PARESH M. KARIYA (HUF), MUMBAI V. ACIT CEN CIR 12, MUMBAI

ITA 7023/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92663 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-04-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 11-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: B V JHAVERI
• Keywords: Unexplained cash credit; Unexplained expenditure; Share purchase agreement
• Section: 69C; 133A; 133(6); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. SHRI PARESH M. KARIYA (HUF), 13, KATHIAWAD CO.OP.HSG.SOC. LTD., GULMOHAR CROSS ROAD NO.2, JVPD SCHEME, MUMBAI 400 049 / VS. THE ACIT, CEN. CIR.12, R.NO.803, 8 TH FLOOR, OLD CGO BLDG., MK ROAD, MUMBAI 400 020 ./ ./ PAN/GIR NO. : AABHP 6818C ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI B.V. JHAVERI R ESPONDENT BY SHRI PREMANAND J ' $ / DATE OF HEARING : 05/05/2015 ' $ / DATE OF PRONOUNCEMENT : 13/05/2015 / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-37, MUMBAI DATED 08/07/2010 FO R ASSESSMENT YEAR 2004-05. GROUNDS OF APPEAL READ AS UNDER: 1. ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE SALE CONSIDERATION OF RS. 55,98,486/-, CLAIMED AS GIVING RISE TO LONG TERM CAPITAL GAINS, AS UNEXPLAINED CASH CREDIT U/S.68. 2. ON FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS. 2,79,924/- BEING 5% OF THE SALE CONSIDERATIO N OF RS. 55,98,486/- AS UNEXPLAINED EXPENDITURE U/S. 69C ON ACCOUNT OF C OMMISSION/SERVICE CHARGES PAYABLE TO THE BROKER. ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 2 2. THE ASSESSEE IN THE PRESENT CASE IS PART OF KARI YA GROUP. A SEARCH WAS CONDUCTED AT KARIYA GROUP AND PERSONS CONNECTED WITH THE SAID GROUP ON 18/1/2007. AS PER PARA-3 OF THE ASSESSMENT ORDE R THE SEARCH WAS CONDUCTED ON THE MAIN ALLEGATION THAT THE ASSESSEE S OF THE ABOVE GROUP HAD OBTAINED ARTIFICIAL CAPITAL GAIN BY MANIPULATING SH ARE TRANSACTIONS BY OBTAINING BOGUS BACK DATED PURCHASES OF SHARES AND RECEIVED SHARES IN PHYSICAL FORMAT. THOSE SHARES HAVE BEEN SOLD AT S TOCK EXCHANGES EITHER IN OPEN MARKET OR THROUGH ENGINEERED TRANSACTION AND, THUS, THESE ASSESSEES ARE AVAILING ARTIFICIAL/BOGUS CAPITAL GAIN AND, TH US, ARE GAINING THE ENTAILING BENEFIT OF TAXATION EITHER AT LOWER RATE OR EXEMPTI ON. IN SUCH PROCESS, THE CAPITAL GAIN SHOWN BY THE PRESENT ASSESSEE FROM THE SALE OF SHARES OF THREE COMPANIES HAS BEEN TREATED AS UNEXPLAINED MONEY IN POSSESSION OF THE ASSESSEE ATTRIBUTABLE TO BOGUS LONG TIME CAPITAL GA IN AND AN AMOUNT OF RS.81,02,761/- WAS ADDED TO THE INCOME OF THE ASSES SEE. 2.1 FURTHER, THE AO ADDED A SUM OF RS. 4,05,138/- T O THE AFOREMENTIONED AMOUNT ON THE GROUND THAT ASSESSEE MIGHT HAVE PAID CERTAIN FEE OR COMMISSION OR REMUNERATION FOR OBTAINING THESE BOGU S LONG TERM CAPITAL GAIN AND THIS AMOUNT IS CALCULATED @5% ON THE SALE PRICE OF SHARES. THE DETAIL OF SHARES UPON WHICH ASSESSEE HAD EARNED CAP ITAL GAIN ARE DESCRIBED IN PARA-6 OF THE ASSESSMENT ORDER. IN THE SAID CHA RT DETAILS HAVE BEEN GIVEN IN RESPECT OF SHARES DEALT BY THE ASSESSEE AND FO R THE SAKE OF CONVENIENCE THE SAME ARE REPRODUCED. S. NO . NAME QUAN- TITY SALE DATE SALES CONSIDER- ATION PURCHAS E DATE PURCHAS E COST MODE OF PAYING PURCHAS E COST ACTUAL GAIN DATE OF CREDIT IN DEMA T A/C. 1. M/S.ROBINSO N WORLDWISE TRADE LTD. (ALSO KNOWN BY THE NAME M/S.ROBINSO N IMPEX INDIA LTD. 15000 23.11.0 4 25.11.0 4 30.11.0 4 25,04,275 22.04.03 22,074/- 2482201 2 M/S. SHALIMAR 11175 0 02.07.0 3 4197361 18.04.02 112500 4084862 ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 3 AGRO PRODUCT TO 19.03.0 4 3. M/S. G. TECH INFO TRADING LTD. 36000 13.10.0 3 15.10.0 3 23.10.0 3 03.11.0 3 14,01,125/ - 13.05.02 45,360 1355765/ - 2.2 SO FAR AS IT RELATES TO OBSERVATION OF AO WITH REGARD TO SHARES OF ROBINSON WORLDWIDE TRADE LTD. AND G TECH INFO TRADI NG LTD., IT IS NOTICED THAT THESE SHARES WERE PURCHASED BY THE ASSESSEE T HROUGH M/S. DPS SHARES AND SECURITIES PVT. LTD.(DPS) AND DIRECTOR O F DPS SHRI SUJAL C. SHAH IN HIS STATEMENT RECORDED ON OATH UNDER SECTION 13 1 OF THE INCOME TAX ACT,1961 (THE ACT) DURING THE COURSE OF SURVEY UNDE R SECTION 133A OF THE ACT ON 18/1/2007 CARRIED OUT BY INCOME TAX INVESTIGATIO N AUTHORITIES STATED THAT HE HAD NOT ACTUALLY CARRIED OUT ANY PURCHASE T RANSACTION IN THE SAID SCRIP BUT HAD MERELY ISSUED ACCOMMODATION BILLS. T HE AO ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS EXAMINED ANOTHER D IRECTOR NAMELY, SHRI PRATIK C. SHAH ON 18/11/2008 AND RELEVANT PORTION O F HIS STATEMENT IS ALSO REPRODUCED IN THE ASSESSMENT ORDER IN WHICH HE STA TED THAT ABOUT 4 OR 5 YEARS BACK THE SAID CONCERN HAD ISSUED CERTAIN BILL S RELATING TO PURCHASE OF SHARES OF M/S. ROBINSON WORLDWIDE TRADE LTD., M/S. FAST TRACK ENTERTAINMENT LTD., AND M/S. G TECH.INFO TRAINING L TD., WHICH WERE ISSUED WITHOUT ANY ACTUAL PURCHASES HAVING BEEN MADE BY D PS AND THESE WERE ACCOMMODATION BILLS. FOR THE SUPPOSED PURCHASES MA DE BY DPS OF THESE SCRIPS, DPS HAS ISSUED SPECULATION BILLS OUT OF WHI CH SPECULATION GAIN WAS SHOWN TO BE EARNED BY THOSE INDENTING THIRD PARTIES AND, THEREFORE, THERE WAS NO TRANSACTION AT ALL FROM WHERE THOSE SPECULA TION GAIN COULD HAVE ARISEN. THOSE SPECULATION GAIN DID NOT FORM PART O F DPSS BOOKS. THE SPECULATION GAIN BILLS ISSUED TO THE THIRD PARTIES WERE BOGUS WITHOUT ANY BASIS OR WITHOUT ANY TRANSACTION. 2.3 IN RESPECT OF SHARES OF G TECH INFO TRAINING L TD., THE AO ALSO SUMMONED SHRI SANJAY R. SHAH AND HE WAS ASKED TO P RODUCE THE DETAILS OF ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 4 TRANSACTIONS RELATING TO SALE OF SHARES OF G TECH I NFO TRADING LTD. TO THE ASSESSEE. THE SAID SHRI SANJAY R. SHAH VIDE HIS LE TTER DATED 27/11/2008 AND 2/12/2008 HAD DENIED TO HAVE MADE ANY TRANSACT ION WITH ASSESSEE OR KARIYA GROUP. IT IS IN THESE FACTS, AO CONSIDERED THE SALE PRICE OF SHARES TO M/S. ROBINSON WORLDWIDE LTD. AND M/S. G TECH INFO T RAINING LTD. AS NON- GENUINE TRANSACTION AND ADDED THE SALE PRICE OF SH ARES TO THE INCOME OF THE ASSESSEE. 2.4 REGARDING SHARE TRANSACTION OF M/S. SHALIMAR AG RO PRODUCTS LTD., IT WAS NOTICED THAT THOSE SHARES WERE PURCHASED BY THE ASSESSEE FROM M/S. SHREENIDHI BROKING ON VARIOUS DATES. THE AO CALLED FOR DETAILS FROM SHREENIDHI BROKING UNDER SECTION 133(6) OF THE ACT . VIDE LETTER DATED 27/11/2008, THE COPIES OF LEDGER ACCOUNT AND COPIE S OF THE COMPUTERIZED PURCHASE BILLS WERE SUBMITTED. IT WAS MENTIONED T HAT 1,06,500 SHARES OF M/S. SHALIMAR AGRO PRODUCTS LTD. WERE PURCHASED FOR A CONSIDERATION OF RS.85,775/- ON 24/04/2002 AND SUCH PURCHASE PRICE W AS ADJUSTED AGAINST THE TOTAL CREDIT BALANCE LYING TO THE ASSESSEES CR EDIT ON 31/3/2002. IT WAS FURTHER MENTIONED THAT SINCE THE TRANSACTION PERTA INED PRIOR TO 31/3/2002, THE PHYSICAL RECORDS WERE DESTROYED. IT IS IN THIS MANNER, AO HAS TREATED THE SAID TRANSACTION ALSO AS NON-GENUINE AND ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE LD. C IT(A). 4. LD. CIT(A) HAS CONFIRMED THE ACTION OF AO IN RES PECT OF TWO SCRIPS NAMELY G- TECH INFO TRAINING AND M/S. SHALIMAR AG RO PRODUCTS LTD. HOWEVER, IN RESPECT OF ROBINSON WORLDWIDE LTD., LD . CIT(A) HAS OBSERVED THAT THE SAME PERTAINS TO FINANCIAL YEAR 2004-05 RELEVANT TO A.Y 2005-06 WHICH WAS ALSO CONFIRMED BY LD. CIT(A) IN RESPECT OF THAT ASSESSMENT YEAR AND TO THAT EXTENT THE ADDITION WAS DUPLICATE AND T O THAT EXTENT LD. CIT(A) HAS REDUCED THE ADDITION FOR THE YEAR UNDER CONSIDE RATION. CONSEQUENTIAL TO THAT, 5% COMMISSION IS ALSO REDUCED WHICH IS CALCUL ATED AT RS.1,25,214/-. ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 5 THE SUSTENANCE OF ADDITION BY LD. CIT(A) HAS BEEN CHALLENGED BY THE ASSESSEE IN THESE GROUNDS OF APPEAL. 5. LD.AR HAS SUBMITTED THE SYNOPSIS OF HIS ARGUME NTS, COPY OF WHICH WAS ALSO GIVEN TO LD.DR. SO FAR AS IT RELATES TO S HARES OF M/S. SHALIMAR AGRO PRODUCTS LTD., THE SEQUENCE OF EVENTS WITH REF ERENCE TO DOCUMENTARY EVIDENCE IN THE PAPER BOOK IS AS UNDER: (I) THE ASSESSEE PURCHASED 15,000 SHARES OF M/S. S HALIMAR AGRO PRODUCTS LTD. AT RS.7 .50 PER SHARE ON 10TH APRIL, 2002 THRO UGH M/S. SHREENIDHI STOCK & BROKING FOR THE AGGREGATE SUM OF RS.L,12,500/-. ( PAGE 47). (II) THE ASSESSEE HAD TO RECEIVE A SUM OF RS.1,19, 432.10 FROM M/S. SHREENIDHI STOCK & BROKING ON 1.4.2002 AND THEREFOR E, AGAINST THE SAID AMOUNT, A SUM OF RS.1,12,500/- PAYABLE BY THE ASSES SEE WAS ADJUSTED. (III) M/S. SHALIMAR AGRO PRODUCTS LTD. TRANSFERRED 15,000 SHARES IN THE NAME OF THE ASSESSEE AND DELIVERED THE SHARE CERTIFICATE S TO THE ASSESSEE ON 30-4- 2002 (PAGES 49 TO 51). (IV) M/S. SHALIMAR AGRO PRODUCTS LTD. FORWARDED AN EXTRACT OF SHARE TRANSFER REGISTER AND MEMBER REGISTER OF THE COMPANY ON 20-0 6-2007 (PAGES 52 TO 68). FURTHER, THE SHARE CERTIFICATES FOR 15,000 SH ARES WERE DULY TRANSFERRED IN THE NAME OF THE ASSESSEE. (V) THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE YEAR ENDED 31.3.2003 RELEVANT TO THE A.Y. 2003-04 ON 22ND SEPTEMBER, 200 3 ENCLOSING THE BALANCE SHEET WHEREIN THE PURCHASE OF SHARES OF M/S.SHALIMA R AGRO PRODUCTS LTD. FOR RS. 1,12,500/- ARE REFLECTED (PAGES 24 AND 25). (VI) THE ASSESSEE HAD SENT THE SAID SHARE CERTIFICA TES TO M/S. ACTION FINANCIAL SERVICES (INDIA) LTD. WHICH IS REGISTERED WITH NSDL , FOR DE-MATERIALISING ON 5TH MAY, 2003 (SEE PAGES 69 & 70). (VII) ON DE-MATERIALIZATION OF 15,000 SHARES THE A SSESSEE GOT CREDIT IN HIS DEMAT ACCOUNT ON 28TH MAY, 2003 (PAGE 71). (VIII) OUT OF 15,000 SHARES OF RS.10/- EACH, THE A SSESSEE SOLD 4,250 SHARES. THEREAFTER THESE SHARES WERE SPLIT INTO SHARES OF R E.1/- EACH ON 12TH JULY, 2003. THE SAID SHARES WERE SOLD BY THE ASSESSEE AT THE STOCK EXCHANGE THROUGH M/S. SHREENIDHI STOCK AND BROKING, THE SUB- BROKER AND M/S. VIDYUT DEVENDRAKUMAR WHICH IS THE MAIN BROKER REGISTERED W ITH THE BSE. THE DETAILS OF THE SALE OF THESE SHARES ARE AS UNDER: ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 6 5.1 IT WAS SUBMITTED BY LD. AR THAT THE AFORESAID S EQUENCE OF EVENTS WOULD PROVE THAT THE ASSESSEE HAS PURCHASED 15000 S HARES OF SHALIMAR AGRO PRODUCTS LTD. THROUGH M/S. SHREENIDHI STOCK BR OKING, WHICH WAS OFF MARKET TRANSACTION AND THE PAYMENTS OF THE PURCHAS E CONSIDERATION WAS MADE THROUGH CREDIT BALANCE OF THE ASSESSEE WITH TH E SAID CONCERN. THE ASSESSEE RECEIVED SHARES IN PHYSICAL FORM WHICH WER E DULY TRANSFERRED IN THE NAME OF THE ASSESSEE. THE PURCHASES WERE DULY SHOW N AND DECLARED IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2003-04 . THOSE SHARES WERE ALSO DEMATERIALIZED AND CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE AND WERE SOLD AT STOCK EXCHANGE THROUGH M/S. SHREENIDHI STO CK BROKERS FROM TIME TO TIME AND IN PIECEMEAL, IN THE MONTHS JUNE 2003 TO M ARCH 2004 AND, THEREFORE, THE SALE OF THESE SHARES CANNOT BE DISP UTED OR DOUBTED. IT WAS SUBMITTED THAT ALL THESE EVIDENCES WERE FILED BEFO RE AO AS WELL AS LD. CIT(A) AND NO ADVERSE COMMENT HAS BEEN MADE AGAINS T THESE EVIDENCES, THEREFORE, SUSTENANCE OF DISALLOWANCE IS CONTRARY T O THE EVIDENCE AVAILABLE ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 7 ON RECORD WHICH HAS BEEN IGNORED BY THE AO AS WELL AS LD. CIT(A) AND ADDITION IN THIS REGARD HAS BEEN MADE ON THE BASIS OF PRESUMPTIONS AND SURMISES WITHOUT BRINGING ANY EVIDENCE TO CONTRADIC T THE AFOREMENTIONED DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE, COP IES OF WHICH ARE FILED IN THE PAPER BOOK. 5.2 SO FAR AS IT RELATES TO SHARE OF M/S. G- TECH I NFO TRAINING, THE SEQUENCE OF EVENTS IS NARRATED AS UNDER: (A) THE ASSESSEE PURCHASED 36,000 SHARES M/S. G- T ECH INFO TRAINING LTD. THROUGH MR. SANJAY R. SHAH ON 13TH MAY, 2002 FOR TH E AGGREGATE CONSIDERATION OF RS.45,360/- WHICH WAS OFF MARKET T RANSACTION (PAGES 26 & 27). (B) THE AFORESAID PURCHASE CONSIDERATION OF RS.45,3 60/- WAS ADJUSTED AGAINST THE SPECULATION PROFIT OF RS.1,49,600/- EARNED BY T HE ASSESSEE AND TAXED IN THE HANDS OF THE ASSESSEE FOR A.Y. 2003-04. (PAGES 28 AND 21 & 23) (C) THE SAID SHARES WERE DELIVERED TO THE ASSESSEE IN PHYSICAL FORM WITH THE DULY EXECUTED TRANSFER FORM (PAGE 29). (D) THE SAID SHARES WERE DULY TRANSFERRED IN THE NA ME OF THE ASSESSEE BY M/S. G- TECH INFO TRAINING LTD. AND DELIVERED TO THE ASS ESSEE ON 3RD JULY, 2002. (PAGE 30). (E) M/S. G- TECH INFO TRAINING LTD. ISSUED TO THE ASSESSEE A JUMBO CERTIFICATE FOR 36,000 SHARES ON 22ND APRIL, 2003. (PAGE 31 & 3 2). (F) THE ASSESSEE FILED HIS RETURN OF INCOME FOR TH E YEAR ENDED 31.3.2003 RELEVANT TO THE A.Y. 2003-04 ON 22ND SEPTEMBER, 200 3 ENCLOSING THE BALANCE SHEET WHEREIN THE PURCHASE OF THE SAID SHARES FOR R S.45,3601- ARE REFLECTED. (PAGES 24 & 25). (G) THE ASSESSEE HAD LODGED THE AFORESAID SHARES F OR DE- MATERIALISATION WITH M/S. ACTION FINANCIAL SERVICES (INDIA) LTD. WHICH I S REGISTERED WITH NSDL, ON 16TH JULY, 2003. THE SAID SHARES WERE DE- MATERIALI SED AND CREDITED INTO THE DEMAT ACCOUNT OF THE ASSESSEE ON 28TH JULY, 2003 (P AGE 35). (H) THE SAID SHARES WERE SOLD BY THE ASSESSEE AT T HE STOCK EXCHANGE THROUGH M/S. SHREENIDHI STOCK AND BROKING, THE SUB-BROKER A ND M/S. VIDYUT DEVENDRAKUMAR WHICH IS THE MAIN BROKER REGISTERED WITH THE BSE. THE DETAILS OF THE SALE OF THESE SHARES ARE AS UNDER: DATE OF SALE NO. OF SHARES PAGE NO. OF BILL DATE O N WHICH DEMAT ACCOUNT WAS DEBITED PAGE NO. FOR DEMAT ACCOUNT. OCTOBER, 2003 27,500 42-44 VARIOUS DATES IN THE MONTH OF OCTOBER, 2003 40 NOVEMBER, 2003 8,500 46 4 TH NOVEMBER, 2003 45 I) THE ASSESSEE ASKED FOR THE CROSS-EXAMINATION OF MR. SANJAY R. SHAH BOTH BEFORE THE ASSESSING OFFICER AND THE CIT(A) AS HE H AD FILED THE LETTER BEFORE THE ASSESSING OFFICER DISOWNING THE TRANSACTIONS ENTERE D INTO FOR THE ASSESSEE FOR PURCHASE AND SALE OF SHARES WHEREBY THE ASSESSEE HA D EARNED SPECULATION PROFITS IN A.Y. 2003-04 AND PURCHASED THE SHARES OF M/S. G- TECH INFO ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 8 TRAINING LTD. THE AFORESAID REQUEST OF THE ASSESSEE HAS NOT BEEN ACCEDED TO. (PAGES 144 & 145) 5.3 IT WAS FURTHER SUBMITTED THAT AFOREMENTIONED SE QUENCE OF EVENTS WOULD PROVE THAT THE ASSESSEE HAD PURCHASED 36000 S HARES OF M/S .G-TECH INFO TRAINING THROUGH MR. SANJAY R. SHAH AND PURCH ASE CONSIDERATION WAS PAID BY ADJUSTING THE PROFIT ON SALE OF SHARES. TH E SHARES SOLD BY THE ASSESSEE WERE OBTAINED IN PHYSICAL FORM AND THEREA FTER THEY WERE DULY TRANSFERRED IN THE NAME OF THE ASSESSEE BY G-TECH I NFO TRAINING IN THEIR RECORD. THE PURCHASE OF THESE SHARES WERE ALSO DEC LARED BY THE ASSESSEE IN HIS RETURN OF INCOME FOR A.Y 2003-04, WHICH WAS FI LED ON 22/9/2003. THESE SHARES WERE DEMATERIALIZED AND ACCORDINGLY, C REDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE ON 28/07/2003 AND SHARES WE RE SOLD BY THE ASSESSEE AT STOCK EXCHANGE THROUGH M/S. SHREENIDHI STOCK BROKING IN THE MONTH OF OCTOBER AND NOVEMBER, 2003. THEREFORE, IT WAS SUBMITTED THAT ADDITION IN THIS REGARD IS ALSO REQUIRED TO BE DELE TED. 5.4 IT WAS FURTHER SUBMITTED THAT FOR SHARES OF M/ S. ROBINSON WORLDWIDE LTD. WERE TREATED BY THE AO IN THE SAME MANNER, AS WERE SHARES OF THE AFOREMENTIONED TWO COMPANIES WERE TREATED. HOWEVER , LD. CIT(A) FOUND THAT SALE OF SHARES OF THE COMPANY PERTAIN TO FINANCIAL YEAR 2004-05, RELEVANT TO A.Y.2005-06 AND AO HAD MADE UNINTENTIONAL DUPLICATE ADDITION OF THE RECEIPT TO THE EXTENT OF RS.25,04,275/- AND CONSEQU ENT BROKERAGE OF 5% CALCULATED AT RS.1,25,214/- AND IN A.Y.2005-06 THE SAID ADDITION HAS ALREADY BEEN CONFIRMED BY HIS ORDER DATED 16/11/200 9. THUS, THE ADDITION IN THE PRESENT YEAR IS DUPLICATE ADDITION AND IN TH IS MANNER LD. CIT(A) HAD DELETED THE SALE CONSIDERATION OF SHARES OF ROBINSO N WORLDWIDE LTD., AMOUNTING TO RS.25,04,275/- AND BROKERAGE OF 5% OF RS.1,25,215/-. SUCH ADDITION UPHELD BY LD. CIT(A) IN RESPECT OF ASSESSM ENT YEAR 2005-06 WAS CHALLENGED IN THE APPEAL FILED BEFORE TRIBUNAL AND TRIBUNAL VIDE ITS ORDER DATED 30/12/2011 PASSED IN ITA NO.790/MUM/2010 HAS DELETED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 9 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE MAINLY ON GENERALIZATION THAT THERE WAS A PENNY STO CK SCAM WHICH WAS UNEARTHED BY THE DEPARTMENT AND ALSO THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE THE PURCHASE OF SHARES AND IT WAS AN ACCOMMODATION TRANSACTION AS STATED BY THE D IRECTORS OF M/S. DPS SHARES & SECURITIES PVT. LTD. THE LD. CIT(A) AS WELL AS THE LD. DR HAS MAINLY RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAY AL VS. CIT [SUPRA]. IN THAT CASE THE FACTS WERE AS UNDER: THE APPELLANT CARRIED ON BUSINESS AS A DEALER IN AR T PIECES, ANTIQUES AND CURIOS AT BANGALORE. DURING THE ASSESSMENT YEAR 1971-72, SHE CLAIMED THAT RECEIVED A TOTAL AMOUNT OF RS.3,11,831 BY WAY OF RACE WINNINGS IN JA CKPOTS AND TREBLE EVENTS IN RACES AT TURF CLUBS IN BANGALORE, MADRAS AND HYDERABAD. T HE SAID AMOUNT WAS SHOWN BY THE APPELLANT IN THE CAPITAL ACCOUNT IN THE BOOKS. FOR THE ASSESSMENT YEAR 1972-73, SHE CLAIMED RECEIPTS OF RS.93500/- AS RACE WINNING S IN TWO JACKPOTS AT BANGALORE AND MADRAS AND THE SAID AMOUNT WAS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE INCOME-TAX OFFICER THE INCLUDED THE AMOUNT AS I NCOME FROM OTHER SOURCES AND ASSESSED THEM. THE APPELLANT REFERRED MATTER TO THE SETTLEMENT COMMISSION. THE SETTLEMENT COMMISSION BY A MAJORITY HELD THAT THE E XPLANATION OF THE ASSESSEE WAS NOT GENUINE FOR THE FOLLOWING REASONS: (I) THE APPE LLANT'S KNOWLEDGE OF RACING IS VERY MEAGRE. (II) A JACKPOT IS A STAKE OF FIVE EVENTS IN A SINGLE DAY AND ONE CAN BELIEVE A REGULAR AND EXPERIENCED PUNTER CLEARING A JACKPOT O CCASIONALLY BUT THE CLAIM OF THE APPELLANT TO HAVE WON A NUMBER OF JACKPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE BUT AT THREE DIFFERENT CENTRES, NAMELY, M ADRAS, BANGALORE AND HYDERABAD APPEARS, PRIMA FACIE, TO BE WILD AND CONTRARY TO TH E STATISTICAL THEORIES AND EXPERIENCE OF THE FREQUENCIES AND PROBABILITIES. (I II) THE APPELLANT'S BOOKS DO NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATEL Y PRECEDING DAYS FOR THE PURCHASE OF JACKPOT COMBINATION TICKETS, WHICH ENTA ILED SIZABLE AMOUNTS VARYING GENERALLY BETWEEN RS. 2,000 AND RS. 3,000. THE DRAW INGS RECORDED IN THE BOOKS CANNOT BE CO-RELATED TO THE VARIOUS RACING EVENTS A T WHICH THE APPELLANT MADE THE ALLEGED WINNINGS. (IV) WHILE THE APPELLANT'S CAPITA L ACCOUNT WAS CREDITED WITH THE GROSS AMOUNTS OF RACE WINNINGS, THERE WERE NO DEBIT S EITHER FOR EXPENSES AND PURCHASE OF TICKETS OR FOR LOSSES. (V) IN VIEW OF T HE EXCEPTIONAL LUCK CLAIMED TO HAVE BEEN ENJOYED BY THE APPELLANT, HER LOSS OF INTEREST IN RACES FROM 1972 ASSUMES SIGNIFICANCE. WINNINGS IN RACING BECAME LIABLE TO I NCOME-TAX FROM APRIL 1, 1972, BUT ONE WOULD NOT GIVE UP AN ACTIVITY YIELDING OR LIKEL Y TO YIELD A LARGE INCOME MERELY BECAUSE THE INCOME WOULD SUFFER TAX. THE POSITION W OULD BE DIFFERENT, HOWEVER, IF THE CLAIM OF WINNINGS IN RACES WAS FALSE AND WHAT WERE PASSED OFF AS SUCH WINNINGS REALLY REPRESENTED THE APPELLANT'S TAXABLE INCOME F ROM SOME UNDISCLOSED SOURCES. ON THE ABOVE FACTS IT WAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THE SETTLEMENT COMMI SSION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOU NT BEING HER WINNINGS FROM RACES IS NOT GENUINE. FROM THE ABOVE DECISION IT IS CLEAR THAT HUMAN PROB ABILITIES OR CIRCUMSTANTIAL EVIDENCES CAN BE TAKEN INTO ACCOUNT FOR DECIDING AN ISSUE. HOWEVE R, IN THAT CASE THE CIRCUMSTANCES WERE SO STRONG AGAINST THAT THE DOCUMENTARY EVIDENCE WAS IG NORED BY THE HON'BLE APEX COURT. BUT IN THE CASE OF THE ASSESSEE BEFORE US IT SHOWS THAT CI RCUMSTANTIAL EVIDENCE IS NOT SO OVER WHELMING AND RATHER THE DOCUMENTARY EVIDENCE CLEARL Y PROVES THE TRANSACTIONS. ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 10 9. FIRST LET US DEAL WITH THE CONTENTIONS OF THE L D. DR THAT SOME PAPERS IN THE PAPER BOOK AT PAGE NOS.42 TO 45 WERE NOT TRACEABLE IN THE FILE O F THE AO. THE SECOND ALLEGATION VIDE LETTER DATED 11-11-11 IS THAT THE COMPANY M/S ROBINSON WOR LDWIDE TRADE LTD IS NOT IN EXISTENCE. PAGES 42 AND 43 OF THE PAPER BOOK, WHICH IS A COPY OF THE TRANSFER FORM SIGNED BY THE TRANSFEROR AND THE TRANSFEREE. PAGE 4 IS A COPY OF THE COVERING LETTER BY THE COMPANY TO THE ASSESSEE TRANSFERRING THE SHARES BY WAY OF A JUMBO CERTIFICATE I.E. ONE CONSOLIDATED CERTIFICATE IN THE NAME OF THE ASSESSEE AND PAGE-45 IS A COPY O F THE SHARE CERTIFICATE. IT HAS BEEN POINTED OUT THAT SUCH PAPERS WERE FILED WITH THE AO WITH TH E LETTER DATED 5-11-08 ALONG WITH ANNEXURE K AND COPY OF THIS LETTER HAS BEEN FURNISHED BEFORE US WHICH IS PLACED ON RECORDS. IN THE COLUMN DEALING WITH ANNEXURE K IT IS STATED THAT VA RIOUS DOCUMENTS ARE BEING FURNISHED TO PROVE THE GENUINENESS OF PURCHASES WHICH INCLUDES T HE TRANSFER FORM PLACED AT PAGES 42 AND 43 AND COPY OF THE SHARE CERTIFICATE AT PAGE 45. TH IS MAKES IT CLEAR THAT DOCUMENTS WERE FILED BEFORE THE AO BECAUSE IT HAS NOT BEEN DENIED THAT L ETTER DATED 5-11-08 WAS FILED BEFORE THE AO. IN ANY CASE, DURING THE HEARING PHOTO COPIES OF 150 CERTIFICATES ISSUED IN THE NAME OF THE ASSESSEE BY SPLITTING THE JUMBO CERTIFICATE, HAVE B EEN FILED, WHICH SHOW THAT SHARES WERE IN THE NAME OF THE ASSESSEE. A DOCUMENT FROM THE MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA FROM THE CITE HTTP://WWW,.MCA,GOV.IN SERIAL N OS.1 & 2 OF THE SAME READ AS UNDER: OLD NAME NEW NAME (1) ROBINSON IMPEX (INDIA) LTD. SUN AND SHINE WORLDWIDE LTD. (2) M/S ROBINSON WORLDWIDE TRADE LTD SUN AN D SHINE WORLDWIDE LTD. THIS CLEARLY SHOWS THAT ROBINSON IMPEX (INDIA) LTD . AS WELL AS M/S ROBINSON WORLDWIDE TRADE LTD WERE MERGED AND THE NEW NAME OF THE COMPA NY IS SUN AND SHINE WORLDWIDE LTD. THE ABOVE EXTRACT HAS BEEN TAKEN ON 12-12-2011 WHIC H SHOWS THAT THE COMPANY IS VERY MUCH IN EXISTENCE EVEN AS ON TODAY. THIS IS FURTHER SUPP ORTED BY ANOTHER EXTRACT FROM M/S. DPS SHARES & SECURITIES PVT. LTD TAKEN FROM WWW.BSEINDI A.COM. THIS EXTRACT SHOWS THE FOLLOWING INFORMATION: OUTCOME OF EGM 02-05-2011 18:36 M/S R OBINSON WORLDWIDE TRADE LTD HAS INFORMED THAT THE SHAREHOLDERS AT THE EXTRA ORDINAR Y GENERAL MEETING (EGM) OF THE COMPANY HELD ON MAY 02,2011, INTER ALIA, HAVE TAKEN THE FOLLOWING DECISIONS: 1) TO CHANCE TO THE NAME OF THE COMPANY FROM M/S RPBINSON WORLDWIDE TRADE LTD. TO SUN AND SHINE WORLDWIDE LTD. THIS CONFIR MS THAT THE NAME OF THE COMPANY WAS CHANGED IN THE EXTRA ORDINARY GENERAL M EETING HELD ON 2-5-2011. PERHAPS BECAUSE OF THE CHANGE OF NAME, THE AO HAS NOT BEEN ABLE TO CONFIRM THE EXISTENCE OF THE COMPANY. THE THIRD DOCUMENT IS ALSO TAKEN FROM THE BSE SITE SHOWS THAT SHARES WERE TRADED ON 6-9-2011 AT RS.36.75. THIS CLEARLY SHOWS THAT SH ARES OF THE COMPANY ARE STILL BEING TRADED BUT UNDER THE NEW NAME. IN THE LIGHT OF THESE DOCUM ENTS, WE FIND NO MERIT IN THE OBJECTION RAISED IN THE LETTER OF THE DCIT -12, ADDRESSED TO THE CIT DR, WHICH WAS PLACED BEFORE US. 10. THE SECOND IMPORTANT ISSUE ON THE BASIS OF WHIC H THE CLAIM OF THE ASSESSEE FOR CAPITAL GAIN WAS HELD TO BE BOGUS WAS THE STATEMENT OF DIRECTOR OF M/S. DPS SHARES & SECURITIES PVT. LTD. THE AO HAS FAIRLY GIVEN CROSS EXAMINATION TO THE AS SESSEE OF THE DIRECTOR OF M/S. DPS SHARES & SECURITIES PVT. LTD. SHRI PRATIK SHAH DIRE CTOR OF M/S. DPS SHARES & SECURITIES PVT. LTD WAS CROSS EXAMINED BY THE REPRESENTATIVE OF THE ASSESSEE SHRI KETAN MEHTA ON 20-11- 2008 AND AO HAS REPRODUCED THE WHOLE CROSS EXAMINAT ION. THE QUESTION AND ANSWER TO QS. NOS.22 & 34 READ AS UNDER: ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 11 Q.22. YOU HAVE SLATED IN YOUR STATEMENT U/S. 13] O N ]8.IJ.2008 THAT ALL THE BOGUS BILLS WERE ISSUED BY YOU AT THE INSTRUCTION OF MR.NARESH SABOO AND MR. SHIRISH C.SHAH. DO YOU AGREE WITH THE SAME? ANS. YES I AGREE. THE B OGUS BILLS WERE ISSUED BY .NY COMPANY AT THE INSTRUCTIONS OF MR.NARESH SABOO. AS THESE HILLS WERE BOGUS AND OFF MARKET TRANSACTION. THE PHYSICAL SHARES WHICH WERE GIVEN BY US TO THE SAID MS..JIGNA A.KARIYA WERE RECEIVED BY US FROM NARESH SAHOO AND WERE FORWARDED BY US TO MS.JIGNA .A. KARIYA, BECAUSE THESE TRANSACTIONS WER E NOT ON THE FLOOR, THE SAID PHYSICAL SHARES HAD NOT CONIC FROM BSE. HENCE THIS WAS AN ACCOMMODATION TRANSACTION, WE RECEIVED THE SHARES FROM NARESH SAH OO AND FORWARDED TO MS..JIGNA A.KARIYA. Q.34. DO YOU WANT TO SAY ANYTHING ELSE? ANS. YES. ALL THESE ACCOMMODATION HILLS/BOGUS BILL S WERE GIVEN BY OUR COMPANY FOR THE ACCOMMODATION OF THE SAID ASSESSEES FOR THE LTC G PURPOSE AND THE DELIVERY OF PHYSICAL SHARES WHICH WERE GIVEN BY US TO THE SAID ASSESSEES WERE RECEIVED BY US FROM MR.NARESH SABOO AND HANDED OVER TO THE SAID AS SESSEES. THE ABOVE CLEARLY SHOWS THAT THE SO CALLED BOGUS SH ARES WERE ISSUED ON THE INSTRUCTIONS OF SHRI NARESH SABOO. BEFORE US IT WAS DENIED THAT ASS ESSEE HAS ANYTHING TO DO WITH SHRI NARESH SABOO. NEITHER THE AO NOR THE LD. CIT(A) HAS BROUGH T ANY MATERIAL ON RECORD TO SHOW THAT SHRI NARESH SABOO HAS SOME CONNECTION WITH THE ASSE SSEE. EVEN LD. CIT DR HAS NOT PLACED ANY EVIDENCE TO SHOW THAT SHRI NARESH SABOO WAS ACT ING ON BEHALF OF THE ASSESSEE. SECONDLY, SHRI PRATIK SHAH IN ANSWER TO BOTH QUESTION NOS.22 & 34 HAS CLEARLY ADMITTED THAT PHYSICAL DELIVERY OF THE SHARES WAS GIVEN TO THE ASSESSEE. N OW THE QUESTION IS HOW ASSESSEE IS GOING TO FIND OUT WHETHER THIS TRANSACTION WAS BOGUS WHEN PH YSICAL DELIVERY HAS BEEN HANDED OVER TO THE ASSESSEE. THE AUTHORITIES BELOW HAVE ALSO DOUB TED THE SOURCE FOR PURCHASES. AS POINTED OUT BY THE LD. COUNSEL ASSESSEE HAS EARNED SPECULAT ION PROFIT AMOUNTING TO RS.28,941/- WHICH HAS BEEN INCLUDED IN THE RETURN OF INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES FOR A.Y 2004-05, A COPY OF THE COMPUTATION IS ON PAGES 22 & 23 OF THE PAPER BOOK AND THIS HAS BEEN ACCEPTED BY THE DEPARTMENT. THE ASSESSEE HAS ALSO F ILED THE BALANCE SHEET IN WHICH INVESTMENT IN SHARES HAS BEEN SHOWN AT RS.1,45,06,054/- AND IN THE ANNEXURE SHOWING THE DETAILS OF INVESTMENT IN M/S ROBINSON WORLDWIDE TRADE LTD SHAR ES HAVE BEEN INCLUDED AT 15500 SHARES AMOUNTING TO RS.28810.54. THIS PURCHASE HAS TO BE T REATED AS ACCEPTED BECAUSE THIS BALANCE SHEET WAS FILED IN A.Y 2004-05 AND NO ADVERSE INFER ENCE HAS BEEN TAKEN IN THAT YEAR. THESE DOCUMENTS ARE AVAILABLE AT PAGES 24 TO 26 OF THE PA PER BOOK. THE ASSESSEE HAD ALSO FILED THE CONTRACT NOTE FOR SALE AND PURCHASE OF SHARES GENER ATING SPECULATING PROFIT FILED AT PAGES 36 & 37 OF THE PAPER BOOK. THE CONTRACT NOTE FOR PURCH ASE OF 15500 SHARES OF M/S ROBINSON WORLDWIDE TRADE LTD FROM M/S. DPS SHARES & SECURITI ES PVT. LTD HAS BEEN FILED AT PAGE-38 OF THE PAPER BOOK AND THE PARTICULARS READ AS UNDER : ORDER NO . TRADE NO. TRADE TIME QUANTITY KIND OF SECURITY PURCHASE RATE BROKERAGE RATE PLUS AMOUNT BROKERAGE NET RATE 29926007 0002407 10:22:45 15500 ROBINSON 1.45 0.02 1.4 7 22785.00 IMP PHY : TOTAL: 22785.00 THE ABOVE PARTICULARS WOULD NOT INDICATE THAT IT WA S A BOGUS TRANSACTION. IN ANY CASE, ASSESSEE HAS NO NEED TO KNOW WHETHER THE TRANSACTIO N WAS BOGUS OR NOT BECAUSE EVEN INVOICE HAS BEEN ISSUED BY M/S. DPS SHARES & SECURITIES PV T. LTD FOR PURCHASE OF THESE SHARES, COPY OF WHICH IS PLACED AT PAGE 39 OF THE PAPER BOOK AND DELIVERY WAS ALSO GIVEN WHICH IS AT PAGE 40 OF THE PAPER BOOK. LATER ON ASSESSEE FILED AN AP PLICATION FOR TRANSFER OF THESE SHARES AND WE HAVE ALREADY DISCUSSED THE PARTICULARS OF TRANSF ER FORM. ULTIMATELY, A JUMBO SHARE ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 12 CERTIFICATE SHOWING 15500 SHARES WAS ISSUED BY THE COMPANY, COPY OF WHICH IS AT PAGE 45 OF THE PAPER BOOK. LATER ON ASSESSEE LODGED A DEMAT RE QUEST WITH ACTION FINANCIAL SERVICES (INDIA) LTD. FOR DEMAT OF 15500 SHARES OF M/S ROBIN SON WORLDWIDE TRADE LTD AND COPY OF THAT REQUEST IS AVAILABLE AT PAGE 46. THE DEMAT ACCOUNT STATEMENT OF THE ASSESSEE WITH ACTION FINANCIAL SERVICES (INDIA) LTD. SHOWS THAT 15500 SH ARES HAVE BEEN DEMATERIALISED. WE FAIL TO UNDERSTAND HOW THE SHARES WERE ACTUALLY TRANSFERRED IN PHYSICAL FORM AND LATER ON DEMATERIALISED AND HOW THIS WHOLE PROCESS CAN BE CA LLED BOGUS. THIS CANNOT BE CALLED BOGUS UNLESS THE CONNIVANCE OF M/S ROBINSON WORLDWIDE TRA DE LTD AND ACTION FINANCIAL SERVICES (INDIA) LTD. IS ALSO ALLEGED AND PROVED. BUT NO ENQ UIRY SEEMS TO HAVE BEEN CONDUCTED WITH THESE ENTITIES. ULTIMATELY, THE SHARES HAVE BEEN SO LD THROUGH ANUGRAH STOCK AND BROKING PVT. LTD. ON VARIOUS DATES AS UNDER: DATE QUANTITY 09-12-2004 3000 13-12-2004 3000 04-01-2005 6000 O6-01-2005 3500 THE CONTRACT NOTES FOR THE ABOVE SALES ARE PLACED IN THE PAPER BOOK AT PAGES 48 TO 55. THE ABOVE SALES HAVE BEEN REFLECTED IN THE LATER DEMAT ACCOUNT WITH ACTION FINANCIAL SERVICES (INDIA) LTD., COPY OF WHICH IS AT PAGES 57 AND 58 OF THE PAPER BOOK. FROM THE ABOVE IT IS CLEAR THAT ASSESSEE HAS PROVED THE PURCHASES AS WEL L AS THE SALES TRANSACTIONS. THE SHARES HAVE BEEN SOLD THROUGH BSE AND IT IS NOT ALLEGED TH AT THESE TRANSACTIONS ARE ALSO OFF MARKET. ALL THESE FACTS CLEARLY PROVE THAT THE TRANSACTIONS ARE GENUINE AND THE SAME CANNOT BE DOUBTED UNLESS AND UNTILL THE OTHER PARTICIPANTS LI KE DEPOSITORY KNOWN AS ACTION FINANCIAL SERVICES (INDIA) LTD. IS ALSO PROVED TO BE BOGUS OR IN CONNIVANCE WITH THE PENNY STOCK SCAM AND EVEN THE SALE CONDUCTED THROUGH ANUGRAH STOCK A ND BROKING PVT. LTD. IS PROVED TO BE BOGUS. IN OUR OPINION, WHEN OVERWHELMING DOCUMENTARY EVIDE NCE IS AVAILABLE TO PROVE THE PURCHASE AND SALE TRANSACTIONS PART OF WHICH HAS AL READY BEEN ACCEPTED BY THE REVENUE IN A.Y 2004-05, THEN A MERE STATEMENT BY THE BROKER WH O HAS SOLD THE SHARES TO THE ASSESSEE THAT THIS WAS AN ACCOMMODATION ENTRY CANNOT LEAD TO A CONCLUSION THAT THE WHOLE TRANSACTION WAS BOGUS. IN THESE CIRCUMSTANCES, WE A RE OF THE VIEW THAT THE SALE AND PURCHASE OF THE SHARES STAND PROVED AND SHOULD BE A SSESSED UNDER THE HEAD CAPITAL GAINS. ( EMPHASIS BY US ) 5.5 IT WAS SUBMITTED THAT ADDITION UPHELD BY LD. CI T(A) IN THE PRESENT YEAR ARE AT PAR WITH THE ADDITIONS CONSIDERED BY TH E TRIBUNAL IN RESPECT OF A.Y.2005-06 AND THUS, THE ISSUE REGARDING ADDITION OF THESE SHARES IS COVERED BY AFOREMENTIONED DECISION OF TRIBUNAL IN A SSSESSEES OWN CASE FOR A.Y 2005-06 BY THE AFOREMENTIONED ORDER. 5.6 IT WAS FURTHER SUBMITTED THAT ACCORDING TO THE DECISION OF TRIBUNAL IN THE CASE OF MUKESH R. MAROLIA VS. ADDL. CIT, 6 SOT 247 (MUM), IT WAS HELD THAT PURCHASE AND SALE OF SHARES OUTSIDE FLOOR OF S TOCK EXCHANGE IS NOT AN UNLAWFULL ACTIVITY. OFF MARKET TRANSACTION, ARE NO T ILLEGAL. IT IS ALWAYS ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 13 POSSIBLE FOR THE PARTIES TO ENTER INTO TRANSACTIONS EVEN WITHOUT THE HELP OF BROKERS. WHEN THE TRANSACTIONS ARE OFF MARKET TRAN SACTIONS, THERE IS NO RELEVANCE IN SEEKING DETAILS OF SHARE TRANSACTIONS FROM STOCK EXCHANGE AS SUCH ATTEMPT WOULD BE FUTILE. STOCK EXCHANGE CANNO T GIVE DETAILS OF TRANSACTIONS ENTERED INTO BETWEEN PARTIES OUTSIDE T HEIR FLOORS. THEREFORE, RELIANCE PLACED BY AO ON THE COMMUNICATIONS RECEIVE D FROM THE STOCK EXCHANGES THAT THE PARTICULAR SHARE TRANSACTIONS EN TERED INTO BY THE ASSESSEE WERE NOT AVAILABLE IN THEIR RECORD WILL B E OUT OF PLACE. 5.6 LD. AR ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF PUSHPA R. SHAH VS. ITO IN ITA NO.2669/MUM/2006 FOR ASSESSMENT YEAR 2002-03 AND REMESH G. SHAH VS. ITO, ITA NO.2670/MUM/2006 FOR AS SESSMENT YEAR 2002-03 ORDER DATED 29/07/2008, WHEREIN SUCH TRANSA CTION MADE THROUGH BROKERS REGISTERED WITH SEBI AND ALSO BEING ASSESSE D TO INCOME TAX AND IN THE CIRCUMSTANCES WHERE SHARES WERE DULY TRANSFERRE D FROM ASSESSEES DEMAT ACCOUNT AND SALE CONSIDERATION HAVING BEEN RE CEIVED THROUGH ACCOUNT PAYEE CHEQUE THEN THE SALE PRICE COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THUS, IT WAS PLEADED BY LD. AR TH AT THE IMPUGNED ADDITION SHOULD BE DELETED AND APPEAL FILED BY THE ASSESSEE SHOULD BE ALLOWED. 6. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR TH AT ASSESSEE COULD NOT SUBSTANTIATE THE PURCHASE OF THE SHARES AND SIN CE PURCHASE OF THE SHARES COULD NOT BE SUBSTANTIATED, THE LATER SALE THEREOF CANNOT BE CONSIDERED TO BE GENUINE. IT WAS SUBMITTED THAT SH ARES WERE SHOWN TO BE PURCHASED FOR A VERY LOW CONSIDERATION AND SOLD AT A HIGHER RATE. THUS, ALL IT WAS AN ARRANGEMENT JUST TO INTRODUCE ASSESSEE ON-MO NEY IN THE SHAPE OF SALE CONSIDERATION OF THE SHARES. HE SUBMITTED THA T ACCORDING TO THE FACTS OF THE CASE, LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITIO N AND HIS ORDER SHOULD BE UPHELD. THE APPEAL FILED BY THE ASSESSEE SHOULD B E DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. THE SEQUENCE OF DATES HAS ALREADY BEEN NARRATED IN THE ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 14 ABOVE PART OF THIS ORDER IN RESPECT OF SHARE TRANSA CTIONS OF BOTH THE COMPANIES. THE ASSESSEE HAD PURCHASED 15000 SHARE S OF SHALIMAR AGRO PRODUCTS LTD. @ RS.7.50 PER SHARES ON10/04/2002 TH ROUGH SHREENIDHI STOCK & BROKING FOR AGGREGATING TO A SUM OF RS.1,1 2,500/-AND EVIDENCE RELATING TO SUCH PURCHASE IS FILED AT PAGE 47 OF TH E PAPER BOOK. AS PER EVIDENCE FILED AT PAGE 48 OF THE PAPER BOOK, THE AS SESSEE AS ON 1/4/2002 WAS HAVING CREDIT BALANCE OF RS.1,19,432/-. AGAINS T THE SAID OUTSTANDING CREDIT BALANCE AN AMOUNT OF RS.1,12,500/- HAS BEEN DEBITED ON ACCOUNT OF PURCHASE PRICE OF 15000 SHARES OF SHALIMAR AGRO PR ODUCTS AND THUS, EVEN AFTER THE PURCHASE OF THOSE SHARES THE CREDIT BALAN CE OF THE ASSESSEE WITH SHREENIDHI SHARE & BROKING WAS RS. 6,932.10. AT PAGE 49 TO 51 OF THE PAPER BOOK, COPY OF THREE LETTERS ISSUED BY SHALIM AR AGRO PRODUCTS LTD. DATED 30/4/2002 ARE PLACED, ACCORDINGLY, 8000,4200 AND 2800 SHARES WERE TRANSFERRED IN THE NAME OF THE ASSESSEE ON 30/4/200 2. IN THESE LETTERS DISTINCTIVE NUMBERS OF SHARE CERTIFICATES HAVE BEEN GIVEN. LATER ON, ASSESSEE OBTAINED CERTIFICATE FROM SHALIMAR AGRO PR ODUCTS LTD., WHICH IS DATED 20/06/2007 VIDE WHICH EXTRACT OF SHARE TRANSF ER REGISTER AND MEMBER REGISTER OF THE COMPANY WAS GRANTED, COPY OF WHICH HAS BEEN FILED AT PAGE 53 TO 68 OF THE PAPER BOOK. AT PAGE 69 TO 70, COPY OF FORM OF DEMAT IS FILED WHICH IS DATED 5/5/2003 VIDE WHICH A SSESSEE HAD SUBMITTED DEMAT OF THE SHARES OF SHALIMAR AGRO PRODUCTS LTD.A ND AT PAGES 71 TO 140, THE DETAILS OF SALES OF THESE SHARES ARE FILED. AT PAGE 24 THE BALANCE SHEET OF THE ASSESSEE AS ON 31/3/2003 IS FILED, WHEREIN TOTA L INVESTMENT IS SHOWN AT RS.8,32,213.24. THE SCHEDULE OF WHICH IS FILED AT PAGE 25 OF THE PAPER BOOK. THE DETAILS IS AS UNDER: NAME OF THE COMPANY NO. OF SHARES AMOUNT INVESTMENT IN SHARES 360,540.00 ICICI SAFETY BONDS-2000 10,000.00 ICICI SAFETY BOND 2001 20,000.00 ICICI SAFETY BOND 2002 70,000.00 PUBLIC PROVIDENT FUND 183,813.24 SHALIMAR AGRO PRODUCTS LTD. (15000 SHARES) 112,500 .00 G-TECH INFO TRAINING LTD. (36000 SHARES) 45,360. 00 IDBI FLEXI BONDS-2003 30,000.00 8,32,213.24 ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 15 7.1 THUS, IT CAN BE SEEN FROM THE ABOVE THAT IN THE BALANCE SHEET SUBMITTED BY THE ASSESSEE TO THE DEPARTMENT IN RES PECT OF A.Y 2003-04, SHARES OF SHALIMAR AGRO PRODUCTS LTD. WERE ALSO OUT STANDING AND QUANTITY THEREOF WAS ALSO MENTIONED. 7.2 SIMILARLY, IN RESPECT OF SHARES OF G-TECH INFO TRADING THE PURCHASE VOUCHER IS PLACED AT PAGE 20 & 27 OF THE PAPER BOOK . 36000 SHARES WERE PURCHASED FOR A SUM OF RS.45,360/- AND THE SAID PU RCHASE PRICE WAS ADJUSTED AGAINST PROFIT SHOWN BY THE ASSESSEE IN TH E RETURN OF INCOME AT RS.1,49,600/-, COPY OF WHICH IS PLACED AT PAGE 21 O F THE PAPER BOOK. THESE SHARES ARE ALSO OUTSTANDING IN THE INVESTMENT SCHED ULE WHICH HAS ALREADY BEEN REPRODUCED IN PARA-7 OF THE ORDER. THESE SHAR ES WERE RECEIVED BY THE ASSESSEE IN PHYSICAL FORM AS PER LETTER ISSUED BY S HRI SANJAY R. SHAH, COPY OF WHICH IS FILED AT PAGE 29 OF THE PAPER BOOK. TH E SAME IS ALSO SUBSTANTIATED BY LETTER ISSUED BY G-TECH INFO TRADI NG VIDE LETTER DATED 3/7/2002,COPY OF WHICH IS PLACED AT PAGE 30 OF THE PAPER BOOK, WHEREIN THEY HAVE CERTIFIED THAT 36000 SHARES OF G-TECH IN FO TRAINING LTD. HAVE BEEN DULY TRANSFERRED IN THE NAME OF THE ASSESSEE A ND CERTIFICATE NUMBERS HAVE ALSO BEEN MENTIONED ALONG WITH FOLIO NUMBER. LATER ON, JUMBO CERTIFICATE WAS ISSUED BY G-TECH INFO TRAINING LTD. VIDE LETTER DATED 22/4/2003 VIDE CERTIFICATE NO.20245, AND COPY OF TH IS LETTER IS FILED AT PAGE -31 OF THE PAPER BOOK AND ON PAGE 32, COPY OF JUMBO CERTIFICATE HAS BEEN FILED. THESE SHARES WERE DEMATERIALIZED AS PER EVI DENCE FILED IN THE SHARE OF DEPOSIT FORM WITH THE DEPOSITORY NAMELY ACTION FIN ANCIAL SERVICES INDIA LTD ON 16/7/2003, COPY OF THIS EVIDENCE IS FILED AT PAG E34 TO 35 OF THE PAPER BOOK AND THESE SHARES HAVE BEEN SOLD ACCORDING TO T HE EVIDENCE FILED AT PAGES 40 TO 46 OF THE PAPER BOOK. 7.3 FROM THE ABOVE FACTS, IT IS CLEAR THAT SHARES O F BOTH THESE COMPANIES WERE SHOWN TO BE HELD BY THE ASSESSEE IN THE BALANC E SHEET FILED WITH THE DEPARTMENT IN RESPECT OF A.Y 2003-04. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE RETURN FILED BY THE ASSESSEE SHOWING PURCHASES OF THESE ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 16 SHARES IN A.Y 2003-04 HAS EVER BEEN DISTURBED BY TH E REVENUE. THE REVENUE HAS ALSO NOT CONTRADICTED ANY OF THE AFORE MENTIONED EVIDENCE SUBMITTED BY THE ASSESSEE TO SUPPORT THE IMPUGNED TRANSACTIONS. MOREOVER, UNDER SIMILAR FACTS AND CIRCUMSTANCES, ON E OF THE TRANSACTIONS WHICH WAS ADDED BY THE AO IN RESPECT OF SHARES OF M /S. ROBINSON WORLDWIDE LTD., WAS DELETED BY LD. CIT(A) ON THE G ROUND THAT IT PERTAINS TO A.Y 2005-06 HAS BEEN ALREADY DELETED BY THE TRIBUNA L IN THE CASE OF ASSESSEE ITSELF. THE RELEVANT PORTION OF THE TRIBU NALS ORDER HAS ALREADY BEEN REPRODUCED IN PARA 5.4 OF THIS ORDER. THE FACTS O F THAT TRANSACTION AND THE IMPUGNED TRANSACTIONS ARE NOT MATERIALLY DIFFERENT . THEREFORE, THE IMPUGNED TRANSACTIONS IN THE FACTS AND CIRCUMSTANCE S OF THE CASE ARE COVERED BY THE AFOREMENTIONED DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE IN RESPECT OF ASSESSMENT YEAR 2005-06. RESPEC TFULLY FOLLOWING THE SAID DECISION OF TRIBUNAL GIVEN IN RESPECT OF PRESENT AS SESSEE WITH REGARD TO ASSESSMENT YEAR 2005-06, WE ARE OF THE OPINION THAT LD. CIT(A) HAS COMMITTED AN ERROR IN UPHOLDING THE ADDITION. ACCO RDINGLY, THE IMPUGNED ADDITION AS PLEADED IN GROUND NO.1 & 2 ARE DELETED AND GROUND NO.1 & 2 ARE ALLOWED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/05/2015 ' + ,- 13/05/2015 ' SD/- SD/- (RAJENDRA) . . (I.P.BANSAL) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; , DATED 13/05/2015 ./ I.T.A. NO.7023/MUM/2010 ( / ASSESSMENT YEAR : 2004-05. 17 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. 12 34 , $ 34 , / DR, ITAT, MUMBAI 6. 5 / GUARD FILE. / BY ORDER, 1 //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . .VM , SR. PS