The Asstt.Commissioner of Income Tax Central Circle-1(2), Ahmedabad V. Kanchanbhai Baldevbhai Patel, Ahmedabad

ITSSA 72/AHD/2021

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8335 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-03-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-12-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Fair market value; Set aside; Capital Gains
• Section: 132; 13

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ायपी ‘A’ अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER IT(SS)A No. 72/Ahd/2021 िनधा榁रण वष榁/Assessment Year: 2010-11 Asstt. Commissioner of Income-tax, Central Circle – 1(20, Ahmedabad Vs. Kanchanbhai Baldevbhai Patel, 9, Pariseema Complex, C.G. Road, Navrangpura, Ahmedabad PAN : AEIPP 6465 Q अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri K.C. Thaker, AR Revenue by : Shri Akhilendra Pratap Yadav, CIT-DR सुनवाई क琉 तारीख/Date of Hearing : 11.12.2023 घोषणा क琉 तारीख /Date of Pronouncement: 08.03.2024 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: The present appeal has been preferred by the Revenue against the order of the learned Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as “CIT(A)” for short) dated 19.03.2021 passed u/s 250(6) of the Income-tax Act, 1961 (hereinafter referred to as “the Act” for short) for Assessment Year (AY) 2010-11. 2. The grounds raised are as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of the claim of set off of short term capital loss of Rs. 12.60 Cr. against LTCG on sale of land, holding that the Assessing Officer has not made out case for disbelieving, without appreciating the fact that the assessee has grossly failed to explain the genuineness of the short term capital loss and the source of investment made as well as the variation of the price in shares of Fuji Marketing Pvt. Ltd., a company run by the family of the assessee, within a short span of time. 2 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.Ο. 3. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.” 3. The solitary grievance of the Revenue is against the deletion of disallowance made by the Assessing Officer of Short Term Capital loss claimed by the assessee amounting to Rs.12.60 Cr. 4. The facts, as emanates from the orders of the authorities below, are that a search u/s 132 of the Act was conducted in the case of Maruti-Savvy Group of cases on 27.04.2011 and K.B. Zaveri Group was one of the sub-groups covered under the said search. The sub-group is noted to be involved in jewellery business and the assessee before us is the main person of the group and runs a jewellery shop as a proprietorship concern under the name and style of M/s. K.B. Zaveri along with his sons Shri Kandarp K. Patel and Shri Yagnesh K. Patel. During the impugned year, the assessee had returned Long Term Capital Gain on sale of land amounting to Rs.11,86,54,772/-. Against the said gain, the assessee had set off of Short Term Capital Loss on sale of shares amounting to Rs.12.60 Crs. Thus, the entire Long Term Capital Gain was wiped off by the Short Term Capital Loss on sale of shares resulting in no taxes being paid by the assessee on the capital gain transaction. The Assessing Officer found that the Short Term Capital Loss of Rs.12.60 Crs. claimed by the assessee was bogus and was a premeditated transaction contrived by the assessee merely for the purpose of setting off the entire capital gains earned by the assessee on sale of land. Accordingly, he disallowed the Short Term Capital Loss claimed by the assessee of Rs.12.60 Crs. treating it to be bogus. 5. The ld. CIT(A), however, held that the Short Term Capital Loss of the assessee was genuine and reversed the order of the Assessing Officer allowing 3 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 the claim of Short Term Capital Loss of Rs.12.60 Crs. to the assessee. Aggrieved by this order of the ld. CIT(A), the Revenue has now come up in appeal before us. 6. The primary argument of the ld. DR before us was that despite the Assessing Officer having conducted deep inquiry and investigation on the genuineness of the assessee’s claim of short term capital loss on sale of shares including recording the statement of the assessee and finding no plausible reply given by the assessee, the ld. CIT(A) has totally ignored all the findings of the Assessing Officer and on the basis of his own appreciation of the facts of the case before him, he allowed the assessee’s appeal without even confronting the Assessing Officer with his understanding of the facts of the case despite the fact that they were contrary to findings of the Assessing Officer. 7. The contention of the ld. Counsel for the assessee, on the other hand, was that the ld. CIT(A) had acted in accordance with the coterminous power that he had with that of the Assessing Officer, and therefore, the contention of the ld. DR needed to be rejected and the order of the ld. CIT(A) be upheld. 8. We have heard the contentions of both the parties and carefully gone through the orders of the authorities below, more particularly the specific portions of the order which were pointed out to us during the course of hearing before us. The ld. DR pointed out to us from the assessment order that the Assessing Officer arrived on his finding that the Short Term Capital Loss of Ra.12.60 Crs. claimed by the assessee on the sale of shares was bogus, finding that:- (i) the loss was incurred on sale of shares of only one entity i.e. M/s. Fuji Marketing Pvt. Ltd. which company was controlled by the assessee 4 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 along with his son, both being the shareholders and directors of the company; (ii) the assessee had bought 1,40,000 shares of the said company @ Rs.1000/- per share and sold it for Rs.100/- per share within a short span of three months without any justification for either the huge premium of Rs.990/- at which it was bought (Rs.990 + Rs.10 = Rs.1000) or for the sharp drop in its value to Rs.100/- within a short span; (iii) the Assessing Officer had noted that between the date of the last transaction of share purchased at Rs.1000/- on 4 th March 2009 and its sales subsequently on 18 th March 2009 for Rs.100/- there was barely a difference of 15 days and no justifiable reason given by the assessee for this sharp drop in the price of shares; (vi) the Assessing Officer had even noted the fact that all the funds infused by the assessee for investment in the purchase of these shares had been routed back to him through a circular route; 9. That considering all the facts as above, the Assessing Officer had held the transaction to be a make-believe transaction and, therefore, a bogus loss contrived by the assessee solely for the purpose of setting off of its Long Term Capital Gain earned by the assessee on sale of land to the tune of Rs.11.86 Crs. He drew our attention to the findings of the Assessing Officer at paragraph No.5.2 of the order pointing out there from the facts noted by the Assessing Officer that the loss was incurred by the assessee on sale of shares of M/s Fuji Marketing Pvt. Ltd (a group company) whose shares were purchased by the assessee at a premium of Rs.990/- per share, for a price of Rs.1000/- per share, in three tracts ,on 26.08.2009, 29.01.2009 and 04.03.2010, resulting in a total consideration of Rs.14 Crs. for the purchase of shares and further noting the 5 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 fact that there were immediately thereafter on 18.03.2010, sold it for a price of Rs.100/- per share i.e. a total consideration of Rs.1.40 Crs., resulting in a loss of Rs.12.60 Crs. That the assessee and his son Shri Yagnesh K. Patel were the majority shareholders/key persons of the company whose shares were so transacted him, i.e. M/s. Fuji Marketing Pvt. Ltd. 10. The ld. DR drew our attention thereafter to paragraph No. 5.3 of the order wherein the statement on oath recorded of the assessee u/s 132(4) of the Act was reproduced and pointed out there from that on the specific query raised to him seeking justification for the high premium on which the shares were purchased as also justification for their sale at a considerably low price in a short span of three months was specifically raised and no plausible reply was given by the assessee, giving only general explanation for the same. He drew our attention more particularly to question Nos. 6-11 in this regard as under: “Q.6 What prompted you to invest such a huge amount of Rs. 14 Crores at a premium of 990 Rs. per share (i.e. 99 time the face value) of a company having a turnover of only Rs. 65 lacs? Ans. Due to the existing net worth of the company and good track record of the profit and minimum risk involved in the business of the company and good prospect of the company. I was tempted to invest at such a high premium and such a huge amount in this high potential company. Q.7 If, as you mentioned in your answer above, the prospects and track record of M/s Fuji Marketing Pvt. Ltd. Was so bright and the risk involved was minimum which tempted you to make such a huge investment at an extremely high and uncommon premium; what made you sale the shares of this "high potential" company at a loss of 12.6 Crores within a short period of time thereby forfeiting the high premium of Rs.990 per share. Ans. Ultimately I found that I could not get the return as per my expectation and being a Pvt. Ltd. Company it is difficult to sell the share outside and I want to get out of this investment even by incurring a loss I sold the shares to my son Shri Kandrap K. Patel at Rs. 100/- per share in March 2010. 6 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 Q.8 What were your expectation from the company while making the investment and what made you realize that you would not get the expected return which ultimately force you to incurred a loss of Rs. 12.6 Crores (Which is 90% of your total investment of Rs. 14 Crores) within a short span of time? Ans. Management was thinking to diversify into any capital-intensive profitable business for the company but after due market survey company could not found any such type of the business hence, I compelled to take the exits from the investment of the company.. Q.9 You have mentioned in answer of the Q. no. 5 above that you and your son Shri Yagnesh Patel comprise the management of the company. In your answer of q. no. 8 above you mentioned that "Management was thinking to diversity into any capital intensive profitable business for the company but after due market survey company could not found any such type of the business." It means that you yourself, as the director of the company had a idea about the bleak prospects of diversification. As an individual investor, you could have made the investment in your company only after conformation of prospective diversification. On one hand you are saying that the company had good prospects, you were a part of the management and on the other hand after making a investment you say that the prospects became poor and diversification plan failed and this compelled you to make an exist a huge loss. Please explain this contradiction. Please also provide proof of the plan of diversification by the company (as you were a part of the management) and also the failure of the plan after market survey. Ans. All the time it is not necessary that business plan of any businessman or market survey conducted by any businessman can be converted into actual execution because now a day all markets are volatile and depend upon number of factors. Hence, this happens in case of the company also that it could not execute its ideas and business plan. The plan on the basis of decoction of the management. Q.10 It is seen from the schedule of investment made by you in M/s Fuji Marketing Pvt. Ltd. (in answer no.4 above) that the last investment of Rs. 2 Crores was made in 4th March 2010 and you sold the shares of the company to your son on 18th March 2010 itself. How did you realize that the scope of diversification has become non viable in such a short time (2 weeks) despite being a part of management and a prudent investor. Please explain this discrepancy. Ans. I stand by my earlier reply give in Q. no. 8 & 9. 7 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 Q.11 Have you ever made a similar high value, high premium investment in any other company (listed/unlisted, private/public)? Ans. No.” 11. He thereafter drew our attention to the assessee being confronted with the fact that the funds invested for the purchase of these shares were routed back to the assessee to which the assessee had no reasonable explanation. Our attention was drawn to question Nos. 12 to 15 in this regard as under: “Q. 12 what was the source of your investment of Rs. 14 Crores in the company M / s Fuji Marketing Pvt. Ltd? Ans. The major source of investment was unsecure loans from K. B. Patel HUF (i.e. my HUF) and withdrawal from my proprietor concern K. B. Zaveri and M/s K. B. Zaveri Exports in which I am partner. I am submitting details of my investment and source as Annexure-1. Q.13 On a perusal of the submission given by you (Annexure-1) it is seen that you have made and investment of Rs. 2 Crores on 04.03.2010 in M/s Fuji Marketing Pvt. Ltd. The bank account of M / Fuji Marketing Pvt. Ltd. (A/c No. 86508, Union Bank of India) reveal that Rs. 2 Crores was received on 04.03.2010 from your a/c (A/c no.7801, Union Bank of India) and on the very same day i.e. on 04.03.2010 the exact amount of Rs. 2 Crores is transferred to A/c no. 86440 Union Bank of India of M/s K. B. Zaveri exports (your partnership firm). A perusal of bank statement of A/c no. 86440 reveal that immediately after receiving the fund of Rs. 2 Crores from M/s Fuji Marketing Pvt. Ltd, on 04.03.2010, the entire amount of Rs. 2 Crores is transferred on the same date i.e. 04.03.2010 to another account of M/s K. B. Zaveri exports (A/c No. 86430, Union Bank of India) immediately thereafter this fund of Rs,.2 Crores is transferred on the same date i.e. 04.03.2010 back to you original account i.e. A/c no. 7801, Union Bank of India. What do you have say about this circular routing of funds. Ans. It was a temporary parking of the fund till the company M/s Fuji Marketing Pvt. Ltd deploy its fund permanently in any project/business as explained earlier. Q.14 A similar trail of fund flow can be seen for the other investment made by you in M/s Fuji Marketing Pvt. Ltd. What do you have say about this? Ans. Same as explain in reply in Q. no. 13 above. 8 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 Q.15 The funds invested by you in your company M/s Fuji Marketing Pvt. Ltd as share application money immediately comes back to you after routing through bank account of you related concerns within a day or two of your investments. And you call the system temporary parking of funds. This systems of temporary parking of funds goes on till the fag end of the F.Y. until you decide to sell the shares to your son at a huge loss thereby generating short term capital loss of 12.6 Crores which helps you to set it off against your long term capital gains resulting in no tax liability. Therefore, it appears that the entire transaction have been manufactured to avoid payment of capital gain tax. What do you have say about this. Ans. To happen a profit or loss is totally a commercial decision and transaction of the businessman, my said profit and loss is also a part of my commercial decision, which all the times may or may not be converted in to profit. Hence, this transaction is not a part of any tax panning but my own commercial decision.” 12. The ld. DR drew our attention to the inferences drawn by the Assessing Officer from the above recorded at paragraph No. 5.4 of the order as under:- “5.4. The above statement given by the assessee clearly establishes the following: a) The assessee and his son, Sri Yagnesh K Patel, are the directors and shareholders of M/s Fuji Marketing Pvt Ltd. b) The assessee bought the shares at a huge premium without any basis merely with the intention of creating short-term capital loss. c) The assessee sold the shares to his son, Sri Kandarp K Patel, at abnormally low price to book the short-term capital loss. d) All these transactions were premeditated to coincide with the long-term capital gain that resulted to the assessee on sale of above mentioned lands.” 13. He further drew our attention to paragraph Nos. 5.6 to 5.6.4 of the order pointing out that the Assessing Officer had, from his investigation, found that all the funds invested by the assessee in the purchase of these shares were routed back to him in a circular fashion, and, therefore, with no justification of the high price for which the shares were bought or the low price at which 9 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 it was sold within a short span of time of a company in which the assessee was interested and also noting the fact that all the funds invested by the assessee came back to him through a circular route, the Assessing Officer arrived at a finding that it was all bogus short term capital loss booked by the assessee contrived only for the purpose of setting off of the long term capital gain earned from the sale of land. 14. Having said so, the ld. DR drew our attention thereafter to the findings of the ld. CIT(A) and specifically drew our attention to paragraph No.8.1 of the order. Pointing out to the same, he contended that the first basis with the ld. CIT(A) for holding that the Assessing Officer’s order was incorrect was his finding of fact that the assessee had routed back not the entire amount of investment of Rs.14 Crs., but only Rs.5.90 Crs. Paragraph No.8.1 of the ld. CIT(A)’s order reads as under:- “8.1 It is true that the loss in the transaction of purchase and sale of shares has happened in the same year in which the appellant also earned LTCG of nearly the same amount leading to claim of set off, but this fact can at best raise doubt in the mind of the AO and call for the proper scrutiny. The AO's efforts on this score have only led to the finding that out of total investment of Rs.14 Crores, only Rs.5.90 Crores seem to go back to the appellant's account by way of rotation thorough the accounts of sister concerns. Even here, the appellant submits that the mere fact that the entries moved through these accounts to find its way to appellant's account is not enough because the payment towards sale of shares received by FMPL has gone to another account and from that account to still another sister concern and finally to the appellant's account, the AO has not shown that such movement of funds was only for rotation and for no other requisite purpose. It is also submitted that the AO is not justified in using such inconclusive finding involving only Rs.5.90 crores against total investment of Rs.14 crores to record the finding that the funds have rotated and come back to the appellant.” 15. The ld. DR pointed out that the ld. CIT(A) held so accepting the contention made by the ld. Counsel for the assessee before him. It is reproduced at page No.19 of the order as under:- 10 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 “We submit that the story of so-called rotation of funds in the pictorial depiction covers the payment of Rs.5.90 Crs. out of total payment of Rs.14 Crs. made by the appellant. Even here, taking the first item of payment by the appellant to FMPL of Rs.55 Lacs the AO shows that FMPL paid Rs.1.50 Crs. to a concern, K. B. Zaveri Exports. Simply because the payment of Rs.1.50 Crs. has been made by FMPL to K. B. Zaveri Exports the learned AO concludes, without any material brought on record and merely by his assumption that this was for the purpose of rotation of funds back to the appellant. The AO has not thought it fit to bring on record material to substantiate his theory of rotation to conclude that the payments by FMPL to K. B. Zaveri Exports were for no other purpose but to get the funds back to the appellant. It would thus be seen that the AO has not made out his case of rotation of funds.” 16. The ld. DR contended that the AO having categorically found all the funds invested by the assessee in the purchase of shares of M/s. Fuji Marketing Pvt. Ltd.to have been routed back to him in a circular manner, the ld. CIT(A) had accepted the contentions of the assessee to the contrary without even confronting the same to him or seeking his report on the same. The contention of the assessee was contrary to the facts found by the Assessing Officer and the ld. CIT(A) was duty bound to get the same verified by the Assessing Officer before agreeing to the same, the Ld.DR contended. Besides, he stated that the ld. CIT(A) thereafter found that there was no reason to disbelieve the transaction entered into by the assessee or treat it as bogus since it was all done through banking channel and carried out as per the requirements of law, that the Assessing Officer’s observations of huge premium on purchase of shares and sale of the same at abnormally low price was vague, and appreciating other contentions of the assessee that in a private company, sale of shares can take place only with willing buyer and no stranger comes forward to purchase the shares. He drew our attention to paragraph No.8.2 to 8.7 of the order as under:- “8.2 The appellant has also submitted that the AO has accepted the fact that these transactions of purchase and sale of shares have taken place by the appellant. These transactions have been lawfully carried out as per the 11 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 requirements of the Company Law and payments have actually been made on purchase and received on sale through banking channels. Relevant entries have been passed in the accounts. The AO has not doubted the validity of transactions or the accounting entries. There is therefore no valid reason to disbelieve the loss incurred by the appellant. The AO has not looked into legal documents like transfer forms, payment of ROC fees, purchase price etc. or evidence of payment. The AO has not a word on these factual aspects of the case. The AO has also disregarded the relevant ledger accounts reflecting the entries regarding the purchase/sale and not recorded any finding about this evidence. The above transactions of purchase and sales are supported with the documents like share application money, bank account evidencing the payment for the purchases and receipts of sales etc. 8.3 The AO's observation that the purchase was made at a huge premium' and the sale was at an 'abnormally low price' is of no consequence because it is vague. There are no legal limitations in fixing the prices of shares and it is open to parties to decide it. The appellant has also mentioned that the provision for fixing FMV in such cases has been inserted in the I. T. Act, 1961, through S.56(2)(viib) with effect from 01-04-2013. It is submitted that the AO has not even attempted to show what could be the right amount of premium or normal sale price. These amounts of sale price and purchase price determine the loss, and therefore without coming to any definitive conclusion on this score the loss claimed could not be disbelieved. 8.4 The appellant has submitted that the transaction of sale of a group private limited company can take place only with willing buyer and no stranger would come forward for the purchase of shares. It is submitted there is no prohibition against making sale to a relative. 8.5 The appellant submits that the AO has sought to brand the lawfully carried out transactions supported by documentary evidence filed with the Registrar of companies and actual payments made and received through banking channels, as 'colourable device' and the loss as 'created', without any justification and valid reasons. The AO has sought to make the disallowance on such base-less branding of the legally unassailable transactions. 8.6 I find force in the appellant's submission that the appellant had every right to effect sale of shares in the same year resulting in short term capital loss becoming available for set off against the LTCG, as a commercial decision to derive lawfully available advantage. Appellant submits that even if the shares were sold one month after, there was no chance of getting higher price and the advantage of set off would have been lost. Therefore, the appellant's right to arrange his commercial affairs so as to earn more or to lawfully reduce loss or to reduce tax liability cannot be questioned. 12 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 8.7 The appellant has also submitted in his written submission that the appellant's son who bought the shares at Rs.100/- per share, was still holding the shares even after 7 years. It is further informed that the book value of the /shares as on 31-03-2017 was Rs.253/- per share, giving annualized appreciation in 7 years of 22%.” 17. The ld. DR contended that all these findings of ld. CIT(A) are misconceived and it is settled law that the entire facts and circumstances of the case have to be considered and a transaction cannot be held to be genuine merely on the base of documents filed. He pleaded therefore that the order of the Ld.CIT(A) allowing assesses claim of short term capital loss be not upheld. The ld. Counsel for the assessee, however, relied on the order of the ld. CIT(A) and supported the same. 18. Having heard both the parties, we find merit, in the contention of ld. DR. As pointed out to us from the assessment order, the Assessing Officer had conducted thorough enquiry on the transaction of sale of shares of M/s. Fuji Marketing Pvt. Ltd. by the assessee during the year which had resulted in a loss of Rs.12.60 Cr. and had noted certain pertinent facts in the same leading to his finding that the loss was bogus and contrived by the assessee by way of a premeditated transaction. He found the shares being purchased at a very high premium and being sold at an abnormal low price – that too of an entity/company in which the assessee had controlling interest and there was no justification for the prices at which the shares were bought and sold. We have noted the Assessing Officer even found as a matter of fact that the amount introduced by the assessee for investment in these shares was entirely routed back to him through a circular route and he has given detailed finding in this regard in his order with complete facts. Clearly, the Assessing Officer had made the disallowance of the Short-Term Capital Loss on shares finding the impugned transaction to be dubious and a make believe transaction, 13 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 appreciating the entire conspectus of the facts before him. The ld. CIT(A) has allowed the assessee’s appeal finding that (i) not the entire amount of investment in shares has routed back to the assessee, (ii) that the assessee’s transaction of purchase and sales of shares is through banking channel in compliance with the provisions of law and (iii) the Assessing Officer’s basis for holding the price at which the shares bought and sold to be unjustified was vague. In all the three counts, we are unable to agree with the ld. CIT(A). The AO has held the transaction make believe considering all the surrounding facts and circumstances in which it was entered and despite the same having been done through banking channels in compliance with law. Without controverting any of the adverse facts relied upon by the AO while finding the transaction bogus, the Ld.CIT(A), we hold, was wrong in treating the transaction genuine merely because it was done through banking channels and incompliance with law. The fact that the unreasonable prices at which the shares were bought and sold within a very short span of time, which even the assessee was unable to justify on a cogent basis, the fact that the money invested by the assessee was found routed back to him have all been conveniently ignored and given a goby by the Ld.CIT(A) while finding the transaction to be genuine. It is the surrounding facts of the transaction which have led the AO to find the same to be contrived and without controverting the facts pertaining to the same, the Ld.CIT(A), we hold, could not have held the transaction to be genuine . 19. Coupled with this is the fact that the Assessing Officer found all the money invested by the assessee in the purchase of shares to be routed back to him. The ld. CIT(A), on the contrary, finds that only part of the money was routed back. This finding is based merely on appreciating the contentions made by the assessee before him. Before arriving at a contrary finding on fact, the ld. CIT(A) was duty bound to confront the same to the Assessing Officer 14 IT(SS)A No. 72/Ahd/2021 ACIT Vs. Kanchanbhai Baldevbahi Patel AY : 2010-11 for his verification, even if he has coterminous powers as that of the Assessing Officer, since the Assessing Officer is one of the parties before him in appeal. It is his order which is in appeal before him. The ld. CIT(A) was duty bound to seek the Assessing Officer’s report/ comment on facts contrary to that noted by the AO which were submitted by the assessee before him. We have noted that he has not given any finding on why the AO’s finding of all money routed back to the assessee was incorrect. But he has appeared to have simply accepted the assessee’s contention in this regard before him. 20. In the light of the above, we are unable to confirm the order of the ld. CIT(A) and consider it fit to restore the issue back to the ld. CIT(A) to first confront the facts pleaded by the assessee before him to the Assessing Officer and only thereafter proceed to adjudicate the issue in accordance with law. The appeal of the Department is, therefore, allowed for statistical purposes. 21. In effect, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 08/03 /2024 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 08/03/2024 **bt आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 灹瀄यथ牸灹瀄यथ牸 灹瀄यथ牸 / The Respondent. 3. संबंिधत संबंिधतसंबंिधत संबंिधत आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴 / Concerned CIT 4. आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴)अपील अपीलअपील अपील (/ The CIT(A)- 5. िवभागीय िवभागीयिवभागीय िवभागीय 灹ितिनिध 灹ितिनिध灹ितिनिध 灹ितिनिध ,आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण,/DR,ITAT, Ahmedabad, 6. गाड榁 गाड榁गाड榁 गाड榁 फाईल फाईलफाईल फाईल /Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण ITAT, Ahmedabad