JALPA M RUGHANI, MUMBAI V. ITO 25(3)(2), MUMBAI

ITA 7186/MUM/2013

• Counselvise Citation: 718619914 RSA 2013
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C P PATNAYAK
• Assessee Lawyers: BIKASH KUMAR BOGI
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Corroborative evidences; Accommodation entries; Reassessment proceedings
• Section: 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 7186/MUM/2013 (ASSESSMENT YEAR: 2004-05) MS. JALPA M. RUGHANI INCOME TAX OFFICER - 25(3)(2) 802/803, DAYAL SMRUTI, MUMBAI SHANTILAL MODI ROAD VS. KANDIVALI (W), MUMBAI 400067 PAN - ABJPR4293E APPELLANT RESPONDENT APPELLANT BY: SHRI BIKASH KUMAR BOGI RESPONDENT BY: SHRI K.C.P. PATNAYAK DATE OF HEARING: 04.03.2014 DATE OF PRONOUNCEMENT: 04.03.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-35, MUMBAI AND IT PERTAINS TO A.Y. 2004-05. 2. IN THIS APPEAL THE ASSESSEE MAINLY CHALLENGES THE V ALIDITY OF NOTICE ISSUED UNDER SECTION 148 OF THE ACT APART FROM CHAL LENGING THE ADDITION MADE BY THE AO AS UNEXPLAINED CASH CREDITS. 3. FACTS RELEVANT FOR DISPOSAL OF THE APPEAL ARE STATE D IN BRIEF. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED INCO ME FROM SALE OF SHARES. THE INCOME DECLARED WAS ROUNDED OF TO ` 73,570/-, WHICH WAS ACCEPTED UNDER SECTION 143(1) OF THE ACT. HOWEVER, AFTER A L APSE OF MORE THAN FOUR YEARS FROM THE LAST DATE OF THE ASSESSMENT YEAR THE AO SOUGHT TO REOPEN THE ASSESSMENT AND A NOTICE DATED 30.03.2011 WAS ISSUED ON THE GROUND THAT INCOME CHARGEABLE TO TAX IN THIS YEAR HAS ESCAPED A SSESSMENT. WHEN THE ASSESSEE SOUGHT TO KNOW THE REASONS, THE AO OBSERVE D THAT IN THE CASE OF THE ASSESSEE THERE IS SPECIFIC INFORMATION RECEIVED FROM THE CCIT (CENTRAL)-1 WHEREIN IT WAS MENTIONED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT(A)-37, MUMBAI IN THE CASE OF SHRI NAREND RA R. SHAH, A HAVALA ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 2 OPERATOR, WHEREIN HE HAS STATED THAT HE WAS INVOLVE D IN GIVING HAVALA ENTRIES SO THAT THE BENEFICIARIES CAN DECLARE CAPITAL GAINS THEREON. SHRI NARENDRA R. SHAH APPEARS TO HAVE FURNISHED PARTICULARS OF THE P ERSONS WHO HAVE LAUNDERED THEIR BLACK MONEY AND BECAME BENEFICIARY OF IMPUGNED PENNY STOCK SCAM. AS PER THE SAID INFORMATION THE ASSESSE E PURCHASED 16000 SHARES OF M/S. TRIBHUVAN HOUSING LTD., WHICH WAS AL LOTTED ON PAYMENT OF CASH AND HENCE IT IS A FIT CASE FOR REOPENING OF AS SESSMENT. 4. IN RESPONSE THERETO THE ASSESSEE CLARIFIED THAT THE IMPUGNED SHARES WERE PURCHASED THROUGH THE STOCK BROKER M/S. G.R. P ANDYA SHARE BROKING LTD. AND SHE WAS NOT AWARE OF SHRI NARENDRA R. SHAH . IT WAS ALSO SUBMITTED THAT SHE HAS PURCHASED THE SHARES AFTER PAYING THE APPLICABLE SERVICE TAX AND THROUGH A PROPER CONTRACT NOTE. EVEN IF THE TER MINAL OF M/S. G.R. PANDYA SHARE BROKING LTD. WAS DEACTIVATED, IT WAS C LARIFIED THAT THE SHARES WERE PURCHASED THROUGH HIM AND HE IN TURN MIGHT HAV E PURCHASED THE SAME UNDER OFF MARKET TRANSACTIONS. THE PURCHASES WERE D ULY ACCOUNTED FOR IN HER BOOKS OF ACCOUNT AND REMAINED IN THE DEMAT ACCO UNT FOR A LONG TIME. THE PURCHASE PRICE PAID IS NOT IN DISPUTE AND THE R ETURN WAS ACCORDINGLY PROCESSED. IN ADDITION THERETO THERE IS NO CASE FOR REOPENING OF ASSESSMENT BEYOND A PERIOD OF FOUR YEARS. 5. THE AO HAS DISCUSSED ABOUT THE GENERAL MODUS OPERAN DI ADOPTED BY THE ASSESSEES WHO INDULGES IN CONVERTING THEIR UNAC COUNTED CASH THROUGH THE ROUTE OF CAPITAL GAINS. HE ALSO OBSERVED THAT T HE SHARE PRICES ARE ARTIFICIALLY RIGGED THROUGH OFF MARKET TRANSACTIONS . THE SHARES ARE PURCHASED AT LOWER LEVELS AND SOLD AT HIGHER RATES THROUGH TH E SERIES OF OFF MARKET TRANSACTIONS CREATED BY THE BROKER WITH VESTED INTE REST. ASSESSEES OWN CASH IS INTRODUCED AND COMES BACK IN THE FORM OF CAPITAL GAIN THEREBY CLAIMING CONCESSIONAL TAX RATE AND IN ALL SUCH TYPE OF CASES THE ASSESSEE HIMSELF HAS TRANSACTED THROUGH THE BROKER WITH WHOM HE NEVER HA D A DIRECT DEALING. AFTER MAKING THE ABOVE OBSERVATIONS THE AO NOTED, I N PARA 6.2 OF HIS ORDER, THAT THE RECORDS CLEARLY REVEAL THAT THE ABOVE FEAT URES ARE PRESENT IN THE SHARE TRANSACTIONS CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE. IN HIS OPINION THE ACTUAL PURCHASE VALUE SHOULD BE ` 7.70 PER SHARE. REGARDING THE ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 3 CONTRACT BILL OF M/S. G.R. PANDYA SHARE BROKING LTD . DATED 13.10.2003, 05.11.2003 AND 06.11.2003, THE NATIONAL STOCK EXCHA NGE AND THE BOMBAY STOCK EXCHANGE IN ITS REPORT MENTIONED THAT THERE I S NO SUCH MATCHING RECORD UPLOADED BY THE TRADING MEMBERS TO THE EXCHA NGE AS ON THOSE DATES FOR THE CLIENT JALPA MANISH RUGHANI AND IN FACT THE TERMINAL OF TRADING MEMBER M/S. G.R. PANDYA SHARE BROKING LTD. WAS DEAC TIVATED BY THE EXCHANGE W.E.F. 8 TH NOVEMBER, 2002 AND FINALLY SUSPENDED BY THE EXCHAN GE W.E.F. 7 TH APRIL, 2004. UNDER THESE CIRCUMSTANCES THE AO ASSU MED THAT THE SAID BILLS ARE NOTHING BUT BOGUS ACCOMMODATION BILL S AND THE ASSESSEE OUGHT TO HAVE PURCHASED THE SHARES @ ` 7.70 PER SHARE IN WHICH EVENT THE TOTAL PURCHASE PRICE WOULD WORKOUT TO ` 1,23,200/- WHEREAS THE ASSESSEE HAD SHOWN TO HAVE PURCHASED FOR A SUM OF ` 42,564/-. THEREFORE, THE ENTIRE PURCHASE CONSIDERATION OF ` 1,23,200/- WAS TREATED AS UNEXPLAINED CASH CREDIT OF THE ASSESSEE AND ADDED TO THE INCOME OF T HE ASSESSEE. IT DESERVES TO BE NOTICED THAT THE PURCHASE OF SHARES BY THE ASSES SEE IS NOT DISPUTED AND IT IS ALSO NOT IN DISPUTE THAT SHE HAS INCURRED AN EXP ENDITURE OF ` 42,564/-. THEREFORE, THE DIFFERENCE OF ABOUT ` 80,000/- OUGHT TO HAVE BEEN TREATED AS UNEXPLAINED INVESTMENT BUT THE AO, WITHOUT QUOTING ANY SECTION, HAS TREATED IT AS UNEXPLAINED CASH CREDIT. 6. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THA T THE CORRECT ADDITION SHOULD HAVE BEEN ONLY ` 80,636/- BECAUSE THE INVESTMENT TO THE TUNE OF ` 42,564/- WAS ALREADY DISCLOSED IN THE BOOKS IN WHIC H EVENT THE UNEXPLAINED INVESTMENT, IF ANY, ONLY SHOULD BE ADDED. THE LEARN ED COUNSEL FOR THE ASSESSEE FILED A PAPER BOOK ALONGWITH WRITTEN SUBMISSION BEF ORE THE CIT(A) WHEREIN IT WAS CONTENDED THAT REOPENING OF ASSESSMENT IS BAD I N LAW SINCE SECTION 149 OF THE ACT EMPOWERS THE AO TO REOPEN THE ASSESSMENT BE YOND A PERIOD OF FOUR YEARS ONLY IN THE EVENT OF SHOWING THAT THE INCOME ESCAPED ASSESSMENT IS IN EXCESS OF ` 1,00,000/- WHEREAS IN THE INSTANT CASE THE ESCAPEME NT OF INCOME, IF ANY, CANNOT EXCEED ` 80,636/- AND THUS THE REASSESSMENT IS BARRED BY LIMITATION. EVEN ON MERITS IT WAS CONTENDED THAT SO FAR AS THE ASSESSEE IS CONCERNED THE SHARES WERE PURCHASED THROUGH M/S. G. R. PANDYA SHARE BROKING LTD. AND IT IS POSSIBLE THAT THE SAID SHARE S WERE SOLD TO HER BY THE BROKER FROM OFF MARKET. IT WAS ALSO SUBMITTED THAT THE SHARES ARE SHOWN IN THE ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 4 BALANCE SHEET OF THE ASSESSEE, WHICH WERE DULY TRAN SFERRED IN THE NAME OF THE ASSESSEE AND WAS SHOWN IN THE DEMAT STATEMENT. ASSE SSEE WAS NOT AWARE OF CANCELLATION OF THE MEMBERSHIP OF THE SHARE BROKER AND AT THIS STAGE IT IS DIFFICULT FOR HER OR THE SELLER TO KEEP TRACK OF TH E CREDENTIALS OF THE BROKER. SO LONG AS THE PURCHASE IS DULY SUPPORTED BY CONTRACT NOTE THE REVENUE SHOULD HAVE IN FACT WRITTEN TO THE STOCK EXCHANGE TO TAKE ACTION AGAINST SUCH BROKERS WHO ISSUED CONTRACT NOTES EVEN AFTER TERMINATION OF THEIR MEMBERSHIP BUT THE BUYERS CANNOT BE ASKED ABOUT THE MEMBERSHIP OF THE BROKERS, THAT TOO IN THE YEAR 2011-12. IT WAS ALSO CONTENDED THAT THE CLAIM OF THE REVENUE THAT THE SHARE PRICE AT THAT POINT OF TIME WAS ` 7.70 WAS NOT BASED ON ANY TANGIBLE EVIDENCE AND IT WAS NOT PUT TO THE ASSESSEE AND IN FACT IT WAS CLAIMED THAT ASSESSEE PURCHASED THE SHARES @ ` 2.45 TO ` 2.75 PER SHARE AND THIS INVESTMENT HAVING BEEN DECLARED IN THE BOOKS OF ACCOUNT THERE CANNOT BE ANY ADDITION TOWARDS UNEXPLAINED INVESTMENT. IT WAS ALSO SUBMITT ED THAT SECTION 68 OF THE ACT, DEALING WITH CASH CREDIT, HAS NO APPLICATION I N THE PRESENT CASE SINCE IT IS A CASE OF INVESTMENT BUT THE AO HAS NOT APPLIED THE PROVISIONS OF SECTION 69B AND IT WAS NOT TREATED AS INVESTMENT NOT FULLY DISC LOSED AND EVEN ON THAT COUNT THE ADDITION HAS NO LEGS TO STAND. 7. THE LEARNED CIT(A) REFERRED TO PROVISIONS OF SECTIO N 149 OF THE ACT WHEREIN IT IS STATED THAT IF THE INCOME WHICH IS LI KELY TO ESCAPE ASSESSMENT IS LESS THAN ` 1,00,000/- THEN SECTION 149(A) WILL APPLY BUT IF IT IS LIKELY TO BE MORE THAN ` 1,00,000/- ASSESSMENT CAN BE REOPENED WITHIN A PERI OD OF SIX YEARS AS PER SECTION 149(B) OF THE ACT. IN THE INST ANT CASE THE AO SOUGHT TO MAKE AN ADDITION OF ` 1,23,200/- AND THUS THE REOPENING OF ASSESSMENT IS IN ACCORDANCE WITH LAW. EVEN ON MERITS SHE PROCEEDED O N THE FOOTING THAT IN THE ABSENCE OF ANY MATCHING ENTRY IN NSE/BSE RECORD S THE AO IS JUSTIFIED IN MAKING THE ADDITION REFERABLE TO UNEXPLAINED INVEST MENT AND THE SAME SHOULD BE RESTRICTED TO ` 80,636/-, I.E. THE DIFFERENCE BETWEEN ` 1,23,200 AND ` 42,564/- WHICH WAS ALREADY RECORDED IN THE BOOKS. I N OTHER WORDS, THE ADDITION WAS RESTRICTED TO ` 80,636/-. 8. FURTHER AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADM ITTEDLY THE ASSESSMENT ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 5 WAS SOUGHT TO BE REOPENED BEYOND A PERIOD OF FOUR Y EARS FROM THE END OF THE ASSESSMENT YEAR AND IN ORDER TO REOPEN THE ASSESSME NT BEYOND A PERIOD OF FOUR YEARS THE AO SHOULD BE SATISFIED THAT THE INCO ME CHARGEABLE TO TAX BUT HAS ESCAPED ASSESSMENT AMOUNTS TO OR LIKELY TO AMOU NT TO ` 1,00,000/- OR MORE. IN THE INSTANT CASE THE AO HAS IN FACT SOUGHT TO REOPEN THE ASSESSMENT WITHOUT APPLICATION OF MIND IF ONE WERE TO ASSUME THAT HE SOUGHT TO MAKE ADDITION OF ` 1,23,200/- BECAUSE THE MATERIAL ON RECORD CLEARLY SUGGESTS THAT UNDER NO CIRCUMSTANCES ANY PE RSON WHO HAS REASONABLE INSIGHT IN LAW COULD FATHOM THAT IT IS A FIT CASE FOR MAKING ADDITION OF ` 1,23,200/- AND AS RIGHTLY OBSERVED BY THE LEARNED C IT(A) THE ADDITION, IF ANY, COULD NEVER BE BEYOND ` 80,636/-. HE, THEREFORE, CONTENDED THAT EITHER THE AO HAS SOUGHT TO REOPEN THE ASSESSM ENT WITHOUT APPLICATION OF MIND OR IF HE HAS APPLIED HIS MIND IT COULD NOT HAVE BEEN BEYOND ` 1,00,000/- IN WHICH EVENT REASSESSMENT PROCEEDINGS OUGHT TO HAVE BEEN INITIATED WITH FOUR YEARS FROM THE END OF THE ASSES SMENT YEAR WHEREAS IN THE INSTANT CASE THE ASSESSMENT WAS SOUGHT TO BE REOPEN ED AFTER A LAPSE OF MORE THAN FOUR YEARS, WHICH IS NOT PERMISSIBLE IN LAW. H E ALSO SUBMITTED THAT THE LEARNED CIT(A) REFERRED TO THE DELHI BENCH OF ITAT IN THE CASE OF MUKUND FINVST AND PROPERTIES PVT. LTD., WHICH IS DISTINGUI SHABLE ON FACTS IN AS MUCH AS IN THE SAID CASE ACCOMMODATION ENTRIES BY THE AS SESSEE AGGREGATES TO ` 14.45 LAKHS AND THERE IS SUFFICIENT REASON FOR THE AO TO COME TO THE CONCLUSION THAT IT IS A FIT CASE FOR REOPENING OF A SSESSMENT WITHIN THE STIPULATED TIME FRAME WHEREAS IN THE CASE ON HAND N O PERSON, WHO IS REASONABLY INSTRUCTED IN LAW, COULD NOT HAVE MADE A N ADDITION OF ` 1,23,200/- EXCEPT WITHOUT ARTIFICIALLY ENHANCING TH E TIME LIMIT FIXED IN THE STATUTE. IN THE INSTANT CASE THE AO HAS NOT INDEPEN DENTLY APPLIED HIS MIND AT ANY STAGE OF THE PROCEEDINGS, WHICH IS EVIDENT F ROM THE FACT THAT AT THE TIME OF ISSUING OF NOTICE HE ASSUMED THAT THE ASSES SEE HAS ADOPTED THIS MODUS OPERANDI TO CONVERT THE UNACCOUNTED CASH THRO UGH THE ROUTE OF CAPITAL GAINS WHEREAS THE ASSESSEE DID NOT SELL THE SHARES AT ALL TILL DATE. SIMILARLY THE ASSESSEE DECLARED THE PURCHASE PRICE OF ` 42,564/- IN THE BOOKS AND THUS THE ADDITION, IF ANY, CAN ONLY BE ` 80,636/- AND, MOREOVER, SUCH AN ADDITION CAN BE UNDER THE HEAD UNEXPLAINED INVESTM ENT, IF PERMISSIBLE ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 6 UNDER THE LAW, BUT THE AO ASSUMED THAT IT IS AN UNE XPLAINED CASH CREDIT FOR WHICH SECTION 68 IS APPLICABLE WHEREAS IN THE INSTA NT CASE THE ASSESSEE DECLARED THE INVESTMENT IN THE BOOKS OF ACCOUNT AND HENCE IT IS THE DUTY OF THE AO TO PROVE THAT SECTION 69B IS APPLICABLE WHER EAS THE AO HAS NOT APPLIED THE SAID PROVISION. UNDER THESE CIRCUMSTANC ES THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) DESERVES TO BE D ELETED AND IN FACT THE NOTICE ISSUED UNDER SECTION 148 R.W.S. 149 OF THE A CT HAS TO BE TREATED AS INVALID IN LAW SINCE THE SO CALLED UNEXPLAINED INVE STMENT IS LESS THAN ` 1,00,000/- WHEREAS THE ASSESSMENT WAS SOUGHT TO BE REOPENED BEYOND A PERIOD OF FOUR YEARS. 9. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDERS PASSED BY THE AO AS WELL AS THE CIT(A). IT WAS ADMITTED THAT PROVISIONS OF SECTION 68 CANNOT BE APPLIED TO THE INSTANT CASE BUT IT WAS ST RONGLY SUBMITTED THAT THOUGH IT WAS A WRONG OPINION BUT THE AO, NEVERTHEL ESS, MADE AN ADDITION OF ` 1,23,200/- AND THUS NOTICE CAN BE ISSUED BEYOND A P ERIOD OF FOUR YEARS UNDER SECTION 149(B) OF THE ACT. 10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND PERUSED THE RECORD. AT THE OUTSET IT MAY BE NOTICED THAT THE AO , IN THE INSTANT CASE, APPEARS TO HAVE NOT APPLIED HIS MIND AT ALL, WHICH IS EVIDENT FROM THE SEVERAL OBSERVATIONS MADE BY HIM IN HIS ORDER AND I N THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. HE ASSUMED THAT THE A SSESSEE INTENDED TO CONVERT THE UNEXPLAINED CASH THROUGH THE ROUTE OF C APITAL GAINS WHEREAS IN THE INSTANT CASE, EVEN AFTER SEVERAL YEARS THE ASSE SSEE DID NOT SELL THE SHARES, AS STATED BY THE ASSESSEE. IT HAS BEEN EMPH ATICALLY STATED THAT THE SHARES WERE DEMATED AND AVAILABLE IN THE NAME OF TH E ASSESSEE BUT NO MENTION WAS MADE AT ANY STAGE OF THE PROCEEDINGS ON THIS ASPECT THOUGH THE SHARES WERE PURCHASED AT A PARTICULAR PRICE AND SER VICE TAX, COMMISSION, ETC. HAVE BEEN PAID BASED ON THE RATE FOR WHICH IT WAS PURCHASED. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSE E HAD DECLARED THE INVESTMENTS IN THE BOOKS OF ACCOUNT AND EVEN IF THE AO IS OF THE OPINION THAT THE ASSESSEE HAS INVESTED MORE THAN WHAT IS RECORDE D IN THE BOOKS THE DIFFERENTIAL AMOUNT CAN AT BEST BE TREATED AS UNEXP LAINED INVESTMENT UNDER ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 7 SECTION 69B OF THE ACT, WHICH CANNOT EXCEED ` 80,636/-; THUS THE AO COULD NOT HAVE ASSUMED JURISDICTION TO REOPEN THE ASSESSM ENT PROCEEDINGS, THAT TOO BEYOND A PERIOD OF FOUR YEARS, UNLESS IT IS WIT H THE SOLE INTENTION OF BRINGING THE CASE UNDER THE PURVIEW OF SECTION 149( B) OF THE ACT. IN MY CONSIDERED OPINION IT IS NOT PERMISSIBLE IN LAW. IT IS WELL SETTLED THAT WHAT CANNOT BE DONE DIRECTLY CANNOT BE DONE INDIRECTLY. IN FACT THE REVENUE WAS JUSTIFIED IN NOT FILING ANY CROSS OBJECTION OR CROS S APPEAL AGAINST THE ORDER PASSED BY THE CIT(A) IN CONFIRMING THE ADDITION ONL Y TO THE TUNE OF ` 80,636/- WHICH MAKES THE FACTUAL POSITION AMPLY CLEAR THAT T HE ADDITION, IF ANY, CAN AT BEST BE MADE ONLY TO THE TUNE OF ` 80,636/- IN WHICH CASE PROVISIONS OF SECTION 149(1)(A) GETS ATTRACTED. IN THE INSTANT CA SE THE AO HAVING INITIATED THE REASSESSMENT PROCEEDINGS AFTER A LAPSE OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN MY CONSIDERED OPINION, THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW. THE RESULTANT ADDITION AND ASSESSMENT, MADE ON THE STRENGTH OF SUCH PROCEEDINGS, DESERVE TO BE QUASHED. I ORDER ACCORDINGLY. 11. SINCE THE REASSESSMENT PROCEEDINGS ARE ALREADY HELD TO BE BAD IN LAW, IT IS NOT NECESSARY TO GO INTO THE MERITS OF THE AD DITION. BUT, FOR THE SAKE OF COMPLETENESS AND TO SHOW THE CASUAL ATTITUDE OF THE AO IT DESERVES TO BE POINTED OUT THAT THE AO SOUGHT TO TREAT THE DIFFERE NTIAL AMOUNT AS UNEXPLAINED CASH CREDIT IMPLYING THEREBY THAT SECTI ON 68 WAS MADE APPLICABLE WHEREAS IN THE INSTANT CASE SECTION 68 C ANNOT COME INTO PLAY SINCE THE ASSESSEE HAS RECORDED THE PURCHASE OF SHA RES AS INVESTMENT AND DECLARED THE INVESTMENT OF ` 42,564/- IN HER BOOKS. NOTHING WAS BROUGHT TO THE NOTICE OF THE BENCH TO SHOW AS TO ON WHAT BASIS THE PRICE OF ` 7.70 WAS TAKEN AS BASIS FOR MAKING THE IMPUGNED ADDITION AND THAT TOO UNDER SECTION 68 OF THE ACT OVERLOOKING THE FACT THAT THE ASSESSE E DECLARED THE INVESTMENT AND SHARES WERE DEMATED IN HER ACCOUNT AT THE PRICE WHICH WAS DECLARED BY HER WITH SUPPORTING EVIDENCE IN THE FORM OF CONTRAC T NOTE AND THERE IS NO EVIDENCE TO SHOW THAT THE IMPUGNED SHARES OF 16000 WERE SOLD BY ANY OTHER PARTY @ ` 7.70. SUCH BEING THE CASE EVEN THE ADDITION MADE IN THE INSTANT CASE HAS NO LEGS TO STAND. HOWEVER, IT IS NOT NECES SARY TO GO INTO THE MERITS ITA NO. 7186/MUM/2013 MS. JALPA M. RUGHANI 8 OF THE ADDITION. SUFFICE TO SAY THAT THE REASSESSME NT PROCEEDINGS ARE BAD IN LAW AND THE ASSESSMENT ORDER IS HEREBY QUASHED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 4 TH MARCH, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 35, MUMBAI 4. THE CIT 25, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.