Praveen Kumar Agarwal, Kanpur V. Dy. Commissioner Of Income Tax, Kanpur

ITA 838/LKW/2014

• Counselvise Citation: 83823714 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 20-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Salary income; Share purchase agreement; Additional evidence; Question of law; Corroborative evidences; Accommodation entries
• Section: 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.838/LKW/2014 ASSESSMENT YEAR:2004-05 DY.C.I.T., CENTRAL CIRCLE-1, KANPUR. VS SHRI PRAVEEN KUMAR AGARWAL, 24/68, BIRHANA ROAD, KANPUR. (RESPONDENT) (APPELLANT) SHRI ASHISH JAISWAL, ADVOCATE APPELLANT BY SHRI AMIT NIGAM D. R. RESPONDENT BY 20/10/2015 DATE OF HEARING 31/12/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT(A)-I, KANPUR DATED 22/05/2014 FOR THE A SSESSMENT YEAR 2004- 05. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING ACTION OF LD. ASSES SING OFFICER OF TREATING LONG TERM CAPITAL GAINS AS INCO ME FROM OTHER SOURCES AT RS.23,81,341.00. 2. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.55,50 0.00 MADE BY LD. ASSESSING OFFICER AS INVESTMENT IN SHAR ES. 3. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.1,19,562.00 MADE BY LD. ASSESSING OFFICER AS UNEXPLAINED EXPENDITURE ON COMMISSION TO SECURE ACCOMMODATION ENTRIES. 4. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.50,00 0.00 MADE BY LD. ASSESSING OFFICER AS UNEXPLAINED PAYMEN T OF ADVANCE TAX. 5. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF 2 RS.2,04,500.00 MADE BY LD. ASSESSING OFFICER AS UNEXPLAINED CAPITAL. 6. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.17,200.00 ON ACCOUNT OF STANDARD DEDUCTION. 7. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, BOTH LD. ASSESSING OFFICER AND LD. CIT(A) HAS ERRED IN G OING INTO UNDUE CONSIDERATIONS AND MAKING BASELESS OBSERVATIONS. 8. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, NO ATTENTION WAS GIVEN TO THE SUBMISSIONS MADE BY THE ASSESSEE EITHER BY THE LD. ASSESSING OFFICER OR LD. CIT(A) AND BOTH OF THEM GONE INTO SELF MADE STORIES WITHOU T BRINGING ANYTHING ON RECORD. 9. BECAUSE ON FACTS AND IN CIRCUMSTANCES OF THE CAS E, THE ASSESSMENT ORDER AS WELL AS OBSERVATIONS OF LD. ASSESSING OFFICER ARE NOT CORRECT AND IN FACT, LEGA LLY AS WELL AS FACTUALLY, ASSESSEE WAS ELIGIBLE FOR ALL CL AIMS WHICH WERE DISALLOWED BY THE LD. ASSESSING OFFICER AND NO ADDITION WAS WARRANTED. 10. THAT THE ADDITIONS/DISALLOWANCES AS WELL AS APP EAL ORDER AS WELL AS ASSESSMENT ORDER IS BAD IN LAW AS WELL A S ON FACTS IN AS MUCH AS CONFIRMING / MAKING ADDITIONS. 3. LEARNED A. R. OF THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS OF 11 PAGES ALONG WITH THE AFFIDAVIT OF THE ASSESSEE IN R EGARD TO PURCHASE AND SALE OF SHARES IN RESPECT OF INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN OF RS. 23,35,750/-. HE ALSO SUBMITTED CERTAIN ADDI TIONAL EVIDENCES BEING QUOTATION INFORMATION HISTORY OF NAGESHWAR INVESTME NT LIMITED AND SUBMITTED THAT THESE ADDITIONAL EVIDENCES SHOULD BE CONSIDERED FOR THE PURPOSE OF DECIDING THE ISSUE IN DISPUTE IN RESPECT OF LONG TERM CAPITAL GAIN. THE WRITTEN SUBMISSIONS ARE REPRODUCED HEREIN BELOW:- SUB: WRITTEN SUBMISSION IN THE CASE OF PRAVEEN AGA RWAL FOR AY 2004-05, ITA 838/LKW/2014 IN CONNECTION TO THE ABOVE, IT IS HUMBLY SUBMITTED AS UNDER- 1. THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME SHOWING TOTAL INCOME AT RS.24,09,550/- INCLUDING LO NG TERM CAPITAL GAINS OF RS.23,35,750/- AGAINST WHICH 3 ASSESSMENT HAS BEEN COMPLETED AT AN INCOME OF RS.29,53,775/- AND LONG TERM CAPITAL GAIN BEING TREATED AS INCOME FROM OTHER SOURCES. 2. THAT THE ID.AO HAS MADE FOLLOWING ADDITION ON ACCOUNT OF: TREATMENT OF LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES: RS.23,35,750/- UNEXPLAINED EXPENDITURE ON COMMISSION TO SECURE ACCOMMODATION ENTRIES: RS.1,19,562/- INVESTMENT IN SHARES: RS.55,000/- UNEXPLAINED PAYMENT OF ADVANCE TAX: RS. 50,000/- UNEXPLAINED CAPITAL: RS.2,66,752/- DISALLOWANCE OF STANDARD DEDUCTION: RS.17,200/- BEING AGGRIEVED FROM THE ABOVE THE ASSESSEE WENT IN 1 ST APPEAL AND THE ID.CIT(A) CONFIRMED THE ORDER OF AO AFTER GIVING RELIEF OF ONLY RS.96,249 OUT OF UNEXPLAINED CAPITAL OF RS.2,66,752/-. 3. THAT THE ASSESSEE BEING AGGRIEVED FROM THE ABOVE ORDER IS IN APPEAL BEFORE YOUR HONOUR FOR KIND RELI EF ON THE ISSUES ABOVE. 4. THAT THE APPELLANTS SUBMISSION ON ISSUE WISE IS AS UNDER: I. TREATMENT OF LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES: RS.23,35,750/- II. UNEXPLAINED EXPENDITURE ON COMMISSION TO SECURE ACCOMMODATION ENTRIES: RS.1,19,562/- III. UNEXPLAINED PAYMENT OF ADVANCE TAX: RS. 50,000/- IV. UNEXPLAINED CAPITAL: RS.2,04,500/- V. DISALLOWANCE OF STANDARD DEDUCTION: RS.17,200/- I. TREATMENT OF LONG TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES: RS.23,35,750/- (I) THAT THE APPELLANT HUMBLY SUBMITS BEFORE YOUR HONOUR THAT THE LD.AO AS WELL AS ID.CIT(A) HAS 4 MADE AN ERROR IN MAKING ADDITION BY TREATING LONG TERM CAPITAL GAIN FROM SALE OF SHARE AS INCOME FROM OTHER SOURCES BY TREATING THE SHARE TRANSACTION AS SHAM. (II) THAT THE LD.AO HAS BRUSHED ASIDE ALL THE EVIDENCE ON RECORD AND SUMMARIZED HIS FINDING ON PAGE 10 OF THE ASSESSMENT ORDER WHICH IS AS UNDER: 1. ALLEGED PURCHASE WAS MADE IN CASH, SOURCE OF THIS CASH AND HOW IT WAS PAID TO THE BROKER REMAINS UNEXPLAINED. 2. HERE IS NO INDEPENDENT PROOF OF EITHER THE PURCHASE OR SALE AS NONE OF THE TRANSACTION WAS ROUTED THROUGH ANY STOCK EXCHANGE. IN FACT EVEN THE INFORMATION OF THESE TRANSACTION WERE GIVEN TO THE EXCHANGE, THOUGH BOTH THE TRANSACTION ALLEGED TO HAVE BEEN MADE THROUGH THE BROKERS REGISTERED AT THE CALCUTTA STOCK EXCHANGE. 3. NAME OF THE SELLER [FROM WHOM THE ASSESSEE HAVE PURCHASED THESE SHARES), ARE DIFFERENT, AS PER SHARE TRANSFER FORM AND AS PER INFORMATION RECEIVED THE BROKER. 4. ASSESSEE LACKS EVEN THE VERY BASIC KNOWLEDGE OF SHARE TRANSACTIONS. 5. THE BROKER THROUGH WHICH THE ALLEGED PURCHASE WAS MADE HAS BEEN SUSPENDED BY THE CALCUTTA STOCK EXCHANGE (CSE). 6. THE COMPANY, WHOSE SHARES WERE ALLEGED TO HAVE BEEN TRANSACTED, DOES NOT HAVE ANY STANDING. IN FACT, THE SAME HAS BEEN DELISTED BY THE CSE FOR VIOLATION OF VARIOUS NORMS. 7. ASSESSEE DID NOT ENTER INTO ANY OTHER TRANSACTIONS WITH THESE BROKERS. 8. ASSESSEE FAILED TO EXPLAIN AS TO HOW HE APPROACHED THE BROKERS. 9. THE ALLEGED CLIENT AGREEMENT SUFFERS FROM VARIOUS INFIRMITIES AND ACCORDINGLY THE SAME IS HELD TO BE A NON-GENUINE PAPER. IT CONTAINS NAME OF AN ACCOUNT WHICH WAS OPENED APPROXIMATELY ONE AND A HALF YEAR LATER. 10. THE SHARES WERE DEMATERIALIZED AFTER MORE THAN ONE AND A HALF YEAR OF ALLEGED PURCHASE. 5 11.THE ASSESSEE STATED THAT HE SENT A PERSON TO KOLKATA TO MAKE CASH PAYMENT TO THE BROKER. HOWEVER AS PER THE LETTER OF THE BROKER, IT RECEIVE D PAYMENT ON THREE DIFFERENT DATES. IT IS NOT UNDERSTANDABLE AS TO HOW A PERSON, WHO HAD TAKEN ENTIRE MONEY FROM KANPUR TO KOLKATA, STAYS FOR AT LEAST THREE DAYS IN KOLKATA, AND MAKES PAYMENT IN THREE DIFFERENT DAYS INSTEAD OF MAKING PAYMENT IN A SINGLE DAY. (III) THAT THE LD.CIT(A) HAS CONFIRMED THE ORDER OF AO FORMED ON ERRONEOUS FINDING AND SUSPICION BY GOING FURTHER AND COMPLETELY DISREGARDING THE TRUE FACTS OF THE CASE AND EVIDENCES FILED IN SUPPORT OF IT BY DISCUSSING THE LITERATURE OF BOGUS SHARE TRANSACTION AND ACCOMMODATION ENTRIES AND FITTING INTO THE FACT OF THE PRESENT CASE WITHOUT ANY BASIS AS UNDER: '5.2.9. NOW LET US PUT THESE FACTS OF THE PRESENT CASE IN THE ABOVE FRAME WORK AS EXPECTED THERE IS PERFECT DOCUMENTATION OF SALE ENTRIES. PURCHASE OF SHARES AS EXPECTED AND AS EXPLAINED ABOVE IS IN CASH. AS EXPECTED THE BROKER THROUGH WHOM PURCHASE IS MADE IN CASH IN UNTRACEABLE. SHARES ARE PURCHASED IN NOVEMBER 2001 REMAIN UN-TRANSFERRED IN THE NAME OF ASSESSEE TILL 2003. THERE IS NO ENTRY IN THE STOCK EXCHANGE IN NAME OF CLIENT. THE BROKER SALE BILL DOES NOT HAVE THE STOCK EXCHAN GE CLIENT TRANSACTION NUMBER. THE SHARES ARE NOT DEMATTED DESPITE ASSESSEE HAVING A 2YEARS OLD DEMAT ACCOUNT THIS CLEARLY ESTABLISHES CREATION OF BOGUS PURCHASE S. 5. CONCLUSION: 5.2.10 LET US LOOK AT THE OVERALL PICTURE: 1. ASSESSEE BELONGS TO KANPUR BUT HAS NEVER MADE AN Y TRANSACTION IN KANPUR STOCK EXCHANGE. 2. THE TRANSACTION RELATES TO KOLKATA, THE BIGGEST CENTER GENERATION OF ENTRIES. 6 3. THE PURCHASE OF SHARES TRANSACTION DID NOT TAKE PLACE THROUGH THE STOCK MARKET BUT IS OFF MARKET TRADE. 4. THE PURCHASE OF SHARES WAS CLAIMED TO HAVE BEEN MADE IN CASH. 5. CLEARLY THERE IS ANTI-DATING OF PURCHASE DOCUMEN TS TO CREATE A BACK DATED PURCHASE. 6. A BROKER WHO TRANSACTED PURCHASE EXERCISE WAS CAUGHT, AND SUSPENDED BY THE KOLKATA STOCK EXCHANGE. 7. THE BROKER SALE BILL DOES NOT HAVE THE STOCK EXC HANGE CLIENT TRANSACTION NUMBER. 8. SHARES ARE PURCHASED IN NOVEMBER 2001 REMAIN UN- TRANSFERRED DEMATTED IN THE NAME OF ASSESSEE TILL 2003. 9. THE SHARES ALLEGEDLY PURCHASE SOLD PERTAIN TO A LITTLE KNOWN, IRREGULARLY TRADED COMPANY. 10. THE SCRIP OF THE TRADED COMPANY WAS SUSPENDED SUBSEQUENTLY FOR VIOLATION OF EXCHANGE NORMS. 11. ASSESSEE HAVE NO KNOWLEDGE OF SHARES. 12. THIS IS THE ONLY TRANSACTION ENTERED BY HIM EVE R IN SHARE MARKET 13. INVESTMENT WAS MADE IN SINGLE SCRIP TO GENERATE HUGE LONG-TERM GAINS WHICH ARE TAX FREE. (RS. 23 LACS ON INVESTMENT OF RS.55,000/-) 14. THIS POINTS TO A PATTERN OF A 'DABBA COMPANY' W HERE THE PRICE OF A BOGUS COMPANY IS MANIPULATED TO GENERATE ENTRIES. 15. THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT TH E DETAILED FINDINGS RECORDED BY THE ASSESSING OFFICER WITH REGARD TO GENUINENESS OF THE TRANSACTIONS OF SHARES. 16. THE ASSESSEE HAS FURNISHED EVIDENCE FOR PURCHAS E OF SHARES SHARE CERTIFICATE ISSUED BY THE COMPANY. PURCHASE CONTRACT NOTE, CONTRACT NOTE FOR SALE, DISTINCTIVE NUMBERS OF SHARES PURCHASED AND SOLD, QUOTATION OF THE SHARES ON THE DATE OF PURCHASE AND SALE. 17. DOCUMENTATION OF PURCHASE IS UNSUBSTANTIAL FUDG ED AND UNRELIABLE. 18. THESE EVIDENCES PROVIDED ALL PERTAIN MAINLY TO SALE AND THESE NECESSARILY BE AVAILABLE IN ALL CASES WHE RE ENTRY IS BEING GENERATED. 7 5.2.11 IT IS THEN CLEAR THAT THESE ARE THE CLASSICA L INGREDIENTS OF GENERATION OF ENTRY OF PROFIT. WE CA N, AFTER EXAMINING ABOVE FACTS, EITHER HIDE BEHIND THE SMOKE SCREEN CREATED BY THE ASSESSEE OR LOOK STRAIG HT AT THE TRUE FACTS. 5.2.12 IN MY UNDERSTANDING OF THE FACTS AS STATED ABOVE THIS IS NOT A GENUINE TRANSACTION OF SALE PURCHASE OF SALES BUT PROCUREMENT OF ENTRY OF LONG- TERM CAPITAL GAINS TO MISUSE THE EXEMPTION PROVIDED IN THE PROVISIONS OF THE INCOME-TAX ACT' (IV) THAT ON THE ABOVE OBSERVATION AND FINDING OF THE LD.AO AND LD.CIT(A), THE APPELLANT HUMBLY SUBMITS BEFORE YOUR HONOUR THE FACTS AND RECORD OF THE CASE AS UNDER: A) THAT THE SHARE WERE PURCHASED ON BEHALF OF THE ASSESSEE BY THE BROKER 'M/S BUBNA STOCK BROKING SERVICE LTD.' ON 20.11.2001 WHICH WAS BILLED ON 27.11.2001 AS APPEARING IN CONTRACT NOTE AND BILL ON PAGE NUMBER 6 TO 7 AND 8 TO 9 OF THE PAPER BOOK VOLUME II RESPECTIVELY, WHICH HAS BEEN FURTHER BEEN CONFIRMED IN !TI INQUIRY REPORT AND LETTER FROM BUBNA STOCK BROKER TO THE AO APPEARING ON PAGE 42 TO 43 AND 44 TO 45 OF THE PAPER BOOK VOLUME II RESPECTIVELY. B) THAT THE SHARE TRANSACTION WAS HANDED OVER BY PHYSICAL DELIVERY OF SHARE CERTIFICATES OF 25000 SHARES IN NAGESHWAR INVESTMENT LTD. IN THE NAME OF ZENITH WOOD BOARDS (P) LTD. AT RS.2.22 AS APPEARING ON PAGE NUMBER 13 TO 32, WHICH WERE TRANSFERRED IN THE NAME OF PRAVEEN AGARWAL ON 31.12.2001 AS APPEARING IN TRANSFER LETTER FROM NAGESHWAR INVESTMENT LTD. FOR TRANSFER OF SHARES ON PAGE 11 TO 12 ALONG WITH SHARE TRANSFER FORM ON PAGE 10 AND THE TRANSFER ENDORSED ON SHARE CERTIFICATE APPEARING AT PAGE NUMBER 14,16,18, 20,22 ALONG WITH RETYPED COPY ON 24,26,28,30,32 OF THE PAPER BOOK VOLUME II. C) THESE SHARES WERE TRANSFERRED IN THE NAME OF PRAVEEN AGARWAL ON 31.12.2001 ON SHARE TRANSFER FORM AND SUBSEQUENTLY ENDORSED ON THE SHARE 8 CERTIFICATE BY THE COMPANY AS APPEARING ON PAGE NUMBER 11 TO 12. D) THAT THE REQUEST FOR DEMATERILISATION WAS MADE ON 04.02.2003 WITH THE KARVY AS APPEARING ON PAGE NUMBER 33 AND 34, WHICH DEMATERIALIZED ON 11.03.2003 IN THE DMAT A/C WITH KARVY CONSULTANTS AS APPEARING ON PAGE 35 OF THE PAPER BOOK VOLUME II. E) THAT THE ALLEGED SHARES WERE SOLD BY THE BROKER PRAMOD KUMAR KOTHARI ON 06.05.2003 AS APPEARING IN THE CONTRACT NOTE APPEARING ON PAGE 36 TO 39 AND ACCOUNT OF PRAVEEN AGARWAL WITH PRAMOD KUMAR KOTHARI ON PAGE 40 OF THE PAPER BOOK VOLUME II. THAT THE CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. TRANSACTION REPORT IS ENCLOSED IN THE PAPER BOOK ON PAGE 56 TO 59 OF THE PAPER BOOK II. FURTHERMORE PRAMOD KUMAR KOTHARI HAS CONFIRMED THE TRANSACTION BY LETTER TO THE AO APPEARING PAGE NUMBER 46 TO 47 OF THE PAPER BOOK VOLUME II. F) THAT THE SHARE RATE OF NAGESHWAR INVESTMENT LTD IS AVAILABLE ON PAGE 60 OF THE PAPER BOOK IN THE OFFICIAL REPORT & QUOTATION OF THE CALCUTTA STOCK EXCHANGE ASSOCIATION. ALSO IN THE ADDITIONAL LIST FILED BEFORE YOUR HONOUR APPEARING FOR THE FIRST TIME BEFORE YOUR HONOUR HAS BEEN EXTRACTED FROM THE CALCUTTA STOCK EXCHANGE WEBSITE GIVING THE DETAILS OF TRANSACTION THROUGHOUT THE EXISTENCE OF THE COMPANY. THAT THE TRANSACTION ON 06.05.2003 EXIST AND THE MARKET RATES ARE AVAILABLE ON PAGE 16 OF THE LIST FILED SEPARATELY ON 28.09.2015. G) THAT THE SALE OF SHARE HAS BEEN MADE THROUGH DMAT A/C. (V) FROM THE ABOVE, IT CAN BE INFERRED ABOUT THE GENUINENESS OF THE TRANSACTION OF PURCHASE AND SALE OF SHARE IN NAGESHWAR INVESTMENT LTD. (VI) THE MAIN REASON FOR CREATING DOUBT ON THE ALLEGED TRANSACTION OF THE SHARE IS THE STEEP INCREASE IN SHARE PRICE WITHIN SHORT SPAN OF TIME. (VII) THAT THE LD.AO HAS DOUBTED THE TRANSACTION AND HAS GIVEN HIS OBSERVATION ON ERRONEOUS PREMISES SUCH AS THAT THE ID.AO HIMSELF HAS CONDUCTED AN INQUIRY THROUGH HIS INSPECTOR AS APPEARING ON PAGE 9 42 TO 43 WHICH THE AO HAS BRUSHED ASIDE COMPLETELY. THE LD.AO HAS ALSO BRUSH ASIDE THE LETTER FROM THE PURCHASE AND SALE BROKER OF THE SHARE AS APPEARING ON PAGE 44 TO 45 AND 46 TO 47 RESPECTIVELY. (VIII) THE ID.AO HAD ALSO ASKED FOR INFORMATION FROM THE CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON WRONG AND INCORRECT FACTS SUCH AS GIVING INCORRECT DATE O F PURCHASE AND NAME OF THE BROKERS AS APPEARING ON PAGE 48 TO 53 OF THE PAPER BOOK II AND INTERPRETING THE SAID LETTER ON HIS OWN WHIMS AND FANCIES WITHOUT READING THE TRUE INTENT OF THE LETTER AND ALSO ALONG WITH THE OTHER CORROBORATIVE EVIDENCES FILED BEFORE HIM. (IX) IN THE LETTER FROM CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. THE COUNSEL HUMBLY SUBMITS BEFORE YOUR HONOUR THE DISCREPANCIES WHICH RESULTED FROM AN INQUIRY CONDUCTED ON INCORRECT FACTS GIVEN TO CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. BY THE ID.AO AS UNDER: ON PAGE 50 OF THE PAPER BOOK POINT NO. 1, CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. HAS WRITTEN TO THE AO THAT' NO TRANSACTION IN THE SCRIP NAGESHWAR INVESTMENT LTD WERE FOUND TO BE ROUTED THROUGH THE ON-LINE TRADING SYSTEM OF EXCHANGE BY M/S BUBNA STOCK BROKING SERVICES LTD. ON 27.11.2001 OR ON 06.05.2003.'. FROM THIS IT CAN READ THAT THE AO HAS REQUESTED DETAILS FROM CSEA FOR TRADE MADE THROUGH ON-LINE TRADING SYSTEM OF EXCHANGE BY M/S BUBNA STOCK BROKING SERVICES LTD ON 27.11.2001 OR ON 06.05.2003. THE TRANSACTION ARE DONE BY BROKER ON BEHALF OF HIS CLIENT AND THE SCRIP ARE TRADED ON EXCHANGE THROUGH MEMBERS OF THE STOCK EXCHANGE, IN THE PRESENT CASE THE BROKERS ARE ALSO THE MEMBER OF STOCK EXCHANGE AND AT THE TIME OF PURCHASE OF SHARE M/S BUBNA STOCK BROKING SERVICES LTD. WAS THE BROKER AND MEMBER OF EXCHANGE WHEREAS AT THE TIME OF SALE PRAMOD KUMAR KOTHARI WAS THE BROKER AND MEMBER OF THE EXCHANGE. AS IT IS CLEAR FROM THE ABOVE SUBMISSION AND FACTS 10 ON RECORD THAT THE PURCHASE OF SHARE WAS MADE OFF MARKET BY PHYSICAL DELIVERY OF THE SHARE CERTIFICATE BY THE BROKER M/S BUBNA STOCK BROKING SERVICES LTD. ON 20.11.2001 AND NOT 27.11.2001, INSTEAD THE BILL WAS RAISED ON 27.11.2001 AND TRANSFER OF SHARE IN THE NAME OF PRAVEEN AGARWAL WAS REGISTERED ON 31.12.2001 WHEREAS THE SALE OF SHARE WAS MADE BY THE BROKER PRAMOD KUMAR KOTHARI BEING MEMBER OF THE STOCK EXCHANGE ON BEHALF OF THE CLIENT THROUGH ON-LINE TRADING ON EXCHANGE ON 06.05.2003 AS APPARENT FROM THE FACTS AND RECORD MENTIONED ABOVE. FURTHER, THE INFORMATION REQUESTED BY THE LD.AO FROM THE CSEA VIDE LETTER DATED ON PAGE 52 AND 53 OF THE PAPER BOOK, THE AO AGAIN HAS REQUESTED FOR INFORMATION ON TRANSACTION IN THE SCRIP OF NAGESHWAR INVESTMENT LTD IN THE NAME OF PRAVEEN AGARWAL, INSTEAD OF PRAMOD KUMAR KOTHARI WHO HAS DONE THE TRANSACTION BEING MEMBER OF THE EXCHANGE ON BEHALF OF PRAVEEN AGARWAL. ALSO WHEN THE AO HAS REQUESTED INFORMATION FOR THE BROKER PRAMOD KUMAR KOTHARI THE AO HAS REQUESTED FOR INCORRECT NAME AS PRAMOD KUMAR TIWARI FOR WHICH THE CSEA HAS REFUSED TO EXIST AND HAS CONFIRMED THAT THE PRAMOD KUMAR KOTHARI EXIST AS MEMBER OF EXCHANGE AND HAS FURTHER CONFIRMED THAT THERE IS NO TRANSACTION ON THE SCRIP THROUGH PRAMOD KUMAR KOTAHRI ON 27.11.2001 INSTEAD OF SALE OF SHARE ON 06.05.2003. IN ANY CASE THE SHARE WAS REGISTERED WITH COMPANY IN THE NAME OF PRAVEEN AGARWAL ON 31.12.2001 AS MENTION ABOVE AND APPEARING ON PAGE 24 OF THE PAPER BOOK AND SALE DEMATERIALIZED IN DMAT A/C ON 17.05.2005. (X) NOW COMING ON THE OBSERVATION OF LD.CIT(A), IT IS HUMBLY SUBMITTED AS UNDER: THAT THE LD.CIT(A) HAS SIMPLY REITERATED THE LITERATURE OF BOGUS SHARE TRANSACTION AND HAS 11 SIMPLY BRUSH ASIDE THE FACTS OF THE CASE AND EVIDENCE ON RECORD AND CONFIRMED THE FINDING OF AO IN POINT 5.2.9 TO 5.2.12 ON PAGE 15 TO 17 OF THE CIT(A) ORDER. THAT THE LD.CIT(A) IN HIS ABOVE FINDING HAS QUESTIONED FEW ASPECTS WITHOUT LOOKING INTO THE FACTS AND RECORD OF THE CASE AS UNDER: THAT THE ASSESSES ASSESSEE HAS NEVER MADE SHARE TRANSACTION EXCEPT THE PRESENT ONE WHEREAS THE ASSESSEE HAS MADE SEVERAL SHARE TRANSACTION IN SUBSEQUENT YEAR WHICH CAN BE SEEN THE DMAT A/C ON PAGE 35 OF THE PAPER BOOK II. THAT THE BROKER AS EXPECTED ARE UNTRACEABLE WHEREAS IN FACT THE AO HIMSELF MADE ENQUIRY THROUGH ITI ON PAGE 42 TO 43 OF PAPER BOOK AND ALSO BY LETTER WHICH WERE CONFIRMED FROM THE RESPECTIVE BROKERS ON PAGE 44-45 AND PAGE 46 TO 47 OF THE PAPER BOOK II RESPECTIVELY. THAT THE TRANSFER OF PURCHASE IN THE NAME OF ASSESSEE NOT MADE WHEREAS THE SHARE WERE ALREADY TRANSFERRED ON 31.12.2001 AS APPEARING ON PAGE 11 TO 32 OF THE PAPER BOOK II. THAT THERE IS NO ENTRY IN THE STOCK EXCHANGE IN NAME OF CLIENT WHEREAS IN FACT THE TRANSACTION IS MADE THROUGH MEMBER OF STOCK EXCHANGE IN THE PRESENT CASE BEING PRAMOD KUMAR KOTHARI WHO ALSO SUBMITTED THE TRANSACTION REPORT AT CSEA FOR SALE OF SHARE ON 06.05.2003 THROUGH HIS ACCOUNT INCLUDING THE ALLEGED SHARE. THE FINDING OF AO CANNOT BE RELIED UPON AS THE ENQUIRY MADE BY HIM FROM CSEA IS BASED ON INCORRECT OR ERRONEOUS FACTS AS DISCUSSED ABOVE IN PARA V PAGE 5 TO 6 OF THIS SUBMISSION. THAT THE BROKER BILL DOES NOT HAVE THE TRANSACTION DETAILS WHEREAS ALL THE DETAILS ARE MENTION IN THE CONTRACT NOTE OF PURCHASE OF SHARE AND SALE OF SHARES AS APPEARING ON 12 PAGE 36 TO 39 OF THE PAPER BOOK ALONG WITH ORDER NUMBER, DATE AND TIME AND ALSO DISTINCTIVE NUMBER AND FOLIO NUMBER OF THE SHARES. THAT THE BROKER HAS BEEN SUSPENDED BY THE EXCHANGE AND THE COMPANY HAS BEEN DELISTED WHEREAS AT THE TIME WHEN THE ASSESSEE HAD ENTERED TRANSACTION IS RELEVANT AS AT THAT TIME THE BROKERS WERE ALSO NOT BANNED AND THE COMPANY WAS ALSO LISTED. MERELY THAT BROKER ARE BANNED WOULD NOT MAKE THE TRANSACTION DOUBTFUL. (XI) EVEN THE LD.CIT(A) FORMED HIS OPINION OF SHARE TRANSACTION BEING SHAM ON THE BASIS OF LITERATURE REPRODUCED ON BOGUS SHARE TRANSACTION AND RELATING IT TO THE PRESENT TRANSACTION BECAUSE OF STEEP INCREASE IN SHARE PRICE, ALTHOUGH THE TRANSACTION IS GENUINE AND HAS BEEN SOLD THROUGH DMAT A/C AND ALSO THAT THE ASSESSEE HAD SUBMITTED ALL THE EVIDENCE BEFORE THE AO AS WELL AS CIT(A) BUT BOTH THE AUTHORITIES HAS BRUSHED ASIDE ALL THE EVIDENCES ON RECORD ON DOUBTING THE TRANSACTION BECAUSE OF STEEP INCREASE IN PRICE. (XII) YOUR HONOUR, THE COUNSEL PLACES HIS RELIANCE ON THE SUBMISSION MADE ABOVE AND THE FOLLOWING CASE LAWS IN WHICH THE SHARE TRANSACTION OF THE SAME SCRIP OF NAGESHWAR INVESTMENT LTD. WAS QUESTIONED AND DOUBTED BY THE DEPARTMENT BECAUSE OF THE STEEP INCREASE IN SHARE VALUE SHORT PERIOD OF TIME. THE HON'BLE HIGH COURT AT RAJASTHAN IN C1T V. SMT PUSHPA MALPANI [2012] 20 TAXMANN.COM 597 [RAJ] ITA 50/2010 DECIDED ON 15.11.2010 AND J URISDICTIONAL INCOME TAX APPELLATE TRIBUNAL LUCKNOW IN THE CASE OF ITO V. VIJAV KANODIA, ITA 503/LKW/2012. AY 2004-05 ARE ON THE SHARE TRANSACTION OF NAGESHWAR INVESTMENT LTD, IN WHICH IT WAS HELD THAT THE SALE CONSIDERATION SHOUL D NOT BE DOUBTED ONLY FOR THE REASON THAT THE VALUE OF THE SHARES HAVE BEEN INCREASED MANY FOLD WITHIN A SHORT SPAN OF TIME. 13 THAT THE FINDING OF HON'BLE HIGH COURT AT RAJASTHAN IN CIT V. SMT PUSHPA MALPANI (2012) 20 TAXMANN.COM 597 (RAJ): 1TA 50/2010 DECIDED ON 15.11.2010 IS AS UNDER: 'THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER OF INCOME-TAX APPELLATE TRIBUNAL, JAIPUR (FOR SHORT, 'TRIBUNAL') DT, 28TH NOV., 2008 WHICH DISMISSED ITS APPEAL PREFERRED AGAINST ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) [FOR SHORT, 'CIT(A)] DT 10TH JAN., 2008. CIT(A), IN HIS ORDER, DIRECTED AO TO TREAT SALE CONSIDERATION OF SHARES AT RS.21,87,800 AS LONG-TERM CAPITAL GAIN INSTEAD OF TREATING IT AS INCOME FROM OTHER SOURCES. ASSESSEE ORIGINALLY FILED RETURN DECLARING INCOME OF RS.21,45,950 ON 29TH MARCH, 2005 ON SALE OF TWENTY THOUSAND SHARES OF M/S NAGESHWAR INVESTMENT LTD. THOSE SHARES WERE PURCHASED BY ASSESSEE ON 9TH MAY, 2002 @ RS. 2.02 PER SHARE THROUGH BROKER SHRI V.K. SINGHANIA & CO. OF CALCUTTA, WHICH WERE SOLD ON 22ND JULY, 2003 @ RS. 109.50 PER SHARE. IN ASSESSMENT ORDER PASSED ON 29TH DEC, 2006, AO HELD THAT TOTAL TRANSACTIONS IN SHARES WERE ONLY 1,331 DURING PERIOD FROM DECEMBER, 2002 TO APRIL, 2003 BUT SALE PRICE OF SHARES SHOT UP DRAMATICALLY WITHIN A SHORT SPAN OF TIME. ASSESSEE HAVING NOT FURNISHED ANY SUPPORTING EVIDENCE LIKE BALANCE SHEET/FINAL STATEMENT OF M/S NAGESHWAR INVESTMENT LTD. PROVING WORTH OF THE COMPANY, SALE CONSIDERATION OF ITS SHARES WAS LIABLE TO BE TREATED AS INCOME FROM OTHER SOURCES. 2. SHRI R.B. MATHUR, LEARNED COUNSEL FOR REVENUE, ARGUED THAT IT WAS A CASE OF ARTIFICIAL JACKING UP OF PRICE OF SHARES AND BROKER M/S AHILYA COMMERCIAL (P) LTD., KOLKATA THROUGH WHOM SHARES WERE PURCHASED, HAD SUFFERED A BAR FROM SEBL AT THE TIME OF TRANSACTION. CIT(A) AND TRIBUNAL BOTH ERRED IN LAW IN DELETING ADDITIONS MADE BY AO UNDER HEAD OF INCOME FROM OTHER SOURCES. THERE WAS NO JUSTIFICATION OF THEIR INTERFERENCE WITH WELL REASONED ASSESSMENT ORDER PASSED BY AO. LEARNED 14 COUNSEL ARGUED THAT ASSESSEE HAD IN FACT NOT MADE ANY GENUINE TRANSACTION OF SHARES AND CONVERTED HER UNDISCLOSED INCOME INTO LONG- TERM CAPITAL GAIN THROUGH ACCOMMODATION ENTRY OF BOGUS SALE CONSIDERATION. IT WAS THEREFORE ARGUED THAT SUBSTANTIAL QUESTION OF LAW ARISES IN THIS MATTER WHETHER DESPITE NUMEROUS DISCREPANCIES POINTED OUT BY AO IN WORKING OF ASSESSEE AND BROKER, WHO WAS LATER ON BANNED BY THE STOCK EXCHANGE FOR ARTIFICIALLY JACKING UP PRICE OF SHARES, TRIBUNAL/CIT(A) WERE JUSTIFIED IN REVERSING ADDITIONS MADE BY THE AO. 3. UPON HEARING LEARNED COUNSEL FOR REVENUE AND PERUSING IMPUGNED ORDER, WE FIND THAT WHETHER OR NOT SALE OF SHARES AND RECEIPT OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSENTIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT AT THE TIME OF TRANSACTION, THE BROKER IN QUESTION WAS NOT BANNED BY SEBI AT THE TIME OF TRANSACTION AND THAT ASSESSEE HAD PRODUCED COPIES OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICATE, APPLICATION FOR TRANSFER OF SHARE CERTIFICATE TO DEMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN DEMAT ACCOUNT, BALANCE SHEET AS ON 31ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS OF CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. ON 23RD JULY, 2003. IN OUR VIEW, PRESENT APPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW. 4. THIS APPEAL IS ACCORDINGLY DISMISSED.' FURTHER THE HON'BLE LUCKNOW TRIBUNAL IN THE CASE OF ITO V. VIJAY KANODIA HAS OBSERVED AND HELD AS UNDER : '6. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. IT WAS ALSO CONTENDED ON BEHALF OF THE REVENUE THAT THE ASSESSE E HAS PURCHASED 25,000 SHARES OF NAGESHWAR 15 INVESTMENT LTD. FROM M/S S.B. BHUTRA & CO. AT RS.2. 02 PER SHARE AT A COST OF RS.50,500/- ON 26.12.2001 AN D THE PAYMENT WAS MADE THROUGH DD AND SHARES WERE SOLD THROUGH BROKER, SHRI. RAJENDRA PRASAD SHAH FOR RS.16.74 LAKHS AS PER SETTLEMENT DATED 13.3.2003 AN D EARNED LONG TERM CAPITAL GAINS. SIMILARLY, 5,000 SH ARES OF SUPREME AGRO PRODUCTS LTD. WERE PURCHASED ON 25.2.2002 BY MAKING PAYMENT OF RS.50,000/- AND THE SAME WERE SOLD THROUGH BROKER, D. N. KANSAL SECURITIES LTD. FOR RS.4,78,517/- WITHIN A SHORT SP AN. SINCE THERE WAS INCREASE OF 30 TIMES WITHIN A PERIO D OF 15 MONTHS, THE ASSESSING OFFICER HAS RIGHTLY DOUBTED, AS IT IS IMPROBABLE AND UNBELIEVABLE. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFIC ER IS CORRECT AND JUSTIFIED. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, BESIDES PLACING RELIANCE UPON THE ORDER OF TH E ID. CIT(A), HAS SUBMITTED THAT THE ASSESSEE HAS MAINTAINED DEMAT ACCOUNT AND THE SALE HAS BEEN EFFECTED THROUGH DEMAT ACCOUNT BASED ON THE QUOTATION OF THE DAY. IN SUPPORT OF HIS CONTENTION, THE ID. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENT ION TO THE QUOTATION AS ON 12.3.2003, IN WHICH THE SHAR ES OF NAGESHWAR INVESTMENT WAS SHOWN AT 58.20; 64.25 AND 58.20. SINCE THE SHARES WERE SOLD ON THE RATE QUOTED BY THE STOCK EXCHANGE AND THE TRANSACTION WAS EFFECTED THROUGH DMAT ACCOUNT, THE SALE OF SHAR ES SHOULD NOT HAVE BEEN DOUBTED. IN SUPPORT OF HIS CONTENTION, THE ID. COUNSEL FOR THE ASSESSEE HAS AL SO FILED COPY OF SHARE CERTIFICATE OF SUPREME AGRO PRODUCTS LIMITED TO SHOW THAT THE AMOUNT PAID UP PE R SHARE WAS RS.10/-. THE CONTRACT NOTE FROM THE BROKE R IS ALSO FILED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT IN THE LIGHT OF THIS EVIDENCE, THE TRANSACTION IN SHARES CANNOT BE DOUBTED. THE ASSESSING OFFICER HAS SIMPLY DOUBTED THE SALE OF SHARES WITHOUT LOOKING TO THE FACT THAT SHARES WERE SOLD AT THE RATES QUOTED AT THE STOCK EXCHANGE. PURCHASE OF SHARES WAS NEVER DOUBTED BY THE ASSESSING OFFICER. THEREFORE, THE CAPITAL GAIN DECLARED BY THE ASSESSEE WAS RIGHTLY ACCEPTED BY TH E LD. CIT(A). 16 8. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE PURCHASE OF THE SHARES. HE HAS DOUBTED THE SALE CONSIDERATION OF THE SHARES, AS THERE WAS SUBSTANTI AL INCREASE IN THE VALUE OF SHARES. IN ORDER TO ESTABL ISH THE SALE TRANSACTION TO BE GENUINE, THE ASSESSEE HA S PLACED COPY OF THE QUOTATIONS OF THE STOCK EXCHANGE AS ON 12.3.2003, IN WHICH THE RATE OF SHARES OF NAGESHWAR INVESTMENT WAS SHOWN AT 58.20 AND 64. THE SHARES WERE SOLD ON 23.3.2003 AT RS.67.05 PER SHARE, THOUGH THE QUOTATION AS ON 23.3.2003 IS NOT AVAILABLE ON RECORD, BUT IN THE LIGHT OF THE QUOTATION DATED 12.3.2003, THE CONTENTION OF THE ASSESSEE THAT SHARES WERE SOLD AT RS.67.05 PER SHAR E CANNOT BE DOUBTED. NO DOUBT WAS RAISED BY THE ASSESSING OFFICER IN THE PURCHASE OF SHARES. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE S ALE CONSIDERATION DECLARED BY THE ASSESSEE SHOULD NOT B E DOUBTED ONLY FOR THE REASON THAT THE VALUE OF THE SHARES HAVE BEEN INCREASED TO 30 TIMES WITHIN A SPA N OF 15 MONTHS. IN THE CASE OF SHARE TRANSACTION, SOMETIMES THE VALUE OF SHARES MAY INCREASE MANY FOLD WITHIN A SPAN OF SHORT PERIOD. BUT FOR THIS RE ASON, THE TRANSACTION CANNOT BE DOUBTED. WE ACCORDINGLY FIND NO MERIT IN THE REVENUE'S APPEAL AND WE CONFIR M THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D.' IN THE ABOVE CASE THE HON'BLE RAJASTHAN HIGH COURT AND LUCKNOW TRIBUNAL HAS RIGHTLY HELD THAT THE SALE CONSIDERATION SHOULD NOT BE DOUBTED ONLY FOR THE REASON THAT THE VALUE OF THE SHARES HAVE BEEN INCREASED MANY FOLD WITHIN A SHORT SPAN OF TIME AND THAT IN CASE OF SHARE TRANSACTION SOMETIMES THE VAL UE OF SHARES MAY INCREASE MANY FOLD WITHIN A PERIOD OF SHORT PERIOD AND THAT FOR THIS REASON TRANSACTION CANNOT BE DOUBTED. (XIII) ALSO, FURTHER THERE ARE CASES IN WHICH THE S HARES WERE TRADED OFF MARKET THROUGH SHARE BROKER AND WAS NOT REFLECTED IN THE STOCK EXCHANGE AND THE STOCK BROKE R HAD CONFIRMED THE TRANSACTION, IN THESE CASES THE 17 COURT HAS HELD THAT THE TRANSACTION CANNOT BE SAID TO BOGUS AND NO ADDITION CAN BE MADE, RELIANCE IS PLAC ED UPON: ITO V. AJAY SHANILAL LALWANI (2012) 23 TAXMANN.COM 143(PUNE) ITO VS. SMT ARTI MITTAL (2014) 41 TAXMANN.COM 118 (HYD TRIB) ACCHYALAI SHAW VS. ITO (2009) 30 SOT 44 (KOL) (URO) IN VIEW OF ABOVE, YOUR HONOUR IS HUMBLY REQUESTED T O DELETE THE ADDITION. II. UNEXPLAINED EXPENDITURE ON COMMISSION TO SECURE ACCOMMODATION ENTRIES: RS.1.19.562/- IT IS HUMBLY SUBMITTED THAT THIS ISSUE OF COMMISSIO N TO SECURE ACCOMMODATION ENTRIES IS CONSEQUENTIAL TO ISSUE NUMBER I/ GROUND OF APPEAL 1. III. UNEXPLAINED PAYMENT OF ADVANCE TAX: RS.50,000/- IT IS HUMBLY SUBMITTED THAT THE APPELLANT HAS MADE PAYMENT OF ADVANCE TAX OUT OF HIS OWN CAPITAL, THE BALANCE SHEET IS APPEARING ON PAGE 09 OF THE PAPER BOOK AND NO ADDITION SHOULD BE MADE ON THIS COUNT. FURTHERMORE THE ID.AO HAS MADE ADDITION ON ACCOUNT OF OPENING CAPITAL BALANCE AS ON 1.04.2003 WHICH HA S BEEN CONFIRMED BY CIT(A) OF RS.2,04,500. THE APPELLANT HUMBLY REQUEST YOUR HONOUR IN CASE THE ADDITION ON ACCOUNT OF UNEXPLAINED CAPITAL BALANCE IS SUSTAINED, IT IS REQUESTED TO PROVIDE SET OFF OF RS.50,000 AS PAYMENT FROM ADVANCE TAX FROM THE OPENING CAPITAL AS OTHERWISE IT WOULD LEAD TO DOUBL E ADDITION AND DOUBLE TAXATION IN THE HAND OF ASSESSE E. IV. UNEXPLAINED CAPITAL: RS.2,04,500/- IT IS HUMBLY SUBMITTED THAT THE APPELLANT HAS EXPLAINED THAT THE OPENING CAPITAL IS COMING PREVIO US YEAR AND BALANCE SHEET OF PREVIOUS IS APPEARING ON PAGE 09 AND 10 AS 31.03.2004 & 31.03.2003. 18 IT IS FURTHER REQUESTED THAT IF THE ADDITION ON ACC OUNT OF OPENING CAPITAL IS SUSTAINED THEN ACCORDINGLY SE T OFF INVESTMENT IN SHARE AND PAYMENT OF ADVANCE TAX MAY KINDLY BE ALLOWED AS OTHERWISE IT WOULD LEAD TO DOU BLE ADDITION AND DOUBLE TAXATION IN THE HAND OF ASSESSE E. V. DISALLOWANCE OF STANDARD DEDUCTION: RS.17.200/- IT IS HUMBLY SUBMITTED THAT THE ID.AO HAS DISALLOWE D THE STANDARD DEDUCTION OF RS.17,200 EVEN THOUGH BEING LAWFUL CLAIM. IT IS SUBMITTED THAT THERE IS N O DISPUTE THAT THE ASSESSEE IS KARTA OF HUF FROM WHIC H HE IS DERIVING SALARY INCOME, IT IS ALSO NOT IN DIS PUTE THAT THE ASSESSEE WHOLE AND SOLE LOOKING AFTER THE BUSINESS. IN VIEW OF ABOVE, IT IS SUBMITTED THAT WHEN THE ASSESSEE IS KARTA OF HUF AND HE IS THE WHOLE AND SO LE PERSON LOOKING AFTER THE PROPRIETORSHIP CONCERN AND IN LIEU OF WHICH HE IS BEING PAID SALARY INCOME THEN I T IS THE LAWFUL RIGHT OF THE ASSESSEE TO CLAIM STANDARD DEDUCTION FROM SALARY AS PRESCRIBED BY THE ACT. THE LD.CIT(A) HAS CONFIRMED THE DISALLOWANCE OF THE BASIS OF CASE LAW WHICH ARE NOT APPLICABLE ON THE ASSESSEE AS THE BUSINESS CONCERN IN THE PRESENT CAS E IS PROPRIETORSHIP AND IN THE CASE LAW RELIED BY CIT (A) ARE PARTNERSHIP FIRM. THE LD.AO DISALLOWED ON ACCOU NT OF NO EMPLOYER EMPLOYEE RELATIONSHIP EXISTING. THE ALLAHABAD HIGH COURT IN CIT V. RAGHUNANDAN SARAN (1977) 108 ITR 818 (ALL) HAS HELD THAT EVEN AN AGREEMENT TO PAY SALARY TO TH E KARTA CAN BE INFERRED FROM THE FACT THAT THE CLAIM FOR THE SALARY TO KARTA HAS ALL ALONG BEEN MADE BY THE HUF. AN AGREEMENT NEED NOT ALWAYS BE IN WRITING AND CAN BE INFERRED FROM THE CONTENT OF THE PARTIES. TH E HIGH COURT IN CIT V. P. NIRMAL RAO (1991) 188 ITR 6 21 (ORI), HELD THAT, IN THE ABSENCE OF ANY PROHIBITION IN ANY LAW, IF THE MEMBERS OF HUF DECIDE TO PAY SOME REMUNERATION TO THE KARTA WHO MAY BE MANAGING ITS BUSINESS IT IS ALLOWABLE. SIMIL AR VIEWS OF VARIOUS OTHER HIGH COURTS IN THE FOLLOWING 19 CASES HOLDING THE REMUNERATION PAID TO THE MEMBERS OF THE FAMILY AS ALLOWABLE DEDUCTION UNDER SECTION 37 WHILE COMPUTING THE INCOME OF THE HUF: GOPINATH SETH V. CIT (1982] 135 ITR 365 (ALL); SUNDERLAL NANALAL (HUF) V. CIT (1985) 151 ITR 25 (GUJ) AND JAINARAYAN CHHOTELAL V. CIT (1985) 152 ITR 11 (MP). IN VIEW OF ABOVE, YOUR HONOUR IS HUMBLY REQUESTED T O ALLOW THE STANDARD DEDUCTION CLAIMED BY THE APPELLA NT ON HIS SALARY. 4. AS AGAINST THIS, LEARNED D. R. OF THE REVENUE SU BMITTED THAT NEW EVIDENCES ARE SUBMITTED AND THEREFORE, THE MATTER S HOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. GROUN D NO. 1,2 & 3 ARE INTER CONNECTED WHICH ARE IN RESPECT OF LONG TERM C APITAL GAIN OF RS.23,81,341/- TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES. IN THIS REGARD, WE FIND THAT VARIOUS OBJEC TIONS ARE SUMMARIZED BY LEARNED CIT (A) IN PARA 5.2.10 OF HIS ORDER. THERE ARE TOTAL 17 OBJECTIONS NOTED IN THIS PARA. WE WILL EXAMINE EACH OBJECTION AND WILL DECIDE ABOUT THOSE OBJECTIONS FOR WHICH CONSIDERATION OF NEW EV IDENCES SUBMITTED BEFORE US AS ADDITIONAL EVIDENCES IS NOT REQUIRED B UT FOR REMAINING OBJECTIONS, FOR WHICH CONSIDERATION OF NEW EVIDENC ES SUBMITTED BEFORE US AS ADDITIONAL EVIDENCES IS NECESSARY, WE WILL RESTO RE THE MATTER BACK TO THE A.O. FOR FRESH DECISION AFTER CONSIDERING THE NEW E VIDENCES SUBMITTED BEFORE US AS ADDITIONAL EVIDENCES. 5.1 THE FIRST OBJECTION IS THIS THAT THE ASSESSEE B ELONGS TO KANPUR BUT HAS NEVER DONE ANY TRANSACTION IN KANPUR STOCK EXCH ANGE. IN OUR CONSIDERED OPINION, THIS CANNOT BE A BASIS TO REJEC T THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTED IN KOLKATA STOCK EXCHANGE. 20 5.2 THE SECOND OBJECTION IS THIS THAT THE TRANSACTI ON RELATES TO KOLKATA, THE BIGGEST CENTRE OF GENERATION OF ENTRIES. IN OUR CONSIDERED OPINION, THIS ALSO CANNOT BE A BASIS TO REJECT THE CLAIM OF THE A SSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTED IN KOLKA TA STOCK EXCHANGE WITHOUT POINTING OUT ANY ADVERSE EVIDENCE SHOWING T HAT THE TRANSACTION UNDERTAKEN BY THE ASSESSEE IS AN ENTRY ONLY AND NOT A REAL TRANSACTION. 5.3 THE THIRD OBJECTION IS THIS THAT THE TRANSACTIO N DID NOT TAKE PLACE THROUGH THE STOCK EXCHANGE BUT IS OFF MARKET TRADE. IN OUR CONSIDERED OPINION, THIS ALSO CANNOT BE A BASIS TO REJECT THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTE D IN KOLKATA STOCK EXCHANGE WITHOUT POINTING OUT ANY PROVISION OF LAW AS PER WITCH OFF MARKET TRANSACTION IN LISTED SHARES IS PROHIBITED. 5.4 THE FOURTH OBJECTION IS THIS THAT THE PURCHASE HAS TAKEN PLACE IN CASH. IN OUR CONSIDERED OPINION, THIS ALSO CANNOT B E A BASIS TO REJECT THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTED IN KOLKATA STOCK EXCHANGE WITHOUT POINTING O UT ANY PROVISION OF LAW AS PER WITCH CASH PURCHASE OF LISTED SHARES IS PROH IBITED. 5.5 THE FIFTH OBJECTION IS THIS THAT THERE IS ANTI- DATING OF PURCHASE DOCUMENTS. IN THIS REGARD, WE FIND THAT THE SHARES WERE PURCHASED IN NOVEMBER, 2001 AND WERE TRANSFERRED IN THE NAME OF THE ASSESEE BY THE CONCERNED COMPANY IN DECEMBER 2001 BECAUSE THE DELI VERY WAS IN PHYSICAL FORM AND WERE DEMATERIALIZED LATER. IN OUR CONSIDERED OPINION, WHEN PURCHASE IS IN NOVEMBER, 2001AND DELIVERY IS I N PHYSICAL FORM AND THE SHARES ARE TRANSFERRED BY THE CONCERNED COMPANY IN THE NAME OF THE ASSESSEE IN DECEMBER, 2001, IT CANNOT BE SAID THAT THIS IS A CASE OF ANTI DATING AND THEREFORE, THIS ALSO CANNOT BE A BASIS T O REJECT THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTED IN 21 KOLKATA STOCK EXCHANGE WITHOUT POINTING OUT ANY VAL ID BASIS OF ALLEGING ANTI DATING. 5.6 THE SIXTH OBJECTION IS THIS THAT THE BROKER WHO TRANSACTED PURCHASE OF SHARES WAS CAUGHT AND SUSPENDED BY THE KOLKATA S TOCK EXCHANGE. IN THIS REGARD, WE FIND THAT THERE IS NO SUCH ALLEGATI ON THAT THE SUSPENSION OF THE BROKER BY KOLKATA STOCK EXCHANGE WAS FOR THIS REASON THAT THE CONCERNED BROKER WAS SUSPENDED FOR THIS ALLEGATION THAT HE WAS ISSUING BOGUS BILLS TO THIS ASSESSEE OR OTHERS. AS NOTED BY THE A.O. ON PAGE 9 OF THE ASSESSMENT ORDER, THE BROKER WAS SUSPENDED FOR VIOLATING VARIOUS NORMS. IF THE BROKER IS VIOLATING CERTAIN NORMS OF THE STOCK EXCHANGE AND HE IS SUSPENDED BY THE STOCK EXCHANGE, THIS CANNOT BE A BASIS TO DOUBT THE TRANSACTION UNDERTAKEN BY THE ASSESSEE THROUGH THAT BROKER. IN OUR CONSIDERED OPINION, THIS ALSO CANNOT BE A BASIS TO REJECT THE CLAIM OF THE ASSESSEE FOR LONG TERM CAPITAL GAIN IN SHARES OF A COMPANY LISTED IN KOLKATA STOCK EXCHANGE. 5.7 THE SEVENTH OBJECTION IS THIS THAT THE BROKER S ALE BILL, DOES NOT HAVE THE STOCK EXCHANGE CLIENT TRANSACTION NUMBER. IN TH IS REGARD, WE FEEL THAT HAVING SAID THAT THE TRANSACTION IS OFF MARKET TRAN SACTION, ONE CANNOT EXPECT THIS NUMBER IN THE BILL FOR AN OFF MARKET TR ANSACTION AND HENCE, THIS OBJECTION IS ONE AND SAME THAT THE TRANSACTION IS O FF MARKET TRANSACTION AND WE HAVE ALREADY DECIDED AS PER PARA 5.3 ABOVE THAT THIS IS NOT A VALID OBJECTION. THEREFORE, THIS OBJECTION IS ALSO REJEC TED. 5.8 THE EIGHTH OBJECTION IS THIS THAT THE SHARES WE RE PURCHASED IN NOVEMBER 2001 AND WERE DEMATERIALIZED IN 2003. IN T HIS REGARD, WE HAVE ALREADY NOTED IN PARA 5.5 ABOVE THAT THE PURCHASE I S IN NOVEMBER, 2001 AND DELIVERY IS IN PHYSICAL FORM AND THE SHARES ARE TRANSFERRED BY THE 22 CONCERNED COMPANY IN THE NAME OF THE ASSESSEE IN DE CEMBER, 2001. ONCE THE SHARES ARE TRANSFERRED IN THE NAME OF THE ASSES SEE IN DECEMBER, 2001, THE FACT OF DEMATERIALIZATION IN 2003 CANNOT BE A B ASIS TO DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE. THEREFORE, THIS OBJECTION IS ALSO REJECTED. 5.9 THE NINTH OBJECTION IS THIS THAT THE SHARES PUR CHASED AND SOLD WERE OF A LITTLE KNOWN IRREGULARLY TRADED COMPANY. IN OU R CONSIDERED OPINION, THIS FACT ALSO CANNOT BE A BASIS TO DRAW ANY ADVERS E INFERENCE AGAINST THE ASSESSEE. THEREFORE, THIS OBJECTION IS ALSO REJECTE D. 5.10 THE TENTH OBJECTION IS THIS THAT THE SCRIPT OF THE CONCERNED COMPANY WAS SUSPENDED SUBSEQUENTLY FOR VIOLATION OF EXCHANG E NORMS. IN OUR CONSIDERED OPINION, THIS FACT ALSO CANNOT BE A BASI S TO DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE. THEREFORE, THIS OBJ ECTION IS ALSO REJECTED. 5.11 THE ELEVENTH OBJECTION IS THIS THAT THE ASSESS EE HAS NO KNOWLEDGE OF SHARES. IN OUR CONSIDERED OPINION, THIS FACT ALSO C ANNOT BE A BASIS TO DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE BECAUSE IF THE ASSESSEE IS DOING THE TRANSACTION EVEN WITHOUT KNOWLEDGE, THE D EPARTMENT CANNOT DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE. TH EREFORE, THIS OBJECTION IS ALSO REJECTED. 5.12 THE TWELFTH OBJECTION IS THIS THAT THE ASSESSE E HAS UNDERTAKEN ONLY THIS TRANSACTION IN THE SHARE MARKET. IN OUR CONSID ERED OPINION, THIS FACT ALSO CANNOT BE A BASIS TO DRAW ANY ADVERSE INFERENC E AGAINST THE ASSESSEE. THEREFORE, THIS OBJECTION IS ALSO REJECTED. 5.13 THE THIRTEENTH AND FOURTEENTH OBJECTIONS ARE T HAT THE INVESTMENT WAS MADE IN SINGLE SCRIP TO GENERATE HUGE LONG TERM GAINS, WHICH ARE TAX 23 FREE AND THIS POINTS TO A PATTERN OF A DABBA COMPA NY WHERE THE PRICE OF A BOGUS COMPANY IS MANIPULATED TO GENERATE ENTRIES. IN OUR CONSIDERED OPINION, FOR DECIDING THESE TWO OBJECTIONS, NEW EVI DENCES PRODUCED BEFORE US ARE RELEVANT AND HENCE, WE RESTORE THE MATTER BA CK TO THE A.O. FOR FRESH DECISION IN RESPECT OF THESE TWO OBJECTIONS A FTER CONSIDERING THE NEW EVIDENCES SUBMITTED BEFORE US AS ADDITIONAL EVIDENC ES. 5.14 THE REMAINING THREE OBJECTIONS BEING NUMBER 1 5 TO 17 ARE GENERAL OBJECTIONS BUT SINCE, WE ARE RESTORING THE MATTER B ACK TO THE FILE OF THE A.O. IN RESPECT OF OBJECTIONS NO. 13 & 14, WE FEEL IT PROPER THAT FOR THESE THREE OBJECTIONS ALSO, THE A.O. SHOULD DECIDE THE I SSUE AFRESH AFTER CONSIDERING THE ENTIRE MATERIAL ON RECORD INCLUDING THE NEW EVIDENCES SUBMITTED BEFORE US AS ADDITIONAL EVIDENCES. 6. AS PER ABOVE DISCUSSION, WE FIND THAT OUT OF 17 OBJECTIONS NOTED BY CIT (A), 12 ARE NOT VALID AND FOR REMAINING 5 OBJEC TIONS, WE HAVE RESTORED THE MATTER BACK TO THE FILE OF THE A.O. FRESH DECIS ION IN RESPECT OF OBJECTIONS NO. 13 TO 17. ACCORDINGLY, GROUND NO. 1, 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 7. REGARDING GROUND NO. 4, IT WAS SUBMITTED BY THE ASSESSEE IN THE WRITTEN SUBMISSIONS, AS REPRODUCED ABOVE, THAT THE ASSESSEE MADE PAYMENT OF ADVANCE TAX OUT OF HIS OWN CAPITAL AND B ALANCE SHEET IS APPEARING ON PAGE NO. 9 OF THE PAPER BOOK. AS AGAIN ST THIS, LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER BALANCE SHEET OF THE ASSESSEE FOR THE PRESENT YEAR, THERE IS AN AMOUNT OF RS.2.40 LAC SHOWN IN THE ASSETS SIDE OF THE BALANCE SHEET AS ADVANCE TAX PAID. ON PAGE NO. 10 IS A BALANCE SHEET OF THE ASS ESSEE AS ON 31/03/2003 AS PER WHICH THERE ARE ONLY THREE ASSETS SHOWN I.E. INVESTMENT OF 24 RS.55,500/-, FDR WITH ACCRUED INTEREST RS.41,249/- AND CASH AND BANK BALANCE RS.2,05,003/-, TOTAL RS.3,01,752/-. HENCE, IT IS SEEN THAT AS PER THE BALANCE SHEET OF THE ASSESSEE FOR THE PRESENT Y EAR, TOTAL ADVANCE TAX PAID IS RS.2.40 LAC AND NOT RS.50,000/- FOR WHICH A DDITION IS MADE BY THE ASSESSING OFFICER. AS PER THE ASSESSMENT ORDER, TH E ASSESSING OFFICER SAYS THAT THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT OF RS.50,000/- AS ADVANCE TAX ON 15/09/2003 AND THIS PAYMENT WAS MADE IN CASH. IT MAY BE THAT THE REMAINING PAYMENT OF ADVANCE TAX OF RS. 1.90 LAC WAS MADE BY THE ASSESSEE OUT OF BANK ACCOUNT AND THEREFORE, THE RE IS NO DISCUSSION IN THE ASSESSMENT ORDER AND DISPUTE IS ONLY OF RS.50,0 00/- BEING ADVANCE TAX PAID IN CASH. THE CASE OF THE ASSESSING OFFICER IS THAT SINCE THE ASSESSEE WAS HAVING A BANK ACCOUNT, IT IS NOT CLEAR AS TO WH Y HE CHOSE NOT TO PAY ADVANCE TAX BY CHEQUE. THIS IS NO BASIS FOR MAKING ADDITION. REGARDING AVAILABILITY OF CASH IN HAND, THE ASSESSING OFFICER SAYS THAT THE POSITION OF OPENING CASH BALANCE REMAINS UNVERIFIABLE BUT AS PE R THE SAME BALANCE SHEET OF THE ASSESSEE AS ON 31/03/2004, AVAILABLE O N PAGE NO. 9, THE ASSESSEE IS SHOWING CASH IN HAND OF RS.2,82,426/-, WHICH IS MUCH MORE THAN THE CASH AND BANK BALANCE SHOWN IN THE BALANCE SHEET AS ON 31/03/2003 AT RS.2,05,003/- BUT THE ASSESSING OFFIC ER HAS ACCEPTED SUCH INCREASE IN CASH IN HAND AS ON 31/03/2004 AND HE IS DOUBTING ONLY THE AVAILABILITY OF CASH ON 15/09/2003 FOR MAKING CASH PAYMENT OF ADVANCE TAX OF RS.50,000/-. CONSIDERING THESE FACTS, WE AR E OF THE CONSIDERED OPINION THAT THE ADDITION MADE BY THE ASSESSING OFF ICER OF RS.50,000/- IS NOT JUSTIFIED. THE SAME IS THEREFORE, DELETED. GR OUND NO. 4 IS ALLOWED. 9. REGARDING GROUND NO. 5, THE ASSESSEE HAS SUBMITT ED IN THE WRITTEN SUBMISSIONS THAT THE OPENING CAPITAL HAS BEEN EXPLA INED AS PER BALANCE SHEET FOR THE PRESENT YEAR AND PRECEDING YEAR, AVAI LABLE ON PAGE NO. 9 & 10 OF THE PAPER BOOK. AS AGAINST THIS, LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. WE F IND THAT THE BALANCE 25 SHEET OF THE ASSESSEE AS ON 31/03/2003 IS AVAILABLE ON PAGE NO. 10 OF THE PAPER BOOK, AS PER WHICH, CLOSING CAPITAL WAS RS.2, 66,752/- WHICH HAS BEEN SHOWN AS OPENING CAPITAL IN THE BALANCE SHEET OF THE PRESENT YEAR. THE ASSESSING OFFICER MADE ADDITION OF ENTIRE AMOUN T OF RS.2,66,752/-. ON THIS ISSUE, IT WAS HELD BY CIT(A) THAT THIS AMOU NT OF OPENING CAPITAL SHOWN BY THE ASSESSEE IN THE BALANCE SHEET IS REPRE SENTED BY THREE ASSETS I.E. CASH IN HAND RS.2,04,500/-, INVESTMENT IN SHAR E RS.55,500/- AND FDR WITH ACCRUED INTEREST RS.41,249/-. THE CIT(A) HELD THAT AMOUNT OF FDR WITH ACCRUED INTEREST PERTAINS TO PAST INVESTMENT I N FDR AND SIMILARLY INVESTMENT IN SHARES DOES NOT PERTAINS TO PRESENT Y EAR AND THEREFORE, THESE ADDITIONS CANNOT BE MADE IN THE PRESENT YEAR. HE THEREFORE, DELETED THE ADDITION OF RS.55,500/- AND RS.41,249/- AND CON FIRMED THE ADDITION OF RS.2,04,500/- WHICH IS REPRESENTED BY CASH IN HAND AS ON 31/03/2003. IN THIS REGARD, WE FIND THAT AS PER BALANCE SHEET OF T HE ASSESSEE FOR THE YEAR ENDING ON 31/03/2002, AVAILABLE ON PAGE NO. 12 OF T HE PAPER BOOK, THE ASSESSEE HAS SHOWN CASH INCOME OF RS.46,000/- ON AC COUNT OF BROKERAGE AND OUT OF THIS, HE HAS SHOWN DRAWINGS OF RS.12,000 /- RESULTING INTO INCREASE IN CASH IN HAND OF RS.34,000/-.AND SIMILAR LY AS PER BALANCE SHEET FOR YEAR ENDING ON 31.03.2003 AVAILABLE ON PAGE 10 OF THE PAPER BOOK, THE ASSESSEE HAS SHOWN CASH INCOME OF RS.47,500/- ON AC COUNT OF BROKERAGE AND THE DRAWINGS IS RS.12,000/- RESULTING INTO INCR EASE IN CASH IN HAND OF RS.35,500/-. HENCE, IT IS SEEN THAT IN THESE TWO Y EARS, THERE IS INCREASE IN CASH OF RS.69,500/-. THIS IS ALSO NOTED BY CIT(A) IN PARA 8.2.2 OF HIS ORDER THAT THE ASSESSEE IS 27 YEARS OF AGE AND BELONGS TO BUSINESS FAMILY AND THE ASSESSEE WAS DOING BUSINESS SINCE LAST SEVERAL YEARS. ALTHOUGH THIS IS A SUBMISSION OF THE ASSESSEE BEFORE CIT(A) AND NOT HIS FINDING BUT THERE IS NO FINDING OF CIT(A) THAT THESE SUBMISSIONS ARE UNT RUE. LEARNED D. R. OF THE REVENUE ALSO COULD NOT SHOW THAT THESE SUBMISSI ONS ARE UNTRUE. WE ALSO FIND THAT AS PER INDIVIDUAL CLIENT REGISTRATIO N APPLICATION FORM 26 SUBMITTED BY THE ASSESSEE TO BUBNA STOCK BROKING SE RVICES LTD., AVAILABLE ON PAGES 19 & 20 OF THE PAPER BOOK, THE DATE OF BIR TH OF THE ASSESSEE IS SHOWN AS 24/08/77. HENCE, IT HAS TO BE ADMITTED TH AT IN THE PRESENT YEAR, THE ASSESSEE HAS COMPLETED 26 YEARS OF AGE AND THER EFORE, IT CANNOT BE DOUBTED THAT HE WAS EARNING INCOME SINCE LAST 5-6 YEARS. DATE OF BIRTH OF THE ASSESSEE IS ALSO AVAILABLE ON PAGE NO. 1 OF THE ASSESSEES PAPER BOOK BEING COPY OF INCOME TAX RETURN IN FORM 2D FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 AND AS PER THIS ALSO, THE D ATE OF BIRTH IS 24/08/77. CONSIDERING ALL THESE FACTS, IN OUR CONS IDERED OPINION, AVAILABILITY OF CASH IN HAND OF RS.2,04,500/- AS ON 31/03/2003 AS PER BALANCE SHEET OF THE ASSESSEE FOR ASSESSMENT YEAR 2 003-04 AVAILABLE ON PAGE NO. 10, DESERVES TO BE ACCEPTED AND NO ADDITIO N IS CALLED FOR ON THIS ACCOUNT IN THE PRESENT YEAR BECAUSE EVEN IF THERE I S SOME UNEXPLAINED CASH AS ON 31/03/2003, THE ADDITION CANNOT BE MADE IN THE PRESENT YEAR. HENCE, THIS ADDITION IS ALSO DELETED. ACCORDINGLY, GROUND NO. 5 IS ALLOWED. 10. REGARDING GROUND NO. 6, IT IS SUBMITTED BY ASSE SSEE IN THE WRITTEN SUBMISSIONS THAT THE ASSESSEE IS KARTA OF HUF FROM WHICH HE IS DERIVING SALARY INCOME AND THEREFORE, STANDARD DEDUCTION IS ALLOWABLE U/S 16(1) OF THE ACT. AS AGAINST THIS, LEARNED D. R. OF THE REV ENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 11. REGARDING THIS SUBMISSION OF LEARNED A. R. OF T HE ASSESSEE, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DECLARED TO HAVE RECEIVED AN AMOUNT OF RS.43,000/- FROM A CONCE RN NAMELY M/S SHYAMJI STEEL AND AGAINST THIS AMOUNT, STANDARD DED UCTION OF RS.17,200/- WAS CLAIMED. THE ASSESSING OFFICER FURTHER NOTED T HAT THIS CONCERN IS PROPRIETORSHIP CONCERN OF PRAVEEN AGARWAL (HUF) AN D THE ASSESSEE IS KARTA OF THIS HUF. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THERE IS NO EMPLOYER AND EMPLOYEE RELATIONSHIP BETWEEN THE A SSESSEE AND THIS 27 CONCERN BECAUSE THE OWNER OF THIS CONCERN IS PRAVEE N AGARWAL, HUF OF WHICH THE ASSESSEE HIMSELF IS KARTA AND THEREFORE, THIS CANNOT BE TREATED AS SALARY INCOME AND AS A CONSEQUENCE, STANDARD DED UCTION IS NOT ALLOWABLE. THE CIT(A) HAS GIVEN A FINDING THAT THE RE IS NO EMPLOYER AND EMPLOYEE RELATIONSHIP IN THE PRESENT CASE. THE CIT (A) HAS ALSO REFERRED TO A JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF SIVASANKARI CHANDRASEKARAN AND BRINDA JAYARAMAN VS. CIT [1991] 189 ITR 51 WHEREIN IT WAS HELD THAT WHEN THE KARTA OF A HUF ENTERS INTO A PARTNERSHIP WITH OTHERS, HE DOES SO IN HIS INDIVIDU AL CAPACITY AND THE KARTA ALONE BECOMES THE PARTNER BUT NOT THE INDIVIDUAL ME MBER OF THE FAMILY. HENCE, IN THE PRESENT CASE ALSO, THE KARTA OF HUF H IMSELF IS THE OWNER OF THE FIRM FROM WHOM THIS AMOUNT IN QUESTION WAS RECE IVED BY THE ASSESSEE AND ONE CANNOT HAVE A RELATIONSHIP OF EMPLOYER AND EMPLOYEE WITH HIMSELF. HENCE, ON THIS ISSUE, WE FIND NO REASON T O INTERFERE IN THE ORDER OF CIT(A). THIS GROUND IS REJECTED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:31/12/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGIS TRAR