HEREINAFTER REFER RED TO AS CIT(A)]. ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 3 2. THOUGH NUMEROUS GROUNDS HAVE BEEN TAKEN BY THE A SSESSEES IN ALL THE APPEALS, BUT THE MAIN ISSUE BEING IDENTICAL IN ALL THE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER. ITA NO. 625/CHD/2019 IS TAKEN AS LEAD CASE FOR NARRATION OF FACTS. 3. THE GROUNDS RAISED IN THIS APPEAL BY THE ASSESSE E ARE REPRODUCED AS UNDER:- ITA NO. 625/CHD/2019 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED ON FACTS AND IN LAW BY UPHOLDING THE ADDITION ON THE GROUND THAT ASSESSEE APPELLANT HAS SURRENDERED THE AMOUNT OF CAPITAL GAIN DURING THE SEARCH WITHOUT PROPERLY APP RECIATING THE FACTS THAT SURRENDER WAS A CONDITIONAL I.E. SUB JECT TO NO PENAL ACTION AND WITH A RIGHT TO CONTEST THE TAXABI LITY THEREOF IN VIEW OF ANY NEW DEVELOPMENT IN THE MATTER. AS SU CH, ADDITION CONFIRMED IS UNJUSTIFIED. THE SAME BE DELE TED. 2. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION MADE IN THE ASSESSMENT U/S 1 53A OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACTS T HAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH IN CONTEXT WITH IMPUGNED ADDITION ESPECIALLY WHEN THE ASSESSME NT HAS ALREADY BEEN COMPLETED U/S 143(1) OF THE ACT. AS SU CH, ADDITION CONFIRMED IS UNJUSTIFIED. THE SAME BE DELE TED. 3. THAT THE LEARNED CIT(A) HAS ERRED IN NOT DECIDING T HE GROUND NO. 2 OF THE APPEAL. THE SAME IS REPRODUCED HERE AS UNDER:- 'THAT THE LEANED AO HAS ERRED IN LAW AND ON FACTS B Y DISALLOWING THE CLAIM OF THE ASSESSEE APPELLANT UND ER SECTION 10(38) OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACT THE IN THE ORIGINAL ASSESSMEN T WHICH WAS MADE U/S 143(3) OF THE INCOME TAX ACT, IN ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 4 THE CASE OF SH. SANJAY JAIN AND SMT. RAJNI JAIN I.E . FATHER AND MOTHER OF THE ASSESSEE, SIMILAR TRANSACT ION OF LONG TERM CAPITAL GAIN EARNED IN THE SHARES OF T HE SAME COMPANY WAS CONSIDERED AS GENUINE BY THE LEARNED AO AT THAT TIME. AS SUCH ADDITION MADE IS WITHOUT ANY BASIS UNJUSTIFIED AND UNCALLED FOR. THE SAME BE DELETED.' 4. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION WITHOUT APPRECIATING THE DOC UMENTARY EVIDENCES PLACED ON RECORD AND CASE LAWS REFERRED B Y THE ASSESSEE APPELLANT AND REBUTTING THE SAME ESPECIALL Y WHEN ALL THE CONDITIONS OF SECTION 10(38) OF THE INCOME TAX ACT ARE FULFILLED. AS SUCH, ADDITION CONFIRMED IS UNJUSTIFI ED. THE SAME BE DELETED. 5. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION BY FOLLOWING THE SINGLE MEMB ER JUDGEMENT OF ITAT, DELHI BENCH IGNORING TWO MEMBER JUDGEMENTS OF ITAT. DELHI BENCH AND JUDGEMENTS OF JURISDICTIONAL HIGH COURT. AS SUCH, ADDITION CONFIR MED IS UNJUSTIFIED. THE SAME BE DELETED. 6. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION ON THE THEORY OF HUMAN PROBA BILITY WHEREAS AS PER FACTS OF THE CASE THIS THEORY IS NOT APPLICABLE. AS SUCH, ADDITION CONFIRMED IS UNJUSTIFIED. THE SAM E BE DELETED. 7. THAT THE LEARNED CIT(A), LUDHIANA HAS ERRED ON FACT S AND IN LAW BY UPHOLDING THE ADDITION ON THE THEORY OF PREP ONDERANCE OF PROBABILITY IGNORING THE EXPLANATIONS FURNISHED AND MATERIAL PLACED ON RECORD ESPECIALLY WHEN MERE SUSP ICION CANNOT TAKE THE CHARACTER OF EVIDENCE. AS SUCH, ADD ITION CONFIRMED IS UNJUSTIFIED. THE SAME BE DELETED. 8. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION MADE U/S 68 OF THE INCOME T AX ACT IGNORING THE FACTS THAT THE AO HAS NOT EXAMINED THE DETAILS OF THE BUYERS OF SHARES ESPECIALLY WHEN OBLIGATION OF THE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 5 ASSESSEE APPELLANT IN REGARDS TO INITIAL EXPLANATIO N HAS BEEN DISCHARGED. AS SUCH, ADDITION CONFIRMED U/S 68 OF T HE ACT IS ILLEGAL AND UNJUSTIFIED. THE SAME BE DELETED. 9. THAT THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN L AW BY UPHOLDING THE ADDITION ON THE GROUND THAT SALE RECE IPT OF SHARE WAS OBTAINED AFTER PAYING THE MONEY TO BROKER IGNORING THE FACTS THAT THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE WHICH MAY RELATE TO THE COMPENSATORY PAYMENTS MADE BY THE ASSESSEE APPELLANT TO THE BUYER OF THE SHARES. AS S UCH, ADDITION CONFIRMED WITHOUT ANY EVIDENCE IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. THE SAME BE DELETED. 10. THAT THE ASSESSEE APPELLANT CRAVES TO ADD OR AMEND THE GROUNDS OF APPEAL . 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT SINCE GROUND NO.2 IS LEGAL GROUND, THE SAME SHOULD BE ADJUDICATE D FIRST. THE LD. DR HAS NOT OBJECTED TO THE SAME. HENCE, WE HAVE HEARD ON THE LEGAL ISSUE RAISED VIDE GROUND NO.2 OF THE APPEAL. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL HAVING SALARY INCOME FROM M/S ROYAL LIFESTYLE JEWEL LERS PVT. LTD. IN THE CAPACITY OF DIRECTOR. THE ASSESSEE DURING THE Y EAR EARNED LONG TERM CAPITAL GAIN BY SALE OF SHARES OF M/S PRESHA METTAL LURIGICAL LTD., COMPANY, AMOUNTING TO RS 26,68,215/- AND THE SAME H AD BEEN CLAIMED AS EXEMPT U/S 10(38) OF THE ACT IN THE RETURN OF IN COME FILED ON 24.06.2013. THE RETURN OF THE ASSESSEE HAD BEEN PRO CESSED U/S 143(1) OF THE ACT. HOWEVER, ON 11.02.2016, A SEARCH ACTION H AD BEEN CARRIED OUT AT THE PREMISES OF ASSESSEE AND DURING THE SEARCH P ROCEEDINGS, THE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 6 ASSESSEE WAS TOLD THAT THE SHARE IN WHICH ASSESSEE HAD TRADED WAS A PENNY STOCK AND AS PER REPORT OF INVESTIGATION WING OF KOLKATA, PRICE OF THE SHARES HAD BEEN RIGGED MANUALLY TO GIVE BOGUS LONG TERM CAPITAL GAINS TO THE SHARE HOLDERS. THE ASSESSEE, UNDER THE ABOVE CIRCUMSTANCES, AGREED TO SURRENDER THE LTCG CLAIMED. THE SURRENDER WAS MADE WITH A CONDITION THAT NO PENAL ACTION WOULD BE TAKEN AND RIGHT TO CONTEST THE TAXABILITY OF THE SURRENDERED INCOME IN VIEW OF AN Y NEW DEVELOPMENT IN THE MATTER WAS RESERVED. THOUGH THE ASSESSEE AGREED FOR TAXATION THE SURRENDERED INCOME IN THE RETURN OF INCOME, HOWEVER , THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS CLAIMED THAT THE SAID ADDITIONAL INCOME WAS NOT TAXABLE. THE ASSESSEE STATED THAT D URING THE SEARCH PROCEEDINGS NO INCRIMINATING EVIDENCE HAD BEEN FOUN D TO SHOW THAT THE CLAIM MADE BY THE ASSESSEE WAS NOT CORRECT. THEREFO RE, THE ASSESSEE CONTESTED THE CLAIM AS GENUINE DURING THE ASSESSMEN T PROCEEDINGS U/S 153A OF THE ACT. HOWEVER, THE LD. ASSESSING OFFICER RELYING UPON THE REPORT O F THE INVESTIGATION WING, KOLTAKA HELD THAT THE PATTERNS OF INVESTMENT OF THE ASSESSEE IN THE SHARES OF M/S KAPPAC PHARMA LTD AND M/S PRESHA METALLURGICAL LTD. RESEMBLE THE CHARACTER OF THE PENNY STOCK DONE BY THE BOGUS COMPANIES BASED AT KOLKATA. HE, FURTHER T OOK NOTE OF THE FACT THAT DURING THE SEARCH ACTION, THE ASSESSEE HIMSELF HAD SURRENDERED THE AMOUNT IN RESPECT OF THE INCOME FROM CAPITAL GAINS WHICH WAS CLAIMED ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 7 AS EXEMPT. HE, ACCORDINGLY, MADE THE ADDITIONS IN THE ASSESSMENT CARRIED OUT U/S 153A OF THE ACT. 6. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND PLEADED THAT SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEAR CH ACTION, HENCE, NO ADDITION COULD HAVE BEEN MADE BY THE ASSESSING OFFI CER TO THE INCOME OF THE ASSESSEE IN THE ALREADY CONCLUDED ASSESSMENT . THE ASSESSEE IN THIS RESPECT RELIED UPON THE FOLLOWING DECISIONS:- I) CIT (CENTRAL)-III VS KABUL CHAWLA [2015] 61 TAXMANN .COM 412 II) PRINCIPAL CIT-9 VS RAM AVTAR VERMA [2017] 88 TAXMANN.COM 666 III) PCIT-1 V. DEVANGI [2-017] 88 TAXMANN.COM 610 IV) PCIT, CENTRAL IT NEW DELHI V MEETA GUTGUTIA [2018] 96 TAXMANN.COM 468 V) PCIT-V VS VIKAS GUTGUTIA [2017] 88 TAXMANN.COM 605 HOWEVER, THE LD. CIT(A) DID NOT AGREE WITH THE ABO VE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE BY CONFIRMING THE ADDITIONS SO MADE BY THE ASSESSING OFFICER; OBSERVI NG AS UNDER;- 4.2 GROUNDS OF APPEAL NOS. 2 TO 7 RELATE TO DISALLOWANCE OF CLAIM MADE BY THE ASSESSEE U/S 10(38) OF THE ACT ON LONG TERM CAPITAL GAIN SHOWN TO HAVE BEEN EARNED ON THE SALE OF SHARES AND ADDITION OF RS. 26,68,215/- U/S 68 OF THE INCOME TA X ACT, 1961. THE AO HAS MENTIONED THAT A SEARCH U/S 132 WAS COND UCTED IN THE CASE OF M/S. ROYAL LIFESTYLE JEWELLERS GROUP OF BAT HINDA ON ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 8 11.02.2016 AND VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED FROM THE VARIOUS RESIDENTIAL AND BUSINESS PR EMISES OF THE GROUP. THE NOTICE U/S 153A WAS ISSUED ON 16.05.2017 AND THE ASSESSEE FILED RETURN DECLARING AN INCOME OF RS. 14 ,94,580/- ON 19.05.2017. THE AO HAS FURTHER MENTIONED THAT THE A SSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNTS AND DURING THE YE AR UNDER CONSIDERATION, DECLARED LONG TERM CAPITAL GAIN OF R S. 26,68,215/- WHICH WAS CLAIMED EXEMPT U/S 10(38) OF INCOME TAX ACT, 1961. AS PER THE DETAILS FURNISHED REGARDING T HE PURCHASE AND SALES OF SHARES, THE ASSESSEE PURCHASED 7500 SH ARES OF M/S. PRESHA METALLURGICAL LTD. ON 05.02.2011 @ 2.50/-PER SHARE FOR RS. 18,750/- PAID IN CASH AND THESE SHARES WERE SOL D DURING THE FINANCIAL YEAR 2012-13 RELEVANT TO ASSESSMENT YEAR 2013-14 FOR RS. 27,19,500/-(4500 SHARES @ RS. 371 & 3000 SHARES @ RS. 350 ON 02.01.2013 & 04.01.2013 RESPECTIVELY). AS PER TH E AO, TO EXAMINE THE GENUINENESS OF ASSESSEE'S CLAIM FOR EXE MPTION U/S 10(38), ENQUIRIES/INVESTIGATIONS WERE CONDUCTED ALO NG WITH THE EXAMINATION OF SEIZED RECORD AND APPRAISAL OF DOCUM ENTS FURNISHED BY THE DDIT WHICH LED TO THE FACT THAT TH E CLAIM OF THE ASSESSEE WAS BOGUS. AS PER THE AO, GIST OF ENQUIRIE S WERE CONFRONTED TO THE ASSESSEE VIDE SHOW CAUSE NOTICE D ATED 03.10.2017. THE CONTENT OF THE SHOW CAUSE HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. IT IS MENTIONED THAT AS PE R PAGE NO. 28, 31, 34, 37, 38, 39 & 40 OF ANNEXURE A-3 SEIZED FROM HOUSE NO. B-5, CIVIL LINES, BATHINDA, IT HAS BEEN FOUND THAT THE ASSESSEE MADE CERTAIN INVESTMENT AND PURCHASED/SOLD SHARES O F M/S. PRESHA METALLURGICAL LTD. AND M/S. KAPPAC PHARMA LT D. IN ASSESSMENT YEAR 2013-14 & 2014-15 RESPECTIVELY. IT IS ALSO MENTIONED THAT THE DIRECTORATE OF INCOME TAX, KOLKA TA UNDERTOOK DETAILED INVESTIGATION ON 'ACCOMMODATION ENTRIES' O F LONG TERM CAPITAL GAIN AND IDENTIFIED VARIOUS PENNY STOCKS I. E. STOCKS HAVING VERY LOW PRICE, CLOSELY HELD AND PRIVATELY P LACED THROUGH ROUTE OF PREFERENTIAL ALLOTMENT. AFTER SOME TIME, T HE LARGE SCALE MANIPULATION IN THE PRICE OF THESE SHARES IS DONE T O ARTIFICIALLY INFLATE THEIR MARKET PRICE IN ORDER TO PROVIDE ENTR Y OF LONG TERM CAPITAL GAIN WHICH IS CLAIMED EXEMPT. AS PER THE AO , THE SHARES OF M/S. KAPPAC PHARMA LTD. AND M/S. PRESHA METALLUR GICAL LTD. RESEMBLE THE CHARACTER OF PENNY STOCK. AS PER THE A O, DURING THE SEARCH PROCEEDINGS THESE FACTS REGARDING BOGUS CLAI M OF LONG TERM CAPITAL GAIN VIA PENNY STOCK OF THE ABOVE TWO COMPANIES ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 9 WERE CONFRONTED AND STATEMENT U/S 132(4) WAS RECORD ED. THE ASSESSEE HAS DECLARED SUCH LONG TERM CAPITAL GAIN I N THE RETURNS FOR 2013-14 & 2014-15 AND DURING THE STATEMENT U/S 132(4), THE ASSESSEE VOLUNTARILY SURRENDERED THE AMOUNT OF CAPI TAL GAIN OF RS. 26,68,215/- FOR ASSESSMENT YEAR 2013-14 AND RS. 18, 78,643/- FOR ASSESSMENT YEAR 2014-15. IT IS ALSO MENTIONED THAT THE ASSESSEE REVISED RETURN FOR ASSESSMENT YEAR 2014-15 (THE ORI GINAL RETURN WAS FILED ON 09.07.2014 AT AN INCOME OF RS. 14,21,6 30/-WHICH WAS REVISED ON 28.03.2016) DECLARING AN INCOME OF R S. 33,00,280/-. IN THE REVISED RETURN, THE ASSESSEE PA ID TAX ON BOGUS LONG TERM CAPITAL GAIN OF RS. 18,78,643/- EARNED ON TRADING OF SHARES OF M/S. KAPPAC PHARMA LTD. HOWEVER, FOR ASSE SSMENT YEAR 2013-14, THE ASSESSEE HAS NEITHER REVISED THE RETUR N NOR DEPOSITED THE TAX. THE AO MENTIONED THAT THE TWO CONCERNS M/S . PRESHA METALLURGICAL LTD. AND M/S. KAPPAC PHARMA LTD. HAVE SIMILAR FINANCIAL FACTS AND BEHAVIOR AS LISTED COMPANY AT T HE TIME OF TRADING. THE AO REPRODUCED THE SIMILARITIES IN TERM S OF FINANCIAL STATEMENTS, SHARE PRICE PATTERN, SHARE VOLUME PATTE RN OF THE TWO COMPANIES TO SHOW THE SIMILARITIES. BOTH THE CONCER NS HAVE NIL GROSS RECEIPTS, NIL/VERY LOW EXPENSES AND ARE LOSS MAKING FOR THE FINANCIAL YEAR 2012-13 WITH NIL STOCK AND VERY LESS SHARE CAPITAL. THE SHARE PRICE PATTERN WAS BELL SHAPED FOR BOTH TH E CONCERN WITH SIMILAR PATTERN IN SHARE TRADING VOLUME THE AO ALSO REFERRED TO THE MODUS OPERANDI TO GENERATE BOGUS LONG TERM CAPI TAL GAIN AS PER THE REPORT OF THE INVESTIGATION WING, KOLKATA. THIS MODUS OPERANDI HAS BEEN DEDUCED BY SEBI AND OTHER GOVERNM ENT AGENCIES AND THE FINDINGS OF THE SEBI HAVE ALSO BEE N REPRODUCED BY THE AO. THE AO HAS ALSO REFERRED TO THE REPORT O F THE SIT OF HON'BLE SUPREME COURT ON 'BLACK MONEY' WHICH HAS AL SO MENTIONED THE ABOVE MODUS OPERANDI IN ITS 'THIRD SI T REPORT' REGARDING MISUSE OF EXEMPTION ON LONG TERM CAPITAL GAIN TAX FOR 'MONEY LAUNDERING'. THE AO MENTIONED ABOUT SAME MODUS OPERANDI FOLLOWED BY THE TWO CONCERNS NAMELY M/S. P RESHA METALLURGICAL LTD. AND M/S. KAPPAC PHARMA LTD. AND CONCLUDED THAT BOTH ARE PENNY STOCK CONCERNS. THE AO ALSO MEN TIONED ABOUT THE PENAL ACTION TAKEN BY BOMBAY STOCK EXCHANGE AGA INST THESE TWO CONCERNS AND THEIR SUSPENSION DUE TO GRADED SUR VEILLANCE MEASURE. THE AO ALSO REPRODUCED THE DETAILS OF THE ENQUIRIES CARRIED OUT IN THE CASE OF M/S. PRESHA METALLURGICA L LTD. BY DDIT (INV.), VADODARA AND DDIT, AHMADABAD WHICH SHOWS TH AT IT WAS ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 10 A PENNY STOCK ENTITY. AS PER THESE ENQUIRIES M/S. P RESHA METALLURGICAL LTD. DID NOT HAVE OFFICE AT THE GIVEN ADDRESS AND SOME OTHER COMPANY WAS RUNNING AND LOCAL ENQUIRY AL SO REVEALED THAT NO SUCH BUSINESS ENTITY IN THE NAME OF M/S. PR ESHA METALLURGICAL LTD. WAS RUNNING FROM THE ADDRESSES G IVEN IN INCOME TAX AND ROC RECORDS AND NO ONE WAS AWARE ABO UT ANY COMPANY BY THIS NAME IN THAT LOCALITY. THE AO CONCL UDED THAT ON THE BASIS OF FACTS AND DISCUSSION, IT WAS CLEAR THA T M/S. KAPPAC PHARMA LTD. AND M/S. PRESHA METALLURGICAL LTD. ARE 'PENNY STOCK COMPANIES' WHOSE IDENTITY AND CREDENTIAL ARE SUSPIC IOUS IN NATURE AND THE ASSESSEE WAS ASKED THAT WHEN IT HAS SURREND ERED THE LONG TERM CAPITAL GAIN IN RESPECT OF M/S. KAPPAC PHARMA LTD. WHY THE CAPITAL GAIN SHOWN IN RESPECT OF SALE OF STOCKS OF M/S. PRESHA METALLURGICAL LTD. SHOULD ALSO NOT BE TREATED AS BO GUS AND ADDED U/S 68 OF THE INCOME TAX ACT, 1961. THE ASSESSEE SU BMITTED REPLY DATED 10.10.2017 WHICH WAS CONSIDERED POINT-WISE BY THE AO BUT NOT FOUND TENABLE. THE AO CONCLUDED THAT BOTH M /S. KAPPAC PHARMA LTD. AND M/S. PRESHA METALLURGICAL LTD. WERE 'PENNY STOCK COMPANIES' AS NO GENUINE BUSINESS ACTIVITY WA S CARRIED OUT BY THEM, THE SHARES OF BOTH THE COMPANIES WERE SHOW N PURCHASED IN CASH, NATURE OF TRANSACTION IS SUSPICIOUS AND CO NCLUDED THAT THE LONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE WAS NOT GENUINE. THE AO ALSO REFERRED TO THE STATEMENT OF S H. SANJAY JAIN WHO ADMITTED THE FACT THAT THERE WAS GENERATION OF UNACCOUNTED INCOME ON ACCOUNT OF SUPPRESSION OF SALE AND HE DI SCLOSED AN AMOUNT OF RS. 2.83 CRORES ON ACCOUNT OF DISCREPANCY IN STOCKS IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT. THE C LAIM OF THE ASSESSEE FOR EXEMPTION U/S 10(38) WITH RESPECT TO LONG TERM CAPITAL GAIN ON THE SALE OF SHARES OF M/S. PRESHA M ETALLURGICAL LTD. WAS THUS FOUND BOGUS AND THE' SAME WAS TREATED AS UNEXPLAINED CREDIT U/S 68 OF THE INCOME TAX ACT, 19 61 AND RS. 26,68,215/- WAS ADDED TO THE INCOME OF THE ASSESSEE . THE FACTS OF THE CASE, BASIS OF ADDITION MADE BY TH E AO AND THE ARGUMENTS OF THE AR DURING THE COURSE OF AP PELLATE PROCEEDINGS HAVE BEEN CONSIDERED. THE AR HAS ARGUED THAT THE ASSESSEE EARNED LONG TERM CAPITAL GAIN ON THE SALE OF SHARES OF M/S. PRESHA METALLURGICAL LTD. WHICH WAS CLAIMED EX EMPT U/S 10(38) OF THE ACT. AS PER THE SUBMISSION, THE ASSES SEE AGREED TO SURRENDER THE LONG TERM CAPITAL GAIN JUST TO AVOID LITIGATION AND ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 11 TO BUY PEACE OF MIND AND THE SURRENDER WAS MADE WIT H A CONDITION THAT NO PENAL ACTION WILL BE TAKEN AND RI GHT TO CONTEST THE TAXABILITY IN VIEW OF THE NEW DEVELOPMENT IN TH E MATTER. IT IS ARGUED THAT ALL THE PREREQUISITE FOR CLAIMING EXEMP TION U/S 10(38) ARE FULFILLED IN THIS CASE AND NO MATERIAL HAS BEEN BROUGHT BY THE AO TO DISPROVE THE CLAIM. IT IS ALSO MENTIONED THAT NAME OF THE COMPANY M/S. PRESHA METALLURGICAL LTD. IS NOT MENTI ONED IN ANY REPORT. AS PER THE AR, THE PURCHASE & SALE DOCUMENT S ARE GENUINE AND THE TRANSACTIONS CANNOT BE HELD AS BOGU S OR SUSPICIOUS. HERE, IT IS RELEVANT TO MENTION THE RAT IO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DURGA PRAS AD MORE (1971) 82 ITR 540 HEDGE J, IS SQUARELY APPLICABLE I N THIS CASE. THE PART OF THE ABOVE JUDGMENT OF HON'BLE SUPREME C OURT, RELEVANT TO THE MATTER IN HAND, IS REPRODUCED BELOW : - 'IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRESENT KIND A PA RTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS OTHERWISE IT WILL BE VERY EASY TO MA KE SELF- SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME RECITALS MAD E IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES W ERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DO CUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. ' IT MAY BE TRUE THAT THE ASSESSEE HAS FURNISHED THE DOCUMENTS REGARDING THE SALE/PURCHASE OF THE SHARES FROM THE BROKER AND PAID STT. BUT THE DOCUMENTS HAVE TO BE S EEN CRITICALLY AND THE STORY OF THE ASSESSEE IS TO BE J UDGED ON THE TEST OF HUMAN PROBABILITY. IN FACT, THE STORY IN THE CAS E OF THE ASSESSEE DOES NOT PASS THE TEST OF HUMAN PROBABILITY. IT IS A KNOWN FACT IN THE MARKET THAT THESE (LONG TERM CAPITAL GAIN) ARE FAKE ENTRIES AND STILL THE ASSESSEES TAKE SUCH RISK FULLY KNOWIN G THAT THESE ARE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 12 NOT GENUINE TRANSACTION, BECAUSE NOW-A-DAYS ONLY A SMALL FRACTION OF RETURN IS SUBJECT TO SCRUTINY / INVESTIGATION BY THE DEPARTMENT EVERY YEAR. MOST OF THE ASSESSEES TAKING SUCH ENTRI ES GO UNNOTICED SINCE THEIR CASES DO NOT GET SELECTED FOR SCRUTINY. THIS FACT ACTS AS INCENTIVE FOR THE OTHERS WHO ARE ALLUR ED TO TAKE THESE NON-GENUINE ENTRIES. IT IS AN UNDISPUTED FACT THAT AT THE TIME OF SEARCH , THE ASSESSEE SURRENDERED THE LONG TERM CAPITAL GAIN WHI CH WAS CLAIMED EXEMPT U/S 10(38) OF THE INCOME TAX ACT, 19 61. DURING THE COURSE OF STATEMENT RECORDED U/S 132(4), THE AS SESSEE HAD SUBMITTED THAT IT HAD EARNED LONG TERM CAPITAL GAIN AS THE PERIOD OF HOLDING WAS MORE THAN 12 MONTHS AND THE S ALE HAVE TAKEN PLACE IN A RECOGNIZED STOCK EXCHANGE VIZ. BSE AND STT ON THE SALE WAS DULY PAID, HOWEVER AFTER DISCUSSION WI TH THE COUNSEL AND TO BUY PEACE OF MIND, SURRENDERED THE AMOUNT OF CAPITAL GAIN OF RS. 26,68,215/- IN ASSESSMENT YEAR 2013-14 AND R S. 18,78,643/- IN ASSESSMENT YEAR 2014-15 TO INCOME TA X AS 'INCOME FROM OTHER SOURCES' FOR THE RELEVANT ASSESS MENT YEARS WITH A RIGHT TO CONTEST THE TAXABILITY IN VIEW OF A NY NEW DEVELOPMENT IN THE MATTER. IT IS HOWEVER NOTED THAT ALL THESE FACTS HAVE REMAINED THE SAME AND THERE IS NO NEW DEVELOPM ENT REGARDING THE SALES AND PURCHASE OF SHARES, THE INC OME FROM WHICH WAS SURRENDERED AND IN FACT FOR ASSESSMENT YE AR 2014-15, THE ASSESSEE REVISED THE RETURN AND PAID THE TAX. S INCE, THE FACTS FOR THE TWO YEARS ARE SIMILAR, THERE IS NO REASON F OR NOT PAYING THE TAX FOR ASSESSMENT YEAR 2013-14. IT IS DULY BROUGHT ON RECORD BY THE AO THAT M/S. PRESHA METALLURGICAL LTD. IS ALSO A PENNY STOCK AND ITS WEAK FINANCIAL POSITION, SUSPICIOUS PATTERN OF RIGGING OF SHARE PRICE, VERY LOW CREDITWORTHINESS ETC. ARE SIM ILAR TO THAT OF M/S. KAPPAC PHARMA LTD. IN RESPECT OF WHICH THE ASS ESSEE HAS PAID THE TAX. IT IS ALSO RELEVANT TO MENTION THAT AS PER RECORDS, THE OTHER MEMBERS OF THE ASSESSEE GROUP HAVE ALSO TAKEN SUCH TYPE OF ENTRIES AND DURING THE SEARCH U/S 132 ACCEPTED GENE RATION OF UNACCOUNTED INCOME, THE GROUP MEMBERS SURRENDERED T HESE AMOUNTS AND PAID TAX ON THE SAME AND ALSO REVISED T HEIR RETURNS FOR ASSESSMENT YEAR 2014-15. THE AMOUNT SURRENDERED BY DIFFERENT FAMILY MEMBERS WERE RS. 42,76,242/- BY SH . SANJAY ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 13 JAIN, RS. 45,42,855/- BY SMT. RAJNI JAIN, RS. 18,78 ,643/- BY SH. TARUN JAIN AND RS. 31,65,198 BY SANJAY JAIN & SONS (HUF) FOR ASSESSMENT YEAR 2014-15 AND ALL OF THEM REVISED THE IR RETURNS AND PAID TAX ON THESE AMOUNTS. THIS WAS IN FACT AN UNSC RUPULOUS METHOD ADOPTED BY THE ASSESSEE (GROUP) TO REINTRODU CE THE UNACCOUNTED INCOME. THE PICTURE BECOMES CLEAR WHEN WE SEE THE WHOLE ARRANGEMENT AS DISCUSSED BY THE AO IN THE ASS ESSMENT ORDER WHILE DISCUSSING MODUS OPERANDI OF MISUSE OF LONG TERM CAPITAL GAIN FOR RE-INTRODUCING THE UNACCOUNTED INC OME. THE FUNDS ARE BEEN GIVEN TO THE OPERATOR WHO GIVES CHEQ UE WHICH IS DEPOSITED BY THE ASSESSEE IN THE BANK AND SHOWN AS 'LONG TERM CAPITAL GAIN' AS IN THE PRESENT CASE. HAD IT BEEN T RUE THAT THERE WAS SO MUCH APPRECIATION IN THE SHARES THEN QUESTIO N ARISES WHY THE BROKERS THEMSELVES DID NOT INVEST FUNDS IN THES E SHARES AND EARNED THE PROFIT THEMSELVES? ALSO THERE ARE WHOLE TIME BROKERS AT MUMBAI AND OTHER METROS WHOSE ONLY JOB IS TO EAR N PROFIT BY NG IN SHARES, THEN HOW THESE SHARES ESCAPED THEIR A TTENTION. THERE ARE MUTUAL D|\MANAGERS ALSO WHOSE WHOLE TIME JOB IS TO INVEST IN THE SHARES WHERE THE RETURNS ARE MAXIMUM AND IF THE PROFIT SHOWN BY THE ASSESSEE WAS GENUINE THEN HOW THIS ESCAPED T HE ATTENTION OF THESE MUTUAL FUND MANAGERS. ON THE ABOVE FACTS, IT CAN BE SEEN THAT THE APPARENT IS NOT REAL AND THE MODUS-OP ERANDI ADOPTED TO ASSESSMENT ORDER. REGARDING THE LEVEL OF PROOF T O SUBSTANTIATE THE ABOVE MODUS-OPERANDI, IT IS OBSERVED THAT IN TH E CRIMINAL PROCEEDINGS, THE LEVEL OF PROOF REQUIRED IS 'BEYOND REASONABLE DOUBTS' WHEREAS IN THE CIVIL PROCEEDINGS THE LEVEL OF PROOF REQUIRED IS 'PREPONDERANCE OF PROBABILITY'. IT HAS BEEN HELD BY THE HIGHER COURTS THAT DURING THE INCOME TAX ASSESSMENT PROCEEDINGS, THE LEVEL OF PROOF REQUIRED IS THAT OF 'PREPONDERANCE OF PROBABILITY' AND IF THE ASSESSING OFFICER IS ABL E TO SUBSTANTIATE HIS ACTION UPTO THIS LEVEL, THEN THE ADDITION IS RE QUIRED TO BE UPHELD. IN THE PRESENT CASE, ON THE TEST OF 'PREPON DERANCE OF PROBABILITY', IT IS NOT BELIEVABLE THAT ASSESSEE WO ULD EARN SUCH A HUGE PROFIT ON THE SALES OF THESE SHARES. IT IS ALS O NOT UNDERSTOOD HOW THE ASSESSEE CAME TO KNOW ABOUT THESE SHARES WH ICH WERE TRADED AT FARAWAY PLACE AND THE COMPANY IS NOT A PR OMINENT ONE. THE ASSESSEE HAS PAST EXPERIENCE OF TRADING IN SHAR ES BUT NEVER HAD SUCH PROFIT IN THE PAST OR IN THE FUTURE EXCEPT THESE TWO YEARS. IT IS HIGHLY IMPROBABLE THAT SUCH HUGE PROFIT IS EA RNED ON THE SHARES OF AN UNKNOWN COMPANY MAKING LOSSES OR HAVIN G NOMINAL ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 14 INCOME. SUCH TYPE OF PROFIT IS UNREALISTIC, IS ALSO SUPPORTED BY THE FACT THAT EVEN THE GOVERNMENT OF INDIA IS ADVISING THE CITIZENS NOT TO BE ALLURED BY THE PROMISE OF HIGH RETURNS. T HE CITIZENS ARE CAUTIONED THAT SUCH HIGH RETURNS ARE NOT POSSIBLE A ND INVESTMENT SHOULD NOT BE MADE ON THE PROMISE OF SUCH HIGH RETU RNS. FOR THIS, AN INVESTMENT PROTECTION PROGRAM IS RUN BY THE 'INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY' (MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA) AND REGULAR ADVERTISEMENT/ADVISORIES ARE GIVEN ON THE NATIONAL CHANNELS OF DOORDARSHAN AND OTHER PROMINENT CHANNEL FOR THE BEN EFIT OF THE CITIZENS. IF SUCH TYPE OF INCOMES/RETURNS, AS DECLA RED BY THE ASSESSEE WERE POSSIBLE, THEN WHY SHOULD THE GOVERNM ENT DEPRIVE ITS CITIZENS OF SUCH BENEFITS? FURTHER, THE EXISTEN CE OF PAPER COMPANIES WHICH ARE USED FOR THE PURPOSE OF MONEY L AUNDERING AND PROVIDING ACCOMMODATION ENTRIES, HAS BEEN ACCEP TED BY THE GOVERNMENT OF INDIA AND A NUMBER OF SUCH COMPANIES HAVE BEEN DE-REGISTERED AND DELETED FROM THE RECORDS OF REGIS TRAR OF COMPANIES. IN THE PRESENT CASE, THE ACTION HAS BEEN TAKEN BY THE BOMBAY STOCK EXCHANGE AGAINST THE COMPANIES FROM WH OSE SHARES THE ASSESSEE HAS SHOWN PROFIT. THIS AMPLY PR OVES THAT SHOWING THE RECEIPTS FROM THE COMPANIES WILL NOT MA KE THE FUNDS GENUINE WHEN THE SOURCE ITSELF IS NON-GENUINE. IN F ACT THERE ARE NUMBER OF PERSONS/BROKERS DEALING IN SHARES THROUGH OUT THE COUNTRY AND SPENT ALMOST WHOLE OF THEIR LIFE IN THE BUSINESS, STILL THEY COULD NEVER LAY HAND ON SUCH HUGE PROFITS IN T HE SHARE TRANSACTIONS AND THEY ONLY EARN A NOMINAL PROFIT/LO SS. ON THE 'TEST OF PREPONDERANCE OF PROBABILITY', THE EARNING OF SU CH HUGE PROFITS AS SHOWN BY THE ASSESSEE IS FOUND AS NON-GENUINE. I T IS IN FACT, ASSESSEE'S OWN UNACCOUNTED FUNDS WHICH WERE GIVEN T O THE BROKERS WHO ISSUED CHEQUE IN FAVOR OF THE ASSESSEE, WHICH HAVE BEEN SHOWN AS RECEIPTS ON SALE OF SHARES. THE OPERA TOR HAS CHARGED A COMMISSION AND ARRANGED THE VARIOUS DOCUM ENTS TO GIVE THE WHOLE TRANSACATION A COLOR OF GENUINITY, W HEN IN FACT NO SUCH HIGH PROFIT IS POSSIBLE IN SUCH A SHORT PERIOD OF TIME. THE SHARES WERE PURCHASED OFF-LINE AND THERE WAS NO CON TRACT NOTE REGARDING THE PURCHASE/SALE OF SHARES. IT IS RELEVA NT TO MENTION THAT FOR ONE ASSESSMENT YEAR, THE ASSESSEE HAS SURR ENDERED THE AMOUNT AND PAID TAX ON SUCH TYPE OF TRANSACTION. AL L THESE THINGS POINT TO A MAKE BELIEF STORY BECAUSE SUCH THING DOE S NOT HAPPEN IN REAL WORLD. INFACT THIS DID NOT HAPPEN WITH THE ASSESSEE ALSO ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 15 AND THE CHEQUE SHOWN AS 'SALE RECEIPT OF SHARES' WA S OBTAINED AFTER PAYING THE MONEY TO THE BROKER WHO ARRANGED T HE TRANSACTION. SUCH TYPES OF METHOD ARE IN FACT COLOR ABLE DEVICE TO LAUNDER THE UNACCOUNTED FUND OF THE ASSESSEE. THE A PPELLATE AUTHORITIES CAN ALSO NOT TURN A BLIND EYE TO REALIT IES AROUND AND THE REALITY IS THAT NOBODY CAN EARN SUCH HUGE PROFIT AS CLAIMED BY THE ASSESSEE. IN FACT, IT IS ASSESSEE'S OWN UNACCOUNTED MONEY WHICH HAS BEEN REINTRODUCED AS CAPITAL GAINS CLAIMED AS E XEMPT INCOME. IF WHAT HAS BEEN CLAIMED BY THE ASSESSEE WAS A REAL ITY, THEN WHAT THE BROKER, WHO ARRANGED THE TRANSACTIONS, WAITING FOR? HE SHOULD ALSO HAVE EARNED SUCH PROFIT INSTEAD OF CHARGING NO MINAL COMMISSION. THE STORY OF THE ASSESSEE IS NOT FOUND ACCEPTABLE ON THE TEST OF HUMAN PROBABILITY. THE MATTER GAINS FUR THER STRENGTH FROM THE ORDER OF BOMBAY STOCK EXCHANGE ORDER REFER RED BY THE AO IN THE ASSESSMENT ORDER. IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT THAT 'TAX PLANNING MAY BE LEGITIMATE PROVIDED IT IS WITHIN THE FRAMEWORK OF LAW. COLORABLE DEVICES C ANNOT BE PART OF TAX PLANNING AND IT IS WRONG TO ENCOURAGE OR ENT ERTAIN THE BELIEF THAT IT IS HONORABLE TO AVOID THE PAYMENT OF TAX BY RESORTING TO DUBIOUS METHODS. IT IS THE OBLIGATION OF VERY CI TIZEN TO PAY THE TAXES HONESTLY WITHOUT RESORTING TO SUBTERFUGES '. THE AO DREW ADVERSE INFERENCE BASED UPON THE INVESTIGATION CARRIED OUT BY DIT, INVESTIGATION, KO LKATA. THE LARGE INCREASE IN THE VALUE OF SHARES IN SHORT TIME LED THE AO TO DRAW ADVERSE INFERENCE IN THIS CASE AND IN FACT THE ASSESSEE HAS ALSO ACCEPTED THIS POSITION AND SURRENDERED THE AMO UNT AT THE TIME OF SEARCH AND THEN -REVISED THE RETURN AND PAID THE TAX FOR ASSESSMENT YEAR 2014-15. THE AR RELIED UPON CASE LA WS AND ARGUED THAT NO SUCH INFERENCE WAS CALLED FOR. A PER USAL OF THE REPLY SHOWS THAT THE PURCHASES HAVE NOT BEEN MADE I N CASH AND THIS FACT CREATES DOUBT ABOUT THE GENUINENESS OF TH E TRANSACTIONS AND SUPPORTS THE CONCLUSION THAT IT WAS MERELY AN A RRANGEMENT TO REINTRODUCE THE UNACCOUNTED FUNDS OF THE ASSESSEE I N THE BANK ACCOUNT. IN THE RECENT JUDGMENT, THE HON'BLE ITAT H AS HELD, VIDE ITS ORDER DATED 08.01.2019 REGARDING THE MISUSE OF LONG TERM CAPITAL GAIN IN THE CASE OF ANIP RASTOGI VS. ITO IN ITA NO. 3809/DEL/2018 AND ANJU RASTOGI VS. ITO IN ITA NO. 3810/DEL/2018 FOR THE ASSESSMENT YEAR 2015-16, AS U NDER:- ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 16 '3. I WILL FIRST TAKE UP THE APPEAL IN THE CASE OF ANIP RASTOGI, BEING ITA NO. 3809/DEL/2018 (AY 2015-16) A ND MY FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDI S IN OTHER APPEAL, SINCE SIMILAR FACTS AND FINDINGS ARE PERMEATING IN OTHER APPEAL ALSO. THE ASSESSEE IS AG GRIEVED BY ADDITION OF RS. 22,28,172/- MADE U/S. 68 OF THE I. T. ACT, 1961 ON ACCOUNT OF CREDITS OF SALE OF PENNY ST OCK. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN IN DIVIDUAL EARNING RENTAL INCOME, INCOME FROM MEDICAL PROFESSI ON AND INTERESTS ON DEPOSITS WITH BANKS, DURING THE RE LEVANT YEAR. THE ASSESSEE FILED HIS ITR FOR THE RELEVANT Y EAR ON 22.09.2015, DECLARING A TOTAL INCOME OF RS. 9,39,25 0/-. THE RETURN FILED HIM WAS SELECTED FOR SCRUTINY ASSE SSMENT WHICH WERE COMPLETED VIDE ORDER DATED 18.12.2017, PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT') MAKING AN ADDITION OF RS. 22,28,172/-, HOLDING THAT THE EXEMPT LONG TERM CAPITAL GAIN EARNED BY THE ASS ESSEE ON SALE OF SHARES OF M/S CCL INTERNATIONAL LTD., WA S NOT GENUINE AND THE SAME WAS BOGUS. AGAINST THE ASSESSM ENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A) VIDE HIS IMPUGNED ORDER DATED 20.4.2018 HAS DISMISSED TH E APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE ORDER OF THE ID. CIT(A), ASSESSEE APPEALED BEFORE THE TRIBUNAL. 5. DURING THE HEARING, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADDITION IN DISPUTE WAS MADE AND CONFIRMED PURELY ON PRESUMPTIONS, CONJECTURE AND SURMISES AND THEREFORE, DESERVE TO BE DELETED. HE F URTHER SUBMITTED THAT THE AUTHORITIES BELOW HAVE FAILED IN DISALLOWING DEDUCTION CLAIMED BY THE ASSESSEE U/S. 10(38) OF THE ACT FOR RS. 22,28,172/-. IT WAS FURTHER SUBM ITTED THAT LOWER AUTHORITIES FAILED TO APPRECIATE THAT TH E AMOUNT OF L TCG EARNED BY THE ASSESSEE ON STT PAID SALES O F LISTED EQUITY SHARES OF M/S CCL INTERNATIONAL LTD., IGNORING THE EVIDENCES, DOCUMENTS AND CASE LAWS REL IED UPON BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW ANY LINK ING BETWEEN THE ALLEGED ENTRY OPERATORS WHOSE STATEMENT S HAVE BEEN RELIED UPON AND THE ASSESSEE. THE EVIDENC ES AND ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 17 ARGUMENTS USED BY THE AUTHORITIES BELOW ARE GENERIC IN NATURE AND CAN IN NO SENSE BE RELATED TO THE ASSESS EE. HE FURTHER SUBMITTED THAT THE ADDIION MADE WAS WITHOUT ANY BASIS AND WITHOUT BRINING ON RECORD ANY CORROBORATI VE MATERIAL FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO BY COMPLETELY IGNORING THE WEL L- ESTABLISHED LAW THAT NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF STATEMENTS 8 RECORDED ON OATH DURING THE C OURSE OF SURVEY CONDUCTED BY THE INVESTIGATION WING OF IN COME TAX, KOLKATA AND DEPARTMENTAL COMMUNICATED TO THE A.O., WITHOUT MAKING HIS OWN INDEPENDENT ENQUIRY AN D EFFORTS. HENCE, HE REQUESTED TO CANCEL THE ORDERS O F THE AUTHORITIES BELOW AND ALLOW THE APPEAL OF THE ASSES SEE. IN SUPPORT OF HIS CONTENTION, HE FILED A PAPER BOOK CONTAINING PAGES 1 TO 55 IN WHICH HE HAS ATTACHED T HE COPY OF WRITTEN SUBMISSIONS DATED 20.4.2018 AS FILE D BEFORE THE LD. CIT(A), MEERUT; PHOTOCOPY OF SALE NO TE AND CONFIRMATION FROM M/S SAI SECURITIES FOR PURCHASE OF SHARES OF M/S CCL INTERNATIONAL LTD. AS FILED BEFOR E THE LD. CIT(A), MEERUT; PHOTOCOPY OF THE RELEVANT BANK STATEMENT OF THE ASSESSEE SHOWING PAYMENT FOR PURCH ASE OF SHARES AS FILED BEFORE THE CIT(A); PHOTOCOPY OF STATEMENT OF D-MAT ACCOUNT OF THE ASSESSEE, AS MAINTAINED BY HIM WITH MANSUKH SECURITIES AND FINAN CE LTD. AS FILED BEFORE THE CIT(A), MEERUT; PHOTOCOPY OF THE SALE NOTE OF THE SHARES SOLD AS FILED BEFORE THE CI T(A), MEERUT; PHOTOCOPY OF THE STOCK TRADING DETAILS AS DOWNLOADED FROM WEBSITE OF BSE INDIA AS FILED BEFOR E THE CIT(A); FINANCIAL DETAILS OF M/S CCL INTERNATIONAL LTD. FOR FY'S 2012-13 TO 16017 AS DOWNLOADED FROM THE WEBSITE OF MONEY CONTROL.COM AS FILED BEFORE THE LD . CIT(A); PHOTOCOPY OF SUBMISSIONS DATED 4.10.2017 & 28.11.2017 AS FILED BEFORE THE AO DURING THE ASSESS MENT PROCEEDINGS; COPY OF JUDGMENT OF HON'BLE 9 DELHI HI GH COURT IN THE CASE OF PCIT & ORS. VS. BEST INFRASTRU CTURE INDIA PVT. LTD. (2017) 397ITR 0082; COPY OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ASHWANI GUP TA (2010) 322 ITR 0396; JUDGMENT OF HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF PRAKASH CHAND NAHATA VS. CIT (2008) 301 ITR 134 AND COPY OF JUDGMENT OF HON' BLE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 18 HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. M/S ASH ISH INTERNATIONAL (2011) ITA NO. 4299 OF 2009; ITAT, DE LHI 'SMC BENCH DECISION DATED 25.9.2018 IN ITA NOS. 20121/DEL/2018 TO 2028/DEL/2018 IN THE CASE OF SHOU BIT GOEL (HUF) & ORS. VS. ITO; ITAT, DELHI SMC DECISION DATED 24.10.2018 IN THE CASE OF AMIT RASTOGI (HUF) & ORS. VS. ITO IN ITA NO. 2128, 2129, 2131 & 2132/DEL/2018 (AY 2015-16) AND SMC, ITAT, DELHI DECISION DATED 5.11.2018 IN THE CASE OF ARUN KUMAR & ORS. VS. ACIT IN ITA NO. 457, 2825 & 2826/DEL/2018) . 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE FURTHER STATED THAT ASSESSEE HAS NOT SUBSTANTIATED HIS CLAIM BEFORE THE REVENUE AUTHORIT IES. HE STATED THAT ASSESSEE HASD GENERATED BOGUS ENTRIES O F LONG TERM CAPITAL GAINS ON SALE OF PENNY STOCKS AND CLAI MED THE SAME TO BE EXEMPTED UNDER SECTION 1 0(38) OF THE ACT. IN THIS CASE THE INVESTIGATION WING AT KOLKATA HAD CAR RIED OUT COUNTRY WISE INVESTIGATION TO UNEARTH THE ORGAN IZED RACKET OF GENERATING BOGUS ENTRIES OF LONG TERM CAP ITAL 10 GAINS WHICH IS EXEMPT FROM TAX. IT WAS FURTHER SUBM ITTED THAT THE ASSESSEE HAD PURCHASED 5000 EQUITY SHARES OF M/S CCL INTERNATIONAL LTD. FOR RS. 2,00,000/- ON 15.4.2013 IN OFF MARKET TRANSACTION @ RS. 40.00 PER SHARE FROM SAI SECURITIES. THESE SHARES WERE SOLD B Y THE ASSESSEE THROUGH STOCK BROKER M/S MANSUKH SECURITIE S AND FINANCE LTD. RANGING FROM RS. 492.50 TO 481.20 PER SHARE. HE FURTHER SUBMITTED THAT THE PAYMENT FOR PURCHASE OF SHARES HAS BEEN DEBITED FROM ASSESSEE ACCOUNT THROU GH CHEQUE FOR A SUM OF RS. 2,00,000/- WAS DEBITED WHER EAS THE SALE NOTE WAS DATED 15.4.2013, WHICH PROVES THA T THE TRANSACTION WAS AN AFTERTHOUGHT AND THE BUYER HAS B ACK DATED THE TRANSACTION. THE SHARES WERE PURCHASED TH ROUGH OFF MARKET DEALS OF UNKNOWN COMPANY. IN VIEW OF THE ABOVE ASSESSEE FAILED TO PROVE THE GENUINENESS OF T HE ALLEGED LONG TERM CAPITAL GAIN CLAIMED TO HAVE BEEN EARNED BY THE ASSESSEE. HE FURTHER STATED THAT THE CASE LAWS RELIED UPON BY THE AO AS WELL AS LD. CIT(A) M AY BE READ AS HIS ARGUMENTS INCLUDING THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF SUMAT I ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 19 DAYAL VS. CIT AND IN THE CASE OF MC DOWELL AND COMP ANY LIMITED, 154 ITR 148. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER. I NOTE THAT THE ASSE SSEE HAS SHOWN LONG TERM CAPITAL GAIN AMOUNTING TO RS. 22,28,172/- EARNED DURING 11 THE FY 2014-15 AND EXE MPT U/S. 10(38) OF THE I.T. ACT, 1961. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF AFORESAID LONG TERM CAPITA L GAIN DURING THE COURSE OF SCRUTINY PROCEEDINGS. THE EXPLANATION OFFERED THAT IT IS SALE PROCEEDS OF SHA RES ARE FOUND TO BE UNSATISFACTORY. THE EXPLANATION OF THE ASSESSEE IS GENERAL IN NATURE THAT AS THE TRANSACTI ON IS THROUGH STOCK EXCHANGE AND THE PAYMENT IS BY CHEQUE , THE TRANSACTIONS SHOULD BE TREATED AS GENUINE. FURTHER, REGARDING THE STATEMENT OF SH. JAI KISHAN PODDAR TH E ASSESSEE HAS ONLY STATED THAT IN THE STATEMENT THER E IS NO SPECIFIC LINK WITH THE CLAIM OF EXEMPTION IN RESPEC T OF LONG TERM CAPITAL GAIN OF RS. 22,78,172/- U/S. 10(3 8) BY HIM. HE HAS NOT STATED A THING WITH RESPECT TO THE STATEMENT OF SH. JAI KISHAN PODDAR IN WHICH HE HAS ACCEPTED THAT FACILITATION OF ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN I LONG TERM CAPITAL LOSS THR OUGH HIS SHARE BANKING FIRM HAS BEEN DONE TO FEW BENEFICIARI ES WITH THE HELP OF DIFFERENT ACCOMMODATION ENTRY OPERATORS , PROMOTERS OF THE SCRIPTS OF VARIOUS PENNY STOCKS OT HER BROKERS ETC. SH. JAI KISHAN PODDAR ALSO GAVE DETAIL S OF DIFFERENT BOGUS SCRIPTS/ PENNY STOCKS WHICH HAVE BE EN USED FOR PROVIDING THE ACCOMMODATION ENTRIES OF LTCG AND LTCL TO DIFFERENT BENEFICIARIES USING HIS BROKERAGE COMPANY CONSORTIUM CAPITAL PVT. LTD. AND THE NAME O F CCL INTERNATIONAL LIMITED HAVING SCRIP NAME CCL INT ER APPEARS IN THE LIST WHOSE 12 SHARES WERE SOLD BY TH E ASSESSEE AND EXEMPTION ON LTCG AMOUNTING TO RS. 22,28,172/- CLAIMED U/S. 10(38) OF THE ACT. AFTER P ERUSING THE RECORDS, I FIND THAT IN THE INSTANT CASE THE IN VESTMENT IN SHARES MADE BY THE ASSESSEE REVEALS THAT HE HAS NOT BEEN DEALING IN SHARES ON A REGULAR BASIS AND THE ENTRIES OF LTCG HAVE ALSO BEEN TAKEN BY OTHER MEMBERS OF THE ASSESSEE COMPANY AND THE PURCHASE OF THESE SHARES W ERE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 20 CLAIMED TO BE THROUGH OFF MARKET DEALS AND NOT THRO UGH STOCK EXCHANGE. THE FINANCIALS OF PENNY STOCK COMPA NY M/S CCL INTERNATIONAL LTD. AND MOVEMENT OF ITS PRIC E ARE ABRUPT, UNREALISTIC AND BASED UPON ANY REALISTIC PARAMETERS. FROM THE PERUSAL OF FINANCIAL STATEMENT S OF THE AFORESAID COMPANY M/S CCL INTERNATIONAL LTD. FR OM THE MINISTRY OF CORPORATE AFFAIRS WEBSITE (MCA) EXAMINING THE INFORMATION AVAILABLE IN THE PUBLIC D OMAIN FROM WHERE IT WAS OBSERVED THAT THERE IS NO EXTRAOR DINARY INCREASE IN THE PROFITS OF THE COMPANY TO JUSTIFY T HE INCREASE IN VALUE OF THE SHARES. I FURTHER NOTE THA T INVESTIGATION WING HAD RECORDED THE STATEMENT OF SH . JAI KISHAN PODDAR WHO IS ONE OF THE DIRECTOR OF M/S CONSORTIUM CAPITAL PVT. LTD. WHICH IS ONE OF THE EN TITIES UTILISED FOR PROVIDING ENTRY OF BOGUS LONG TERM CAP ITAL GAIN OF M/S CCL INTERNATIONAL LTD. WHO HAD ADMITTED THAT HE WAS INVOLVED IN SCAM OF PROVIDING BOGUS LON G TERM CAPITAL GAINS THROUGH SHARES OF M/S CCL INTERNATIONAL LTD. HAD ALSO ADMITTED THAT THEY WERE ALSO 13 INVOLVED IN TRADING OF THESE JAMAKHARCHI COMPANIES THROUGH WHICH MANIPULATIVE TRANSACTIONS IN SECURITI ES TO EITHER ARTIFICIALLY RAISE OR LOWER THE MARKET RATE OF THE SHARES ARE BEING DONE. I ALSO NOTE THAT THE INDEPEN DENT FINDINGS OF THE AO, WHICH ARE CORROBORATED BY THE INFORMATION GIVEN BY THE INVESTIGATION WING, THE AS SESSEE HAS FAILED TO SUBSTANTIATE THE GENUINENESS OF ALLEG ED SHARE TRANSACTIONS IN RESPECT OF LONG TERM CAPITAL GAIN U /S. 10(38) OF THE ACT. IN VIEW OF ABOVE DISCUSSIONS, TH E LANDMARK DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF MCDOWELL AND COMPANY LIMITED, 154 ITR 148 ARE SQUARELY APPLICABLE IN THIS CASE WHEREIN IT HAS BEEN HELD THAT TAX PLANNING MAY BE LEGITIMATE PROVIDED I T IS WITHIN THE FRAMEWORK OF THE LAW AND ANY COLOURABLE DEVICES CANNOT BE PART OF TAX PLANNING AND IT IS WR ONG TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOUR ABLE TO AVOID THE PAYMENT OF TAX BY DUBIOUS METHODS. HOWEVE R, THE CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSE SSEE ARE ON DISTINGUISHED FACTS, HENCE, NOT APPLICABLE IN TH E INSTANT CASE. THE ASSESSEE HAS NOT ARGUED ANY OTHER GROUND MENTIONED IN THE GROUNDS OF APPEAL, BUT ONLY ARGUED ON ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 21 MERIT FOR WHICH ASSESSEE HAS FAILED TO SUBSTANTIATE HIS CLAIM BEFORE THE LOWER REVENUE AUTHORITIES AS WELL AS BEFORE THIS BENCH. IN VIEW OF ABOVE DISCUSSIONS, I AM OF THE CONSIDERED OPINION THAT LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION IN DISPUTE, WHICH DOES NOT N EED ANY INTERFERENCE ON MY 14 PART, THEREFORE, I UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJEC T THE GROUNDS RAISED BY THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. SINCE IN OTHER APPEAL I.E. IN THE CASE OF ANJU RASTOGI, ITA NO. 3810/DEL/2018 (AY 2015-16), SIMILAR FACTS A RE PERMEATING AND SAME FINDING HAS BEEN GIVEN, THEREF ORE, MY FINDING GIVEN ABOVE WILL APPLY MUTATIS MUTANDIS IN THIS ALSO, BECAUSE THE NATURE OF TRANSACTIONS, EVIDENCES AND DOCUMENTS ARE EXACTLY THE SAME. THUS, BOTH THE APPE ALS ARE TREATED AS DISMISSED.' IT IS RELEVANT TO MENTION HERE THAT IN THE CASE OF SMT. HARJIT KAUR VS. ACIT ; THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO.280 OF 2013 UPHELD THE DECISION OF THE HON'B LE ITAT CHANDIGARH HOLDING THAT THE DEPARTMENT CANNOT BAKE OR ACCEPT 'MAKE BELIEVE TRANSACTIONS' AS HELD BY THE HON'BLE ITAT CHANDIGARH BENCH. THE TRIBUNAL IN THAT CASE RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F DURGA PARSAD MORE, 82 ITR 540 AND MCDOWELL & COMPANY LTD. , 154 ITR 148 ALSO. THE HON'BLE ITAT, CHANDIGARH HELD THA T IT IS ESSENTIAL ON THE PART OF THE REVENUE AUTHORITY, TO LOOK INTO THE REAL NATURE OF THE TRANSACTION AND WHAT HAPPENS IN THE R EAL WORD AND CONTEXTUALIZE THE SAME TO SUCH TRANSACTIONS IN THE REAL MARKET SITUATION. THE FOLLOWING OBSERVATIONS OF THE HON'BL E ITAT ARE WORTH MENTIONING HERE:- 'IT IS ESSENTIAL ON THE PART OF REVENUE AUTHORITY, TO LOOK INTO THE REAL NATURE OF TRANSACTION AND WHAT HAPPEN S IN THE REAL WORD AND CONTEXTUALIZE THE SAME TO SUCH TRANSA CTION IN THE REAL MARKET SITUATION. IT IS PERTINENT TO ST ATE HERE, THE JUDICIAL WISDOM OF HON 'BLE SUPREME COURT IN CI TVS. ARVINDS RAJU (TN) 120 ITR 46 (SC) WHEREIN IT WAS HE LD THAT 'ONE DAY IN OUR WELFARE STATE GEARED TO SOCIAL JUSTICE, ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 22 THIS CLEVER CONCEPT OF AVOIDANCE AS AGAINST EVASION MAY HAVE TO BE EXPOSED. IN THE PRESENT CASE, THERE IS A N OBVIOUS AND PLAIN TRANSACTION OF TAX EVASION WHICH HAS BEEN CLOTHED WITH THE SMOKE SCREEN OF SUBTERFUGES, BY THE ASSESSEE APPELLANTS. ' THE RELEVANT OBSERVATIONS AND FINDINGS OF HON'BLE SUPREME COURT, IN THE MATTER OF DISCHARGE OF ONUS O F PROOF AND THE RELEVANCE OF SURROUNDING CIRCUMSTANCES OF THE C ASE ARE THAT THOUGH AN APPELLANT'S STATEMENT MUST BE CONSIDERED REAL UNTIL IT WAS SHOWN THAT THERE WERE REASONS TO BELIEVE THAT T HE APPARENT WAS NOT THE REAL, IN A CASE WHERE THE PARTY RELIED ON SELF-SERVING RECITALS, THE TAXING AUTHORITIES WERE ENTITLED TO L OOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F SUCH RECITALS. IN VIEW OF THE FACTS OF THE CASE, THE DECISION OF T HE SUPREME COURT IN THE CASE OF CIT VS. DURGA PARSAD MORE IS A PPLICABLE THAT THE INCOME TAX AUTHORITIES ARE ENTITLED TO LOOK INT O SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY. THE DECISION OF THE SUPREME COURT IN THE CASE OF SUMATI DYAL VS. CIT 214 ITR 80 1 IS ALSO RELEVANT WHERE IT HAS BEEN HELD THAT MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITY. MERELY BECAUSE THE PAYMENTS WERE MADE BY CHEQUES AND RECEIVED BY CHEQUE DOES NO T RENDER THE TRANSACTION GENUINE. GIVEN THE CIRCUMSTANCES, I T IS QUITE APPARENT THAT THE PAPER DOCUMENTS FILED BY THE APPE LLANT ARE SHAM AND THE PAPER EVIDENCE HAS BEEN CREATED ALTHOUGH TH ESE ARE NOT GENUINE BECAUSE ONCE, DURING THE COURSE OF INVESTIG ATION BY THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATA AND THE INVESTIGATION BY THE SEBI/BSE, THE TRANSACTIONS IN SHARES HAVE BEEN PROVED TO BE NOT GENUINE, THEN HOW THE FUNDS R ECEIVED FROM SUCH SOURCE CAN BE GENUINE IN THE HANDS OF THE ASSE SSEE. THE GENUINE FUNDS COULD COME FROM A GENUINE SOURCE ONLY AND THE FUNDS RECEIVED FROM A NON-GENUINE SOURCE CANNOT BE GENUINE. FURTHER, ACCORDING TO SECTION 68, THE PRIMARY BURDE N IS ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CREDIT E NTRIES IN THE ACCOUNTS OF THE PREVIOUS YEAR. IF THE EXPLANATION G IVEN BY THE ASSESSEE IS NOT SATISFACTORY OR THE SOURCE OFFERED BY THE ASSESSEE IS NOT GENUINE, THE AMOUNT IS TO BE TAKEN AS THE INCOM E OF THE ASSESSEE. THE EXPLANATION REGARDING THE NATURE AND SOURCE OF CREDIT SHOULD BE SATISFACTORY IN THE OPINION OF THE ASSESSING ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 23 AUTHORITY AND SECTION 68 SETS UP A PRESUMPTION AGAI NST THE ASSESSEE WHENEVER UNEXPLAINED CREDITS ARE FOUND IN THE ACCOUNTS OF THE ASSESSEE. THE INITIAL BURDEN IS ON THE ASSES SEE TO REFUTE THE PRESUMPTION RAISED AND THE BURDEN SHIFTS ONLY WHEN THE ASSESSEE ESTABLISHES THE AUTHENTICITY OF THE TRANSACTIONS. S ECTION 68 APPLIES EQUALLY TO MONEY RECEIVED BY THE ASSESSEE SHOWN AS SALE OF SHARES AND THE BURDEN IS ON THE ASSESSEE TO PROVE T HE NATURE AND SOURCE THEREOF TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE THREE INGREDIENTS I.E. PROOF REGARDIN G IDENTITY OF THE PURCHASER, THE CREDITWORTHINESS TO PURCHASE THE SHA RES AND THE GENUINENESS OF THE TRANSACTION AS A WHOLE. THE BURD EN OF PROVING THE SOURCE OF A CASH CREDIT IS ON THE ASSESSEE AND THE ASSESSING OFFICER IS NOT REQUIRED TO PROVE THE SOURCE. MERE F URNISHING OF PARTICULARS IS NOT ENOUGH, MERE PAYMENT BY ACCOUNT PAYEE BY CHEQUE IS NOT SACROSANCT AS HELD IN HINDUSTAN TEA T RADING CO. LTD. VS CIT 2003 [263 ITR 289, 297 (CAL)]. WHERE TH ERE IS UNEXPLAINED CREDIT, IT IS OPEN TO THE ASSESSING OFF ICER TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE ASSESSING OFFICER TO SHOW THAT THE INCOME IS FROM A NY PARTICULAR SOURCE AS HELD IN CIT VS. DEVI PRASAD VISWANATH PRA SAD 1969 72 ITR 194 (SC). THE CASE LAWS QUOTED BY THE AR ARE NOT APPLICABLE T O THE FACTS OF THE PRESENT CASE AS IN THE PRESENT CASE TH E GENUINENESS OF THE TRANSACTION HAS NOT BEEN ESTABLISHED BECAUSE ON INVESTIGATION, THE EXISTENCE OF THE COMPANY M/S. PRESHA METALLURGI CAL LTD. HAS NOT BEEN ESTABLISHED AND IT WAS REVEALED THAT THE C OMPANY WAS NOT CARRYING OUT ANY BUSINESS ACTIVITIES AND NOBODY KNEW ABOUT THE EXISTENCE OF THE COMPANY AT THE GIVEN ADDRESS. FROM THE FACTS, IT IS CLEAR THAT THE ASSESSEE HAS INFACT RE-INTRODU CED ITS UNACCOUNTED INCOME IN THE SHAPE OF LONG TERM CAPITA L GAIN BY ROUTING IT THROUGH PAPER COMPANIES WHO HAVE NO REAL BUSINESS OR ACTIVITIES AND ARE CREATED ON PAPERS FOR SUCH TYPE OF SHAM TRANSACTIONS. THE PERSONS OPERATING SUCH PAPER COMP ANIES COMPLETE THE PAPER FORMALITIES BUT NO REAL BUSINESS / ACTIVITIES ARE CARRIED OUT BY THESE COMPANIES. THE BANK ACCOUNTS A RE OPENED AND OPERATED ONLY TO LAUNDER MONEY AND PROVIDE ACCO MMODATION ENTRIES. IT IS AN ACCEPTED PRINCIPLE OF JURISPRUDEN CE THAT IN CERTAIN EXCEPTIONAL CASES THE COURT IS ENTITLED TO LIFT THE VEIL OF CORPORATE ENTITY AND TO PAY REGARD TO THE ECONOMIC REALITIES BEHIND THE LEGAL ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 24 FACADE. THE COURT HAS POWER TO DISREGARD THE CORPOR ATE ENTITY IF IT USED FOR TAX EVASION OR TO CIRCUMVENT TAX OBLIGATIO N OR TO PERPETRATE S HELD IN JUGGILAL KAMLAPAT V. CIT, (196 9) 73 ITR 702 (SC); UNION OF INDIA V. PLAYWORLD ELECTRONICS PVT. LTD. (1990) 184 ITR 308, 317 (SC); CIT V. SRI MEENAKSHI MILLS L TD., (1967) 63 ITR 609, 616 (SC) ETC. FURTHER THE LEGISLATURE C AN FORGE A SLEDGE- HAMMER CAPABLE OF CRACKING OPEN THE CORPORA TE SHELL; AND IT CAN, IF IT CHOOSES, DEMAND THAT THE COURTS IGNOR E ALL THE CONCEPTIONS AND PRINCIPLES WHICH ARE AT THE ROOT OF COMPANY LAW [BANK VOOR HANDEL ENSCHEEPVART N.V. V. SLATFORD, (1 953) 1QB 248]. THE FACTS AND CIRCUMSTANCES OF THE CASE, AS MENTION ED ABOVE, CLEARLY SUGGEST THAT THE REVENUE CANNOT TAKE OR ACCEPT SUCH 'MAKE BELIEVE TRANSACTION', AS PRESENTED BY THE APP ELLANTS. TRUTH OR GENUINENESS OF SUCH TRANSACTIONS MUST PREVAIL OV ER THE SMOKE SCREEN, CREATED BY WAY OF PREMEDITATED SERIES OF ST EPS TAKEN BY THE APPELLANTS, WITH A VIEW TO IMPARTING A COLOUR O F GENUINENESS AND CHARACTER OF REAL RECEIPT AS SALE OF SHARES. NE EDLESS TO SAY THAT ONE HAS TO LOOK AT THE WHOLE TRANSACTIONS AND A SER IES OF STEPS TAKEN TO ACCOMPLISH SUCH SHARE TRANSACTIONS, IN AN INTEGRATED MANNER, WITH A VIEW TO ASCERTAINING THE TRUE NATURE AND CHARACTER OF THE MONEY RECEIVED. THE ASSESSEE HAS NOT BEEN AB LE TO IDENTIFY THE PURCHASER OF THE SHARES (SOLD BY THE ASSESSEE) AND THEIR CREDITWORTHINESS TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS. THE PLEA THAT THE SALE PROCEEDS HAVE COME THROUGH ACCOUNT PAYEE CHEQUES LOSES ALL FORCE IN THE LIGHT OF THE MATERIAL GATHERED BY THE INVESTIGATION WING ABOUT THE MODUS OPERANDI FOLLOWED BY THE OPERATORS. IN VIEW OF THE SAID FACT S AND CIRCUMSTANCES, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION U/S 68 AFTER GRANTING ADEQUATE OPPORTUNITY TO THE APPELLANT AND AFTER DULY REBUTTING THE SUBMISSIONS OF THE APPELLANT. MOREOVER THE AMOUNT HIMSELF SURRENDERED BY THE ASSESSEE IN THE STATEMENT U/S 132(4) DURING THE COU RSE OF SEARCH AND IN FACT PAID TAX AND REVISED RETURN FOR ASSESSM ENT YEAR 2014- 15. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ARGUMENTS OF THE AR ARE NOT FOUND ACCEPTABLE AND TH E ACTION OF THE AO IN MAKING THE ADDITION OF RS. 26,68,215/- U/ S 68 OF THE INCOME TAX ACT, 1961 IS FOUND SUSTAINABLE. THE AO H AS DULY ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 25 MENTIONED THE FACTS AND THE LEGAL POSITION IN SUPPO RT OF THE ADDITION MADE ON THE ISSUE AND HENCE THE ADDITION I S CONFIRMED. ACCORDINGLY, THESE GROUNDS OF APPEAL ARE DISMISSED. 4.3 GROUND OF APPEAL NO. 8 IS OF GENERAL IN NATURE AND IT HAS BEEN CONTENDED THAT THE REVERSAL OF SURRENDER WAS O N ACCOUNT OF FULFILLMENT OF OTHER CONDITIONS AND IT CANNOT BE MA DE A GROUND FOR MAKING THE ADDITION. IT IS HOWEVER A FACT ACCEPTED BY THE APPELLANT THAT A SURRENDER U/S 132(4) WAS MADE DURI NG THE SEARCH WHICH WAS HOWEVER NOT HONORED LATER ON FOR THE YEAR UNDER CONSIDERATION. THE AO HAS RELIED UPON THE STATEMENT RECORDED DURING THE SEARCH AS PER THE PROVISIONS OF SECTION 132(4) OF THE INCOME TAX ACT, 1961, WHICH MANDATES THAT STATEMENT S MADE MAY BE USED AS EVIDENCE IN ANY PROCEEDINGS UNDER TH E INCOME TAX ACT, 1961. FOR CLARITY, THE PROVISION OF SECTIO N 132(4) IS REPRODUCED BELOW:- '132 4) THE AUTHORIZED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO I S FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS O F ACCOUNT, DOCUMENTS, MONEY BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE US ED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME- TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. [EXPLANATION- FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE EXAMINATION OF ANY PERSON UNDER T HIS SUB-SECTION MAY NOT BE MERELY IN RESPECT OF ANY BOO KS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND AS A RESUL T OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELE VANT FOR THE PURPOSE OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN INCOME-TAX ACT, 1922 (1 1 OF 1922), OR UNDER THIS ACT.]' IN VIEW OF THE ABOVE POSITION THAT THE STATEMENT RE CORDED U/S 132(4) CAN BE USED AS AN EVIDENCE IN ANY PROCEEDINGS UNDER INCOME TAX ACT, 1961 THIS GROUND OF APPEAL IS FOUND WITHOUT ME RITS AND HENCE DISMISSED ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 26 7. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE ALSO G ONE THROUGH THE RECORD. AFTER GOING THROUGH THE IMPUGNED ORDER OF THE ASSESSING OFFICER AND OF THE CIT(A), WE FIND THAT NO INCRIMIN ATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ACTION AT THE PRE MISES OF THE ASSESSEE. WHAT WAS FOUND WAS THE INFORMATION / DOCUMENTS RELA TING TO THE AFORESAID SHARE TRANSACTIONS BY THE ASSESSEE. IT IS PERTINENT TO MENTION HERE THAT ASSESSEE HAD ALREADY DECLARED LONG TERM C APITAL GAINS IN RESPECT OF THE AFORESAID SHARE TRANSACTIONS IN THE SHARES OF M/S KAPPAC PHARMA LTD AND M/S PRESHA METALLURGICAL LTD. IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSESSEE HAD ALSO SHOWN / RET URNED CAPITAL GAINS EARNED FROM THE AFORESAID SHARE TRANSACTIONS. THE I NFORMATION DISCOVERED BY THE SEARCH PARTY WAS ALREADY FURNISHE D BY THE ASSESSEE IN THE RETURN OF INCOME, WHICH WAS PROCESSED U/S 143(3 ) OF THE ACT. THE TIME PERIOD FOR ISSUING NOTICE U/S 143(2) HAD ALRE ADY EXPIRED AND THE RETURN FILED BY THE ASSESSEE HAD ATTAINED FINALITY OR TO SAY THAT ASSESSMENT FOR THE YEAR UNDER CONSIDERATION HAD ALR EADY BEEN CONCLUDED AND NOT ABATED AS ON THE DATE OF SEARCH. THE LD. AS SESSING OFFICER HAS RELIED UPON THE REPORT OF THE INVESTIGATION WING OF KOLKATA AND THE ADDITION HAS BEEN MADE ON THE BASIS OF THE PREPONDE RANCE OF ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 27 PROBABILITIES. NO INCRIMINATING DOCUMENTS DIRECTLY REFLECTING THE ENTRIES OF THE BOGUS SHARE TRANSACTIONS WERE EITHER FOUND D URING SEARCH ACTION OR OTHERWISE DURING THE POST SEARCH ASSESSMENT PROCEED INGS. THE ASSESSEE IN THIS CASE HAS RELIED UPON THE VARIOUS JUDICIAL D ECISIONS INCLUDING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. MURLI AGRO PRODUCTS PVT LTD, (2014) 49 TAXMAN .COM 172 (BOM.), ITA NO.36 OF 2009 AND IN THE CASE OF CIT VS. CONTI NENTAL WAREHOUSING CORPORATION ITA NO. 523 OF 2013 REPORTED IN (2015) 279 CTR 0389 (BOMBAY) AND OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA 234 TAXMAN 300 (DELHI) AND SUBSEQUENT DECISION OF THE DELHI HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. MEETA GUTGUTIA PROP M/S FERNS N PETALS, ITA 306/2017 AND OTHERS DECI DED VIDE ORDER DATED 25.5.2017, WHEREIN, THE HON'BLE HIGH COURTS H AVE BEEN UNANIMOUS TO HOLD THAT IT HAS BEEN TIME AND AGAIN HELD THAT I F NO INCRIMINATING MATERIAL IS FOUND DURING THE SEARCH ACTION, THE ADD ITION IN THE CASE OF ALREADY CONCLUDED ASSESSMENT CANNOT BE MADE WHIL E FRAMING ASSESSMENT U/S 153A OF THE ACT. 9. SO FAR AS THE RELIANCE OF THE ASSESSING OFFICER ON THE STATEMENT MADE BY THE ASSESSEE DURING THE SEARCH ACTION U/S 132(4) OF THE ACT IS CONCERNED, IT HAS BEEN HELD TIME AND AGAIN BY VARI OUS COURTS OF LAW THAT SUCH A STATEMENT RECORDED U/S 132(4) OF THE AC T ON A STAND-ALONE BASIS WITHOUT REFERENCE TO ANY OTHER INCRIMINATING MATERIAL FOUND DURING SEARCH OPERATION WILL NOT HAVE AN EVIDENTIARY VALUE AND THE SAME CANNOT ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 28 BE MADE THE SOLE BASIS FOR MAKING THE ADDITION IN T O THE INCOME OF THE ASSESSEE. 10. THE ASSESSEE IN THIS RESPECT HAS RELIED UPON TH E FOLLOWING DECISIONS:- 1. PR. CIT V/S BEST INFRASTRUCTURE (INDIA) PVT. LTD 397 ITR 82 DEL-HC 2. DEPUTY COMMISSIONER OF INCOME TAX V/S A M EXPORT S 69 ITR (TRIB) 16 JAIPUR-TRIB 3. COMMISSIONER OF INCOME TAX V/S HARJEEV AGGARWAL 290 CTR 263 DEL-HC 4. BRAHMAPUTRA FINLEASE (P) LTD. V/S DEPUTY COMMISS IONER OF INCOME TAX 51 CCH 796 DEL-TRIB 5. RATHI STEEL LTD. V/S ASSISTANT COMMISSIONER OF I NCOME TAX 56 CH 102 DEL-TRIB 6 NARESH KUMAR AGARWAL [2015] 53 TAXMANN.COM 306 (A.P .) 7 CIT VS SUNIL AGARWAL [2015] 64 TAXMAN.COM 107 (DE LHI HIGH COURT) 8 BASANT BANSAL VS ACIT [2015] 63 TAXMANN.COM 199 (JAIPUR TRIB.) 11. WE HAVE GONE THROUGH THE ABOVE DECISIONS AS ALS O THE OTHER DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE AS SESSEE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CI T VS BEST INFRASTRUCTURE (INDIA) PVT. LTD HAS OBSERVED THAT THE STATEMENT RECORDED U/S 132(4) OF THE ACT DO NOT THEMSELVES CONSTITUTE INCRIMINATING MATERIAL. THE HON'BLE DELHI HIGH COURT IN THIS RESP ECT HAD ALSO DISTINGUISHED THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF SMT. DAYAWANTI GUPTA VS CIT [2016] 390 ITR 496. THE RE LEVANT PART OF THE OBSERVATIONS MADE ARE REPRODUCED AS UNDER;- ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 29 38. FIFTHLY, STATEMENTS RECORDED UNDER SECTION 13 2 (4) OF THE ACT OF THE ACT DO NOT BY THEMSELVES CONSTITUTE INCR IMINATING MATERIAL AS HAS BEEN EXPLAINED BY THIS COURT IN COMMISSIONER OF INCOME TAX V. HARJEEV AGGARWAL (SUPRA). LASTLY, AS ALREADY POINTED OUT HEREINBEFORE, THE FACTS IN THE PRESENT CASE ARE DIFFERENT FROM THE FACTS IN SMT. DAYAWANTI GUPTA V. CIT (SUPRA) WHERE THE ADMISSION BY THE ASSESSEES THEMSE LVES ON CRITICAL ASPECTS, OF FAILURE TO MAINTAIN ACCOUNTS A ND ADMISSION THAT THE SEIZED DOCUMENTS REFLECTED TRANSACTIONS OF UNACCOUNTED SALES AND PURCHASES, IS NON-EXISTENT IN THE PRESENT CASE. IN THE SAID CASE, THERE WAS A FACTUAL FINDING TO THE EFFEC T THAT THE ASSESSEES WERE HABITUAL OFFENDERS, INDULGING IN CLA NDESTINE OPERATIONS WHEREAS THERE IS NOTHING IN THE PRESENT CASE, WHATSOEVER, TO SUGGEST THAT ANY STATEMENT MADE BY M R. ANU AGGARWAL OR MR. HARJEET SINGH CONTAINED ANY SUCH AD MISSION. 39. FOR ALL THE AFOREMENTIONED REASONS, THE COURT I S OF THE VIEW THAT THE ITAT WAS FULLY JUSTIFIED IN CONCLUDING THA T THE ASSUMPTION OF JURISDICTION UNDER SECTION 153A OF TH E ACT QUA THE ASSESSEES HEREIN WAS NOT JUSTIFIED IN LAW. FURTHER, THE HONBLE A.P. HIGH COURT IN THE CASE OF NARESH KUMAR AGARWAL (2015) 53 TAXMANN.COM 306 (ANDHRA PR ADESH) HAS OBSERVED THAT WHERE, IN THE ABSENCE OF ANY INCRIMIN ATING MATERIAL ETC. FOUND FROM THE PREMISES OF THE ASSESSEE DURING THE COURSE OF SEARCH, STATEMENT OF ASSESSEE RECORDED UNDER SECTION 132(4) WOULD NOT HAVE ANY EVIDENTIARY VALUE. SIMILAR VIEW HAS BEEN ADOPTED B Y THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF SHREE CHAND SONI VS. D CIT (2006) 101 TTJ 1028 (JODHPUR). THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . HARJEEV AGARWAL IN ITA NO.8/2004 VIDE ORDER DATED 10.03.16 HAS OBSERVED THAT ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 30 A STATEMENT MADE UNDER SECTION 132(4) OF THE ACT ON A STAND-ALONE BASIS, WITHOUT REFERENCE TO ANY OTHER MATERIAL DISCOVERED DURING SEARCH AND SEIZURE OPERATION, WOULD NOT EMPOWER THE AO TO MAKE A BLOCK ASSESSMENT MERELY BECAUSE ANY ADMISSION WAS MADE BY THE ASSESSEE DURING SEARCH OPERATION. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUNI L AGARWAL (2015) 64 TAXMAN.COM 107 (DELHI-HC), THE ASSESSEE T HEREIN, DURING THE COURSE OF SEARCH, MADE A CATEGORICAL ADMISSION UNDE R SECTION 132(4) OF THE ACT THAT THE CASH AMOUNT SEIZED BELONGED TO HI M AND IT REPRESENTED UNDISCLOSED INCOME NOT RECORDED IN THE BOOKS OF ACC OUNTS. THE ASSESSEE DID NOT IMMEDIATELY RETRACT FROM THE ABOVE ADMISSIO N BUT ONLY DURING THE ASSESSMENT PROCEEDINGS AT A BELATED STAGE. IN HIS RETRACTION, THE ASSESSEE STATED THAT THE SURRENDER WAS MADE UNDER A MISTAKEN BELIEF AND WITHOUT LOOKING INTO BOOKS OF ACCOUNT AND WITHOUT U NDERSTANDING LAW AND THAT HE HAD BEEN COMPELLED AND PERTURBED BY EVE NTS OF SEARCH AND THAT THE PRESSURE OF SEARCH WAS BUILT SO MUCH THAT HE HAD TO MAKE THE SURRENDER WITHOUT HAVING ACTUAL POSSESSION OF THE A SSETS OR UNEXPLAINED INVESTMENTS OR EXPENSES INCURRED AND THAT THERE WAS NO SUCH INCOME AS UNDISCLOSED. THE HONBLE DELHI HIGH COURT, AFTER CO NSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, WHILE DISMISSING THE APPEAL OF THE REVENUE, OBSERVED THAT THOUGH THE FACT THAT THE ASS ESSEE MAY HAVE RETRACTED HIS STATEMENT BELATEDLY, YET, IT DID NOT RELIEVE THE AO FROM EXAMINING THE EXPLANATION OFFERED BY THE ASSESSEE W ITH REFERENCE TO THE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 31 BOOKS OF ACCOUNT PRODUCED BEFORE HIM. ALTHOUGH, A STATEMENT UNDER SECTION 132(4) OF THE ACT CARRIES MUCH GREATER WEIG HT THAN THE STATEMENT MADE UNDER SECTION 133A OF THE ACT, BUT A RETRACTE D STATEMENT EVEN UNDER SECTION 132(4) OF THE ACT WOULD REQUIRE SOME CORROBORATIVE MATERIAL FOR THE AO TO PROCEED TO MAKE ADDITIONS ON THE BASIS OF SUCH STATEMENT. IN THE CASE OF BASANT BANSAL VS. ACIT REPORTED IN (2015)63 TAXMANN.COM 199 (JAIPUR TRIB.), HAVING SOMEWHAT SIM ILAR FACTS, THE ASSESSEE THEREIN, DURING THE SEARCH AND SEIZURE ACT ION U/S 132 OF THE ACT, OFFERED A SUMMARY DISCLOSER OF INCOME AS UNDISCLOSE D AND THE DEPARTMENT ACCEPTED THE SUMMARY SURRENDER OF INCOME AND THEREAFTER ADVANCE TAX FOR THE SAID SURRENDERED OF INCOME WAS ALSO DEPOSITED, BUT THEREAFTER IT WAS CONTENDED BY THE ASSESSEE THAT TH E SURRENDER WAS MADE UNDER THREAT OR COERCION AND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION. THE STAND OF THE DEPARTM ENT WAS THAT THE ADMISSION WAS VOLUNTARY AND WAS NOT UNDER A MISTAKE N BELIEF OF FACT OR LAW AND THAT THE ASSISTANCE HAD ENOUGH TIME TO GO T HROUGH THE FACTS OF THEIR CASE, LAW APPLICABLE IN THEIR CASE AND TAKE A DVICE FROM THEIR COUNSELS AND ADVISORS BEFORE FILING THE LETTER OF S URRENDER OF UNDISCLOSED/UNACCOUNTED INCOME AND THAT THE ADMISSI ON BY THEM WAS FINAL AND BINDING ON THEM; THE CO-ORDINATE JAIPUR B ENCH OF THE TRIBUNAL, AFTER OVERALL APPRECIATION OF THE FACT AN D EVIDENCES BEFORE IT, OBSERVED THAT THE ASSESSEES SURRENDER WAS NOT BASE D ON ANY ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 32 INCRIMINATING MATERIAL AND THAT THE DISCLOSER BEING NOT VOLUNTARY AND EXTRACTED BY THE DEPARTMENT IN CREATING A COERCIVE SITUATION CANNOT BE RELIED SOLELY TO BE BASIS OF ADDITION AS UNDISCLOSE D INCOME. THE CO- ORDINATE BENCH OF THE TRIBUNAL WHILE RELYING UPON V ARIOUS CASE LAWS OF THE HIGHER AUTHORITIES OBSERVED THAT IT IS WELL SET TLED LEGAL POSITION THAT MERELY ON THE BASIS OF A STATEMENT WHICH IS NOT SUP PORTED BY THE DEPARTMENT WITH COGENT CORROBORATIVE MATERIAL CANNO T BE A VALID BASIS FOR SUSTAINING SUCH AD-HOC ADDITION. THE CO-ORDINA TE JAIPUR BENCH OF THE TRIBUNAL (SUPRA) FURTHER OBSERVED THAT THE ISSU E OF EXISTENCE OF PRESSURE, THREAT, COERCION DURING SEARCH PROCEEDING S IS TO BE JUDGED BY REFERENCE TO THE EXISTING FACTS AND CIRCUMSTANCES, HUMAN CONDUCT AND PREPONDERANCE OF POSSIBILITIES. DURING THE SEARCH PROCEEDINGS, RECORD RELATING THERETO BEING IN EXCLUSIVE CUSTODY OF THE SEARCHING OFFICERS, IT IS THEIR WISH AND WILL WHICH PREVAILS DURING THE FA TEFUL PERIOD. THAT IT IS ALMOST IMPOSSIBLE FOR THE ASSESSEE TO ADDUCE DEMONS TRATIVE EVIDENCE OF EXERTING SUCH PRESSURE. THE CO-ORDINATE BENCH OF TH E TRIBUNAL (SUPRA) WHILE HOLDING SO, APART FROM RELYING UPON VARIOUS D ECISIONS OF THE HIGHER COURTS HAS ALSO RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF DY CIT VS. PRAMUKH BUILDERS (2008) 112 IT D 179 (AHD.) WHEREIN IT HAS BEEN HELD THAT EVEN IN THE ABSENCE O F PROOF OF COERCION OR PRESSURE, THE STATEMENT BY ITSELF CANNOT BE TAKEN A S CONCLUSIVE. THEREFORE, MERELY IN THE ABSENCE OF PROOF OF PRESSU RE, THREAT, COERCION ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 33 OR INDUCEMENT THE STATEMENT CANNOT BE HELD AS CONCL USIVE AND ADDITIONS CANNOT BE MADE BY SOLELY RELYING ON A STATEMENT OR A LETTER. 12. EVEN THE CBDT LETTER NO.286/2/2003-IT(INV) DATE D OCT 3, 2003 IN THIS RESPECT READ AS UNDER: TO THE CHIEF COMMISSIONERS OF INCOME TAX, (CADRE CONTRA)&ALL DIRECTORS GENERAL OF INCOME TAX INV. SIR, SUBJECT: CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION REGARDING INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE T HE INCOME TAX DEPARTMENTS. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 34 YOURS FAITHFULLY, 13. A PERUSAL OF THE ABOVE CIRCULAR ALSO SHOWS THAT IT IS IN THE NOTICE OF THE STATUTORY CONTROLLING BODY OF THE INCOME TAX AUTHORITIES THAT THE REVENUE OFFICIALS ARE USED TO TAKE CONFESSIONAL STA TEMENTS FROM THE PERSON SEARCHED UNDER FORCE, PRESSURE OR THREAT AND THAT IS WHY THEY HAVE MADE IT MANDATORY THAT ADDITIONS SOLELY ON THE BASIS ON SUCH STATEMENTS SHOULD NOT BE MADE AND THAT CORROBORATIV E EVIDENCES SHOULD BE COLLECTED OR OBTAINED BEFORE MAKING SUCH ADDITIO NS. THE CIRCULAR OF THE CBDT IS BINDING ON THE REVENUE OFFICIALS. IN T HE FACTS AND CIRCUMSTANCES OF THIS CASE, WHEN SEEN IN THE LIGHT OF ABOVE CASE LAWS AND CBDT CIRCULAR, ADDITIONS IN THIS CASE CANNOT BE SAID TO BE JUSTIFIABLY MADE. 14. SO FAR AS THE LEGAL QUESTION RAISED BY WAY OF A DDITIONAL GROUND REGARDING CONTESTING OF THE IMPUGNED ADDITION MADE / DESPITE THE INCOME BEING OFFERED IN THE RETURN OF INCOME IS CONCERNED, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE MUMBAI BE NCH OF THE TRIBUNAL IN SHRI PANDOO P. NAIG, VS ACIT ITA NO. 7089/MUM/2011 & OTHERS VIDE ORDER DATED 24.6.2016. THE RELEVANT PAR T OF THE FINDINGS OF THE ORDER OF THE TRIBUNAL ARE REPRODUCED AS UNDER:- 14. NOW COMING TO THE POINT, WHETHER, THE CLAIM PU T BY THE ASSESSEE SHRI PANDOO P. NAIG BY WAY OF ADDITIONAL GROUND BEFORE THE LD. CIT(A) REGARDING T HE DELETION OF ADDITION OF RS.4 CRORE OFFERED DURING T HE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 35 SURVEY ACTION AND THEREBY OFFERED IN THE RETURN OF INCOME CAN BE ALLOWED AT THIS STAGE? THE LD. COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWE R CO. LTD. VS. CIT 229 ITR 383. THE FACTS BEFORE T HE HONBLE SUPREME COURT WERE THAT THE ASSESSEE IN THA T CASE OFFERED THE INTEREST AMOUNT FOR TAXATION AND T HE ASSESSMENT WAS COMPLETED ON THAT BASIS. BEFORE THE LD. CIT(A), THE ASSESSEE THOUGH HAD TAKEN A NUMBER OF GROUNDS OF APPEAL, HOWEVER, THE INCLUSION OF THE SA ID AMOUNT OF INTEREST WAS NOT CHALLENGED. THE INCLUSI ON OF THE SAID AMOUNT OF INTEREST WAS NOT OBJECTED TO EVE N IN THE GROUNDS OF APPEAL AS ORIGINALLY FILED BEFORE TH E TRIBUNAL. HOWEVER, THE ASSESSEE BY WAY OF SUBSEQUE NT LETTER RAISED THE ADDITIONAL GROUND IN RELATION TO THE SAID INCLUSION OF INTEREST INTO THE INCOME OF THE ASSESS EE. IN THE ABOVE CIRCUMSTANCES, THE QUESTION BEFORE THE HONBLE SUPREME COURT WAS WHERE ON THE FACTS FOUND BY THE AUTHORITIES BELOW A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE THE AUTHORITIES) WHICH BE ARS ON THE TAX LIABILITY OF THE ASSESSEE, WHETHER THE T RIBUNAL HAS JURISDICTION TO EXAMINE THE SAME? THE HONBLE SUPREME COURT WHILE ANSWERING THE SAID QUESTION OBSERVED THAT UNDER SECTION 254 OF THE INCOME TAX A CT, THE POWER OF THE TRIBUNAL IN DEALING WITH THE APPEA LS IS EXPRESSED IN THE WIDEST POSSIBLE TERMS; THE POWER O F THE TRIBUNAL UNDER SECTION 254 IS NOT RESTRICTED ONLY T O DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS); THAT BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS OBJECTION BEFORE THE TRIBUNAL AND THE TRIBUNAL IS NOT PREVENTED FROM CONSIDERING QUESTION S OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. WHILE ANSWERING THE QUESTION IN AFFIRMATIVE, THE HONBLE SUPREME COURT CONCLUDED TH AT THE TRIBUNAL HAS JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH ARISES FROM THE FACTS AS FOUND BY THE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 36 AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. 15. THE FACTS OF THE CASE IN HAND ARE ON BETTER FO OTING. IN THE CASE IN HAND, THOUGH UNDER CONSISTENT PRESSU RE, THE ASSESSEE OFFERED THE ADDITIONAL INCOME FOR TAXA TION IN THE ASSESSMENT PROCEEDINGS BUT WHEN HE WAS BURDENED WITH MANY MORE ADDITIONS, HE AT THE FIRST INSTANCE DURING THE APPEAL BEFORE THE LD. CIT(A), CHALLENGED THE OFFER OF ADDITIONAL INCOME ON THE BA SIS OF STATEMENT RECORDED UNDER SECTION 133A. EVEN THE SA ID GROUND WAS ALSO ADMITTED BY THE LD. CIT(A) FOR ADJUDICATION THOUGH FINALLY DECIDED AGAINST THE ASS ESSEE. THE FULL BENCH OF THE HONBLE BOMBAY HIGH COURT IN THE CASES OF AHMEDABAD ELECTRICITY COMPANY LTD. VS. CI T AND GODAVARI SUGAR MILLS LTD. VS. CIT BY WAY OF A COMMON ORDER DATED 30.04.1992 (1993) 199 ITR 351 HA S OBSERVED THAT THE BASIC PURPOSE OF AN APPEAL PROCED URE IN AN INCOME TAX MATTER IS TO ASCERTAIN THE CORRECT TAX LIABILITY OF THE ASSESSEE IN ACCORDANCE WITH LAW. THEREFORE, AT BOTH THE STAGES, EITHER BY THE APPELL ATE ASSISTANT COMMISSIONER OR BEFORE THE APPELLATE TRIBUNAL, THE APPELLATE AUTHORITY CAN CONSIDER THE PROCEEDINGS BEFORE IT AND THE MATERIAL ON RECORD BE FORE IT FOR THE PURPOSE OF DETERMINING THE CORRECT TAX L IABILITY OF THE ASSESSEE. THE APPELLATE AUTHORITIES, OF COU RSE, CANNOT TRAVEL BEYOND THE PROCEEDINGS AND EXAMINE NE W SOURCE OF INCOME, FOR THAT PURPOSE OTHER SEPARATE REMEDIES ARE PROVIDED TO THE DEPARTMENT UNDER THE INCOME TAX ACT. THE HONBLE FULL BENCH OF THE BOMB AY HIGH COURT OBSERVED THAT APART FROM THE ABOVE, THER E WAS NOTHING IN SECTION 254 OR SECTION 251 WHICH WOU LD INDICATE THAT THE APPELLATE AUTHORITIES ARE CONFINE D TO CONSIDERING ONLY THE OBJECTIONS RAISED BEFORE THEM OR ALLOWED TO BE RAISED BEFORE THEM EITHER BY THE ASSE SSEE OR BY THE DEPARTMENT, AS THE CASE MAY BE. THEY CAN CONSIDER THE ENTIRE PROCEEDINGS TO DETERMINE THE TA X LIABILITY OF THE ASSESSEE. ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 37 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM.) HAS OBSERVED THAT THE ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES, BUT I S ALSO ENTITLED TO RAISE ADDITIONAL CLAMS BEFORE THEM. TH E APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS, WHICH BECAME AVAILABLE ON ACCOUNT OF CHANGE OF CIRCUMSTANCES OR LAW, BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILABLE WHEN THE RE TURN WAS FILED. THE WORDS COULD NOT HAVE BEEN RAISED MUST BE CONSTRUED LIBERALLY AND NOT STRICTLY. THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLE A IN AN APPEAL AND EACH CASE MUST BE CONSIDERED ON ITS OWN FACTS. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN TH E CASE OF SHRI CHANDRASHEKHAR BAHIRWANI ITA NO.7810/M/2010 AND 6599/M/2011 VIDE ORDER DATED 17.06.2015 WHILE DECIDING THE QUESTION AS TO WHETHE R THE INCOME CANNOT BE ASSESSED LESS THAN THE RETURNE D INCOME HAS OBSERVED AS UNDER: 5. NOW COMING TO THE FINDING OF THE LD. CIT(A), THAT INCOME CANNOT BE ASSESSED LESS THAN THE RETURNED INCOME, THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ACTION OF THE LD. CIT(A) IN REJECTING THE CLAIM OF THE ASSESSEE ON THIS GROUND WAS NOT JUSTIFIED. HE HAS FURTHER RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT GAS LTD. VS. JCIT (2000) 245 ITR 84. IN THE SAID CASE, THE WORDS OF THE CIRCULAR NO.549, PARA 5.12, DT. 31 ST OCTOBER, 1989, PROVIDING THAT THE ASSESSED INCOME UNDER SECTION 143(3) SHALL NOT BE LESS THAN THE RETURNED INCOME WAS CONSIDERED BY THE HONBLE HIGH COURT AND IT WAS HELD THAT AS PER PROVISO TO SECTION 119 OF THE ACT, THE BOARD CANNOT ISSUE INSTRUCTIONS TO THE INCOME TAX AUTHORITY TO MAKE A PARTICULAR ASSESSMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER AS WELL AS NOT TO INTERFERE WITH THE DISCRETION OF THE COMMISSIONER ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 38 IN EXERCISE OF HIS APPELLATE FUNCTIONS. IT WAS FURTHER HELD THAT THE AO, WHILE EXERCISING HIS QUASI JUDICIAL POWERS, WAS NOT BOUND BY THE SAID CIRCULAR AND SHOULD HAVE EXERCISED HIS POWERS INDEPENDENTLY. THE HONBLE HIGH COURT, THEREFORE, DIRECTED THE AO TO MAKE THE ASSESSMENT WITHOUT KEEPING IN MIND THE SAID CIRCULAR. IT MAY BE FURTHER OBSERVED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. ITA NO.3908 OF 2010 DECIDED ON 21.06.12, WHILE RELYING UPON THE VARIOUS DECISIONS OF THE HONBLE SUPREME COURT AND OTHER HONBLE HIGH COURTS HAS HELD THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE AO, IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM IS NOT BARRED. THE HONBLE HIGH COURT HAS FURTHER OBSERVED THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LIMITED V. CIT (2006) 157 TAXMAN 1, RELATING TO THE RESTRICTION OF MAKING THE CLAIM THROUGH A REVISED RETURN WAS LIMITED TO THE POWERS OF THE ASSESSING AUTHORITY AND THE SAID JUDGMENT DOES NOT IMPINGE ON THE POWER OR NEGATE THE POWERS OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM BY WAY OF ADDITIONAL GROUND. EVEN OTHERWISE, THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE CLAIM OF THE ASSESSEE IN EXERCISE OF HIS APPELLATE JURISDICTION UNDER SECTION 250 OF THE ACT. MOREOVER, IF THE ASSESSEE IS, OTHERWISE, ENTITLED TO A CLAIM OF DEDUCTION BUT DUE TO HIS IGNORANCE OR FOR SOME OTHER REASON COULD NOT CLAIM THE SAME IN THE RETURN OF INCOME, BUT HAS RAISED HIS CLAIM BEFORE THE APPELLATE AUTHORITY, THE APPELLATE AUTHORITY SHOULD HAVE LOOKED INTO THE SAME. THE ASSESSEE CANNOT BE BURDENED WITH THE TAXES WHICH HE OTHERWISE IS NOT LIABLE TO PAY UNDER THE LAW. EVEN A DUTY HAS ALSO BEEN CAST UPON THE INCOME TAX AUTHORITIES TO CHARGE THE LEGITIMATE TAX FROM THE TAX PAYERS. THEY ARE NOT ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 39 THERE TO PUNISH THE TAX PAYERS FOR THEIR BONAFIDE MISTAKES. IN VIEW OF OUR ABOVE OBSERVATIONS, IT IS HELD THAT THE ASSESSEE IS NOT LIABLE TO PAY CAPITAL GAINS TAX, THOUGH ORIGINALLY HE HAD SUBJECTED HIMSELF TO THE SAID TAX AS PER HIS RETURN OF INCOME . THE AO IS DIRECTED TO PROCESS THE CLAIM OF REFUND IN THIS RESPECT AS PER PROVISIONS OF THE LAW. 16. IN VIEW OF THE ABOVE OBSERVATION, WE HOLD THAT THE LD. CIT(A) THOUGH, RIGHTLY ADMITTED THE QUESTION OF LAW AS TO WHETHER THE INCOME OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME CONSEQUENT TO OFFER MADE IN HIS STATEMENT RECORDED DURING THE SURVEY ACTION CAN BE CHALLENGED BEFORE THE APPELLATE AUTHORITY, BUT WRO NGLY DECIDED THE SAME IN FAVOUR OF REVENUE. IN VIEW OF OUR FINDINGS GIVEN ABOVE AND IN VIEW OF THE VARIOUS CAS E LAWS AS DISCUSSED ABOVE, WE HAVE NO HESITATION TO H OLD THAT THE ADDITIONAL INCOME WAS RETURNED BY THE ASSE SSEE PERHAPS UNDER FORCE, PRESSURE, THREAT OR COERCION A ND UNDER THE MISTAKEN BELIEF. THE ASSESSEE, IN OUR VIE W, WAS NOT LIABLE TO PAY TAX ON THE SAID ADDITIONAL IN COME RETURNED. WE, ACCORDINGLY DIRECT THE DEPARTMENT TO REFUND THE TAXES, IF ANY, PAID BY THE ASSESSEE IN R ESPECT OF ADDITIONAL INCOME OFFERED DURING THE SURVEY ACTI ON. THE ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE A SSESSEE. IN VIEW OF OUR OBSERVATIONS MADE ABOVE, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED AND THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER ARE ORDERED TO BE DELETED AND IF THE ASSESS EE HAS ALREADY PAID ANY TAXES IN RESPECT OF THE IMPUGNED ADDITION, THE SAME BE REFUNDED TO THE ASSESSEE. SINCE THE FACTS IN ALL THE CAPTIONED APPEALS ARE ID ENTICAL AND THE IDENTICAL LEGAL ISSUE HAS BEEN RAISED IN ALL THE AP PEALS EITHER THROUGH THE ITA NOS. 625 TO 630 & 707 TO 710-CHD-2019 SHRI TARUN JAIN & OTHERS, LUDHIANA 40 MAIN GROUNDS OR THROUGH ADDITIONAL GROUND OF APPEA L, HENCE, IN VIEW OF OUR FINDINGS GIVEN ABOVE ON THE LEGAL ISSUE, ALL TH E AFORESAID CAPTIONED APPEALS OF THE ASSESSEES STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.01.2020 SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 27.01.2020 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR