Marble Centre International Pvt. Ltd., Bangalore V. ACIT, Bangalore

ITA 71/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5321 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 25-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: H N KHINCHA
• Keywords: Unexplained investment; Income from undisclosed sources; Share purchase agreement; Opportunity of being heard; Accommodation entries
• Section: 143(1); 68; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.71/BANG/2010 ASSESSMENT YEAR : 2004-05 MARBLE CENTRE INTERNATIONAL PVT. LTD., NO.12A, 7 TH CROSS, R.D. LAYOUT, BANNERGHATTA ROAD, BANGALORE. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), BANGALORE. : RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, C.A. RESPONDENT BY : SMT. V.S. SREELEKHA, ADDL. CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE COMPANY IS DIRECTED AGA INST THE ORDER OF THE LD. CIT(A)-VI, BANGALORE, IN ITA NO:399/ACIT CC 1(2)/CIT(A)- VI/2008-09 DATED: 4.12.2009 FOR THE ASSESSMENT YEAR 2004-05. ITA NO.71/BANG/10 PAGE 2 OF 11 2. THE ASSESSEE COMPANY (THE ASSESSEE IN SHORT) H AS RAISED FOUR GROUNDS IN AN ELABORATE AND ILLUSTRATIVE MANNER. G ROUND NOS: 1 AND 4 BEING GENERAL, THEY HAVE BECOME NON-CONSEQUENTIAL. IN THE REMAINING GROUNDS, THE CRUXES OF THE ISSUES ARE, FOR THE SAKE OF CLARITY, REFORMULATED, IN CONCISE MANNER, AS UNDER: (I) THE AO HAD ERRED IN ADDING RS.2,90,80,218/- AS INCO ME OF THE YEAR ON THE GROUND THAT SUCH PAYMENT WAS MADE IN THE COU RSE OF ACQUISITION OF SHARES OF EXIM FINANCE LTD. [EFL] IG NORING THE FACT THAT THE SAID SUM WAS OFFERED AS INCOME FOR TH E AY 07-08; - THE OBSERVATION AND CONCLUSION DRAWN BY THE CIT(A ) WAS TOTALLY WITHOUT ANY EVIDENCE AND AGAINST THE MATERIAL AVAIL ABLE ON RECORD; (II) THE CIT(A) ERRED IN ADDING RS.11,88,000/-AS SO CALL ED ENTRY CHARGES WITHOUT ANY BASIS; - THE ADDITION OF RS.1,10,88,000 [9900000 + 1188000] AS SUSTAINED BY THE CIT(A) BEING TOTALLY UNWISE REQUIR ES TO BE DELETED. 3. BRIEFLY STATED, THE ASSESSEE, A DEALER IN RANDOM SLABS OF MARBLES GRANITE, FURNISHED ITS RETURN OF INCOME FOR THE AY UNDER DISPUTE, ADMITTING AN INCOME OF RS.31,22,800/- ON 1.1.2004 WHICH WAS P ROCESSED U/S 143(1) OF THE ACT. 3.1. SUBSEQUENTLY, THERE WAS AN ACTION U/S 132 OF THE ACT IN THE PREMISES OF THE ASSESSEE, ITS DIRECTORS AND ALSO IT S ACCOUNTANT ON 8.3.2007. DURING THE COURSE OF SEARCH, CERTAIN INC RIMINATING DOCUMENTS, ACCORDING TO THE AO, WERE SEIZED WHICH SHOW THAT EX IM FINANCE LTD. WAS PURCHASED BY THE DIRECTORS AND THEIR FAMILY MEMBERS OF THE ASSESSEE AND THE PAYMENT WAS ALLEGED TO HAVE BEEN MADE BY THE AS SESSEE ON THEIR ITA NO.71/BANG/10 PAGE 3 OF 11 BEHALF. ACCORDING TO THE AO, R K LADHA, DIRECTOR, HAD ADMITTED ON OATH (ON 23.5.07) THAT IN THE COURSE OF NEGOTIATION, TO EASE AND FACILITA TE THE ACQUISITION OF SHARE, WE HAD GIVEN A SUM OF RSW.2.9 CORES AS AN ADVANCE TO VARIOUS PERSONS IDENTIFIED BY EFL. THIS CASH OF RS .2.9 CRORES WAS PAID FROM THE UNACCOUNTED SALE PROCEEDS OF GOODS OF MCI(P) LTD AND, HENCE, WE ARE AGREEABLE TO OFFER THE SAME AS E XTRA INCOME OF THE COMPANY FOR THE YEAR-ENDING 31.3.2007 IN ADDITI ON TO THE EXTRACT INCOME ALREADY DECLARED. ACCORDINGLY, THIS SUM WAS ADMITTED AS ITS INCOME FO R THE AY 2007-08. 3.2. BRUSHING ASIDE THE ASSESSEES CONTENTIONS TH AT THE ADVANCES OF RS.2.9 CRORES WERE OUT OF UNACCOUNTED SALE PROCEEDS OF THE FY 06-07 FOR THE ACQUISITION OF THE SHARES OF EFL WHOSE COMPLETE MANAGEMENT WAS TAKEN OVER IN THE FY 2006-07 AND, ACCORDINGLY, OFFE RED AS ASSESSEES INCOME FOR THE AY 2007-08, THE AO HAD REASONED THA T - (I) ALL THE RECONCILIATION ENTRIES IN THE SEIZED MATERI AL HAVE BEEN MADE FROM THE YEAR 03-04 ONWARDS. IN THE ABSENCE OF ANY OTHER EVIDENCE, IT IS REASONABLE TO SAY THAT THE TRANSACTION OF PURCHASING OF EFL HAS COMMENCED IN THE YEAR 03-04 ONLY AND THE DECLARED AMOUNT OF RS.2.9 CRORES HAS TO BE TAXE D IN THE AY 2004-05; (II) THE ASSESSEE WAS HAVING TRANSACTIONS WITH EFL EVEN BEFORE FY 06-07 AS IS EVIDENT FROM THE CASH PAYMENT OF RS.36. 35 LAKHS; (III) THE ASSESSEE HAS NOT SUBSTANTIATED WITH DOCUMENTARY PROOF THAT THE CASH WAS PAID IN THE YEAR 2006-07 ONLY SO AS TO TAX THE SAME IN THE AY 2007-08; - THE AGREEMENT DT: 31.1.2006 BETWEEN THE ERSTWHILE SHAREHOLDERS AND THE DIRECTORS OF THE ASSESSEE MERE LY FORMALIZES THE AGREEMENT ORIGINALLY ARRIVED AT BETW EEN TWO PARTIES IN AY 2004-05; - THE FACT THAT THE RECONCILIATION WAS DONE FROM 2003 -04 SHOW THAT THE PURCHASE TRANSACTION PERTAIN TO THE AY 200 4-05; ITA NO.71/BANG/10 PAGE 4 OF 11 (III) AS ADMITTED BY RK LADHA ON OATH THAT THE PROMOTERS WANTED THEM TO PAY MAINTENANCE CHARGES AND OTHER CHARGES OF EFL FOR THE YEARS 04-05, 05-06 AND 06-07, IT IS CLEAR EVIDENCE OF THE TIMING OF THE TRANSACTION AS BUYER WAS EXPECTED TO MAKE ALL P AYMENTS WITH RESPECT TO PURCHASED PROPERTY; - NO EVIDENCE WAS FURNISHED FOR HAVING MADE THE PAYME NTS IN THE FY 2006-07, IN THE ABSENCE OF WHICH, THE PAYMEN T SHOULD BE TAKEN TO HAVE BEEN MADE IN THE AY 04-05 WHEN THE PURCHASE TRANSACTION WAS ORIGINALLY DECIDED BETWEEN THE PARTIES; (IV) RPG MARBLES (P) LTD,BANGALORE WHEREIN THE DIRECTORS OF THE ASSESSEE WERE ALSO THE DIRECTORS ALONG WITH PAVAN K UMAR GUPTA, RELATIVE OF THE DIRECTORS. THIS COMPANY AVAILED IN TEREST FREE LOAN OF RS.1.6 CRORE FROM EFL DURING THE PERIOD RELEVANT TO THE AY 04- 05 WHICH WAS OUTSTANDING AS ON 31.3.07. THE ASSES SEE TOO AVAILED A INTEREST FREE LOAN OF RS.0.99 CRORE DURING THE SA ME PERIOD; & (V) NO DETAILS OF DATE(S) AND THE PERSONS TO WHOM THE A SSESSEE HAD PAID RS.2.9 CRORES TOWARDS THE PURCHASE OF THE SHAR ES EXCEPT ADMITTING THAT THE PAYMENT WAS TO THE PERSONS IDEN TIFIED BY EFL; - THE TAXABILITY OF RS.2,90,80,218/- SHOULD BE TAKE N IN AY 04-05 ON ACCRUAL BASIS. 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE BEFO RE THE CIT(A) FOR REDRESSAL. THE LD. CIT (A) HAD, AFTER DUE CONSIDERA TION OF ASSESSEES CONTENTIONS, ALSO ANALYZING THE STATEMENT OF RK LAD HA RECORDED ON OATH IN A COMPREHENSIVE MANNER AND THE REASONING OF THE AO, OBSERVED THUS ALL THE ABOVE FACTS, ESTABLISHES THAT THE CASH WAS PAID FOR OBTAINING THE CHEQUES FOR ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOAN FROM M/S. EXIM FINANCE LTD TO THE EX TENT OF RS.2.89 CRORES WHICH INCLUDES RS.30 LAKHS PAID IN THE ASSES SMENT YEAR IN CASH OR ARRANGING THIS ACCOMMODATION ENTRY. THE SA ME IS CLEARLY MENTIONED IN PAGE NO.5 AND PAGE 6 DISCUSSED ABOVE. HOWEVER, IN THE CASE OF THE APPELLANT, THE UNACCOUNTED INCOME I NTRODUCED IN THE FORM OF UNSECURED LOAN IS RS.99 LAKHS. REMAINING R S.160 LAKHS IS INTRODUCED IN THE BOOKS OF M/S.RPG MARBLES PVT. LTD . IT IS CLEAR THAT THE UNSECURED LOAN OF RS.99 LAKHS INTRODUCED I N THE BOOKS OF ITA NO.71/BANG/10 PAGE 5 OF 11 ACCOUNTS IS OUT OF THE UNACCOUNTED INCOME OF THE AP PELLANT COMPANY, THE SAME IS REQUIRED TO BE ADDED UNDER SEC TION 68 OF THE INCOME-TAX ACT. IN ADDITION TO THAT, FOR ARRANGING THE ACCOMMODATION ENTRIES TO THE EXTENT OF RS.259 LAKHS , THE CASH OF RS.30 LAKHS WAS PAID WHICH WORKS OUT TO 12% OF THE TOTAL ACCOMMODATION ENTRIES. THE ACCOMMODATION ENTRY CHA RGES FOR RS.99 LAKHS @ 12% WORKS OUT TO RS.11,88,000/- ARE A LSO REQUIRED TO BE ADDED TO THE INCOME OF THE APPELLANT. ACCORDING LY, THE ADDITION MADE BY THE ASSESSING OFFICER IN THE CASE OF THE AP PELLANT IS UPHELD TO THE EXTENT OF RS.1,10,88,000/- [RS.99,00,000 + R S.11,88,000/-). 5. AGITATED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL. THE FORCEFUL CONTENTION OF THE LD. A R WAS THAT THE AO HAD IGNORED THE VERY FACT THAT THE ASSESSEE ITSELF OFFERED RS.2.9 CRORES AS I TS INCOME FOR THE AY 2007-08, THAT THE CONCLUSION DRAWN BY THE AO THAT T HE INCOME WAS CHARGEABLE TO TAX DURING THE AY UNDER DISPUTE WAS NOT ONLY BASED ON ANY DOCUMENTARY EVIDENCE, BUT, ALSO CONTRARY TO THE EVI DENCE AVAILABLE, AND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E INCOME IN QUESTION WAS OFFERED FOR THE AY 07-08, BUT, THE ADDITION OF RS.2,90,80,218/- MADE BY THE AO FOR THE AY UNDER DISPUTE WAS MISCARRIAGE OF JUSTICE, AND, THEREFORE, REQUIRES TO BE DELETED. 5.1. IT WAS FURTHER CONTENDED THAT THE CONCLUSION OF THE LD. CIT (A) THAT THE ASSESSEE HAD NOT ACTUALLY BORROWED THE MONEY AN D THAT THE LOANS WERE IN THE FORM OF ACCOMMODATION ENTRIES AND THAT FOR T HESE ENTRIES CASH WAS ALLEGEDLY PAID WAS QUITE CONTRARY TO THE FACTS. BE SIDES, THE CIT (A), WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD, ADDED RS.1 1,88,000 AS ALLEGED ENTRY CHARGES WHICH BEING IN THE FORM OF AN ENHANCE MENT, DESERVES TO BE DELETED AS THE SAID ADDITION WAS MADE AT THE BACK O F THE ASSESSEE. THE LD. CIT (A) ALSO ERRED IN RESTRICTING THE ADDITION TO THE EXTENT OF ITA NO.71/BANG/10 PAGE 6 OF 11 RS.99,00,000/- FOR THE REASONS ATTRIBUTED WHICH H AVE, IN FACT, LACKING ANY CONVICTION. 5.1.1. DURING THE COURSE OF HEARING, THE LD. A R H AD FURNISHED A VOLUMINOUS PAPER BOOK CONTAINING OF 1 171 PAGES W HICH CONSISTS OF AMONG OTHERS, COPIES OF (I) SEIZED MATERIALS; (II) FINANCIAL STATEMENTS OF EFL FOR THE YEARS-ENDED 31.3.05 AND 31.3.06, 31.3.07 (I II) STATUTORY FORM FILED BEFORE THE ROC, (IV) SHARE PURCHASE AGREEMENT ETC., 5.2. ON HER PART, THE LD. D R WAS CATEGORICAL I N HER URGE THAT THE LD. CIT (A) HAS, AFTER GIVING DUE WEIGHT-AGE TO THE CON TENTIONS OF THE ASSESSEE AND ANALYZING THE ISSUE AT A GREATER LENGTH, COME T O A WELL-JUDGED CONCLUSION TO RESTRICT THE ADDITION TO THE TUNE OF RS.1.10 CRORES WHICH REQUIRES TO BE SUSTAINED. 6. WE HAVE CAREFULLY CONSIDERED THE FORCEFUL CON TENTIONS OF THE LD. AR WHICH WERE COUPLED WITH VARIOUS DOCUMENTARY EVIDENC ES IN THE SHAPE OF A PAPER BOOK, DILIGENTLY PERUSED THE RELEVANT CASE RE CORDS AND ALSO TAKEN COGNIZANCE OF THE ARGUMENT PUT-FORTH BY THE LD. D.R . 6.1. THE ASSESSEES CONTENTION WAS THAT THE ORDER S OF THE AUTHORITIES BELOW BAD IN LAW WHICH REQUIRE TO BE QUASHED. STRA NGELY ENOUGH, THE ASSESSEE HAD NOT PUT ACROSS ANY TANGIBLE EVIDENCE T O DRIVE HOME ITS POINT. AS RIGHTLY REMARKED BY THE LD. CIT(A), THE ASSESSEE HAD FAILED TO SUBSTANTIATE THAT THE IMPUGNED ORDERS OF THE AUTHOR ITIES CONCERNED WERE NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AN D, THUS, THE ASSESSEE FAILS ON THIS COUNT. ITA NO.71/BANG/10 PAGE 7 OF 11 6.2. TURNING TO THE MAIN ISSUE, THE ASSESSEE, CO NSEQUENT ON THE ACTION U/S 132 OF THE ACT, OFFERED RS.2.9 CRORES AS ITS IN COME FOR THE FY 2006-07, AS ADMITTED BY THE DIRECTOR OF THE ASSESSEE ON OATH , BEING INVESTMENT FOR THE PURCHASE OF SHARES IN EFL. THE CRUX OF TAXING THIS AMOUNT WAS BASED ON THE NOTING IN THE SEIZED MATERIALS. IT IS PERTI NENT TO MENTION HERE THAT THE REVENUE HAS NOT FURNISHED ANY PAPERBOOK TO EXPLAIN THEIR STAND. 6.2.1. THE AO HAD RESORTED TO ADD THESE AMOUNT S, PRESUMABLY U/S 69 OF THE ACT UNEXPLAINED INVESTMENTS. HOWEVER, THE AO HAD, UNCONSCIOUSLY, MENTIONED THAT 4.3..THE YEAR OF TAXABILITY OF RS.2.9 CRORES SHOULD BE TAKEN IN AY 2004-05 ON ACCR UAL BASIS... THE AO HAD MADE AN ATTEMPT TO ADD THESE AMOUNTS UNDER THE DEEMING PROVISIONS OF S.69 OF THE ACT ON THE BASIS THAT THE INVESTMENT WAS NOT ACCOUNTED FOR. ON A GLIMPSE OF THE DEEMING PROVISION, IN OUR CONSI DERED VIEW, ONLY THE ACTUAL ARE TAXABLE AND THAT THERE CANNOT BE ANY TAXING ON ACCRUAL BASIS IN THE CASE OF DEEMING PROVISIONS SUCH AS S.68 OR 69 O F THE ACT. THIS TECHNICAL BLEMISH ON THE PART OF THE REVENUE CANNOT BE GIVEN A GO BY . 6.3. WE HAD HAD A GLANCE OF THE 12 TH ANNUAL REPORT FOR 2004-05 OF EFL WHEREIN THE BOARD OF DIRECTORS WERE (I) MAHESH DUDHORIA, (II) SANTANU CHATTOPADHYAYA AND (III) SHOUVIK KUNDU [SOURCE: P 2 1 OF PB - AR]. LIKEWISE, FOR THE 13 TH ANNUAL REPORTS FOR 2005-06 OF EFL, THE BOARD OF DIRECTORS WERE THE SAME AS IN FOR THE FY 2004-05 [P 43 OF PB]. HOWEVER, 14 TH ANNUAL REPORT AUDITED FINANCIAL STATEMENTS FOR T HE YEAR-ENDED 31.3.2007 [P 66 OF PB] OF EFL, THE BOARD OF DIREC TORS, AS MENTIONED ON PAGE 71 WERE (I) RAJKUMAR LADHA, (II) GIRIRAJ LADHA & (III) OMPRAKASH ITA NO.71/BANG/10 PAGE 8 OF 11 LADHA. THIS UNAMBIGUOUSLY DEMONSTRATES THAT THE DI RECTORS OF THE ASSESSEE HAVE BECOME THE DIRECTORS OF EFL ONLY DURI NG THE PREVIOUS YEAR RELEVANT TO THE AY 2007-08. ANOTHER PIECE OF EVIDE NCE WHICH CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE WAS THAT FORM NO.32 [PAGES 91 99 OF PB] PARTICULARS OF APPOINTMENT OF MD, DIRECTORS ETC., OF THE COMPANY WHICH WAS FURNISHED WITH THE MINISTRY OF COMPANY AFFAIRS FOR THE APPOINTMENT OF DIRECTORS OF EFL. 6.3.1. WE HAVE ALSO DULY PERUSED THE BALANCE-SHEET S FOR THE YEARS- ENDED 31.3.2006, 31.3.2007 - THE DETAILS OF INVESTM ENTS MADE IN SHARES ETC. OF THE DIRECTORS OF THE ASSESSEE FOR THE SAI D PERIOD. ON A CLOSE SCRUTINY OF THE DEMAT STATEMENT OF ONE OF THE DIREC TORS, OMPRAKASH LADHA, WE FIND THAT THE TRANSFER OF SHARES OF EFL TOOK PLA CE FOR THE YEAR-ENDED 31.3.2007. THIS CRUCIAL FACT FURNISHED BY HDFC BA NK DEPOSITORY SERVICES [PAGES 116 188 OF PB] CANNOT BE BRUSHED ASIDE. THE RETURNS OF INCOME IN THE CASE OF EFL FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 WERE FURNISHED BEFORE THE AUTHORITIES CONCERNED BY THE (ERSTWHILE) ONE OF THE DIRECTORS OF EFL, NAMELY, SHOUVIK KUNDU WHEREAS FOR THE AY 2007-08, THE RETURN OF INCOME WAS FURNISHED BY ONE OF THE DI RECTORS OF THE ASSESSEE, NAMELY, RAJKUMAR LADHA [P 65 OF PB] WHICH GOES TO P ROVE THAT THE DIRECTORS OF THE ASSESSEE, NAMELY, RAJKUMAR LADHA, GIRIRAJ LADHA AND OMPRAKASH LADHA HAVE BECOME THE DIRECTORS OF EFL DU RING THE PREVIOUS YEAR RELEVANT TO THE AY 2007-08 (I.E., ON 23.1.2007 ). 6.4. WHILE ANALYZING THE REASONS SET-OUT BY THE AO , THE FOLLOWING VITAL POINTS EMERGE: ITA NO.71/BANG/10 PAGE 9 OF 11 (I) NO DISCREET DOCUMENTARY EVIDENCE WAS BROUGHT ON RECORD TO SUGGEST THAT THE PURCHASE TRANSACTIONS TOOK PLACE D URING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE; (II) THE NEGOTIATIONS FOR PURCHASES OF SHARES COULD HAVE TAKEN PLACE DURING THE FY 2003-04 WHICH, AS CONTENDED BY THE AS SESSEE, DOES NOT MEAN THAT THE PAYMENTS WERE MADE IN THAT Y EAR, WHEREIN THE SEIZED MATERIALS SHOW THAT THE CALCULAT IONS WERE DONE UP-TO SEPTEMBER, 2006. ON THIS ISSUE, THE AO WAS RATHER CONSPICUOUSLY SILENT; (III) THE CASH PAYMENT OF RS.36.35 LAKHS SHOWS THAT THE ASSESSEE WAS HAVING TRANSACTIONS WITH EFL EVEN PRIOR TO THE FY 06-07; (IV) THE AOS STAND THAT THE ASSESSEE HAD NOT SUBST ANTIATED WITH DOCUMENTARY PROOF THAT THE CASH WAS PAID DURING THE FINANCIAL YEAR TO TAX THE ENTIRE SUM OF RS.2.90 CRORES DURING THE AY 2007- 08, WHEREAS THE AO HIMSELF HAD MISERABLY FAILED TO BRING ON RECORD ANY CIRCUMSTANTIAL DOCUMENTARY EVIDENCE TO C ONTRADICT THE ASSESSEES ASSERTION. PRECISELY, THE AO HAD, IN F ACT, OPINED THAT IN THE ABSENCE OF EVIDENCE THE PAYMENT SHOULD BE TAKEN TO HAVE BEEN MADE IN AY 2004-05 WHEN PURCHASE TRANSACT ION WAS ORIGINALLY DECIDED BETWEEN THE TWO PARTIES. A MERE OPINION OR PRESUMPTION, IN OUR CONSIDERED VIEW, CANNOT BE A SO LE AND STRONG GROUND TO ARRIVE AT A CONCLUSION THAT (AT THE COST OF REPETITION) IN THE ABSENCE OF WHICH, THE PAYMENT SHOULD BE TAKEN T O HAVE BEEN MADE IN AY 04-05, WHEN PURCHASE TRANSACTION WAS ORI GINALLY DECIDED BETWEEN THE TWO PARTIES. - THE AOS ASSUMPTION WAS MERELY BASED ON SURMISE AN D JUGGLE WHICH CANNOT STAND THE TESTIMONY OF LAW; (V) THE AOS ASSERTION THAT THE AGREEMENT DATED 31. 1.2006 BETWEEN THE ERSTWHILE SHARE-HOLDERS OF EFL AND THE DIRECTOR S OF THE ASSESSEE MERELY FORMALIZES THE AGREEMENT ORIGINALLY ARRIVED AT BETWEEN THE TWO PARTIES IN AY 2004-05, TO PUT IT GE NTLY, VISUALIZE THE AOS MERE PRESUMPTION AND NOTHING-ELSE. ITA NO.71/BANG/10 PAGE 10 OF 11 - UNLESS THE AO COUNTERS THE CLAIM OF THE ASSESSEE WITH A STRONG AND UN-REBUTTABLE EVIDENCE, THE STAND OF TH E AO CANNOT BE TAKEN ON ITS FACE VALUE; (VI) THE SHARE PURCHASE AGREEMENT WAS EXECUTED ON 3 1.1.2006 ON A NON-JUDICIAL STAMP PAPER WHICH WAS PROCURED ON 27.1 2.2005, I.E., MUCH BEFORE THE ACTION U/S 132 OF THE ACT (8.3.200 7), AND, THUS, THE BONA-FIDE OF THE SAID DOCUMENT CANNOT BE PUT UN DER SCANNER; - THE AOS STAND THAT THE AGREEMENT DT.3.1.2006 BE TWEEN THE ERSTWHILE SHAREHOLDERS AND THE DIRECTORS OF MCIPL M ERELY FORMALIZES THE AGREEMENT ORIGINALLY ARRIVED AT BETW EEN THE TWO PARTIES IN AY 2004-05 DOESNT CARRY ANY CONVICTION WITHOUT ANY IOTA OF PROOF. HOW DOES THE AO VISUALIZE THAT THE AGREEMENT DT.3.1.06 MERELY FORMALIZES THE AGREEMENT ORIGINALL Y ARRIVED AT WITHOUT ANY PROOF WHATSOEVER? 7. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE ISSUE WHICH HAVE BEEN COMPREHENSIVELY DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS AND ALSO TAKING COGNIZANCE OF THE FINDIN G OF THE LD. CIT(A), WE ARE OF THE UNANIMOUS VIEW THAT THE AO HAS NOT BROUG HT ON RECORD ANY CONCRETE DOCUMENTARY EVIDENCE TO ASSERT THAT THE PU RCHASE OF SHARES OF EFL TO THE EXTENT OF RS.2.9 CRORES WAS TO BE TAXED IN THE ASSESSMENT YEAR 2004-05 WHEREIN THE ASSESSEE HAS BEEN CLAIMING THAT THE INVESTMENT IN QUESTION TOOK PLACE DURING THE PREVIOUS YEAR RELEVA NT TO THE ASSESSMENT YEAR 2007-08, AND, ACCORDINGLY, IT HAS TO BE TAXED IN THE AY 2007-08. 7.1. IN A NUT-SHELL, THE AO IS DIRECTED TO ASSESS THE SUM OF RS.2.90,80,218/- AS OFFERED BY THE ASSESSEE AS ITS INCOME FOR THE ASSESSMENT YEAR 2007-08. IT IS ORDERED ACCORDINGLY . 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO.71/BANG/10 PAGE 11 OF 11 PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF APRIL, 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 30 TH APRIL, 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.