TaxTMI 
TaxTMI 
2013 (10) TMI 557
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....present circumstances of the case, the ld. CIT(A) has erred in:- 1) deleting the addition of Rs. 20,07,929/-made u/s 68 of the I.T. Act . 2) deleting the addition of Rs. 1,00,000/- made on account of undisclosed expenditure. That the appellant craves to add, amend, alter, delete or modify any or all the above grounds of appeal before or at the time of hearing.'' 2.3 Nobody appeared on behalf of the assessee in spite of service of notice nor any adjournment petition was filed, the Bench therefore decided to dispose off the appeals after hearing the ld. DR and considering the matter placed on record. 2.4 We have considered the contentions of the ld. DR and gone through the orders of the authorities below. The facts of the case in brief are that during the course of scrutiny assessment, the Assessing Officer found that the assessee has credited the amount received on account of sale of shares of M/s Buniyad Chemicals, Ahemdabad. To find out the genuineness of the transactions, the Assessing Officer issued notices u/s 133(6) of the Act to the Director of the broker M/s Goldstar Finvest Pvt. Ltd. and to the Principal Officer, Buniyad Chemicals, Ahemdabad. After recording ....
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....king arbitrarily addition of Rs. 1,00,000/- as undisclosed expenditure paid without considering the facts and circumstances." 4.1 The Id. AO treated the above mentioned share transaction as accommodation entries and he estimated commission paid to the broker @ 5% and added Rs. 78,100/- and Rs.1,00,000/- for A.Y. 2003-04 & 2004-05 respectively as undisclosed commission paid in cash. 4.2 During appeal proceedings, the appellant has submitted that: 2.1 "The Ld. AO has discussed the above issue at of page 15 of the assessment order. 2.2 That the Id AO while completing the assessment made additions amounting to Rs.78,100 as commission would have been paid to share broker on surmises basis without any evidence, which is unjustified and bad in law due to the following facts. 4 2.3 During the year under consideration (A.Y. 2003-04), the appellant sold 18500 Equity shares of Buniyad Chemicals Ltd amounting to Rs. 15,62,425/- and after deducting commission net payable was Rs. 15,61,884 which were purchased in the year 2001 at a cost of Rs.11,193 and earned long term capital gains of Rs. 15,50,690/-. As regards, A.Y. 2004-05, the appellant sold 17500 equity shares of Buniyad....
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....dh/2010 vide its order dated 16-12-2011 has dismissed the Revenue's appeals on the same issue. We found that in the years under consideration the issue was with regard to genuineness of shares of M/s Buniyad Chemicals Ltd., Ahemdabad, wherein the Assessing Officer found that the genuineness of transactions of sale of shares of M/s Buniyad Chemicals Ltd. , Ahemdabad and thereby claiming of Long Term Capital Gain thereon was not established in view of the facts that these shares were not listed in the Stock Exchange. The Assessing Officer also issued notice to Director of M/s Gold Star Finvest Pvt. Ltd. (who was broker) u/s 133(6) dated 9-11-2010 and sought information as contained at page 3 of his order. The Assessing Officer also issued notice to the Principal Officer, M/s Buniyad Chemicals Ltd. , Ahemdabad u/s 133(6) dated 9-11-2010. The notice was also issued to the Principal Officer of Bombay Stock Exchange and Principal Officer, M/s National Stock Exchange. Thereafter, the Assessing Officer noted as under:- The outcomes of the investigation carried out through notices u/s 133(6) as above, are as under:- The notice u/s 133(6) issued to M/s Gold star Finvest Pvt. Ltd. Mumba....
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.... 10 th Road, Santa Kruz (E), Mumbai recorded u/s 131 of the Act on 11/12/2009 during the process of investigation in connection with search and seizure operation u/s 132(1) of the Act carried out in the case of M/s Mahasagar Securities?.Ltd., (Now M/s Alag Securities P.Ltd.) on 25/11/2009 are also relevant and conclusive. In his report the DIT(Inv.) Mumbai vide his letter dated 09/03/2010 passing on information's of beneficiaries of M/s Mahasagar securities P..Ltd., elaborately discussed modus operand! of providing accommodations entries in the guise of LTCG/STCG, speculation profit, share application money etc., and unearthened the bogus transactions made by the above parties and the beneficiaries. Relevant part of the statements of Sh.Mukesh Choksi recorded on Oath are reproduced here- Copy of statement of Sh Mukesh M Choksi will form part of this Annexure A. Q.2. Kindly state your educational qualification, and the nature of business being carried out by you at Block No.H, Shree Sadashiv CHS Ltd., 6 th Road, Santcruz (East) Mumbai- 55. Ans. I am a Chartered Accountant by training, having completed my Chartered Accountancy in 1978. I am engaged in the business of providing ....
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.... 2003020 412563 31/01/03 Buniyad Chemicals - 1100 84.50 -92950.00 2003020 412564 31/01/03 Buniyad Chemicals -800 84.40 -67520.00 2003020 415637 31/01/03 Buniyad Chemicals - 1700 84.35 - 143395.00 2003020 429562 31/01/03 Buniyad Chemicals - 1200 84.50 - 101400.00 2003020 484526 31/01/03 Buniyad Chemicals - 1300 84.45 - 109785.00 2003020 484884 31/01/03 Buniyad Chemicals - 2000 84.40 - 168800.00 2003020 491205 31/01/03 Buniyad Chemicals - 1500 84.55 - 126825.00 2003020 493021 31/01/03 Buniyad Chemicals - 1700 84.50 - 143650.00 2003020 415636 31/01/03 Buniyad Chemicals - 2000 84.40 - 168800.00 2003020 415638 31/01/03 Buniyad Chemicals - 1800 84.35 - 151830.00 20....
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....d to M/s ISE Securities & Services Limited (TM Code: 10777), a registered trading member of the Exchange. However, the securities of the company 'Buniyad Chemical Limited' as reflected in the copies of contract notes attached with your letter is not listed on the Exchange and hence no details are available with the Exchange which can be furnished." Copy of letter is enclosed herewith for your information and reference. .o incompliance to notice u/s 133(6), (The Dy. General Manager) Bombay Stock Exchange .vide his letter No. L/DOSS/INV/RD/1543/2010-11/1654 dated 26/11/2010 to submitted that. "In this regards, we would like to inform you that from the contract notes provided by you, it appear that transaction stated in the contract notes are executed at the National Stock Exchange India Ltd. Therefore, we request you to take in the matter with national Stock Exchange Ltd., Also, it may be noted that no company with the name Buniyad Chemicals Ltd., is/was listed on the Bombay Stock Exchange Ltd. " Copy of letter is enclosed herewith for your information and reference. 5. In this regard, the copies of statements of Shri Mukesk M.Choksi recorded on Oath u/s 131 of the ....
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....rewith. Please also send the copies of relevant documents furnished by the assessee for dematerialization of shares of above scrip i.e. M/s Buniyad Chemicals as claimed by the assessee. In response to Notice U/s 142(1) dated 13.12.2010 the assessee vide his submission dated 16.12.2010 contended that 1. It is to state vide this letter you have asked for bank accountof financial years 2000-01,2001-02 & 2002-03. For the relevant year 2002-03 we have already submitted. It is a well known fact that bank accounts of long back period is very difficult to obtain and we are trying to get the same and it would take time. We are solely dependent on bank for the same and we have already requested to submit, on receipt we shall submit to you. Meanwhile we request to bear with this situation. 2. CORRESPONDANCE WITH BROKER As stated earlier, we have already submitted the documents lying with us and income was declared by us. Further in the assessment proceedings we have disclosed all facts and filed return showing profit earned thereon. During the assessment proceedings we have already submitted the documents available with us. Here we would like to place on record that with ....
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....ment of providing accommodation entries through LTCG. These evidences will form part of this order as page No 1 to 10 of annexure A. 2. The correspondence made with M/s Gold Star Finvest Pvt Ltd & M/s Buniyad Chemicals Ltd for confirmation of transactions of shares claimed by the assessee returned unserved, which proves that the evidences produced by the assessee in form of contract note and bill of the share broker and purchase and transfer of shares of M/s Buniyad Chemical in the hands of assessee stand unproved and onus to prove the transactions and furnish further additional evidences lies on the assessee and for which he failed to discharge his onus in spite of repeated correspondence. 3. The assessee failed to comply with the notice U/s 131(1) dated 14.12.2010 & subsequent opportunity provided vide letter dated 23.12.2010 for this purpose without any reasonable cause which shows that the assessee has no evidences with him to prove the genuineness of the share transactions claiming LTCG. The issue of non compliance of summons U/s 131(1) is being referred separately to the Addl CIT Range-2, Udaipur for penalty provisions u/s 272A(l)(c ) of the IT Act. 4. The National S....
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....lision of the company issued back dated purchase bill to the assessee against the sale shown in the real time. In fact this transaction has been used to bring in his income from undisclosed sources in the form of LTCG on sale of shares. The assessee paid the unaccounted money in cash which was deposited by the broker in some of his accounts. Then the assessee received the same back in the form of cheque/ Draft from the broker as alleged sale consideration. By above transaction the assessee has camouflaged his undisclosed income as Long Term Capital Gain on shares, thereby, making the same white by paying taxes at the rate of 10%. In fact the amount shown as the Long Term Capital Gain is liable to be taxed as unexplained cash credit u/s 68 of the Income tax Act since the assessee has brought in the unexplained cash in the books disguising the same in the form of LTCG on shares to build up its capital. In the CIT vs. Durga Prasad More [1971] 82 ITR 540(SC) it has been held by the Hon'ble Supreme Court in a case where a party relies on self-serving recitals in a document, it is for that party to establish the truth of these recitals. The tax authorities are entitled to look into....
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....d relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered - to use the words of Lord Mansfield in Blatch Vs. Archer according to the proof which it was in the power of one side to prove, and in the power of the other to have contradicted". Since it is exceedingly difficult, if not absolutely impossible for the Department to prove facts, which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden. Therefore in view of the above findings and discussion I hold at the income shown as Long Term Capital Gain is a sham transaction, in reality the assessee has not earned any Long Term Capital Gain. It has been used to bring in. the money to build up capital by paying taxes at lower rate of 10 %. The same is liable to be taxe....
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....that shares of M/s Buniyad Chemicals Ltd., Ahemdabad was also transacted through M/s Gold Star Finvest Pvt. Ltd. who was found to be engaged in providing accommodation entries. The assessee was also provided the copies of evidence gathered and copies of statement of Shri Mukesh M Choksi and was asked to furnish the explanation and any other evidence in support of his claim of shares transactions deriving long term capital gain vide his letter dated 13-12-2010. A categorical finding has been recorded by the Assessing Officer to the effect that the assessee was one of the beneficiaries of M/s Gold Star Finvest Pvt. Ltd. who was providing accommodation entries by charging nominal commission. However, without controverting all these findings as recorded by the Assessing Officer, the ld. CIT(A) has deleted the additions just by following the order of his predecessor which was upheld by the Tribunal. We found that in earlier years 2005-06 and 2006-07, the issue before the Assessing Officer was with regard to genuineness of long term capital gain earned on shares of M/s Talent Infoways Ltd. whereas during the years 2003-04 and 2004-05, the issue is with regard to shares of M/s Buniyad Che....