Sh. Rajnish Thakur, Ludhiana V. JCIT (OSD)/AO, Ludhiana

ITA 914/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73505 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-03-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 10-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Principle of natural justice
• Section: 234B; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.914/CHD/2010 ASSESSMENT YEAR: 2003-04 SHRI RAJNISH THAKUR, V THE JCIT (ISD)/AO, S/O SHRI RAM, PAL THAKUR, CIRCLE-IV, LUDHIANA LUDHIANA PAN NO. AAJPT2443L & ITA NO.915/CHD/2010 ASSESSMENT YEAR: 2003-04 SHRI RAM PAL THAKUR, VS THE JCIT (ISD)/AO, S/O SHRI RAM, PAL THAKUR, CIRCLE-IV, LUDHIANA LUDHIANA PAN NO. AAJPT3444L (APPELLANT) (RESPONDENT) DATE OF HEARING : 06.03.2014 DATE OF PRONOUNCEMENT : 11/03/2014 APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI AKHILESH GUPTA ORDER PER T.R.SOOD, A.M. THE APPEALS FILED BY THE DIFFERENT ASSESSEES ARE D IRECTED AGAINST THE SEPARATE ORDERS BOTH DATED 31.3.2010 OF LD. CIT(A)- II, LUDHIANA. 2. IN BOTH THESE APPEALS, THE ASSESSEES HAVE FILED COMMON GROUNDS EXCEPT THE AMOUNT OF CAPITAL GAIN IS DIFFERENT. THE COMMON GR OUNDS RAISED BY THE ASSESSEE IN ITA NO. 914/CHD/2010 READS AS UNDER:- 2 1. THAT THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING THE CAPITAL GAIN ON PURCHASE AND SALE OF SHARES AS UNDI SCLOSED INCOME FROM OTHER SOURCES U/S 68 OF THE INCOME TAX ACT, 1961 TO THE TUNE OF RS. 11,25,300/- 2. THAT THE LD. CIT(A)-II, LUDHIANA HAS ALSO GROSSL Y ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER B Y RELYING UPON CERTAIN ALLEGED ENQUIRIES WITHOUT CONFRONTING THE MATERIAL SOUGHT TO BE USED AGAINST THE ASSESSEE. 3. THAT THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN NO T CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS RELIED ON THE STATEMENTS OF CERTAIN PARTIES AT THE BACK OF TH E ASSESSEE WHICH IS AGAINST THE PRINCIPLES OF MATERIAL JUSTICE SINCE THESE STATEMENTS HAD NOT BEEN CONFRONTED TO THE ASSESSEE. 4. THAT THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN NO T CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN NOT CONFRONTIN G THE MATERIAL SOUGHT TO BE USED AGAINST THE ASSESEE AND ALSO NOT ALLOWING THE OPPORTUNITY TO CROSS EXAMINE THE PARTI ES TO THE ASSESSEE. 5. THAT THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN NO T CONSIDERING THE FACT THAT THE CONCLUSION AS DRAWN B Y THE ASSESSING OFFICER ABOUT THE D-MAT ACCOUNT MAINTAINE D BY THE ASSESSEE AND ALSO WITH REGARD TO THE DELIVERY OF SH ARES ARE TOTALLY UNFOUNDED. 6. THAT THE ADDITION AS MADE BY THE ASSESSING OFFIC ER AND AS CONFIRMED BY THE CIT(A)-II, LUDHIANA IS AGAINST THE FACTS AND CIRCUMSTANCES AND WHILE CONFIRMING THE ADDITION THE LD. CIT(A)-II, LUDHIANA HAS NOT CONSIDERED OUR SUBMISSI ONS PROPERLY. 7. THAT INTEREST U/S 234B HAS BEEN WRONGLY CHARGED. 3 3. AT THE OUTSET, LD. DR SUBMITTED THAT ISSUE IS I DENTICAL TO THE CASE OF SHRI CHANDAN GUPTA V ACIT WHICH HAS BEEN DECIDED BY THE TRIBUNAL IN ITA NO. 552/CHD/2008. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT NO DOUBT THE FACTS ARE IDENTICAL BUT IN THE CASE OF C HANDAN GUPTA, THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR IN 299 ITR 279 (P&H) HAS NOT BEEN CONSIDERED. IN THA T CASE, IT WAS CLEARLY HELD THAT IF NO MATERIAL WAS AVAILABLE THEN THE TRANSACT ION COULD NOT BE CALLED A DEVICE TO CAMOUFLAGE ACTIVITY TO DEFRAUD REVENUE. HE ALSO REFERRED TO THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS RAD HEY SHYAM PODDAR(HUF) A COPY OF WHICH IS AVAILABLE AT PAGE 45 TO 52 OF THE PAPER BOOK WHEREIN IT WAS HELD THAT WHERE ALL THE DOCUMENTARY EVIDENCE WAS FI LED THEN TRANSACTION COULD NOT BE CALLED BOGUS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IN THIS CASE THE ASSESSING OFFICER HAS CONDUCTED DETAILED I NQUIRES IN RESPECT OF CAPITAL GAIN GENERATED ON SHARES RELATING TO COMPANY KNOWN AS M/S COUNTRY CREDIT CAPITAL LTD WHICH IS SIMILAR TO THE CASE OF SHRI CH ANDAN GUPTA. IN THE CASE OF SHRI CHANDAN GUPTA, WE HAVE CLEARLY FOUND THAT ASS ESSING OFFICER HAS MADE DETAILED INQUIRES AND VARIOUS STOCK EXCHANGES HAD C LEARLY CONFIRMED THAT THESE SHARES WERE NOT LISTED OR TRADED IN THE CONCERNED S TOCK EXCHANGES. WHEN THE SHARES WERE NOT LISTED AND ARE TRADED IN THE STOCK EXCHANGES THEN HOW THE SAME WERE SHOWN TO HAVE BEEN PURCHASED AND SOLD. NO DOU BT IN THE CASE OF SHRI CHANDAN GUPTA V ACIT, THE DECISION OF THE HON'BLE P UNJAB & HARYANA HIGH COURT HIGH COURT IN THE CASE OF CIT V ANUPAM KAPOOR (SUPRA) WAS NOT CITED AND, THEREFORE, NOT DISCUSSED. IN THIS CASE THE ASS ESSMENT WAS REOPENED ON THE BASIS OF COMMUNICATION FROM DDI (INV), GURGAON THA T THE LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE WERE FALSE AND THE C HEQUES WERE OBTAINED BY THE 4 ASSESSEE BY PAYING CASH. IN THE RE-ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER HELD THAT ASSESSEE FAILED TO LEAD EVIDENCE TO SUPPORT HIS CLAIM FOR LONG TERM CAPITAL GAINS. THUS, IT BECOMES CLEAR THAT IN THAT CASE DETAILED ENQUIRES WERE NOT CONDUCTED WHEREAS IN THE CASE OF CHANDAN G UPTA VS ACIT AS WELL AS IN THE PRESENT CASE DETAILED INQUIRIES HAVE BEEN CONDU CTED BY THE ASSESSING OFFICER WHICH CLEARLY SHOWS THAT CAPITAL GAIN IS BOGUS. SIM ILARLY, THE DECISION OF TRIBUNAL IN THE CASE OF ITO VS RADHEY SHYAM PODDAR (HUF) IS DISTINGUISHABLE BECAUSE IN THE PRESENT CASE WHATEVER EVIDENCE WAS F IELD WAS FOUND TO BE INCORRECT. FURTHER, IN THE CASE OF CHANDAN GUPTA V S ACIT THE TRIBUNAL ADJUDICATED THE ISSUE VIDE PARAS 22 TO 42, WHICH ARE AS UNDER;- 22 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT THE LD. CIT(A) HAS DECIDED THE ISSUE AGAINST T HE ASSESSEE BY OBSERVING THAT THE EVIDENCE DISCUSSED BY THE ASSESS ING OFFICER AS WELL AS CATEGORICAL STATEMENT OF THE BROKER THAT NO SALE OR PURCHASE OF SHARES WAS DONE BY THE ASSESSEE BUT ONL Y ENTRIES OF CAPITAL GAIN WAS GIVEN TO THE ASSESSEE ON RECEIPT O F CASH PAYMENT. THE LD. CIT(A) RELIED ON THE STATEMENT OF THE BROKER FOR ASSESSMENT YEAR 2005-06. IT WAS OBSERVED THAT IT WOULD NOT MAKE ANY DIFFERENCE WHETHER STATEMENT WAS RECORDED FOR ASSESSMENT YEARS 2005-06 & 2004-05. THE LD. CIT(A) HAS ALSO DEALT WITH OTHER ARGUMENTS IN PARA 7 TO 17 OF HIS O RDER. 23 THOUGH THE LD. CIT(A) HAS CATEGORICALLY DEALT WI TH ALL THE ARGUMENTS IN DETAIL, WE WOULD LIKE TO DEAL WITH THE ARGUMENTS MADE BEFORE US. FIRST CONTENTION OF THE LD. COUNSE L OF THE ASSESSEE WAS THAT THE ASSESSEE WAS NOT CONFRONTED W ITH THE MATERIAL GATHERED FROM ENQUIRIES CONDUCTED, THEREFO RE, THE VIEW TAKEN BY THE REVENUE WAS NOT POSSIBLE. FIRST OF AL L WE WOULD LIKE TO REFER TO THE DECISION OF HON'BLE PUNJAB & H ARYANA HIGH COURT IN CASE OF SOM NATH MAINI VS. CIT, 306 ITR 41 4 (PH). IN THAT CASE ALSO THE ISSUE WAS WHETHER SHORT TERM CAP ITAL GAINS ON PURCHASE AND SALE OF SHARES OF 45000 SHARES OF ANKU R INTERNATIONAL LTD. WHICH WERE PURCHASED AT THE RAT ES VARYING FROM RS. 2.06 TO 3.01 PER SHARE AND SOLD AT THE RAT ES VARYING FROM RS. 47.75 TO RS. 55.00 PER SHARES. IN THAT CA SE IT WAS ALSO HELD THAT SHORT TERM CAPITAL GAINS WAS NOT GENUINE AND BOGUS. THE ADDITION WAS CONFIRMED BY THE TRIBUNAL AND WHEN THE MATTER TRAVELED TO THE HON'BLE HIGH COURT, HON'BLE COURT G AVE THE FOLLOWING OBSERVATIONS/FINDINGS: WE ARE UNABLE TO ACCEPT THE SUBMISSIONS MADE. THE BURDEN OF PROVING THAT INCOME IS SUBJECT TO TAX IS ON THE REVENUE BUT ON THE FACTS, TO SHOW THAT THE TRANSACTION IS GENUI NE BURDEN IS PRIMARILY ON THE ASSESSEE. THE ASSESSING OFFICER IS TO APPLY THE TEST OF HUMAN PROBABILITIES FOR DECIDING GENUI NENESS OR OTHERWISE OF A PARTICULAR TRANSACTION. MERE LEADIN G OF EVIDENCE THAT THE TRANSACTION WAS GENUINE, CANNOT B E CONCLUSIVE. SUCH EVIDENCE IS REQUIRED TO BE ASSESS ED BY THE ASSESSING OFFICER IN A REASONABLE WAY. GENUINENESS OF THE 5 TRANSACTION CAN BE REJECTED EVEN IF THE ASSESSEE LE ADS EVIDENCE WHICH IS NOT TRUST-WORTHY, EVEN IF THE DEPARTMENT D OES NOT LEAD ANY EVIDENCE ON SUCH AN ISSUE. 24 FROM ABOVE IT IS CLEAR THAT ONCE THE TRANSACTION IS DOUBTED THE BURDEN WAS ON THE ASSESSEE TO PROVE THAT THE TR ANSACTION WAS GENUINE. IN CASE BEFORE US THE ASSESSEE HAS SIMPLY FILED COPIES OF SALE AND PURCHASE BILLS AND NO OTHER EVIDENCE WA S FILED. THE ASSESSEE SHOWED ITS INABILITY TO PRODUCE THE BROKER AND DESPITE THE SUMMONS THE BROKER DID NOT ATTEND THE PROCEEDIN GS. THEREFORE, IN THIS BACKGROUND THE ASSESSING OFFICER WAS LEFT WITH NO OPTION BUT TO CONDUCT THE ENQUIRIES AT HIS OWN. THE MAIN ENQUIRY WAS CONDUCTED FROM STOCK EXCHANGES TO ASCER TAIN WHETHER THE SHARES WERE LISTED IN ALL THE STOCK EXC HANGES AND WHETHER ANY TRADING TOOK PLACE IN THE SHARES. VARI OUS STOCK EXCHANGES CONFIRMED THAT EITHER THE SHARES WERE NO T LISTED IN STOCK EXCHANGES OR IN ANY CASE NO TRADING HAS TAKEN THE PLACE. THE REPLIES OF THE VARIOUS STOCK EXCHANGES HAVE BEE N SUMMARISED IN TABLE 2 WHICH WE HAVE EXTRACTED ABOVE . THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE W HEN HIS STATEMENT WAS RECORDED ON 15.12.2006 AND WHICH HAVE BEEN EXTRACTED BY THE ASSESSING OFFICER IN THE ASSESSMEN T ORDER. RELEVANT QUESTION AND ANSWER IS AS UNDER: QUESTION AS PER THE INFORMATION RECEIVED FROM MA NY STOCK EXCHANGES IT IS SEEN THAT THIS COMPANY (COUNTRY CRE DIT CAPITAL LTD) IS NOT LISTED WITH BOMBAY STOCK EXCHAN GE AND WAS LAST TRADED ON DSE ON 26.11.1996 AND THERE WAS NO TRANSACTION AFTER THAT PERIOD AND EVEN IN LUDHIANA STOCK EXCHANGE THERE IS NO TRANSACTION DURING THE PERIOD WHEN PURCHASE AND SALE HAS BEEN DONE ON YOUR BEHALF. KI NDLY TELL WHERE THESE SHARES WERE TRADED. IN THE ABSENCE OF ANY TRADING IN THE ABOVE MENTIONED RECOGNIZED STOCK EXCHANGE. ANSWER I DO NOT REMEMBER AT PRESENT BUT I WILL SU BMIT THE EVIDENCE LATER ON. 25 THUS ASSESSEE WAS CLEARLY INFORMED THAT VARIOUS STOCK EXCHANGES HAVE ALREADY INFORMED THAT NO TRADING HAS TAKEN PLACE. THE ASSESSEE HAS TAKEN TROUBLE BY OBTAINING ONE LOOSE PAPER FROM AHMEDABAD STOCK EXCHANGE (WHICH IS PLACE D AT PAGES 237 AND 238 OF THE PAPER BOOK.) CAREFUL PERU SAL OF THIS TABLE SHOWS THAT IT IS NOT SIGNED BY ANYBODY. THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE WAS THAT THE SHARES OF COUNTRY CREDIT CAPITAL LTD. WAS ALLOWED TO BE TRADED IN AH MEDABAD STOCK EXCHANGE IN THE PERMITTED CATEGORY. HE HAS EXPLAINED THAT PERMITTED CATEGORY IS ALL TOGETHER DIFFERENT FROM LISTED CATEGORY AND IN CASE OF PERMITTED CATEGORY THE C OMPLIANCE LEVEL IS MUCH LESS THEN THE COMPLIANCE REQUIRED IN CASE OF LISTED SHARE. WE DO NOT FIND ANY FORCE IN THIS CONTENTION BECAUSE ALL THE STOCK EXCHANGES HAVE CLEARLY REPLIED TO THE ASS ESSING OFFICER THAT THESE SHARES HAVE NOT BEEN TRADED IN T HEIR EXCHANGES. STOCK EXCHANGES ARE PUBLIC AUTHORITY AN D THERE IS NO REASON TO DOUBT THE STATEMENTS OF THE EXCHANGES. E VEN IF ASSUMING FOR ARGUMENT SAKE THAT THE SHARES WERE TRA DED IN AHMEDABAD STOCK EXCHANGE IN THE PERMITTED CATEGORY AND IF THE ASSESSEE WAS ABLE TO OBTAIN THE STATEMENT FROM THE AHMEDABAD STOCK EXCHANGE TO THIS EFFECT WHICH IS NO T SIGNED BY ANYBODY THEN THE ASSESSEE COULD HAVE EASILY OBTAINE D MORE INFORMATION THAT THE SHARES WERE TRADED IN AHMEDABA D STOCK 6 EXCHANGE. HE COULD HAVE ATLEAST ASKED THE REVENUE THAT MORE INFORMATION SHOULD BE GATHERED FROM THE AHMEDABAD S TOCK EXCHANGE WHICH HAS NOT BEEN DONE DESPITE THE FACT T HAT HE WAS MADE AWARE THAT THE SHARES ARE NOT BEING TRADED IN ANY OF THE STOCK EXCHANGES. AS OBSERVED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF SOM NATH MAINI VS. CIT (SUPRA ) THE BURDEN WAS WITH THE ASSESSEE TO PROVE THAT TRANSACT ION WAS GENUINE. FURTHER MERE QUOTATION IN A GUJARATI DAIL Y IN RESPECT OF TRADING QUOTES IN RESPECT OF SHARE OF COUNTRY CREDIT CAPITAL LTD. IN AHMEDABAD STOCK EXCHANGE IS CONCERNED, THE SAME HAS TO BE VIEWED IN THE LIGHT OF THE MODUS OPERANDI ADO PTED IN CASE OF BOGUS CAPITAL GAINS. IN SUCH CASES SHARE OF SH ELL COMPANIES OR NON ACTIVE COMPANIES WHICH ARE NOT TRADED IN A NY STOCK EXCHANGE, ARE QUOTED IN A PARTICULAR DAILY IN RESPE CT OF A PARTICULAR STOCK EXCHANGE AND THEN SAME IS USED TO GIVE AS EVIDENCE THAT THE SHARE PRICE WAS SO MUCH. SUCH SIN GLE QUOTATION ITSELF PROVE THAT THE SHARES ARE NOT ACTIVELY TRADE D IN THE PARTICULAR STOCK EXCHANGE. SOMETIMES ACTUAL TRANSA CTION OF VERY SMALL QUANTITY OF SHARES IS DONE SAY FOR 10 OR 100 SHARES TO CREATE PROOF THAT SHARES ARE REGULARLY TRADED BUT S UCH QUOTATION HAS TO BE VIEWED IN THE LIGHT OF OVER ALL FACTS AND ENQUIRIES MADE IN A PARTICULAR CASE. IN CASE BEFORE US, OVER WHELMING EVIDENCE SHOW THAT BOGUS CAPITAL GAINS HAS BEEN GEN ERATED BY THE ASSESSEE AND THEREFORE, THESE QUOTATIONS IN A GUJARATI DAILY WILL NOT HELP THE ASSESSEE. WE ALSO FIND THAT THER E IS NO MERIT IN THE CONTENTION THAT THE ASSESSING OFFICER HAS NOT C ONSIDERED ANNEXURE A&B GIVEN BY DELHI STOCK EXCHANGE IN ITS L ETTER DATED NOV 20,2006 (COPY OF WHICH HAS BEEN REFERRED BY THE LD. COUNSEL OF THE ASSESSEE AT PAGE 236 OF THE PAPER BOOK). IN FACT THE LD. DR FOR THE REVENUE HAS FILED THE COPY OF THE ANNEXU RE A&B CLEARLY STATES THAT NO TRADING REPORTED DURING THI S PERIOD. ANNEXURE A REFERS TO PERIOD 1.4.2003 TO 31.3.2004 A ND ANNEXURE B REFERS TO THE PERIOD 1.4.2002 TO 31.3.2003, THERE FORE, FOR THE PERIOD UNDER CONSIDERATION THERE WAS NO TRADING IN THE SHARES OF COUNTRY CREDIT CAPITAL LTD. IN DELHI STOCK EXCHANG E. WE HAVE ALSO PERUSED PAGE 235 OF PAPER BOOK WHICH IS COPY O F THE LETTER WRITTEN BY MP STOCK EXCHANGE IN RESPONSE TO THE QUE RY RAISED BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT. NO DO UBT THIS LETTER MENTIONS THE ADDRESS OF THE COMPANY. HOWEVER, CARE FUL READING OF THE LETTER SHOWS THAT THE STOCK EXCHANGE HAS NOT DENIED OR CONFIRMED THE FACT WHETHER THE SHARES OF COUNTRY CR EDIT CAPITAL LTD. WERE LISTED THERE OR NOT? HOWEVER, IT IS CAT EGORICALLY MENTIONED THAT NO TRADING OF SHARES OF THIS COMPANY TOOK PLACE ON THE FLOOR OF THE EXCHANGE DURING THE PERIOD MENT IONED IN THE LETTER. 26 THE STATEMENT OF BROKER WHICH THE ASSESSING OFFI CER HAS RECORDED IN ASSESSMENT YEAR 2005-06 INRESPONSE TO S UMMONS, THE ASSESSEE WAS ALLOWED TO HAVE CROSS EXAMINATION OF THE SHARE BROKER AND SHARE BROKER HAS CLEARLY STATED THAT THI S TRANSACTION WAS DONE AFTER RECEIVING THE CASH. THUS IT IS VERY CLEAR THAT THE ASSESSEE HAS BEEN CONFRONTED WITH THE EVIDENCE AND OR ENQUIRIES MADE BY THE ASSESSING OFFICER. IT WAS CONTENDED THA T THE STATEMENT OF THE SHARE BROKER RECORDED DURING ASSES SMENT YEAR 2005-06 CAN NOT BE RELIED IN THE ASSESSMENT PROCEED INGS OF ASSESSMENT YEAR 2004-05. WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS FIRSTLY IT IS CLEAR THAT THE ASSESSEE F AILED TO PRODUCE THE BROKER AS HELD BY HON'BLE PUNJAB & HARYANA HIGH COURT IN 7 CASE OF SOM NATH MAINI (SUPRA). THE ASSESSEE WAS D UTY BOUND TO PRODUCE THE BROKER TO PROVE HIS CLAIM. SECONDLY IT IS SETTLED POSITION OF LAW THAT THE LD. CIT(A) HAS CO. TERMINU S POWERS WITH THE ASSESSING OFFICER (REFER TO THE CASE OF CIT VS. KANPUR COLA SYNDIATE, 53 ITR 225 (SC). IN THIS CASE IT WAS HEL D BY THREE JUDGE BENCH OF THE HON'BLE APEX COURT AS UNDER: THE APPELLATE ASSISTANT COMMISSIONER HAS PLENARY P OWERS IN DISPOSING OF AN APPEAL. THE SCOPE OF HIS POWERS IS CONTERMINOUS WITH THAT OF THE INCOME-TAX OFFICER. HE CAN DO WHAT THE ITO CAN DO AND CAN ALSO DIRECT HIM TO DO W HAT HE HAS FAILED TO DO. 27 THE STATEMENT WAS RECORDED BY THE ASSESSING OFFI CER IN ASSESSMENT YEAR 2005-06 BUT SAME WAS AVAILABLE BEFO RE THE LD. CIT(A) DURING APPEAL PROCEEDINGS, THEREFORE, THE L D. CIT(A) HAS FULL RIGHT TO RELY ON THE STATEMENT. IN THIS REGAR D WE WOULD ALSO LIKE TO RECALL THE FAMOUS STATEMENT OF LORD MACMILL AN, SMART V. LINCOLNSHIRE SUGAR CO. LTD. 20 TC 643, 671 (HL) WHE RE HE OBSERVED THAT IT MAY BE A QUESTION WHETHER IT IS LEGITIMATE TO H AVE REGARD TO THE FACT THAT IT IS NOW KNOWN THAT THE PAYMENTS ARE IRREVOCABLE AND THAT THE CONTINGENCY OF REPAYMENT C AN NOW NEVER ARISE.A COURT OUGHT NOT TO SHUT ITS EYES TO THE TRUE FACTS IF IT SUBSEQUENTLY KNOWS THEM ALTHOUGH THESE FACTS COULD NOT HAVE BEEN KNOWN WHEN THE QUESTION ORIGINALLY AR OSE, AND OUGHT NOT TO RESORT TO GUESSING WHEN CERTAINTY IS A VAILABLE. 28 THIRD CONTENTION WAS THAT THE STATEMENT OF SMT. BINDIYA GUPTA AND SHRI SURESH KUMAR GUPTA ARE NOT RELIABLE BECAUSE THEY WERE EVEN NOT AWARE OF THE BASIC FACTS OF THE CASE AND SMT. BINDYA GUPTA HAS CLEARLY ADMITTED THAT SHE WAS NOT AWARE OF THE KNITTY GRITTY OF THE BUSINESS. IN THIS REGARD HE R EFERRED TO THE QUESTIONS AND ANSWERS DURING CROSS OBJECTION DURING WHICH SHRI SURESH KUMAR GUPTA HAS REPLIED THAT HE DOES NOT REM EMBER THE STATUS OF THE PROPRIETARY CONCERN FOR ALL THE YEARS . IT WAS FURTHER CONTENDED THAT PROPER TIME TO CROSS EXAMINE WAS NOT GIVEN BECAUSE THE LD. COUNSEL OF THE ASSESSEE HAD SOUGHT FURTHER TIME TO CROSS EXAMINE SHRI SURESH KUMAR GUPTA. IN THIS REGARD FIRST OF ALL WE WOULD LIKE TO REPRODUCE THE RELEVAN T PORTION OF THE STATEMENT RECORDED BY THE ASSESSING OFFICER. 29 THE RELEVANT PORTION OF THE STATEMENT OF THE ASS ESSEE, SHRI CHANDAN GUPTA IS AS UNDER: QUESTION KINDLY TELL THE TOTAL NUMBER OF SHARES OF COUNTRY CREDIT CAPITAL LTD. YOU HAVE PURCHASED AND S OLD A ND ALSO THE PURCHASE AND SALE RATES. ANSWER AT PRESENT I DO NOT REMEMBER. QUESTION HOW MUCH AMOUNT WAS RECEIVED ON THE SALE OF THE SHARES? ANSWER AT PRESENT I DO NOT REMEMBER. QUESTION IN YOUR RETURN OF INCOME MAJOR SOURCE OF INCOME IS FROM CAPITAL GAIN IN THE ASSESSMENT YEAR 2004-05 ST ILL YOU ARE NOT ABLE TO MAKE OUT THE AMOUNT AT WHICH THE SHARES WERE SOLD. 8 ANSWER AT PRESENT IMPUGNED DO NOT REMEMBER. QUESTION HAVE YOU ANY KNOWLEDGE ABOUT SHARE TRANS ACTIONS IN SHARES BEFORE FINANCIAL YEAR 2003-04 AND AFTER F INANCIAL YEAR 2004-05. ANSWER NO SHARE TRADING HAS BEEN DONE PRIOR TO FI NANCIAL YEAR 2003-04 AND NO SHARE TRANSACTION WAS MADE AFTE R FINANCIAL YEAR 2005-06. QUESTION WERE THESE SHARES PURCHASE AND SOLD AT M ARKET RATE AND DO YOU HAVE ANY EVIDENCE REGARDING THE SAME. ANSWER AT PRESENT I DO NOT REMEMBER. BUT I WILL SUBMIT THE EVIDENCE LATER ON. 30 RELEVANT PORTION OF THE STATEMENT OF SMT. BINDYA GUPTA WHO IS THE PROPRIETOR OF MODI SHARE SHOPPEE UPTO OC TOBER, 2003 READS AS UNDER: QUESTION DO YOU KNOW THE NATURE OF BUSINESS TRAN SACTION CARRIED OUT BY SHRI CHANDAN GUPTA THROUGH M/S MODI SHARE SHOPPEE? ANSWER I AM NOT AWARE OF THE KNITTY GRITTIES OF S HARE TRADING AS SUCH BECAUSE MOST OF THE BUSINESS HAS BEEN HANDL ED BY MY FATHER-IN-LAW SHRI SURESH KUMAR GUPTA. BUT SHIR CH ANDAN GUPTA HAS DEALT WITH M/S MODI SHARE SHOPPEE FOR THR EE TO FOUR YEARS FOR GETTING SHARE PROFITS. QUESTION I AM SHOWING YOU BANK A/C NO. 6342000002 508 OF M/S MODI SHARE SHOPPEE MAINTAINED WITH HDFC BANK, F EROZE GANDHI MARKET, LUDHIANA WHERE A NUMBER OF ENTRIES H AVE BEEN MARKED TOTALING APPROXIMATELY RS. 50 LAKHS WHICH AR E IN NATURE OF CHEQUES ISSUED BY M/S MODI SHARE SHOPPEE TO SHRI CHANDAN GUPTA. ALSO THERE IN CASH DEPOSITS OF SIMI LAR AMOUNTS IMMEDIATELY PROCEEDING THE ENTRIES RELATING TO CHEQUES ISSUED TO SHRI CHANDAN GUPTA. KINDLY EXPLA IN? ANSWER IN RESPONSE TO THIS QUERY I WOULD RESUBMIT THAT I MAY NOT BE ABLE TO EXPLAIN THE NATURE OF ENTRIES BUT ON E IMPORTANT THING WHICH I WOULD LIKE TO MENTION WHICH I AM WELL AWARE OF IS THAT THE CHEQUES ISSUED TO SHRI CHANDAN GUPTA AR E IN LIEU OF THE CASH WHICH HAS BEEN RECEIVED FROM HIS BEHALF. QUESTION DO YOU MEAN TO SUGGEST THAT ALTHOUGH CHE QUES TOTALING TO APPROXIMATELY RS. 50 LAKHS HAVE BEEN IS SUED AFTER RECEIVING RS. 50 LAKHS IN CASH ON BEHALF OF SHRI CH ANDAN GUPTA. DO YOU MEAN TO SUGGEST THAT THE ENTRIES OF LONG TERM CAPITAL GAINS TAKEN BY SHRI CHANDAN GUPTA THROUGH M /S MODI SHARE SHOPPEE ARE BOGUS AND ALL ENTRIES HAVE BEEN R OUTED BY GIVING EQUIVALENT AMOUNT OF CASH. ANSWER I WOULD SUBMIT THAT I AM NOT SO CLEAR ABOU T THE NATURE OF ENTRIES HAS BEEN MENTIONED BEFORE BUT I A M FULLY AWARE OF THE FACT THAT ALL CHEQUES ISSUED TO SHRI C HANDAN GUPTA ARE IN LIEU OF CASH ACCEPTED ON HIS BEHALF. I WOULD FURTHER SUBMIT THAT IF COMPLETE DETAILS REGARDING T HE MODUS OPERANDI OF SHRI CHANDAN GUPTA REGARDING THESE ENTR IES IN REQUIRED THAT CAN BE CLARIFIED FROM MY FATHER-IN-LA W SHRI SURESH KUMAR GUPTA WHO SHALL BE ABLE TO PROVIDE COM PLETE DETAILS REGARDING THE RECEIPT OF CASH, THE BOGUS NA TURE OF ENTRIES AND OTHER NECESSARY DETAILS. I WOULD REEMP HASIZE THAT THERE IS NO DOUBT IN THIS FACT THAT CHEQUES HAVE BE EN ISSUED TO 9 SHRI CHANDAN GUPTA OUT OF THE ACCOUNT OF M/S MODI S HARE SHOPPEE AFTER RECEIVING EQUIVALENT AMOUNT OF CASH. AS CAN BE SEEN FROM THE ABOVE STATEMENT OF SMT. BIN DIA GUPTA IT IS VERY CLEAR THAT THOUGH SHE IS NOT AWARE OF THE I NTRICACIES OF THE BUSINESS OF SHARE TRADING. SHE IS WELL AWARE O F THE FACT THAT THE ASSESSEE SHRI CHANDAN GUPTA HAS PROVIDED CASH T O THE FIRM/S MODI SHARE SHOPPEE FOR PROVIDING BOGUS ENTRIES OF L ONG TERM CAPITAL GAINS. THIS SUBSTANTIATES THE ENQUIRIES CO NDUCTED FROM THE BANKS AND OTHER SOURCES THAT THE ASSESSEE SHRI CHANDAN GUPTA HAS TAKEN BOGUS CAPITAL GAIN ENTRIES. BUT TO PROVE THE THINGS BEYOND DOUBT THE STATEMENT OF SHRI SURESH KU MAR GUPTA WAS ALSO RECORDED TO FURTHER CRYSTALLIZE THE ISSUE. THE STATEMENT IS BEING REPRODUCED BELOW. 31 RELEVANT PORTION OF THE STATEMENT OF SHRI SURESH KUMAR GUPTA WHO WAS PROPRIETOR OF THE FIRM M/S MODI SHARE SHOPPEE AND FATHER OF SHRI RAJIV GUPTA IS AS UNDER: QUESTION KINDLY PROVIDE THE DETAILS OF NATURE OF TRANSACTIONS CARRIED OUT BY SHRI CHANDAN GUPTA THRO UGH M/S MODI SHARE SHOPPEE. ANSWER SHRI CHANDAN GUPTA HAS TAKEN ENTRIES OF LO NG TERM CAPITAL GAINS AND IS PAID TAXES @ 10%. FURTHER THE ENTRIES REGARDING LONG TERM CAPITAL GAINS RELATE TO A COMPA NY BY THE NAME OF M/S COUNTRY CREDIT CAPITAL LTD. WHOSE NAME HAS CHANGED TO M/S COUNTRY GOLD CAPITAL LTD. NO TRADIN G OF THE SHARES OF THIS COMPANY HAVE TAKEN PLACE DURING THE RELEVANT YEARS IN WHICH SHRI CHANDAN GUPTA HAS TAKEN ENTRIES FOR LONG TERM CAPITAL GAINS. THE TRANSACTION IN THESE SHARE S HAVE TAKEN PLACE OFF MARKET AND NOT ON THE FLOOR OF ANY STOCK EXCHANGE. QUESTION CAN YOU FURTHER ELABORATE ON HOW THESE E NTRIES HAVE BEEN BOOKED. ANSWER THE MODUS OPERANDI IN THIS CASE IS VERY CL EAR. SHRI CHANDAN GUPTA HAS RECEIVED CHEQUES FROM THE ACCOUNT OF M/S MODI SHARE SHOPPEE MAINTAINED WITH HDFC BANK, FEROZ E GANDHI MARKET, LUDHIANA AFTER GIVING EQUIVALENT AMO UNT OF CASH. ALL THESE ENTRIES ARE BOGUS LONG TERM CAPITA L GAINS ENTRIES AS NO GENUINE SALE AND PURCHASE OF SHARES H AS OCCURRED. SHRI CHANDAN GUPTA HAS SIMPLY RECEIVED C HEQUES FOR ENTRIES OF LONG TERM CAPITAL GAINS AFTER GIVING EQUIVALENT AMOUNT OF CASH. THERE IS NO DOUBT THAT THESE ENTRI ES ARE BOGUS LONG TERM CAPITAL GAINS ENTRIES. CASH HAS BEEN REC EIVED ON BEHALF OF SHRI CHANDAN GUPTA ON NUMEROUS OCCASIONS AT DIFFERENT TIMES USUALLY AT ROOM NO. 236. LSE BUILDI NG OR IN BANK WHERE THE CASH WAS FINALLY DEPOSITED INTO THE ACCOUNT OF M/S MODI SHARE SHOPPEE. IT IS IMPORTANT TO MENTION THAT ALL THE CASH HANDED OVER ON BEHALF OF SHRI CHANDAN GUPT A HAS NOT BEEN DIRECTLY DEPOSITED IN THE BANK AS THE SAME WAS USED IN BUSINESS FOR MAKING PAYMENTS AND CHEQUES WERE ISSUE D TO SHRI CHANDAN GUPTA AGAINST BOTH REGULAR PAYMENT AND PART CASH DEPOSITED. BUT IT NEEDS TO BE REEMPHASIZED THAT AL L THE CHEQUES WHICH HAVE BEEN ISSUED TO SHRI CHANDAN GUPT A IS LIEU OF EQUIVALENT AMOUNT OF CASH RECEIVED ON HIS BEHALF . THIS IS TRUE FOR ASSESSMENT YEAR 2005-06 AS WELL ASSESSMENT YEAR 2004-05. 10 QUESTION SO IF IT IS SAID THAT SHRI CHANDAN GUPTA HAS TAKEN BOGUS LONG TERM CAPITAL GAINS BY GIVING YOU CASH IS EQUIVALENT AS SEEMS BY YOU STATEMENT ABOVE WILL IT BE TRUE. ANSWER YES, THE LONG TERM CAPITAL GAINS ENTRIES A RE UNDOUBTEDLY BOGUS. 32 RELEVANT PORTION OF CROSS EXAMINATION ALLOWED IS AS UNDER: PARTY NO. 1 CONSISTING OF SHRI SURESH KUMAR GUPTA PROP M/S MODI SHARE SHOPPEE AND SHRI RAJIV GUPTA, C.A SON OF SHRI SURESH KUMAR GUPTA. AND PARTY NO. 2 CONSISTING OF SHRI CHANDAN GUPTA THE AS SESSEE AND SHRI SUBHASH JAIN, C.A. LD. COUNSEL OF THE ASSESSEE . P-2 QUESTION WHAT IS THE NAME OF ACCOUNTANT FOR F INANCIAL YEAR 2004-05? P-1 ANSWER I DO NOT REMEMBER AT PRESENT. P-2 QUESTION HAVE YOU EVER RECEIVED CASH FROM SHR I CHANDAN GUPTA DIRECTLY DURING THE FINANCIAL YEAR 20 04-05 ON BEHALF OF M/S MODI SHARE SHOPPEE WHERE YOU ARE PROP ? P-1 ANSWER AS MUCH AS I REMEMBER THE CASH HAS BEE N RECEIVED ON BEHALF OF SHRI CHANDAN GUPTA ON DIFFERE NT OCCASION DURING THIS FINANCIAL YEAR (YEAR 2003-04 & 2004-05) TO THE BEST OF MY KNOWLEDGE. P-2 QUESTION COMPLETE DETAILS OF CASH BOOK WITH R EFERENCE TO SHRI CHANDAN GUPTA IN RELATION TO CASH? P-1 ANSWER KINDLY CLARIFY. P-2 QUESTION YOU HAVE STATED THAT THE CASH HAS BE EN RECEIVED FROM SHRI CHANDAN GUPTA IN FINANCIAL YEAR 2003-04 & 2004-05. CAN YOU GIVE DETAILS? P-1 ANSWER SHRI CHANDAN GUPTA USED TO GIVE CASH O N DIFFERENT OCCASIONS. THE ASSESSEE SHRI CHANDAN GUP TA USED TO SEND CASH ON DIFFERENT OCCASIONS. MY EARLIER STATE MENT (RECORDED BY ASSESSING OFFICER) GIVES VARIOUS DETAI LS WHICH CAN BE READ WITH. FURTHER DETAILS CAN BE OBTAINED FROM ACCOUNTANT. QUESTION PLEASE GIVE THE COMPLETE DETAILS OF DEPO SITORY BEING MAINTAINED BY THE M/S MODI SHARE SHOPPEE IN Y OUR PERSONAL NAME? ANSWER I DO NOT REMEMBER BUT THE ACCOUNTANT CAN E XPLAIN THE SAME. QUESTION WHAT IS THE NAME OF ACCOUNTANT FOR FINAN CIAL YEAR 2004-05? ANSWER I DO NOT REMEMBER AT PRESENT. P-2 QUESTION PLEASE LET ME KNOW STILL M/S MODI SH ARE SHOPPEE IS WORKING IN THE FINANCIAL YEAR 2005-06 AN D ONWARD? 11 P-1 ANSWER I SO NOT REMEMBER THE STATUS OF THE PR OP. CONCERN OF ALL THESE YEARS. 33 THE ABOVE QUESTIONS AND ANSWERS OF THE STATEMENT OF SHRI CHANDAN GUPTA CLEARLY SHOW THAT THE ASSESSEE HAS NO T DONE ANY SHARE BUSINESS BEFORE FINANCIAL YEAR 2003-04 AND AF TER FINANCIAL YEAR 2004-05 IN WHICH HE HAS EARNED CAPIT AL GAIN OF ABOUT 51 LAKHS. WHEN THE ASSESSEE WAS ABLE TO MAKE SUCH HUGE MONEY WE FAIL TO UNDERSTAND WHY THE ASSESSEE STOPPE D THIS BUSINESS. THE ASSESSEE ALSO WAS NOT AWARE WHAT IS THE MEANING OF THE DEMATERIALIZATION OF THE SHARE. IN FACT, DU RING THE YEAR THE LD. COUNSEL OF THE ASSESSEE CLARIFIED THAT HE H AD GIVEN BLANK SHARE DELIVERY SLIPS TO THE BROKER. THIS CLEARLY S HOW THAT CAPITAL GAIN WAS NOT GENUINE. WHEN THE ASSESSEE WAS CONFRO NTED WITH THE ISSUE THAT THESE SHARES ARE NOT TRADED IN ANY S HARE STOCK EXCHANGE THEN THE ASSESSEE SIMPLY REPLIED THAT HE W ILL FILE THE EVIDENCE LATER ON BUT NO EVIDENCE WAS EVER FILED. 34 WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS THAT THE STATEMENT OF SMT. BINDIYA GUPTA CANNOT BE RELIED BE CAUSE SHE DID NOT KNOW THE KNITTY GRITTIES OF THE SHARE BUSIN ESS. SMT. BINDIYA GUPTA HAD CLEARLY STATED THAT IN RESPONSE T O THE QUESTION RELATING TO THE NATURE OF THE BUSINESS TRANSACTION THAT THOUGH SHE WAS NOT AWARE OF THE KNITTY GRITTIES OF SHARE BUSIN ESS BUT SMT. BINDIYA GUPTA HAD VERY CATEGORICALLY STATED THAT TH E CHEQUES WERE ISSUED TO SHRI CHANDAN GUPTA IN RETURN OF CAS H WHICH WERE IN THE NATURE OF ENTRIES. SIMILARLY SHRI SURESH KU MAR GUPTA HAS CATEGORICALLY STATED THAT THE CHEQUES WERE ISSUED B Y RECEIVING EQUIVALENT AMOUNT OF CASH. WHEN THE CROSS EXAMINAT ION WAS GIVEN TO THE ASSESSEE, THE ASSESSEE COULD NOT PROVE OTHERWISE SIMPLY BY SAYING THAT THE CROSS EXAMINATION SHOULD NOT BE RELIED BECAUSE THE ASSESSEE WAS NOT GIVEN FURTHER TIME. T HIS IS PARTICULARLY NOT CORRECT BECAUSE THE ASSESSEE WAS G IVEN THREE HOURS TO CROSS EXAMINE SHRI SURESH KUMAR GUPTA. IT IS ALSO PERTINENT TO KNOW THAT SHRI RAJIV GUPTA WHO THE ASS ESSEE CLAIMS TO KNOW AND ON WHOSE ADVICE IT WAS STATED THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS IN SHARES, WAS ALSO PRESEN T DURING CROSS EXAMINATION WHICH BECOME CLEAR FROM THE STATEMENT B ECAUSE IT HAS BEEN MENTIONED VERY CLEARLY THAT PARTY NO. 1 CO NSISTING OF SHRI SURESH KUMAR GUPTA PROP M/S MODI SHARE SHOPPEE AND SHRI RAJIV GUPTA, C.A SON OF SHRI SURESH KUMAR GUPT A AND PARTY NO. 2 CONSISTING OF SHRI CHANDAN GUPTA, THE A SSESSEE AND SHRI SUBHASH JAIN, C.A COUNSEL OF THE ASSESSEE. 35 THE ABOVE ANALYSIS IS CLEARLY SUPPORTED BY THE T EST OF HUMAN PROBABILITIES GIVEN BY THE HON'BLE APEX COURT IN CASE OF SUMATI DAYAL VS. CIT (SUPRA) WHICH WAS RELIED ON BY THE LD. DR FOR THE REVENUE. IN THAT CASE THE ASSESSEE CARRIED ON BUSINESS AS A DEALER IN ART PIECES, ANTIQUES AND CURIOS IN BANG ALORE. DURING THE ASSESSMENT YEAR 1971-72 SHE CLAIMED THAT SHE RE CEIVED A TOTAL AMOUNT OF RS. 3,11,831 BY WAY OF RACE WINNING S IN JACKPOTS AND TREBLE EVENTS IN RACES AT TURF CLUBS I N BANGALORE, MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE APPELLANT IN THE CAPITAL ACCOUNT IN THE BOOKS. FOR THE ASSESSMENT YEAR 1972-73 SHE CLAIMED RECEIPTS OF RS. 93,500 AS RACE WINNINGS IN TWO JACKPOTS AT BANGALORE AND MADR AS AND THE SAID AMOUNT WAS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE INCOME-TAX OFFICER INCLUDED THESE AMOUNTS AS IN COME FROM 12 OTHER SOURCES AND ASSESSED THEM. THE APPELLATE ASS ISTANT COMMISSIONER CONFIRMED THE ORDER. THE APPELLANT RE FERRED THE MATTER TO THE SETTLEMENT COMMISSION. THE SETTLEMEN T COMMISSION BY A MAJORITY HELD THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUINE FOR THE FOLLOWING REASONS: (I) THE APPELLANTS KNOWLEDGE OF RACING WAS VERY MEAGRE. ( II) A JACKPOT IS A STAKE OF FIVE -EVENTS IN A SINGLE DAY AND ONE CAN BELIEVE A REGULAR AND EXPERIENCED PUNTER CLEARING A JACKPOT OCCASIONALLY BUT THE CLAIM OF HAVING WON A NUMBER O F JACKPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE B UT AT THREE DIFFERENT CENTRES, NAMELY, MADRAS, BANGALORE AND HY DERABAD APPEARED, PRIMA FACIE, TO BE WILD AND CONTRARY TO S TATISTICAL THEORIES AND EXPERIENCE OF FREQUENCIES AND PROBABIL ITIES.(III) THE APPELLANTS BOOKS DID NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATELY -PRECEDING DAYS FOR THE PURCH ASE OF JACKPOT COMBINATION, TICKETS, WHICH ENTAILED SIZABL E AMOUNTS VARYING GENERALLY BETWEEN RS. 2,000 AND RS. 3,000. THE DRAWINGS RECORDED IN THE BOOKS COULD NOT BE CO-RELA TED TO THE VARIOUS RACING EVENTS AT WHICH THE APPELLANT MADE THE ALLEGED WINNINGS. (IV) WHILE THE APPELLANT'S CAPITAL ACCOU NT WAS CREDITED WITH THE GROSS AMOUNT OF RACE WINNINGS, T HERE WERE NO DEBITS EITHER FOR EXPENSES AND PURCHASES OF TICKETS OR FOR LOSSES, (V) IN VIEW OF THE EXCEPTIONAL LUCK CLAIME D TO HAVE BEEN ENJOYED BY THE APPELLANT, HER LOSS OF INTEREST IN R ACES FROM 1972 ASSUMED SIGNIFICANCE. THE SETTLEMENT COMMISSION TO OK THE VIEW THAT WINNINGS IN RACING BECAME LIABLE TO INCO ME-TAX FROM APRIL 1, 1972, BUT ONE WOULD NOT GIVE UP AN ACTIV ITY YIELDING OR LIKELY TO YIELD A LARGE INCOME MERELY BECAUSE T HE INCOME WOULD SUFFER TAX AND THAT THE POSITION WOULD BE DIF FERENT, HOWEVER, IF THE CLAIM, OF WINNINGS IN RACES WAS FAL SE AND WHAT WERE PASSED OFF AS SUCH WINNINGS REALLY REPRESENTE D THE APPELLANT'S TAXABLE INCOME FROM SOME UNDISCLOSED S OURCES ON THESE FACTS IT WAS HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT THE SETTLEMENT C OMMISSION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTLY CONCLUD ED THAT THE APPELLANTS CLAIM ABOUT THE AMOUNT BEING HER WINNIN GS FROM RACES WAS NOT GENUINE. THUS FROM ABOVE IT IS ABSOLUTELY CLEAR THAT SURROU NDING CIRCUMSTANCES AND HUMAN PROBABILITY WAS APPLIED AND UPHELD BY THE HON'BLE APEX COURT. WHEN THE FACTS IN CASE BEFORE US ARE EXAMIN ED ON THIS PRISM IT BECOMES ABSOLUTELY CLEAR THAT THE ASSESSEE HAD MISE RABLY FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION OF SALE AN D PURCHASE OF THE SHARES. 36 ANOTHER CONTENTION THAT THE ASSESSING OFFICER HA S NOT PRODUCED THE BALANCE SHEET OF COUNTRY CREDIT CAPITAL LTD. I N THE ASSESSMENT ORDER, IS OF NO ASSISTANCE TO THE CASE OF THE ASSES SEE. WHEN THIS CONTENTION IS EXAMINED IN THE OVERALL CIRCUMSTANCES OF THE CASE AS WELL AS TEST OF HUMAN PROBABILITIES THEN IT CAN BE EASILY SEEN THAT THE BALANCE SHEET SUPPLIED BY REGISTRAR OF COMPANIES IT SELF SHOWS THE VALUATION OF THE SHARES I.E. NAV HAS BEEN WORKED OU T AT RS. 7.05 AND RS. 7.07 ON 31.3.2003 AND 31.3.2004 RESPECTIVELY. THERE IS NO MATERIAL MADE AVAILABLE BY THE ASSESSEE TO PROVE TH AT THE VALUATION OF THE SHARE HAS GONE UP SO MUCH SO AS TO REACH MORE T HAN RS. 100 PER 13 SHARE. THE SHARE IS NOT BEING TRADED IN ANY STOCK EXCHANGES, THERE IS NO EXCEPTIONAL CIRCUMSTANCE IN THE COMPANY COUNTRY CREDIT CAPITAL LTD. TO JUSTIFY THE HIGH VALUATION. THEREFORE, T HE TEST OF HUMAN PROBABILITIES CLEARLY SHOWS THAT THE PRICE HAS BEEN SIMPLY JACKED UP IN ONE TRANSACTION TO GIVE ACCOMMODATING ENTRIES IN FO RM OF BOGUS CAPITAL GAIN. 37 WE HAVE ALSO PERUSED THE DECISION OF HON'BLE PUN JAB & HARYANA HIGH COURT IN CASE OF CIT V. LAUL TRANSPORT CORP (SUPRA). IN THAT CASE HON'BLE HIGH COURT HAS SIMP LY DECLINED TO INTERFERE WITH THE FINDINGS OF THE ORDERS OF THE LD . CIT(A) AS WELL AS THE TRIBUNAL BECAUSE THESE AUTHORITIES HAVE CAREFULLY PERUSED THE RELEVANT DOCUMENTS. EVEN IF IT IS ASSU MED THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCES OF SO URCES, IT CANNOT BE DENIED THAT SOME CASH WAS DEPOSITED BY TH E BROKER ON CERTAIN DATES BEFORE ISSUING THE CHEQUES TO THE ASS ESSEE. THIS ONLY FURTHER FORTIFIES THE CASE OF THE REVENUE THAT THE TRANSACTION WAS BOGUS. THERE IS OVER-WHELMING EVIDENCE AGAINST THE ASSESSEE AND MERE FACT THAT FEW CHEQUES HAVE BEEN I SSUED BY THE BROKER OUT OF THE PROCEEDS RECEIVED THROUGH CLEARIN G, WILL NOT ALTER THE RESULT OF OTHER EVIDENCES GATHERED BY THE REVENUE. THE LD. COUNSEL OF THE ASSESSEE HAD RELIED ON THE DECIS ION OF CHANDIGARH BENCH OF THE TRIBUNAL IN MOHAN LAL JINDA L, ITA NO. 303/CHD/2004. NO DOUBT IN THAT CASE THE FACTS ARE ALMOST IDENTICAL BUT THE TRIBUNAL ALLOWED THE APPEAL OF TH E ASSESSEE BECAUSE THE REVENUE HAD NOT CONDUCTED THE PROPER EN QUIRIES. IN FACT IT IS CLEARLY OBSERVED IN THE ORDER OF THE TRI BUNAL AT THE END OF PARA 11 THAT IN THE INSTANT CASE ALSO THE ADDITION HAD BEEN MADE ONLY ON THE BASIS OF STATEMENT OF SHRI S.K. J AIN AND THE OPPORTUNITY TO CROSS EXAMINE HIM HAS NOT BEEN PROVI DED TO THE ASSESSEE. THEREFORE, THE FINDINGS GIVEN IN THE AF ORESAID REFERRED TO CASES ARE APPLICABLE TO THE FACTS OF TH E PRESENT CASE . FURTHER IN PARA 13 IT WAS OBSERVED THAT THE REV ENUE HAS NOT CONDUCTED ANY ENQUIRIES. RELEVANT PORTION READ S AS UNDER: HOWEVER, THE ASSESSING OFFICER DID NOT MAKE ANY IN QUIRY EITHER FROM THE COMPANY WHOSE SHARES WERE PURCHASED AND SOLD BY THE ASSESSEE OR FROM THE SHARE BROKER THROU GH WHOM THE TRANSACTION TOOK PLACE. THEREFORE, IT CAN BE HELD THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE RELATING T O LONG TERM CAPITAL GAINS WAS NOT A SHAM TRANSACTION RATHER IT WAS A GENUINE TRANSACTION. AS SUCH THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CONSIDERING THE CAPITAL GAIN EARNED B Y THE ASSESSEE AS NON GENUINE AND THE LD. CIT(A) WRONGLY CONFIRMED THE ACTION OF THE ASSESSMENT ORDER. 38 SIMILARLY THE DECISION RELIED ON BY THE LD. COUN SEL OF THE ASSESSEE IN CASE OF BAIJNATH AGGARWAL VS. ACIT (201 0) 133 TTJ (AGRA)(TM) IS OF NO ASSISTANCE TO THE ASSESSEE. FIR STLY IN THAT CASE SHARES WERE OBTAINED BY THE ASSESSEE THROUGH I NITIAL PUBLIC OFFER. SECONDLY IN THAT CASE ALSO DETAILED ENQUIRI ES WERE NOT MADE BY THE REVENUE AUTHORITIES WHEREAS IN CASE BEF ORE US THE BROKER OF THE ASSESSEE HIMSELF CATEGORICALLY ADMITT ED THAT THE ASSESSEE HAD PAID CASH IN LIEU OF THE ENTRY OF CAPI TAL GAIN. 39 IT WAS ALSO ARGUED BEFORE US THAT WHEN THE ASSES SEE HAD RETURNED AN ITEM OF INCOME UNDER THE HEAD CAPITAL GAIN THE PROVISIONS OF SECTION 48 WILL BE APPLICABLE. IT WA S SUBMITTED THAT SECTION 48 TALKS OF FULL VALUE OF THE CONSIDER ATION. 14 THEREFORE, EVEN IF THE MARKET VALUE OF THE SHARES WAS LESS THE ASSESSEE HAS RIGHTLY DECLARED THE FULL AMOUNT OF CO NSIDERATION RECEIVED BY THE ASSESSEE. THIS ARGUMENT LOOKS ATTR ACTIVE ON THE FACE VALUE BUT HAS NO SUBSTANCE BECAUSE IN CASE BEF ORE US THE ISSUE IS NOT WHAT IS THE CONSIDERATION RECEIVED BY THE ASSESSEE, THE ISSUE IS WHETHER THE TRANSACTION OF PURCHASE AN D SALE OF SHARES IS GENUINE OR BOGUS. WE HAVE ALREADY HELD IN ABOVE NOTED PARAS THAT THE TRANSACTION IS BOGUS, THEREFORE, THE RE IS NO QUESTION OF ASSESSING THE SAME UNDER THE HEAD CAPI TAL GAIN. IT WAS FURTHER CONTENDED THAT IN ANY CASE THIS INCOME SHOULD NOT HAVE BEEN ASSESSED U/S 68 BECAUSE ONCE THE ITEM OF CREDIT HAS BEEN SHOWN AS INCOME OF THE ASSESSEE HIMSELF THEN S AME CAN NOT BE TREATED AS UNDISCLOSED INCOME U/S 68 OF THE ACT. SECTION 68 READS AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR , AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE (ASSESSING) OFFICER, SATISFACTORY THE SUM SO CREDIT ED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR . 40 THE ABOVE CLEARLY SHOWS THAT WHAT CAN BE TAXED U /S 68 IS AN ITEM WHICH HAVE BEEN CREDITED IN THE BOOKS AND W HICH HAS NOT BEEN EXPLAINED BY THE ASSESSEE. THERE IS NO OTHER REQUIREMENT UNDER THIS SECTION. ONCE THE TRANSACTION OF PURCHA SE AND SALE IS FOUND TO BE BOGUS THEN SALE PROCEEDS HAS TO BE ADDE D AS INCOME OF THE ASSESSEE U/S 68 BECAUSE MONEY RECEIVED ON TH E BASIS OF BOGUS TRANSACTION HAS BEEN CREDITED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. THE SAME POSITION WAS UPHELD BY HON'BL E SUPREME COURT IN CASE OF CIT VS. P. MOHANAKALA, 291 ITR 278 (S.C). IN THIS CASE THE HON'BLE SUPREME COURT WAS CONCERNED W HETHER THE GIFTS WHICH WERE PROVED TO BE BOGUS CAN BE ADDED U/ S 68 OF THE ACT. THE HON'BLE SUPREME COURT MADE VARIOUS OBSERV ATIONS AND THE RELEVANT PORTION AT PARA 24 READS AS UNDER: 24 WE ARE REQUIRED TO NOTICE THAT SECTION 68 OF TH E ACT ITSELF PROVIDES, WHERE ANY SUM IS FOUND CREDITED IN THE BO OKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE IF THE PRE VIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT TH E NATURE AND SOURCE OF SUCH SUMS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE IS IN THE OPINION OF THE ASSESSING OFFICER NOT SATISFACTORY. SUCH OPINION FORMED ITSELF CONSTITUT ES APPELLATE AUTHORITY PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE , VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEE FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEE BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. 41 WE MAY REITERATE THAT CHANDIGARH BENCH OF THE TR IBUNAL IN CASE IN CASE OF ACIT V. AVTAR SINGH, ITA NO. 949/CH D/2011 HAS TAKEN SIMILAR VIEW. IN THAT CASE THE ASSESSEE HAS P URCHASED SHARES OF ARCEE ISPAT UDYOG @ RS. 100 PER SHARE AND LATER ON SOLD THE SAME AT RS. 10 PER SHARE AND CLAIMED CAPI TAL LOSS. AFTER DETAILED DISCUSSION IT WAS HELD THAT THIS TRA NSACTION WAS BOGUS AND THEREFORE, CAPITAL LOSS COULD NOT BE ALLO WED. IN THIS DECISION ONLY DIFFERENCE IS THAT THE ASSESSEE HAD C LAIMED BOGUS CAPITAL LOSS WHEREAS IN CASE BEFORE US THE ASSESSEE HAS CLAIMED BOGUS CAPITAL GAIN AND THEREFORE, RATIO OF THIS DEC ISION IS 15 APPLICABLE. FURTHER HON'BLE PUNJAB & HARYANA HIGH C OURT HAS CONFIRMED THE ADDITION IN CASE OF SOM NATH MAINI VS . CIT (SUPRA) BY OBSERVING THAT THE BURDEN WAS ON THE ASS ESSEE TO PROVE THAT THE TRANSACTION WAS GENUINE. SIMILARLY OTHER DECISION RELIED ON BY THE LD. DR FOR THE REVENUE IN CASE OF BALBIR CHAND MAINI VS. CIT (SUPRA) IS ALSO SQUARELY APPLICABLE. IN THAT CASE ALSO THE ASSESSEE HAS PURCHASED SHARES @ RS. 2.50 T O 3.40 PER SHARE AND SOLD THE SAME AT RS. 55 PE SHSARE. AFTER DISCUSSION THE FACTS OF THE CASE AND ORDER OF THE TRIBUNAL WAS CONFIRMED BY HON'BLE PUNJAB & HARYANA HIGH COURT. 42 IN VIEW OF THE DETAILED DISCUSSION, WE FIND NOTH ING WRONG WITH THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SA ME. 6. SINCE AS OBSERVED EARLIER THE FACTS OF THESE CAS ES ARE IDENTICAL TO THE FACTS IN THE CASE OF CHANDAN GUPTA V ACIT IN ITA NO. 552/ CHD/2008. FOLLOWING THE ABOVE ORDER, WE DECIDE THE ISSUES RAISED BY THE ASS ESSEE AGAINST THE ASSESSEE. 7. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/03/2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 11 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR