TaxTMI 
TaxTMI 
2013 (6) TMI 494
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....s an entry operator and has provided accommodation entries to various persons through his company M/s. M.K.M. Finsec Pvt. Ltd. The statement on oath of Shri Mahesh Batra was recorded on 23.01.2004 by Investigation Wing, New Delhi in which Shri Mahesh Batra has admitted to have provided accommodation entries through its company M/s. M.K.M. Finsec Pvt. Ltd. as capital gain on shares for which one of the major recipient of these accommodation entries in the form of capital gain on shares for which no actual sale/purchase of shares were transacted. The addition made by the A.O. has been deleted by the CIT(A) as under :- (Page nos.6 to 9) "4.2 Appellant's submissions along with assessment order and records and remand report of the AO have been duly considered. In his remand report, AO has not made any adverse comment regarding submissions of the appellant supported by relevant documentary evidence. However, while relying on the assessment order, AO has not accepted the submissions of the appellant again by solely relying on the statement of Shri Mahesh Batra. The statement, as recorded by the Investigation Wing, has not been provided to the appellant nor he has been given any oppor....
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....appellant's black money into white money with the help of unscrupulous share brokers who either by floating so-called companies themselves or dealt in shares of such small time companies which were incorporated for this purpose only. By relying on the modus operandi of these people, the AO has ignored the vital evidence produced by the appellant in the shape of purchase bills and sales bills along with share certificates which also contain the endorsement of transfer. The general observations made by the Investigation Wing percolated throughout and aroused a suspicion about all the transactions carried out by these concerns such as M/s. M.K.M. Finsec Pvt. Ltd. and such suspicion snowballed into a kind of 'conclusive proof' that anybody and everybody who was found to be dealing with these concerns in share transactions was earning illegal income by taking accommodation entries with the aim to convert unaccounted money into his accounted money. Investigation in the affairs of the brokers and their companies is relevant to raise a presumption of malfunction, but this presumption is also rebuttable. The appellant has tried to defend his case and prove the transactions by wa....
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....o corroborative evidence to show that the cash for drafts in the bank account of M/s. M.K.M. Finsec Pvt. Ltd. was received from the appellant. There is no direct evidence for the same. In the absence of any corroborative evidence, statement of Shri Mahesh Batra cannot be accepted as true on his mere ipse dixit. He has never been confronted wih the evidences produced by the appellant. The apparent has to be treated as real unless proved otherwise. This has long been held by the Hon'ble Supreme Court in the case of CIT vs. Daulat Ram Rawatmal (1964) 53 ITR 574 (SC), whereas the appellant has countered the statement of Shri Mahesh Batra by way of his submissions and evidences. Credence cannot be given to the statement of a person who himself admits and has dubious dealings as against the documentary evidences produced by the appellant. The same view has been held by Hon'ble ITAT, Agra in case of Shri Ashok Kumar Lavania, Prop. Bajrang Automobiles, Agra in ITA No.112/Agr/2004 vide order dated 30.05.08. The same has been followed by Hon'ble ITAT in case of Shri Baijnath Agrawal, Prop. M/s. Baijnath Scrap Centre in ITA No.133/Agr/2005 vide order dated 13.04.2010 whereby Ld. T....
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....notice under section 147 as held in the case of Ganga Saran & Sons (P) Ltd vs. ITO [1981] 130 ITR 1 (SC), ITO vs. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239 (SC)/Raymond Woolen Mills Ltd. vs. ITO [1999] 236 ITR 34 (SC). 13.1 The Hon'ble Supreme Court in the case of S. Narayanappa vs. CIT [1976] 63 ITR 219 (SC) has held that the expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the ITO. The belief must be held in good faith; it cannot merely be a pretence. 13.2 The Hon'ble Supreme Court in the case of Sheo Nath Singh vs. AAC [1971] 82 ITR 147 (SC) held that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds, and that the ITO may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The ITO would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. 13.3 On perusal of reasons recorded, we find that the reasons recorded are not in accordance with law as it was simply on the....
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....d along with the return of income. The payments were made through books of account which has not been doubted. The shares belong to a listed company which is also not in doubt. The company itself has issued certificate that all these shares have been demated, copy of the same is placed on record. Once the purchase of shares is not doubted, then in our considered view, the sale of same shares should not have been doubted. If assessee has invested his own money under the garb of fictitious sale of shares then where the actual shares purchased by assessee which were duly demated have gone. This fact has not been considered either by AO or by learned CIT(A) who originally rejected the claim of the assessee. When this fact was brought to the notice of learned CIT(A) by filing miscellaneous application under section 154 that the assessee has purchased the shares of listed company and the AO has not made any enquiry, rather he has noted wrong fact, then learned CIT(A) realized this mistake and rectified his order under section 154 by allowing the claim of assessee. Only on the basis of statement of Shri Mahesh Batra, the AO has drawn adverse inference in case of assessee. It may be true t....
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....ised in the case of Shri Akash Goenka which was decided by a common judgment by the Tribunal. The Revenue filed Income Tax Appeal (Defective) No. 261 of 2009 in the case of Shri Akash Goenka which has been dismissed by this Court by judgment dated 18.11.2010 and thus judgment of the Tribunal has been upheld. The Senior Standing Counsel could not point out any distinguishing feature for not following the aforesaid judgement." 14.3 The I.T.A.T., Agra Bench in the case of ITO vs. Shri Rakesh Khetrapal in ITA No.226/Agra/2010, order dated 18.01.2013, has decided the issue in favour of the assessee. The relevant finding is reproduced as under :- "4. We have considered the rival submissions and the material on record. The facts of the case of the assessee are similar to that of departmental appeal in the case of Ram Prakash Garg in ITA No. 237/2011 for the assessment year 2001-02, in which ITAT, Agra Bench dismissed the departmental appeal vide order of the even date, holding as under : "5. We have considered the rival submissions and the material on record and do not find any justification to interfere with the order of the ld. CIT(A) in deleting the addition. The AO, on the facts of....
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....e paper book to support the contention of the assessee. The sale rate of Rs. 114/- per share is also supported by the information received from M.P. Stock Exchange. Whatever statements of CMS Securities Ltd. through their directors were recorded were never confronted to the assessee. Therefore, the same cannot be read in evidence, which is also substantiated by the decision of Hon'ble Supreme Court in the case of Kishan Chand Chelaram vs. CIT, 125 ITR 713. Considering the totality of facts and circumstances, in the light of the decision of the jurisdictional Allahabad High Court in the group cases above, we do not find any justification to interfere with the order of the ld. CIT(A) in deleting the addition. The assessee on the basis of evidence and material on record has been able to prove that he has received entire sale consideration of shares through known sources. Therefore, no addition u/s. 68 could be made against the assessee. As a result, the departmental appeal fails and is dismissed." 4.1 Considering the facts of the case in the light of above order of the Tribunal and other decisions referred by the ld. Counsel for the assessee, we are of the view that the departmen....