ACIT, Central Circle-17, V. Kuber Securities Ltd.,

ITSSA 182/DEL/2005

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8543 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 14-03-2011
• Assessment Year: misc
• Appeal Filed On: 15-04-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANGEETA GUPTA
• Assessee Lawyers: SAURABH ROHTAGI CAS
• Keywords: Unexplained expenditure; Document seized; Share purchase agreement; Principle of natural justice; Cost of acquisition; Block assessment; Documents seized
• Section: 69C; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER IT(SS)A.NO.182/DEL./2005 (BLOCK ASSESSMENT : 01/4/87 TO 08/05/97) ACIT, CENTRAL CIRCLE 17, VS. M/S. KUBER SECURITIE S LTD., NEW DELHI. S 32, GREATER KAILASH I, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI R.K. GUPTA & SAURABH ROHTAGI, CAS REVENUE BY : SMT. SANGEETA GUPTA, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF CIT (APPEALS)-II, NEW DELHI DATED 20.1.2005 FOR THE BLO CK ASSESSMENT PERIOD 1.4.87 TO 8.5.97. THE FOLLOWING GROUNDS ARE TAKEN IN THE APPEAL :- 1) THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION OF RS.1,73,70,000/- SINCE ANNEXURE A-12 SEIZED FROM S-32, GREATER KAILASH, NEW DELHI, IS STOCK REGISTER OF SH ARES WHEREIN TRANSACTIONS STARTING FROM 04/08/1996 TO 29/04/1997 ARE GIVEN WHICH REFLECTS OPENING STOCK OF VARIOUS COMPANY SHA RES TOGETHER WITH TRANSACTIONS OF THEIR SALES AND PURCH ASES OF SUCH COMPANIES AS RIL, TISCO, BPL ENGG., DEE PHARMA, J.P . HOTELS, S.R. LTD., VENUS REMEDIES LTD., OBC, ITC, A CC, KUBER AUTO, ESCORTS, DR. REDDYS LAB, RANBAXY, INDIA N HOTELS, NESTLE, SEIMENS, GLAXO, KUBER MEDIA ETC. AND THESE SHARES ARE PERIODICALLY PURCHASED AND SOLD IN THOUSAND OF SHAR ES AMOUNTING TO SEVERAL CRORES OF RUPEES AND THE LD. C IT (A) HAS FAILED TO EXAMINE THE DOCUMENTS AND GIVEN A CATEGOR ICAL FINDING IN THIS REGARD. IT(SS)A.NO.182/DEL./2005 2 2. THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION OF RS.13,17,50,000/- ON ACCOUNT OF SHARE APPLICATIO N MONEY, KEEPING IN VIEW THE FACT THAT THE COMPANIES FROM WH ICH SHARE APPLICATION MONEY WAS ALLEGEDLY RECEIVED WERE BANKR UPT PAPER COMPANIES HAVING NO CAPACITY AS ALSO THESE COMPANIE S DO NOT HAVE ANY ASSET WHICH COULD PROVE THEIR WORTH. 3. THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION OF RS.36,23,800/- KEEPING IN VIEW THE FACT THAT ALT HOUGH THE ASSESSEE IS A SHARE BROKER YET THERE IS NO BAR ON I T IN DOING ITS OWN BUSINESS AND THE LD. CIT (A) HAS NOT EXAMINED T HE POINT WHETHER THE SHARES BELONG TO THE ASSESSEE OR ITS CL IENTS AND HAS NOT GIVEN A CATEGORICAL FINDING IN THIS REGARD. 2. THE ASSESSEE IS A LIMITED COMPANY AND IT BELONGS TO THE KUBER GROUP OF COMPANIES. A SEARCH U/S 132 OF THE INCOME-TAX ACT WAS CARRIED ON 8.5.1997. THE RETURN U/S 158BC WAS FILED ON 30.4.1998 DECLARI NG INCOME AT NIL. THE FIRST ASSESSMENT WAS FRAMED ON 31.5.1999 AT AN INCO ME OF RS.19,34,50,800/-. THE ASSESSMENT WAS SET ASIDE BY CIT (A) ON 28.11.20 00 FOR MAKING A FRESH ASSESSMENT. THE CIT GAVE FOLLOWING DIRECTION IN T HAT ORDER :- A) ADEQUATE OPPORTUNITY MUST BE GIVEN TO THE APPEL LANT COMPANY TO MARSHAL FACTS, FIGURES AND EVIDENCES BY IT AS IT DEEMS NECESSARY B) PHOTO COPIES OF PAPERS AND DOCUMENTS NEEDED BY T HE APPELLANT COMPANY FOR THEIR DEFENSE AND EXPLANATION SHOULD BE SUPPLIED EXPEDITIOUSLY BY THE A.O. C) EVERY INTERPRETATION OF FACTS, FIGURES AND EVIDE NCES PROPOSED BY THE A.O. SHOULD BE PLACED BEFORE THE AP PELLANT COMPANY FOR THEIR COMMENTS, ACCEPTANCE, REPUDIATION AND EXPLANATION D) OPPORTUNITY OF CROSS-EXAMINATION OF PARTIES BY T HE APPELLANT COMPANY SHALL BE GIVEN WHEREVER NECESSARY AS PER LAW AND NATURAL JUSTICE. IT(SS)A.NO.182/DEL./2005 3 3. IN THE GROUND NO.1, THE ISSUE INVOLVED IS DELETI ON OF ADDITION OF RS.1,73,70,000/- MADE ON THE BASIS OF SEIZED MATERI AL AT PAGE 21 IN ANNEXURE A-36 WHICH WAS SEIZED FROM E-21, GREATER KAILASH I, NEW DELHI. THIS PAGE CONTAINS DETAILS OF SHARE TRANSACTIONS OF VARIOUS C OMPANIES. THE DEPARTMENT AHS SUBMITTED A PAPER BOOK CONTAINING 1 TO 51 OF AN NEXURE 12 WHERE SHARE TRANSACTIONS HAVE BEEN RECORDED. IT IS STOCK REGIS TER. THE TRANSACTION IN SBI SHARE RECORDED AT PAGE 1 OF ANNEXURE 36 IS NOT REFL ECTED IN THE REGISTER. THE ASSESSING OFFICER HAD MADE THE ADDITION BY HOLDING THAT THE ASSESSEE HAS NOT FURNISHED AN EXPLANATION AND SOME OF THE TRANSACTIO NS HAVE NOT BEEN DISCLOSED IN THE FINAL REGULAR BOOKS OF ACCOUNT. THE CIT (A) DELETED THE ADDITION BY HOLDING AS UNDER :- 5.4 I HAVE CONSIDERED THE WHOLE ISSUE FROM ALL THE ANGLES ALONG WITH VARIOUS DOCUMENTS, WRITTEN SUBMISSIONS, REPLY OF THE AO AS WELL AS THE REJOINDER FILED BY THE APPELLANT COMPANY. ON CAREFULLY EXAMINING THE RELEVANT SEIZED PAPER I FIN D THAT THE AO HAS REFERRED TO TWO PAPERS NAMELY PAGE NO. 20 AND 2 1, HOWEVER, HE HAS TAKEN THE ADVERSE INFERENCE ONLY IN RESPECT OF PAGE NO. 21 ONLY. NOW ON EXAMINING THE PAGE NO. 21, I NOTICE THAT IT GIVES ONLY THE FOLLOWING DETAILS NAMELY DAT E AS 8/4/97, THE WORD SBI, THREE FIGURES AS 19700, 19550 AND 186 50 AND THEREAFTER THE TOTAL OF THESE THREE FIGURES AS 5790 0. I ALSO NOTICED THAT THERE IS NO MENTION OF THE WORDS 'SHARES, RUPE ES, NO OF SHARES, RATE OF SHARES'. THE ONLY OTHER NOTING ON T HE SAID PAGE IS AS RECEIVED FROM SECURITIES'. THE AO HAS READ THIS PAGE AS FOR SALE OF 57900 NO OF SHARES OF SBI FOR RS.300/- EACH , THUS CALCULATED THE TOTAL VALUE AS RS.1,73,70,000/- AND MADE THE ADDITION OF THE SAID AMOUNT BY HOLDING THE SAME AS IN THE NATURE OF UNDISCLOSED INCOME. I FIND THAT THERE IS NO NOTI NG ON THIS PAGE, WHICH MAY SUGGEST THAT THIS PAGE REFERS TO AN Y SALE OF SBI SHARES OF THE SAID AMOUNT. I AM IN AGREEMENT WITH T HE LD. AR IT(SS)A.NO.182/DEL./2005 4 THAT THIS PAPER NOWHERE GIVES ANY INDICATION OF SHO WING ANY UNACCOUNTED SALES TRANSACTION. I AM OF THE CONSIDER ED OPINION THAT IT IS A DOCUMENT OF DUMB NATURE TO WHICH NO ME ANINGFUL INFERENCE CAN BE ASSIGNED, MORE SO SINCE EVEN THE A O HAS NOT BROUGHT ON RECORD ANY MATERIAL WHICH MAY SUGGEST FO R ANY UNRECORDED TRANSACTION BEING REFLECTING OUT OF THES E PAPERS, EVEN THE BASIS OF THE PRICE OF THESE SHARES HAVE NO T BEEN SPELT OUT BY HIM ALTHOUGH A REMAND REPORT WAS ALSO CALLED UPON FROM HIM. I ALSO FIND FORCE IN THE CONTENTION OF THE LD. AR THAT EVEN THE REGULAR ASSTT. OF THIS VERY COMPANY HAS BEEN DO NE BY THE SAME AO WHEREIN THE SHARE TRANSACTIONS FOR PURCHASE AND SALE OF HUGE QUANTITY OF SSI SHARES HAVE BEEN DULY APPEA RING. I HAVE ALSO NOTICED THAT THE ASSESSEE COMPANY HAS BEEN DEA LING IN THE SHARES OF SBI AND HAS PURCHASED A HUGE QUANTITY OF SHARES AS IS EVIDENT FROM OTHER SEIZED PAPERS ALSO FOR WHICH NO SEPARATE ADDITION HAS BEEN MADE AS THE AO HAS BEEN SATISFIED THAT THE SAME HAVE NOT BEEN REFLECTING ANY UNACCOUNTED NATUR E OF TRANSACTION. I FURTHER NOTICED THAT MORE PAPERS OF SIMILAR NOTINGS HAVE BEEN FOUND AND SEIZED INCLUDING PAGE NO. 21 BU T NO ADDITION HAS BEEN MADE FOR ANY OF THOSE PAGES INCLU DING NO ADDITION MADE EVEN FOR PAGE NO. 21. THUS WHEN THE S AME EXPLANATION I.E. THESE ARE IN THE NATURE OF DUMB PA PERS AND AT THE MOST SHOWING THE ROUGH WORKINGS/ NOTINGS OF THE WORKING STAFF, STANDS ACCEPTED, THERE IS NO REASON FOR GIVI NG A DIFFERENT MEANING TO THIS ISOLATED PAGE NO.20 WITHOUT GIVING ANY REASON WHATSOEVER. IN VIEW IF THIS, I AM OF THE CONSIDERED OPINION THAT THIS PAGE NO.20 IS ONLY A DUMB PAPER ROUGH WORKING SHEET HAVING NO FINANCIAL IMPLICATION AT ALL. FOR THIS SO LE REASON, THIS WHOLE ADDITION STANDS DELETED. I FURTHER FIND THAT THE APPELLANT COMPANY IS THE MEMBER OF THE DSE AND HAS BEEN WORKI NG AS A MAIN BROKER AND IS MAINLY ENGAGED IN THE SALE AND P URCHASE OF SHARES IN VERY LARGE QUANTITY AND ON A VERY LARGE S CALE. I FURTHER AGREE WITH THE CONTENTION OF THE LD. AR THAT THESE SEIZED PAGES CAN BE THE WORKING PAPERS OF THE STAFF MAINTAINED O NLY FOR CONTROLLING PURPOSES ONLY. THUS, CONSIDERING ALL TH E FACTS AND CIRCUMSTANCES OF THE CASE I FIND NO JUSTIFICATION I N TREATING THE NOTING AS MENTIONED IN THE SAID SEIZED PAGE AS REFL ECTING ANY UNACCOUNTED TRANSACTION RELATING TO THE SHARE OF TH E SBI. THUS I DIRECT THE AO TO DELETE THE WHOLE ADDITION OF RS.1, 73,70,000/-. THE APPELLANT GETS A RELIEF OF RS.1,73,70,000/-. T HIS GROUND OF APPEAL IS ALLOWED. IT(SS)A.NO.182/DEL./2005 5 4. THUS, THE CIT (A) DELETED THE ADDITION BY HOLDIN G THAT PAGE NOS.20 & 21 OF THE ANNEXURE 36 ARE IN THE NATURE OF DUMB PAP ER AND NO MEANINGFUL MEANING CAN BE ASSIGNED TO THESE PAPERS AS THESE AR E ONLY ROUGH WORKINGS AND JOTTING MAINTAINED BY THE STAFF. 5. LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFI CER AND ALSO PLEADED THAT THE DOCUMENT IS NOT A DUMB DOCUMENT AS THE OTH ER ENTRIES ARE TALLYING WITH THE REGULAR BOOKS OF ACCOUNT EXCEPT THE ENTRY IN RESPECT OF SBI SHARE TRANSACTIONS OF 57900 AT PAGE 21 OF THE ANNEXURE A- 36. THEREFORE, THE TRANSACTION IN SBI SHARE IS A GENUINE TRANSACTION A ND THE DOCUMENT IS NOT DUMB DOCUMENT. THIS DOCUMENT GIVE FULL MEANING TO THE ENTRIES WHICH COULD BE WELL UNDERSTAND BY THE SEIZED DOCUMENTS ONLY. T HEREFORE, THE NOTINGS IN RESPECT OF 57,900 SHARES OF SBI ARE GENUINE AND ADD ITION ON THAT ACCOUNT NEEDS TO BE SUSTAINED. 6. ON THE OTHER HAND, LEARNED AR SUBMITTED THAT THE ANNEXURE A-36 SEIZED IN THE SEARCH IS THE BUNCH OF ROUGH WORKING SHEETS HAVING VARIOUS NOTINGS AND JOTTINGS. PAGE NOS.20 & 21 OF ANNEXURE A-36 ARE ROUGH NOTINGS AND JOTTINGS AND ARE RELEVANT ONLY FOR RECONCILIATI ON PURPOSES. HE ALSO PLEADED THAT THESE NOTINGS ARE FOR OPENING STOCK ON LY AND NOT FOR SALES AND PURCHASES. HE ALSO PLEADED THAT NOTINGS OF 57,900 SHARES OF SBI STAND CROSSED/CANCELLED AS CAN BE SEEN FROM PAGE NO.21 OF ANNEXURE A-36. THIS DOCUMENT WAS FOUND AND SEIZED WITH CROSSED SYMBOLS. HE PLEADED THAT THIS IT(SS)A.NO.182/DEL./2005 6 NOTING DOES NOT SHOW THAT WHETHER IT IS SALE OR PUR CHASE OR OPENINGS TOCK OR OLD STOCK. HE ALSO PLEADED THAT THE CROSSING OF TH E NOTINGS ON IT SHOWS THAT THIS TRANSACTION NEITHER SHOWS SALE/PURCHASE NOR OF OPENING OLD STOCK, THEREFORE IT DOES NOT FIND ANY RECORDING IN ANNEXUR E A-12. IT DOES NOT REFLECT ANY FINANCIAL/BUSINESS TRANSACTION ACTUALLY UNDERTA KEN. ALTERNATIVELY, HE ALSO PLEADED THAT IF THIS TRANSACTION IS TAKEN AS UNACCO UNTED SALES THEN DEDUCTION FOR PURCHASE SHOULD BE GIVEN AS ONLY THE PROFITS CA N BE TAXED AND FOR THAT HE HAS MADE A WORKING. HE ALSO PLEADED THAT BAR ON T HE DEDUCTION OF UNEXPLAINED EXPENDITURE HAS BEEN PUT ONLY FROM 1.4. 1999 WHICH IS EFFECTIVE FROM THE ASSESSMENT YEAR 1999-00 ONWARDS. HE RELIE D ON THE DECISION OF DCIT VS. RADHE DEVELOPERS INDIA LTD. & ORS. 329 ITR 1 (GUJ.) WHERE IT WAS HELD THAT PROVISO BELOW SECTION 69C IS EFFECTIVE FR OM 1.4.1999 AND THUS APPLICABLE FOR ASSESSMENT YEAR 1999-00. HE ALSO RE LIED ON THE DECISION OF KRISHNA TEXTILES VS. CIT 310 ITR 227 (GUJ.) AND ALS O ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF DGP WINDSOR INDIA LIMITED 74 TTJ (MUM) 291. HE FURTHER RELIED ON THE CBDT CIRCULAR NO.772 DATED 23.12.1998. 7. AFTER HEARING BOTH THE SIDES ON THIS ISSUE, WE F IND THAT THE CIT (A) HAS DELETED THE ADDITION WITHOUT APPRECIATING THE SEIZE D MATERIAL IN CORRECT MANNER. DETAILS SUBMITTED TO EXPLAIN THE ENTRIES O N PAGE 21 OF THE SEIZED ANNEXURE 36 ARE AS UNDER :- IT(SS)A.NO.182/DEL./2005 7 S.NO. NAME OF SHARE AS PER PG.21 OF ANN.A- 36 NOS. OF SHARES AS PER PG. 21 OF ANN.A-36 INTERNAL PG. NO. ANN. A-12 NARRATION IN ANN. A-12 1 L & T 1900 43 31.07.1996 OPENING STOCK 2 OBC 2000 81 31.07.1996 OPENING STOCK 3 TISCO 11200 35 31.07.1996 OPENING STOCK 4 SBI 57900 51 ENTRY UNDER CONSIDERATION 5 RIL 2306 26 08.04.1997 OLD STOCK 6 TISCO 1740 35 08.04.1997 OLD STOCK 7 ESSAR 960 75 02.08.1996 OPENING STOCK 8 VENUS 10600 87 04.08.1996 OPENING STOCK 9 BPL 9000 61 04.08.1996 OPENING STOCK 10 D.PHARMA 2900 65 04.08.1996 OPENING STOCK 11 L & T 180 43 08.04.1997 OLD STOCK 12 JPH 2000 69 04.08.1996 OPENING STOCK THIS ITSELF SHOWS THAT THE PAPER WAS NOT A DUMB DOC UMENT AND THESE NOTINGS WERE HAVING DEFINITE MEANING AND ASSESSEE HAD PROVI DED A DEFINITE MEANING EXCEPT ENTRIES IN RESPECT OF SBI SHARES. ON THE P AGE 21 OF ANNEXURE 36 THE DATE IS DEFINITE, THAT IS 8.4.1997. THE NUMBER OF SHARES IS DEFINITE, THAT IS 57,900 (IN THREE LOT 19,700 + 19,550 + 18,650). THE SHARES WERE OF SBI (STATE BANK OF INDIA). THE ENTRIES PRIOR AND AFTER ARE FINDING PLACE IN REGULAR BOOKS OF ACCOUNT. THERE IS DEFINITE NARRATION PART ICULARLY IN RESPECT OF SBI SHARES AS RECEIVED FROM SECURITIES. PAGE 21 GIVE S DETAIL OF 19,700 SHARES IT(SS)A.NO.182/DEL./2005 8 AND WHICH ALSO NARRATES THAT RECEIVED FROM KUBER S ECURITIES LIMITED. ASSESSEE HAS NOT PROVIDED ANY EXPLANATION IN RESPEC T OF TRANSACTION RELATED TO 57,900 SHARES OF SBI. ALL THESE FACTS ESTABLISH TH E GENUINE TRANSACTION. THEREFORE, DOCUMENT IS NOT A DUMB DOCUMENT. ASSESS EE HAS NOT EXPLAINED THESE TRANSACTIONS. ASSESSEE HAS JUST BRUSHED ASID E BY STATING THAT THESE ARE ROUGH WORKING/JOTTINGS MAINTAINED BY THE STAFF FOR RECONCILIATION BUT WE DO NOT AGREE WITH THIS EXPLANATION AND WE HOLD THAT TH IS NOTINGS IN RESPECT OF SHARES OF 57,900 SHARES IS A GENUINE AND THE ASSESS EE NEEDS TO EXPLAIN THE SAME. SINCE WE HAVE HELD THAT THE DOCUMENT IS NOT A DUMB DOCUMENT THE ASSESSEE HAS TO EXPLAIN THE TRANSACTION BY GIVING A PLAUSIBLE EXPLANATION. THE CONTENT WRITTEN ON THE SEIZED PAPER IN RESPECT OF S BI SHARE ESTABLISH THAT DEFINITELY THERE WAS A TRANSACTION AND CROSSING OF SAME SHALL NOT ESTABLISH OTHERWISE. ASSESSEE HAS MADE AN ALTERNATIVE PLEA T HAT ONLY PROFIT SHOULD BE ADDED ON THESE TRANSACTIONS. BUT WE FIND THAT NEIT HER CIT (A) HAS GIVEN ANY FINDING NOR THE ASSESSING OFFICER CONSIDERED THE IS SUE IN THAT VIEW OF THE MATTER. THEREFORE, WE SET ASIDE THE ORDER OF AUTH ORITIES BELOW TO DECIDE DE NOVO TO CONSIDER THE ALTERNATIVE PLEA. HOWEVER, WE ALSO RECORD THAT CIT DR HAD OBJECTED THIS BY STATING THAT THE ADDITION SHOU LD ALSO BE MADE FOR THE COST OF ACQUISITION OF THE SHARES. WE ALSO DIRECT ASSES SING OFFICER TO LOOK INTO THIS ASPECT ALSO. IT(SS)A.NO.182/DEL./2005 9 8. IN THE GROUND NO.2, THE ISSUE INVOLVED IS AGAINS T THE DELETION OF ADDITION OF RS.13,17,50,000/- ON ACCOUNT OF SHARE A PPLICATION MONEY. THE REVENUE HAS RAISED THAT THIS SHARE APPLICATION MONE Y WAS RECEIVED FROM BANKRUPT PAPER COMPANIES HAVING NO CAPACITY AND THE SE COMPANIES WERE HAVING NO ASSETS WHICH COULD PROVE THEIR WORTH. 9. LEARNED DR FAIRLY CONCEDED THAT THE ADDITION IN RESPECT OF SHARE APPLICATION MONEY AT RS.13,17,50,000/- RECEIVED DUR ING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 1997-98 WAS DULY CONSID ERED IN THE REGULAR ASSESSMENT PROCEEDINGS AND THE ADDITION WAS MADE. THIS ADDITION HAS BEEN DELETED BY THE ITAT. THE ORDER OF ITAT IS AVAILABL E AT PAGES 33 TO 43 OF THE PAPER BOOK. LEARNED AR WAS ALSO OF THE SAME VIEW. 10. AFTER HEARING BOTH THE SIDES, WE FIND THAT THIS ADDITION OF RS.13,17,50,000/- WAS MADE IN THE REGULAR ASSESSMEN T AND THIS ISSUE WAS CONTESTED BY THE REVENUE AGAINST THE ORDER OF CIT ( A) IN GROUND NO.1 OF THE ORDER DATED 31.7.2009 OF ITAT IN ITA NO.2352/DEL/20 05 FOR ASSESSMENT YEAR 1997-98, WHICH IS AVAILABLE AT PAGE 33 OF THE PAPER BOOK AND READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.13,37,50,000/- MADE ON ACCOUNT OF UNEXPLAINED IN CREASE IN SHARE CAPITAL ON THE BASIS OF FRESH EVIDENCE FILED BEFORE HIM AND THE LD. CIT (A) HAS NOT EXAMINED THE INCREASE IN SH ARE CAPITAL WITHOUT EXAMINING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SHARE HOLDERS. IT(SS)A.NO.182/DEL./2005 10 THE ITAT DELETED THE ADDITION BY HOLDING AS UNDER : - 3.3 THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE O THER HAND, DREW OUR ATTENTION TO THE VARIOUS PAPERS ON WHICH F INDING OF THE LEARNED CIT (APPEALS) STANDS RECORDED. THE CLAIM O F THE ASSESSEE THAT AMOUNT OF ADDITIONAL SHARE CAPITAL WA S RECEIVED THROUGH CHEQUES AND THAT GENUINENESS OF ENTRIES OR CREDITWORTHINESS OF THE SHAREHOLDERS WAS FULLY ESTA BLISHED, AND THESE FACTS WERE NOT REFUTED BY THE A.O. IN THE REM AND REPORT. THERE IS NOTHING BEFORE US TO SHOW THAT FACTUAL FIN DING RECORDED BY THE LEARNED CIT (A) SUFFER FROM ANY INFIRMITY. FURTHER IN THE LATEST DECISION OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195, THE SUPREME COURT HAS HELD THAT IF TH ERE ARE BOGUS ENTRIES RELATING TO SHARE CAPITAL, THEN ADDIT ION HAS TO BE MADE IN THE HANDS OF THE SHAREHOLDER AND NOT IN THE HANDS OF THE COMPANY. HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, AND AUTHORITATIVE PRONOUNCEMENTS OF SUPREME COURT, WE SEE NO JUSTIFICATION FOR INTERFERING IN THE IMPUGNED ORDER . THIS ADDITION WAS MADE IN THE REGULAR ASSESSMENT AN D THE MATTER TRAVELED UP TO ITAT, DELHI BENCH. THE ITAT UPHELD THE DELETION OF ADDITION. SINCE THE ADDITIONS MADE IN REGULAR ASSESSMENT HAVE BEEN CONS IDERED AND FINALLY DELETED IN REGULAR ASSESSMENT, WE FIND NO MERITS IN THIS GROUND OF THE REVENUES APPEAL. 11. GROUND NO.3 IS AGAINST THE DELETION OF ADDITION OF RS.36,23,800/-. 12. THE REVENUE HAD CONTESTED THAT THE CIT (A) HAD DELETED THE ADDITION BY HOLDING THAT THE ASSESSEE IS A SHARE BROKER BUT THE RE IS YET NO BAR IN DOING ITS OWN BUSINESS. IT(SS)A.NO.182/DEL./2005 11 13. THE CIT (A) HAS NOT EXAMINED THE POINT WHETHER THE SHARES BELONG TO THE ASSESSEE OR ITS CLIENTS AND HAS NOT GIVEN A CAT EGORICAL FINDING THIS REGARD. 14. LEARNED DR SUBMITTED THAT THE CIT (A) DELETED T HE ADDITION WITHOUT ANY COGENT REASONS. THE SHARES OF RELIANCE INDUSTR IES LIMITED WERE FOUND AT THE TIME OF SEARCH IN TOTAL OF 18,119. THE ASSESSI NG OFFICER MADE THE ADDITION ON ACCOUNT OF NON-FURNISHING OF ANY EXPLAN ATION AND HE MADE THE ADDITION ON THE AVERAGE PRICE OF RS.200/- PER SHARE . HE ALSO NOTED THAT SEPARATE PROCEEDINGS IN THE CASE OF TANMAR INVESTME NT PRIVATE LIMITED WERE INITIATED. LEARNED DR RELIED ON THE ORDER OF ASSES SING OFFICER AND PLEADED THAT THE CIT (A) HAS DELETED THE ADDITION BY HOLDIN G THAT THE ASSESSEE IS A MEMBER OF DELHI STOCK EXCHANGE AND HAS BEEN EXTENSI VELY DEALING IN SHARES OF RELIANCE INDUSTRIES LIMITED IN ROUTINE COURSE AS IS EVIDENT FROM THE REGULAR RECORDS AS WELL A FROM THE SEIZED MATERIAL. HE ALS O SUBMITTED THAT ON THE DATE OF SEARCH, AS PER THE STOCK RECORDS, THE STOCK SHOW S 72,300 NUMBERS OF SHARES OF RIL. IN THE SEARCH OPERATION, 18,119 SHARE OF R IL WERE PHYSICALLY AVAILABLE. THEREFORE, THE 18,119 SHARES OF RIL WER E FULLY EXPLAINED BY STOCK OF SHARES AS PER BOOKS AT THE TIME OF SEARCH. 15. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE CIT (A) HAS CONSIDERED THE PHYSICAL STOCK FOUND OF 18,119 SHARES AS PART O F THE REGULAR STOCK AVAILABLE IN THE BOOKS OF ACCOUNT. HOWEVER, IT HAS NOT BEEN FOUND TO WHOM THESE SHARES WERE BELONGING. THE ASSESSEE IS A DEALER IN SHARES AND HE MUST HAVE IT(SS)A.NO.182/DEL./2005 12 RECORD FOR THE SHARES TO THE TUNE OF 18,119. IF TH E SHARES BELONG TO ASSESSEE THEN THE ASSESSEE MUST HAVE MADE A PAYMENT FROM THE BOOKS OF ACCOUNT WHICH HAS NOT BEEN VERIFIED. SIMILARLY IF THE STOCK BELO NGS TO CUSTOMERS THEN THESE SHARE CERTIFICATES MUST HAVE BEEN ACCOMPANIED WITH THE SHARE TRANSFER FORM. THERE IS NOTHING ON RECORD WHICH SHOWS THAT THESE S HARES WERE ACCOMPANIED WITH THE SHARE TRANSFER CERTIFICATES. IF THE SHARE S ARE BELONGING TO ASSESSEE THEN NATURALLY HE MUST HAVE MADE PAYMENT FROM THE R EGULAR BOOKS OF ACCOUNT WHICH CIT (A) HAS NOT CONSIDERED. THEREFORE, THE F INDING OF THE FACT BY THE CIT (A) IS NOT CONCLUSIVE. THE COPY OF THE REGULAR STOCK REGISTER ALSO SHOWS THAT THESE ITEMS WERE NOT REFLECTED IN THE STOCK RE GISTER. IN SUCH SITUATION, WE SET ASIDE THE ORDER OF AUTHORITIES BELOW TO DECIDE THE ISSUE DE NOVO. THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF MARCH, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 25 TH DAY OF MARCH, 2011/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.