Sri Jagmohan Jalan, Kolkata V. ACIT, Circle - 32, Kalimpong

ITA 661/KOL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9275 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2009
• Court: TRIBUNAL
• Department Lawyers: PIYUSH KOLHE
• Keywords: Gift; Business income; Salary income; Opportunity of being heard; Onus to prove; Penny stocks; Set aside; Capital Gains
• Section: 133(6); 208; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE . .. . . .. . , , , , , SHRI B.R.MITTAL, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 661/KOL/2009 &' ()/ ASSESSMENT YEAR : 2004-05 (+, / APPELLANT ) SHRI JAGMOHAN JALAN, KOLKATA (PAN : ACXPJ 5234 D) - & - - VERSUS - . (./+,/ RESPONDENT ) A.C.I.T., CIRCLE-32, KOLKATA +, 0 1 #/ FOR THE APPELLANT: SHRI SUBHAS AGARWAL ./+, 0 1 #/ FOR THE RESPONDENT: SHRI PIYUSH KOLHE, SR.DR #2 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ), , , , #$ PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 30.01.2009 OF THE CIT(A)-XIX, KOLKATA PERTAINING TO ASSESSMENT YEAR 2 004-05. 2. THOUGH THE ASSESSEE HAS TAKEN AS MANY AS MANY G ROUNDS RELATING TO TWO ISSUES WHERE THE CONFIRMATION OF ADDITION OF RS.5,00,000/- ON ACCOUNT OF GIFTS AND THE OTHER IS RS.35,59,680/- ON ACCOUNT OF SALE PROCEEDS OF T HE SHARES. 3 THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AO WH ILE DOING THE SCRUTINY ASSESSMENT THE AO HAS OBSERVED AS UNDER :- DURING THE FINANCIAL YEAR 2003-04, THE ASSESSEE HA S CLAIMED TO HAVE RECEIVED TWO GIFTS, BY WAS OF CHEQUES AGGREGATING TO RS.5,00 ,000/-. IT IS OBSERVED THAT ONE GIFT OF RS.2,50,000/- IS SHOWN TO HAVE BEEN. RE CEIVED FROM SHRI KISHAN LAL CHOUDHURY OF 9/1, BELIAGHATA ROAD, KOLKATA-15. TOWA RDS CONFIRMATION OF THE GIFTS, THE ASSESSEE HAS FILED A DECLARATION OF GIF T SIGNED BY THE NOTARY PUBLIC, 2 KOLKATA. A PERUSAL OF THE DECLARATION, IT APPEARS T HAT THE GIFT WAS MADE BY CHEQUE NO.261530 DATED 09-09-2003 IN THE NAME OF TH E ASSESSEE DRAWN ON THE VYSYA BANK LTD., R.B.AVENUE BRANCH, KOLKATA. IN ORD ER TO PROVE THE DETAILS OF MOVEMENT OF MONEY THROUGH BANKING CHANNEL AND GENUI NENESS OF THE GIFT, SHRI MIHIR BANERJEE AN INSPECTOR OF INCOME-TAX ATTACHED TO THIS OFFICE WAS DEPUTED ON 01-09-2006 TO OBTAIN THE BANK ACCOUNT DETAILS OF THE DONOR FROM THE BANK. THE INSPECTOR HAS ACCORDINGLY OBTAINED A STATEMENT OF THE ACCOUNT OF THE DONOR. THE DONOR IS MAINTAINING ONLY ONE BANK ACCOUNT WITH THE SAID BANK BEARING ACCOUNT NO.566010015293 AND IN THE BANKS RECORDS T HE CUSTOMERS ADDRESS IS SHOWN AS 7/1, BELIAGHATA ROAD, KOLKATA-15. ON VERIF ICATION OF THE ACCOUNT STATEMENT, IT IS FOUND THAT NO CHEQUE BEARING NO.26 1530 DATED 09.9.2003 HAS EVER BEEN CLEARED THROUGH THIS ACCOUNT. BUT IT APPE ARS THAT THE IMPUGNED SUM OF RS.2,50,000/- WAS INTRODUCED INTO THE SAID ACCOUNT ON 09.9.2003 AND ON THE SAME DAY IT WAS WITHDRAWN BY CHEQUE NO.261547. IT I S FURTHER OBSERVED THAT DURING THE PERIOD FROM 1 ST AUGUST, 2003 TO 31 ST DECEMBER, 2003 A SERIES OF HIGH VALUE TRANSACTIONS OF DEPOSITS & THE WITHDRAWALS ON THE SAME DAY HAVE BEEN CARRIED OUT THROUGH THIS ACCOUNT. READING OF THE SA ID BANK ACCOUNT CLEARLY REVEALS THAT THE SERIES OF TRANSACTIONS AGGREGATING TO RS.30,48,853/- COMPRISE OF VARIOUS HIGH VALUE DEBIT-CREDIT ENTRIES ON THE SAME DATES WHICH ONLY INDICATE THAT THE SAID BANK ACCOUNT WAS USED BY MANY UNSCRUP ULOUS PERSONS AS A CHANNEL FOR MONEY LAUNDERING ACTIVITIES. AFTER ANALYZING THE BANK ACCOUNT FOR THE PERIOD FR OM 31-07- 2003 TO 30- 10-2003 IT IS CLEAR THAT IMPUGNED TRANSACTION OF RS .2,50,000/- SHOWN AS GIFT RECEIVED BY THE ASSESSEE CANNOT BE ATTRIBUTED TO TH E FINANCIAL CAPACITY OF THE DONOR SHRI KISHSAN LAL CHOUDHURY AND THE SAID AMOUN T WAS ACTUALLY DEPOSITED AND WITHDRAWN ON THE SAME DATE, I.E. ON 09.09.2003 TO GIVE IT A COLOUR OF GIFT TO THE ASSESSEE. ALL THESE FACTS ESTABLISH THAT THE IM PUGNED TRANSACTIONS SHOWN TO HAVE CONSIDERED THE GIFT ARE NOT GENUINE AND MORESO EVER THE DONOR HAS NO CAPACITY TO MAKE A GIFT TO THE TUNE OF RS.2,50,000/ -. ANOTHER GIFT OF RS.2,50,000/- IS SHOWN TO HAVE BEEN RECEIVED FROM SHRI RAJENDRA AGARWAL OF 138, B.L.SAHA ROAD, KOLKATA-53. TOWARDS CONFIRMATION OF THE GIFTS, THE ASSESSEE HAS FILED A DECLARATION OF GIFT SIGNED BY THE NOTARY PUBLIC, KOLKATA A PERUSAL OF THE DECLARA TION, IT APPEARS THAT THE GIFT WAS MADE BY CHEQUE NO.261547 DATED 09-09-2003 IN TH E NAME OF THE ASSESSEE DRAWN ON THE VYSYA BANK LTD., R.B.AVENUE BRANCH, KO LKATA. IN ORDER TO PROVE THE DETAILS OF MOVEMENT OF MONEY THROUGH BANK ING CHANNEL AND GENUINENESS OF THE GIFT, SHRI MIHIR BANERJEE AN INS PECTOR OF INCOME-TAX ATTACHED TO THIS OFFICE WAS DEPUTED ON 01-09-2006 T O OBTAIN THE BANK ACCOUNT DETAILS OF THE DONOR FROM THE BANK. THE INSPECTOR H AS VISITED THE BANK AND OBTAINED A LETTER FROM THE BRANCH HEAD STATING THAT WITH REGARD TO RAJENDRA AGARWAL WE HAVE NOT FOUND ANY ACCOUNT WITH OUR BRAN CH. FROM THE ABOVE DISCUSSION, IT IS AMPLY CLEAR THAT T HE IMPUGNED TRANSACTION OF RS.2,50,000/- SHOWN AS GIFT RECEIV ED BY THE ASSESSEE IS ENTIRELY BOGUS IN-AS MUCH- AS THE INFORMATION REGARDING TRAN SACTION VIA BANKING CHANNEL SUPPLIED BY THE ASSESSEE THROUGH DECLARATION OF GI FTS IS NOT TO BE FOUND IN THE RECORDS OF THE BANK. 3 THUS IN RESPECT OF THE IMPUGNED GIFT OF RS.2,50,000 /- FROM SHRI KISHAN LAL CHOUDHURY, IT IS CLEARLY ESTABLISHED BASED UPON PREPONDERANCE OF PROBABILITIES THAT THE TRANSACTIONS ARE NOT GENUINE AT ALL AND SHRI CHOUDHURY HAS NO CAPACITY TO MAKE A GIFT OF SUCH A HIGH VALUE. TH E CASH WAS INTRODUCED INTO THE BANK ACCOUNT AND SUBSEQUENTLY WITHDRAWN BY CHEQ UE ON THE VERY DAY TO REACH THE HAND OF THE ASSESSEE IN THE GUISE OF GIFT . FURTHER, THE ALLEGED DONOR IS NEITHER RELATIVE OF THE ASSESSEE NOR HAS BEEN PROVE D TO BE SO BY THE ASSESSEE AND THUS IT APPEARS TO BE VERY VERY IMPRACTICABLE PROPO SITION THAT SOME UNRELATED PERSON WOULD MAKE GIFT OF SUCH HIGH VALUE TO THE AS SESSEE. IN RESPECT OF THE OTHER GIFT OF RS.2,50,000/- FROM SHRI RAJENDRA AGAR WAL, IT IS SEEN THAT THE INFORMATION IN REGARD TO THE TRANSACTIONS VIA BANKI NG CHANNEL IS TOTALLY FALSE AND HENCE THE IMPUGNED GIFT HAS TO BE TREATED AS BOGUS. THOUGH THE DICE IS ALREADY LOADED AGAINST THE ASSES SEE, THE ASSESSEE WAS GIVEN AN OPPORTUNITY, VIDE THIS OFFICE LETTER NO.AC IT/CIR-32/HEARING/06-07/419 DATED 01-11- 2006 TO SHOW CAUSE ON OR BEFORE 08-11- 2006 WHY THE AFORESAID TWO SUM AGGREGATING TO RS.5,00,000/- SHOULD NOT TRE ATED AS CASH CREDIT U/S.68 OF THE ACT. BU THE ASSESSEE HAS NEITHER OFFERED ANY REPLY TO THE SHOW CAUSE NOR COMMUNICATED ANY REASONS FOR HIS INABILITY TO MAKE A REPLY TILL DATE. SO THE MATTER IS NOW DECIDED ON THE BASIS OF AVAILABLE FAC TS ON RECORD. IN VIEW OF THE ABOVE DISCUSSION, THE FOLLOWING CON CLUSIONS HAVE BEEN ARRIVED AT :- I) A SUM OF RS.5,00,000/- IS FOUND TO HAVE BEEN CREDI TED AS RECEIPTS FROM GIFTS IN THE BOOKS OF ACCOUNTS MAINTAINED FOR THE F INANCIAL YEAR 2003-04. II) THE CLAIM OF RECEIVING GIFTS DOES NOT RELATE TO GEN UINE TRANSACTIONS AT ALL IN THE INSTANT CASE; III) ONE OF THE DONORS HAS REMAINED UNPROVED AND THE OTH ER HAS NO CAPACITY TO MAKE ANY GIFTS AS HAVE BEEN CLAIMED BY THE ASSES SEE. IV) THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS TO PR OVE THE GENUINENESS OF THE TRANSACTIONS AND THE CREDIT-WORTHINESS OF THE A LLEGED DONORS, AND V) THE CONDUCT OF THE ASSESSEE IN RESPECT OF THE CLAIM OF RECEIVING THE GIFTS AS WELL AS THE ENTIRE PROCEEDINGS IS NOT FREE FROM CONTUMACY. BASED ON THE ABOVE FACTS AND CIRCUMSTANCES, IT IS NOW HELD THAT THE IMPUGNED SUM OF RS.5,00,000/- IS NOTHING BUT CASH C REDIT IN THE BOOKS OF THE ASSESSEE AND IS THUS TREATED AS INCOME OF THE ASSES SEE U/S 68 OF THE ACT FOR THE FY 2003-04. IN ORDER TO BETTER APPRECIATE THE FACTS OF THE INSTANT CASE VIS--VIS THE PROVISIONS OF THE STATUTE, SECTION 68 IS REPROD UCED BELOW :- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OF FERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. A CAREFUL ANALYSIS OF VARIOUS JUDICIAL PRONOUNCEME NTS ON THE ISSUE OF CASH CREDITS ESTABLISH THAT THE PRIMARY LIABILITY U/S 68 IS THAT OF THE ASSESSEE IS WHOSE BOOKS THE CASH CREDIT ENTRY IS FOUND. IT IS T HE ASSESSEE HIMSELF WHO IS IN POSSESSION OF THE FIRST HAND INFORMATION AND KNOWLE DGE AS TO THE SOURCE AND NATURE OF SUCH RECEIPT. RIGHTLY THEREFORE, THE LIAB ILITY OF PROVING THE NATURE AND 4 SOURCE OF THE RECEIPT SO FOUND IN THE BOOKS IS THAT OF THE ASSESSEE. IF THE ASSESSEE DISPUTES THE LIABILITY TO TAX, IT IS FOR H IM TO SHOW THAT HOW THE RECEIPT IS NOT INCOME OR TO SHOW THAT IT IS EXEMPT FROM THE PR OVISIONS OF THE ACT. IN THE ABSENCE OF SUCH PROOF, THE ASSESSING OFFICER IS ENT ITLED TO TREAT THE SUM AS TAXABLE INCOME. THE ASSESSING OFFICER IS NOT REQUIR ED TO SPECIFY OR PROVE THE SOURCE OF SUCH CREDIT ENTRY. THE HONBLE DELHI TRIB UNAL IN D.C.RASTOGI (HUF) VS ACIT 57 ITD 295 HAS HELD THAT THE ONUS LIES ON T HE ASSESSEE TO ESTABLISH IDENTITY, CAPACITY OF DONOR AND GENUINENESS OF TRAN SACTION. ALSO THE HONBLE CALCUTTA HIGH COURT HAS LAID DOWN IN THE CASE OF CI T VS PRECISION FINANCE PVT. LTD. (1993) 208 ITR 465 THAT THE ASSESSEE IS EXPECT ED TO ESTABLISH :- I) PROOF OF IDENTITY OF HIS CREDITORS; II) CAPACITY OF CREDITORS TO ADVANCE MONEY; AND III) GENUINENESS OF TRANSACTION. THUS, BASED ON THE FACTS OF THE INSTANT CASE READ WITH PROVISIONS OF THE ACT AND OTHER JUDICIAL PRONOUNCEMENTS CITED ABOVE, THE IMPUGNED SUM OF RS.5,00,000/- IS RIGHTLY TREATED AS CASH CREDIT U/S 68 OF THE ACT. HAVING BEEN HELD AS SUCH, THE SUM OF RS.5,00,000/- IS NOW ASSES SED AS INCOME FROM OTHER SOURCES FOR THE PREVIOUS YEAR 2003-04. FURTHER, BY RESORTING TO CASH CREDIT AS AFORESAID, THE ASSESSEE HAS CONCEALED PARTICULARS O F INCOME AND/OR FURNISHED INACCURATE PARTICULARS OF INCOME. 2.1. ON APPEAL THE LD. CIT(A) CONFIRMED THE SAME BY OBSERVING AS UNDER :- (6) I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND PERUSED THE DOCUMENTS SUBMITTED AND ALSO THE RECORD. THE APPELL ANT HAS CLAIMED THAT DURING THE RELEVANT PREVIOUS YEAR, HE HAS RECEIVED GIFTS O F RS.5,00,000/- FROM TWO DONORS, WHO HAVE GIVEN GIFT OF RS.2,50,000/- EACH. THE A .0. HAS MADE THE ADDITION U/S. 68 OF THE I.T. ACT FOR REASONS STATED IN THE ASSESSMENT ORDER. ON PERUSAL OF DOCUMENTS SUBMITTED TO PROVE THE RECEIPT OF GIFT OF RS.2,50,000/- FROM SRI KISHAN LAL CHOUDHURY, THAT HE HAS FILED HI S RETURN F INCOME FOR A.Y. 2004- 05 DECLARING TOTAL INCOME OF RS.51,500/.. HE HAS SHOWN BUSINESS INCOME FROM GROSSERY STORE AT RS. 48,950/- AND COMMISSION INCOME FOR SUPPLY OF ELECTRICAL GOODS, AT RS.16,683/-. THE NET PROFIT WA S SHOWN AT RS.51,500/-. THE TAX PAID WAS RS. NIL. THE OPENING CAPITAL WAS SHOWN AT RS.14,96,850/- AND HE HAS CLAIMED THAT GIFTS OF RS.3,00,000/- WERE GIVEN BY HIM DURING THE RELEVANT YEAR. OUT OF THIS, THE GIFT OF RS.2,50,000/- WAS GI VEN TO THE APPELLANT. AS PER BALANCE SHEET AS ON 31.3.2004, THE INVESTMENT IN GR OSSERY STORE AND ELECTRICAL GOODS BUSINESS HAS BEEN SHOWN AT RS.1,70,500/- AND RS.1,08,100/- RESPECTIVELY. THE WITHDRAWALS FOR THE YEAR WERE RS.56,450/-. THE ANALYSIS OF BANK ACCOUNT OF THE DONOR SHOWS THAT IMMEDIATELY PRIOR TO THE ISSUE OF HIGH VALUE CHEQUES, THERE WAS EITHER CASH DEPOSIT OR THE AMOUNTS WERE T RANSFERRED FROM ANY OTHER ACCOUNT. AS PER BALANCE SHEET, THE DONOR, SHRI CHOU DHURY WAS HAVING ONLY ONE BANK ACCOUNT IN THE VYSYA BANK, R.B. AVENUE, HAVING NO. 566010015293. ON 9.9.2003, WHEN ALLEGED GIFT OF RS.2,50,000/- WAS GI VEN BY THE DONOR TO THE APPELLANT, ON THE SAME DATE, RS.2,50,000/- WERE TRA NSFERRED IN THE ACCOUNT OF THE DONOR FROM THE A/C. NO.566011002813. THE DONOR, SHRI CHOUDHURY IS NOT HAVING ANY SUCH BUSINESS THAT HE MIGHT HAVE RECEIPT BY WAY OF CASH OR RECEIPT 5 AGAINST THE BUSINESS AS REFLECTED IN HIS BANK ACCOU NT. THE ANALYSIS OF HIS BANK ACCOUNT SHOWS THAT EITHER HE HAS GIVEN GIFTS OR LOA N TO VARIOUS PERSONS. UNDOUBTEDLY, THE DONORS FILE HAS BEEN CREATED AND THE CAPITAL HAS BEEN BUILT UP FOR SUCH TYPE OF DUBIOUS TRANSACTIONS OF GIFTS AND LOAN. A PERSON WHOSE YEARLY WITHDRAWALS HAS BEEN SHOWN AT RS.56,450/- AND WHOSE YEARLY INCOME WAS RS.5 1,500/- WOULD NOT GIVE GIFT OF RS.2,50,000/- OUT OF LOVE AND AFFECTION. AS PER BALANCE SHEET, HIS INVESTMENT IN BUSINESS HAS BEEN SHOWN AT RS.2,78,600/-. A PRACTICAL PERSON WOULD LIKE TO INVEST MORE IN HIS O WN BUSINESS RATHER THAN GIVING GIFTS TO VARIOUS PERSONS INCLUDING THE APPEL LANT. (6.1) SIMILARLY, IN THE CASE OF ANOTHER DONOR, SHR I RAJENDRA AGARWAL, THE RETURN OF INCOME FOR A.Y. 2004-05 WAS FILED DECLARING TOTA L INCOME OF RS.57,800/-. HE HAS SHOWN SALARY INCOME OF RS.96,600/- AND INCOM E FOR OTHER SOURCES AT RS. 21,650/-. THE NET INCOME HAS BEEN SHOWN AT RS.86,60 0/-. THE CAPITAL A/C SHOWS THAT HE HAS GIVEN GIFT OF RS.4,00,000/- DURIN G THE RELEVANT YEAR, WHICH INCLUDE GIFT OF RS.2,50,000/- TO THE APPELLANT. THE APPELLANT AS FURNISHED THE COPY OF BANK STATEMENT HAVING A/C. NO. 566010015303 IN ING VYSYA BANK, R.B. AVENUE, KOLKATA. ON PERUSAL OF BANK STATEMENT IT IS OBSERVED THAT ON THE DATE OF GIFT IE., 9.9.2003, THE AMOUNT OF RS.2,50,0 00/- WERE CREDITED TO THE ACCOUNT OF THE ALLEGED DONOR BY TRANSFER FROM A/C. NO. 56601100253. THE STATUS OF THIS DONOR IS ALSO EXACTLY SAME AS DISCUS SED ABOVE IN THE CASE OF FIRST DONOR. (6.2) THE APPELLANT HAS SUBMITTED THAT HE HAS PROVE D THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S AS THE DONORS WERE ASSESSED TO TAX, GIFTS HAS BEEN MADE FROM THEIR A/C AND BY WAY OF CHEQUES. HOWEVER DO NOT AGREE WITH THE CONTENTION OF THE APP ELLANT. DURING THE COURSE OF DISCUSSION, THE A.R. OF THE APPELLANT WAS ASKED TO STATE THE RELATIONSHIP BETWEEN THE DONORS AND DONEE, BUT HE WAS NOT AWARE ABOUT THEIR RELATIONSHIP. IT IS VERY STRANGE THAT BOTH THE ALLEGED DONORS HAVE G IVEN GIFT OUT OF LOVE AND SUDDENLY THAT LOVE AND AFFECTION TOWARDS THE APPELL ANT EMERGED SIMULTANEOUSLY ON 9.9.2003. IT IS ALSO STRANGE, THAT BOTH THE DONO RS WERE HAVING BANK ACCOUNT IN THE SAME BANK AND SAME BRANCH. IN FACT, THE P.& L. A/C., CAPITAL A/C, BALANCE-SHEET AND THE BANK STATEMENTS OF BOTH THE D ONORS, SPEAKING THAT THE ALLEGED TRANSACTIONS OF GIFTS WERE NOT GENUINE AND THEY WERE NOT HAVING CREDITWORTHINESS TO GIVE GIFTS OF SUCH HUGE AMOUNT. IN TODAYS WORLD NOBODY HAVE SO MUCH LOVE AND AFFECTION TOWARDS OTHERS THAT HE WILL IGNORE HIS OWN GOODNESS AND PROSPERITY AND DO CHARITY BY GIVING GI FTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE OPPORTUNITY WAS GIVEN T O THE APPELLANT TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WI TH DONORS, BUT THE APPELLANT HAS CHOSEN TO KEEP SILENCE AND NO EXPLANATION WAS O FFERED BY HIM. THUS, THE APPELLANT HAS FAILED TO DISCHARGE THE PRIMARY ONUS, OF PROVING THE TRANSACTIONS, CAST UPON HIM. MERELY FOR THE REASON THAT THE GIFTS WERE RECEIVED BY CHEQUE AND THE DONORS ARE ASSESSED TO TAX, WOULD NOT MAKE A NO N-GENUINE TRANSACTION, A GENUINE TRANSACTION. THE A.O. WAS JUSTIFIED IN MAKI NG ADDITION OF RS.5,00,000/- U/S 68 OF THE I.T. ACT. I AM NOT INCLINED TO INTERF ERE WITH THE STAND TAKEN BY THE A.O. AND UPHOLD HIS ACTION. THE GROUND NO. 1 IS DIS MISSED. 6 2.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 3. AT THE TIME OF HEARING THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS SUBMITTED THE FOLLOWING IN RESPECT OF THE GIFTS :- (I) THE AO HAS ADDED THE GIFTS OF RS.5,00,000/- U /S 68 INSPITE OF SUBMITTING ALL THE EVIDENCES I.E. COPY OF RETURN OF INCOME OF THE DONORS, GIFT DECLARATIONS, COPIES OF BANK STATEMENTS AND THE COPIES OF PAN ALL OTMENT LETTERS. (II) THE DONOR SHRI KISHAN LAL CHAUDHURYS BANK ACC OUNT CLEARLY REFLECTS THE GIFTS OF RS.2,50,000/- EACH BY WAY OF CHEQUE NO.261 547. THE DONOR RESIDES AT 9/1, BELIAGHATA ROAD, KOLKATA-15. (III) THE WORKING OF THE DONORS IN HIS BANK ACCOUN T CANNOT BE MADE A TOOL FOR DETERMINATION OF THE LEGALITY OF THE GIFTS. (IV) THE DONOR IS RELATIVE OF THE APPELLANT (V) FROM THE COPY OF PROFIT AND LOSS ACCOUNT AND BA LANCE-SHEET IT IS CRYSTAL CLEAR THAT THE DONORS HAS THE CAPACITY TO GIVE GIFT. (VI) THE DONOR IS ASSESSED TO TAX UNDER PAN:ACIPC 6 907A.. THUS, THE GIFT MADE BY SHRI KISHANLAL CHOUDHURY IS FULLY EXPLAINED AS ABOVE. (VII) ANOTHER DONOR, SHRI RAJENDRA AGARWAL IS RESID ENT OF 138,B.L.SAHA ROAD, KOLKATA-53 IS ASSESSED TO TAX UNDER THE PAN:AFHPA 1 593C. THE APPELLANT HAS SUBMITTED SAME ARGUMENTS WITH RES PECT TO THE SECOND DONOR, I.E., SHRI RAJENDRA AGARWAL AS MENTIONED ABOVE IN THE CAS E OF FIRST DONOR. IT WAS CONTENDED BY THE APPELLANT THAT HE HAS PROVED THE IDENTITY OF THE DONORS AS THEY ARE ASSESSED TO TAX. THEY WERE HAVING THE CAPACITY TO GIVE GIFT AS GIFTS WERE MADE OUT OF THEIR CAPITAL ACCOUNTS AND PAYMENTS WERE MADE BY CHEQUES. THERE W ERE NO OUTSTANDING LOANS IN THEIR NAME AS EVIDENT FROM THEIR CAPITAL A/C. AND B ALANCE-SHEET. THE GENUINENESS IS ALSO ESTABLISHED ON THE BASIS OF THEIR CAPITAL ACCO UNTS AND TRANSACTIONS BY WAY OF CHEQUES. THUS, THE ADDITION OF RS.5,00,000/- DESERV ES TO BE DELETED. 4. ON THE OTHER HAND THE LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT AS REGARDIN G THE GIFTS ON PERUSAL OF THE BALANCE SHEET OF SHRI RAJENDRA AGARWAL WHICH WAS PLACED AT PAGE 52 OF THE PAPER BOOK WHEREIN THE CAPITAL ACCOUNT IS RS.10,20,300/- AS O N 31.3.2004 WHEREAS AT PAGE 53 WHEREIN THE OPENING BALANCE IS SHOWN AS RS.14,20,30 0/- AND GIFTS PROVIDED RS.4,00,000/-. THERE IS NO DISPUTE THAT THE NET PRO FIT FOR THE YEAR ENDING 31.3.2004 IS RS.86,600/- AND THE TOTAL DRAWINGS FOR PERSONAL EXP ENSES IS ONLY RS.62,792/-. 5.1. SIMILARLY ON PERUSAL OF THE BALANCE SHEET OF A NOTHER DONOR SHRI KISHAN LAL CHOUDHURY WHICH WAS PLACED AT PAGE T58 OF THE PAPER BOOK IT WAS OBSERVED THAT THE CAPITAL ACCOUNT AS ON 31.3.2004 IS RS.11,96,850/- W HEREAS AT PAGE T59 WHEREIN THE OPENING BALANCE IS SHOWN AS RS.14,96,850/- AND THE GIFTS PROVIDED IS RS.3,00,000/- THERE IS NO DISPUTE THAT THE NET PROFIT FOR THE YEA R ENDING 31.3.2004 IS RS.51,500/- AND THE TOTAL DRAWINGS FOR PERSONAL EXPENSES IS ONLY RS .56,450/-. 5.2. KEEPING IN VIEW OF THE ABOVE FINANCIAL POSITI ON AND APPLYING THE HUMAN PROBABILITY THEORY WE FIND NO INFIRMITY IN THE ORDE RS OF THE REVENUE AUTHORITIES IN DISBELIEVING THE CREDITWORTHINESS AS WELL AS THE GE NUINENESS OF THE TRANSACTIONS. THEREFORE, WE CONFIRM THE SAME. 6. AS REGARDING THE OTHER ISSUE IN RESPECT OF ADDIT ION OF RS.37,88,160/- U/S 68 OF THE IT ACT BEING THE SALE PROCEEDS OF SHARES THE AO HAS MADE THE ADDITION BY OBSERVING AS UNDER :- CAPITAL GAINS HELD AS BOGUS :- IN THE RETURN OF INCOME, THE ASSESSEE HAS OFFERED A SUM OF RS.35,59,680/- TO TAX ON LONG TERM CAPITAL GAINS. IN THE BOOKS OF ACCOUNTS, THE ASSESSEE HAS SHOWN TO HAVE S OLD 48,000 SHARES OF M/S. SHARDA CONSTRUCTION LTD. FOR RS.37,88,160/- THROUGH THE BROKER M/S. BASANT PERIWAL & CO. AFTER HOLDING THE SHARES FOR A PERIOD EXCEEDING TWELVE MONTHS FROM THE DATE OF PURCHASE FOR WHICH THE TOTAL PURCH ASE PRICE WAS RS.2,28,480/-. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE BROK ERS CONTRACT NOTES FOR PURCHASE AND SALE OF SHARES WERE FILED ON 21.8.2006 . AS PER THE CONTRACT NOTE FOR PURCHASE, 48,000 SHARES HAVING CODE SARDATR. WE RE ALL PURCHASED ON 28.8.2002 THROUGH TRADE NOS. 1350 TO 1354 IN THE ON -LINE TRADING SYSTEM OF THE CALCUTTA STOCK EXCHANGE. AS PER THE CONTRACT NO TE FOR SALE, ALL THE ABOVE- REFERRED 48,000 SHARES WERE SOLD ON 07.11.2003 THRO UGH TRADE NOS. 5334 TO 5338 IN THE ON-LINE TRADING SYSTEM OF THE CALCUTTA STOCK EXCHANGE. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTI ONS OF SALE-PURCHASE OF THE AFORESAID SHARES, TWO NOTICES, BOTH DATED 04.9. 2006, U/S. 133(6) WERE ISSUED TO THE SECRETARY OF THE CALCUTTA STOCK EXCHANGE LTD . ALONG WITH THE COPIES OF 8 THE CONTRACT NOTES FILED BY THE ASSESSEE. IN A LETT ER BEARING NO. CSE/MSDIITAX/O9O6/1838 DATED 13.9.2006, THE SECRETA RY SENT A REPLY AS UNDER: PLEASE REFER TO YOUR LETTER REF NO. ACIT/CIR-32/K OL/S. 133(6)/06- 07/217 DATED 04.09.2006. THE COMPANY NAMED SHARDA CONSTRUCTION LTD. IS NOT A LISTED OR TRADED SECURITY AT THIS EXCHANGE. HOWEVER, FROM THE SCRIP ID SARDATR MENTIONED IN THE CONTRACT NOTE, IT APPEARS THAT SHARADARAJ T RADEFIN LTD. IS THE SECURITY FOR WHICH THE CONTRACT NOTE WAS ISSUED. AS PER THE RECORDS OF THE EXCHANGE, M/S. MUKESH DOK ANIA CO (BUSINESS CODE : 850) HAD EXECUTED FIVE CROSS DEALS IN THE SCRIP SHA RDARAF TRADEJMN LTD. ON 28.03.2002 WITH TRADE NOS. STARTING FROM 1350 TO 13 54 FOR A TOTAL QUANTITY OF 48 000 SHARES RS. 4.75 IN THE ON-LINE TRADING SYS TEM OF THE EXCHANGE FOR THE CLIENT CODE CLIENT. FROM THE TRADE DETAILS AVAILA BLE WITH EXCHANGE IT WAS OBSERVED THAT BOTH BUY SELL TRANSACTIONS WERE DONE BY THE MEMBER FOR THE SAME CLIENT CODES. AS PER THE RECORDS OF THE EXCHANGE NO DETAILS ARE A VAILABLE WITH THIS EXCHANGE FOR CLIENT CODE CLIENT AND WE ARE UNABLE TO GIVE ANY FURTHER DETAILS IN THIS REGARD. IN ANOTHER LETTER BEARING NO. CSE/MSD/JTAX/O9O6/184 8 DATED 18.9.2006, THE SECRETARY SENT A REPLY AS UNDER :- P!EASE REFER TO YOUR LETTER REF NO. ACIT/CIR-32,K O/S 133(6) 06- 07/218 DATED 04.09.2006. IT APPEARS FROM THE RECORDS OF THE EXCHANGE THAT ON 07.112003 M/S.BASANT PERIWA! & CO. (BUSINESS CODE 618) HAD NOT EXECUTED ANY TRANSACTION IN THE SCRIP SHARDARAJ TRADEFIN LTD. IN THE ON-LINE TRADIN G SYSTEM OF THE EXCHANGE EITHER IN PHYSICAL OR IN D-MAT FORM THE ABOVE TWO LETTERS FROM THE SECRETARY OF THE CAL CUTTA STOCK EXCHANGE LTD. ARE VERY MUCH SEIF-EXPLANATORY. IT MAY BE INFERRED FROM THE FIRST LETTER THAT PURCHASE OF THE SAID 48,000 SHARES WERE EXECUTED BY THE BROKER M/S. MUKESH DONANIA & CO. ON BEHALF OF THE ASSESSEE. AS FAR AS THE IMPUGNED SALE OF HE SHARES ARE CONCERNED, IT IS AMPLY CLEAR FROM REPLY FURNISHED BY THE SECRETARY BASED N THE RECORDS OF THE EXCHANGE THAT ON 07.11.2 003 THE BROKER MS. BASANT PERIWAL & CO. HAD NOT EXECUTE ANY TRANSACTIONS OF S ALE ON BEHALF OF THE ASSESSEE. IT MAY BE NOTED HERE THAT WHENEVER ANY TR ANSACTION IS CARRIED OUT THROUGH THE EXCHANGE IN THE ON-LINE TRADING SYSTEM, WHETHER IN DEMAT OR IN PHYSICAL FORM, A TRADE NO. IS UNIQUELY GENERATED TH ROUGH THE COMPUTER OF THE EXCHANGE. THOUGH THE ASSESSEE HAS CLAIMED TO HAVE SOLD THE SH ARES THROUGH TRADE NOS. 5334 TO 5338, IT IS FOUND FROM THE RECORDS OF THE EXCHANGE THAT NO SUCH TRANSACTIONS HAD TAKEN PLACE AS CLAIMED BY THE ASSE SSEE. HENCE THE ASSESSEES CLAIM OF SALE OF THE ALLEGED SHARES FOR RS.37,88,16 0/- IS NOT CORRECT AND THE CLAIM OF LONG TERM CAPITAL GAINS FROM SHARES IS TO TALLY BOGUS. ENUMERATING THE AFORESAID DISCREPANCIES, AN OFFICE LETTER BEARING NO. ACIT/CIR- 31/HEARING/06-07/419 DATED 01.11.2006 WAS ISSUED TO THE ASSESSEE 9 ASKING TO SHOW CAUSE ON OR BEFORE 07.11.2006 WHY TH E SUM OF RS.37,88,160/- CREDITED IN THE BOOKS AS THE SALE PROCEEDS OF THE A LLEGED 48,000 SHARES SHOULD NOT BE TREATED AS CASH CREDIT. BUT THE ASSESSEE HAS NEITHER FILED ANY REPLY NOR COMMUNICATED ANY REASONS FOR HER INABILITY TO OFFER A REPLY TO THE SHOW CAUSE TILL DATE. SO THE MATTER IS NOW DECIDED ON THE BASI S OF THE AVAILABLE FACTS ON RECORD. BASED ON THE MATERIALS AVAILABLE ON RECORD AND THE FOREGOING THE FOLLOWING CONCLUSIONS HAVE BEEN DRAWN :- I) A SUM OF RS.37,88,160/- IS FOUND CREDITED AS SAL E PROCEEDS IN THE BOOKS OF ACCOUNTS MAINTAINED FOR THE FINANCIAL YEAR 2003-04 II) THE CLAIM OF SALE IS FOUND TO BE FALSE BASED ON INFORMATION FROM, THE CALCUTTA STOCK EXCHANGE LTD.; III) IN THE ABSENCE OF ANY SALE, THE COMPUTATION OF CAPITA GAINS IS NOT TENABLE AND THE CLAIM OF LONG TERM CAPITAL GAINS IN THE RET URN OF INCOME IS ENTIRELY BOGUS. IV) THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUIN ENESS OF CLAIM OF THE IMPUGNED SALE AND THEREBY HAS FAILED TO DISCHARGE H IS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS; AND V) THE CONDUCT OF THE ASSESSEE IN RESPECT OF THE EN TIRE ASSESSMENT PROCEEDINGS IS NOT FREE FROM CCNTUMACY. IN THIS VIEW OF THE MATTER, IT IS NOW HELD THAT THE SUM OF RS.37,88,160/- HAVING BEEN CREDITED IN THE BOOKS OF THE ASSESSEE IS NOT T HE SALE PROCEEDS OF ANY SHARES, AND IS THUS ASSESSABLE AS CASH CREDIT U/S. 68 OF TH E ACT. ACCORDINGLY THE ASSESSEES OFFER OF RS.35,59,680/- TO TAX AS LONG T ERM CAPITAL GAINS IS NOT ACCEPTED AND THE ENTIRE CASH CREDIT OF RS.37,88,160 /- IS ASSESSED AS INCOME FROM OTHER SOURCES 6.1. ON APPEAL THE LD. CIT(A) CONFIRMED THE SAME BY OBSERVING AS UNDER :- (9) 1 HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT PERUSED THE DOCUMENTS SUBMITTED AND ALSO GONE THROUGH THE RECORD. THE APP ELLANT HAS CLAIMED THAT HE HAS PURCHASED 48000 SHARES OF SHARADA CONSTRUCTION LTD. ON 28.8.2002 THROUGH THE BROKER MUKESH DOKANIA & CO. UNDER TRADE NOS. 13 50 TO 1358. ON BEING ENQUIRED FROM THE STOCK EXCHANGE IT WAS GATHERED BY THE A.O. THAT THE COMPANY NAMED SHARDA CONSTRUCTION LTD., WAS NOT A LISTED OR TRADED SECURITY AT CALCUTTA STOCK EXCHANGE. IT WAS INTIMATED BY THE EXCHANGE THAT SCRIP ID SARDATR REFERS TO THE SCRIP SHARDARAJ TRADEFIN L TD.. STILL, IN THE SUBMISSIONS MADE BY THE APPELLANT DURING THE APPELL ATE PROCEEDINGS, IT IS MENTIONED THAT HE HAS PURCHASED SHARES OF M/S. SHAR DA CONSTRUCTION LTD. CONTRARY TO THE SUBMISSION OF THE APPELLANT, THE CO PY OF DEMAT A/C FILED BY HIM. SHOWS THAT THE ALLEGED SCRIP WAS SHARDARAJ TR ADEFIN LTD.. THUS, EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT HAS NOT QUOTED THE CORRECT NAME OF THE SCRIP AND HE WAS NOT SURE WHETH ER SHARES PURCHASED WERE OF SHARDA CONSTRUCTION OR SHARDARAJ TRADEFIN. THIS ITS ELF SHOWS THAT ALL WAS NOT WELL IN THE TRANSACTIONS. IT WAS ALSO REPORTED BY T HE EXCHANGE THAT THE BROKER M/S. MUKESH DOKANIA & CO. HAD EXECUTED FIVE CROSS D EALS IN THE SCRIP 10 SHARADARAJ TRADEFIN LTD. ON 28.8.2002 FOR THE CLIEN T CODE CLIENT. BOTH BUY AND SELL TRANSACTIONS WERE DONE BY THE BROKER FOR T HE SAME CLIENT CODE WHOSE DETAILS WERE NOT AVAILABLE WITH THE EXCHANGE. (9.1) THE APPELLANT HAS CLAIMED THAT THE ALLEGED SH ARES WERE SOLD BY HIM ON 7.11 2003 THROUGH M/S. BASANT PERIWAL & CO. @ RS.79 /- PER SHARE UNDER THE TRADE NO. 5334 TO 5338. ON BEING ENQUIRED FROM THE CALCUTTA STOCK EXCHANGE, IT WAS GATHERED THAT SAID BROKER HAD NOT EXECUTED A NY TRANSACTION IN THE SCRIP SHARDA.RAJ TRADEFIN IN ON-LINE TRADING SYSTEM OF TH E EXCHANGE EITHER IN PHYSICAL OR IN DEMAT FORM. ON THE OTHER HAND, THE APPELLANT HAS SUBMITTED THE CONTRACT NOTE WHICH SHOWS THAT THE ALLEGED SALE TRANSACTIONS WERE DONE UNDER THE TRADE NOS. 5334 TO 5338. THE CONTRACT NOTE ISSUED BY THE BROKER ALSO SHOWS THE TRADE TIME FROM 15:43:32 TO 15:43:36 FOR THE ALLEGED SALE . UNTIL AND UNLESS, THE TRANSACTIONS HAS BEEN DONE IN THE ON-LINE SYSTEM OF THE STOCK EXCHANGE, THERE WOULD BE NO TRADE NOS. AND TRADE TIME ON THE CONTRA CT NOTE. THIS ALSO SHOWS THAT GENUINENESS OF THE TRANSACTIONS WAS DOUBTFUL. THE C OPY OF DEMAT A/C SHOWS THAT 48000 SHARES WERE TRANSFERRED TO BASANT PERIWA L & CO. ON 12.111.2003 AND NOT TO CALCUTTA STOCK EXCHANGE. (9.2) IT IS AN OPEN SECRET THAT DURING FINANCIAL Y EAR 2001-02 TO 2003-04, A NUMBER OF ASSESSEES HAD ENTERED INTO THE DUBIOUS TR ANSACTIONS OF PENNY STOCKS IN CONNIVANCE WITH SOME OF THE SHARE BROKER AND THE COMPANIES. THIS WAS DONE TO CLAIM LONG TERM CAPITAL GAIN ON SALE OF ALLEGED SHARES. AS STATED EARLIER, THE A.O. HAS GIVEN AN OPPORTUNITY TO THE APPELLANT TO P ROVE THE GENUINENESS OF THE TRANSACTIONS BUT NO EFFORTS WERE MADE BY THE APPELL ANT. THE PRIMARY ONUS CAST UPON THE APPELLANT TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND THE AMOUNT CREDITED IN HIS BOOKS OF ACCOUNT, WAS NOT DISCHARGE D BY THE APPELLANT. THE APPELLANT CANNOT ABSOLVE HIMSELF FROM HIS ONUS BY S IMPLY SAYING THAT THE TRANSACTIONS WERE DONE THROUGH THE BROKERS AND THE PAYMENT/RECEIPT WAS BY WAY OF CHEQUE. THIS WILL NOT MAKE A NON-GENUINE TRA NSACTION, A GENUINE TRANSACTION. UNDER THE CIRCUMSTANCES AND CIRCUMSTAN TIAL EVIDENCES, THE A.O. WAS JUSTIFIED IN CONCLUDING THAT THE TRANSACTIONS O F PURCHASE AND SALE OF ALLEGED SHARES WERE NOT GENUINE. THE JUDICIAL PRONOUNCEMENT S RELIED UPON BY THE APPELLANT IN THE CASES OF MAN MOHAN SADANI VS. CIT, 304 ITR 52 (MP) AND CIT VS. ANUPAM KAPOOR, 212 CTR 49 (P&H) ARE NOT REL EVANT ON THE ISSUE UNDER CONSIDERATION. THE APPELLANT HAS MISERABLY FA ILED TO PROVE THE GENUINENESS OF TRANSACTIONS, EVEN THOUGH THE DOCUME NTS WERE CREATED TO PROVE THE GENUINENESS. THE RELIANCE IS PLACED ON THE DECI SION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT REPORTED IN 214 ITR 801, WHEREIN IT WAS HELD THAT BURDEN OF PROOF IS ON THE ASSESSEE TO PROVE THAT THE AMOUNT CREDITED IN THE ACCOUNTS DID NOT REPRESENT THE INCO ME, IN VIEW OF SECTION 68 OF THE ACT. WHERE ANY SUM IS FOUND CREDITED IN THE BOO KS OF THE ASSESSEE FOR ANY PREVIOUS YEAR. THE SAME MAY BE CHARGED TO INCOME TA X AS THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IF THE EXPLANATION OF FERED THE ASSESEE ABOUT THE NATURE AND SOURCE THEREOF, IS. IN THE OPINION OF TH E A.O. NOT SATISFACTORY. IN SUCH CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSE SSEE. VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT THE SAME, THE SAID EVIDENCE BEING UNREBUTTED CAN BE USED AGAINST HIM BY HOLDING THAT IT IS A RECEIPT OF AN INCOME NATURE. 11 THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING TH E SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. WHERE THE NATURE AND SOURCE OF A RECEIPT, WHETHER IT BE A MONEY OR O THER PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OP EN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE ROA HAN DI HATTI VS CIT [1977] 107 ITR 938 (SC)/KALE KHAN MOHAMMAD HANIF VS. CIT [ 1963] 50 ITR 1 (SC). IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FAC IE THE TRANSACTION, WHICH RESULTS IN A CASH CREDIT IN HIS BOOKS OF ACCO UNTS. SUCH PROOF INCLUDE PROOF OF THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF SUCH CREDITOR AND LASTLY THE GENUINENESS OF THE TRANSACTION. ONLY AFTER THE AS SESSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID, THE ONUS SH IFTS ON THE DEPARTMENT - SHANKAR INDUSTRIES VS C.IT. 114 ITR 689 (CAL.). (9.3) IN VIEW OF ABOVE FACTS AND DISCUSSION IT IS H ELD THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE AND SALE OF ALLEGED SHARES OF SHARDARAJ TRADEFIN LTD. THE A.O. WAS JUSTIFIED IN MAKING ADDITION OF RS.37,88,160/- U/S. 68 OF THE I.T. ACT. THE ADDITION SO MADE IS CONFIRMED. THE GROUND NO.2,3,4 ARE DISMISSED. 6.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 7. AT THE TIME OF HEARING THE LD. COUNSEL APPEARING FOR THE ASSESSEE HAS SUBMITTED AS UNDER :- (I) ADDITION U/S. 68 OF THE ACT HAS BEEN MADE BY THE A.O. WITHOUT ANY BASIS. (II) THE APPELLANT HAS PURCHASED 48000 SHARES OF M/ S. SHARDA CONSTRUCTION LTD. CODE : SARDATAR ON 28.82002 WHICH IS A LIMITED COMP ANY AND QUOTED IN CALCUTTA STOCK EXCHANGE. THE SHARES WERE PURCHASED @ 4.76/- PER SHARE FROM THE BROKER MUKESH DOKANIA & CO. UNDER TRADE NO.1350 TO 1358 IN ON-LINE TRADING. (III) THE SHARES WERE RECEIVED IN DEMAT A/C WITH IC ICI BANK. (IV) THE APPELLANT HAS THE SHARES IN HIS NAME FOR M ORE THAN 12 MONTHS. (V)THE SHARES WERE SOLD ON 7.11.2003 THROUGH THE BR OKER BASANT PERIWAL & CO. @ RS.79/- PER SHARE. VI) THE APPELLANT HAS FULL FAITH IN THE BROKER AND AS SUCH SALE WAS MADE THROUGH HIM. VII) SHARES WERE PURCHASED AND SOLD IN ON-LINE SYST EM THROUGH THE BROKERS. VIII)THE SHARE BROKERS ARE ASSESSED TO TAX AND THEY ARE IN EXISTENCE. IX)TRANSACTIONS WERE DONE THROUGH CHEQUE. X)RELIANCE IS PLACED ON THE DECISION IN THE CASE OF MAN MOHAN SADANI VS. CIT. 304 ITR 52 (MP) AND CIT VS. ANUPAM KAPOOR, 212 CTR 49 (P&H). 12 7.1. IN SUPPORT OF THE SUBMISSIONS HE FILED THE DOC UMENTS FILED BEFORE THE REVENUE AUTHORITIES AND CONTENDED THAT THE ACTION OF THE RE VENUE IS NOT JUSTIFIABLE AS THE TRANSACTIONS ARE ROUTED THROUGH DEMAT ACCOUNT AND B ANK ACCOUNT. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDERS OF THE REVENUE AU THORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 8. ON THE OTHER HAND THE LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 9. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT AS PER THE ASSESSEES CONTENTION THE SHARES ARE PURCHASED ON 28.08.2002, BUT HOWEVER HE HAS NOT FIL ED ANY BALANCE SHEET AS ON 31.3.2003 SHOWING THAT THE SAID SHARES OF M/S.SHARD A CONSTRUCTION LTD. ARE RECORDED IN THE BOOKS OF THE ASSESSEE FOR THE YEAR ENDING 31 .03.2002. IN ADDITION TO THE ABOVE THOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DOCUMENTS PLACED BEFORE US HE COULD NOT REBUT THE OBSERVATIONS MADE BY THE AO/ CIT(A). BUT HOWEVER THE UNDISPUTED FACTS ARE THAT THE PURCHASE AND SALE OF SHARES WERE ENTERED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND THE SALE PROCEEDS ARE R ECORDED IN THE BANK ACCOUNT OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES WE ARE UNABLE T O ACCEPT THE VIEW OF THE REVENUE THAT THE PURCHASE AND SALE OF SHARES CLAIMED BY THE ASSESSEE IS TO BE TREATED AS BOGUS. THEREFORE, IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO RE- DECIDE THE ISSUE AFRESH AFTER MAKING FURTHER ENQUIR IES AS PER LAW AND GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. IT IS FURTHER CLARIFIED THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT WHY THE T RANSACTIONS ARE RECORDED IN THE DEMAT ACCOUNT OTHER THAN THE DATE OF PURCHASE/SALE AS MEN TIONED BY THE ASSESSEE AND THE PREVAILING RATES AS ON THE DATE OF PURCHASE/SALE IN ORDER TO PROVE GENUINENESS OF THE TRANSACTION. 13 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 11.03.2011. SD/- SD/- . .. . . .. . , , , , B.R.MITTAL, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , ,, , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 11.03.2011. #2 0 .3 4#3(5- COPY OF THE ORDER FORWARDED TO: 1. SHRI JAGMOHAN JALAN, 26, SHAKESPEARE SARANI, KOLKAT A-7000017. 2 THE A.C.I.T., CIRCLE-32 KOLKATA 3. THE CIT, 4. THE CIT(A)-CENTRAL-XIX KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, #2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)