Shri Govind G.Sarawagi,HUF, Surat V. The ACIT., Cent.Circle-4, Surat

ITSSA 539/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0838 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS VIBHA BHALLA
• Keywords: Unexplained cash credit; Unexplained investment; Question of law; Wrong claim; Block assessment
• Section: 143(3); 133A; 153A; 133(6); 131; 68; 132; 15; 139

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ IT(SS)A NO.539 AND 540/AHD/2011 / ASSTT. YEAR: 2006-2007 AND 2007-08 SHRI GOVIND G. SARAWAGI HUF V-2131, SURAT TEXTILE MARKET RING ROAD, SURAT. PAN : AAGHS 8859 F VS ACIT, CENT.CIR.4 SURAT. ./ ITA NO.3177/AHD/2011 / ASSTT. YEAR: 2008-2009 MANOJ SARAWAGI - HUF 538, J.J.AC MARKET RING ROAD, SURAT. PAN : AAGHS 8368 M VS ACIT, CENT.CIR.4 SURAT. ./ ITA NO.3306/AHD/2011 / ASSTT. YEAR: 2009-10 ACIT, CENT.CIR.4 SURAT. VS SHRI GOVIND G. SARAWAGI HUF V-2131, SURAT TEXTILE MARKET RING ROAD, SURAT. PAN : AAGHS 8859 F ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI MEHUL SHAH REVENUE BY : MRS.VIBHA BHALLA, CIT-DR / DATE OF HEARING : 12/08/2015 / DATE OF PRONOUNCEMENT: 30/09/2015 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE LD.CIT(A)-II, AHMEDABAD HAS DECIDED APPEALS OF THE ASSESSEE FOR THE ASSTT.YEAR 2006-07 AND 2007-08 VIDE SEPARAT E ORDERS OF EVEN IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 2 DATED I.E. 17.8.2011. THE ASSESSEE IS CHALLENGING THESE ORDERS IN ITA NO.539/AHD/2011 AND 540/AHD/2011. THE APPEALS FOR THE ASSTT.YEARS 2008-09 AND 2009-1 0 HAVE BEEN DECIDED BY THE LD.CIT(A) BY SEPARATE ORDERS OF EVEN DATE I.E. 13.10.2011. THE REVENUE IS CHALLENGING THE ORDER OF THE CIT(A) IN THE ASSTT.YEAR 2009-10, WHEREAS, THE ASSESSEE IS IN APP EAL IN THE ASSTT.YEAR 2008-09. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THEREFORE, WE HEARD THEM TOGETHER AND DEEM IT APPRO PRIATE TO DISPOSE OF THESE APPEALS BY COMMON ORDER. 2. FIRST COMMON DISPUTE IS INVOLVED IN THE ASSTT.YE AR 2006-07 AND 2007-08. THE ASSESSEE HAS PLEADED THAT THE ASSESSM ENT ORDER FRAMED UNDER SECTION 143(3) R.W.S. 153A ARE VOID AB-INITIO BECAUSE NO SEARCH WAS CARRIED OUT UPON THE ASSESSEE, THEREFORE, THE A O HAS NO JURISDICTION TO INITIATE PROCEEDINGS UNDER SECTION 153A OF THE I NCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZ URE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF KARTA WHO HAPPENED TO BE A SUB-GROUP OF LAXMIPATI GROUP IN SURAT. THIS SEARCH WAS CARRIED OUT ON 20.1.2009. THE ASSESSEE HAS FILED RETURN OF ITS IN COME UNDER SECTION 139 OF THE INCOME TAX ACT ON 31.7.2006 DECLARING AN INCOME OF RS.3,42,930/-. ALONG WITH SEARCH, A SURVEY UNDER S ECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE A SSESSEE ON 20.1.2009. THE LD.AO HAD ISSUED NOTICE UNDER SECTI ON 153A OF THE INCOME TAX ACT ON 27.7.2009 WHICH WAS DULY SERVED U PON THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 13.1.2010 DECLARING TOTAL INCOME OF RS.3, 42,926/-. AFTER HEARING THE ASSESSEE, THE LD.AO HAS PASSED THE ASSE SSMENT ORDER UNDER SECTION 143(3) R.W.S. 153A ON 31.12.2010 IN THE ASS TT.YEAR 2006-07. HE HAS DETERMINED THE TAXABLE INCOME OF THE ASSESSE E AT RS.72,42,926/-. AN ADDITION OF RS.69,00,000/- WAS MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS MADE PAYMENT OF ON -MONEY IN IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 3 PURCHASE OF PLOT BEARING NOS.30,31 AND 32 OF CENTRA L PARK, PANDESARA, SURAT FROM CENTRAL CORPORATION. A TOTAL ON-MONEY O F RS.73,19,460/- WAS PAID OUT OF WHICH RS.69,00,000/- WAS PAID DURIN G THE ACCOUNTING PERIOD RELEVANT TO THE ASSTT.YEAR 2006-07. 4. IN THE ASSTT.YEAR 2007-08 ALSO, NOTICE UNDER SEC TION 153A WAS ISSUED ON 27.7.2009 AND ASSESSEE HAS FILED ITS RETU RN OF INCOME ON 13.1.2009 SHOWING TOTAL INCOME OF RS.3,42,926/-. T HE ASSESSMENT ORDER WAS PASSED ON 31.12.2010. THE LD.AO HAS DETE RMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.35,78,370/- WH ILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 153A O F THE INCOME TAX ACT. THE LD.AO HAS BASICALLY MADE TWO ADDITIONS. ONE ADDITION OF RS.4,19,460/- WHICH IS PART OF PAYMENT OF ON-MONEY FALLING IN THIS ACCOUNTING YEAR AND ADDITION OF RS.28,58,402/- ON A CCOUNT OF UNEXPLAINED INVESTMENT IN SHARES. 5. THE LD.COUNSEL FOR THE ASSESSEE HAS RAISED TWO F OLD SUBMISSIONS. IN THE FIRST FOLD SUBMISSION, HE CONTENDED THAT NO AUTHORIZATION WAS ISSUED FOR CARRYING OUT SEARCH ON THE HUF. THE AU THORIZATIONS WERE ISSUED IN THE NAME OF INDIVIDUALS. MORE SO, ALL TH E MEMBERS OF HUF WERE NOT COVERED UNDER THE SEARCH. HE PLACED ON RE CORD LIST OF HUF MEMBERS AS WELL AS COPY OF PANCHNAMA EXHIBITING THE AUTHORIZATION ISSUED FOR COVERING THE PERSONS UNDER THE SEARCH AC TION. ON THE STRENGTH OF THESE DETAILS, HE CONTENDED THAT SINCE NO SEARCH ACTION WAS INITIATED IN THE CASE OF THE ASSESSEE, THEREFORE, T HE AO HAS NO JURISDICTION TO TAKE ACTION UNDER SECTION 153A OF T HE INCOME TAX ACT. FOR BUTTRESSING HIS CONTENTIONS, HE RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. JOLLY FANTASY WORLD LTD., IN TAX APPEAL NO.1254 OF 2014 (GUJ). H E HAS PLACED ON RECORD COPY OF THE DECISION RENDERED ON 9.3.2015. HE ALSO RELIED UPON THE DECISION OF THE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. RAMESH D. PATEL, TAX APPEAL NO.344, 346 TO 349 OF 2 013 (GUJ), AND IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 4 COPY OF THE SAID DECISIONS DATED 21.1.2013 HAS BEEN PLACED AT PAGE NO.63 OF THE CASE COMPILATION. APART FROM THESE TW O DECISIONS FROM THE JURISDICTIONAL HIGH COURT, THE ASSESSEE HAS RELIED UPON THE ORDERS OF THE ITAT IN THE CASE OF A.L. AHUJA VS. DCIT, 1 SOT 475 (DEL), ACIT VS. SMT. MOHINDER KAUR, ITA NO.13/CHD/2006 AND JINDAL STAINL ESS LTD. VS. ACIT, 19 DTR 0345 (DEL.TRIB.). THE LD. COUNSEL FOR THE A SSESSEE HAS ALSO PLACED THE COPIES OF THESE DECISIONS. 6. IN HIS NEXT FOLD OF SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY, A PAPER BEARING NO.15 OF ANNEXURE-AS/27 WAS FOUND AND IMPOUNDED FROM GROUP P REMISES. THIS PAPER CONTAINS THE DETAILS OF PAYMENT FOR PURCHASE OF THREE PLOTS BEARING NOS.30, 31 AND 32 OF CENTRAL PARK, PANDESAR A, SURAT, WHICH WERE PURCHASED BY THE ASSESSEE ON 19.4.2006. THE S TATEMENT OF SHRI RAKESH SARAWAGI WAS RECORDED UNDER SECTION 131 OF T HE ACT BY THE DIT (INVESTIGATION) SURAT ON 23.1.2009. IN THE STATEME NT, IT WAS DISCLOSED THAT THESE PLOTS WERE PURCHASED BY SHREE SIDDHI VIN AYAK SAREES PVT. LTD. FOR A CONSIDERATION OF RS.1,72,34,775/-. AS F AR AS THE CONSIDERATION IS CONCERNED, THERE IS NO DISPUTE BETWEEN THE ASSES SEE AND THE REVENUE. THE DISPUTE IS THAT THE ASSESSEE HAS PAID A SUM OF RS.73,19,460/- IN CASH OVER AND ABOVE, THE AMOUNT S TATED IN THE SALE DEED. IN OTHER WORDS, THE ASSESSEE HAD PAID AN AMO UNT OF RS.90.00 LAKHS BY CHEQUE. RS.9,15,315/- WAS OUTSTANDING OUT OF THE CHEQUE AMOUNT. THE CASE OF THE ASSESSEE IS THAT THIS AMOU NT OF RS.73,19,460/- PAID IN CASH WAS PAID TO SHRI JAVED S. DALAL IN THE ACCOUNTING PERIOD RELEVANT TO THE ASSTT.YEAR 2009-1 0. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO THAT SHRI JAVED S. DA LAL HAS BOOKED THESE PLOTS ORALLY AND ULTIMATELY THE ASSESSEE HAS PURCHASED THESE PLOTS WITH THE HELP OF SHRI JAVED S. DALAL. IT HAS PAID ON-MONEY OF RS.73.00 LAKHS TO SHRI JAVED S. DALAL. THE ASSESSEE HAS PRO DUCED SHRI JAVED S. DALAL, WHO IN HIS STATEMENT RECORDED ON 23.7.2010 D ISCLOSED THAT THIS AMOUNT WAS RECEIVED BY HIM BEFORE THE SALE DEED, BU T, LATER ON HE FILED IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 5 CONFIRMATION BEFORE THE AO THAT THE PAYMENT WAS REC EIVED DURING THE ACCOUNTING PERIOD RELEVANT TO THE ASSTT.YEAR 2009-1 0. HE HAS SHOWN THIS PAYMENT IN HIS RETURN FOR THE ASSTT.YEAR 2009- 10. THE ASSESSEE HAS ALSO SHOWN THIS PAYMENT IN THE RETURN FOR THE A SSTT.YEAR 2009-10. IN OTHER WORDS, THE ASSESSEE HAS OFFERED THIS AMOUN T FOR TAXATION IN THE ASSTT.YEAR 2009-10. THE STATEMENT OF SHRI RAKESH SARAWAGI, DIRECTOR OF SHREE SIDDHI VINAYAK SAREES PVT. LTD. WAS RECORD ED ON 3.3.2009. IN HIS STATEMENT, HE HAS CATEGORICALLY STATED THAT THE PAYMENT OF RS.73,19,460/- WAS MADE IN CASH. IT WAS MADE IN TH E MONTH OF NOVEMBER, 2008. ACCORDING TO THE LD.COUSNEL FOR TH E ASSESSEE, IMMEDIATELY AFTER SEARCH/SURVEY, STATEMENT OF VARIO US PERSONS RECORDED. THEY WERE CATEGORICAL THAT THE PAYMENTS WERE MADE IN THE MONTH OF NOVEMBER, 2008, FALLING WITHIN THE ACCOUNT ING PERIOD RELEVANT TO THE ASSTT.YEAR 2009-10. 7. THE AO HAS TAXED THIS AMOUNT IN BOTH THE YEARS I .E. THE ASSTT.YEAR 2006-2007 AS WELL AS THE ASSTT.YEAR 2009-10. 8. ON APPEAL, THE LD.FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION FROM THE ASSTT.YEAR 2009-10 ON THE GROUND THAT IT AMOUNTS TO DOUBLE TAXATION OF THE SAME AMOUNT. THIS ORDER OF THE CIT(A) IS BEING IMPUGNED BY THE REVENUE IN ITA NO.3306/AHD/2011. 9. THE LD.DR ON THE OTHER HAND, CONTENDED THAT ONCE THE AUTHORIZATION WAS ISSUED IN THE NAME OF THE MEMBERS OF HUF, THEN IT SHOULD BE CONSTRUED THAT SEARCH WARRANT WAS ISSUED IN THE NAME OF HUF ALSO. THE AO HAS RIGHTLY TAKEN COGNIZANCE UNDER SE CTION 153A OF THE INCOME TAX ACT. SHE FURTHER CONTENDED THAT THE REC IPIENT IN HIS STATEMENT RECORDED ON 3.8.2010 UNDER SECTION 131 OF THE ACT HAS REPLIED THAT THE PAYMENT WAS RECEIVED BEFORE THE EX ECUTION OF THE SALE DEED, MEANING THEREBY, THE ASSESSEE HAS MADE PAYMEN T IN THE ACCOUNTING YEAR RELEVANT TO THE ASSTT.YEAR 2006-07. IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 6 10. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. THE HONBLE GUJARAT HIGH COURT I N THE CASE OF CIT VS. RAMESH D. PATEL, TAX APPEAL NO.347 OF 2013 AND OTHE R APPEALS) HAS CONSIDERED AN ISSUE THAT WHERE SEARCH WARRANT WAS N OT ISSUED IN THE NAME OF THE ASSESSEE, THEN THE AO WILL HAVE NO JURI SDICTION TO ASSESS HIM UNDER SECTION 153A OF THE INCOME TAX ACT. THE QUESTION FRAMED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RAMES H D. PATEL (SUPRA) READ AS UNDER: WHETHER THE ITAT WAS JUSTIFIED IN LAW AND IN FACTS IN ANNULLING THE ASSESSMENT FINALIZED U/S.153A(B) ON TECHNICAL G ROUND THAT IN ABSENCE OF SEARCH WARRANT, NO ORDER CAN BE PASSED U /S.153A(B) OF THE ACT, WITHOUT APPRECIATING FACT THAT THE ASSESSE E DID NOT CHALLENGE ISSUE OF STATUTORY NOTICE CALLING FOR RET URN U/S.153A OF INCOME TAX ACT, 1961 WITHIN STIPULATED TIME OR BEFO RE COMPLETION OF ASSESSMENT, IN VIEW OF SECTION 124(3) OF INCOME TAX ACT,1961? 11. AFTER REPRODUCING THE FINDING RECORDED BY THE T RIBUNAL, THE HONBLE COURT HAS MADE THE FOLLOWING OBSERVATIONS: HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIES, WE FIND FROM THE RECORD THAT THE ASSESSING OFFICER HAD MADE CONTRADICTORY STATEMENTS WITH RESPECT TO THE ASSESSEE BEING SUBJE CTED TO SEARCH. IN ONE ORDER, HE NOTED THAT NO SEARCH WARRA NT WAS ISSUED AGAINST THE ASSESSEE, WHILE IN ANOTHER ORDER, HE RE CORDED THAT NOT ONLY M/S.J.K.SECURITIES GROUP, BUT THE ASSESSEE WAS ALSO SUBJECTED TO SEARCH. TO CLEAR THIS CONFUSION, THE T RIBUNAL GAVE MULTIPLE OPPORTUNITIES TO THE REVENUE TO PRODUCE TH E RECORD OF SEARCH AND AUTHORIZATION. DESPITE SUFFICIENT OPPORT UNITIES, THE REVENUE COULD NOT PRODUCE THE SAME. THE TRIBUNAL, T HEREFORE, CONCLUDED THAT THERE WAS NO SEARCH WARRANT AGAINST THE ASSESSEE. THE TRIBUNAL, THEREFORE HELD THAT IN ABSENCE OF ANY SEARCH WARRANT, THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 153B OF THE ACT WERE INVALID. WE HAVE NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE TRIBUNAL. SECTION 153A OF T HE ACT PERTAINS TO ASSESSMENT IN CASE OF SEARCH OR REQUISITION. SUB -SECTION (1) THEREOF PROVIDES THAT NOTWITHSTANDING ANYTHING CONT AINED IN SECTIONS 139, 147, 148, 149, 151 AND 153 OF THE ACT , IN CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 13 2 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER 31ST OF MAY 2003, THE ASSESSING OFFICER SHALL IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 7 ISSUE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH THE RETURN OF INCOME AND ASSESS OR REASSESS THE TOTAL INCOME O F SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. SECTION 153B OF THE ACT PROVID ES FOR TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 15 3A. LEARNED COUNSEL FOR THE ASSESSEE HAS RIGHTLY RELIED ON A DE CISION OF THE ORISSA HIGH COURT IN THE CASE OF SIKSHA O ANUSAND HAN V. CIT, 336 ITR 112 (ORISSA) IN WHICH IT WAS HELD THAT PROV ISIONS OF SECTION 153A MAKE IT CLEAR THAT ONLY IN THE CASE OF A PERSON WHERE A SEARCH WAS INITIATED UNDER SECTION 132 OR BOOKS O F ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UN DER SECTION 132A AFTER 31.3.2002, THE ASSESSING OFFICER COULD A FTER ISSUING A NOTICE, ASSESS OR REASSESS THE TOTAL INCOME OF SUCH PERSON FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH WAS CONDUCED OR REQUISITION WAS MADE. IN THE PRESENT CASE, THE T RIBUNAL CAME TO A FACTUAL FINDING THAT NO SEARCH AUTHORIZATION W AS PRODUCED. THIS WAS NECESSARY BECAUSE THE ASSESSING OFFICER HA D MADE CONTRADICTORY REFERENCES TO THE ASSESSEE BEING SUBJ ECTED TO SEARCH OR NOT. IN ABSENCE OF A SEARCH AUTHORIZATION , THE TRIBUNAL CORRECTLY HELD THAT ASSESSMENT ORDERS UNDER SECTION 153A COULD NOT HAVE BEEN PASSED. 12. SIMILARLY, IN THE CASE OF JOLLY FANTASY WORLD L TD. (SUPRA), THE HONBLE GUJARAT HIGH COURT HAS FRAMED THE FOLLOWING QUESTION OF LAW, AND ANSWERED THESE QUESTIONS AS UNDER: (I) WHETHER THE HON'BLE APPELLATE TRIBUNAL HAS COM MITTED SUBSTANTIAL ERROR OF LAW IN ACCEPTING THE ADDITIONA L GROUND OF THE ASSESSEE THAT SINCE, THE NAME OF THESE ASSESSEES AR E NOT APPEARING IN THE AUTHORIZATION/REQUISITION, PROCEED INGS INITIATED U/S 158BC OF THE ACT AGAINST THEM ARE VOID INITIO W ITHOUT APPRECIATING THE FACT THAT THE ORDER UNDER DISPUTE WAS PASSED IN PURSUANCE OF AN ORDER PASSED BY THE TRIBUNAL ITSELF ? (II) WHETHER THE TRIBUNAL WAS JUSTIFIED IN LAW IN A CCEPTING THE ADDITIONAL GROUNDS OF THE ASSESSEE WHICH WERE RAISE D AFTER A LAPSE OF 5 YEARS OF FILING OF SECOND ROUND OF APPEAL AND 14 YEARS AFTER THE SEARCH WITHOUT ANY JUSTIFICATION BY THE ASSESSE E FOR SUCH DELAY? (IV) WHETHER THE HON'BLE TRIBUNAL WAS JUSTIFIED IN LAW IN ACCEPTING THE CONTENTION RAISED BY ASSESSEE AT A LATER STAGE THAT BLOCK ASSESSMENT FAILED FOR WANT OF JURISDICTION EVEN THO UGH THE FACTS OF THE CASE CLEARLY SHOWS THAT THE ASSESSEE HAD RESPON DED TO IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 8 NOTICES, FILED RETURN, PARTICIPATED IN BLOCK ASSESS MENT PROCEEDINGS AND ACCEPTED THE ASSESSMENT PROCEEDINGS AND FURTHER PARTICIPATED IN SET-ASIDE ASSESSMENT PROCEEDINGS AND SUFFERED AN ASSESSMENT AS PER THE DIRECTION OF HON'BLE TRIBUNAL, WITHOUT R AISING SUCH CONTENTION. .. 12. THE AFORESAID OBSERVATIONS GO TO SHOW THAT IF THE CONDITION PRECEDENT FOR BLOCK ASSESSMENT UNDER SECTION 158BC IS NOT SATISFIED, SUCH WOULD GO TO THE ROOT OF THE MATTER AND THE JURISDICTION, WHICH HAS NOT BEEN EXPRESSLY CONFERRE D BY THE STATUTE, CANNOT BE INVESTED WITH THE AO FOR THE BLO CK ASSESSMENT. 14. ON FACTS, AS RECORDED HERE ABOVE, ADMITTEDLY, T HERE WAS NO WARRANT AUTHORIZATION ON THE NAME OF THE ASSESSEE A ND HENCE, THE TRIBUNAL HAS FOUND THE ASSESSMENT AS AB INITIO VOID , WHICH, IN OUR VIEW, CALLS FOR NO INTERFERENCE, ON FACTS AND ON LA W. 15. IN VIEW OF THE ABOVE, WE DO NOT FIND THAT ANY S UBSTANTIAL QUESTIONS OF LAW WOULD ARISE FOR CONSIDERATION AS C ANVASSED IN THE PRESENT GROUP OF APPEALS. HENCE, ALL THE APPEALS A RE MERITLESS AND THEREFORE, DISMISSED. 13. A BARE PERUSAL OF SECTION 153A WOULD INDICATE T HAT THIS SECTION PROVIDES THAT NOTWITHSTANDING ANYTHING IN SECTION 1 39, 147, 148, 149, 151 AND 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY, 2003, THE AO SHALL (A) ISSUE NOTICE TO SUCH PERSON . (B) ASSESS OR REASSESS THE TOTAL INCOME. THE CONDITION PRECEDENT FOR TAKI NG ACTION UNDER THIS SECTION THAT SEARCH OUGHT TO HAVE BEEN INITIATED UN DER SECTION 132 OF THE INCOME TAX ACT UPON THAT PERSON. THE LEARNED D R APPEARING ON BEHALF OF THE REVENUE DID NOT DISPUTE WITH REGARD T O THIS PROPOSITION. HER CONTENTION WAS THAT ONCE ON THE MEMBERS OF THE HUF SEARCH ACTION HAS BEEN INITIATED, THEN, THE HUF AS A WHOLE WOULD ALSO BE COVERED UNDER THIS SECTION. BEFORE CONSIDERING THIS ARGUMEN T, LET US TAKE NOTE OF THE AUTHORIZATION. COPY OF THE PANCHNAMA IS AVAILABLE AT PAGE NO.57. THE RELEVANT PART OF THIS PANCHNAMA READS AS UNDER: PARTY NO.E-1 IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 9 PANCHNAMA DT. OF SEARCH : 20/1/2009 (TO BE PREPARED N QUADRUPLICATE) A) WARRANT IN THE NAME SHRI GOVIND PRASAD G. SARAWAGI, SANJAY KUMAR G. SARAWAGI, MAOJKUMAR G. SARAWAGI, RAKESHKUMAR G. SARAWAGI. B) WARRANT TO SEARCH (DETAILS & OWNERSHIP OF PLACE OF SEARCH)TELEPHONE NUMBERS 9-C, 8-C, RUDRAVAN APPTTS., ATHWALINES, SURAT. C) (A) AND (B) STATED TO BE ASSESSED (A) (B) 14. THE ASSESSEE HAS SUBMITTED A LIST OF MEMBERS OF THE HUF, WHICH READS AS UNDER: NAME RELATION MR.GOVINPRASAD GOPIRAM SARAWAGI KARTA MRS.KANTA DEVI GOVINDPRASAD SARAWAGI SPOUSE OF KARTA MR. SANJAY GOVINDPRASAD SARAWAGI SON OF KARTA MRS.SANDHYA SANJAY SARAWAGI DAUGHTER IN LAW OF KART A MR.MANOJ GOVINDPRASAD SARAWAGI SON OF KARTA MRS.SARLA MANOJ SARAWAGI DAUGHTER IN LAW OF KARTA MR.RAKESH GOVINDPRASAD SARAWAGI SON OF KARTA MRS.SUJATA RAKESH SARAWAGI DAUGHTER IN LAW OF KARTA NAME OF THE HUF, WHO IS SEPARATE TAXABLE ENTITY, I S NO WHERE AVAILABLE IN THE PANCHNAMA . IT IS ALSO PERTINENT TO NOTE THAT ALL THE MEMBERS OF THE HUF WERE NOT COVERED UNDER THE SEARC H ACTION. IN SECTION 153A, NOWHERE IT HAS BEEN PROVIDED THAT IF THE SEARCH IS CONDUCTED ON THE PARTNERS, IN THEIR INDIVIDUAL CASE S, THEN THE FIRM WOULD AUTOMATICALLY DEEM TO HAVE BEEN COVERED UNDER SEARC H ACTION. SIMILARLY, THERE CANNOT BE ANY IMPLIED SEARCH ACTIO N ON THE HUF MERELY ON THE GROUND THAT SOME OF THE INDIVIDUAL MEMBERS O F THE HUF WERE COVERED UNDER THE SEARCH ACTION. FOR INVOKING JURI SDICTION, THERE CANNOT BE ANY IMPLIED OPERATION OF LAW. IT SHOULD BE SPEC IFIC AND DIRECT. THUS, IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 10 NO SEARCH WAS CONDUCTED ON THE HUF, AND THEREFORE, NO ORDER UNDER SECTION 153A OUGHT TO BE PASSED. 15. SINCE WE HAVE NOT UPHELD THE ASSESSMENT ORDER P ASSED UNDER SECTION 153A, THEREFORE, DO NOT DEEM IT NECESSARY T O CONSIDER OTHER ISSUES ON MERIT IN ASSTT.YEARS 2006-07 AND 2007-08. 16. WE NOW TAKE THE APPEAL OF THE REVENUE I.E. ITA NO.3306/AHD/2011. 17. THE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.73,19,460/-. 18. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED ITS RETURN OF INCOME ON 31.3.2010 DECLARING TOTAL INCOME OF RS.7, 63,23,722/-. AS DISCUSSED ABOVE, THE ASSESSEE HAS PURCHASED THREE P LOTS IN CENTRAL PARK AREA, WHERE IT PAID A SUM OF RS.73,19,462/-, OVER A ND ABOVE THE AMOUNT STATED IN THE SALE DEED. THIS AMOUNT WAS PA ID IN CASH. THE ASSESSEE HAS OFFERED THIS AMOUNT FOR TAXATION IN TH E ASSTT.YAR 2009-10. THE LD.CIT(A) HAS DIRECTED THE AO TO EXCLUDE THIS A MOUNT ON THE GROUND THAT EQUIVALENT TO THIS AMOUNT HAS BEEN ADDED IN TH E INCOME OF THE ASSESSEE FOR THE ASSTT.YEAR 2006-07 AND 2007-08. T HE LD.CIT(A) WAS OF THE OPINION THAT THE SALE DEED WAS EXECUTED IN THE ACCOUNTING YEAR RELEVANT TO ASSTT.YEAR 2006-07, AND THEREFORE, THE ASSESSEE MUST HAVE PAID AMOUNT BEFORE THE SALE DEED. WE HAVE QUASHED T HE ASSESSMENT ORDER ON THE GROUND THAT NO SEARCH ACTION WAS TAKEN AGAINST THE ASSESSEE AND THEREFORE, NO ASSESSMENT ORDER CAN BE FRAMED UNDER SECTION 153A OF THE INCOME TAX ACT. IN THIS YEAR, THE AO HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3). HE HAS ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE AT THE SAME FIGURE. SINCE WE HAVE DELETED THE ADDITION FROM THE ASSTT.YEAR 2006- 07 AND 2007-08, THEREFORE, THE ARGUMENTS OF DOUBLE TAXATION WOULD N OT BE AVAILABLE TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE DID NOT DISPUTE FOR IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 11 SETTING ASIDE THE ORDER OF THE CIT(A) AND INCLUSION OF THIS AMOUNT FOR TAXATION IN THE ASSTT.YEAR 2009-10, AS OFFERED BY T HE ASSESSEE IN ITS RETURN OF INCOME. WE ALLOW THE APPEAL OF THE REVENU E AND RESTORE THE ADDITION OF RS.73,19,460/-. THE TOTAL TAXABLE INCO ME OF THE ASSESSEE WILL BE OF RS.7,63,23,720/- WHICH HAS BEEN DETERMIN ED BY THE AO. THE DIRECTIONS OF THE CIT(A) FOR REDUCTION OF RS.73,19, 460/- OUT OF THIS AMOUNT ARE VACATED. THIS APPEAL BE TREATED AS ALLO WED FOR STATISTICAL PURPOSE. 19. NOW WE TAKE THE ITA NO.3177/AHD/2011. 20. THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL. OUT OF THAT, THE GROUND NO.3 AND 4 ARE GENERAL GROUNDS OF APPEAL, WH ICH DO NOT CALL FOR RECORDING OF ANY SPECIFIC FINDING. HENCE, THEY ARE REJECTED. 21. IN GROUND NO.1, THE ASSESSEE HAS PLEADED THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO FOR ADDING RS.6,98,606/- IN THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 69B OF T HE INCOME TAX ACT, AS UNEXPLAINED INVESTMENT. IN GROUND NO.2, THE ASSESSEE HAS PLEADED THAT THE LD.REVENUE AUTHORITIES HAVE ERRED IN REJECTING ITS CLAIM OF LO NG TERM CAPITAL GAIN EXEMPT FROM TAX AMOUNTING TO RS.7,61,589/-. 22. BOTH THESE GROUNDS ARE INTER-CONNECTED TO EACH OTHER, THEREFORE, WE TAKE THEM TOGETHER. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 13.9.2008 DECLARI NG TOTAL INCOME OF RS.16,23,748/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE A CT DATED 16.9.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTI NY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS SHOWN L ONG TERM CAPITAL GAIN OF RS.7,61,589/- WHICH IT CLAIMED AS EXEMPT. THE LD.AO HAS NOTED THE DETAILS OF PURCHASE AND SALES OF SHARES IN PARA GRAPH 4 AT PAGE NO.2 IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 12 OF THE ASSESSMENT ORDER. A PERUSAL OF THESE DETAIL S WOULD INDICATE THAT THE ASSESSEE HAD PURCHASED SHARES OF THREE COMPANIE S FROM SWAN SECURITIES PVT. LTD. IN THE MONTH OF APRIL, 2005 FO R CONSIDERATION OF RS.2,04,659/-. THESE SHARES WERE SOLD IN MARCH, 20 07. THE LD.AO FOUND THAT THE ASSESSEE HAS NOT MADE THE PAYMENT OF PURCHASE OF SHARES UPTO THE END OF THE FINANCIAL YEAR ON 31.3.2 006. ACCORDING TO THE AO, THE DEMAT ACCOUNT OF THE ASSESSEE REFLECTS THAT ALMOST ALL THE SHARES ARE CREDITED IN APRIL, 2007 AND THEY WERE WI THIN A MAXIMUM PERIOD OF 5 DAYS. THUS, IN THE OPINION OF THE AO, THE ASSESSEE HAS NOT EARNED ANY LONG TERM CAPITAL GAIN, WHICH IS EXEMPT FROM TAX. HE WORKED OUT AN AMOUNT OF RS.6,98,606/- AS UNEXPLAINE D INVESTMENT AND MADE ADDITION UNDER SECTION 69B OF THE INCOME TAX A CT. THIS AMOUNT HAS BEEN WORKED OUT AFTER DEBITING PURCHASE PRICE O F RS.1,97,890/- OUT OF SALE PRICE OF RS.8,69,496/-. BEFORE THE LD.CIT( A), IT WAS CONTENDED THAT THE ASSESSEE HAD MADE PURCHASES FROM SWAN SECU RITIES PVT. LTD. WHICH IS DULY REGISTERED WITH SEBI AND CONCERNED ST OCK EXCHANGE. ALL THE PURCHASES ARE SUPPORTED BY BILLS, GIVING FULL D ETAILS AS TO THE NAME OF SCRIPS, QUANTITY, PRICE, TOTAL PURCHASE CONSIDER ATION, BROKERAGE, BILLS OF BROKERS ETC. THE PURCHASES WERE MADE AT THE PRE VAILING MARKET RATE AS QUOTED BY THE RECOGNIZED STOCK EXCHANGE. THE RE LEVANT QUOTES WERE PRODUCED BEFORE THE AO. THE PURCHASE PRICE OF THE SHARES IS PROVED AND THERE IS NO DISPUTE ABOUT THE SOURCE OF PAYMENT . THE BROKER HAS CONFIRMED THE TRANSACTIONS IN RESPONSE TO THE QUERY RAISED UNDER SECTION 133(6) OF THE ACT BY THE AO. THE BROKER HA S ALSO GIVEN AN EXTENSIVE REPLY. ALL THE PAYMENTS WERE MADE TO THE BROKERS THROUGH ACCOUNT PAYEE CHEQUES. ACTUAL DELIVERIES WERE TAKE N BY THE ASSESSEE IN ITS DEMAT ACCOUNT MAINTAINED WITH M/S.MOTILAL OSWAL SECURITIES LTD. COPIES WERE ALSO PRODUCED IN THE RECORD. THE LD.FI RST APPELLATE AUTHORITY HAS REJECTED THE CONTENTIONS OF THE ASSES SEE BY GIVING FOLLOWING REASONS: IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 13 A) THE SHARES CLAIMED TO HAVE BEEN PURCHASED THROU GH SWAN SECURITIES P.LTD. WERE PURCHASED UN 1.4.2005 AND 11 .4.2005 NO PAYMENT IS MADE UPTO 31,3.2006 AND FROM THE COPY OF THE ACCOUNT OF THE SUBSEQUENT PERIOD, IT IS CLEAR THAT THE PAYMENT WAS MADE AFTER SALE OF THESE SHARES THROUGH ANOTHER BRO KER MOTILAL OSWAL SECURITIES LTD. B) NO DEMAT ACCOUNT OF SWAN SECURITIES P.LTD. OR TH E APPELLANT WAS PRODUCED BEFORE THE ASSESSING OFFICER TO PROVE THAT THE PURCHASES OF SHARES WERE POOLED IN THE DEMAT ACCOUN T OF THE BROKER IN THE MONTH OF APRIL,2005. C) COPY OF THE DEMAT ACCOUNT OF MOTILAL OSWAL SECU RITIES LTD. CLEARLY PROVES THAT THE SHARES WERE CREDITED IN THE ACCOUNT OF BROKER FROM APRIL,2007. IN THE DEBIT SIDE OF THE DE MAT ACCOUNT TRANSACTION REPORT INTER DEPOSITORY REFERENCE IS MA DE FOR THE SAME SHARES ON THE SAME DATE BUT -FROM WHICH DEPOSITORY ACCOUNT, THE SHARES WERE TRANSFERRED, WAS NEVER EXPLAINED BEFORE THE ASSESSING OFFICER OR DURING THE APPELLATE PROCEEDIN GS. D) THE PURCHASE OF SHARES IN THE MONTH OF APRIL,200 5 WAS NEVER DONE THROUGH RECOGNIZED STOCK EXCHANGE OR EVEN CONT RACT NOTE OF BROKER WAS NEVER PRODUCED BEFORE THE ASSESSING OFFI CER OR DURING THE APPELLATE PROCEEDINGS E) THE APPELLANT HAD NOT FILED ANY BALANCE SHEET FO R THE YEAR ENDED ON 31.3.2006 ALONGWITH THE ORIGINAL RETURN WH ICH REFLECTED THE INVESTMENT IN SHARES. IT IS CLEAR FROM THE COPY OF THE RETURN OF INCOME FILED DURING THE APPELLATE PROCEEDINGS BECAU SE AS PER LIST OF ENCLOSURES, THE BALANCE SHEET WAS NOT ENCLOSED W ITH THE RETURN. THE APPELLANT HAS MADE WRONG CLAIM THAT THE BALANCE SHEET AS ON 31.3.2006 ALONGWITH THE RETURN OF INCOME WAS FILED ON 31.07.2006 I.E. BEFORE THE DATE OF SEARCH. F) THE CLAIM OF THE APPELLANT THAT BROKER M/S.SWA N SECURITIES P.LTD. WAS REPUTED BROKER WORKING FOR MANY YEARS AN D DULY REGISTERED WITH STOCK EXCHANGE AND THE APPELLANT HA S NOT DEPOSITED ANY ADVANCE MONEY WITH THE BROKER BECAUSE THE TRANSACTION WERE CARRIED ON MUTUAL TRUST OF BUYER A ND SELLER, IS ALSO OF NO HELP TO THE APPELLANT BECAUSE HAD THE AP PELLANT SHOWN PURCHASE OF SHARES THROUGH M/S.SWAN SECURITIES P.LT D,, BUT IT SOLD THE SHARES THROUGH M/S.MOTIAL OSWAL SECURITIES LTD WHO IS ANOTHER BROKER. THE PAYMENT TO M/S. SWAN SECURITIES P. LTD. WAS REFLECTED IN THE LEDGER ACCOUNT OF M/S.SWAN SECURITIES P.LTD, ONLY AFTER REALIZATION OF SALE PROCEEDS OF SHARES SOLD THROUGH MOTIAL OSWAL SECURITIES LTD. THIS ALSO PROVES THAT SHARES WERE N OT POOLED IN THE DEMAT ACCOUT OF SWAN SECURITIES P. LID. IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 14 G) THE APPELLANT HAS UTTERLY FAILED TO PROVE THE SH ARE HOLDING FOR MORE THAN 12 MONTHS BY PRODUCING ANY OTHER CREDIBLE EVIDENCE IN THE FORM OF DEMAT ACCOUNT BY SHOWING PURCHASES OF S HARES IN THE DEMAT ACCOUNT OF THE APPELLANT OR BROKER AND PAYMEN T FOR THE PURCHASE OF SHARES IN THE NORMAL COURSE OF BUSINESS I.E. IN NORMAL TIME PERIOD. THE PURCHASES OF SHARES WERE ALSO NOT MADE THROUGH ANY OF THE RECOGNIZED STOCK EXCHANGE WHICH IS CLEAR FROM THE BILLS ISSUED BY M/S.SWAN SECURITIES P.LTD. ON WHICH THE B ILL DATES AND .THE SETTLEMENT DATE IS SAME AND SHARES WERE NOT PU RCHASED AND SETTLED THROUGH ANY STOCK EXCHANGE. 23. THE LD.COUNSEL FOR THE ASSESSEE HAS REITERATED THE CONTENTIONS AS RAISED BEFORE THE CIT(A). HE RELIED UPON THE ORDER OF THE ITAT PASSED IN ITA NO.3233 AND 3156/AHD/2010 IN THE CASE OF MAN OJKUMAR SARAWAGI HUF FOR THE ASSTT.YEAR 2007-08. HE CONTEN DED THAT ADDITION OF RS.22,93,718/- IN THE CASE OF ONE OF THE HUFS AS SOCIATED WITH GROUP CONCERN WAS MADE. THIS ADDITION WAS MADE ON ACCOUN T OF UNEXPLAINED CASH CREDIT IN THE BOOKS OF THE HUF THE ASSESSEE H AD PURCHASED SHARES FROM SWAN SECURITIES PVT. LTD. AND THESE WERE SOLD THROUGH THE BROKER, M/S. MOTILAL OSWAL SECURITIES. THE REVENUE HAS DOU BTED THE GENUINENESS OF THE TRANSACTION, BUT THE TRIBUNAL HA S ACCEPTED THE CONTENTIONS OF THE ASSESSEE, AND DELETED THE ADDITI ON. HE HAS PLACED ON RECORD COPY OF THE TRIBUNALS DECISION. 24. ON THE OTHER HAND, THE LD.DR RELIED UPON THE OR DER OF THE CIT(A). 25. BEFORE EMBARKING UPON THE OBJECTIONS RAISED BY THE REVENUE, WE WOULD LIKE TO MAKE REFERENCE OF THE OBSERVATIONS MA DE BY THE ITAT IN THE CASE OF MANOJKUMAR SARAWAGI (HUF) IN ASSTT.YEAR 2007-08. THE OBSERVATIONS OF THE TRIBUNAL READ AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE CLAIMED LONG TERM CAPITAL GAINS ON SALE OF SHARES. IT WAS CLAIMED THA T SHARES HAVE BEEN PURCHASED FROM BROKER M/S. SWAN SECURITIES PVT . LTD. IN APRIL, 2005. THE ASSESSEE FILED CONFIRMATION OF THE BROKER M/S. SWAN SECURITIES PVT. LTD. BEFORE THE ASSESSING OFFI CER WHO HAS CONFIRMED PURCHASE OF SHARES BY THE ASSESSEE THROUG H THEM IN IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 15 APRIL, 2005. COPY OF THE ACCOUNT WAS ALSO FURNISHED AND THE CONSIDERATION WAS MADE THROUGH BANKING CHANNEL. PB- 17 AND IS THE LEDGER ACCOUNTS OF THE PARTY TO CONFIRM PURCHAS E OF THE SHARES THROUGH BANKING CHANNEL. PB-9 IS DEBIT NOTE OF THE BROKER CHARGING INTEREST ON THE OUTSTANDING AMOUNT AGAINST THE ASSESSEE IN ACCOUNTING YEAR 2006-07. PB-17 IS LEDGER ACCOUNT TO SHOW THAT SHARES HAVE BEEN PURCHASED BY THE ASSESSEE IN APRIL , 2005 THROUGH THE BROKER M/S. SWAN SECURITIES PVT. LTD. P B-22 IS ALSO THE STATEMENT OF BILLS CONTAINING THE CLOSING BALAN CE OF THE SHARES PURCHASED BY THE ASSESSEE ON 31-03-2006. PB-12 TO 1 6 ARE THE BROKERS DEBIT NOTE TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT SHARES WERE PURCHASED IN APRIL, 2005. THE ASSESSEE ALSO FILED SALE BILLS TO SHOW THAT THE SAME SHARES WERE SOLD THROUG H THE BROKER M/S. MOTILAL OSWAL SECURITIES LTD. AND PAYMENTS HAV E BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES ON WHICH SEC URITY TRANSACTIONS TAXES AND STAMP DUTY HAVE BEEN PAID. T HE SAME IS SUPPORTED BY PB-2 WHICH IS LEDGER ACCOUNT OF THE BR OKER THROUGH WHOM SHARES WERE SOLD AT RS.16.42 LACS. PB-3 TO 7 A RE THE BROKERS CONTRACT NOTE TO SHOW THAT SHARES WERE SOLD IN MARCH, 2007. COPY OF THE BANK STATEMENT WAS FILED IN SUPPO RT OF THE CONTENTION. PB-22 IS THE BALANCE SHEET OF THE ASSES SEE AS ON 31- 03-2006 TO SHOW OUTSTANDING LIABILITY IN THE NAME O F M/S. SWAN SECURITIES PVT. LTD. THROUGH WHOM SHARES WERE PURCH ASED. THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 U/S 14 3(3) OF THE IT ACT PASSED AFTER SCRUTINY IN WHICH RETURNED INCO ME IS ACCEPTED ON FURNISHING THE DOCUMENTS ON THE RECORD OF THE AO . THEREFORE, IT IS UNBELIEVABLE THAT THE ASSESSEE WOULD NOT HAVE FI LED THE PROFIT & LOSS AND BALANCE SHEET FOR THE ASSESSMENT YEAR 2006 -07 BEFORE THE AO. WE MAY FURTHER NOTE THAT THE AO IN THE ASSE SSMENT ORDER MERELY HOLDING THAT PURCHASES ARE NOT GENUINE PRESU MED THAT SALES OF THE SHARES ARE BOGUS. THE AO HAS NOT MENTI ONED EVEN THE NAME OF THE BROKERS IN THE ASSESSMENT ORDER THR OUGH WHOM THE SHARES HAVE BEEN SOLD. THE AO IGNORED ALL THE D OCUMENTARY EVIDENCES ON RECORD IN RESPECT OF THE SALES OF THE SHARES. SINCE NOTHING IS MENTIONED IN THE ASSESSMENT ORDER WITH R EGARD TO SALE OF THE SHARES BY THE ASSESSEE THROUGH BROKER, THERE FORE, SALE OF THE SHARES IS NOT DOUBTED BY THE AO. SINCE THE ASSE SSEE PROVED THE SOURCES OF THE SALE PROCEEDS OF THE SHARES THRO UGH IDENTIFIED PARTY WHO HAS ALSO ACKNOWLEDGED THE SAME, THEREFORE , NO ADDITION U/S 68 COULD HAVE BEEN MADE AGAINST THE AS SESSEE UNLESS PURCHASES OF THE SHARES ARE MADE, SALES COUL D NOT BE DOUBTED BY THE AO. THEREFORE, THERE IS NO UNDISCLOS ED CASH CREDIT INVOLVED IN THIS CASE AND AS SUCH THE LEARNED CIT(A ) RIGHTLY HELD THAT THE SALE PROCEEDS OF THE SHARES CANNOT BE TERM ED AS UNEXPLAINED CASH CREDIT. THE COO-ORDINATE BENCH IN THE GROUP CASES OF SMT. VIMLABRANI BIHARILAL BATRA AND OTHERS (SUPRA) CONSIDERING THE IDENTICAL ISSUE IN THE LIGHT OF THE CASE LAWS RELIED IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 16 UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE DELETE D SIMILAR ADDITION AND HELD IN PARA 10 AND 11 OF THE ORDER DA TED 16- 09- 2011 AS UNDER .. : 26. THE CASE OF THE ASSESSEE IS THAT IT HAS PURCHAS ED SHARES FOR CONSIDERATION OF RS.1,97,890/- PERTAINING TO THREE COMPANIES ON 1.4.2005 AND 11.4.2005 THROUGH SWAN SECURITIES PVT. LTD., MEANING THEREBY, THE SHARES WERE NOT PURCHASED FROM STOCK M ARKET, BUT, THEY WERE PURCHASED OFF-LINE. ACCORDING TO THE ASSESSEE , THESE SHARES WERE CREDITED TO ITS DEMAT ACCOUNT MAINTAINED WITH M/S.M OTILAL OSWAL SECURITIES LTD. IN THE MONTH OF APRIL, 2007, AND TH EREAFTER, THESE SHARES WERE SOLD. THE ASSESSEE HAD COMPUTED LONG TERM CAP ITAL GAIN ON THE SALE OF THESE SHARES AND CLAIMED EXEMPTION OF RS.7, 61,589/-. THE AO HAS REJECTED THE CLAIM OF THE ASSESSEE. IN SUPPORT OF ITS CLAIM, THE ASSESSEE HAS SUBMITTED THE CONFIRMATION FROM THE BR OKER, COPY OF THE BILL RAISED BY THE BROKER, DETAILS OF PAYMENTS THRO UGH ACCOUNT PAYEE CHEQUES, RECEIPT OF SALE PROCEEDS THROUGH ACCOUNT P AYEE CHEQUES. THE AO HAD ISSUED SUMMONS UNDER SECTION 133(6) TO SWAN SECURITIES PVT. LTD. WHO HAS CONFIRMED THE TRANSACTION AND SUBMITTE D REQUISITE DETAILS. ACCORDING TO THE ASSESSEE, IT HAS SHOWN INVESTMENT OF THESE SHARES IN THE BALANCE SHEET AS ON 31.3.2006 WHICH WERE FILED ALONG WITH RETURN OF INCOME FILED ON 31.7.2006, I.E. BEFORE THE DATE OF SEARCH. IT IS ALSO PERTINENT TO NOTE THAT THESE SHARES WERE SOLD BEFOR E SEARCH AND CAPITAL GAIN WAS SHOWN IN THE RETURN. THE COPY OF THE DEMA T ACCOUNT OF THE ASSESSEE ALSO SHOWS THAT SOME PART OF THE SHARES PU RCHASED HAVE BEEN RECEIVED IN THE DEMAT ACCOUNT OF THE ASSESSEE AND H AVE BEEN LATER ON SOLD THROUGH M/S.MOTILAL OSWAL SECURITIES LTD. IN T HE BOMBAY STOCK EXCHANGE. THE CASE OF THE REVENUE, ON THE OTHER HA ND, IS THAT THE ASSESSEE DID NOT MAKE PAYMENT OF PURCHASE PRICE BEF ORE 31.3.2006. THUS, IT GIVES A SUSPICION ABOUT THE GENUINENESS OF THE TRANSACTION. THE SECOND REASONS ASSIGNED BY THE LD.CIT(A) IS THAT TH E ALLEGED BALANCE SHEET WAS NOT ANNEXED WITH THE RETURN FILED ON 31.7 .2006, BECAUSE, NOTHING IS MENTIONED TO THIS EFFECT IN THE LIST OF ENCLOSURES. ON AN IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 17 ANALYSIS OF THE OBJECTIONS POINTED OUT BY THE LD.CI T(A) EXTRACTED SUPRA, WE FIND BASICALLY TWO CIRCUMSTANCES ARE BEING HIGHL IGHTED AGAINST THE ASSESSEE FOR DOUBTING ITS CLAIM OF LONG TERM CAPITA L GAIN. THE FIRST CIRCUMSTANCE IS THAT PAYMENT OF PURCHASE PRICE WAS NOT MADE BEFORE 31.3.2006. THE CONTENTION OF THE ASSESSEE IS THAT IT HAS ORDERED FOR THE PURCHASE OF SHARES AND PURCHASE WAS MADE ON ACCOUNT OF MUTUAL TRUST THAT PAYMENT WILL BE MADE. THESE HAVE ACTUALLY BEE N MADE BY THE ASSESSEE LATER ON. THUS, THIS IS NOT SUCH AN ISSUE WHICH CAN DOUBT THE VERY TRANSACTION. THE NEXT REASON ASSIGNED BY THE LD.CIT(A) IS THAT THE ASSESSEE HAS NOT MADE DEPOSIT OF ADVANCE MONEY WITH THE BROKER. TO OUR MIND, THESE CIRCUMSTANCES HIGHLIGHTED BY THE RE VENUE ARE OF PERIPHERAL IN NATURE. ONCE THE ASSESSEE HAS BEEN P LEADED THAT IT HAS MADE PURCHASE OF SHARES THROUGH SWAN SECURITIES PVT . LTD. AND SWAN SECURITIES PVT. LTD. HAS TRUST IN THE ASSESSEE OF P AYMENT, THEN ACTUAL PAYMENT NOT MADE BEFORE 31 ST MARCH WOULD NOT CREATE ANY DENT IN THE TRANSACTION OF THE ASSESSEE. THE LD.AO FAILED TO P OINT OUT ANY DEFECT IN THE CONFIRMATION OF SWAN SECURITIES PVT. LTD. OR AN Y DOCUMENTS FURNISHED TO HIM IN RESPONSE TO HIS QUERY UNDER SEC TION 133(6) OF THE ACT. THE SHARES HAVE ACTUALLY BEEN SOLD BY THE ASS ESSEE. IT MEANS IT MUST HAVE BEEN PURCHASED. THE PURCHASE AND SALE BO TH HAPPEN BEFORE THE DATE OF SEARCH. THERE CANNOT BE ANY SPECIFIC R EASON FOR THE ASSESSEE TO MAKE SUCH A CLAIM AFTER THE SEARCH, BEC AUSE NOTHING DISCRIMINATORY QUA THIS TRANSACTION WAS FOUND. IF THE SWAN SECURITIE S PVT. LTD. HAS CONFIDENCE OF RECOVERY OF ITS AMOUNT INCURRED FOR PURCHASE OF SHARES AT THE INSTRUCTIONS OF THE ASSESSEE, THEN , MERELY ON ACCOUNT OF THE REASON THAT PAYMENT WAS OUTSTANDING, TRANSACTIO N CANNOT BE DOUBTED. THE PAYMENT HAS BEEN SUBSEQUENTLY MADE RE FLECTS THE RELATIONSHIP BETWEEN SWAN SECURITIES PVT. LTD. AND THE ASSESSEE. UNDER SIMILAR CIRCUMSTANCES, THE ITAT HAS DELETED THE ADD ITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT IN THE CAS E OF MANOJKUMAR SARAWAGI-HUF (SUPRA). THOUGH THIS DECISION HAS NOT LAID DOWN ANY PROPOSITION OF LAW, IT HAS BEEN PUT IN SERVICE SIMP LY IN ORDER TO IT(SS)A NO.539 AND 540/AHD/2011 (2 OTHERS) 18 CORROBORATE THAT SWAN SECURITIES PVT. LTD. AND M/S. MOTILAL OSWAL SECURITIES LTD. ARE GENUINE BROKERS DEALING IN SHAR E TRANSACTIONS. 27. TAKING INTO CONSIDERATION ALL THE FACTS AND CIR CUMSTANCES, WE ALLOW BOTH THE GROUNDS OF APPEAL RAISED BY THE ASSE SSEE, AND THE DIRECT THE AO TO ACCEPT THE CLAIM OF LONG TERM CAPITAL GAI N MADE BY THE ASSESSEE. 28. IN THE RESULT, APPEALS OF THE ASSESSEE AND THAT OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 30 TH SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER