Sh. Gurinder Singh Matta, Ludhiana V. ACIT, Ludhiana

ITA 799/CHANDI/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8239 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 29-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 29-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Accommodation entries; Onus to prove; Sham transactions
• Section: 143(3); 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.799/CHD/2015 (ASSESSMENT YEAR : 2005-06) SH.GURINDER SINGH MATTA VS. THE A.C.I.T., PROP. M/S SUPER GOLDEN CIRCLE-5, AREA(INDIA), LUDHIANA. NIRANKARI STREET NO.5, MILLERGANJ, LUDHIANA. PAN: AAXPM2840F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 05.12.2016 DATE OF PRONOUNCEMENT : 03.03.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDHIANA DATED 5.8.2015 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) RELATING TO ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HA RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFICER IN LEVYING PENALTY OF RS.87,140/ - U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961. 2 2. THAT THE WORTHY CIT )A) HAS ERRED IN NOT CONSIDER ING THAT PENALTY OF RS.87,140/- U/S 271(1)(C) HAS BEEN LEVIED BY THE ASSESSING OFFICER AGAINST THE FACTS AN D CIRCUMSTANCES OF THE CASE. 3. THAT THE DETAILED SUBMISSIONS FILED DURING THE COURSE OF HEARING ALONGWITH CITATION OF VARIOUS CASE LAWS HAS NOT BEEN CONSIDERED BY HIM PROPERLY. 4. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDERING THE FACT THAT COMPLETE PARTICULARS OF INCOME HAD BEEN DISCLOSED AND NOTHING HAS BEEN CONCEALED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT ASSESSMENT IN THE PRESENT CASE WAS COMPLETED VIDE O RDER PASSED U/S 143(3) OF THE ACT, 1961 AT AN ASSESSED I NCOME OF RS.8,31,11713/- AGAINST RETURNED INCOME OF RS.5,446,413/- AFTER MAKING ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT U/S 68 OF THE ACT AMOUNTING TO RS.2,84,760/-. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD NOTED THAT THE ASSESSEE HAD S HOWN PROFIT OF RS.2,73,875/- AS LONG TERM CAPITAL GAIN O N WHICH TAX @ 10% HAD BEEN LEVIED. ON MAKING DETAILED ENQU IRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE CLAIM OF THE ASSESS EE WAS FALSE AND CONCOCTED AS NO SUCH TRANSACTIONS WERE MA DE BY THE ASSESSEE. THEREFORE, THE ENTIRE AMOUNT OF SALE VALUE OF SHARES WAS TREATED AS INCOME OF THE ASSESSEE FRO M UNDISCLOSED SOURCES U/S 68 OF THE ACT. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFFIC ER 3 NOTED THAT THE LD. CIT (APPEALS) HAD CONFIRMED THE ADDITION MADE IN TOTO AND FURTHER HE FOUND NO MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE DURING PENALTY PROCEEDINGS WHEREIN THE ASSESSEE HAD SUBMITTED THAT MERELY BECAUSE THE EXPLANATION OF THE ASSESSEE REGA RDING THE TRANSACTIONS RELATING TO SALE OF SHARES HAD NOT BEEN ACCEPTED BY THE ASSESSING OFFICER, NO PENALTY WAS L EVIABLE CONSIDERING THE FACT THAT SALE PROCEEDS HAD BEEN RE CEIVED BY CHEQUE. THE ASSESSING OFFICER HELD THAT DURING ASSESSMENT PROCEEDINGS DETAILED ENQUIRIES REGARDING GENUINENESS OF THE ASSESSEES CLAIM HAD BEEN DONE A ND IT WAS FOUND THAT THE COMPANY OF THE ASSESSEE WAS FALS E AND CONCOCTED AND NO SUCH TRANSACTIONS HAD BEEN MADE BY THE ASSESSEE. THE ASSESSING OFFICER ALSO HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS HAD PROVED THAT THE ASSESSEE HAD INTRODUCED ITS UNEXPLA INED MONEY IN THE GARB OF SALE OF SHARES ON THE BASIS OF DOCUMENTARY EVIDENCES PRODUCED AS A RESULT OF VARIO US OF ENQUIRIES CONDUCTED DURING ASSESSMENT PROCEEDINGS. FURTHER THE ASSESSING OFFICER HELD THAT THE LD. CIT (APPEALS) HAD ALSO SUSTAINED THE ADDITION BY HOLDIN G THAT IT WAS ESTABLISHED BEYOND DOUBT THAT WHOLE ARRANGEM ENT IN THIS CASE WAS AN ACCOMMODATION ENTRY. THE ASSES SING OFFICER, THEREFORE, HELD THAT THE ASSESSEE HAD HEAV ILY AND DELIBERATELY FURNISHED INACCURATE PARTICULARS OF IN COME AND, THEREFORE, IT WAS A FIT CASE FOR LEVY OF PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED ON THE ADDITION MADE OF 4 RS.2,,84,760/- AMOUNTING TO RS.87,140/- WAS LEVIED ON THE ASSESSEE. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) AND DETAILED SUBMISSIONS WERE MADE BY THE ASSESSEE WHICH ARE REPRODUCED IN THE IMPUGNED ORDER . THE ASSESSEE CONTENDED BEFORE THE LD. CIT (APPEALS) THAT NO PENALTY WAS LEVIABLE IN THE PRESENT CASE SINCE A LL MATERIAL FACTS RELATING TO THE COMPUTATION OF INCOM E HAD BEEN DULY DISCLOSED AND NOTHING HAS BEEN CONCEALED. THE ASSESSEE FURTHER CONTENDED THAT MERELY BECAUSE THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT PROVED TO THE SATISFACTION OF THE ASSESSING OFFICER AND WAS NOT C ORRECT, IT COULD NOT BY ITSELF BE SUFFICIENT TO LEVY PENALT Y UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE ALSO CO NTENDED THAT THE FINDINGS IN THE ASSESSMENT PROCEEDINGS COL D NOT BE RECORDED AS CONCLUSIVE FOR THE PURPOSE OF PENALT Y PROCEEDINGS AND BEFORE PENALTY CAN BE IMPOSED THE ENTIRETY OF CIRCUMSTANCES HAS TO BE TAKEN INTO ACCO UNT AND MUST POINT TO THE CONCLUSION THAT THE DISPUTED AMOUNT REPRESENTS INCOME. THE ASSESSEE CONTENDED T HAT IT HAD GIVEN A VALID EXPLANATION OF THE TRANSACTION S SUPPORTED WIT DOCUMENTARY EVIDENCES IN THE FORM OF ACCOUNT PAYEE CHEQUES, CONTRACT NOTES, BILLS OF BRO KERS AND THUS THE ASSESSEE HAD BEEN ABLE TO DISCHARGE IT S ONUS REGARDING THE EXPLANATION GIVEN BEING BONAFIIDE. T HE ASSESSEE ALSO CONTENDED THAT ADDITION HAD BEEN MADE RELYING UPON THE STATEMENT OF ONE SHRI NARAIN DUTT WHOSE 5 CROSS EXAMINATION WAS NOT ALLOWED. THE ASSESSEE CONTENDED THAT NO ADDITION COULD HAVE BEEN MADE ON THIS BASIS AND RELIED UPON THE DECISION OF THE HON'BLE A PEX COURT IN THE CASE OF KISHAN CHAND CHELA RAM, 125 I TR 713 AND OTHER JUDGMENTS. THE ASSESSEE CONTENDED TH AT WHEN THE ADDITION ITSELF COULD NOT HAVE BEEN MADE, THERE WAS NO CASE FOR LEVY OF PENALTY AT ALL. THE LD. CI T (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE, UPHELD THE PENALTY LE VIED HOLDING THAT THE ASSESSEE HAD FAILED TO FURNISH COR RECT INFORMATION IN HIS RETURN OF INCOME. THE LD. CIT (APPEALS) HELD THAT IT WAS A CLASSIC CASE OF FURNI SHING INACCURATE PARTICULARS OF INCOME WITH THE INTENTION TO MISLEAD THE REVENUE. THE ASSESSEE FAILED MISERABLY TO NEGATE THE FINDINGS OF THE ASSESSING OFFICER AFTER DETAILED ENQUIRIES AT THE TIME OF ASSESSMENT. INVOKING THE PROVISIONS OF EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT, THE LD. CIT (APPEALS) HELD THAT THE ASSESSEE HAD CO NCEALED PARTICULARS OF INCOME AND WAS, THEREFORE, LIABLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE RELEVANT F INDINGS OF THE LD. CIT (APPEALS) AT PARAS 3.1 AND 3.2 OF TH E ORDER ARE AS FOLLOW: 3.1 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I AM INCLINED TO AGREE WITH THE CONTENTION OF A.O. THE A.O. HAS RIGHTFULLY MADE THE ADDITION U/S 68 AS THE APPELLANT H AS FAILED TO FURNISH CORRECT INFORMATION IN HIS RETURN O F INCOME. IT IS INCORRECT ON PART OF APPELLANT, TO SAY THAT IT HAD FURNISHED PLAUSIBLE EXPLANATION FOR THE UNEXPLAINED CASH CREDITS. I COMPLETELY AGREE WITH THE OBSERVATION OF A.O. THAT IT IS A CLASSIC CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME , WITH THE INTENTION TO MISLEAD REVENUE. EVEN THE AT THE TIME OF 6 ASSESSMENT PROCEEDINGS THE APPELLANT HAS FAILED MISE RABLY TO NEGATE THE FINDINGS OF A.O. AFTER DETAILED ENQUIRIES AT THE TIME OF ASSESSMENT. THE APPELLANT DID NOT EVEN ATTENDED T HE PROCEEDING AT THE TIME OF APPELLATE PROCEEDINGS TO PU T FORWARD ITS ARGUMENTS AGAINST THE ADDITION . NOW THE FACTS R EMAIN UNCHALLENGED ,THAT THE APPELLANT HAS TAKEN THE ENTRIE S OF SHARE TRANSACTION AND THE SAME ARE SHAM TRANSACTION AND OWN MONEY HAS BEEN INTRODUCED TO GET SHARE PROFITS. I HAVE OBSERVED, THAT MY PREDECESSOR HAS ALSO RIGHTLY BROUG HT THE FACTS, WHILE DECIDING APPEAL OF APPELLANT U/S 143 (3) ,THAT THE APPELLANT HAS TAKEN ENTRIES FROM M/S SUNRISE STOCK S ERVICES ( P) LTD AND M/S SURYA SCRIPS PVT LTD IN WHICH ALREADY HONABLE JURISDICTIONAL IT AT HAS CONFIRMED THE FACT THAT M/S SUNRISE STOCK SERVICES ( P) LTD WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AGAINST CASH PAYMENTS. WORD 'CONCEALMENT' HAS BEEN DISCUSSED BY HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF V/S. JCIT REPORTED IN 291 ITR 519 (RELEVANT PAGE 546). WORD CONCEAL ACCORDING TO LAW LEXICON IS 'TO HIDE OR KEE P SECRETE, TO HIDE OR WITHDRAW FROM OBSERVATION, TO COVER OR K EEP FROM SIGHT, TO PREVENT THE DISCOVERY OF, TO WITHHOLD KNOWLE DGE OF. AS PER WEBSTER'S DICTIONARY WORD 'INACCURATE' HAS BEEN DEFINED AS 'NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDI NG TO TRUTH, ERRONEOUS, AS AN INACCURATE STATEMENT, COPY OF TRANS CRIPT'. THUS IN CONCEALMENT, THERE IS DIRECT ATTEMPT TO HID E AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF T HE INCOME TAX AUTHORITIES.' IN CONCEALMENT THERE IS SUPPRESSION OF TRUTH BY THE ASSESSEE. IN THE CASE OF K.C. BUILDERS V/S. ACIT REPORTED IN 265 ITR 562 S.C., IT WAS HELD THAT WORD CONCEALMENT INHERENTLY CARRIED WITH IT THE ELEMENT O F MENS REA. CONCEALMENT IS ATTRIBUTABLE TO AN INTENTION OR DESI RE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME TO AV OID IMPOSITION OF TAX THEREON. THUS IF THE INCOME IS NO T DISCLOSED, IT IS THE ACT OF CONCEALMENT BUT IF THE BOGUS TRANSACTI ONS ARE RECORDED IN THE BOOKS OF ACCOUNT AND WRONG DEDUCTIO NS ARE CLAIMED, IT IS THE ACT OF FURNISHING INACCURATE PAR TICULARS OF INCOME. IN SOME CASES THERE IS ELEMENT OF CONCEALMENT OF INCOME AS WELL AS FURNISHING INACCURATE PARTICULARS OF INCOME. WHERE THERE IS A FAILURE OF DUTY TO DISCLOSE FULLY AND TRULY PARTICULARS OF INCOME, THE PENAL PROVISION WOULD OPERATE AS HELD IN THE CASE OF A.M. SHAH & CO. V/S. CIT REPORTED IN 238 ITR 415 GUJARAT HIGH COURT. AS HELD IN THE CASE OF PEIZER LTD V/S DCIT BY ITAT, MUMBAI 'C' BENCH REPORTED IN 146 TTJ 385, 'IN CONCEALMENT SOME INCOME IS NOT OFFERED FOR TAXATION. THUS THERE IS DIRECT ATTEMPT TO HIDE INCOME OR A PART TH EREOF. IN FURNISHING INACCURATE PARTICULARS OF INCOME THOUGH CERTAIN 7 INCOME IS OFFERED FOR TAXATION BUT SOME OTHER MEANS HAVE BEEN EMPLOYED FOR WITHHOLDING THE DISCLOSER THEREOF. THIS IS INDIRECT WAY OF KEEPING BACK SOME PART OF INCOME. I N BOTH THE CASES THERE IS EVASION OF TAX. BAD FACTS BRINGS BAD JUDGMENT. IN THE CASE OF K.P. MADHUSUDAN V/S. CIT REPORTED IN 251 ITR 99 S.C., THE ASSESSEE A PARTNERSHIP FIRM HAD TAKEN CERTAIN BANK ;DRAFTS FOR PAYMENT TO SUPPLIERS: THE ENTRY FOR THESE DRAFTS WERE NOT MADE ON THE DATES ON WHICH THEY WERE OBTAINED BUT I T WAS ENTERED IN THE BOOKS FEW DAYS LATER. THE EXPLANATION OF THE ASSESSEE WAS THAT, SUFFICIENT CASH BALANCE WAS NOT A VAILABLE ON THOSE DATES AND IT HAD OBTAINED HAND LOANS FROM FR IENDS AND IT HAD EXPECTED TO REPAY SUCH LOANS WITHIN A SHOR T TIME HENCE NO ENTRIES WERE MADE IN RESPECT OF SUCH LOANS . THE ASSESSEE ALSO STATED THAT SINCE IT WAS UNABLE TO FUR NISH EVIDENCE FOR SUCH LOANS, IT OFFERED THE AMOUNT AS A DDITIONAL INCOME. THE EXPLANATION OF THE ASSESSEE WAS NOT FOUN D SATISFACTORY TO THE ASSESSING OFFICER. IT WAS HELD B Y THE HON'BLE SUPREME COURT THAT THE ASSESSEE WAS NOT ABL E TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM AND HEN CE THE PENALTY WAS RIGHTLY LEVIED. IT IS NOW WELL SETTLED THAT EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT AUTOMATICALLY COMES INTO OPERAT ION WHEN IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY ASSESSEE, THERE IS FAILURE TO OFFER AN EXPLA NATION OR AN EXPLANATION IS OFFERED WHICH IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR AN EXPLANATION IS OFFERED, WHICH IS NOT SUBSTANTIATED. IN SUCH A CASE, THE AMOUNT ADDED IN COMPUTING THE TOTAL INCOME IS DEEMED TO REPRESENT T HE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEA LED AND, CONSEQUENTLY, THE ASSESSEE BECOMES LIABLE TO THE PENA LTY PROVIDED BY SECTION 271(1)(C) OF THE ACT. IN NUTSHE LL, THE EXPLANATION SHIFTS THE BURDEN OF PROOF ON THE ASSES SEE. [K.P. MADHUSUDNAN VS. CIT 251 ITR 99( S.C). 3.2 IN VIEW OF ABOVE FACTS AND RESPECTFULLY FOLLOW ING THE RATIO OF K.P. MADHUSUDAN VS. CIT WHEREIN IT WAS HELD BY HONORABLE SUPREME COURT THAT, AFTER ADDITION OF THE EXPLANATION TO SECTION 271(1), THE JUDGMENT GIVEN IN THE CASE O F SIR SADILAL SUGAR AND GENERAL MILLS V/S. CIT REPORTED IN 168 ITR 70 5 WAS NOT A GOOD LAW, THE APPEAL ON THIS GROUND IS DISMISSE D. 5. AGGRIEVED BY THE SAME, THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. DURING THE COURSE OF HEARING BY, THE LD. COUNSEL FOR THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE LD. 8 COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL PARTICU LARS RELATING TO THE PURPORTED TRANSACTIONS OF SALE OF S HARES WERE DISCLOSED IN THE RETURN OF INCOME FILED AND TH E COMPUTATION OF INCOME FOR THE IMPUGNED ASSESSMENT Y EAR. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAPER BOOK PAGE NO.125 IN THIS REGARD. THE LD. COUNSEL FOR TH E ASSESSEE ALSO STATED THAT ALL DOCUMENTARY EVIDENCES RELATING TO THE SAID TRANSACTIONS WERE ALSO FILED B EFORE THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSE E REFERRED TO THE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S SURYA SCRIPTS PVT. LTD., THE BROKER TH ROUGH WHICH THE TRANSACTION TOOK PLACE, PLACED AT PAPER B OOK PAGE NO.6, COPY OF CONTRACT NOTE OF M/S SURYA SCRIP TS PVT. LTD., PLACED AT PAPER BOOK PAGE NO.7, COPY OF CONTR ACT NOTE OF M/S SUNRISE STOCK SERVICES (P) LTD., PLACED AT PAPER BOOK PAGE NO.8 THROUGH WHOM THE SHARES WERE S OLD. THE COPY OF ACCOUNT IN THE BOOKS OF M/S SUNRISE STO CK SERVICES (P) LTD., PLACED AT PAPER BOOK PAGE 9 AND COPY OF BANK ACCOUNT OF THE ASSESSEE WITH UTI BANK REFLECTI NG THE TRANSACTION OF PURCHASE AND SALE RELATING TO THE SA ID SHARES. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE TRANSACTIONS WERE CARRIED THROUGH BANKING CHANN EL AND THROUGH DMAT ACCOUNT AND ALL EVIDENCES PERTAINI NG TO THE SAID TRANSACTIONS HAD BEEN FILED BY THE ASSESSE E, THUS DISCHARGING ITS ONUS OF EXPLAINING THE SAID TRANSAC TION. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT MER ELY BECAUSE THE ASSESSING OFFICER DID NOT FIND IT TO IT S SATISFACTION, DID NOT CONCLUSIVELY PROVE THAT THE S AID 9 TRANSACTION WAS BOGUS AND MERELY AN ACCOMMODATION ENTRY AND THUS TANTAMOUNTING TO FURNISHING OF INACC URATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME. THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE PR ESENT CASE WAS MERELY A CASE OF CHANGE OF HEAD OF INCOME FROM LONG TERM CAPITAL GAIN AS DISCLOSED BY THE ASSESS EE TO INCOME FROM OTHER SOURCES ASSESSED BY THE ASSESSI NG OFFICER AND MERELY ON ACCOUNT OF CHANGE OF HEAD NO PENALTY WAS LEVIABLE PARTICULARLY WHEN ALL PARTICUL ARS RELATING TO THE TRANSACTION HAD BEEN DISCLOSED. TH E LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DEC ISION OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF SHRI RAJNISH THAKUR VS. ACIT IN ITA NO.697/CHD/2015 DATE D 17.6.2016, COPY OF THE SAME WAS PLACED BEFORE US. 6. THE LD. DR, ON THE OTHER HAND, VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT (APPEALS) AND ST ATED THAT THE FACT THAT THE TRANSACTION WAS BOGUS AND SA ID MONEY REPRESENTED THE UNACCOUNTED INCOME OF THE ASSESSEE HAD BEEN CATEGORICALLY ESTABLISHED BY THE ASSESSING OFFICER BY VIRTUE OF THE DETAILED ENQUIRI ES CONDUCTED DURING THE ASSESSMENT PROCEEDINGS WHICH H AD BEEN UPHELD BY THE LD. CIT (APPEALS) ALSO. THE LD. DR STATED THAT IT WAS NOT A MERE CASE OF CHANGE OF HEA D BUT WAS A CLASSIC CASE OF FURNISHING OF INACCURATE PART ICULARS OF INCOME WITH THE INTENTION TO MISLEAD THE REVENUE AND THE PENALTY, THEREFORE, HAD BEEN RIGHTLY LEVIED. 10 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE DOCUMENTS PRODUCED BEFORE US. WE FIND NO MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD CONDUCTED DETAILED ENQUIRIES REGARDING THE TRANSACTION OF SAL E OF SHARES TO M/S CITY GOLD CREDIT CAPITAL LTD. BY THE ASSESSEE ON ACCOUNT OF WHICH THE ASSESSEE HAD RETURNED LONG TERM CAPITAL GAIN AMOUNTING TO RS.2,73,875/-. THE ASSESSING OFFICER HAD CONDUCTED ENQUIRIES FROM THE SHARE BROKERS FROM WHOM THE SHARES HAD BEEN BOUGHT I.E. SHRI SHIV PURI OF M/S SURYA SCRIPTS PVT. LTD. AND THE BROKER THROUGH WHOM THE SHARES HAD BEEN SOLD I.E. M/S SUNRISE STOCK SERVICES (P) LTD. ENQUIRIES WERE CONDUCTED FROM STOCK EXCHANGES OF LUDHIANA, NEW DELHI, MUMBAI, KOLKATA, AHMEDABAD AND MADHYA PRADESH TO FIND OUT AND VERIFY WHETHER THE SHARES OF M/S COUNTRY CREDIT CAPITAL LTD. WERE TRANSACTED DURING THIS PERIOD IN THE STOCK EXCHANGES. ENQUIRY WAS ALSO CONDUCTED FROM M/S COUNTRY CREDIT CAPITAL LTD. THE ASSESSING OFFICER ALSO CONDUCTED ENQUIRIES FROM THE REGISTRAR OF COMPANIES, JALANDHAR AND THE BANKS THROUGH WHICH THE AMOUNT PAID AND RECEIVED ON ACCOUNT OF THE AFORESAID TRANSACTIONS WERE ROUTED. ENQUIRY WAS AL SO CONDUCTED FROM THE ASSESSEE. THE ASSESSING OFFICER ALSO TOOK NOTE OF THE INFORMATION DERIVED ON ACCOUN T 11 OF SURVEY CONDUCTED U/S 133A OF THE ACT IN THE CASE OF THE BROKERS FROM WHOM SHARES WERE PURCHASED AND SOLD I.E. M/S SURYA SCRIPTS PVT. LTD. AND M/S SUNRISE STOCK SERVICES (P) LTD., AS A RESULT OF THE EXHAUSTIVE DETAILED ENQUIRIES CONDUCTED, THE ASSESSING OFFICER ARRIVED AT THE FOLLOWING FACTS AS OUTLINED AT PAGE 18 OF THE ASSESSMENT ORDER: A) THE ASSESSEE HAS DONE ALL THE SHARE TRANSACTION S THROUGH M/S SURYA SCRIPS PVT.LTD. AND M/S SUNRISE STOCK SERVICE S PVT.LTD. B) THE ASSESSEE HAS FAILED TO PRODUCE THE SHARE BRO KER. C) THE ASSESSEE HAS STALED TO PRODUCE ANY SUPPORTIN G EVIDENCE OF PURCHASE AND SALE OF SHARES. THE ASSESSEE HAS ONLY PRODUCE THE COPIES OF CLIENT BILLS ISSUED BY THE STOCK BROKER T HE GENUINENESS OF WHICH CANNOT BE VERIFIED. D) ENQUIRIES FROM VARIOUS STOCK EXCHANGES HAVE REVE ALED THAT THE SHARES WERE NEVER LISTED OR TRADED. E) THE COMPANIES WHOSE SHARES WERE TRADED ARE UNABL E TO PRODUCE SBOOKS OF ACCOUNTS F) INFORMATION FROM THE REGISTRAR OF COMPANIES JALA NDHAR THAT THE COMPANY IS RUNNING IN LOSSES AND NAV PER SHARE OF THIS COMPANY WAS APPROXIMATELY RS.7.0/- DURING THIS PERI OD. THERE IS NOTHING TO EXPLAIN THE SUDDEN APPRECIATION IN THE V ALUE OF SHARES OF M/S CITYGOLD CREDIT CAPITAL LTD. G) ENQUIRIES FROM THE BANKS REVEALED THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF BROKER BEFORE THE ALLEGED SALE PROCEEDS OF SHARES WERE CLEARED FROM THE ACCOUNT AND DEPOSITED IN THE ACCOUNT OF THE ASSESSEE. THUS IT IS CLEAR THAT THE CHEQUES ISSUED BY THE SHARE BROKER WERE NOTHING BUT ACCOMMODATING ENTRIES. 12 H) THE STATEMENT OF THE ASSESSEE WAS RECORDED FROM WHERE MANY LOOSE ENDS CAN BE SEEN TO HAVE CREPT UP. THE ASSE SSEE IS NOT SURE ABOUT THE PURCHASE OF THE SHARES OF COUNTRY CR EDIT CAPITA! LIMITED. HE IS UNABLE TO PROVE THE MODE OF PURCHASE OF SHARES AND ALSO COULD NOT EXPLAIN SATISFACTORILY WHY T HESE SHARES WERE CREDITED IN HIS DEMAT A/C MORE THAN 1 YEAR AFTER TH E DATE OF PURCHASE. THE ASSESSEE IS TOTALLY UNAWARE OF WHE RE THE SHARES OF THIS COMPANY ARE TRADED. THE KNOWLEDGE OF THE AS SESSEE AS FAR AS THE MODE OF TRADE OF THE SHARES BEING ON MAR KET OR OFF MARKET IS SKETCHY AND THE ASSESSEE IN THE STATEMENT RECORDED COULD NOT EXPLAIN WHY THE SHARES WERE STILL LYING I N HIS DEMAT A/C EVEN 3 YEARS AFTER THE DATE OF SALE. THE CONTEN TION OF THE ASSESSEE THAT DELIVERY INSTRUCTIONS WERE ISSUED DOE S NOT MEAN THAT A TRANSACTION HAD BEEN CARRIED OUT. THE FACT THAT T HE SHARES ARE STILL LYING IN THE DEMAT A/C OF THE ASSESSEE PROVES THAT THESE ARE SHAM TRANSACTIONS. THERE WAS NO OTHER PARTY THAT BOUGHT THE SHARES. THE ASSESSEE IS USING THE GUISE OF DEMAT STATEMENT TO CLOAK THE TRANSACTION AND REVEAL THEM AS GENUINE. THE ASSESSEE AND THE STOCK BROKER HAVE ACTED IN COL LUSION TO GIVE THE GUISE OF LONG TERM CAPITAL GAIN FOR ENABLING TH E ASSESSEE TO INTRODUCE HIS ON MONEY FROM UNDISCLOSED SOURCES. 8. IN THE LIGHT OF THE ABOVE FACTS THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEES CLAIM FOR LON G TERM CAPITAL GAIN WAS FALSE AND CONCOCTED AND IT WAS IT OWN UNEXPLAINED MONEY WHICH WAS INTRODUCED IN THE GARB OF SALE OF SHARES. 9. BEFORE THE LD. CIT (APPEALS) NO REPRESENTATION WAS MADE BY THE ASSESSEE AND LD. CIT (APPEALS), THEREFORE, DECIDED THE CASE ON THE BASIS OF MERITS AND HELD THAT THE EVIDENCES ON RECORD PROVED BEYOND DOUBT TH AT THE 13 WHOLE ARRANGE WAS AN ACCOMMODATION ENTRY TO INTRODU CE THE ASSESSEES OWN UNACCOUNTED INCOME IN THE GUISE OF BOGUS TRANSACTION. THE LD. CIT (APPEALS) ALSO POIN TED OUT THAT THE SHARES BROKERS THROUGH WHOM THE SHARES WER E SOLD I.E. M/S SUNRISE STOCK SERVICES (P) LTD. WAS HELD TO BE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATI ON ENTRIES BY THE I.T.A.T. IN ITS ORDER IN ITA NO.367/CHD/2008. THE RELEVANT FINDINGS OF THE LD. CIT (APPEALS) AT PARA 3.6 OF THE ORDER ARE AS FOLLOW: 3.6 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AS WELL AS THE GROUNDS OF APPEAL. THE AO, FROM THE DETAILED ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND FROM THE INFORMATION GATHERED PERTAINING TO SURVEY UNDER SECTION 133A IN THE CASE OF M/S SUNRISE STOCK SERVICES (P) LTD AND M/S SURYA SCRIPS (P) LTD, HAS ESTABLISHED BEYOND DOUBT THAT THE WHOLE ARRANGEMENT INVOLVED IN THIS CASE WAS AN ACCOMMODATION ENTRY IN ORDER TO INTRODUCE THE APES OWN UNACCOUNTED INCOME IN THE GUISE OF THESE BOGUS TRANSACTIONS. THE FACT THAT THESE TRANSACTIONS WERE ACCOMMODATION ENTRIES STAND ADMITTED BY THE BROKERS IN THE STATEMENTS RECORDED DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT. IT MAY ALSO BE RELEVANT TO MENTION HERE THAT THE FACT THAT M/S SUNRISE STOCK SERVICES (P) LTD WAS ENGAGED INTEREST HE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES STANDS CONFIRMED BY THE ORDER OF THE HON'BLE ITAT IN THAT CASE. THE HON'BLE ITAT IN ITS ORDER DATED 31.12.2009 IN THE CASE OF ACIT, C-VII, LUDHIANA VS. M/S SUNRISE STOCK SERVICES 14 (P) LTD. IN ITA NO.367/CHD/2008 HAS HELD AS UNDER:- IN THE FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) THAT THERE IS NOTHING TO DOUBT THE CONSISTENT STAND OF THE ASSESSEE THAT THE CASH CREDITS IN THE BANK ACCOUNTS ARE ON ACCOUNT OF CASH RECEIVED AND DEPOSITED BELONGS TO DIFFERENT CLIENTS, WHO WERE GIVEN THE BOGUS SHARE PROFITS BY THE ASSESSEE, WHICH IN TURN IS THE BASIS FOR WORKING OUT THE INCOME OF THE ASSESSEE. THE HON'BLE ITAT IN REACHING THIS CONCLUSION REFERRED TO THE STATEMENT F THE DIRECTOR OF THE CM, WHICH IS REPRODUCED AS UNDER:- I CATEGORICALLY STATE THAT THERE ARE BOGUS SHARE PROFITS ISSUED TO DIFFERENT PERSONS AGAINST CASH PAYMENTS MADE BY THEM. IN REALITY NO SUCH PROFITS HAVE BEEN EARNED BY THEM. THESE TRANSACTIONS OF SHARES ARE NOT THROUGH STOCK EXCHANGE BUT ARE KNOWN AS PRINCIPLE TO PRINCIPLE TRANSACTIONS WHICH MEANS THESE TRANSACTIONS ARE ENTERED WITH NON-EXISTING PARTIES OF PUBLIC PERSONS A SIMILAR ISSUE WAS DECIDED BY THE HON'BLE , CHANDIGARH IN THE CASE OF VISHAL SHARMA S/O SH.HARI DUTT VS. ACIT, CIRCLE-1, LUDHIANA IN ITA NO.1170/CHD/2010. IN THIS ORDER DATED 28..11.2011, THE HON'BLE ITAT HELD AS UNDER:- APROPOS GROUND NO.2, THE A.O. HAS BROUGHT SUFFICIENT MATERIAL ON RECORD TO ESTABLISH THE BOGUS NATURE OF TRANSACTION OF SALE OF SHARES CARRIED OUT BY THE ASSESSEE. 15 THE ASSESSEE HAS NOT BEEN ABLE TO REBUT THE FINDINGS RECORDED BY THE A.O. IN THE ASSESSMENT ORDER AND BY THE LD. CIT(A) IN HIS APPELLATE ORDER. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE A.O. HAS MADE ENQUIRIES FROM VARIOUS SOURCES FOR COMING TO THE CONCLUSION THAT THE IMPUGNED TRANSACTION OF SALE OF SHARE IS BOGUS. IN THE ABSENCE OF ANY EFFECTIVE REBUTTAL OF THE FINDINGS IN THE ASSESSMENT ORDER, WE ARE UNABLE TO REVERSE THE FINDINGS RECORDED BY THE A.O. AND UPHELD BY THE CIT(A). GROUND NO.2 IS DISMISSED. KEEPING IN THE VIEW THE AFORESAID FACTS THE ADDITION MADE BY THE AO IS CONFIRMED. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 10. THE ORDER OF THE LD. CIT (APPEALS), IT WAS STA TED AT BAR, WAS NOT CHALLENGED BEFORE THE I.T.A.T., THU S THE FINDINGS OF THE LD. CIT (APPEALS) HAD ATTAINED FINA LITY. DURING THE COURSE OF PENALTY PROCEEDINGS, NO NEW FA CTS WERE BROUGHT EITHER BEFORE THE ASSESSING OFFICER, C IT (APPEALS) OR EVEN BEFORE US. THEREFORE, IT STANDS ESTABLISHED BEYOND ALL DOUBT THAT THE ASSESSEE HAD NOT ENTERED INTO ANY TRANSACTION RELATING TO SALE OF SH ARES BUT IN FACT SAME WAS AN ACCOMMODATION ENTRY TO INTRODUC E ITS OWN UNACCOUNTED INCOME. THE ASSESSEES CONTENTION THAT IT HAD PURCHASED AND SOLD SHARES HAD BEEN PROVED FA LSE AND INCORRECT BY THE EXHAUSTIVE ENQUIRY CONDUCTED B Y THE ASSESSING OFFICER DURING WHICH THE ASSESSEE COULD N OT SUBSTANTIATE ITS CLAIM BY EITHER PRODUCING THE BROK ER OR PROVING THE GENUINENESS OF THE CONTRACT NOTES OF PU RCHASE 16 AND SALE OF SHARES THAT THE TRANSACTION WAS A SHAM WAS ESTABLISHED BY THE ASSESSING OFFICER BY CONDUCTING ENQUIRIES FROM VARIOUS STOCK EXCHANGES WHICH REVEAL ED THAT THE SHARES WERE NEVER LISTED OR TRADED. ENQUI RIES ALSO REVEALED THAT COMPANY WHOSE SHARES WERE SOLD B Y THE ASSESSEE WERE RUNNING INTO LOSSES AND ENVOY OF THE SHARES WAS APPROXIMATELY RS.7 DURING THIS PERIOD. NO EXPLA NATION WAS GIVEN TO EXPLAIN THE SUDDEN APPRECIATION IN THE VALUE OF THE SHARES WHICH WAS SOLD FOR A PRICE OF RS.135. 60 PER SHARE. EVEN THE COMPANIES WHOSE SHARES WERE TRADED WERE UNABLE TO PRODUCE BOOKS OF ACCOUNT AND ENQUIRI ES FROM THE BANK REVEALED THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE BROKER BEFORE MAKING PAYMENT OF THE ALLEGED SALE PROCEEDS OF THE SHARES. FURTHER, IT W AS REVEALED DURING THE COURSE OF ENQUIRY THAT THE ASSE SSEE HAD NO IDEA ABOUT THE PURCHASE AND SALE OF THE SHAR ES. HE WAS UNABLE TO PROVE THE MODE OF PURCHASE AS TO W HY THE SHARE WERE CREDITED IN HIS DEMAT ACCOUNT MORE T HAN ONE YEAR AFTER THE DATE OF PURCHASE. HE WAS NOT EV EN AWARE WHERE THE SHARES WERE TRADED. THE ASSESSEE A LSO COULD NOT EXPLAIN WHY THE SHARES LYING IN HIS DEMAT ACCOUNT EVEN THREE YEARS AFTER THE SALE OF SHARES. THUS IT WAS CONCLUSIVELY PROVED THAT THE SAID TRANSACTION W AS A SHAM AND THE EVIDENCES PRODUCED BY THE ASSESSEE REFLECTING THE TRANSACTION OF PURCHASE AND SALE OF SHARES WERE MERE COVER-UP. CLEARLY, BY REFLECTING THE SAI D TRANSACTION AS LONG TERM CAPITAL GAIN EARNED ON SAL E OF SHARES WHILE IT WAS THE ASSESSEES OWN UNACCOUNTED 17 INCOME, THE ASSESSEE HAD FURNISHED FALSE/INACCURATE PARTICULARS OF ITS INCOME JUSTIFYING THE LEVY OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. 11. FURTHER WE FIND NO MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS A MERE CHA NGE OF HEAD FROM THE INCOME UNDER THE HEAD CAPITAL GAINS TO THE INCOME FROM OTHER SOURCES WHICH CANNOT RESULT IN LEVY OF PENALTY. IN THE PRESENT CASE, THOUGH IT DOES INVOL VE A CHANGE OF HEAD, AT THE SAME TIME IT ALSO REFLECTS T HAT THE ASSESSEE HAD FURNISHED WRONG PARTICULARS OF INCOME BY SHOWING THE IMPUGNED TRANSACTION AS SALE OF SHARES WHILE IT WAS ACTUALLY ITS OWN INCOME. A MERE CHANGE OF H EAD WITH NO CHANGE IN THE PARTICULARS OF INCOME LIKE FO R EXAMPLE, CAPITAL GAIN EARNED ON SALE OF SHARES REFL ECTED UNDER THE HEAD CAPITAL GAINS BUT ASSESSED AND BRO UGHT TO TAX UNDER THE HEAD BUSINESS INCOME WOULD BE AN EX AMPLE OF CHANGE OF HEAE INVOLVING NO CHANGE IN THE PARTIC ULARS OF INCOME. THE PARTICULARS OF INCOME IN SUCH A CASE W OULD REMAIN THE SALE OF SHARES WHICH CAN EITHER BE ASSES SED UNDER THE HEAD CAPITAL GAINS OR UNDER THE HEAD B USINESS INCOME DEPENDING UPON THE NATURE OF TRANSACTION. IN SUCH A CASE, THERE WOULD BE NO FURNISHING OF INACCU RATE OR FALSE PARTICULARS OF INCOME BUT IN THE PRESENT CASE THE CHANGE OF HEAD FROM CAPITAL GAINS TO INCOME FROM OTHER SOURCES HAS BEEN ON ACCOUNT OF THE FACT THAT THE A SSESSEE HAD DISCLOSED FALSE PARTICULARS OF HIS INCOME REFLE CTING THE TRANSACTION AS SALE OF SHARES WHEN ACTUALLY IT WAS HIS OWN 18 UNDISCLOSED INCOME. THEREFORE, WE HOLD THAT IT WAS A MERE CASE OF CHANGE OF HEAD OF INCOME SO AS TO ATTR ACT NO LEVY OF PENALTY. 12. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT (APPEALS) HAS RIGHTLY CONFIRMED THE LEVY OF PENALTY IN THE PRESENT CASE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH MARCH, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH