Shri Amandeep Singh Bhatai, Indore V. The Addl.CIT Range-3, Indore

ITSSA 115/IND/2011

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2397 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 11-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY; R A VERMA DRS
• Assessee Lawyers: ARPIT GAUR CAS
• Keywords: Unexplained cash credit; Gift; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Share purchase agreement; Opportunity of being heard; Question of law; Accommodation entries; Block assessment; Sham transactions; Documents seized; Reassessment proceedings
• Section: 143(3); 142(1); 153A; 14A; 260A; 133(6); 147; 131; 68; 263; 132; 139

Judgement Text

AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER IT(SS)A NOS.112 TO 115/IND/2011 A.YS. 2002-03, 03-04, 05-06 & 2006-07 AMANDEEP SINGH BHATIA, INDORE PAN AGOPB 3205 E :: ASSESSEE VS ADDL. CIT, RANGE-3, INDORE :: RESPONDENT ASSESSEES BY SHRI ANIL KAMAL GARG AND SHRI ARPIT GAUR, CAS RESPONDENT BY SHRI RAJEEV VARSHNEY AND SHRI R.A. VERMA, DRS DATE OF HEARING 18.5.2016 DATE OF PRONOUNCEMENT 18.5.2016 O R D E R PER SHRI D.T. GARASIA, JM THE ABOVE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE DIFFERENT ORDERS OF LD. CIT(A)-I, INDORE, DATED 05. 8.2011. GROUND NOS. 1.1 & 1.2 (A.YS. 2002-03, 03-04, 05-06 & 2006-07) THESE GROUNDS OF THE APPEALS OF THE ASSESSEE ARE DI RECTED AGAINST THE AOS ACTION OF MAKING ADDITIONS U/S 153A ON THO SE ISSUES IN RESPECT OF WHICH NO INCRIMINATING MATERIAL WAS FOUND OR SEI ZED DURING THE COURSE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 2 OF SEARCH. DURING THE COURSE OF THE HEARING, BOTH T HE PARTIES SUBMITTED THAT THIS ISSUE IS ALSO INVOLVED IN THE FOLLOWING A PPEALS, WHEREIN THE ASSESSMENT ORDERS PASSED U/S 153/143(3) ARE NON-ABA TED: APPEAL NO. A/D A.Y. NAME OF THE ASSESSEE IT(SS)A NO.116/ IT(SS)A NO.117/ A A 2003-04 2004-05 GURVINDER SINGH BHATIA IT(SS) A NO.26 & 17/ IT(SS)A NO.27 & 18/ CO & IT(SS)A NO.14 & 19/ A & D A & D A & D 2002-03 2003-04 2004-05 SURENDRA SINGH BHATIA IT(SS) A NO.104/ IT(SS)A NO.105/ IT(SS)A NO.106/ A A A 2002-03 2003-04 2004-05 BHATIA INTERNATIONAL LTD. IT(SS) A NO.120/ IT(SS)A NO.121/ IT(SS)A NO.122/ A A A 2002-03 2003-04 2004-05 MANJIT SINGH BHATIA IT(SS)A NO.15/ D 2005-06 BCC FINANCE LTD. 2. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, PRESENTLY AGED NEARLY 35 YEARS. THE ASSESSEE IS REG ULARLY ASSESSED TO INCOME-TAX FOR THE LAST MANY YEARS. THE ASSESSEE FU RNISHED HIS ORIGINAL RETURN OF INCOME, PERTAINING TO THE ASSESSMENT YEAR UNDER REVIEW, U/S. 139 OF THE INCOME-TAX ACT, 1961, ON 25-01-2003 VIDE ACK. NO. 43630 WITH THE THEN JCIT, RANGE-4, INDORE, DECLARING AN I NCOME OF RS.63,500/- [KINDLY REFER PB PAGE NO. 20 TO 24]. IN RESPONSE TO THE RETURN OF INCOME, FURNISHED BY THE ASSESSEE U/S. 139 OF THE INCOME-TA X ACT, 1961, NO ACTION WAS TAKEN BY THE ASSESSING OFFICER AND AS SU CH THE ASSESSMENT WAS DEEMED TO HAVE BEEN COMPLETED U/S. 143(1)(A) OF THE INCOME-TAX ACT, 1961. A SEARCH U/S. 132(1) OF THE INCOME-TAX A CT, 1961 WAS CARRIED OUT BY THE ASSISTANT DIRECTOR OF INCOME-TAX (INV.)- II, INDORE, ON 25-09- 2007, IN THE RESIDENTIAL PREMISES OF THE ASSESSEE A S ALSO IN THE BUSINESS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 3 PREMISES IN WHICH FAMILY MEMBERS/RELATIVES OF THE A SSESSEE WERE HAVING VESTED INTEREST. DURING THE COURSE OF THE SEARCH, T HE BHATIA GROUP HAD ADMITTED ADDITIONAL INCOME AGGREGATING TO RS.26,15, 24,529/- AND AS AGAINST SUCH ADMITTED INCOME OF RS.26,15,24,529/-, THE GROUP, AS A WHOLE, HAD SHOWN AN ADDITIONAL INCOME OF RS.27,33,7 3,087/- IN THE RETURNS OF INCOME FURNISHED UNDER S.153A OF THE ACT . HOWEVER, THE ASSESSEE NEITHER ADMITTED NOR DECLARED ANY ADDITION AL INCOME IN HIS RETURN OF INCOME. SUCH FACTS ARE EVIDENT FROM THE F INDINGS GIVEN BY THE CIT(A) AT PARA 2 & 2.1 AT PAGE NO. 2 & 3 OF HIS ORD ER. DURING THE COURSE OF THE SEARCH, NO UNDISCLOSED OR UNEXPLAINED MONEY, BULLION, JEWELLERY, VALUABLE ARTICLES OR THINGS PERTAINING TO THE ASSES SEE WERE FOUND OR SEIZED. SUBSEQUENTLY, A NOTICE DATED 03-03-2008 WAS ISSUED BY THE LEARNED ADDL. COMMISSIONER OF INCOME-TAX, RANGE-3, INDORE, U/S. 153A OF THE INCOME-TAX ACT, 1961 [PB-1]. UNDER SUCH NOTI CE, THE ASSESSEE WAS REQUIRED TO FURNISH HIS RETURN OF TOTAL INCOME PERTAINING TO THE ASSESSMENT YEAR UNDER REVIEW, WITHIN A PERIOD OF 30 DAYS FROM THE DATE OF SERVICE OF THE NOTICE. IN COMPLIANCE TO THE NOT ICE UNDER S. 153A, THE ASSESSEE, FURNISHED HIS RETURN OF TOTAL INCOME ON 2 7-05-2008 VIDE ACK. NO. 6030100053 DECLARING THE SAME INCOME OF RS.63,5 00/- AS WAS DECLARED BY HIM IN THE ORIGINAL RETURN FURNISHED U/ S. 139. ALONG WITH THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAD FURNI SHED COPY OF CAPITAL ACCOUNT AND ALSO HIS STATEMENT OF AFFAIRS R ELEVANT TO THE PREVIOUS YEAR UNDER REVIEW [PB-25 TO 29]. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICES U/S. 143(2) & 142 (1) ALONG WITH A QUESTIONNAIRE WERE ISSUED FOR THE FIRST TIME ON 25- 08-2009. XEROX COPIES OF THE NOTICES U/S. 142(1) ALONG WITH A COPY OF QUE STIONNAIRE ARE FILED BY THE ASSESSEE IN THE PAPER BOOK AT PAGE NO. 51 TO 53 . IN RESPONSE TO SUCH NOTICES, THE ASSESSEE THROUGH HIS AUTHORIZED R EPRESENTATIVE ATTENDED THE HEARING BEFORE THE LEARNED ASSESSING O FFICER FROM TIME TO AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 4 TIME AND MADE WRITTEN SUBMISSIONS DATED 23-06-2009, 09-11-2009, 09- 12-2009 ALONG WITH NECESSARY DOCUMENTARY EVIDENCES. XEROX COPIES OF SUCH WRITTEN SUBMISSIONS ARE FILED BY THE ASSESSEE IN THE PAPER BOOK AT PAGE NO. 54 TO 76. FINALLY, THE ASSESSING OFFICER F RAMED THE ASSESSMENT ON 18-12-2009, U/S. 143(3) READ WITH SECTION 153A O F THE INCOME-TAX ACT, 1961, DETERMINING THE INCOME OF THE ASSESSEE A T RS.70,93,470/- AS AGAINST THE RETURNED INCOME OF RS.63,500/- THEREBY MAKING ADDITIONS OF RS.70,29,970/-, AS PER DETAILS GIVEN BELOW: S. NO. PARTICULARS AMOUNT (RS.) 1 ADDITION ON ACCOUNT OF GIFT IN FORM OF RESURGENT BONDS [ON PROTECTIVE BASIS] 70,29,000 2 ADDITION ON ACCOUNT OF DIVIDEND UNDER RULE 8D R.W .S. 14A 970 TOTAL ADDITIONS 70,29,970 3. SO FAR AS THE ISSUE OF INCRIMINATING MATERIAL IS CONCERNED, THE AO HAS NOT GIVEN ANY SPECIFIC FINDING ON THE ISSUE. HO WEVER, THE AO AT PAGE NO. 2 OF THE ASSESSMENT ORDER, HAS STATED THAT DURI NG THE COURSE OF THE ASSESSMENT PROCEEDING HE HAD ASCERTAINED FROM THE P &L ACCOUNT AND BALANCE SHEET OF THE ASSESSEE THAT THE ASSESSEE HAD RECEIVED CERTAIN GIFT FROM VARIOUS PERSONS. 4. MATTER CARRIED TO LEARNED CIT(A), WHO UPHELD THE VALIDITY OF THE ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. TH E LD. CIT(A) ALSO CONFIRMED THE ADDITION MADE BY THE AO IN THE ASSESS EES INCOME, ON PROTECTIVE BASIS, ON ACCOUNT OF GIFT IN FORM OF RES URGENT BONDS, AT RS.70,29,000/- TO SUBSTANTIVE BASIS. THE CIT(A) ALS O ENHANCED THE ADDITION OF RS.70,29,000/- SO MADE BY THE AO TO RS. 1,00,44,384/-. THE LD. CIT(A) REPRODUCED THE WRITTEN SUBMISSION OF THE ASSESSEE MADE ON THIS LEGAL ISSUE AT PAGE NO. 9 TO 25 OF HIS ORDER A ND DEALT WITH THE ISSUE AT PARA 4.1, PAGE NO. 46 TO PARA 4.1.8, PAGE NO. 60 OF THE ORDER. THE LD. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 5 CIT(A) HAS SUMMED-UP HIS FINDINGS AT PARA 4.1.7 AND PARA 4.1.8 FROM PAGE NO. 57 TO 60 OF HIS ORDER. ACCORDING TO THE CI T(A), THERE WAS NO REQUIREMENT FOR AN ASSESSMENT MADE UNDER S. 153A OF THE ACT BEING BASED ON ANY MATERIAL SEIZED IN THE COURSE OF THE S EARCH. THE CIT(A) HELD THAT THE JUDGMENT GIVEN BY THE HONBLE ITAT IN DORE BENCH IN THE CASE OF S.K. JAIN VS. ACIT 14 ITJ 434 (TRIB.) WAS NOT A CORRECT DECISION AS IN SUCH DECISION, THE BENCH HAD NOT CONSIDERED I TS EARLIER JUDGMENT GIVEN IN A CASE OF RAJAT TRADECOM (INDIA) PVT. LTD. [IT(SSA) NO. 182 & 183/IND/2007]. THE DECISION IN THE CASE OF S.K. JAI N WAS GIVEN BY THE INDORE BENCH WITHOUT REFERRING THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF SHIVNATH HARNARAYAN (INDIA) LTD. AS REPORTED IN 117 TTJ 480 AND ALSO IN THE CASE OF MS. SHYAMLATA KAUSHIK 114 TTJ 940 . FINALLY, THE CIT(A) AT PARA 4.1.8, P. 59, HELD THAT THERE WAS NO ILLEGALITY IN ISSUING NOTICE UNDER S. 153A AND MAKING ADDITION OF THE ITE MS SHOWN IN THE ORIGINAL RETURN (FILED PRIOR TO SEARCH) WHERE NO VI EW WAS FOUND IN THE ORIGINAL ASSESSMENT PROCEEDINGS. 5. LD. AR FOR THE ASSESSEE HAS MADE ORAL AS WELL AS WRITTEN SUBMISSION AS UNDER: 1.01 THE ASSESSEE HAD VOLUNTARILY FURNISHED HIS RE TURN OF INCOME UNDER THE PROVISIONS OF SECTION 139(1) OF THE INCOME-TAX ACT, 1961 ON 25-01-2003 [KINDLY REFER PB PAGE NO. 20]. 1.02 THAT, IN RESPONSE TO THE ORIGINAL RETURN, NO A CTION WAS TAKEN BY THE REVENUE HENCE THE ASSESSMENT IS DEEMED TO HAVE BEEN COMPLETED UNDER THE PROVISIONS OF SECTION 143(1)(A) OF THE INCOME-TAX A CT, 1961. 2.00 THAT, A SEARCH UNDER THE PROVISIONS OF SECTION 132(1) OF THE INCOME- TAX ACT, 1961 WAS CARRIED OUT BY THE ASSISTANT DIRE CTOR OF INCOME-TAX (INV.)- II, INDORE, ON 25-09-2007, IN THE RESIDENTIAL PREMI SES OF THE ASSESSEE. 2.01 THAT, DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS, NO INCRIMINATING MATERIAL OR UNDISCLOSED ASSET PERTAIN ING TO THE ASSESSMENT YEAR UNDER CONSIDERATION WAS EITHER FOUND OR SEIZED. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 6 3.00 THAT, DURING THE COURSE OF THE ENTIRE ASSESSME NT PROCEEDINGS CARRIED OUT UNDER S. 153A OF THE INCOME-TAX ACT, 1961, THE AO DID NOT RAISE ANY QUERY ON ANY OF THE MATERIALS OR FINDINGS RELATING TO THE SEARCH CARRIED OUT UNDER S. 132. IT IS SUBMITTED THAT THE ASSESSING OF FICER MADE THE ADDITION ONLY ON THE ROUTINE ITEMS SUCH AS GIFT RECEIVED IN FORM RESURGENT BONDS AND DISALLOWANCE UNDER RULE 8D. R.W.S. 14A OF THE INCOM E-TAX ACT, 1961. HOWEVER, NONE OF THE ADDITIONS WAS BASED ON ANY LOO SE PAPER/ DOCUMENT/ OTHER INCRIMINATING MATERIAL/ ASSET FOUND AND/ OR S EIZED DURING THE COURSE OF THE SEARCH. 3.01 THE ASSESSMENT YEAR-WISE DETAILS OF ASSESSMENT S FRAMED BY THE AO ARE GIVEN AS UNDER: S. NO A.Y. INCOME RETURNED U/S. 153A ADDITION ON ACCOUNT OF GIFT IN FORM OF RIB BONDS ADDITION BY HOLDING SHARE TRANSACTIONS AS NON- GENUINE OTHERS TOTAL ADDITIONS ASSESSED INCOME REMARKS 1 2002-03 63,500 70,29,000 - 970 70,29,970 70,93,47 0 - 2 2003-04 63,500 1,47,00,000 - 300 1,47,00,300 1,47 ,63,800 - 3 2004-05 15,34,410 5,10,26,518 - 965 51027483 5,25 ,61,893 - 4 2005-06 2,67,25,030 2,32,34,318 3,175 3175 2,67, 28,205 STCG TREATED AS BUSINESS INCOME 5 2006-07 3,18,60,170 - 2,72,39,741 [STCG] 9,91,440 [LTCG] 2,075 2,075 3,28,53,685 STCG & LTCG TREATED AS BUSINESS INCOME 6 2007-08 59,27,310 - 1,26,575 4,575 4,575 59,31,88 5 STCG TREATED AS BUSINESS INCOME 7 2008-09 68,51,840 - - 3,19,929 3,19,929 71,71,769 - 3.02 IT IS SUBMITTED THAT DURING THE COURSE OF THE SEARC H, NOT A SINGLE DOCUMENT OR ANY OTHER CLINCHING MATERIAL WAS EITHER FOUND OR RECOVERED WHICH COULD HAVE FORMED ANY BASIS FOR MAKING THE ADDITION S BY THE AO, AS STATED IN THE ABOVE TABLE. 3.03 THE AO MADE THE ENTIRE ADDITIONS MERELY ON GUE SS WORK, CONJECTURES AND SURMISES. IT SHALL BE WORTHWHILE TO NOTE THAT I N THE INSTANT CASE, THE AO HAS MADE ADDITIONS ON ACCOUNT OF RESURGENT BONDS ME RELY BY MAKING A REFERENCE OF P&L ACCOUNT AND BALANCE SHEET WHICH WE RE FILED BY THE ASSESSEE HIMSELF ALONG WITH HIS ORIGINAL RETURN UND ER S.139 AS WELL AS ALONG WITH THE RETURN FILED UNDER S.153A OF THE ACT. SUCH FACT IS EVIDENT FROM PAGE NO. 2 OF THE ASSESSMENT ORDER AT WHICH THE AO HAS C LEARLY STATED AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS ASCERTAIN FROM THE P & L ACCOUNT AND BALANCE SHEET THAT THE ASSESSEE HAS REC EIVED GIFT FROM THE FOLLOWING PERSONS :.. 3.04 THE AO MADE THE ADDITION ON ACCOUNT OF GIFT IN THE FORM OF RESURGENT BONDS BY INVOKING PROVISIONS OF SECTION 68 OF THE A CT BY HOLDING THAT SOURCES AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 7 AND CREDITWORTHINESS OF THE DONORS OF THE BONDS HAD NOT STOOD ESTABLISHED. THE MAKING OF ADDITION UNDER S.68 ITSELF PROVES THA T THE ADDITION WAS BASED MERELY ON THE ENTRIES FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE AND IT WAS NOT BASED UPON ANY INCRIMINATIN G MATERIAL SEIZED DURING THE COURSE OF SEARCH. 4.01 IN THE INSTANT CASE, THE IMPUGNED ASSESSMENT O RDERS HAVE BEEN PASSED BY THE ASSESSING OFFICER, UNDER S.153A OF TH E INCOME-TAX ACT, 1961, ONLY ON THE BASIS OF A SEARCH UNDER S.132 CARRIED O UT IN THE BUSINESS PREMISES OF THE ASSESSEE. AS SAID IN THE PRECEDING PARA, THE AO HAS MADE THE ADDITION IN THE RETURNED INCOME OF THE ASSESSEE WITHOUT HAVING ANY RECOURSE TO ANY INCRIMINATING MATERIAL OR DOCUMENT OR VALUABLE ARTICLE OR THING FOUND DURING THE COURSE OF THE SEARCH PROCEEDINGS. SUCH AN ACT OF THE LEARNED AO IS PATENTLY WRONG, UNJUSTIFIED, UNWARRANTED AND BAD IN LAW IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSIT ION AS DISCUSSED IN THE ENSUING PARAS. 4.02 THE PROVISIONS OF SECTION 153A, 153B AND 153C ENJOINING SCHEME FOR ASSESSMENT IN CASE OF SEARCH OR REQUISITION HAVE BE EN BROUGHT TO THE STATUTE BY THE FINANCE ACT, 2003 W.E.F. 01-06-2003. ON A PL AIN READING OF THE PROVISIONS OF SECTION 153A IT BECOMES ABUNDANTLY CL EAR THAT SUCH PROVISIONS ARE MEANT TO CARRY THE OPERATION OF SEARCH UNDER S. 132 OR THE OPERATION OF REQUISITION UNDER S. 132A TO ITS LOGICAL END BY WAY OF FRAMING AN ASSESSMENT OR REASSESSMENT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. IN THIS CONTEXT, BEFORE PROCEEDING FURTHER, IT SHALL BE USEFUL TO REPRODUCE THE PROVISIONS OF SECT ION 153A AS UNDER: 153A. [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 1 53D, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 13 2 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UND ER SECTION 132A AFTER THE 31 ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF IN COME IN RESPECT OF ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIB ED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SU CH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MA DE: PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASSESSMENT YEARS; AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 8 PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT, I F ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX AS SESSMENT YEARS REFERRED TO IN THE [SUB-SECTION] PENDING ON THE DATE OF INITIAT ION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE; PROVIDED ALSO THAT THE CENTRAL GOVERNMENT OF MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE (EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED UNDER THE SECOND PROVISO), SPECIFY THE CLASS OR CLASSES OF CASES IN WHICH THE ASSESSING OFFICER SHA LL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOM E FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE. [(2) IF ANY PROCEEDING INITIATED OR ANY ORDER OF AS SESSMENT OR REASSESSMENT MADE UNDER SUB-SECTION (1) HAS BEEN ANNULLED IN APP EAL OR ANY OTHER LEGAL PROCEEDING, THEN, NOTWITHSTANDING ANYTHING CONTAINE D IN SUB-SECTION (1) OR SECTION 153, THE ASSESSMENT OR REASSESSMENT RELATIN G TO ANY ASSESSMENT YEAR WHICH HAS ABATED UNDER THE SECOND PROVISO TO S UB-SECTION (1), SHALL STAND REVIVED WITH EFFECT FROM THE DATE OF RECEIPT OF THE ORDER OF SUCH ANNULMENT BY THE COMMISSIONER. PROVIDED THAT SUCH REVIVAL SHALL CEASE TO HAVE EFFE CT, IF SUCH ORDER OF ANNULMENT IS SET ASIDE.] EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT - (I) SAVE AS OTHERWISE PROVIDED IN THIS SECTION, SEC TION 153B AND SECTION 153C, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTION; (II) IN AN ASSESSMENT OR REASSESSMENT MADE IN RESPE CT OF AN ASSESSMENT YEAR UNDER THIS SECTION, THE TAX SHALL BE CHARGEABL E AT THE RATE OR RATES AS APPLICABLE TO SUCH ASSESSMENT YEAR.' 4.03 ON A PLAIN READING OF THE PROVISIONS OF SECTIO N 153A, ONE MAY NOTE THAT THESE PROVISIONS CAN BE SET INTO MOTION ONLY IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER S. 132 OR BOOKS OF ACCOUNT, OTHE R DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER S. 132A. EVEN, THE CAPTION OF THE PROVISION IS READ AS ASSESSMENT IN CASE OF SEARCH OR REQUISITION. THUS , THERE REMAINS NO DOUBT TO THE PROPOSITION THAT THE SECTION 153A CANNOT BE INV OKED IN EACH AND ANY CASE BUT IT CAN BE INVOKED ONLY FOR THE PURPOSE OF MAKIN G AN ASSESSMENT OR REASSESSMENT IN THE CASE OF A PERSON IN WHOSE CASE EITHER A SEARCH UNDER S. 132 IS INITIATED OR A REQUISITION UNDER S. 132A IS MADE. THE SOLE PURPOSE OF THE SECTION 153A IS TO BRING HOME THE TAX ON THE UNDISCLOSED INCOME, UNEARTHED DURING THE COURSE OF ACTION UNDER S. 132/ 132A, TO THE KITTY OF THE EX-CHEQUER. IT IS SUBMITTED THAT THE SECTION 153A I S NOT MEANT FOR ASSESSING/ REASSESSING ANY INCOME WHICH IN THE OPINION OF REVE NUE AUTHORITIES HAS ESCAPED TO THE ASSESSMENT AND FOR THAT THERE ARE OT HER PROVISIONS SUCH AS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 9 SECTION 147 AND SECTION 263 IN THE STATUTE. ALTHOUG H, NOT EXPLICITLY STATED, THE PROVISIONS OF SECTION 153A ARE AIMED FOR MAKING THE ASSESSMENT/ REASSESSMENT, FOR SIX ASSESSMENT YEARS, OF THE PERS ONS SEARCHED/ REQUISITIONED, ONLY, ON THE BASIS OF MONEY, BULLION , JEWELLERY, OTHER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS FOUND AND SEIZED EITHER UNDER S. 132 OR REQUISITIONED UNDER S. 132A. IN OTH ER WORDS, SUBJECT TO CERTAIN EXCEPTIONS, AS DISCUSSED HERE-IN-AFTER, UNDER THE S CHEME OF THE LAW ANY ASSESSMENT/ REASSESSMENT UNDER THE PROVISIONS OF SE CTION 153A HAS TO BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL OR UNDISCLOSED ASSETS FOUND DURING THE COURSE OF ACTION UNDER S. 132/ 132A AND IT CANNOT BE MADE ON THOSE ISSUES IN RESPECT OF WHICH NO INCRIMINATING M ATERIAL/ UNDISCLOSED ASSET WAS FOUND. 4.04 IT IS SUBMITTED THAT NORMALLY PROVISIONS OF SE CTION 132 ARE INVOKED ONLY WHEN THE AUTHORIZING OFFICER BEING THE DIRECTOR GEN ERAL OR DIRECTOR OR CHIEF COMMISSIONER OR COMMISSIONER OR ADDITIONAL DIRECTOR OR ADDITIONAL COMMISSIONER OR JOINT DIRECTOR OR JOINT COMMISSIONE R, IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEV E THAT ANY PERSON IS IN POSSESSION OF SOME MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLES OR THINGS OR BOOKS OF ACCOUNT OR DOCUMENTS WHICH HAVE NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED BY SUCH PERSON FOR THE PURPOSE OF THE INCOME-TAX ACT, 1961. THE PURPOSE OF THE PROVISIONS OF SECTION 132 IS NOT TO MAKE ANY ASSESSMENT OR REASSESSMENT BUT TO GATHER THE MATERI AL NECESSARY FOR THE PURPOSE OF MAKING ASSESSMENT OR REASSESSMENT. IT IS SUBMITTED THAT THE PROVISIONS OF SECTION 132 ARE NOT AIMED FOR DISCOVE RY OF THOSE ASSETS, BOOKS OR DOCUMENTS OR TRANSACTIONS, WHICH ARE ALREADY IN THE SPECIFIC KNOWLEDGE OR DOMAIN OF THE REVENUE OR IF REQUIRED MAY COME IN TH E SPECIFIC KNOWLEDGE OR DOMAIN OF THE REVENUE. IT SHALL THUS BE APPRECIATED THAT THE PROVISIONS OF SECTION 132 ARE NOT MEANT FOR VERIFYING THE TRANSAC TIONS WHICH ARE ALREADY RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF AN ASSE SSEE. FOR SUCH VERIFICATION, THE POWERS OF ASSESSMENT OR REASSESSM ENT ARE DULY VESTED WITH THE AO UNDER THE PROVISIONS OF SECTION 143/ 147 OF THE ACT. AS A NATURAL COROLLARY IT THUS FOLLOWS THAT VERY PURPOSE OF INIT IATING ACTION UNDER S. 132 IS TO UNEARTH OR DISCOVER ANY UNDISCLOSED INCOME OR UNDIS CLOSED ASSET OF AN ASSESSEE AND ITS OBJECTIVE IS NOT AT ALL TO VERIFY THE VERACITY OF THE TRANSACTIONS ALREADY RECORDED IN TH E REGULAR BOOKS OF ACCOUNT OR IN RESPECT OF WHICH ASSESSMENTS HAVE ALREADY ATT AINED FINALITY. SINCE, THE PROVISIONS OF SECTION 153A HAVE THE SOLE OBJECTIVE OF FRAMING THE ASSESSMENT/ REASSESSMENT IN THE CASE OF A PERSON IN WHOSE CASE SEARCH UNDER S. 132 IS INITIATED OR REQUISITION UNDER S. 132 IS MADE, IT H AS TO BE NECESSARILY CONCLUDED THAT THE SCOPE OF THE ASSESSMENT/ REASSES SMENT UNDER THE PROVISIONS OF SECTION 153A IS LIMITED AND RESTRICTE D ONLY TO THE UNDISCLOSED INCOME BASED UPON THE INCRIMINATING MATERIAL/ UNDIS CLOSED ASSETS FOUND DURING THE COURSE OF SEARCH/ REQUISITION. 4.05 IT IS SUBMITTED THAT THE SCHEME OF SECTION 153 A TAKES WITHIN ITS SWEEPS NOT ONLY THE ASSESSMENT/ REASSESSMENT FOR THOSE COM PLETED ASSESSMENT YEARS IN RESPECT OF WHICH EITHER THE ASSESSMENTS UN DER S. 143(3) HAVE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 10 ALREADY GOT COMPLETED PREVIOUSLY OR THE TIME LIMIT FOR ISSUANCE OF NOTICE UNDER S. 143(2) HAVE GOT EXPIRED BUT IT ALSO INCLUDE THOS E ASSESSMENT YEARS IN RESPECT OF WHICH EITHER THE ASSESSMENT PROCEEDINGS WERE PENDING OR THE STATUTORY TIME LIMIT FOR ISSUANCE OF NOTICE UNDER S . 143(2) WERE ALIVE, ON THE DATE OF INITIATION OF THE SEARCH. THE LATER SITUATI ON HAS BEEN CONTEMPLATED UNDER CLAUSE (B) OF SUB-SECTION (1) TO SECTION 153A OF THE ACT WHICH PRESCRIBES THAT ALL THE ASSESSMENT PROCEEDINGS WHIC H ARE PENDING ON THE DATE OF SEARCH SHALL GET ABATE. IT IS SO BECAUSE WHILE L EGISLATING THE LAW THE LEGISLATURE WERE NOT INTENDING TO CARRY OUT TWO PAR ALLEL ASSESSMENT/ REASSESSMENT PROCEEDINGS FOR THE SAME ASSESSMENT YE ARS UNDER TWO DIFFERENT SECTIONS WHICH WAS THE SITUATION PREVALEN T IN THE OLD BLOCK ASSESSMENT SCHEME UNDER CHAPTER XIV-B OF THE ACT IN RESPECT OF SEARCH INITIATED UP TILL 31 ST DAY OF MAY, 2003. IT IS THEREFORE, IT HAS BEEN PRE SCRIBED THAT NO SOONER ANY SEARCH UNDER S. 132 TAKES PLACE IN CASE OF ANY ASSESSEE, ALL THE ASSESSMENT PROCEEDINGS WHICH WERE EITHER IN THE MOTION OR WHICH WERE PENDING SHALL COME TO A HALT. 4.06 IT IS SUBMITTED THAT UNDER THE PROVISIONS OF S ECTION 153A OF THE ACT, ASSESSMENT OR REASSESSMENT OF TOTAL INCOME OF THE P ERSON SEARCHED OR REQUISITIONED FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE HAS TO BE MADE BY THE CONCERNING ASSESSING OFFICER. UNDER THE SECOND PROVISO TO SECTION 153A, IT HAS BEEN ENJOINE D THAT ASSESSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY OF THE SIX AS SESSMENT YEARS WHICH IS PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING THE REQUISITION SHALL ABATE. ON A PLAIN READING OF THE PROVISO, IT BECOME S ABUNDANTLY CLEAR THAT ONLY THE ASSESSMENT PROCEEDINGS WHICH WERE PENDING ON TH E DATE OF INITIATION OF SEARCH OR REQUISITION SHALL GET ABATE WHEREAS THE A SSESSMENT PROCEEDINGS FOR OTHER ASSESSMENT YEARS, WHICH HAVE ATTAINED FINALIT Y, SHALL NOT GET ABATED. THUS, A CLEAR CUT DISTINCTION HAS BEEN MADE IN THE SECTION ITSELF IN RESPECT OF THOSE ASSESSMENT YEARS IN RESPECT OF WHICH PROCEEDI NGS HAVE ATTAINED FINALITY AT THE AO STAGE AND THOSE ASSESSMENT YEARS WHERE TH E ASSESSMENT PROCEEDING HAVE NOT SO ATTAINED THE FINALITY AT AO STAGE. IT IS SUBMITTED THAT WHILE MAKING THE ASSESSMENT UNDER S. 153A, AN AO HA S TO MAKE A SPECIFIC DISTINCTION FOR NON-ABATED ASSESSMENT YEARS WITH TH AT OF THE ABATED ASSESSMENT YEARS. 5.00 IT IS SUBMITTED THAT THE ISSUE RELATING TO SCO PE OF ASSESSMENT UNDER S. 153A/153C IS NOT RES INTEGRA. THE VARIOUS CONTROVER SIES AND INTRICACIES INVOLVED IN THE ISSUE HAS FINALLY BEEN SET AT REST BY HON'BLE ITAT, MUMBAI SPECIAL BENCH, IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. & ORS. VS. DCIT (2012) 74 DTR (MUMBAI) (SB) (TRIB) 89 IN ITS LANDMARK DECISION PRONOUNCED ON 06-07-2012. IT IS SUBMITTED THAT THE HON'BLE SPE CIAL BENCH AT PARA (58) OF ITS ORDER, WAS PLEASED TO LAY DOWN THE RATIO AS UND ER: ' 58. THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UN DER: AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 11 (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER S. 1 53A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT UNDER S. 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COU RSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH.' 5.01 THE HON'BLE SPECIAL BENCH OF ITAT IN THE CASE OF ALL CARGO (SUPRA) AT PARA (5) OF THE ORDER HAS IMPLIEDLY STATED THAT EVE N IN A CASE WHERE THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDER S. 143(1 )(A), IT HAS TO BE TAKEN THAT THE PROCEEDINGS ARE COMPLETED AND THESE ARE NO T PENDING AND CONSEQUENTLY SUCH PROCEEDINGS WOULD NOT GET ABATED. 5.02 THE RATIO LAID DOWN BY THE ITAT SPECIAL BENCH, MUMBAI IN THE CASE OF AL CARGO SUPRA HAS BEEN APPROVED EXPLICITLY BY THE HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF JAI STEEL (INDIA) VS. CIT (2013) 259 CTR 281 (RAJ.) AND IMPLIEDLY BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ANIL KUMAR BHATIA (2012) 211 TAXMAN 453 (DEL.) . 5.03 THE HONBLE HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA (APPEAL NO. ITA/707/2014 DATED 28-08-2015), AFTER CONSIDERI NG ALL THE AVAILABLE DECISIONS ON THE ISSUE HAS HELD THAT IN RESPECT OF THE COMPLETED ASSESSMENT, ADDITIONS CAN BE MADE ONLY ON THE BASIS OF INCRIMIN ATING DOCUMENTS. IT IS SUBMITTED THAT FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE DELHI HIGH COURT, THE HONBLE JURISDICTIONAL BENCH OF ITAT IN CASE OF KALANI BROTHERS IN IT(SS)A NO. 71/IND/2014 AND AGAIN IN THE CASE OF ANANT STEE L PVT. LTD. IN IT(SS)A NOS. 31, 28, 29 & 30/IND/2010, HAS HELD THAT IN RES PECT OF THE COMPLETED ASSESSMENT YEARS, IN ABSENCE OF ANY INCRIMINATING D OCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH, NO ADDITION CAN BE MADE. THE HONBLE ITAT, INDORE IN YET ANOTHER CASE OF MUKESH SANGLA H UF AND OTHERS (2016) 27 ITJ 172 (TRIB.-INDORE) HAS REITERATED ITS VIEW TAKE N EARLIER THAT IN RESPECT OF THE COMPLETED ASSESSMENT YEARS, IN ABSENCE OF HAVING RE COURSE TO ANY INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE. 5.04 RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDIC IAL PRONOUNCEMENTS: I) ACIT VS. DELHI HOSPITAL SUPPLY P. LTD. (2015) 45 CCH 0092 DEL. TRIB II) VIMAL KUMAR RATHI VS. DCIT (2015) 45 CCH 0122 M UM. TRIB. III) SANJAY AGARAWAL VS. DCIT (2015) 169 TTJ 0282 (DEL) IV) SHRI YAMUNA PROTEINS, DAHOD VS. ACIT [APPEAL NO . IT(SS) NOS. 227 TO 232/AHD/2010 ORDER DATED 18-10-2012] V) VEE GEE INDUSTRIAL ENTERPRISES NEW DELHI VS. ACI T [ITA NO. 1/DEL/2011 ORDER DATED 12-07-2013] AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 12 VI) MARIGOLD MERCHANDISE (P) LTD. VS. DCIT (2014) 1 04 DTR (DEL)(TRIB) 113 VII) ACIT VS. M/S. PRITHVI SOUND PRODUCTS CO. PVT. LTD. [ITA NO.3422 TO 3426/DEL/2011 ORDER DATED 17-04-2014] VIII) ACIT VS. M/S. KS. FOOD PRODUCTS [ITA NO.519/A GRA/2012 & C.O. NO.10/AGRA/2013 ORDER DATED 17-05-2013] IX) SMT. SUNITA BAI VS. DCIT (2015) 68 SOT 0098 (PA NAJI) (URO) X) DCIT VS. RELIANCE GRANITE P LTD. (2015) 43 CCH 0 028 (HY. TRIB.) 6.00 IN THE INSTANT CASE, UNDISPUTEDLY, THE ASSESSE E HAD VOLUNTARILY FURNISHED HIS RETURN OF INCOME UNDER THE PROVISIONS OF S.139 OF THE ACT ON 25- 02-2003 AND, AS PER THE LAW THEN PREVAILING, THE TI ME LIMIT FOR ISSUANCE OF NOTICE UNDER S.143(2), IN RESPONSE TO THE RETURN SO FILED, HAD ALSO GOT EXPIRED BY 29-02-2004 I.E. MUCH PRIOR TO THE DATE OF INITIA TION OF SEARCH ON 25-09-2007. IN SUCH CIRCUMSTANCES, IT HAS TO BE NECESSARILY HE LD THAT AS ON THE DATE OF SEARCH, THE ASSESSMENT OF THE ASSESSEE FOR THE A SSESSMENT YEAR UNDER CONSIDERATION WAS NOT PENDING AND THE SAME HAD G OT COMPLETED. THIS BEING SO, THE ASSESSMENT YEAR UNDER CONSIDERATION CANNOT BE TERMED TO BE A YEAR IN RESPECT OF WHICH ASSESSMENT PROCEEDINGS GOT ABATED IN TERMS OF SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A O F THE ACT. IT SHALL BE WORTHWHILE TO MENTION HERE THAT IN MANY OF THE JUDI CIAL AUTHORITIES, AS CITED ABOVE, IT HAS BEEN HELD THAT IF IN RESPECT OF ANY A SSESSMENT YEAR, AN ASSESSEE HAD FILED A RETURN UNDER S.139 AND THE TIM E LIMIT FOR ISSUANCE OF NOTICE UNDER S.143(2) IN RESPECT OF SUCH RETURN HAD GOT EXPIRED BEFORE THE DATE OF SEARCH, SUCH ASSESSMENT YEAR WOULD HAVE TO BE REGARDED AS A YEAR IN RESPECT OF WHICH NO PROCEEDING WAS PENDING. CONSEQU ENTLY, IN VIEW OF THE SETTLED JUDICIAL POSITION NOW, THE ENTIRE ADDITIONS MADE IN THE ASSESSEES INCOME WITHOUT HAVING RECOURSE TO ANY INCRIMINATING MATERIAL SEIZED DURING THE COURSE OF SEARCH CANNOT BE ALLOWED TO SURVIVE. 7.00 IT IS SUBMITTED THAT THERE WAS NO INCRIMINATIN G DOCUMENT FOUND BY THE SEARCH PARTY PERTAINING TO THE ASSESSMENT YEAR UNDE R CONSIDERATION AND THEREFORE, NO ADDITION CAN BE MADE/ SUSTAINED ON TH IS LEGAL COUNT ALONE. FOR SUCH PROPOSITION, RELIANCE IS PLACED ON THE VERY RE CENT JUDICIAL PRONOUNCEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. LATA JAIN (ITA 274/2016) PRONOUNCED ON 29-04-2016. THE HONBLE DEL HI HIGH COURT FOLLOWING ITS OWN DECISION IN THE CASE OF CIT VS. KABUL CHAWLA (2016) 380 ITR 573 (DEL.) HELD THAT WHERE NO INCRIMINATING MATERIAL QUA THE ASSESSEE IS FOUND FOR THE ASSESSMENT YEAR IN QUESTION, NO ADDITION CAN BE MADE. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE AND VARIOUS JUDICIAL PRONOUNCEMENTS, IT IS SUBMITTED TH AT SINCE THE ASSESSMENT YEAR UNDER CONSIDERATION WAS A YEAR IN RESPECT OF W HICH ASSESSMENT PROCEEDINGS HAD GOT COMPLETED AND THE SAME WERE NOT PENDING ON THE DATE OF THE SEARCH, ANY ADDITION WHICH IS NOT BASED ON A NY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IS NOT LEGALLY SU STAINABLE AND THE SAME DESERVES TO BE KNOCKED OUT ON THE THRESHOLD ITSELF. ACCORDINGLY, THE ADDITION AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 13 MADE ON ACCOUNT OF GIFT OF RIB BONDS DESERVES TO BE DELETED ON THIS LEGAL COUNT ALONE. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE ASSESSEE IS PLACING RELIANCE FOR THIS GROUND PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 20 22 COPY OF ORIGINAL RETURN FILED UNDER S.139 ESTABLISHING THAT THE ASSESSEE HAD FILED HIS ORIGINAL RETURN. 23 24 COPY OF CAPITAL ACCOUNT AND STATEMENT OF AFFAIRS FILED WITH ORIGINAL RETURN ESTABLISHING THAT IN THE CAPITAL ACCOUNT FILED WITH THE ORIGINAL RETURN ITSELF, THE ASSESSEE HAD DISCLOSED THE FACTUM OF RECEIPT OF RESURGENT INDIA BONDS OF WORTH OF RS.70,29,000/- DURING THE YEAR UNDER CONSIDERATION. 30 32 ABSTRACT OF WRITTEN SUBMISSIONS FILED BEFORE CIT(A) ESTABLISHING THAT EVEN BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ADDITIONS ARE NOT BASED UPON ANY INCRIMINATING MATERIAL. SUCH ASSERTION WAS NOT REBUTTED BY THE CIT(A) IN HIS ORDER. 52 52 COPY OF SHOW- CAUSE NOTICE DATED 07-12- 2009 ISSUED BY AO ESTABLISHING THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH IN RESPECT OF RIB/NRI GIFTS AS IS EVIDENT FROM PARA 1 OF THE SHOW-CAUSE NOTICE. 6. ON THE OTHER HAND, LD. DR HAS RELIED ON THE ORDE RS OF THE REVENUE AUTHORITIES AND SUBMITTED AS UNDER: ISSUE HAS BEEN DEALT BY CIT(A) IN PARA 4 ON PAGE 4 6 IN CASE OF SHRI AMANDEEP SINGH BHATIA FOR A.Y. 2002-03 IN WHICH HE COUNTER EVERY PLEA OF ASSESSEE ON THE ISSUE AS WELL AS HE ALSO DISTINGUIS HED ALL THE DECISION AS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 14 RELIED UPON BY THE ASSESSEE INCLUDING THE DECISION OF HONB'E THIS BENCH IN CASE OF M/S S.K. JAIN AND ALSO QUOTED VARIOUS DECIS ION IN FAVOUR OF REVENUE ON THE ISSUE. AS PER HIS FINDINGS GIVEN IN PARA 4.1 .7 AND 4.1.8 ON PAGE 57 TO 59 THERE IS NOTHING IN THE PROVISION OF SECTION 153 A FOR MAKING ADDITION WITHOUT INCRIMINATING MATERIAL FOUND DURING THE SEA RCH. I RELIED UPON THESE FINDINGS OF CIT(A). BESIDES THIS, I ALSO RELIED UPO N SOME OF THE DECISIONS OF HIGH COURT/ITAT IN WHICH THE SIMILAR VIEW HAS BEEN TAKEN AND COPY THEREOF IS ENCLOSED IN MY COMPILATION. SOME OF THESE ARE AS UN DER WHICH ARE DIRECTLY APPLICABLE ON THE ISSUE:- CIT V/S RAJKUMAR ARORA (2014) 367 ITR 517 (ALL) : IN WHICH CLEARLY HELD ' ONLY THE UNDISCLOSED INCOME FOUND DURING THE SEARCH AND SEIZURE OPERATION WERE REQUIRED TO BE ASSESSED AND THE REGU LAR ASSESSMENT PROCEEDINGS WERE PRESERVED. THE INTRODUCTION OF SEC TION 153A OF THE ACT PROVIDES A DEPARTURE FROM THIS PROCEEDING . UNDER SECTION 153A OF THE ACT, THE ASSESSING OFFICER HAS BEEN GIVEN THE POWER TO ASSES S OR REASSESS THE TOTAL INCOME OF THE ASSESSMENT YEARS IN QUESTION IN SEPAR ATE ASSESSMENT ORDERS. CONSEQUENTLY, THERE WOULD BE ONLY ONE ASSESSMENT OR DER IN RESPECT OF SIX ASSESSMENT YEARS IN WHICH TOTAL DISCLOSED OR UNDISC LOSED INCOME WOULD BE BROUGHT TO TAX. CONSEQUENTLY, EVEN THOUGH AN ASSESS MENT ORDER HAS BEEN PASSED UNDER SECTION 143(1) (A) OR UNDER SECTION 14 3(3) OF THE ACT, THE ASSESSING OFFICER WOULD BE REQUIRED TO REOPEN THESE PROCEEDINGS AND REASSESS THE TOTAL INCOME TAKING NOTICE OF UNDISCLO SED INCOME EVEN FOUND DURING THE SEARCH AND SEIZURE OPERATION. THE FETTER IMPOSED UPON THE ASSESSING OFFICER UNDER SECTIONS 147 AND 148 OF THE ACT HAVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE UNDER SECTION 153A OF TH E ACT.' CIT V/S CHETAN DAS LACHMAN DAS (2012) 25 TAXMANN.CO M 227 (DELHI): HELD 'SECTION 153A OF THE INCOME TAX ACT, 1961-SEA RCH OR SEIZURE- ASSESSMENT IN CASE OF ASSESSMENT YEARS 2000-01 TO 2 006-07-WHETHER THERE IS NO CONDITION IN SECTION 153A THAT ADDITIONS SHOU LD STRICTLY BE MADE ON BASIS OF EVIDENCE FOUND IN COURSE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH ASSESSING OFFICER WHICH CAN BE RELATED TO EVIDENCE FOUND-HELD, YES- WHETHER SEIZED MATERIAL CAN ALSO B E RELIED UPON TO DRAW INFERENCE THAT THERE CAN BE SIMILAR TRANSACTIONS TH ROUGHOUT PERIOD OF SIX YEARS COVERED BY SECTION 153A-HELD, YES (IN FAVOUR OF REV ENUE). MADUGULA VENU V/S DIT (2013) 29 TAXMAN.COM 200 (DEL HI):- HELD 'SECTION 153A IS COUCHED IN MANDATORY LANGUAGE WHIC H IMPLIES THAT ONCE THERE IS A SEARCH THE ASSESSING OFFICER HAS NO OPTI ON BUT NO CALLAPON THE ASSESSEE TO FILE THE RETURNS OF THE INCOME FOR THE EARLIER SIX ASSESSMENT YEARS. IT IS NOT MERELY THE UNDISCLOSED INCOME THAT WELL BE BROUGHT TO TAX IN SUCH ASSESSMENT BUT THE TOTAL INCOME OF THE ASSESSE E INCLUDING BOTH THE INCOME EARLIER DISCLOSED AND INCOME FOUND CONSEQUEN T TO THE SEARCH, WOULD BE THROUGH TO TAX' CANARA HOUSING DEVELOPMENT CO. V/S DIT (2014) 49 T AXMANN.COM 98 (KARNATAKA):- HELD 'UNDER SECTION 153A HOWEVER THE ASSESSING OFF ICER HAS BEEN GIVEN THE POWER TO ASSES OR REASSESS THE T OTAL INCOME OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROCEEDINGS AN D REASSESS THE TOTAL INCOME TAKING NOTE OF THE UNDISCLOSED INCOME IF ANY UNEARTHED DURING THE SEARCH. HE HAS BEEN ENTRUSTED WITH THE DUTY OF BRIN GING TO TAX THE TOTAL AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 15 INCOME OF AN ASSESSEE WHOSE CASE IS COVERED BY SECT ION 153A BY EVEN MAKING REASSESSMENTS WITHOUT ANY FETTERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT O RDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEARS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. WHEN ON CE THE PROCEEDINGS ARE INITIATED UNDER SECTION 153A THE LEGAL EFFECT IS EV EN IN CASE WHERE THE ASSESSMENT ORDER IS PASSED IT STANDS REOPENED. IN T HE EYE OF LAW THERE IS NO ORDER OF ASSESSMENT. RE OPENED MEANS TO DEAL WITH O R BEGIN WITH AGAIN. IT MEANS THE ASSESSING OFFICER SHALL ASSESS OR REASSES S THE TOTAL INCOME OF SIX ASSESSMENT YEARS. CIT V/S ANIL KUMAR BHATIA (2012) 24 TAXMANN.COM 98 (DELHI):- HELD 'ASSESSING OFFICER HAS POWER TOO ASSESS 'TOTAL INCO ME' WHICH INCLUDES BOTH DISCLOSED AND UNDISCLOSED INCOME. UNDER THE PROVISI ONS OF SECTION 153A THE AO IS BOUND TO ISSUE NOTICE TO THE ASSESSEE TO FURN ISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT Y EARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHER IMPORTANT F EATURE OF THIS SECTION IS THAT THE AO IS EMPOWERED TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICANT DEPARTURE FR OM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSMENT REO PENED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCE EDING WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENT. UNDER SECTION 153 A, HOWEVER, THE AO HAS THE POWER TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. TH IS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX ASSESSMENT YEAR, IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INC OME WOULD BE BROUGHT TO TAX, (PARA 19).' RAJAT TRADECOM INDIA (P) LTD. V/S DCIT- ITAT, INDO RE BENCH (2010) 3 ITR 0321:- HELD ' ONCE THE WARRANT OF AUTHORIZATION OR REQUISITION IS ISSUED AND SEARCH IS CONDUCTED, PANCHNAMA IS DRAWN, THE CO MPLETED ASSESSMENTS FOR ALL THE RELEVANT YEARS WOULD GET REOPENED IRRES PECTIVE OF WHETHER ANY INCRIMINATING MATERIAL IS FOUND OR NOT IN RELATION TO A PARTICULAR ASSESSMENT YEAR.' IN VIEW OF THE ABOVE DECISIONS IT IS WELL ESTABLIS HED THAT ADDITION CAN BE MADE WITH OR WITHOUT INCRIMINATING MATERIAL FOUN D DURING THE SEARCH AND HENCE, ASSESSMENT ORDER PASSED BY THE AO U/S 153A I S COMPLETELY A LEGAL ORDER WITHOUT ANY PERVERSITY. THUS, ASSESSEE'S GROU NDS IN THIS REGARDS MAY KINDLY BE REJECTED. 7. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES. IN NUTSHELL, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS T HAT FOR THE YEARS 2002- 03, 2003-04 & 2005-06, ASSESSMENT ORDERS ARE BAD IN LAW SINCE NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE COURS E OF SEARCH. UPTO THE ASSESSMENT YEAR 2005-06, THE ASSESSMENTS ARE NO T ABATED AND THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 16 TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2)/142(1) HAD ALREADY EXPIRED. THE ASSESSEE HAD ALREADY FILED THE RETURNS FOR VARI OUS YEARS IN TIME AND SUBMITTED ALL THE DETAILS IN TAR. FOR AND UPTO THE ASSESSMENT YEAR 2005-06, WITHOUT FINDING ANY INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH, NO ADDITIONS CAN BE MADE ON THE BASIS OF EN TRIES IN THE BOOKS OF ACCOUNT WHICH WERE ALREADY RECORDED AND INCORPORATE D IN THE BALANCE- SHEET. IN THE PRESENT APPEALS, WE FIND THAT THE ASS ESSING OFFICER HAS MADE ADDITIONS BY INVOKING PROVISIONS OF SEC. 68 OF THE ACT ON THE BASIS OF P & L ACCOUNT, CAPITAL ACCOUNT AND BALANCE-SHEET , WHICH WERE ALREADY ON RECORD OF THE DEPARTMENT HAVING BEEN FILED BY TH E PRESENT ASSESSEES ALONG WITH ORIGINAL RETURNS OF INCOME U/S 68 OF THE ACT. IN OTHER WORDS, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT ANY I NCRIMINATING MATERIAL WAS FOUND BY HIM DURING THE COURSE OF ASSESSMENT PR OCEEDINGS WHICH COULD HAVE BEEN MADE A VALID BASIS FOR MAKING ANY A DDITION. ON THE OTHER HAND, LD. DRS HAVE DEFENDED THE ACTION OF THE REVENUE AUTHORITIES AS ABOVE BUT COULD NOT CONTROVERT THE FACTUAL SUBMI SSION MADE BY THE LD. AR OF THE ASSESSEES. 8. ON CONSIDERATION OF FACTS AND SUBMISSIONS THEREO F, WE FIND THAT THE PRESENT ISSUE WITH REGARD TO ABSENCE OF ANY INCRIMI NATING MATERIAL OR DOCUMENTS SEIZED DURING THE COURSE OF SEARCH HAS BE EN DECIDED BY THIS VERY BENCH IN THE CASE OF KALANI BROS. IN IT(SS)A N O.71/IND/2014 AND OTHERS WHEREIN WE HAVE DECIDED THAT IN THE ABSENCE OF INCRIMINATING MATERIAL DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER CANNOT PASS ORDER U/S 153A R.W.S. SEC. 143(3) OF THE I.T. ACT. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER: 8. IN RESPECT OF 153A BAD IN LAW ON THE GROUND THA T ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) WAS COMPLETED ON 29.12.2006 (HEREINAFTER REFERRED AS ORIGINAL ASSESSMENT ORDER FOR EASE OF REFERENCE), THE AO TREATED THE SAID LEASE TRANSACTI ON AS SALE TRANSACTION AND TAXED THE TOTAL SECURITY DEPOSIT RE CEIVABLE AS SALE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 17 CONSIDERATION OF SALE OF LAND. THE ADDITION MADE IN THE SEARCH ASSESSMENT ORDER PERTAINED TO THE ISSUE ALREADY DEA LT IN THE ORIGINAL ASSESSMENT ORDER I.E. LEASE TRANSACTION CATEGORIZED AS SALE TRANSACTION. THE FACT THAT THE AFORESAID ISSUE BEAR S NO RELATION TO THE ANY OF THE MATERIAL / DOCUMENTS / RECORDS FOUND AND SEIZED DURING THE SEARCH ACTION ON 16.04.2009. LD. CIT(A) HAS RELIED UPON THE CIRCULAR NO. 7 OF 2003 WHICH CLARIFIES THE POSITION OF THE P ENDING APPEALS AS ON THE DATE OF THE SEARCH. THE RELEVANT PORTION IS PRO DUCED HEREWITH 'THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF EACH OF THESE SIX ASSESSMENT YEARS. ASSE SSMENT OR REASSESSMENT, IF ANY, RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS P ENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, SHALL ABATE. IT IS CLARIFIED THAT THE APPEAL, REVISION OR RECTIFICATION PROCEEDINGS PENDING ON THE DATE OF INITIATION OF SE ARCH UNDER SECTION 132 OR REQUISITION SHALL NOT ABATE..' ACCORDINGLY, AS FAR AS COMPLETED ASSESSMENTS ARE CO NCERNED, THEY DO NOT ABATE. THE AO CANNOT PROCEED TO MAKE THE SAME A DDITION IN THE BLOCK ASSESSMENT WITHOUT ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH. THE SAID VIEW PREVENTS THE AO TO UNDO WHAT HAS ALREADY BEEN COMPLETED AND HAS BECOME FINAL IN THE ORIGINAL ASSESSMENT PROCEEDINGS. 9. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE HAV E ALSO CONSIDERED VARIOUS RELEVANT FACTS OF THE CASE. IT IS A SETTLED LEGAL POSITION THAT ONCE A SEARCH AND SEIZURE ACTION HAS TAKEN PLACE U/S 132 OF THE ACT OR A REQUISITION HAS BEEN MADE U/S 132A, THE PROVISIONS OF SECTION 153A TRIGGED AND ASSESSING OFFICER IS BOUND TO ISSUE NOT ICE U/S 153A OF THE ACT. ONCE NOTICES ARE ISSUED U/S 153A OF THE ACT TH EN ASSESSEE IS LEGALLY OBLIGED TO FILE RETURN OF INCOME FOR SIX YE ARS. THE ASSESSMENT AND REASSESSMENT FOR SIX YEARS SHALL BE FINALISED B Y THE ASSESSING OFFICER. IT IS ALSO HELD BY VARIOUS COURTS THAT ON CE NOTICE U/S 153A OF THE ACT ISSUED, THEN ASSESSMENT FOR SIX YEARS SHALL BE AT LARGE BOTH FOR ASSESSING OFFICER AND ASSESSEE HAVE NO WARRANT OF L AW. IT HAS BEEN ALSO HELD THAT IN THE ASSESSMENT YEARS WHERE ASSESS MENTS HAVE BEEN ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A T HEN ASSESSING OFFICER ACTS UNDER ORIGINAL JURISDICTION AND ONE AS SESSMENT IS MADE FOR TOTAL INCOME INCLUDING THE ADDITION MADE ON THE BAS IS OF SEIZED MATERIAL. BUT WHERE THERE IS NO ABATEMENT OF ASSESS MENTS AND ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH TH EN ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENT S OR UNDISCLOSED ASSETS, ETC. IN THESE CASES THERE WAS NO INCRIMINAT ING DOCUMENT FOUND AND SEIZED. NO ASSESSMENT PROCEEDINGS WERE ABATED I N THESE ASSESSEES. THUS ASSESSMENTS FOR THESE ASSESSMENT Y EARS WERE COMPLETED ON THE DATE OF SEARCH. THE ASSESSMENTS WE RE COMPLETED U/S 143(3) OF THE ACT READ WITH SECTION 153A/153C O F THE ACT AFTER THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 18 SEARCH. THERE WAS NO ABATEMENT OF ANY PROCEEDINGS I N THESE CASES FOR THESE ASSESSMENT YEARS IN TERMS OF SECOND PROVISO T O SECTION 153A OF THE ACT. THERE IS NO SEIZED MATERIAL BELONGING TO T HE ASSESSEE WHICH WAS FOUND AND SEIZED IN RELATION TO ADDITIONS MADE. IN A RECENT DECISION, HON'BLE DELHI HIGH COURT IN THE CASE OF C IT VS. KABUL CHAWLA (SUPRA) HAS HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT U/S 1 53A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UN EARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UND ISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W AS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE O F ORIGINAL ASSESSMENT. IN ALL THESE CASES NO ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH FOR THESE ASSESSMENT YEARS. NO ASSES SMENTS WERE ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A O F THE ACT. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWL A (SUPRA) HAS CONSIDERED VARIOUS HIGH COURT DECISIONS RELIED UPON BY THE LEARNED DR. THE HON'BLE DELHI HIGH COURT HAS CONSIDERED THE CASES OF CANARA HOUSING DEVELOPMENT CO. VS. DCIT; MADUGULA VS. DCIT ; CIT VS. CHETANDAS LAXMANDAS AND CIT VS. ANIL KUMAR BHATIA ( SUPRA). THE ONLY DECISION OF THE HON'BLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. RAJ KUMAR ARORA; 367 ITR 517 RELIED ON BY THE L EARNED DR WAS NOT CONSIDERED BY HON'BLE DELHI HIGH COURT WHILE DECIDI NG THE ISSUE IN THE CASE OF KABUL CHAWLA. THE HON'BLE ALLAHABAD HIGH CO URT HAS REVERSED THE ORDER OF THE TRIBUNAL AND REMANDED THE ISSUE TO THE TRIBUNAL TO CONSIDER THE APPEAL OF THE DEPARTMENT ON MERITS. IT IS A SETTLED LEGAL POSITION THAT WHEN TWO VIEWS ARE POSSIBLE ON A PART ICULAR ISSUE THEN THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS; 88 ITR 192. RESPECTFULLY FOLLOWING THE DECISION OF THE HO N'BLE APEX COURT, WE DISMISS THE GROUND OF APPEALS OF THE REVENUE. DEPAR TMENTAL APPEALS ARE DISPOSED ACCORDINGLY. 9. WE, FOLLOWING THE ABOVE ORDER OF THIS BENCH, ALL OW THE APPEALS FILED BY THE ASSESSEES ON THE ISSUE OF SECTION 153A R.W.S. SECTION 143(3) OF THE I.T. ACT WHEREIN WE HAVE ALREADY HELD THAT I N ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING TH E ADDITIONS IN NON- ABATED ASSESSMENT ORDERS WHILE PASSING THE ORDERS U /S 153A R.W.S. 143(3) OF THE ACT. THUS, WE QUASH THE NON-ABATED A SSESSMENT ORDERS FOR THE A.YS. 2002-03, 2003-04 & 2005-06. ACCORDING LY, THIS ISSUE OF INCRIMINATING MATERIAL INVOLVED IN THE ASSESSEES A PPEALS IT(SS)A NOS.112 TO 114/IND/2011 IS ALLOWED. HOWEVER, SINCE THE ASSESSMENT FOR AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 19 THE A.Y. 2006-07 IS ABATED, THE PRESENT ISSUE IN AS SESSEES APPEAL IT(SS)A NO.115/IND/2011 FOR THE A.Y. 2006-07 WAS NO T PRESSED BY THE ASSESSEE, THEREFORE, SAME IS DISMISSED FOR THE A.Y. 2006-07 BEING NOT PRESSED. GROUND NO. 2 10. THIS GROUND OF THE APPEALS OF THE ASSESSEE IS D IRECTED AGAINST THE CIT(A)S FINDING OF UPHOLDING AOS ACTION OF PASSIN G THE ASSESSMENT ORDER ARBITRARILY WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE CIT(A) HAS DEALT WITH THIS GROUND AT PARA 5.2 OF PAGE NO. 68 OF HIS ORDER. ACCORDING TO THE CIT(A), THE ASSES SEE WAS GIVEN DUE OPPORTUNITY BY THE AO. HOWEVER, BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND. THUS, THIS GROU ND IS DISMISSED BEING NOT PRESSED IN ALL THE APPEALS OF THE ASSESSEE I.E. IT(SS)A NOS.112 TO 115/IND/2011. ADDITIONAL GROUND NOS. 1 & 2 TAKEN BEFORE THE BENCH 11. THE ASSESSEE HAS TAKEN TWO ADDITIONAL LEGAL GRO UNDS VIDE A SEPARATE APPLICATION UNDER RULE 11 OF THE INCOME-TA X (APPELLATE TRIBUNAL) RULES, 1963 FILED ON 27-04-2012. THESE GR OUNDS ARE DIRECTED AGAINST THE CIT(A)S ACTION OF ENHANCING THE ADDITI ON OF RS.70,29,000/- MADE BY THE AO IN RESPECT OF RIB BONDS, ON PROTECTI VE BASIS TO RS.1,00,44,384/- ON SUBSTANTIVE BASIS WITHOUT GIVIN G ANY NOTICE OF ENHANCEMENT EITHER AS REGARD TO THE QUANTUM OR AS R EGARD TO THE CHANGE IN THE NATURE OF ADDITION FROM PROTECTIVE TO SUBSTANTIVE. THESE ADDITIONAL GROUNDS WERE ADMITTED FOR HEARING IN VIE W OF THE FACT THAT THESE ARE PURE QUESTION OF LAW NOT REQUIRING ANY FU RTHER INVESTIGATION OF FACTS AND ALSO IN VIEW OF THE DECISIONS IN CASES OF NATIONAL THERMAL AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 20 POWER CO. LTD. VS. CIT;229 ITR 383 (SC) AND NATIONA L NEWS PRINT & PAPER MILLS LTD. VS. CIT (MP). 12. MATTER CARRIED TO LEARNED CIT(A), WHO HAS GIVEN HIS FINDINGS AT PARA 4.2.6 AT BOTTOM OF THE PAGE NO. 66 OF HIS ORDE R. THE CIT(A) HAS GIVEN THE DETAILS OF THE ADDITION MADE BY THE AO AN D ADDITIONS UPHELD BY HIM, ON ACCOUNT OF RIB BONDS, IN FORM OF A TABLE GI VEN AT PAGE NO. 68 OF HIS ORDER. 13. THE LD. AR FOR THE ASSESSEE HAS MADE ORAL AS WE LL AS WRITTEN SUBMISSION AS UNDER: 1.01 IN THE ASSESSEES CASE, FOR THE ASSESSMENT YEA R UNDER CONSIDERATION I.E. A.Y. 2002-03, THE ADDITION OF RS.70,29,000/- W AS MADE BY THE AO ON PROTECTIVE BASIS ONLY. THE ADDITION WAS MADE FOR SU CH ASSESSMENT YEAR ON THE BASIS THAT DURING SUCH ASSESSMENT YEAR ONLY, TH E ASSESSEE HAD CLAIMED TO HAVE RECEIVED CERTAIN RESURGENT BONDS FROM NRIS AS GIFTS. SUCH BONDS GOT MATURED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2 004-05 FOR A SUM OF RS.1,00,44,384/-. IT WAS THEREFORE, THE AO MADE AN ADDITION OF RS.1,00,44,384/- IN A.Y. 2004-05 ON SUBSTANTIVE BAS IS. THE ASSESSEE PREFERRED THE APPEALS AGAINST THE ASSESSMENT ORDERS PASSED FOR BOTH THE ASSESSMENT YEARS I.E. A.Y. 2002-03 AND A.Y. 2004-05 . 1.02 DURING THE COURSE OF THE APPELLATE PROCEEDINGS , THE ASSESSEE MADE A DETAILED EXPLANATION BEFORE THE CIT(A) BY CONTENDIN G THAT AT ANY RATE, THE ADDITION OF RS.1,00,44,384/- COULD NOT HAVE BEEN MA DE FOR THE ASSESSMENT YEAR 2004-05 BEING THE ASSESSMENT YEAR IN WHICH THE BONDS, RECEIVED IN THE FORM OF GIFT IN EARLIER YEARS, GOT MATURED. 2.00 THE CIT(A) CONCURRED WITH THE VIEW OF THE ASSE SSEE THAT ADDITION ON ACCOUNT OF GIFT IN FORM OF RIB BONDS CANNOT BE MADE IN THE YEAR IN WHICH SUCH BONDS GOT MATURED. ACCORDINGLY, THE CIT(A) RIGHTLY DIRECTED TO DELETE THE ENTIRE ADDITION MADE ON ACCOUNT OF RIB BONDS, ON SUBSTANTI VE BASIS, IN THE ASSESSEES INCOME FOR A.Y. 2004-05. 3.00 HOWEVER, THE CIT(A) ENHANCED THE ADDITION OF R S.70,29,000/- MADE BY THE AO IN THE ASSESSEES INCOME, FOR THE ASSESSM ENT YEAR UNDER CONSIDERATION, TO RS.1,00,44,384/- WITHOUT GIVING A NY NOTICE OF ENHANCEMENT WHICH IS A MANDATORY REQUIREMENT UNDER THE PROVISIO NS OF SECTION 251(2) OF THE ACT. 4.00 THE CIT(A) ALSO CHANGED THE NATURE OF ADDITION MADE BY THE AO ON PROTECTIVE BASIS TO SUBSTANTIVE BASIS THEREBY RAISI NG THE LIABILITY FOR ENFORCEABLE DEMAND AGAINST THE ASSESSEE. BEFORE MAK ING SUCH CHANGE IN THE NATURE OF NON-ENFORCEABLE DEMAND ARISEN FROM PROTEC TIVE ADDITION TO AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 21 ENFORCEABLE DEMAND CONSEQUENT UPON THE SUBSTANTIVE ADDITION, THE CIT(A) HAS NOT GIVEN ANY NOTICE OF ENHANCEMENT TO THE ASSE SSEE. 5.00 IT IS SUBMITTED THAT IN ABSENCE OF ISSUANCE OF ANY NOTICE UNDER S.251(2) OF THE ACT, THE ACTION OF THE CIT(A) IN EN HANCING THE ADDITION AND CONVERTING THE NATURE OF ADDITION FROM PROTECTIVE A DDITION TO SUBSTANTIVE ADDITION DESERVES TO BE SET ASIDE. FOR SUCH PROPOSI TION, WE PLACE RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : I) CIT VS. LOTTE INDIA CORPORATION LTD. (2007) 290 ITR 248 (MAD.) II) SURENDRA KUMAR SINGH VS. ITO (1982) 14 TTJ 502 (GAU.) III) Y. BRAHMIAH VS. ITO (2015) 229 TAXMAN 558 (AP) . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE LD. CIT(A). 14. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. HOWEVER, WE FIND NO MERIT IN THE CONTENTION OF THE LD. AR OF THE ASSESSEE. WE FIND T HAT IN THE ASSESSEES CASE, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I .E. A.Y. 2002-03, THE ADDITION OF RS.70,29,000/- WAS MADE BY THE AO ON PR OTECTIVE BASIS ONLY. THE ADDITION WAS MADE FOR SUCH ASSESSMENT YEAR ON T HE BASIS THAT DURING SUCH ASSESSMENT YEAR ONLY, THE ASSESSEE HAD CLAIMED TO HAVE RECEIVED CERTAIN RESURGENT BONDS FROM NRIS AS GIFTS . SUCH BONDS GOT MATURED DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2 004-05 FOR A SUM OF RS.1,00,44,384/-. IT WAS THEREFORE, THE AO MADE AN ADDITION OF RS.1,00,44,384/- IN A.Y. 2004-05 ON SUBSTANTIVE BAS IS. THE ASSESSEE PREFERRED THE APPEALS AGAINST THE ASSESSMENT ORDERS PASSED FOR BOTH THE ASSESSMENT YEARS I.E. A.Y. 2002-03 AND A.Y. 200 4-05. IN OUR VIEW, THE VERY PURPOSE OF GIVING NOTICE U/S 251(2) OF THE ACT IS TO MAKE THE ASSESSEE AWARE OF THE PROPOSED ENHANCEMENT AND CHAR GES AGAINST HIM. IN THE INSTANT CASE, THE ASSESSEE WAS ALREADY AWARE OF THE CHARGES AGAINST HIM AND THE LD. CIT(A) HAS MERELY SHIFTED A DDITION MADE IN ONE ASSESSMENT YEAR TO ANOTHER ASSESSMENT YEAR AND THER EFORE, THERE WAS NO SPECIFIC NEED FOR ISSUANCE OF ANY NOTICE U/S 251 (2) OF THE ACT. THUS, AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 22 THESE ADDITION GROUNDS TAKEN BY THE ASSESSEE ARE HA VING NO MERIT AND THE SAME ARE DISMISSED IN THE RESPECTIVE APPEALS OF THE ASSESSEE. GROUND NOS. 3.1 & 3.2 IN IT(SS)A NOS.112/IND/2011 ( A.Y. 2002-03) AND GROUND NOS. 3 IN IT(SS)A NOS.113/IND/2011 (A.Y. 2003-04) ISSUE OF GIFTS IN FORM OF RESURGENT INDIA BONDS (RI B) 15. IN A.Y. 2002-03, THESE GROUNDS OF THE APPEALS O F THE ASSESSEE ARE DIRECTED AGAINST THE CIT(A)S ACTION OF CONFIRMING AND RATHER ENHANCING ADDITION OF RS.70,29,000/- MADE BY THE AO UNDER S.6 8 OF THE ACT ON ACCOUNT OF RESURGENT BONDS. THE AO HAD MADE THE ADD ITION OF RS.70,29,000/-, BEING THE FACE VALUE OF RIB BONDS C LAIMED TO BE RECEIVED AS GIFTS, ON PROTECTIVE BASIS, WHEREAS THE CIT(A) HAS ENHANCED THE ADDITION TO RS.1,00,44,384/-, BEING THE MATURIT Y VALUE OF RIB BONDS. WHEREAS, IN THE A.Y. 2003-04, THIS GROUND IS DIRECT ED AGAINST THE CIT(A)S ACTION OF CONFIRMING THE ADDITION TO THE E XTENT OF RS.1,41,97,107/- OUT OF THE ADDITION OF RS.1,47,00, 000/- MADE BY THE AO UNDER S.68 OF THE ACT ON PROTECTIVE BASIS, ON ACCOU NT OF RESURGENT BONDS. THE AO HAD MADE THE ADDITION OF RS.1,47,00,0 00/-, BEING THE FACE VALUE OF RIB BONDS CLAIMED TO BE RECEIVED AS G IFTS, ON PROTECTIVE BASIS, WHEREAS THE CIT(A) HAS CONFIRMED THE ADDITIO N TO THE EXTENT OF RS.1,41,97,107/-, BEING THE MATURITY VALUE OF RIB B ONDS ON SUBSTANTIVE BASIS. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH TH E PRESENT APPEALS, WE ARE TAKING FACTS FROM THE CASE OF A.Y. 2002-03 BEIN G LEAD CASE. THIS ISSUE IS ALSO INVOLVED IN FOLLOWING GROUP APPE ALS: S.NO. A.Y. APPEAL NO. NAME OF THE ASSESSEE 1 2004-05 IT(SS)A NO.19/IND/2012 (D) SURENDRA SINGH BHATIA 2 2003-04 IT(SS)A NO.116/IND/2011 (A) GURVINDER SIN GH BHATIA 3 2003-04 IT(SS)A NO.121/IND/2011 (A) MANJEET SINGH BHATIA AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 23 16. SHORT FACTS OF THE CASE ARE THAT THE AO HAS DEA LT WITH THE ISSUE AT PARA 1, FROM PAGE NO. 1 TO 25 OF HIS ORDER. THE CRU X OF THE FINDINGS OF THE AO, AS GIVEN AT PAGE NO. 14 OF THE ORDER, IS THAT ( I) WHY THE NRIS ARE GIFTING HUGELY TO AFFLUENT PERSONS ONLY AND NOT TO POOR PERSONS; (II) DOCUMENTATION BY ITSELF CANNOT PROVE THE REAL INTEN T OF THE TRANSACTION AND; (III) AN NRI SITTING ABROAD GIVING GIFT TO PER SONS IN INDIA THEN HOW THE SOURCES AND CREDITWORTHINESS OF THE NRI CAN BE EXAM INED. FINALLY, THE AO, AT LAST BUT ONE PARA OF PAGE NO. 25, HAS MADE T HE ADDITION OF RS.70,29,000/- BY HOLDING THE GIFT IN THE FORM OF R ESURGENT BONDS, RECEIVED BY THE ASSESSEE DURING THE RELEVANT ASSESS MENT YEAR, AS ACCOMMODATION ENTRIES UNDER S.68 OF THE ACT ON PROT ECTIVE BASIS. 17. MATTER CARRIED TO LEARNED CIT(A), WHO HAS REPRO DUCED THE WRITTEN SUBMISSION OF THE ASSESSEE MADE ON THIS LEGAL ISSU E AT PAGE NO. 25 TO 46 OF HIS ORDER. THE CIT(A) HAS DEALT WITH THE ISSU E AT PARA 4.2, PAGE NO. 60 TO PARA 4.2.7, PAGE NO. 68 OF THE ORDER. AT PARA 5.3, P.68, WHILE ADJUDICATING THE GROUND NO. 3, THE CIT(A) HAS CONFI RMED THE ADDITION ON SUBSTANTIVE BASIS AT RS.1,00,44,384/- AS AGAINST TH E PROTECTIVE ADDITION OF RS.70,29,000/- MADE BY THE AO. THE CIT(A) HAS S UMMED-UP HIS FINDINGS AT PARA 4.2.6, P.65 OF HIS ORDER. ACCORDI NG TO THE CIT(A), THE GIFTS WERE RECEIVED BY THE ASSESSEE AND THE GROUP M EMBERS DURING VERY SMALL PERIOD OF 2 TO 3 YEARS WHEN THE MODUS OPERAND I OF CONVERTING BLACK MONEY INTO THE WHITE BY WAY OF PURCHASING OF RIBS WERE PREVALENT. THE CIT(A) HAS GIVEN THE FURTHER FINDING THAT SUCH DONORS HAVE NOT GIVEN ANY FURTHER GIFT THEREAFTER. THE CIT(A) ALSO HELD T HAT THE GIFTS WERE NOT GIVEN ON ANY SPECIAL OCCASION. THE CIT(A) HAS FURTH ER GIVEN THE FINDING THAT CREDITWORTHINESS OF THE DONORS OF THE BONDS IS NOT IN QUESTION BUT ACCORDING TO THE CIT(A), THE BHATIA GROUP HAD PAID THEIR UNACCOUNTED MONEY TO NRIS FOR ACQUIRING RIBS. FINALLY, THE CIT( A), RELYING UPON THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 24 DECISION OF HONBLE SUPREME COURT IN THE CASE OF P. MOHANKALA & OTHERS 291 ITR 278 (SC) AND SOME OTHER DECISIONS, UPHELD THE DECISION OF THE AO IN MAKING ADDITION IN THE HANDS OF VARIOU S RECIPIENTS OF BHATIA FAMILY ON ACCOUNT OF RIBS AS THEIR UNACCOUNTED INCO ME. HOWEVER, THE CIT(A) HELD THAT SUCH ADDITION IS TO BE MADE IN THE YEAR OF RECEIPT OF RIBS AND NOT IN THE YEAR OF MATURITY THEREOF AS ACC ORDING TO CIT(A), THE ASSESSEE AND BHATIA GROUP MEMBERS HAD PAID THEIR UN ACCOUNTED MONEY FOR PURCHASE OF RIBS. ACCORDINGLY, FOR THE AS SESSMENT YEAR UNDER CONSIDERATION, THE CIT(A) CONFIRMED (ENHANCED) ADDI TION TO THE EXTENT OF RS.1,00,44,384/- IN THE ASSESSEES INCOME ON ACCOUN T OF RIBS ON SUBSTANTIVE BASIS. 18. THE LD. AR FOR THE ASSESSEE HAS MADE ORAL AS WE LL AS WRITTEN SUBMISSION AS UNDER: 1.00 AT THE OUTSET, IT IS SUBMITTED THAT THE ASSES SEE HAD DISCLOSED THE FACT OF RECEIPT OF RIB BONDS OF THE FACE VALUE OF RS.70, 29,000/-, DURING THE RELEVANT ASSESSMENT YEAR, IN HIS ORIGINAL RETURN OF INCOME FURNISHED UNDER S.139 OF THE INCOME-TAX ACT, 1961 ON 25-02-2009 [R EFER PB PAGE NO. 20]. THE ASSESSEE HAD FURNISHED HIS COPY OF CAPITAL ACCO UNT FOR THE FINANCIAL YEAR ENDED ON 31-03-2002 [REFER PB PAGE NO. 24] IN WHICH THE RECEIPT OF RESURGENT INDIA BONDS OF VALUE OF RS.70,29,000/- WA S CLEARLY REFLECTED. EVEN IN THE STATEMENT OF AFFAIRS AS OF 31-03-2002 [PB PA GE NO. 23] AS FILED ALONG WITH THE ORIGINAL RETURN, THE ASSESSEE HAD SHOWN SU CH RESURGENT INDIA BONDS AT RS.4,42,29,000/- WHICH INTER ALIA INCLUDES THE B ONDS OF RS.70,29,000/- RECEIVED BY HIM DURING THE RELEVANT PREVIOUS YEAR. 1.01 IN RESPONSE TO THE RETURN SO FILED UNDER S.139 , NO ACTION WAS TAKEN BY THE DEPARTMENT THEREBY MEANING THAT THE ASSESSMENT WAS DEEMED TO HAVE BEEN COMPLETED UNDER S.143(1)(A) OF THE ACT. IN RES PECT OF SUCH ASSESSMENT YEAR, NO NOTICE UNDER S.143(2) OF THE ACT WAS EVER ISSUED IN RESPONSE TO THE ORIGINAL RETURN FILED. 1.02 IN THE ASSESSEES CASE, THE SEARCH WAS INITIAT ED ON 25-09-2007 AND BY SUCH DATE, THE TIME LIMIT FOR ISSUANCE OF ANY NO TICE UNDER S.143(2) IN RESPONSE TO THE ORIGINAL RETURN FILED UNDER S.139 H AD ALREADY GOT EXPIRED MUCH PRIOR. IN THESE CIRCUMSTANCES, THE ASSESSMENT YEAR UNDER CONSIDERATION HAS TO BE REGARDED AS THE NON-ABATED ASSESSMENT YEAR IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. IN OTHER WORDS, SUCH ASSESSMENT YEAR CAN BE TERMED AS A COMPLETED YEAR OF ASSESSMENT. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 25 2.00 SINCE THE ASSESSMENT YEAR UNDER CONSIDERATION IS A NON-ABATED ASSESSMENT YEAR, IN VIEW OF THE DETAILED DISCUSSION MADE IN RESPECT OF GROUND NO. 1.1 & 1.2 SUPRA , ANY ADDITION IN THE ASSESSEES INCOME COULD HAVE BEEN MADE ONLY ON THE BASIS OF SOME INCRIMINAT ING MATERIAL SEIZED DURING THE COURSE OF THE SEARCH. 3.00 IN THE ASSESSEES CASE, THE ADDITION ON ACCOUN T OF RIBS HAS BEEN MADE UNDER S.68 OF THE ACT MERELY ON THE BASIS OF P & L ACCOUNT AND BALANCE SHEET FILED BY THE ASSESSEE HIMSELF. SUCH FACT IS E VIDENT FROM OPENING LINES AT PARA 1 OF THE BODY OF THE ASSESSMENT ORDER ITSELF. IT IS ALSO EVIDENT FROM THE COPY OF THE SHOW-CAUSE NOTICE PLACED AT PAGE NO. 52 OF THE PAPER BOOK. 4.00 IN VIEW OF THE ABOVE FACTS, THE IMPUGNED ADDIT ION IS LIABLE TO BE DELETED ON THIS LEGAL GROUND ALONE. 5.00 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT EVEN ON MERITS, THE ADDITION SO MADE BY THE AO AND CONFIRMED BY THE CIT (A) IS NOT SUSTAINABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISS IONS MADE IN THE ENSUING PARAS. 6.01 THAT, DURING THE RELEVANT PREVIOUS YEAR, AS ON 05-05-2001, THE ASSESSEE HAD RECEIVED THREE RESURGENT INDIA BONDS C ERTIFICATE [IN SHORT, RIBS], OF FACE VALUE OF 50,000 USD EACH, ISSUED B Y STATE BANK OF INDIA, IN FORM OF GIFT FROM TWO PERSONS OF USA NAMELY SHEKHAR JAYANTILAL BHANSALI AND MEERA SAMIR BHANSALI. THE FACE VALUE OF SUCH RIBS I N INDIAN RUPEES WAS TO THE EXTENT OF RS.70,29,000/-. THE COMPLETE DETAILS OF RIBS ARE GIVEN AT PAGE NO. 77 OF THE PAPER BOOK. 6.02 THE DONORS HAD PURCHASED SUCH RIBS OUT OF THEI R OWN NRI FUNDS AND RELEVANT CERTIFICATES WERE ISSUED IN THEIR RESPECTI VE NAMES. COPIES OF CERTIFICATES ISSUED TO THEM BY THE BANK ARE PLACED AT PAGE NO. 79 TO 81 OF THE COMPILATION. 6.03 THAT, THE SUBJECT RIBS WERE ISSUED BY THE APEX BANK OF INDIA I.E. THE STATE BANK OF INDIA TO NON-RESIDENT INDIANS, IN THE YEAR 1998, FOR FIVE YEARS MATURITY, ON 7.75% CUMULATIVE INTEREST BASIS, WITH A STIPULATION THAT INVESTMENT IN THESE BONDS WERE TO BE MADE ONLY OUT OF NRI FUND S. THUS, THE SOURCES OF INVESTMENT IN PURCHASE OF SUCH BONDS BY THE ORIGINA L SUBSCRIBERS THEREOF, BEING THE DONORS, STAND ESTABLISHED BEYOND ALL DOUB TS. EVEN THE CIT(A), OVERRULING THE DOUBT OF THE AO, HAS GIVEN A CLEAR F INDING, AT LAST FEW LINES OF PAGE NO. 65 OF HIS ORDER, TO THE EFFECT TH AT SOURCE OF PURCHASE OF RIBS BY THE NRI IS NOT IN DOUBT. 6.04 THAT, AS PER CLAUSE (4) OF THE TERMS OF ISSUE OF THE BONDS, THE NRIS WERE ELIGIBLE TO TRANSFER THE BONDS TO ANY INDIAN R ESIDENTS BY WAY OF GIFTS. ACCORDINGLY, THE ORIGINAL SUBSCRIBERS OF THE BONDS, BEING THE DONORS, TRANSFERRED THE SUBJECT BONDS TO THE ASSESSEE BY WA Y OF EXECUTING A LETTER OF GIFT, ON 05-05-2001, IN FAVOUR OF THE ASSESSEE AND ADDRESSED TO THE CONCERNING OFFICER OF THE STATE BANK OF INDIA. COPI ES OF SUCH LETTERS ARE PLACED AT PAGE NO. 82 TO 84 OF OUR COMPILATION. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 26 6.05 THAT, IN PURSUANCE OF THE LETTER OF TRANSFER, THE STATE BANK OF INDIA, VIDE ITS LETTERS DATED 23-05-2001, TRANSFERRED THE RIBS IN FAVOUR OF THE ASSESSEE. COPIES OF LETTERS INTIMATING SUCH TRANSFE R OF BONDS FROM THE NRIS TO THE ASSESSEE ARE PLACED AT PAGE NO. 85 TO 86 OF OUR COMPILATION. IN SUCH LETTER OF TRANSFER, THE MODE OF TRANSFER HAS CLEARL Y BEEN REFLECTED BY THE BANK AS GIFT. 6.06 IT IS SUBMITTED THAT THIS HONBLE BENCH, IN THE IDE NTICAL CIRCUMSTANCES, IN ITS ORDER PRONOUNCED ON 26-03-201 2 IN APPEAL NO. ITA- 381/IND/2010 IN CASE OF ACIT-3(1), INDORE VS. SHRI PHOOLCHAND AGRAWAL HAS UPHELD THE CIT(A)S ACTION IN DELETING THE ADDI TION MADE BY THE AO ON ACCOUNT OF RESURGENT BOND [REFER PB PAGE NO. 115 TO 136]. THE HONBLE BENCH AT PARA 6, HAS OBSERVED AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOU ND FROM RECORD THAT AS PER THE TERMS OF ISSUE OF RESURGENT BOND, THE SA ME IS EXEMPT IN THE HANDS OF THE SUBSCRIBER OF INDIAN INCOME TAX ACT. IT IS A LSO FREE FROM WEALTH TAX AND GIFT TAX ACT. TAX CONCESSION IS ALSO AVAILABLE TO T HE DONEES AND THE TRANSFEREES ALSO TILL MATURITY OF RBI TO NRI HOLDER S/DONEES/TRANSFEREES IF THEY RETURN THE INDIAN BEFORE MATURITY OF RBI BOND AND A LSO TO, RESIDENT DONATIONS. AS PER THE FINDINGS RECORDED BY THE LD. CIT (A) AS NARRATED ABOVE, IDENTITY AND GENUINENESS AND CREDITWORTHINESS OF THE DONOR WAS E STABLISHED AS PER THE MATERIALS PLACED ON RECORD. THE FINDINGS SO RECODED BY THE LD. CIT (A) HAS NOT BEEN CONTROVERTED BY THE LD. SENIOR DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF CIT (A). 6.07 THIS HONBLE BENCH, IN THE CASE OF DCIT VS. DARPAN ANAND IN ITA NO. 218/IND/2009 DATED 30-06-2010, RELYING UPON THE DEC ISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS. CIT (2009) 221 CTR 456 (ALL.) HAS HELD THAT GIFTS OF RIBS RECEIVED BY AN ASSESSE E FROM ONE NRI WHO IS NOT HIS RELATIVE, CANNOT BE TREATED AS THE I NCOME OF THE ASSESSEE. IN THE CASE OF KANCHAN SINGH SUPRA, THE HONBLE ALLAHA BAD HIGH COURT HAS HELD THAT UNLESS AND UNTIL, THE AO BRINGS ON RECORD SOME COGENT EVIDENCE TO ESTABLISH THAT SOME EQUIVALENT AMOUNT HAD BEEN PASS ED ON TO THE DONOR, NO ADDITION ON ACCOUNT OF GIFT OF BONDS CAN BE MADE IN THE HANDS OF THE ASSESSEE. 7.00 IT HAS BEEN HELD IN THE CASE OF DCIT VS. RAMDEV KUMAR CHITLANGIA (2004) 89 TTJ (JD) 346 THAT BLOOD RELATIONSHIP IS NO CONDITION PRECEDENT FOR MAKING A VALID GIFT. THE SAME VIEW WAS EXPRESSED BY THE HON. CHANDIGARH BENCH OF ITAT IN THE CASE OF R.K. SYAL VS. ACIT AS REPORTED IN (2000) 66 TTJ (CHD) 656 . RELIANCE IS ALSO PLACED ON THE DECISION OF HON. I TAT ALLAHABAD BENCH IN THE CASE OF ITO VS. MATADIN SNEHLATA (HUF) AS REPORTED IN (2003) 81 TTJ (ALL) 995 . 8.00 IT IS SUBMITTED THAT NEITHER DURING THE COURSE OF THE SEARCH PROCEEDINGS NOR DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND FURTHERMORE, NOR DURING THE COURSE OF THE APPELLATE PROCEEDINGS, ANY MATERIAL MUCH LESS OF ANY COGENT MATERIAL HAS BEEN BROUGHT O N RECORD TO GIVE ANY IOTA AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 27 OF EVIDENCE AS REGARD TO ASSESSEE HAVING PAID ANY S UM TO THE DONORS AGAINST RECEIPT OF SUBJECT GIFTS. IT IS SUBMITTED THAT MERE LY ON THE BASIS OF GUESS WORK, SURMISES AND CONJECTURES, NO ADDITION CAN BE MADE I N THE HANDS OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE ENTIRE ADDITION/ ENHANCEMENT SO MADE/ CONFIRMED/ ENHANCED BY THE AO/ CIT(A) DESERVES TO BE DELETED. RELEVANT DOCUMENTS FILED IN THE PAPER BOOK ON WHICH THE ASSESSEE IS PLACING RELIANCE FOR THESE GROUNDS PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 77 78 COPY OF CHART SHOWING THE DETAILS OF RIB GIFTS GIVING THE COMPLETE DETAILS OF THE DONORS AND THE TRANSACTIONS 79 81 COPY OF RIB BONDS ESTABLISHING THE IDENTITY O F THE DONORS, THE PURCHASE OF THE BONDS IN THE YEAR 1998 BY THE DONORS, THE TERMS OF THE ISSUE OF THE BONDS. 82 84 COPIES OF TRANSFER LETTERS ESTABLISHING THE G ENUINENESS OF THE TRANSACTIONS 85 86 COPIES OF THE LETTERS ISSUED BY SBI FOR ESTABLISHING THE ASSERTION THAT THE BANK HAD ACCEPTED THE GENUINENESS OF THE TRANSACTION OF GIFTS. 87 106 RELEVANT ABSTRACT OF REPLY ON THE ISSUE FILED BEFORE CIT(A) FOR ESTABLISHING THE FACT THAT ALL THE ARGUMENTS WHICH HAVE BEEN CANVASSED BEFORE THIS HONBLE BENCH WERE ALSO MADE BEFORE THE CIT(A) BUT HE FAILED TO APPRECIATE SUCH ARGUMENTS. 108 110 SUPPLEMENTARY SUBMISSION BEFORE CIT(A) --- DO --- 114 114 GIST OF THE SCHEME OF THE RIBS FOR ESTABLISHING THAT AS PER THE SCHEME, RIBS WERE TRANSFERRABLE BY WAY OF GIFT EVEN TO A NON-RELATIVE INDIAN. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 28 115 136 COPY OF DECISION OF HONBLE INDORE BENCH OF ITAT IN THE CASE OF SHRI PHOOLCHAND AGRAWAL FOR ESTABLISHING THE FACT THAT THE ISSUE IN HAND IS SQUARELY COVERED BY THE ORDER OF THIS HONBLE BENCH ITSELF. 19. ON THE OTHER HAND, LD. DRS RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED AS UNDER: AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS RIB GIFTS TAKEN BY THE ASSESSEE FROM NRI. CIT(A) HAS CONFIRMED THE SAME. I N APPEAL BEFORE ITAT, ASSESSEE CONTENTED THAT INVESTMENT IN THOSE BONDS W ERE MADE BY THE NRIS OUT OF THE FOREIGN EXCHANGE AND THUS SOURCES OF INV ESTMENT ARE FULLY EXPLAINED BUT ISSUE INVOLVED IS DIFFERENT I.E. GENU INENESS OF GIFTS MEANS THE FACT OF NATURAL LOVE AND AFFECTION WITH SPECIFIC OC CASION HAS TO BE PROVED BY THE ASSESSEE. THESE GIFTS WERE TAKEN BY FOUR FAMILY MEMBER OF BHATIA GROUP I.E. SHRI S.S. BHATIA, SHRI G.S. BHATIA, SHRI AMAND EEP BHATIA, & SHRI MANJEET BHATIA WHOSE STATEMENTS WERE RECORDED BY THE AO. F ROM THEIR STATEMENT IT IS CLEARLY ESTABLISHED THAT THEY HAVE NOT ANY CLOSE RELATIONSHIP WITH THOSE NIRS AND GIFTS WERE TAKEN WITHOUT ANY OCCASION. AO IS ALSO NOTED THAT NO GIFTS WERE TAKEN FROM THOSE NRIS EITHER LATER OR EARLIER. THUS, HUGE AMOUNT OF GIFTS TAKEN BY BHATIA FAMILY ARE NOT APPEARING GENUINE GI FTS WHILE ACTUALLY THEY HAVE CONVERTED THEIR UNACCOUNTED MONEY INTO WHITE T HROUGH THOSE RIB GIFTS FROM NRIS. THE FINDINGS ON THE ISSUE HAS BEEN GIVEN BY CIT(A) IN PARA 4.2 ON PAGE 16 ONWORDS OF HIS ORDER IN CASE OF SHRI AMANDE EP SINGH BHATIA ON WHICH I RELIED UPON. I ALSO RELIED UPON THE DECISIO N OF HONBLE SUPREME COURT REPORTED IN 291 ITR 278 IN CASE OF P. MOHANKALA WHI CH IS EXACTLY APPLICABLE ON THE FACTS OF THE ASSESSEE. IN THAT DECISION IT H AS BEEN HELD- 'SECTION 68 OF THE INCOME-TAX ACT, 1961-CASH CREDITS- ASSESSMENT Y EARS 1993-94 TO 1996- 97-ASSESSING OFFICER REJECTED EXPLANATION OF ASSESS EE THAT AMOUNTS CREDITED IN THEIR RESPECTIVE ACCOUNTS WERE GIFTS FROM NRI AN D ADDED SAID AMOUNT TO INCOME OF ASSESSEE AS INCOME FROM UNDISCLOSED SOURC ES, ON GROUND THAT SO CALLED GIFTS WERE NOT REAL AND GENUINE-ON APPEAL, C OMMISSIONER (APPEALS) AS WELL AS TRIBUNAL DID NOT ACCEPT EXPLANATION OF ASSE SSEE AND CONFIRMED FINDING OF ASSESSING OFFICER- HIGH COURT, HOWEVER, REAPPREC IATED EVIDENCE AVAILABLE ON RECORD AND SUBSTITUTED ITS OWN FINDINGS FOR THAT OF TRIBUNAL- HIGH COURT HELD THAT REASONS ASSIGNED BY TRIBUNAL AND OTHER AUTHORI TIES WERE IN REALM OF SURMISES, CONJECTURES AND SUSPICIONS- WHETHER SINCE FINDINGS OF FACTS ARRIVED AT BY AUTHORITIES BELOW WERE BASED ON PROPER APPREC IATION OF FACTS, MATERIAL AVAILABLE ON RECORD AND SURROUNDING CIRCUMSTANCES, HIGH COURT COMMITTED ERROR IN DISTURBING CONCURRENT FINDINGS OF FACTS-HE LD, YES.' COPY OF THE DECISION IS ENCLOSED IN MY COMPILATION GIVEN SEPARA TELY. I FURTHER RELIED UPON THE DECISION OF HON'BLE GUJRA T HIGH COURT IN CASE OF SHATISHKUMAR KANTILAL SHAH (HUF) REPORTED IN 35 TAXMANN.COM 640 IN WHICH IT HAS BEEN HELD THAT - 'SECTION 68 OF THE IN COME TAX ACT, 1961-CASH CREDIT (GIFT)-ASSESSMENT YEAR 2004-05- ASSESSING OF FICER MADE ADDITION UNDER SECTION 68 TO ASSESSEE'S INCOME ON GROUND THA T ASSESSEE HAD NOT SUBMITTED ANY PROOF IN RESPECT OF AMOUNT RECEIVED A S GIFT- TRIBUNAL UPHELD AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 29 SAID ADDITION ON GROUND THAT THOUGH ASSESSEE HAD FU RNISHED GIFT DEED, BANK CERTIFICATE, COPY OF PASSPORT AS WELL AS COPY OF RE TURN OF INCOME FILED BY DONOR BUT HE FAILED TO PROVE ANY CLOSE RELATION WITH DONO R AND HER CREDITWORTHINESS TO MAKE GIFT-WHETHER TRIBUNAL WAS JUSTIFIED IN ITS DECISION- HELD, YES (PARA 3.1) [IN FAVOUR OF REVENUE]'. APART FROM THE ABOVE I ALSO RELIED UPON THE FOLLO WING DECISIONS- 294 IRT 288 (DEL.) 290 ITR 306 (P &H) 292 ITR 552 (DEL.) IN VIEW OF THE ABOVE FACTS THE ORDER OF CIT(A) ON THE ISSUE MAY KINDLY BE CONFIRMED. 20. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LOOKING TO THE FA CTS AND CIRCUMSTANCES, WE FIND THAT ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME U/S 139 OF THE I.T. ACT, 1961 ON 25.1.2003. ALONG WITH THE RETURN, THE ASSESSEE HAS FURNISHED THE COPY OF CAPITAL ACCOUNT, F.Y. ENDED O N 31.3.2002 IN WHICH THE RECEIPT OF RIB OF VALUE AT RS.70,29,000 WAS CLE ARLY REFLECTED IN THE STATEMENT OF AFFAIRS FILED ALONG WITH THE ORIGINAL RETURN. ASSESSEE HAS SHOWN SUCH RIB BOND OF RS.70,29,000/-. WE FIND THAT ASSESSING OFFICER HAS MADE THE ADDITION BY INVOKING PROVISIONS OF SEC . 68 OF THE ACT WHICH SAYS THAT ADDITION IS BASED ON ENTRIES FOUND IN REG ULAR BOOKS OF ACCOUNTS. THE ASSESSING OFFICER DID NOT REFER ANY S EIZED MATERIAL OR ANY INCRIMINATING MATERIAL WHILE MAKING THIS ADDITION. WHILE MAKING THE ADDITION U/S 153A, THE ADDITION CAN BE MADE IN RESP ECT OF NON-ABATED ASSESSMENTS ONLY IF ANY SEIZED MATERIAL IS FOUND DU RING THE COURSE OF SEARCH. THE ADDITION IS BASED ONLY ON THE MATERIAL WHICH WAS SUBMITTED BY THE ASSESSEE DURING THE ORIGINAL ASSESSMENT ORDE R. THEREFORE, NO ADDITION CAN BE MADE IN ABSENCE OF ANY INCRIMINATIN G MATERIAL AS HELD BY HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CH AWLA (SUPRA). AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 30 21. THE ASSESSEE HAS FURNISHED ALL THE NECESSARY DO CUMENTS SUCH AS, COPY OF RIB, COPY OF TRANSFER LETTERS, COPY OF LETT ER ISSUED BY SBI SHOWING TRANSFER BOND IN FAVOUR OF THE ASSESSEE THR OUGH MODE OF GIFT. WE FIND THAT THE ONLY OBJECTION BY THE REVENUE THAT THE ASSESSEE HAS PURCHASED THIS BOND BY HIS OWN MONEY BY PAYING CASH TO THE DONOR. HOWEVER, WE FIND THAT DURING THE COURSE OF SEARCH, NO SUCH DOCUMENTS OR EVIDENCES ESTABLISH ANY PAYMENT OF CASH BY THE A SSESSEE TO THE DONOR. WE ALSO FIND THAT ON MERIT, THIS ISSUE IS CO VERED BY THE DECISION OF THIS BENCH IN THE CASE OF ACIT VS. PHOOLCHAND AGRAW AL IN ITA NO.381/IND/2006 RELYING UPON THE DECISION OF THE HO NBLE ALLAHABAD HIGH COURT IN THE CASE OF KANCHAN SINGH VS. CIT (20 09) 221 CTR 456 (ALL) HAS HELD THAT GIFTS OF RIBS RECEIVED BY AN AS SESSEE FROM ONE NRI CANNOT BE TREATED AS INCOME OF THE ASSESSEE. WE ALS O FIND SUBSTANCE IN THE CONTENTION OF THE LD. AR OF THE ASSESSEE THAT I N VIEW OF THE DECISION OF THE ITAT, JODHPUR BENCH IN THE CASE OF DCIT VS. RAMDEV KUMAR CHYITLANGIA (2004) 89 TTJ (JD.) 346, THE BLOOD RELA TIONSHIP IS NO CONDITION PRECEDENT FOR MAKING A VALID GIFT. IN VIE W OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT E VEN ON MERITS OF THE CASE, THE ADDITION MADE BY THE ASSESSING OFFICER U/ S 68 OF THE ACT ON ACCOUNT OF RIB GIFT AT RS.70,29,000/- AND SUBSEQUEN TLY, ENHANCED BY THE LEARNED CIT(A) TO RS.1,00,44,348/- IS NOT SUSTAINAB LE. THUS, EVEN ON MERITS, GROUND NOS. 3.1 & 3.2 OF THE ASSESSEE ARE A LLOWED. SINCE COMMON ISSUE ON IDENTICAL SET OF FACTS IS INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE, THE IDENTICAL ISSUE OF RESURGENT INDI A BONDS (RIB) IS ALSO ALLOWED FOR THE ASSESSMENT YEAR 2003-04 ON THE SAME REASONING. ACCORDINGLY, THIS GROUND OF GENUINENESS OF RIB IS A LLOWED IN BOTH THE PRESENT RESPECTIVE APPEALS OF THE ASSESSEE. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 31 GROUND NOS. 3.1 & 3.2 IN IT(SS)A NOS.114/IND/2011 ( A.Y. 2005-06) AND GROUND NOS. 3.1, 3.2 & 3.3 IN IT(SS)A NOS.115/I ND/2011 (A.Y. 2006-07) ISSUE OF GENUINENESS OF LTCG/STCG 22. IN ASSESSMENT YEAR 2005-06, THESE GROUNDS ARE D IRECTED AGAINST THE CIT(A)S FINDING OF UPHOLDING AOS ACTION OF TR EATING THE SHORT-TERM CAPITAL GAIN OF RS.2,28,66,180/- AS UNACCOUNTED CAS H CREDITS UNDER S.68 OF THE ACT. WHEREAS, IN THE ASSESSMENT YEAR 2006-07 , THESE GROUNDS ARE DIRECTED AGAINST THE CIT(A)S FINDING OF UPHOLDING AOS ACTION OF TREATING THE SHORT-TERM CAPITAL GAIN AND LONG-TERM CAPITAL G AIN, RESPECTIVELY OF RS.2,72,30,004/- AND RS.9,91,440/-, AS UNACCOUNTED CASH CREDITS UNDER S.68 OF THE ACT. SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THE PRESE NT APPEALS, WE ARE TAKING FACTS FROM THE CASE OF A.Y. 2006-07 BEIN G LEAD CASE. THIS ISSUE IS INVOLVED IN THE FOLLOWING GROUP APPEA LS: S.NO. A.Y. A/D APPEAL NO. NAME OF THE ASSESSEE 1 2 2005-06 2006-07 A A IT(SS)A NO.114/ IT(SS)A NO.115/ AMANDEEP SINGH BHATIA 3 4 5 2004-05 2005-06 2006-07 A A A IT(SS)A NO.117/ IT(SS)A NO.118/ IT(SS)A NO.119/ GURVINDER SINGH BHATIA 6 7 8 9 10 11 12 2002-03 2003-04 2005-06 2005-06 2006-07 2006-07 2007-08 A A A D A D D IT(SS)A NO.26/ IT(SS)A NO.27/ IT(SS)A NO.28/ IT(SS)A NO.20/ IT(SS)A NO.29/ IT(SS)A NO.21/ IT(SS)A NO.22/ SURENDRA SINGH BHATIA 13 14 2004-05 2006-07 A A IT(SS)A NO.122/ IT(SS)A NO.123/ MANJIT SINGH BHATIA 23. SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE H AD DULY DISCLOSED THE FACTS OF DERIVING INCOME FROM SHORT TERM/LONG T ERM CAPITAL GAINS IN THE ORIGINAL RETURN FURNISHED MUCH PRIOR TO THE DAT E OF SEARCH (PB PAGE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 32 NO. 18 TO 21). ON A PERUSAL OF THE STATEMENT OF SH ORT-TERM CAPITAL GAIN AND LONG-TERM CAPITAL GAIN, FORMING PART OF THE COM PUTATION OF INCOME ITSELF, IT IS SEEN THAT WHILE FURNISHING THE ORIGIN AL RETURN, THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS AS REGARD TO THE SHORT-T ERM AND LONG-TERM CAPITAL GAINS. THE ASSESSEE HAD DULY FURNISHED THE NAME OF THE COMPANIES, NUMBER OF SHARES PURCHASED AND SOLD, AMO UNT OF PURCHASES AND SALES, DATE OF PURCHASES AND SALES AND AMOUNT O F SHORT-TERM/ LONG- TERM CAPITAL GAIN. IT WAS SUBMITTED THAT THE ORIGIN AL RETURN UNDER S.139 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED B Y THE ASSESSEE MANUALLY AND ALONG WITH THE MANUAL RETURN, THE ASSE SSEE HAD NOT ONLY FURNISHED THE DETAILS AS AFORESAID, BUT HAD ALSO FI LED THE NECESSARY DOCUMENTARY EVIDENCES IN SUPPORT OF DERIVING OF SUC H GAINS FROM SALE OF SHARES. DURING THE COURSE OF THE ASSESSMENT PROCEED INGS, THE AO VIDE ENCLOSURE TO HIS NOTICE UNDER S.142(1) DATED 14-10- 2008 (PB PAGE NO. 33), REQUIRED THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF STCG AND LTCG. IN RESPONSE TO SUCH SPECIFIC QUERY, THE ASSES SEE, VIDE HIS LETTER DATED 23-06-2009 (PB PAGE NO. 41), FURNISHED THE CO MPLETE DETAILS ON THE SHORT-TERM CAPITAL GAIN AND LONG-TERM CAPITAL G AIN IN THE MANNER DESIRED BY THE AO. MEANWHILE, THE AO ISSUED A SUMMO NS UNDER S.131 OF THE ACT TO THE ASSESSEE. THE RELEVANT PORTION OF THE STATEMENT OF THE ASSESSEE RECORDED BY THE AO IN PURSUANCE OF SUMMONS UNDER S. 131 IS ALSO REPRODUCED BY THE AO HIMSELF AT PAGE NO. 5 TO 7 OF THE ASSESSMENT ORDER. ON A PERUSAL OF SUCH STATEMENT, IT IS SEEN T HAT ALL THE QUESTIONS RAISED BY THE AO IN RESPECT OF SHARE TRANSACTIONS U NDERTAKEN BY THE ASSESSEE WERE DULY ANSWERED BY THE ASSESSEE AND THE AO COULD NOT EXPRESS ANY DISSATISFACTION OR FIND ANY ADVERSITY I N ANY OF THE ANSWERS GIVEN BY THE ASSESSEE. THEREAFTER, THE AO ISSUED A SHOW-CAUSE NOTICE TO THE ASSESSEE ON 07-12-2009. A COPY OF THE SHOW-C AUSE NOTICE IS PLACED AT PAGE NO. 36 & 37 OF THE PAPER BOOK. IN TE RMS OF THE SHOW- AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 33 CAUSE NOTICE, THE ASSESSEE WAS REQUIRED BY THE AO A S TO SHOW-CAUSE THAT (I) WHY THE STCG/LTCG SHOWN IN THE RETURNS SHO ULD NOT BE TREATED AS ACCOMMODATION ENTRIES WITHOUT ANY REAL PROFIT UN DER S.68; (II) WHY THESE TRANSACTIONS SHOULD NOT BE TREATED AS TRADING IN THE NATURE OF BUSINESS CONSIDERING THE MAGNITUDE OF THE SHARE DEA LINGS; AND (III) TO EXPLAIN ON WHAT BASIS, SHARES WERE PURCHASED AND SO LD BY THE ASSESSEE OF CERTAIN COMPANIES WHICH ACCORDING TO THE AO WERE NOT WORTH INVESTING. IN RESPONSE TO SHOW-CAUSE NOTICE DATED 0 7-12-2009, THE ASSESSEE, THROUGH HIS LETTER DATED 09-12-2009 (PB P AGE NO. 45 TO 73), FURNISHED A DETAILED WRITTEN SUBMISSION BEFORE THE AO IN RESPECT OF EACH AND EVERY QUERY RAISED BY THE AO IN THE AFORESAID S HOW-CAUSE NOTICE. FINALLY, THE AO DISCARDED THE ENTIRE EXPLANATION OF THE ASSESSEE AND BY DEVELOPING HIS OWN WHIMSICAL STORY OF MONEY LAUNDER ING AND FURTHER, RELYING UPON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF MCDOWELL & COMPANY LTD., HELD THE CAPITAL GAIN AS U NEXPLAINED CASH CREDIT OF THE ASSESSEE UNDER S.68 OF THE ACT. ALTER NATIVELY, THE AO ALSO HELD THAT CONSIDERING THE MAGNITUDE OF TRANSACTIONS , THE ENTIRE GAIN SHOULD BE TAXED AS BUSINESS INCOME OF THE ASSESSEE. THE AO HAS DEALT WITH THE SUBJECT ISSUE FROM PAGE NO. 1 TO 37 OF HIS ORDER. THE AO HAS GIVEN HIS FINDINGS AT PARA 26, PAGE NO. 27 & 28 OF THE ORDER. THE OPERATIVE PART OF THE AOS FINDINGS FIND PLACE AT P AGE NO. 37 OF THE ORDER. THE AO FROM THE COPIES OF THE VARIOUS CAPITA L ACCOUNTS FILED BY THE ASSESSEE AND THE GROUP ASSESSEES, OBSERVED THAT THE ASSESSEE AND THE GROUP ASSESSEES HAD SHOWN AGGREGATE SHORT-TERM CAPITAL GAIN AND LONG-TERM CAPITAL GAIN, RESPECTIVELY OF RS.12,18,40 ,398/- AND RS.8,79,77,250/- IN VARIOUS ASSESSMENT YEARS FROM S ALE OF SHARES. THE AO NOTED THAT THE ASSESSEE AND GROUP ASSESSEES HAD SHOWN STCG FROM SCRIPS OF SIX COMPANIES ONLY. THE AO FROM MAKI NG AN ANALYSIS FROM PROFIT & LOSS ACCOUNT OF THESE COMPANIES, FOUND THA T THERE WAS SUDDEN AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 34 INCREASE IN THE PRICES OF SHARES OF THESE COMPANIES . ACCORDING TO THE AO, SUCH INCREASE IN PRICES WAS ABNORMAL AND NOT BA SED ON FUNDAMENTALS. ACCORDING TO THE AO, NO PRUDENT PERSO N COULD HAVE MADE INVESTMENT IN SUCH COMPANIES. THE AO ALSO NOTICED T HAT SEBI HAD CONDUCTED THE ENQUIRY AS REGARD TO THE HIKE IN THE PRICES OF THE SHARES. FINALLY, THE AO BY EXPRESSING THE THEORY OF MONEY L AUNDERING AND RELYING UPON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF MCDOWELL & COMPANY LTD., AT OPERATIVE PARA AT PAGE NO. 37, HELD THAT THE ASSESSEE HAD BROUGHT THE UNACCOUNTED CASH IN TH E SYSTEM THROUGH SHAM AND ILLUSORY SHARE TRANSACTIONS TO AVOID THE T AX ON THE WHOLE UNACCOUNTED MONEY AND PAID ONLY 20% AND 10% OF TAX RESPECTIVELY. THE AO HELD SUCH CAPITAL GAIN AS UNACCOUNTED CASH C REDIT OF THE ASSESSEE CREDITED IN HIS BOOKS OF ACCOUNT AND MADE THE ADDITION UNDER S.68 OF THE ACT. 24. MATTER CARRIED TO LEARNED CIT(A), WHO HAS REPRO DUCED SUCH SUBMISSION IN HIS ORDER ITSELF. COPIES OF RELEVANT ABSTRACT OF THE SUBMISSION AS FILED BEFORE THE CIT(A) ARE PLACED AT PAGE NO. 269 TO 339 AND 340 TO 342 OF THE PAPER BOOK. FINALLY, THE CIT( A) DISPOSED OFF THE APPEAL BY HIS ORDER DATED 05-08-2011. THE CIT(A) GR ANTED A VERY MEAGER RELIEF FOR A SUM OF RS.9,937/-, IN RESPECT O F GAIN DERIVED BY THE ASSESSEE FROM THOSE COMPANIES IN RESPECT OF WHICH N O ADVERSE FINDINGS WERE THERE IN SEBI RECORDS. HOWEVER, IN RESPECT OF THE GAIN ARISING FROM THE REMAINING COMPANIES, THE CIT(A) CONFIRMED THE A CTION OF THE AO IN TREATING THE STCG AND LTCG AS INCOME FROM OTHER SOU RCES. HOWEVER, THE CIT(A) ALLOWED THE GROUND OF THE ASSESSEE BEFOR E HIM THAT THE TRANSACTIONS OF SHARES CANNOT BE REGARDED AS TRADE IN THE NATURE. IN THE APPELLATE ORDER, THE CIT(A) HAS REPRODUCED THE WRIT TEN SUBMISSION OF THE ASSESSEE MADE ON THIS ISSUE AT PAGE NO. 9 TO 79 OF HIS ORDER. THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 35 CIT(A) HAS DEALT WITH THE ISSUE AT PARA 4.2, PAGE N O. 79 TO PARA 4.2.7, PAGE NO. 93 OF THE ORDER. THE CIT(A) HAS SUMMED-UP HIS FINDINGS AT PARA 4.2.6 FROM PAGE NO. 92 TO 93 OF HIS ORDER. ACC ORDING TO THE CIT(A), NO ADVERSE FINDINGS WERE THERE IN THE SEBIS WEBSIT E IN RESPECT OF SOME OF THE COMPANIES AS TABULATED AT PAGE NO. 83 TO 85 OF THE ORDER. HOWEVER, IN RESPECT OF THE OTHER COMPANIES, TABULAT ED AT PAGE NO. 86 TO 88, THE CIT(A) HAS GIVEN A FINDING THAT THE SEBI HA D PENALIZED SUCH COMPANIES AND THEIR BROKERS FOR BEING INVOLVED IN M ANIPULATING ARTIFICIAL ABNORMAL RISE IN THE PRICE OF THE SHARES WITH A VIE W TO ENABLE THEM TO PROVIDE ACCOMMODATION ENTRIES TO BOOK CAPITAL GAIN TO ONE SET OF NEEDY PERSONS. ON THIS BASIS, THE CIT(A) CONFIRMED THE AD DITION. 25. THE LD. AR HAS MADE ORAL AND WRITTEN SUBMISSION S AS UNDER: 1.00 THE ENTIRE ADDITION HAS BEEN MADE BY THE LEAR NED AO MERELY ON GUESS WORK, CONJECTURES AND SURMISES. THE ADDITION IS NOT BASED UPON ANY DOCUMENT FOUND DURING THE COURSE OF SEARCH PROCEEDI NGS. DURING THE COURSE OF ENTIRE SEARCH PROCEEDINGS, NOT A SINGLE INCRIMIN ATING DOCUMENT WAS FOUND WHICH COULD HAVE RAISED ANY DOUBT ON THE GENUINENES S OF THE SHARE TRANSACTIONS. THE ADDITION OF THE AO IS NOT BASED U PON ANY INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF THE SEARCH BUT IT IS ONLY BASED UPON THE ENTRIES REGARDING THE SALE OF SHARES FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE [KINDLY REFER PB PAGE NO. 36]. THE AO HAS MADE THE ADDITION MERELY BY INVOKING THE PROVIS IONS OF SECTION 68 OF THE ACT. IT IS SUBMITTED THAT IN THE SEARCH ASSESSMENTS , MAKING OF ASSESSMENT WITHOUT HAVING RECOURSE TO ANY INCRIMINATING MATERI AL WAS NOT WARRANTED. 2.00 IT IS SUBMITTED THAT THE ASSESSEE HAD GENUINEL Y DERIVED LONG-TERM CAPITAL GAIN/ SHORT-TERM CAPITAL GAIN FROM SALE OF EQUITY SHARES THROUGH RECOGNIZED STOCK EXCHANGES AFTER DUE PAYMENT OF SEC URITY TRANSACTION TAX. THUS, THE ASSESSEE HAD GENUINELY CLAIMED EXEMPTION OF INCOME FROM LONG- TERM CAPITAL GAIN UNDER S.10(38) OF THE ACT. LIKEWI SE, THE ASSESSEE HAD ALSO RIGHTLY CLAIMED CONCESSIONAL RATE OF INCOME-TAX ON SHORT-TERM CAPITAL GAIN FROM SALE OF SHARES IN THE LISTED SECURITIES. 2.01 IT IS SUBMITTED THAT THE ENTIRE TRANSACTIONS W ERE CARRIED OUT BY THE ASSESSEE THROUGH THE SHARE BROKERS WHO WERE DULY RE GISTERED WITH THE SECURITIES EXCHANGE BOARD OF INDIA. SUCH BROKERS WE RE ALSO MEMBERS OF THE RECOGNIZED STOCK EXCHANGES. THE PURCHASES AND SALES TRANSACTIONS OF SHARES WERE CARRIED OUT BY THE ASSESSEE ONLY IN THE LISTED SECURITIES. THE ENTIRE PURCHASE CONSIDERATION FOR PURCHASES OF SHARES WAS MADE THROUGH ACCOUNT PAYEE CHEQUES. AS AGAINST SUCH PURCHASES, THE BROKE R ISSUED CONTRACT NOTES IN FAVOUR OF THE ASSESSEE. IMMEDIATELY AFTER PURCHA SES, THE DELIVERY OF THE SHARES WERE TAKEN IN THE DEMAT ACCOUNT MAINTAINED B Y THE ASSESSEE WITH THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 36 DEPOSITORIES OF THE REPUTE. THE INVESTMENT IN PURCH ASE OF SHARES WAS DULY RECORDED BY THE ASSESSEE IN HIS REGULAR BOOKS OF AC COUNT AND IT WAS ALSO REFLECTED IN THE STATEMENT OF AFFAIRS OF THE ASSESS EE FOR THE CONCERNING YEARS FILED ALONG WITH THE ORIGINAL RETURN FURNISHED UNDE R S.139 OF THE ACT. SUBSEQUENTLY, AFTER HOLDING SHARES FOR A CONSIDERAB LE LONG TIME, UPON INCREASE IN SHARE PRICES, THE ASSESSEE HAD SOLD SUC H SHARES AGAIN THROUGH THE SEBI REGISTERED BROKERS. SUCH BROKERS ISSUED TH E CONTRACT NOTES IN EVIDENCE OF SALES OF SHARES TO THE ASSESSEE. THE SH ARES WERE SOLD THROUGH RECOGNIZED STOCK EXCHANGES ONLY. THE ENTIRE SALES P ROCEEDS WERE RECEIVED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES ONLY AND THE SAME GOT CREDITED IN THE BANK ACCOUNTS OF THE ASSESSEE. UPON SALES OF THE SHARES, THE DELIVERY WAS MADE THROUGH THE DEMAT ACCOUNT ONLY. T HE TRANSACTIONS OF PURCHASES AND SALES WERE MADE AT THE MARKET PRICES PREVAILING AT THE RELEVANT TIME. 2.02 DURING THE COURSE OF THE ASSESSMENT PROCEEDING S, IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE HAD FURNISHED FOLLOWING DOCUMENTARY EVIDENCES: (I) STATEMENT SHOWING COMPLETE DETAILS OF LONG-TER M CAPITAL GAIN OF RS.9,91,440/- AND SHORT-TERM CAPITAL GAIN OF RS.2,7 2,39,741/- DERIVED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. IN SUCH STATEMENT, THE ASSESSEE HAD GIVEN THE COMPLETE DETAILS AS REGARD T O THE NAME OF THE COMPANY, NUMBER OF SHARES PURCHASED, DATE OF PURCHA SES, AMOUNT OF PURCHASES, DATE ON WHICH SHARES WERE DEPOSITED IN D EMAT ACCOUNT, NUMBER OF SHARES SOLD, DATE OF SALE OF SHARES, SALE S PRICE OF SHARES, DATE ON WHICH SHARES WERE ISSUED FROM THE DEMAT ACCOUNT AND THE AMOUNT OF CAPITAL GAIN [KINDLY REFER PB PAGE NO. 78 TO 82]; (II) COPY OF SCRIP-WISE DEMAT ACCOUNT OF THE ASSE SSEE FOR THE RELEVANT PERIOD [KINDLY REFER PB PAGE NO. 83 TO 92] ; (III) XEROX COPIES OF THE CONTRACT NOTES FOR PURCH ASES ISSUED BY THE BROKERS IN RESPECT OF PURCHASES OF SHARES [KINDLY R EFER PB PAGE NO. 93 TO 110]; (IV) XEROX COPIES OF THE CONTRACT NOTES FOR SALES I SSUED BY THE BROKERS IN RESPECT OF SALES OF SHARES [KINDLY REFER PB PAGE NO . 111 TO 125]; (V) COPY OF LEDGER ACCOUNT OF THE SHARE BROKERS I N THE BOOKS OF ASSESSEE [PB PAGE NO. 126 TO 132]; (VI) COPY OF LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SHARE BROKERS CONTAINING CONFIRMATION OF SHARE TRANSACTIONS [PB P AGE NO. 133 TO 140]; (VII) COPIES OF THE RELEVANT ABSTRACTS OF BANK ACC OUNTS OF THE ASSESSEE FOR THE RELEVANT PERIOD REFLECTING THE SHARES TRANSACTI ONS OF PURCHASES [PB PAGE NO. 141 TO 145]; (VIII) COPIES OF THE RELEVANT ABSTRACTS OF THE BAN K ACCOUNTS OF THE ASSESSEE FOR THE RELEVANT PERIOD REFLECTING THE SAL ES PROCEEDS OF SHARES SOLD [PB PAGE NO. 146 TO 167]; AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 37 (IX) COPIES OF QUOTATIONS OF RELEVANT STOCK EXCHAN GE HIGHLIGHTING THE TRADING VOLUME OF SHARES AND THEIR PRICES ON THE RE LEVANT DATES OF TRANSACTIONS OF PURCHASES AND SALES [PB PAGE NO. 16 8 TO 268]; 3.00 DURING THE COURSE OF THE ASSESSMENT PROCEEDING S OF THE GROUP ASSESSEES, THE AO ISSUED NOTICES UNDER S.133(6) OF THE ACT TO THE BROKERS AND SUCH BROKERS HAVE DULY COMPLIED SUCH NOTICES BY PROVIDING THE INFORMATION CALLED FOR BY THE AO. NO MATERIAL ADVER SITY WAS FOUND IN THE COMPLIANCE MADE BY THE BROKERS. 4.00 THE WHOLE FOUNDATION OF THE AO IN DISBELIEVING THE GENUINENESS OF THE TRANSACTIONS IS TWO ORDERS OF THE SEBI PASSED IN TH E CASE OF TWO COMPANIES NAMELY GR INDUSTRIES AND FINANCE LTD. AND NAGESHWAR INVESTMENTS LTD.. IN SUCH ORDERS PASSED BY THE SEBI, THE SEBI HAD PENALI ZED THE SHARE BROKERS FOR MANIPULATING WITH THE SHARE PRICES. INCIDENTALL Y, THE SHARE BROKER PENALIZED WAS THE SAME THROUGH WHICH THE ASSESSEE C ARRIED OUT HIS TRANSACTIONS IN THE SUBJECT SCRIP. 4.01 THE CIT(A) HAS ALSO CONFIRMED THE ACTION OF TH E AO MERELY ON THE BASIS OF SOME REPORTS OF THE SEBI AUTHORITIES DOWNL OADED BY HIM FROM THE WEBSITE. 4.02 YOUR HONOURS, FIRST OF ALL, THE ORDERS OF THE SEBI ESTABLISH THE FACT CLAIMED BY THE ASSESSEE THAT THERE WAS HEAVY HIKE I N THE PRICE OF THE SHARES OF SOME COMPANIES FROM WHICH THE ASSESSEE DERIVED C APITAL GAIN. IT IS SUBMITTED THAT IT IS NOT THE CASE OF THE SEBI OR TH E AO THAT THE ASSESSEE HIMSELF HAD MANIPULATED THE PRICES. IN SUCH CIRCUMS TANCES, MERELY FOR THE REASON THAT THE BROKER OF THE ASSESSEE WHILE CARRYI NG OUT THE TRANSACTIONS FOR SOME OTHER PERSONS WAS FOUND TO BE MANIPULATING THE PRICES OF SHARES CANNOT BE A GROUND FOR HOLDING THE ENTIRE TRANSACTIONS CAR RIED OUT BY THE ASSESSEE AS SHAM. 4.03 YOUR HONOURS, IN THE SIMILAR CIRCUMSTANCES, TH E HONBLE HIGH COURT OF JHARKHAND IN THE CASE OF CIT VS. ARUN KUMAR AGRAWAL (HUF) (2012) 8 TMI 398 (JHAR.) HAS HELD THAT EVEN IN A CASE WHERE THE SHARE BROKE R WAS FOUND INVOLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RISING OF THE SHARE PRICE, THE TRANSACTIONS CARRIED OUT BY A PERS ON WHO HIMSELF WAS NOT SO INDULGED CANNOT BE REGARDED AS SHAM TRANSACTIONS. T HE HONBLE HIGH COURT, AT PARA 10, HAS OBSERVED AS UNDER : 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE PARTIES AND WE ARE OF THE CONSIDERED OPINION TH AT THE LEARNED ASSESSING OFFICER WAS MUCH INFLUENCED BY THE ENQIUR Y REPORT WHICH MAY HAS BEEN BROUGHT ON RECORD BY THE EFFORTS OF TH E ASSESSING OFFICER AND THAT ENQUIRY REPORT WAS PREPARED BY THE SEBI AND FROM THE OBSERVATIONS MADE BY THE TAX APPEAL NO.4 OF 2011 WI TH ANALOGOUS CASE ASSESSING OFFICER HIMSELF, IT IS CLEAR THAT AF TER GETTING THAT ENQUIRY REPORT, THE SEBI PRIMA FACIE FOUND INVOLVEMENT OF S OME OF THE SHARE BROKERS IN UNFAIR TRADE PRACTICES. EVEN IN A CASE WHERE THE SHARE BROKER WAS FOUND INVOLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RISING OF THE SHARE PRICE, AND ANY PERSON, WHO HIMSELF IS NOT INVOLVED IN THAT TYPE OF TRANSACTION, IF PURCHASED THE SHARE FROM THAT BROKER INNOCENTLY AND BONAFIDELY AND IF HE SHOW HIS BONAFIDE IN TRANSACTION BY SHOWI NG RELEVANT MATERIAL, FACTS AND CIRCUMSTANCES AND DOCUMENTS, TH EN MERELY ON THE BASIS OF THE REASON THAT SHARE BROKER WAS IN VOLVED IN AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 38 DEALING IN THE SHARE OF A PARTICULAR COMPANY IN COL LUSION WITH OTHERS OR IN THE MANNER OF UNFAIR TRADE PRACTICES A GAINST THE NORMS OF S.E.B.I AND STOCK EXCHANGE, THEN MERELY BE CAUSE OF THAT FACT A PERSON WHO BONAFIDELY ENTERED INTO SHAR E TRANSACTION OF THAT COMPANY THROUGH SUCH BROKER THEN ONLY BY ME RE ASSUMPTION SUCH TRANSACTIONS CANNOT BE HELD TO BE A SHAME TRANSACTION... . 4.04 THE HONBLE HYDERABAD BENCH OF ITAT ALSO RELYI NG UPON THE PRONOUNCEMENT OF HIGH COURT OF JHARKHAND SUPRA, IN THE CASE OF ITO VS. AARTI MITTAL (2014) 149 ITD 0728 (HYD.) HAS HELD THAT MERELY ON THE BASIS THAT THE SEBI HAD INITIATED SOME ACTION AND HAD FOUND THE BR OKER VIOLATING THE RULES OF SEBI CANNOT BE A GROUND FOR DISBELIEVING THE TRANSA CTIONS OF SHARES. 4.05 THE HONBLE NAGPUR BENCH OF ITAT IN THE CASE O F ACIT VS. KAMAL KUMAR AGRAWAL (INDL.) & ORS. AS REPORTED IN (2010) 133 TTJ 0818 (NAG.) HAS ALSO HELD THAT THE ORDERS OF THE SEBI CANNOT BE A G ROUND FOR ADJUDGING THE GENUINENESS OF SHARE TRANSACTIONS. THE HONBLE BENC H, AT PARA 8, HAS OBSERVED AS UNDER 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOTED THAT THE ASSESSEE IS A PART OF HALDIRAM GROUP SITUA TED AT NAGPUR. THE ASSESSEE EARNED CAPITAL GAIN DURING THE PERIOD COVE RED BY S. 153A PROCEEDINGS. IT IS ALSO NOTED THAT ALL SUCH TRANSAC TIONS HAVE BEEN TAKEN INTO CONSIDERATION WHILE FILING THE RETURNS F OR THESE YEARS IN THE NORMAL COURSE AND THE DEPARTMENT HAS ALSO ACCEPTED THE NATURE OF SUCH TRANSACTIONS. IT IS VERY IMPORTANT TO NOTE THA T NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH WHICH COULD HAVE CAST DOUBT ON THE GENUINENESS OF THE TRANSACTIONS O R COULD HAVE INDICATED THAT IT WAS A CASE OF ASSESSEES OWN UNDI SCLOSED MONEY UTILIZED IN THE EXECUTION OF SUCH TRANSACTIONS. IN THE ASSESSMENT ORDER AS WELL AS AT THE FIRST APPELLATE STAGE AND ALSO BE FORE US, THE FOCUS OF THE DEPARTMENT IS ON THE QUANTUM OF TRANSACTIONS EN TERED INTO BY THE GROUP AS A WHOLE AND, THEREFORE, WE FIND SUBSTANTIA L MERIT IN THE VIEW OF THE LEARNED CIT(A) THAT IT IS THIS FACT WHICH HA S RESULTED INTO SUCH ACTION OF THE AO. WE HAVE ALSO NOTED THAT VOLUMINOU S DOCUMENTARY EVIDENCES HAVE BEEN FILED BY THE ASSESSEE TO PROVE ITS CLAIM WHICH SUPPORT THE GENUINENESS OF THE TRANSACTION. HOWEVER , THE AO HAS UTILIZED THE STATEMENTS OF THE PERSONS WHO WERE NOT CROSS-EXAMINED BY THE ASSESSEE. HENCE, AS PER THE SETTLED JUDICIAL PRINCIPLE, SUCH STATEMENTS CANNOT BE GIVEN ANY WEIGHTAGE. WE ARE FU RTHER OF THE VIEW THAT WHEN THERE ARISES A QUESTION OF APPRECIATION O F DOCUMENTARY EVIDENCES, THEN, A HOLISTIC VIEW HAS TO BE TAKEN AN D IN THE PRESENT CASE MAJORITY OF THE BROKERS HAVE SUPPORTED THE CLA IMS OF THE ASSESSEE AND SURPRISINGLY SOME OF THEM HAVE NOT BEE N APPROACHED BY THE AO AT ALL. THUS, ON APPRECIATION OF DOCUMENT ARY EVIDENCES SUBMITTED BY THE ASSESSEE, THE GENUINENESS OF THE T RANSACTIONS APPEARS TO BE ESTABLISHED. AS REGARDS THE ASPECT OF OFF MARKET TRANSACTIONS, IT IS NOTED THAT NEITHER THESE ARE IL LEGAL NOR PROHIBITED AND ONLY SOME OF THE COMPLIANCES HAVE TO BE MADE BY THE BROKERS. AS REGARD THE ASPECT OF SUCH COMPLIANCES, WE FIND THAT IT IS NOT THE CASE THAT ALL THE OFF MARKET TRANSACTIONS HAVE NOT BEEN REPORTED BY THE CONCERNED BROKERS TO THE STOCK EXCHANGE AS PER RULE S AND EVEN OTHERWISE, ANY FAILURE ON THE PART OF THE BROKERS I N DOING SUCH AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 39 COMPLIANCE CANNOT MAKE THE CONTRACT BETWEEN THE ASS ESSEE AND THE BROKER ILLEGAL OR VOID AS THE BROKER MAY FACE THE C ONSEQUENCES FOR HIS DEFAULT UNDER RELEVANT STATUTE. IT IS ALSO NOTED TH AT ALL THE TRANSACTIONS ARE NOT OFF MARKET TRANSACTIONS, HENCE, THE AOS AP PROACH TO PICK AND CHOOSE THE ONLY SUCH INSTANCES WHICH ARE FAVOURABLE TO HIM CANNOT JUSTIFY SUCH ADDITION. THE LEARNED CIT-DEPARTMENTAL REPRESENTATIVE HAS ALSO ARGUED THAT THERE WERE DIFFERENCES IN THE INFORMATION AS PER CONTRACT NOTES AND AS PER INFORMATION RECEIVED FROM CALCUTTA STOCK EXCHANGE WHICH FACT IS ALSO NOT MATERIAL BECAUSE WH EN SOME OFF MARKET TRANSACTIONS HAVE NOT BEEN REPORTED TO THE S TOCK EXCHANGE, HOW SUCH CONTRACT NOTES CAN BE MATCHED WITH THE REC ORDS OF STOCK EXCHANGE. WE ARE FURTHER OF THE VIEW THAT ECONOMIC CONSEQUENCES AS A RESULT OF OFF MARKET TRANSACTIONS OR OTHERWISE HA VE TAKEN PLACE AND, THEREFORE, SUCH TRANSACTIONS CANNOT BE TREATED AS S HAM MERELY FOR SOME DISCREPANCIES OR FOR THE VIEW OF THE AO IN REG ARD TO GENUINENESS OF THESE TRANSACTIONS. THE REVENUE HAS ALSO RELIED ON THE DECISIONS OF SEBI INVOLVING SOME SCRIPS. IN THIS RE GARD, WE ARE OF THE VIEW THAT ROLE OF SEBI IS DIFFERENT AND THE ORD ERS PASSED BY THEM HAVE DIFFERENT OBJECTIVES SUCH AS ORDERLY COND UCT OF SHARE MARKETS AND INVESTOR PROTECTION AND, THEREFORE, SUC H ORDER CANNOT BE CONCLUSIVE AS REGARD TO THE GENUINENESS O F THE TRANSACTIONS. IN THIS REGARD, IT WOULD NOT BE OUT OF PLACE TO ME NTION THAT STOCK MARKET OPERATIONS ARE SUBJECT TO DIFFERE NT REGULATIONS AND THE INTEREST OF GENERAL PUBLIC ARE PROTECTED BY PRO HIBITING THE MARKET INTERMEDIARIES FROM INDULGING IN UNFAIR TRADE PRACT ICES RIGGING OF A PARTICULAR IN COLLABORATED MANNER. THE ORDER OF THE SEBI RELIED ON BY THE REVENUE IS MAINLY ON THE ASPECT OF PRICE RIGGIN G IN SUCH MANNER. HENCE, IN OUR VIEW, THE SAME CANNOT BE OF ANY ASSIS TANCE TO THE CAUSE OF THE REVENUE. THUS, ON THE BASIS OF APPRECI ATION OF FACTS AND CIRCUMSTANCES OF THE CASE AS A WHOLE AND CONSIDERIN G THE DOCUMENTARY EVIDENCES ON RECORD, WE ARE OF THE VIEW THAT THE SHARE TRANSACTIONS CANNOT BE CONSIDERED AS INGENUINE/SHAM AND, THEREFORE, THE SALE PROCEEDS OF SUCH SHARE TRANSACTIONS CANNOT BE TAXED UNDER S. 68 OF THE ACT. 4.06 FURTHER, THIS HON'BLE BENCH IN THE CASE OF SMT. ARZOO ANAND VS. JCIT (2010) 14 ITJ 604 (TRIB-INDORE), HAS ALSO HELD THAT IF ANY VIOLATION OF THE PROVISIONS OF SEBI (INTERMEDIARIES) REGULATIONS, 20 08 OR SEBI ACT, 1992 HAVE BEEN COMMITTED, THE SAME IS FAULT OF THE SEBI BROKE RS AND FOR WHICH THE ASSESSEE CANNOT BE PENALIZED. IT IS SUBMITTED THAT AGAINST THE DECISION OF THE HON'BLE ITAT, THE REVENUE HAD PREFERRED AN APPEAL B EFORE THE HON'BLE HIGH COURT OF MADHYA PRADESH UNDER S. 260A OF THE ACT. I T IS FURTHER SUBMITTED THAT THE HON'BLE BENCH VIDE ITS ORDER DELIVERED ON 06-01 -2012 HAS DISMISSED THE APPEAL OF THE REVENUE. THE HON'BLE M.P. HIGH COURT AT PARA 7 WAS PLEASED TO OBSERVE AS UNDER: '.. WHILE EXERCISING JURISDICTION UNDER 260A, WE CAN NOT REVERSE THE FINDINGS OF THE ITAT MERELY ON THE GROUND THAT ON FACTS FOUND BY THE TRIBUNAL ANOTHER VIEW IS POSSIBLE. ON THE CONTR ARY WE FIND THAT JCIT AND THE CIT(APPEAL) WHILE DECIDING THE MATTER PROCE EDED ON CERTAIN ASSUMPTIONS/ CONJECTURES WHICH WERE NOT BORNE OUT F ROM MATERIAL ON RECORD.' 5.01 YOUR HONOURS, IN THE PLETHORA OF DECISIONS, IT HAS BEEN HELD THAT WHERE THE SHARES HAVE BEEN PURCHASED AND SOLD THROUGH REG ISTERED SEBI BROKERS, AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 40 THE DELIVERIES HAVE BEEN MADE THROUGH DEMAT ACCOUNT S, THE PROCEEDS HAVE BEEN RECEIVED THROUGH CHEQUES, THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES CANNOT BE DISBELIEVED MERELY ON THE GROUND T HAT THERE WAS MANIFOLD INCREASE IN THE PRICES OF SHARES. 5.02 IN THE CASE OF CIT VS. ANUPAM KAPOOR (2008) 299 ITR 179 (P&H), THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD AS UND ER : 4. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTE D AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCHANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHIC H COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPL ICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO S UCH PRESUMPTION COULD BE DRAWN BY THE AO, MERELY ON SURMISES AND CO NJUCTURES. THE TRIBUNAL RIGHTLY RELIED ON C. VASANTLAL & CO. VS. C IT (1962) 45 ITR 206 (SC), M.O. THOMAKUTTY VS. CIT (1958) 34 ITR 501 (KE R) AND MUKAND SINGH VS. SALES TAX TRIBUNAL (1998) 107 STC 300 (PU NJAB). IT WAS FOR THE AO, WHO HAS REOPENED THE ASSESSMENT TO HAVE SOU GHT SOME EVIDENCE ON RECORD, TO SUBSTANTIATE HIS FORMULATION OF CONSIDERATION THAT THE ASSESSEE HAS NOT FILED A RETURN BONA FIDE. THE TRIBUNAL ALSO TOOK INTO CONSIDERATION THAT IT WAS ONLY ON THE BAS IS OF A PRESUMPTION THAT THE AO CONCLUDED THAT THE ASSESSEE HAD PAID CA SH AND PURCHASED THE CHEQUE. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGARD, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED THE ASSESSMENT. THE ASSESSEE HAD MADE AN I NVESTMENT IN A COMPANY, EVIDENCE WHEREOF WAS WITH THE AO. THEREF ORE, THE AO COULD NOT HAVE ADDED INCOME, WHICH WAS RIGHTLY DELE TED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUS PICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF, AS HAS BEEN HELD BY HONBLE SUPREME COURT IN THE CASE OF UMACHARAN SHAW & BROS. VS. CIT (1959) 37 ITR 271 (SC). 5.03 THE HONBLE ITAT BENCH OF PUNE, IN THE CASE OF SMT. SMITA P. PATIL & ORS. VS. ACIT (2014) 159 TTJ 0182 (PUNE) HAS HELD A S UNDER : 24. WE FIND THAT IN ALL THESE CASES, NO INCRIMINAT ING MATERIAL HAS BEEN SEIZED EXCEPT THE BROKER NOTES. WE HAVE ALSO FIND T HAT THESE ASSESSEES HAVE ALREADY SHOWN THE SHARE TRANSACTIONS IN THEIR BALANCE SHEET AND THE SHARE TRANSACTIONS ARE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE CASE OF THE DEPARTMENT IS THA T EVEN IF THE SALES ARE MADE THROUGH THE DEMAT ACCOUNT, ALL THESE ARE A RRANGED TRANSACTIONS AND HENCE, THE ENTIRE MONEY RECEIVED O N THE SALE OF THESE SHARES (EVEN THOUGH THE SALE IS MADE THROUGH THE DEMAT ACCOUNT AND THROUGH THE STOCK EXCHANGES), TO BE TRE ATED AS UNDISCLOSED INCOME OF THESE ASSESSEES. IT IS SOMETH ING STRANGE THAT THE CHARGE MADE BY THE ASSESSING OFFICER THAT THE B ROKERS ARE LOCATED AT DIFFERENT LOCATIONS LIKE AHMEDABAD AND KOLKATA B UT PAYMENTS ARE ROUTED FROM THE BOMBAY. IN OUR OPINION, NOW A DAYS IT IS COMMON IN THE CORE-BANKING SYSTEM TO TRANSFER THE MONEY FROM ANY LOCATION TO ANOTHER LOCATION AND DUE TO THE ELECTRONIC MEDIA EV EN THE TRADING CAN BE DONE ON-LINE ON SMALL LAPTOP. HENCE, SUCH STATEM ENT OF THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 41 ASSESSING OFFICER IS HAVING NO MERIT. THE ASSESSING OFFICER HAS MADE THE GENERAL COMMENTS WITHOUT BRINGING ON RECORD ANY CONCRETE EVIDENCE TO INDICATE THAT THESE ASSESSEES WERE IN L EAGUE WITH THE BROKERS IN THE TRANSACTIONS OF THE SPECIFIC SCRIPS. THE ASSESSING OFFICER IS REFERRING AND RELYING CONVENIENTLY ONLY ON THE THREE BROKERS WHOSE NAMES ARE NOTED IN THE ASSESSMENT ORDERS WHO ALLEGEDLY DEPOSED AGAINST THESE ASSESSEES BUT THE FACT REMAIN THAT THESE ASSESSEES HAD PURCHASED THE SHARES OF OTHER COMPANI ES I.E. TALENT INFO, SANGOTRI CONSTRUCTION AND NIHARIKA INDUSTRIES FROM DIFFERENT BROKERS. 5.04 THE HONBLE ITAT MUMBAI H BENCH IN THE CASE OF ACIT VS. AJAY NAWANDAR (2010) 33 DTR 0452 (MUM. TRIB.) HAS HELD A S UNDER : 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THEIR RIVAL SUBMISSIONS, WE FIND THAT THE AO HAS DOUBTED THE PU RCHASE OF SHARES BY THE ASSESSEE MAINLY BECAUSE OF THE REPORT RECEIV ED FROM THE ADDL. DIRECTOR OF IT (INV.), KOLKOTTA, THAT THE TRANSACTI ON OF PURCHASE OF SHARES BY THE ASSESSEE IS AN OFF-MARKET TRANSACTION AS NO EVIDENCE COULD BE FOUND FROM THE CALCUTTA STOCK EXCHANGE. AS REGARDS THE PURCHASE OF SHARES FROM OFF-MARKET, THE ASSESSEE HA S PLACED RELIANCE UPON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF MUKESH R. MAROLIA VS. ADDL. CIT (2006) 6 SOT 247 (MUMBAI), WH EREIN IT HAS BEEN HELD THAT THE PURCHASE AND SALE OF SHARES OUTS IDE FLOOR OF STOCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY AND THE OFF-MA RKET TRANSACTIONS ARE NOT ILLEGAL. AS REGARDS THE AOS OBSERVATION TH AT THERE IS EXORBITANT RISE IN THE SALE PRICE OF THE SHARES WHICH CREATED A DOUBT ABOUT THE GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAS PL ACED RELIANCE UPON THE DECISION OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF SMT. MEMO DEVI VS. ASSTT. CIT (2008) 7 DTR (AGRA)(TRIB) 158, WHEREIN IT HAS BEEN HELD THAT INCREASE IN SHARE PRI CE BY MORE THAN 25 TIMES CANNOT BE THE BASIS TO ASSUME THAT THE TRANSA CTION WAS BOGUS AS ABNORMAL INCREASE IN THE SHARE PRICE IS A NORMAL PHENOMENA. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UP ON THE DECISION OF THE JODHPUR BENCH IN THE CASE OF ITO VS. SMT. KUSUM LATA (2006) 105 TTJ (JD) 265, WHEREIN IT HAS BEEN HELD THAT FOR MAK ING AN ADDITION UNDER S. 69, THE DEPARTMENT IS REQUIRED TO PROVE TO THE HILT THAT THE IMPUGNED TRANSACTIONS ARE BOGUS. 5.05 THE HONBLE ITAT BENCH OF AGRA IN THE CASE OF BAIJNATH AGRAWAL VS. ACIT (2010) 133 TTJ 0129 (TM) HAS HELD AS UNDER : IT WAS THE DUTY OF THE AO TO BRING ON RECORD SUFFI CIENT EVIDENCES AND MATERIAL TO PROVE THAT THE DOCUMENTS FILED BY THE A SSESSEE WERE BOGUS, FALSE OR FABRICATED AND THE LONG-TERM CAPITA L GAIN SHOWN BY HIM WAS ACTUALLY HIS INCOME FROM UNDISCLOSED SOURCES. T HE ONLY MATERIAL TO SUPPORT SUCH CONCLUSION OF THE LOWER AUTHORITIES IS EITHER THE FINDINGS OF THE DDI IN GENERAL INVESTIGATIONS OR TH E OBSERVATION THAT THE ASSESSEE COULD NOT PROVE THE TRANSACTION TO BE GENU INE ONE. WHILE MAKING ADDITION AS INCOME FROM UNDISCLOSED SOURCES BURDEN ON THE DEPARTMENT IS VERY HEAVY TO ESTABLISH THAT THE ALLE GED RECEIPT WAS ACTUALLY INCOME OF THE ASSESSEE FROM THE UNDISCLOSE D SOURCES. THEREFORE, THE CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW IN UPHOLDING THE ORDER OF THE AO TREATING THE INCOME UNDER THE H EAD LONG-TERM AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 42 CAPITAL GAIN AS SHAM AND BOGUS AND TAXING THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE INCOME DISCLOSED BY THE ASSESSEE IS CHARGEABLE TO TAX AS LONG-TERM CAPITAL GAIN AND CAN NOT BE TREATED AS INCOME FROM ANY UNDISCLOSED SOURCES.SMT. SUNITA OB EROI VS. ITO (2009) 30 DTR (AGRA)(TM)(TRIB) 474 FOLLOWED ; ASHOK KUMAR LAVANIA (ITA NO. 112/AGRA/2004, DT. 30TH MAY, 2008) AND ITO VS. SMT. KUSUMLATA (2006) 105 TTJ (JD) 265 APPROVED ; CIT VS. DAULATRAM RAWATMULL 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC ) APPLIED . 5.06 THE HONBLE ITAT JODHPUR BENCH IN THE CASE OF ACIT VS. SUMITRA GAUR (2012) 145 TTJ 0026 (UO) HAS HELD AS UNDER : 13. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS EXAMINED THE ISSUE IN THREAD BEAR AND FOUND THA T PURCHASE OF SHARES AS WELL AS SALE OF SHARES ARE GENUINE. THE P URCHASE OF SHARES WERE MADE THROUGH SHRI V.K. SINGHANIA, RENU PODDAR AND BALLABH DAS DAGA. THE SHARES WERE PURCHASED IN EARLIER YEAR S AND WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE SHARES WER E SOLD THROUGH ANOTHER BROKER I.E. M/S. M. BHIWANTIWALA & CO., M/S . AHILYA COMMERCIAL P. LTD. ALL THE PURCHASE AND SALE OF SHA RES WERE DEMATIZED IN REGULAR COURSE OF TRANSACTION. CONFIRM ATION OF PURCHASE OF SHARES THROUGH BROKERS WERE FILED. ALL THE SHARE S ARE OF LISTED COMPANIES. THE SHARES WERE CREDITED TO DEMAT ACCOUN T OF THE ASSESSEE AND THEREAFTER ON SALE OF THOSE SHARES THE ACCOUNT OF THE ASSESSEE WAS DEBITED THROUGH DEMAT ACCOUNT. THEREFO RE, THERE IS NO QUESTION OF DOUBTING THE GENUINENESS OF TRANSACTION S. THERE IS NO EVIDENCE THAT ASSESSEE HAS NOT PURCHASED THE SHARES IN EARLIER YEAR. THEY HAVE BEEN SHOWN IN THE BALANCE SHEET AND THE B ALANCE SHEET OF EARLIER YEAR HAS BEEN ACCEPTED. THE ASSESSEE HAS FILED BROKER NOTE, CONTRACT NOTE, RELEVANT EXTRACT OF CASH BOOK, BALANCE SHEET AS ON 31.3.2005 AND 31.3.2006, COPY OF SHARE CERTIFICATE ETC. AND ALL THESE DETAILS ESTABLISHED THAT THE WAS IN POSSESSION OF R ESPECTIVE SHARES. THE OBJECTION OF THE AO WAS THAT NOTICE ISSUED UNDE R SECTION 133(6) WERE RETURNED BACK AND PAYMENT TO BROKER WAS DELAYE D AND THERE WERE CERTAIN DISCREPANCIES IN THE NAME OF SELLERS A S BROKER AND AS PER ENDORSEMENT IN THE SHARE CERTIFICATE. CLARIFICATION IN RESPECT OF THESE DEFICIENCIES WERE FILED BEFORE THE ASSESSING OFFICE R WHICH WERE FILED BEFORE LD. CIT (A) ALSO. THEY WERE NOT APPRECIATED BY THE ASSESSING OFFICER BUT WERE APPRECIATED BY LD. CIT (A) AND THE N ONLY THE LD. CIT (A) FOUND THAT ALL THE TRANSACTIONS OF PURCHASE AND SALE OF SHARES ARE GENUINE. IT WAS ALSO NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE REPAID THE SALE CONSIDERATION IN HAND. THERE IS NO SUCH EVIDENCE ON RECORD. THEREFORE, INFERENCE DRAWN BY ASSESSING OFF ICER, IN OUR CONSIDERED VIEW WAS NOT CORRECT BY HOLDING THAT THE SHARE TRANSACTION ARE BOGUS. THE LD. CT (A) WAS JUSTIFIED IN HOLDING THAT SHARE TRANSACTIONS WERE GENUINE. ACCORDINGLY WE CONFIRM T HE FINDING OF LD. CIT (A) AS THEY ARE FINDING OF FACT AND REMAINED UN CONTROVERTED. 5.07 IN THE CASE OF SMT. MEMO DEVI VS. ACIT (2008) 7 DTR (AGRA) (TRIB.) 158 , THE HON'BLE BENCH OBSERVED AS UNDER: '7. .. THE ASSESSEE SUBMITTED ALL THE EVIDENC E WHICH WAS WITHIN HER CAPACITY AND POWER. THE BROKER M/S. H.B. RELAN & CO. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 43 THROUGH WHOM THE SHARES HAD BEEN SOLD CONFIRMED TWI CE FIRST UPON REQUEST OF THE ASSESSEE AND AGAIN IN RESPONSE TO TH E SUMMON OF THE AO SALE OF SHARES WITH DISTINCTIVE NUMBERS AND HA VING PAID THE SALE PROCEEDS TO THE ASSESSEE. DURING APPELLATE PROCEEDI NGS ASSESSEE ALSO SUBMITTED DOCUMENTS TO SHOW THAT THE COMPANY WAS A GENUINE COMPANY WITH SUBSTANTIAL CAPITAL BASE AND WAS NOT A SMALL COMPANY. THIS ALSO SHOWS THAT THE ASSESSEE WAS ALL THROUGH K EEN TO CO-OPERATE AND DISCHARGE HER ONUS TO THE MAXIMUM AS COULD BE P OSSIBLE WITHIN HER CAPACITY AND POWER. THE ASSESSEE HAS NO RELATIO N WITH THE DIRECTORS OF THE COMPANY AND WAS IN NO WAY IN THE C APACITY OF AFFECTING THE MARKET PRICE OF THE SHARES. THE INCRE ASE IN SHARE PRICE BY MORE THAN 25 TIMES TOO CANNOT BE THE BASIS TO AS SUME THAT THE TRANSACTION WAS BOGUS. ABNORMAL FLUCTUATION IN SHAR E PRICES IS A NORMAL PHENOMENA. THE LEARNED COUNSEL FOR THE ASSES SEE FILED A CHART SHOWING LOW AND HIGH PRICE OF SOME QUOTED SHA RES DURING THE 52 WEEKS AS PER ECONOMIC TIMES DT. 27 TH FEB., 2007 FROM WHICH IT CAN BE SEEN THAT SOME SHARES INCREASED BY MORE THAN 100 TI MES. THE DEPARTMENTAL ENQUIRIES IN THE CASE OF SOME OTHER PE RSONS AND STATEMENTS OF M/S. JRD STOCK BROKER OR M/S YADAV & CO. IN THAT ENQUIRY TOO HAVE NO BEARING ON THE ASSESSEE'S CASE. THE ASSESSEE HAS NOT DEALT WITH ANY OF THEM. THE EVIDENCE SUBMIT TED BY THE ASSESSEE ARE NOT PROVED TO BE BOGUS, FALSE OR INCOR RECT. ASSESSEE HAS NO OTHER SOURCE OF INCOME EXCEPT RENTAL INCOME AND SHARE FROM PARTNERSHIP FIRM. THE REVENUE TOO HAS NOT BROUGHT O N RECORD ANY SOURCE FROM WHICH THE ASSESSEE COULD HAVE EARNED TH IS ALLEGED UNDISCLOSED INCOME AND THERE IS NO MATERIAL ON RECO RD TO ESTABLISH OR EVEN SUGGEST THAT CASH ACTUALLY FLOWED FROM THE ASS ESSEE TO PURCHASE THE DEMAND DRAFTS AS ALLEGED BY THE REVENUE. ON THE OTHER HAND THE BROKER HAS CATEGORICALLY CONFIRMED THAT HE MADE THE PAYMENT OF SALE PROCEEDS. THE JUDGMENTS RELIED ON BY THE AO OR THE CIT(A) ARE NOT AT ALL APPLICABLE TO THE CASE OF THE ASSESSEE. THERE C ANNOT BE ANY DISPUTE THAT THE DEPARTMENT IS FULLY EMPOWERED TO L IFT THE VEIL TO ESTABLISH THE CORRECT NATURE OF TRANSACTION, BUT TH ERE WAS NOTHING HIDDEN WHICH REQUIRED PENETRATION. FURTHER, AFTER L IFTING THE VEIL DEPARTMENT'S ENQUIRY SHOULD HAVE GONE TO ESTABLISH LOGICALLY, FROM THE RECORDS, THAT SALE CONSIDERATION WAS ACTUALLY THE M ONEY OF THE ASSESSEE CONVERTED UNDER THE GUISE OF SHARE TRANSAC TION. SIMILARLY, HERE THERE WAS NO TAX PLANNING FOR WHICH ANY COLOUR ABLE DEVICE OR COLLUSION COULD HAVE BEEN USED. IT WAS A SIMPLE TRA NSACTION OF SALE OF SHARES AT THE MOST OPPORTUNE TIME WHICH IS PERFECTL Y IN TUNE WITH THE HUMAN NATURE. AS A MATTER OF FACT THE ENTIRE APPROA CH AND FINDING OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMI SES AND CONJECTURES AND BADLY AFFECTED BY VARIOUS OTHER CAS ES, WHICH HAVE NO APPLICATION TO THE ASSESSEE'S CASE. 8. IN OUR VIEW, THE ACTION OF THE REVENUE AUTHORI TIES IN CONCLUDING THAT THE SALE VALUE OF SHARES IS INCOME OF THE ASSE SSEE FROM UNDISCLOSED SOURCES CANNOT BE ACCEPTED. IN VIEW OF THE ABOVE, THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD LONG -TERM CAPITAL GAIN IS DIRECTED TO BE ASSESSED AS SUCH.' 5.08 RELIANCE IS PLACED ON FOLLOWING JUDICIAL PRONO UNCEMENTS: I. SMT. ARZOO ANAND VS. JCIT (2010) 14 ITJ 604 (TRI B-INDORE) AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 44 II. MUKESH R. MAROLIA VS. ADDL. CIT (2006) 6 SOT 24 7 (MUM.) III. SMT. SNEHLATA MAHESHWARI VS. ACIT-2(1), INDORE (2014) 24 ITJ 293 (INDORE TRIB.) IV. ITO VS. NAVIN GUPTA 5 SOT 94 (DEL.) V. ITO VS. SMT. NEELAM CHAWLA 6 DTR 141 (DEL.) VI. SHRIPAL SINGH GULATI VS. ITO 9 DTR 564 (AGRA) VII. ITO VS. SMT. KUSUMLATA (2006) 105 TTJ (JD) 265 VIII. ACIT VS. AJAY NAWANDAR (2010) 33 DTR (MUM) (T RIB) 452 IX. INCOME-TAX OFFICER VS. RAJIV AGGARWAL (2004) 89 TTJ (DEL) 1095 X. SMT. SUNITA OBEROI VS. ITO (2009) 126 TTJ (AGRA) (TM) 745 XI. ITO VS. SMT. BIBI RANI BANSAL (2010) 133 TTJ (A GRA) (TM) 394 XII. ACIT VS. JITENDRA AGRAWAL (2009) 23 DTR (AGRA) (TRIB) 50 XIII. ACIT VS. J.R. SOLVENT INDUSTRIES (P) LTD. (20 09) 24 DTR (CHD) (TRIB) 50 6.00 IT SHALL BE APPRECIATED THAT THE ASSESSEE HAD PRODUCED ALL THE DOCUMENTARY EVIDENCES IN SUPPORT OF TRANSACTIONS RE LATING TO CAPITAL GAIN AS REFERRED TO ABOVE. BUT, IN CONTRAST TO THAT, THE LE ARNED AO HAS NOT BROUGHT ON RECORD ANY SINGLE EVIDENCE FOR DISREGARDING SUCH TR ANSACTIONS. IT IS A SETTLED LAW THAT A SUSPICION HOWSOEVER STRONG IT MAY BE, CA NNOT SUBSTITUTE A PROOF. THE HON'BLE APEX COURT IN THE CASE OF DHAKESHWARI COTTON MILLS VS. CIT (1955) 27 ITR 126 (SC) , HAS VERY EMPHATICALLY LAID DOWN THE FOLLOWING RAT IO: AS REGARDS THE SECOND CONTENTION, WE ARE IN ENTIRE AGREEMENT WITH THE LEARNED SOLICITOR-GENERAL WHEN HE SAYS THAT THE ITO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, AND T HAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDEN CE IN A COURT OF LAW, BUT THERE THE ARGUMENT ENDS; BECAUSE IT IS EQU ALLY CLEAR THAT IN MAKING THE ASSESSMENT UNDER SUB-S. (3) OF S.23 OF T HE ACT, THE ITO IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSES SMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. T HERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPORT THE A SSESSMENT UNDER S. 23(3). THE RULE OF LAW ON THIS SUBJECT HAS, IN O UR OPINION, BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH COURT IN THE CASE OF SETH GURMUKH SINGH VS. CIT (SUPRA). IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN REACHING ITS CONCLUSIONS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS SUBMITTED THAT SINCE THE ASSESSEE HAD GENUINELY DERIVED SHORT-TERM CAPITAL GAIN AND LONG- TERM CAPITAL GAIN FROM SALE OF SHARES, THE APPEAL O F THE ASSESSEE DESERVES TO BE ALLOWED. AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 45 26. LD. DRS HAVE RELIED ON THE ORDERS OF THE REVENU E AUTHORITIES AND SUBMITTED AS UNDER: LONG TERM AND SHORT TERM CAPITAL GAIN ON SALE OF S HARES TREATED AS INCOME FROM OTHER SOURCES AND ALTERNATIVELY AS BUSINESS IN COME. THE GROUP HAS SHOWN HUGE CAPITAL GAINS OVER RS. 23,37,722,148/- I N THE HANDS OF VARIOUS FAMILY MEMBERS FROM PURCHASE AND SALE OF SHARES DUR ING THE BLOCK PERIOD. THE AO NOTED THAT MAJOR CAPITAL GAIN HAD BEEN SHOWN TO BE FROM THE SCRIPS OF COMPANIES SUCH AS NAGESHWAR INVESTMENT LTD., G.R. I NDUSTRIES AND FINANCE LTD. OASIS CINE COMMUNICATIONS LTD., SANGOTRI CONST RUCTIONS LTD., LIMTEX INVT. LTD., STENLEY CREDIT CAPITAL LTD., MEGA CORPO RATION LTD. BAFFIN ENGINEERING LTD. ETC., WHOSE SHARES WERE MANIPULATE D BY SOME OF THE BROKERS AND THEIR ASSOCIATED CLIENTS IN CALCUTTA ST OCK EXCHANGE WITH A VIEW TO PROVIDE ACCOMMODATION ENTRIES FOR BOOKING PROFIT RE FLECTING HUGE CAPITAL GAINS TO ONE SET OF THE INTERESTED PARTIES AND ALSO THE C ORRESPONDING LOSSES TO THE OTHER SET OF INTERESTED PARTIES. ACCORDINGLY AO TRE ATED THE CAPITAL GAIN SHOWN BY THE ASSESSEE AS THEIR INCOME FROM OTHER SOURCES. THIS LED TO THE LEVY OF TAX ON SUCH GAIN/INCOME AT NORMAL RATE AS AGAINST T HE CONCESSIONAL RATES APPLICABLE TO THE SHORT TERM CAPITAL GAIN. CIT APPE AL HAS CONFIRMED THE SAME WITH THE DETAILED FINDINGS GIVEN IN PARA 4.2 ON PAG E 79 ONWARDS OF HIS ORDER IN CASE OF SHRI AMANDEEP SINGH BHATIA ON WHICH I RELIE D UPON AND ORDER OF CIT(A) MAY KINDLY BE CONFIRMED. 27. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME WHEREIN HE HAS DISCLOSED THE INCOME DERIVING FROM SHORT TERM/LONG TERM CAPITAL GAIN PRIOR TO DAT E OF SEARCH. THE ASSESSEE HAS WHILE FURNISHING ORIGINAL RETURN, HE H AS GIVEN THE COMPLETE DETAILS AS REGARD TO SHORT TERM AND LONG TERM CAPIT AL GAIN. THE ASSESSEE HAS FURNISHED THE FOLLOWING DOCUMENTS IN SUPPORT OF THE CLAIM ALONG WITH THE RETURN OF INCOME WHICH READS AS UNDER: PAGE NO. NATURE OF DOCUMENT FILED FOR THE PURPOSE OF FROM TO 78 82 STATEMENT SHOWING DETAILS OF LTCG AND STCG FOR GIVING THE SCRIP-WISE AND DATE-WISE DETAILS OF LTCG & STCG 83 92 COPY OF DEMAT ACCOUNT ESTABLISHING THE HOLDIN G PERIOD OF THE SHARES AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 46 93 110 CONTRACT NOTES ISSUED BY THE BROKERS IN RESPECT OF PURCHASES OF SHARES ESTABLISHING THE PURCHASES HAVE BEEN MADE THROUGH SEBI REGISTERED BROKERS 111 125 CONTRACT NOTES ISSUED BY THE BROKERS IN RESPECT OF SALES OF SHARES ESTABLISHING THE SALES HAVE BEEN MADE THROUGH SEBI REGISTERED BROKERS 126 132 LEDGER ACCOUNT OF THE SHARE BROKER IN BOOKS OF ASSESSEE ESTABLISHING THE SHARES TRANSACTIONS 133 140 LEDGER ACCOUNT OF THE ASSESSEE IN BOOKS OF SHARE BROKER CONTAINING CONFIRMATION OF SHARE TRANSACTIONS ---- DO ---- 141 145 ABSTRACTS OF THE BANK ACCOUNT OF THE ASSESSEE SHOWING PAYMENT FOR PURCHASES ESTABLISHING THAT THE PAYMENTS AGAINST SHARE PURCHASES HAVE BEEN MADE THROUGH BANKING CHANNELS 146 167 ABSTRACTS OF THE BANK ACCOUNT OF THE ASSESSEE SHOWING SALES PROCEEDS OF SHARES ESTABLISHING THAT THE RECEIPTS OF SALES PROCEEDS HAVE BEEN THROUGH BANKING CHANNELS 168 268 COPIES OF QUOTATIONS OF RELEVANT STOCK EXCHANGE HIGHLIGHTING THE TRADING VOLUME OF SHARES AND THEIR PRICE ON THE RELEVANT DATE OF TRANSACTION OF PURCHASES AND SALES ESTABLISHING THE MARKET PRICE OF THE SCRIP ON THE PREVAILING DAY OF PURCHASE AND SALE 28. THE ASSESSEE HAS ALSO FURNISHED THE COMPLETE DE TAILS ON SHORT TERM AND LONG TERM CAPITAL GAIN BEFORE THE ASSESSIN G OFFICER. THE ASSESSING OFFICER FROM THE COPIES OF VARIOUS CAPITA L ACCOUNTS FILED BY THE ASSESSEE AND HIS GROUP ASSESSEES OBSERVED THAT ASSE SSEE AND HIS GROUP HAS SHOWN AGGREGATE SHORT TERM CAPITAL GAIN A ND LONG TERM CAPITAL GAIN, RESPECTIVELY, OF RS.12,18,40,398/- AND RS.8,7 9,77,250/- IN VARIOUS ASSESSMENT YEARS FROM SALE OF SHARES. ASSESSEE HAD TAKEN SHORT TERM CAPITAL GAIN FROM SIX COS. THE ASSESSING OFFICER FO UND THAT THERE WAS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 47 SUDDEN INCREASE IN PRICE OF THESE COS. AND AS SUCH INCREASE IN PRICE WAS ABNORMAL AND NOT BASED ON FUNDAMENTALS. ASSESSING O FFICER FOUND THAT SEBI HAS CONDUCTED AN INQUIRY AS REGARDS TO HIKE IN PRICES OF SHARES AND ASSESSING OFFICER FOUND THAT ASSESSEE HAS BROUG HT UNACCOUNTED CASH IN SYSTEM THROUGH SHAM AND ILLUSORY TRANSACTIO N TO AVOID TAX ON WHOLE UNACCOUNTED MONEY. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, WE FIND THAT THERE WAS NO INCRIMINATIN G DOCUMENTS OR LOOSE PAPERS OR ANY OTHER EVIDENCE WAS FOUND OR SEIZED FR OM THE ASSESSEE THAT THE TRANSACTION OF LONG TERM CAPITAL GAIN OR S HORT TERM CAPITAL GAIN IS NOT GENUINE. 29. THE ASSESSEE HAD MADE ENTIRE TRANSACTION OF PUR CHASE AND SALES IN SHARES OF THESE COS. WHICH ARE DULY REGD. WITH S EBI AND VARIOUS RECOGNISED EXCHANGES. ASSESSEE HAS CARRIED OUT THES E TRANSACTIONS WITH SEBI REGD. BROKERS AFTER PAYMENT OF DUE SECURI TY TRANSACTION TAX. WE FIND THAT ENTIRE PURCHASE AND SALES OF SHARES HA VE TAKEN PLACE THROUGH ACCOUNT PAYEE CHEQUES AND COPIES OF THE BAN K STATEMENT WHICH WAS FILED BY THE ASSESSEE ON PAGE NOS.141 TO 167 OF THE PAPER BOOK. THE DELIVERY OF THE SHARES WAS TAKEN AFTER MAKING T HE PURCHASE AND IT IS REFLECTED IN THE DEMAT ACCOUNT WHICH IS AT PAGE NO. 83 TO 92 OF THE PAPER BOOK. THE ASSESSEE HAS MADE PURCHASE AND SALES OF S HARES WHICH IS MAINTAINED AT INDUSIND BANK. THEREFORE, WE ARE OF T HE VIEW THAT ONCE THE DELIVERY OF SHARES HAS BEEN TAKEN THROUGH RECOG NISED DEPOSITORY, THE GENUINENESS OF PURCHASE AND SALES OF THE SHARES CANNOT BE DOUBTED. THE ASSESSEE ALSO IN SUPPORT OF THE PURCHA SE AND SALES OF SHARES HAS PRODUCED COPIES OF CONTRACT NOTES AND BR OKERS NOTES WHICH ARE ON PAGE NO.93 TO 125 OF THE PAPER BOOK. THE ASS ESSEE HAS ALSO SHOWN THE PRICES OF THE SHARES PREVAILING ON THE DA TES OF PURCHASE AND SALES IN THE CONTRACT NOTES WHICH IS ALSO FOUND IN THE CONCERNING AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 48 QUOTATION OF CONCERNING STOCK EXCHANGE IN RESPECT O F RELATED SHARES. WE FIND THAT THE ASSESSING OFFICER HAS MADE AN INQUIRY BUT NO ADVERSE MATERIAL WAS BROUGHT ON RECORD. WE FIND THAT THE AS SESSING OFFICER AND LEARNED CIT(A) HAVE HELD THAT PENALTY IS IMPOSED UP ON BROKER OR ANY CO. IN WHICH THE ASSESSEE HAS MADE INVESTMENT, THEREFOR E, THIS TRANSACTION IS NOT GENUINE. BUT, WE ARE OF THE VIEW THAT HONBL E JHARKHAND HIGH COURT HAS CONSIDERED THAT WHILE BROKER FOUND IN UNF AIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RISING THE SHARE PRICE S, THE TRANSACTIONS CARRIED OUT BY THE PERSON HIMSELF NOT SO INDULGED I N THAT TYPE PRACTICE CANNOT BE REGARDED AS SHAM TRANSACTIONS WHICH IS HE LD IN THE CASE OF CIT VS. ARUN KR. AGRAWAL HUF (2012) 8 TMI 398 (JHAR KHAND). THE RELEVANT PORTION OF THE OBSERVATION OF THE HON'BLE HIGH COURT READS AS UNDER: WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. COUN SEL FOR THE PARTIES AND WE ARE OF THE CONSIDERED OPINION THAT THE LD. A SSESSING OFFICER WAS MUCH INFLUENCED BY THE ENQUIRY REPORT WHICH MAY HAS BEEN BROUGHT ON RECORD BY THE EFFORTS OF THE ASSESSING OFFICER AND THAT ENQUIRY REPORT WAS PREPARED BY THE SEBI AND FROM THE OBSERVATIONS MADE BY THE TAX APPEAL NO.4 OF 2011 WITH ANALOGOUS CASE ASSESSING O FFICER HIMSELF, IT IS CLEAR THAT AFTER GETTING THAT ENQUIRY REPORT, TH E SEBI PRIMA FACIE FOUND INVOLVEMENT OF SOME OF THE SHARE BROKERS IN UNFAIR TRADE PRACTICES. EVEN IN A CASE WHERE THE SHARE BROKER WAS FOUND INV OLVED IN UNFAIR TRADE PRACTICE AND WAS INVOLVED IN LOWERING AND RIS ING OF THE SHARE PRICE, AND ANY PERSON, WHO HIMSELF IS NOT INVOLVED IN THAT TYPE OF TRANSACTION, IF PURCHASED THE SHARE FROM THAT BROKE R INNOCENTLY AND BONAFIDELY AND IF HE SHOWS HIS BONAFIDE IN TRANSACT ION BY SHOWING RELEVANT MATERIAL, FACTS AND CIRCUMSTANCES AND DOCU MENTS, THEN MERELY ON THE BASIS OF THE REASON THAT SHARE BROKER WAS IN VOLVED IN DEALING IN THE SHARE OF A PARTICULAR CO. IN COLLUSION WITH OTH ERS OR IN THE MANNER OF UNFAIR TRADE PRACTICES AGAINST THE NORMS OF SEBI AN D STOCK EXCHANGE, THEN MERELY BECAUSE OF THAT FACT A PERSON WHO BONAF IDELY ENTERED INTO SHARE TRANSACTION OF THAT CO. THROUGH SUCH BROKER T HEN ONLY BY MERE ASSUMPTION SUCH TRANSACTIONS CANNOT BE HELD TO BE A SHAME TRANSACTION.. 30. THE CO-ORDINATE BENCH OF ITAT, NAGPUR IN THE CA SE OF ACIT VS. KAMAL KUMAR AGRAWAL (INDL.) AND OTHERS (2010) 133 T TJ 818 (NAG.) HAS ALSO HELD THAT THE ORDERS OF THE SEBI CANNOT BE A G ROUND FOR ADJUDGING AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 49 THE GENUINENESS OF SHARE TRANSACTIONS. THE BENCH HA S OBSERVED AS UNDER: 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOTED THAT THE ASSESSEE IS A PART OF HALDIRAM GROUP SITUA TED AT NAGPUR. THE ASSESSEE EARNED CAPITAL GAIN DURING THE PERIOD COVE RED BY S. 153A PROCEEDINGS. IT IS ALSO NOTED THAT ALL SUCH TRANSAC TIONS HAVE BEEN TAKEN INTO CONSIDERATION WHILE FILING THE RETURNS FOR THE SE YEARS IN THE NORMAL COURSE AND THE DEPARTMENT HAS ALSO ACCEPTED THE NAT URE OF SUCH TRANSACTIONS. IT IS VERY IMPORTANT TO NOTE THAT NO INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH WHICH CO ULD HAVE CAST DOUBT ON THE GENUINENESS OF THE TRANSACTIONS OR COU LD HAVE INDICATED THAT IT WAS A CASE OF ASSESSEES OWN UNDISCLOSED MO NEY UTILIZED IN THE EXECUTION OF SUCH TRANSACTIONS. IN THE ASSESSMENT O RDER AS WELL AS AT THE FIRST APPELLATE STAGE AND ALSO BEFORE US, THE F OCUS OF THE DEPARTMENT IS ON THE QUANTUM OF TRANSACTIONS ENTERE D INTO BY THE GROUP AS A WHOLE AND, THEREFORE, WE FIND SUBSTANTIA L MERIT IN THE VIEW OF THE LEARNED CIT(A) THAT IT IS THIS FACT WHICH HAS R ESULTED INTO SUCH ACTION OF THE AO. WE HAVE ALSO NOTED THAT VOLUMINOUS DOCUM ENTARY EVIDENCES HAVE BEEN FILED BY THE ASSESSEE TO PROVE ITS CLAIM WHICH SUPPORT THE GENUINENESS OF THE TRANSACTION. HOWEVER , THE AO HAS UTILIZED THE STATEMENTS OF THE PERSONS WHO WERE NOT CROSS-EXAMINED BY THE ASSESSEE. HENCE, AS PER THE SETTLED JUDICIAL PR INCIPLE, SUCH STATEMENTS CANNOT BE GIVEN ANY WEIGHTAGE. WE ARE FU RTHER OF THE VIEW THAT WHEN THERE ARISES A QUESTION OF APPRECIATION O F DOCUMENTARY EVIDENCES, THEN, A HOLISTIC VIEW HAS TO BE TAKEN AN D IN THE PRESENT CASE MAJORITY OF THE BROKERS HAVE SUPPORTED THE CLAIMS O F THE ASSESSEE AND SURPRISINGLY SOME OF THEM HAVE NOT BEEN APPROACHED BY THE AO AT ALL. THUS, ON APPRECIATION OF DOCUMENTARY EVIDENCES SUBM ITTED BY THE ASSESSEE, THE GENUINENESS OF THE TRANSACTIONS APPEA RS TO BE ESTABLISHED. AS REGARDS THE ASPECT OF OFF MARKET TR ANSACTIONS, IT IS NOTED THAT NEITHER THESE ARE ILLEGAL NOR PROHIBITED AND ONLY SOME OF THE COMPLIANCES HAVE TO BE MADE BY THE BROKERS. AS REGA RD THE ASPECT OF SUCH COMPLIANCES, WE FIND THAT IT IS NOT THE CASE T HAT ALL THE OFF MARKET TRANSACTIONS HAVE NOT BEEN REPORTED BY THE CONCERNE D BROKERS TO THE STOCK EXCHANGE AS PER RULES AND EVEN OTHERWISE, ANY FAILURE ON THE PART OF THE BROKERS IN DOING SUCH COMPLIANCE CANNOT MAKE THE CONTRACT BETWEEN THE ASSESSEE AND THE BROKER ILLEGAL OR VOID AS THE BROKER MAY FACE THE CONSEQUENCES FOR HIS DEFAULT UNDER RELEVAN T STATUTE. IT IS ALSO NOTED THAT ALL THE TRANSACTIONS ARE NOT OFF MARKET TRANSACTIONS, HENCE, THE AOS APPROACH TO PICK AND CHOOSE THE ONLY SUCH INSTANCES WHICH ARE FAVOURABLE TO HIM CANNOT JUSTIFY SUCH ADDITION. THE LEARNED CIT- DEPARTMENTAL REPRESENTATIVE HAS ALSO ARGUED THAT TH ERE WERE DIFFERENCES IN THE INFORMATION AS PER CONTRACT NOTE S AND AS PER INFORMATION RECEIVED FROM CALCUTTA STOCK EXCHANGE W HICH FACT IS ALSO NOT MATERIAL BECAUSE WHEN SOME OFF MARKET TRANSACTI ONS HAVE NOT BEEN REPORTED TO THE STOCK EXCHANGE, HOW SUCH CONTR ACT NOTES CAN BE MATCHED WITH THE RECORDS OF STOCK EXCHANGE. WE ARE FURTHER OF THE VIEW AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 50 THAT ECONOMIC CONSEQUENCES AS A RESULT OF OFF MARKE T TRANSACTIONS OR OTHERWISE HAVE TAKEN PLACE AND, THEREFORE, SUCH TRA NSACTIONS CANNOT BE TREATED AS SHAM MERELY FOR SOME DISCREPANCIES OR FOR THE VIEW OF THE AO IN REGARD TO GENUINENESS OF THESE TRANSACTIO NS. THE REVENUE HAS ALSO RELIED ON THE DECISIONS OF SEBI INVOLVING SOME SCRIPS. IN THIS REGARD, WE ARE OF THE VIEW THAT ROLE OF SEBI IS DIF FERENT AND THE ORDERS PASSED BY THEM HAVE DIFFERENT OBJECTIVES SUCH AS OR DERLY CONDUCT OF SHARE MARKETS AND INVESTOR PROTECTION AND, THEREFOR E, SUCH ORDER CANNOT BE CONCLUSIVE AS REGARD TO THE GENUINENESS O F THE TRANSACTIONS. IN THIS REGARD, IT WOULD NOT BE OUT OF PLACE TO MEN TION THAT STOCK MARKET OPERATIONS ARE SUBJECT TO DIFFERENT REGULATIONS AND THE INTEREST OF GENERAL PUBLIC ARE PROTECTED BY PROHIBITING THE MAR KET INTERMEDIARIES FROM INDULGING IN UNFAIR TRADE PRACTICES RIGGING OF A PARTICULAR IN COLLABORATED MANNER. THE ORDER OF THE SEBI RELIED O N BY THE REVENUE IS MAINLY ON THE ASPECT OF PRICE RIGGING IN SUCH MA NNER. HENCE, IN OUR VIEW, THE SAME CANNOT BE OF ANY ASSISTANCE TO THE C AUSE OF THE REVENUE. THUS, ON THE BASIS OF APPRECIATION OF FACT S AND CIRCUMSTANCES OF THE CASE AS A WHOLE AND CONSIDERIN G THE DOCUMENTARY EVIDENCES ON RECORD, WE ARE OF THE VIEW THAT THE SHARE TRANSACTIONS CANNOT BE CONSIDERED AS INGENUINE/SHAM AND, THEREFORE, THE SALE PROCEEDS OF SUCH SHARE TRANSACTIONS CANNOT BE TAXED UNDER S. 68 OF THE ACT. 31. FURTHER, THIS BENCH IN THE CASE OF SMT. ARZOO A NAND VS. JCIT (2010) 14 ITJ 604 (INDORE TRIBUNAL) HAS ALSO HELD T HAT IF ANY VIOLATION OF THE PROVISIONS OF SEBI (INTERMEDIARIES) REGULATIONS , 2008 OR SEBI ACT, 1992 HAVE BEEN COMMITTED, THE SAME IS FAULT OF THE SEBI BROKERS AND FOR WHICH THE ASSESSEE CANNOT BE PENALISED. AGAINST THE DECISION OF THIS BENCH, THE REVENUE HAD PREFERRED AN APPEAL BEFORE T HE HON'BLE JURISDICTIONAL HIGH COURT OF M.P. U/S 260A OF THE A CT AND THE HON'BLE HIGH COURT, VIDE ITS ORDER DATED 06.1.2012, HAS DIS MISSED THE APPEAL OF THE REVENUE. THE HONBLE M.P. HIGH COURT HAS OBSERV ED AS UNDER: .WHILE EXERCISING JURISDICTION UNDER 260A, WE C ANNOT REVERSE THE FINDINGS OF THE ITAT MERELY ON THE GROUND THAT ON FACTS FOUND BY THE TRIBUNAL ANOTHER VIEW IS POSSIBLE. ON THE CONTRARY WE FIND THAT JCIT AND THE CIT(A) WHILE DECIDING THE MATTER PROCEEDED ON CERTAIN ASSUMPTIONS/CONJECTURES WHICH WERE NOT BORNE OUT FR OM MATERIAL ON RECORD. 32. IN THE CASE OF CIT VS. ANUPAM KAPOOR (2008) 299 ITR 179 (P & H), THE HONBLE P & H HIGH COURT HAS HELD AS UNDER: AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 51 4. THE TRIBUNAL WAS RIGHT IN REJECTING THE APPEAL OF THE REVENUE BY HOLDING THAT THE ASSESSEE WAS SIMPLY A SHAREHOLDER OF THE COMPANY. HE HAD MADE INVESTMENT IN A COMPANY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. THE ASSESSEE HAD TAKEN SHARES FROM THE MARKET, THE SHARES WERE LISTED AND THE TRANSACTION TOOK PLACE THROUGH A REGISTERED BROKER OF THE STOCK EXCH ANGE. THERE WAS NO MATERIAL BEFORE THE AO, WHICH COULD HAVE LEAD TO A CONCLUSION THAT THE TRANSACTION WAS SIMPLICITIER A DEVICE TO CAMOUFLAGE ACTIVITIES, TO DEFRAUD THE REVENUE. NO SUCH PRESUMPTION COULD BE D RAWN BY THE AO, MERELY ON SURMISES AND CONJECTURES. THE TRIBUNAL RI GHTLY RELIED ON C. VASANTLAL & CO. V. CIT , M.O. THOMAKUTTY V. CIT AND MUKAND SINGH V. SALES TAX TRIBUNAL (1998) 107 STC 300 (PUNJAB). IT WAS FOR THE AO, WHO HAS REOPENED THE ASSESSMENT TO HAVE SOUGHT SOME EVIDENCE ON RECORD, TO SUBSTANTIATE HIS FORMULATION OF CONSIDER ATION THAT THE ASSESSEE HAS NOT FILED A RETURN BONA FIDE. THE TRIB UNAL ALSO TOOK INTO CONSIDERATION THAT IT WAS ONLY ON THE BASIS OF A PR ESUMPTION THAT THE AO CONCLUDED THAT THE ASSESSEE HAD PAID CASH AND PURCH ASED THE CHEQUE. IN THE ABSENCE OF ANY COGENT MATERIAL IN THIS REGAR D, HAVING BEEN PLACED ON RECORD, THE AO COULD NOT HAVE REOPENED TH E ASSESSMENT. THE ASSESSEE HAD MADE AN INVESTMENT IN A COMPANY, E VIDENCE WHEREOF WAS WITH THE AO. THEREFORE, THE AO COULD NO T HAVE ADDED INCOME, WHICH WAS RIGHTLY DELETED BY THE CIT(A) AS WELL AS THE TRIBUNAL. IT IS SETTLED LAW THAT SUSPICION, HOWSOEV ER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF, AS HAS BEEN HELD BY HON'B LE SUPREME COURT IN THE CASE OF UMACHARAN SHAW & BROS. V. CIT (1959) 37 ITR 271 (SC). 33. THE COORDINATE PUNE BENCH, IN THE CASE OF SMT. SMITA P. PATIL AND OTHERS VS. ACIT (2014) 159 TTJ 182 (PUNE) HAS H ELD AS UNDER: WE FIND THAT IN ALL THESE CASES, NO INCRIMINATING MATERIAL HAS BEEN SEIZED EXCEPT THE BROKER NOTES. WE HAVE ALSO FIND T HAT THESE ASSESSEES HAVE ALREADY SHOWN THE SHARE TRANSACTIONS IN THEIR BALANCE SHEET AND THE SHARE TRANSACTIONS ARE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE CASE OF THE DEPARTMENT IS THA T EVEN IF THE SALES ARE MADE THROUGH THE DEMAT ACCOUNT, ALL THESE ARE A RRANGED TRANSACTIONS AND HENCE, THE ENTIRE MONEY RECEIVED O N THE SALE OF THESE SHARES (EVEN THOUGH THE SALE IS MADE THROUGH THE DE MAT ACCOUNT AND THROUGH THE STOCK EXCHANGES), TO BE TREATED AS UNDI SCLOSED INCOME OF THESE ASSESSEES. IT IS SOMETHING STRANGE THAT THE C HARGE MADE BY THE ASSESSING OFFICER THAT THE BROKERS ARE LOCATED AT D IFFERENT LOCATIONS LIKE AHMEDABAD AND KOLKATA BUT PAYMENTS ARE ROUTED FROM THE BOMBAY. IN OUR OPINION, NOW A DAYS IT IS COMMON IN THE COREBAN KING SYSTEM TO TRANSFER THE MONEY FROM ANY LOCATION TO ANOTHER LOC ATION AND DUE TO THE ELECTRONIC MEDIA EVEN THE TRADING CAN BE DONE ON-LI NE ON SMALL LAPTOP. HENCE, SUCH STATEMENT OF THE ASSESSING OFFICER IS H AVING NO MERIT. THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 52 ASSESSING OFFICER HAS MADE THE GENERAL COMMENTS WIT HOUT BRINGING ON RECORD ANY CONCRETE EVIDENCE TO INDICATE THAT THESE ASSESSEES WERE IN LEAGUE WITH THE BROKERS IN THE TRANSACTIONS OF THE SPECIFIC SCRIPS. THE ASSESSING OFFICER IS REFERRING AND RELYING CONVENIE NTLY ONLY ON THE THREE BROKERS WHOSE NAMES ARE NOTED IN THE ASSESSMENT ORD ERS WHO ALLEGEDLY DEPOSED AGAINST THESE ASSESSEES BUT THE F ACT REMAIN THAT THESE ASSESSEES HAD PURCHASED THE SHARES OF OTHER C OMPANIES I.E. TALENT INFO, SANGOTRI CONSTRUCTION AND NIHARIKA IND USTRIES FROM DIF ERENT BROKERS. 34. THE ITAT, MUMBAI BENCH H IN THE CASE OF ACIT VS. AJAY NAWANDAR (2010) 33 DTR 452 (MUM. TRIBUNAL) HAS HELD AS UNDER: HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERE D THEIR RIVAL SUBMISSIONS, WE FIND THAT THE AO HAS DOUBTED THE PU RCHASE OF SHARES BY THE ASSESSEE MAINLY BECAUSE OF THE REPORT RECEIV ED FROM THE ADDL. DIRECTOR OF IT (INV.), KOLKOTTA, THAT THE TRANSACTI ON OF PURCHASE OF SHARES BY THE ASSESSEE ISAN OFF-MARKET TRANSACTION AS NO E VIDENCE COULD BE FOUND FROM THE CALCUTTA STOCK EXCHANGE. AS REGARDS THE PURCHASE OF SHARES FROM OFF-MARKET, THE ASSESSEE HAS PLACED REL IANCE UPON THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF MUKESH R . MAROLIA VS. ADDL. CIT (2006) 6 SOT 247 (MUMBAI), WHEREIN IT HAS BEEN HELD THAT THE PURCHASE AND SALE OF SHARES OUTSIDE FLOOR OF STOCK EXCHANGE IS NOT AN UNLAWFUL ACTIVITY AND THE OFF-MARKET TRANSACTIONS A RE NOT ILLEGAL. AS REGARDS THE AOS OBSERVATION THAT THERE IS EXORBITA NT RISE IN THE SALE PRICE OF THE SHARES WHICH CREATED A DOUBT ABOUT THE GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAS PLACED RELIANCE UPON THE DECISION OF THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF SMT. MEMO DEVI VS. ASSTT. CIT (2008) 7 DTR (AGRA)(TRIB) 158, WHEREIN IT HAS B EEN HELD THAT INCREASE IN SHARE PRICE BY MORE THAN 25 TIMES CANNO T BE THE BASIS TO ASSUME THAT THE TRANSACTION WAS BOGUS AS ABNORMAL I NCREASE IN THE SHARE PRICE IS A NORMAL PHENOMENA. THE LEARNED COUN SEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE J ODHPUR BENCH IN THE CASE OF ITO VS. SMT. KUSUMLATA (2006) 105 TTJ ( JD) 265, WHEREIN IT HAS BEEN HELD THAT FOR MAKING AN ADDITION UNDER S. 69, THE DEPARTMENT IS REQUIRED TO PROVE TO THE HILT THAT TH E IMPUGNED TRANSACTIONS ARE BOGUS. 35. THE ITAT, AGRA BENCH IN THE CASE OF BAIJNATH AG RAWAL VS. ACIT (2010) 133 TTJ 129 (TM) HAS HELD AS UNDER: IT WAS THE DUTY OF THE A.O. TO BRING ON RECORD SUF FICIENT EVIDENCES AND MATERIAL TO PROVE THAT THE DOCUMENTS FILED BY THE ASSESSEE WERE BOGUS, FALSE OR FABRICATED AND THE LONG TERM CAPITAL GAIN SHOWN BY HIM WAS ACTUALL Y HIS INCOME FROM UNDISCLOSED SOURCES. THE ONLY MATERIAL TO SUPPORT SUCH CONCLUSI ON OF THE LOWER AUTHORITIES IS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 53 EITHER THE FINDINGS OF THE DDI IN GENERAL INVESTIGA TIONS OR THE OBSERVATION THAT THE ASSESSEE COULD NOT PROVE THE TRANSACTION TO BE GENU INE ONE..WHILE MAKING ADDITION AS INCOME FROM UNDISCLOSED SOURCES BURDEN ON THE DEPARTMENT IS VERY HEAVY TO ESTABLISH THAT THE ALLEGED RECEIPT WAS ACT UALLY INCOME OF THE ASSESSEE FROM THE UNDISCLOSED SOURCES. THEREFORE, THE CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER TREATI NG THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN AS SHAM AND BOGUS AND TAXING THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE INCOME DISCLOSED BY THE ASSESSEE IS CHARGEABLE TO TAX AS LONG TERM CAPITAL GAIN AND CANNOT BE TREATED AS INCOME FROM ANY UNDISCLOSED SOURCES. SMT. SUNITA OBERAI VS. ITO (2009) 30 DTR (AGRA) (TM) (TRIB) 474 FOLLOWED; ASHOK KUMAR LAVANIA (ITA NO.112/AGRA/2004 DATED 30. 5.2008) AND ITO VS. SMT. KUSUMLATA (2006) 105 TTJ (JD) 265 APPROVED; CIT VS. DAULATRAM RAWATMULL, 1972 CTR (SC) 411 (1973) 87 ITR 349 (SC) APPLIED. 36. THE ITAT, JODHPUR BENCH IN THE CASE OF ACIT VS. SUMITRA GAUR (2012) 145 TTJ 26 (UO) HAS HELD AS UNDER: 13. AFTER CONSIDERING THE SUBMISSIONS AND PERUSIN G THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDING OF LD. CIT (A). THE LD. CIT (A) HAS EXAMINED THE ISSUE IN THREAD BEAR AND FOUND THA T PURCHASE OF SHARES AS WELL AS SALE OF SHARES ARE GENUINE. THE P URCHASE OF SHARES WERE MADE THROUGH SHRI V.K. SINGHANIA, RENU PODDAR AND BALLABH DAS DAGA. THE SHARES WERE PURCHASED IN EARLIER YEAR S AND WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE SHARES WER E SOLD THROUGH ANOTHER BROKER I.E. M/S. M. BHIWANTIWALA & CO., M/S . AHILYA COMMERCIAL P. LTD. ALL THE PURCHASE AND SALE OF SHA RES WERE DEMATIZED IN REGULAR COURSE OF TRANSACTION. CONFIRM ATION OF PURCHASE OF SHARES THROUGH BROKERS WERE FILED. ALL THE SHARES A RE OF LISTED COMPANIES. THE SHARES WERE CREDITED TO DEMAT ACCOUN T OF THE ASSESSEE AND THEREAFTER ON SALE OF THOSE SHARES THE ACCOUNT OF THE ASSESSEE WAS DEBITED THROUGH DEMAT ACCOUNT. THEREFO RE, THERE IS NO QUESTION OF DOUBTING THE GENUINENESS OF TRANSACTION S. THERE IS NO EVIDENCE THAT ASSESSEE HAS NOT PURCHASED THE SHARES IN EARLIER YEAR. THEY HAVE BEEN SHOWN IN THE BALANCE SHEET AND THE B ALANCE SHEET OF EARLIER YEAR HAS BEEN ACCEPTED. THE ASSESSEE HAS FI LED BROKER NOTE, CONTRACT NOTE, RELEVANT EXTRACT OF CASH BOOK, BALAN CE SHEET AS ON 31.3.2005 AND 31.3.2006, COPY OF SHARE CERTIFICATE ETC. AND ALL THESE DETAILS ESTABLISHED THAT THE WAS IN POSSESSION OF R ESPECTIVE SHARES. THE OBJECTION OF THE AO WAS THAT NOTICE IS SUED UND ER SECTION 133(6) WERE RETURNED BACK AND PAYMENT TO BROKER WAS DELAYE D AND THERE WERE CERTAIN DISCREPANCIES IN THE NAME OF SELLERS A S BROKER AND AS PER ENDORSEMENT IN THE SHARE CERTIFICATE. CLARIFICATION IN RESPECT OF THESE DEFICIENCIES WERE FILED BEFORE THE ASSESSING OFFICE R WHICH WERE FILED BEFORE LD. CIT (A) ALSO. THEY WERE NOT APPRECIATED BY THE ASSESSING OFFICER BUT WERE APPRECIATED BY LD. CIT (A) AND THE N ONLY THE LD. CIT (A) FOUND THAT ALL THE TRANSACTIONS OF PURCHASE AND SAL E OF SHARES ARE GENUINE. IT WAS ALSO NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 54 REPAID THE SALE CONSIDERATION IN HAND. THERE IS NO SUCH EVIDENCE ON RECORD. THEREFORE, INFERENCE DRAWN BY ASSESSING OFF ICER, IN OUR CONSIDERED VIEW WAS NOT CORRECT BY HOLDING THAT THE SHARE TRANSACTION ARE BOGUS. THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT SHARE TRANSACTIONS WERE GENUINE. ACCORDINGLY WE CONFIRM T HE FINDING OF LD. CIT (A) AS THEY ARE FINDING OF FACT AND REMAINED UN CONTROVERTED. 37. IN THE CASE OF SMT. MEMO DEVI VS. ACIT (2008) 7 DTR (AGRA TRIB.) 158, THE AGRA BENCH HAS OBSERVED AS UNDER: ..THE ASSESSEE SUBMITTED ALL THE EVIDENCE WHICH WAS WITHIN HER CAPACITY AND POWER. THE BROKER M/S H.B. RELAN & CO. THROUGH WHOM THE SHARES HAD BEEN SOLD CONFIRMED TWICEFIRST UPON REQUEST OF THE APPELLANT AND AGAIN IN RESPONSE TO THE SUMMON OF TH E AOSALE OF SHARES WITH DISTINCTIVE NUMBERS AND HAVING PAID THE SALE PROCEEDS TO THE APPELLANT. DURING APPELLATE PROCEEDINGS ASSESSE E ALSO SUBMITTED DOCUMENTS TO SHOW THAT THE COMPANY WAS A GENUINE CO MPANY WITH SUBSTANTIAL CAPITAL BASE AND WAS NOT A SMALL COMPAN Y. THIS ALSO SHOWS THAT THE ASSESSEE WAS ALL THROUGH KEEN TO CO-OPERAT E AND DISCHARGE HER ONUS TO THE MAXIMUM AS COULD BE POSSIBLE WITHIN HER CAPACITY AND POWER. THE ASSESSEE HAS NO RELATION WITH THE DIRECT ORS OF THE COMPANY AND WAS IN NO WAY IN THE CAPACITY OF AFFECTING THE MARKET PRICE OF THE SHARES. THE INCREASE IN SHARE PRICES BY MORE THAN 2 5 TIMES TOO CANNOT BE THE BASIS TO ASSUME THAT THE TRANSACTION WAS BOG US. ABNORMAL FLUCTUATION IN SHARE PRICES IS A NORMAL PHENOMENA. THE LEARNED COUNSEL FOR THE ASSESSEE FILED A CHART SHOWING LOW AND HIGH PRICE OF SOME QUOTED SHARES DURING THE 52 WEEKS AS PER ECONO MIC TIMES DT. 27TH FEB., 2007 FROM WHICH IT CAN BE SEEN THAT SOME SHARES INCREASED EVEN BY MORE THAN 100 TIMES. THE DEPARTMENTAL ENQUI RIES IN THE CASE OF SOME OTHER PERSONS AND STATEMENTS OF M/S JRD STO CK BROKER OR M/S YADAV & CO. IN THAT ENQUIRY TOO HAVE NO BEARING ON THE ASSESSEES CASE. THE. ASSESSEE HAS NOT DEALT WITH ANY OF THEM. THE EVIDENCES SUBMITTED BY THE ASSESSEE ARE NOT PROVED TO BE BOGU S, FALSE OR INCORRECT. ASSESSEE HAS NO OTHER SOURCE OF IN COME EXCEPT RENTAL INCOME AND SHARE FROM PARTNERSHIP FIRM. THE REVENUE TOO HAS NOT BROUGHT ON RECORD ANY SOURCE FROM WHICH THE ASSESSE E COULD HAVE EARNED THIS ALLEGED UNDISCLOSED INCOME AND THERE IS NO MATERIAL ON RECORD TO ESTABLISH OR EVEN SUGGEST THAT CASH ACTUA LLY FLOWED FROM THE ASSESSEE TO PURCHASE THE DEMAND DRAFTS AS ALLEGED B Y THE REVENUE. ON THE OTHER HAND THE BROKER HAS CATEGORICALLY CONF IRMED THAT HE MADE THE PAYMENT OF SALE PROCEEDS. THE JUDGEMENTS RELIED ON BY THE AO OR THE CIT(A) ARE NOT AT ALL APPLICABLE TO THE CASE OF THE ASSESSEE. THERE CANNOT BE ANY DISPUTE THAT THE DEPARTMENT IS FULLY EMPOWERED TO LIFT THE VEIL TO ESTABLISH THE CORRECT NATURE OF TRANSACTION , BUT THERE WAS NOTHING HIDDEN WHICH REQUIRED PENETRATION. FURTHER, AFTER L IFTING THE VEIL DEPARTMENTS ENQUIRY SHOULD HAVE GONE TO ESTABLISH LOGICALLY, FROM THE RECORDS, THAT SALE CONSIDERATION WAS ACTUALLY THE M ONEY OF THE AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 55 ASSESSEE CONVERTED UNDER THE GUISE OF SHARE TRANSAC TION. SIMILARLY, HERE THERE WAS NO TAX PLANNING FOR WHICH ANY COLOUR ABLE DEVICE OR COLLUSION COULD HAVE BEEN USED. IT WAS A SIMPLE TRA NSACTION OF SALE OF SHARES AT THE MOST OPPORTUNE TIME WHICH IS PERFECTL Y IN TUNE WITH THE HUMAN NATURE. AS A MATTER OF FACT THE ENTIRE APPROA CH AND FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON SUSPICION, SURMI SES AND CONJECTURES AND BADLY AFFECTED BY VARIOUS OTHER CASES, WHICH HA VE NO APPLICATION TO THE ASSESSEES CASE. IN OUR VIEW, THE ACTION OF THE REVENUE AUTHORITIES IN CONCLUDING THAT THE SALE VALUE OF SHARES IS INCOME OF THE ASSE SSEE FROM UNDISCLOSED SOURCES CANNOT BE ACCEPTED. IN VIEW OF THE ABOVE, THE INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD LONG -TERM CAPITAL GAIN IS DIRECTED TO BE ASSESSED AS SUCH. 38. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, VARIOUS DOCUMENTARY EVIDENCES PLACED ON RECORD AND IN THE L IGHT OF THE VARIOUS JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED V IEW THAT THERE WAS ABSOLUTELY NO JUSTIFICATION FOR BOTH THE AUTHORITIE S BELOW IN DISBELIEVING THE GENUINENESS OF THE LONG TERM CAPITAL GAIN AND S HORT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE IN HIS RETURN OF INCOME, MERE LY ON GUESSWORK, CONJECTURES AND SURMISES. ACCORDINGLY, THESE ADDITI ONS ARE DIRECTED TO BE DELETED. CONSEQUENTLY, GROUND NOS. 3.1 TO 3.3 ON THE ISSUE OF GENUINENESS OF LONG TERM CAPITAL GAIN/SHORT TERM CA PITAL GAIN ARE ALLOWED. SINCE COMMON ISSUE ON SIMILAR SET OF FACTS AND CIRCUMSTANCES ARE INVOLVED IN THE ASSESSMENT YEAR 2005-06, WE, FO LLOWING OUR ABOVE DECISION GIVEN IN THE ASSESSMENT YEAR 2006-07, ALLO W THE GROUND NOS.3.1 & 3.2 ON THE ISSUE OF LONG TERM CAPITAL GAI N/SHORT TERM CAPITAL GAIN FOR THE ASSESSMENT YEAR 2005-06 TOO IN ASSESSE ES APPEAL IT(SS)A NO.114/IND/2014. GROUND NO. 4 39. THIS GROUND OF APPEALS OF THE ASSESSEE IS DIREC TED AGAINST CHARGING OF INTEREST UNDER S. 234A AND 234B. CHARGI NG OF INTEREST IS AMANDEEP SINGH BHATIA (SS)112 OF 2011 AND OTHERS 56 CONSEQUENTIAL IN NATURE, THEREFORE, SAME DOES NOT R EQUIRE ANY SEPARATE ADJUDICATION. FINALLY, APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18.5.201 6. SD/- (B.C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T. GARASIA) JUDICIAL MEMBER DATED : 17.8.2016 COPY TO: ASSESSEE/RESPONDENT/CIT(A)/CIT/DR, INDORE