TaxTMI 
TaxTMI 
2005 (11) TMI 379
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.... Nistha Finance & 2,000 63,230 Investment (I) Ltd. relating to Master Abhayjeet Kanwar (minor son) 26-11-1996 Total 25,06,535 3. The Assessing Officer during the course of assessment proceedings asked the assessee to furnish details of share transactions and found that sale of shares of Chirau Finance Investment & Leasing Co. (CFIL) Ltd. was carried through Stock Broker M/s. J.K. Jain & Company. The other shares of M/s. Nishtha Finance and Investment (NFI) (India) Ltd. were sold through Stock Broker M/s. Rekha and Co. The Assessing Officer issued summons to these Brokers. The summons to M/s. J.K. Jain and Co. were received back with the remarks. 'no such firm exists at the given address'. In response to summons to M/s. Rekha & Co. their authorized representative appeared but did not produce any books or records relating to sales affected on behalf of the assessee. The broker claimed that books of account were lost. In order to verify further facts, the Assessing Officer issued summons to two companies involved in transactions, namely, M/s. Chirau Finance Investment and Leasing Co. Ltd. and M/s. Nistha Finance and Investm....
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....ng Officer on 17-2-2000 when Shri P.K. Kundra, Advocate appeared on behalf of the assessee. After discussion, he offered to produce broker Shri J.K. Jain for examination of the Assessing Officer. The offer was accepted. He was also required to produce all the persons to whom 50,000 shares of Chirau Finance Investment & Leasing Ltd. were claimed to be sold by the assessee. However, the assessee did not comply with the above directions of the Assessing Officer, although several adjournments were granted to the assessee from time to time till 28-2-2000 as is recorded by the Assessing Officer at pages 4 and 5 of the assessment order. 8. The Assessing Officer accordingly concluded that claim relating to sale of shares was not substantiated by the assessee with any evidence. He also referred to entries in Bank Account No. 1102556 of M/s. J.K. Jain and Co. with Bank of Punjab, Karol Bagh, New Delhi from which money was remitted to Bank Account No. 12846 with SBI, Nehru Place of the assessee as alleged sale consideration of shares. The Assessing Officer also found that money to Bank Account No. 1102556 (M/s. J.K. Jain and Co.) was remitted from Account No. 1102283 with the same Bank mai....
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....1 per share. The above transaction was held as in genuine as the balance-sheets of the said company revealed that book value of shares of the company worked out to Rs. 9.84 and Rs. 9.80 respectively as on 31-3-1996 and 31-3-1997. Net profit of company for the year ending 31-3-1996 and 31-3-1997 was meagre amount of Rs. 1,662 and Rs. 2,685. The Assessing Officer therefore, refused to accept that the shares of the company could be sold at the rate of Rs. 60 per share. Likewise only one transaction of sale of shares of M/s. Nistha Finance & Investment (India) Ltd. was found recorded and book value shown as on 18-12-1996 worked out to Rs. 5.15 per share. No AGM of that company was held nor any balance-sheet of company was prepared for the year ending 31-3-1996 and 31-3-1997. In the above circumstances, the Assessing Officer refused to believe that any prudent person would buy shares of above company at the rate of Rs. 36 per share. The transaction relating to sale of share of M/s. Nistha Finance & Investment (India) Ltd. was also disbelieved. Accordingly, the Assessing Officer held the total deposits Rs. 30,66,780 in Bank account of assessee and his minor son was not explained and was ....
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....of the assessee relating to alleged sale of 4,400 shares of M/s. Chirau Investment & Leasing Co. Ltd. The money in account No. 1102556 was transferred from account No. 1102283 in the name of M/s. Shubh Investment where cash was deposited immediately before remittance to the broker's account. It was further found that Shri Davender Kumar the alleged owner of M/s. Shubh Investment was not available at the address given to the bank nor his introductor Shri Mukesh Kumar was traceable at the address available in Bank record. Thus M/s. Shubh Investment was held to be a bogus account utilized to route the unaccounted money of the assessee. The learned CIT(A) further observed that the chart given by the Assessing Officer at pages 6 and 7 of the assessment order clearly showed that there was a direct date-wise link with the transfer of money from the bank account of M/s. Shubh Investment (bogus concern) to the bank account of broker M/s. J.K. Jain and Co. The learned CIT(A) further observed that deposit of Rs. 2,33,520 and Rs. 1,16,760 in February and March 1997 representing alleged sale proceeds of 600 shares of M/s. Chirau Investment & Leasing Co. Ltd. was also not explained. She....
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....islead investigation and to give an impression that a genuine transaction of sale of shares has been made through the stock brokers. With regard to the financial aspects of the so-called transaction, the chart given at pages 6 and 7 of the assessment order clearly shows that the amounts have been regularly deposited in cash in the bank account of M/s. Shubh Investment which is a proprietorship concern of Shri Davender Kumar. It has already been mentioned that M/s. Shubh Investment is a bogus concern and Shri Davender Kumar is not available at the address given in the bank record. The bank account of M/s. Shubh Investment contains cash deposits which have been transferred to the bank account of the broker M/s. J.K. Jain & Co. from where the broker has issued cheques to the appellant. With regard to the so-called sale proceeds the dates of transaction of three bank accounts almost tally. The assessee has argued that the amounts are not exactly the same. However, the amounts are enough to cover transaction to the assessee. With regard to the balance amounts, it is not the concern in these proceedings. It has been argued that it is for the broker to explain the source i.e., th....
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....e made available on pages 50 and 51 of the paper book. Turning to pages 50 and 51, we find that there is quotation of U.P. Stock Exchange, Kanpur dated 24th September, 1996 showing sale of Chirau Finance Investment and Leasing Co. Ltd. at the rate of Rs. 58 to Rs. 60. In the same manner sale bills were issued in case of sale of shares of Nishtha Finance and Investment (India) Ltd. The amount was received through account payee cheques. 15. Shri Talwar further submitted that the assessee cannot be held responsible for conduct of brokers through whom transactions were effected. Shares were sold in January and February 1997 whereas enquiries by Income-tax Department were conducted much later. The position could have been changed over the period. Even if it is held and presumed that share brokers were indulging in questionable and shady transactions that cannot affect the genuineness of transactions carried on by the assessee particularly in the background narrated above. Shri Talwar further submitted that sale transaction of shares cannot be treated as cash credits to apply provisions of section 68 of the Income-tax Act. It was further submitted that only a part of amount credited i....
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....244 ITR 422 (Cal.)/CIT v. Emerald Commercial Ltd. [2001] 250 ITR 539 (Cal.) - Loss claimed on account of sale of shares - Purchase and sale of shares effected through share brokers - Full details of transaction and names of share brokers furnished - Payment by account payee cheques not disputed - Failure of appearance of a broker even after issue of summons would not disentitle assessee from claim of loss. 5. CIT v. Currency Investment Co. Ltd. [2000] 241 ITR 494 (Cal.) - Loss on account of dealing in shares - Identity of purchaser and seller not disputed - Failure to produce broker through whom shares were sold does not affect genuineness of transactions - Loss on account of share transactions deductible. 6. CIT v. Mangal Chand [2002] 255 ITR 329 (Raj.) - Transfer of shares - Delivery of shares certificate along with blank transfer form without registration - Amounts to actual delivery within the meaning of section 43. 7. S. Hastimal v. CIT [1963] 49 ITR 273 (Mad.) Asstt. CIT v. Mahavir Metals & Alloys [2002] 75 TTJ (Asr.) 256 Mohar Singh v. Dy. CIT [2002] 77 TTJ (Agra) 218 Subhash Dal Mill v. Asstt. CIT [2002] 124 Taxman 169 (Agra) (Mag.). In all the authorit....
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....s also not available at the address given. This information was duly put to the assessee and it was not assessee's case that Devender Kumar or Mukesh Kumar were available or in existence and not fictitious entities as held by the Revenue authorities. Lakhs and Lakhs were credited to the accounts of the assessee as gains and therefore, it was for the assessee to prove that entries in these accounts were genuine. The suspicious surrendering credit entries were required to be removed by the assessee. The fact that amounts were received through cheque does not advance the case of the assessee when everything is shrouded by doubts and suspicion, which clearly showed that transactions were not genuine. Solitary entries in Stock Exchange could not be treated as regular quotations and were not entitled to any weight. These were manipulated and are required to be weighed alongwith other circumstances brought on record by the revenue authority after thorough investigation. The learned DR accordingly, submitted that impugned order of the learned CIT(A) should be upheld. 18. We have given careful thought to the rival submissions of both the parties. Admittedly assessee has not seen the purc....
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....nt no adverse inference, in our considered opinion, can be drawn against the assessee. The revenue authorities have not placed any adverse material on record to justify the rejection of these transaction as non-genuine. Merely because some cash deposited in account of Rekha & Co. is not explained, the entire case could not be rejected particularly when there is no finding that cash could not have been deposited by the said concern and transferred to the account of the assessee. There is no evidence filed on above point by the revenue authorities. The party also confirmed genuineness of transaction before the Assessing Officer without producing books of account. Therefore, in our opinion, case relating to M/s. Rekha & Co. stands on a different footing than sale of shares of M/s. Nishtha Finance. Accordingly, above addition is directed to be deleted. 21. The case relating to addition of Rs. 29,22,780 on account of credits in Banks allegedly representing sale proceeds of 5,000 shares of M/s. Chirau Finance Investment & Leasing Co. Ltd. stands on a different footing. The shares were claimed to have been sold through M/s. J.K. Jain & Co. Shri J.K. Jain is not traceable at the address....
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....ed sale proceeds of 5,000 shares of M/s. Chirau Fin. Inv. & Leasing Co. Ltd. In support of explanation certain credit notes evidencing that shares were sold through M/s. Jain and Co. were produced. The assessee further relied upon the fact that the sale proceeds were realized through account payee cheque. The Assessing Officer was entitled to; rather duty bound to examine genuineness of the transaction and record his satisfaction under the abovesaid statutory provisions. He, therefore called upon the assessee to produce Mr. J.K. Jain. When assessee failed to produce him, the Assessing Officer issued summons to Mr. J.K. Jain. But it was found that no such person was available at the address given. The assessee then furnished new address but no useful purpose could be served. Ultimately Shri P.K. Kundra, Advocate appeared before the Assessing Officer and undertook to produce the broker before the Assessing Officer. The aforesaid commitment was not honoured. This way genuineness of Brokers contract notes, sale bills relating to alleged sale of shares could not be verified. The assessee also allegedly furnished names of the purchaser of shares through M/s. Amarjeet Associates. Summons ....
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....not available at the address given to the Bank. The same is the position of introductor, Shri Mukesh Kumar. Accordingly the account of Shubh Investment was held to be bogus utilized by the assessee to route his unaccounted money. No attempt was made by the assessee at any stage or proceeding to challenge and rebut the above factual finding by placing any evidence on record. Thus so-called transfer to the bank account of the assessee is from a bogus account owned by? The contention of the assessee that he is not liable to prove source of a source has no force as the Assessing Officer has established direct link of transfer of funds from bank account of Shubh Investments to the assessee. 27. In our considered opinion, revenue authorities in the present case has brought sufficient material on record to show that source of investment/credit in bank account of the assessee has not been explained satisfactorily and therefore, investment/credits could be treated as deemed income of the assessee under the statutory provision referred to above. The initial burden of proving source of investment was clearly on the assessee and the same on the facts and in the circumstances of the case has....