TaxTMI 
TaxTMI 
2010 (9) TMI 1190
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....ame may be dismissed as duplicates of the original Cross Objection Nos.20, 23 & 21/Agr/2010. It was pointed out that in all these Cross Objections there are delay between 44 to 50 days as the notice/memorandum of appeal filed by the Department was received by the servant of the assessee as the family members have gone out of Agra. The servant of the assessee is illiterate and was not aware of the gravity of the notice and forgot to give the notice to the assessee. The notices were given to the assessee only on 20.03.2010 and the assessees immediately approached their Counsel and filed Cross Objection in each case. It was pointed out that the delay was unintentional and may be condoned. The ld. D.R., on the other hand, vehemently contended that there is no reasonable cause on the part of the assessees to condone the delay. 3. After carefully considering the rival submissions and going through the application filed by the assessees for condonation of delay, we condone the delay in each of the case as we are of the view that the respective assessee was prevented by sufficient cause to file the Cross Objection in each of the case within time. 4. The ld. A.R., at the outset, point....
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....s. The CIT(A) has deleted the addition merely relying on the evidences submitted by the assessee. The onus is on the assessee to prove the genuineness of the share transactions. Since the assessee failed to prove the genuineness, therefore, the A.O. has rightly made the addition under section 68 of the Act. 6. The ld. A.R., on the other hand, referred to the Paper Book and the written submissions filed before the CIT(A) and pointed out that in this case the original assessment has been completed on 31.7.2001. The A.O. has given clear cut finding that the assessee has shown the Long Term Capital Gain (LTCG) and the interest income from other sources. The profit earned on sales of shares has duly been shown by the assessee in his income tax return and all the evidences relating to the purchases and sales of the shares were produced. There were LTCG on the sales of shares to the extent of Rs. 49,47,778/-. The A.O. had duly considered the evidences filed by the assessee. The LTCG on the sales of shares were duly shown in the income tax return, copy of which is available at page 35 of the Paper Book. Thus, it was pointed out that the assessee has duly disclosed the transaction of pur....
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.... considered the rival submissions and perused the material on record along with the order of the Tax Authorities below. We noted that in each of the case the original assessment has been completed by the A.O. vide the orders detailed as under :- Jagjeet Kaur 31.07.2001 Ranjeeta Kaur 27.07.2001 Surjeet Singh HUF (A.Y. 1999-2000) 30.07.2001 Surjeet Singh HUF (A.Y. 2000-01) 03.12.2001 Gurinder Kaur 03.12.2001 10. In each of the case, the proceedings under section 147 of the Act was initiated by the A.O. by issue of notice dated 30.03.2006. By initiating the proceedings, the following reasons were recorded in the case of Smt. Jagjeet Kaur :- "During the year the assessee has shown/worked out capital gain on sale of shares as under :- Name of the assessee Name of Share Co Date of Sale Sale Amount Sale Sale though Broker Smt. Jagjeet Kaur Status Management Services Ltd 28.4.98 29,60,550 Yadav & Co. vide bill no.DI-PC/9805/16 dt. 4.5.98 Smt. Jagjeet Kaur Cabtree Securities Ltd 10.7.98 26,92,912 Navrang Capital Management Ltd. vide bill no.NRCM/08/1809 dt. 18.9.98 The investigation wing ....
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.... or not on the facts of the case. Section 147 lays down as under :- "147. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any A.Y., he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the a.y. concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under subsection (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub section (1) of section 142 or section 148 or to disclose fully and truly ....
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....rmation of the belief is not a judicial decision, but an administrative decision. The decision to initiate the proceedings is not to be preceded by any judicial or quasi-judicial enquiry. 'Reason to believe' has been the matter of judicial scrutiny by the apex court in several cases. In the case of Calcutta Discount Co Ltd v. ITO 41 ITR 191 (SC), it was observed that it is the duty of the assessee to disclose all the primary facts which have a bearing on the liability of income earned by the assessee being subjected to tax. It is for the AO to draw inferences from the facts and apply the law determining the liability of the assessee. The assessee cannot draw the conclusions drawn by the AO and once the conclusion is drawn and the assessment order framed, the AO cannot at a later point of time form a different opinion by giving a second thought to the facts disclosed by the assessee, holding that he committed an error in computing taxable income and reopen the assessment u/s 147. Discovery of new and important matters or knowledge of fresh facts which were not present at the time of original assessment would constitute a 'reason to believe' that income had escaped assessment' within....
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....opened as appeared from the reasons that the A.O. has received the information from the Investigation Wing who made the detailed enquiry and came to the conclusion in respect of the LTCG on sale of shares in mass cases that Yadav & Co. and Navrang Capital Management Limited have provided bogus accommodation entries to the beneficiaries in the garb of sale of shares of different companies and accordingly he was of the view that the assessee has also taken the bogus entries and LTCG shown by the assessee on sale of shares through these brokers was not genuine. In other cases also such entries were treated as bogus accommodation entries and the additions were made. Thus, the A.O. recorded the reasons on the basis of information received from Investigation Wing. This information nowhere speaks of the name of the assessee or enquiries conducted by investigation wing depicts that these parties has given the bogus entries to the assessee. 16. Now the question arises whether, under these facts, the reasons recorded by the A.O. are bonafide or not. In this regard, we have gone through the various case laws as has been relied before us. The same are discussed as under :- (i) CIT vs. Ke....
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....ddl. CIT-R8, New Delhi vide his letter No.Addl. CIT R- 8/2002-03/572 dt. 26th Aug., 2003 to initiate proceedings under s.148 in respect of cases pertaining to this ward. Thus, I have sufficient information in my possession to issue notice under s.148 in the case of M/s SFIL Stock Broking Ltd. on the basis of reasons recorded as above." When the matter went before the Hon'ble High Court, the Hon'ble High Court held, on the basis of the reasons recorded by the A.O., that the first sentence of the so-called reasons recorded by the A.O. is mere information received from the Dy. Director of IT (Inv.). The second sentence is a direction given by the very same Dy. Director to issue a notice under s.148 and the third sentence again comprises of a direction given by the Addl. CIT to initiate proceedings under s.148 in respect of cases pertaining to the relevant ward. These three sentences are followed by the following sentence, which is the concluding portion of the socalled reasons: "Thus, I have sufficient information in my possession to issue notice under s.148 in the case of M/s SFIL Stock Broking Limited on the basis of reasons recorded as above." From the above, it is clear that the A....
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.... application and was not attracted to the facts of the case. (iv) Idea Cellular vs. DCIT & Others, 301 ITR 407 (Bom.) In this case, it was held that once all the material was placed before the A.O., in case he chooses not to deal with the several contentions raised by the petitioner in his final assessment, it could not be said that he had not applied his mind. Even the explanation of section 147 was not applicable. (v) CIT & Another vs. Foramer France, 264 ITR 566 (SC) In this case, the Hon'ble Supreme Court confirmed the order of the Allahabad High Court in the case of Foramer vs. CIT, 247 ITR 436 . Head note of the ITR reads as under:- "From the decision of the High Court (see [2001] 247 ITR 436) that (i) section 147 substituted in the Income-tax Act, 1961, by the Direct Tax Laws (Amendment) Act, 1987, had made a radical departure from the original section 147, inasmuch as clauses (a) and (b) had been deleted and under the proviso thereto notice for reassessment would be illegal if issued more than four years after the end of the assessment year, if the original assessment were made under section 143(3); (ii) section 153 related to the passing of an order of assessment and not t....
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....of reopening. The A.O. in the reasons referred to the enquiries carried out in mass cases by the Investigation Wing but did not point out any enquiry or material in the case of the assessee. The detailed enquiry in mass cases has been made to be the basis of the reasons. The reasons nowhere speaks of the material collected during the enquiry relates to the assessee. The assessee has duly disclosed the capital gain earned by him which was duly enquired of by the A.O. while framing the assessment and the assessee has replied to all the queries raised by the A.O. The A.O. completed the assessment, accepting the capital gain shown by the assessee in the original assessment. All the material relating to the capital gain was before the A.O. during the course of original assessment. Merely the A.O. has framed the assessment not incorporating the queries raised and the contention taken by the assessee does not mean that the A.O. has not applied his mind. This is a settled law that an assessment completed cannot be reviewed at the garb of reopening. What the A.O., in our opinion, tried to do is, to review the assessment which has been completed on the basis of some material. No fresh materi....
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....erial on record to controvert the assessee's claim of LTCG. The CIT(A) while examining the submission of the assessee along with the evidence filed by the assessee, written a letter to the Additional DIT (Inv.) being the letter no. A.No.CIT(A)- I/Agra/346/ITO-1(1)/Agra/07-08/1339 dated 27.11.2008. Similarly a letter no. A.No.CIT(A)- I/Agra/346/ITO-1(1)/Agra/2007-08/1318 dated 27.11.2008 was addressed to the A.O. as reproduced below:- "With reference to the above pending appeal, you are requested to furnish to this office all materials, documents and other evidences received by you from the Inv. Wing and collected by you in support of the addition of bogus Long Term Capital Gains made in the assessment order passed by you u/s.147/143(3) of the Act. The requisite information should be furnished positively by 17.12.2008." 20. The Addl. DIT replied vide letter no. F.No.ADIT(Inv.)/Unit-I/LTCG/2008-09/Agra/267 dated 02.02.2009 stated as under :- "Kindly refer to your office letters no.1262, 1264, 1268, 1270, 1286, 1287, 1290, 1300, 1336, 1338, 1339, 1340, 1342, 1343, 1344, 1345, 1442, 1443 and 1446 of different dates on the above subject. As desired, the requisite information....
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.... long term capital gains on sale of shares was worked out at Rs. 41,35,662/- [Rs.49,47,778/- (-) Rs. 8,12,116/-] and charged to tax accordingly. No material/evidence is on record to controvert the same." 22. Although the ld. D.R. vehemently supported the order of the A.O., but could not adduce any evidence which may warrant our interference in the order of the CIT(A) so far it relates to the deletion of the addition made by the A.O. Even otherwise also, we noted, as relied on by the ld. A.R., the case of the assessee is duly covered by the decision of Third Member in the case of Smt. Sunita Oberoi vs. ITO, 126 TTJ (Agra)(TM) 745 and that of ITO vs. Smt. Bibi Rani Bansal in ITA No.101/Agr/05 in which vide order dated 09.02.2010 it was held as under:- "10. I have carefully considered the rival submissions alongwith the orders of the Tax Authorities below as well as the order of my ld. colleague Members. I noted that while passing the dissent order the ld. A.M. has mainly relied on its separate order passed in the case of Shri Baijnath Agarwal (ITA No.133/Agr/2005). I have gone through the order of Shri Baijnath Agarwal and noted that in his dissent order in that case the ld. A.....
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....ipse dixit. Shri Manoj Agarwal was not produced for cross-examination. From his statement no adverse inference can be drawn against the assessee. Shri Manoj Agarwal handed over a letter to D.D.I. (Inv) in which he stated that out of the total transactions, the transactions amounting to Rs. 100 crores were only book entries. So it follows as a necessary corollary that entire transactions were not ingenuine. He has also not named this assessee. With regard to Agarwal & Company, there are no adverse comments in the Assessment Order against the assessee. The A.O. has not said anything about the transactions entered through this broker. Whereas the assessee has produced : i) copies of sales and purchase bills; ii) share certificates and transfer letters; iii) contract notes; iv) duly transferred share certificates received from the companies; and v) affidavit. (11) There is no doubt, in such cases, the brokers become the witnesses of the department. The department has got statements of these brokers which are used against the assessee. Irrespective of the fact that the statements were recorded at the back of the assessee and that the assessee was or was not afforded op....
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.... by clearance. Therefore, the allegation of the A.O. that the amount was deposited in cash has no basis. The assessee has accepted having invested her funds on the advice of her father-in-law. The burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character, which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. The assessee made payment for the purchase from her own sources through banking channel. The shares were transferred in the name of the assessee and were held by her for more than one year. There is no relationship between the party from whom the assessee purchased the shares and the party to whom these were sold. The shares were delivered after its sale and the assessee did not remain in possession of those shares. From the above facts, it is established that the assessee acquired the shares to earn profit. There is no evidence except speculation that this profit is not from the sale of shares. The A.O. has failed to establish his case and to discharge the requisite burden cast....
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....ing made by the assessee. The shares were purchased in earlier year. The shares were transferred in the name of the assessee as has been confirmed by the company when enquired by the A.O. The assessee has submitted before the A.O., copies of the contract notes, copies of the sales bills, statement of account from the broker, old address of the broker, new address of the broker. The identity of the broker is proved. Purchases were not doubted by the A.O. The demand draft for the sale consideration was issued from the account of M/s. P.K. Jain & Associates i.e. brokers. The money has not been deposited in cash in this account but has come to this account by way of transfer from the account of M/s. S.G. Fincap Limited. The ld. A.M. has distinguished the decision of Ashok Kumar Lavania. On the basis of that, in Ashok Kumar Lavania's case purchase of the shares was not in dispute. While in fact in assessee's case the purchase of shares is also not in dispute but rather the company has directly confirmed to the A.O. the purchase of the shares by the assessee in reply to the notice issued under section 133(6). The ld. A.M. was also the party to that decision. I noted that in this case the....
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....ll his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that S is not a trustworthy witness and little value can be attached to what he stated either in his affidavit or in his cross examination by the Assessing Officer. His conduct neutralizes his value as a witness. A man indulged in double speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful." 12. Further, as noted, the statement was recorded by the DDI, Investigation Wing, Agra and not by the Assessing Officer himself. Thus, the truthfulness of the statement remained untested by the Assessing Officer. ITAT, Delhi in the case of Rajeev Agarwal (139 Taxman 170 (Mag.)) has observed as under :- "The mere reliance on the statement of third parties who were never examined by the Assessing Officer himself cannot be held to be sufficient to come to the finding that the transaction was not genuine and more so when there are other material and evidences to support the transaction." 13. Hon'ble Delhi High Court in the case of CIT Vs. SM....
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....es of the shares has come up for consideration before the ITAT, Agra Bench in the cases of Smt. Memo Devi (ITA No.396/Ag/2004 - reported as 7 DTR 158) wherein the Co-ordinate Bench observed as under :- "The assessee has no relation with the directors of the company and was in no way in the capacity to affect the market price of shares. The increase in share prices by more than 25 times too cannot be the basis to assume that the transaction was bogus. Abnormal fluctuation in share prices is a normal phenomena - the learned counsel for the assessee filed a chart showing low and high prices of some quoted shares during the 52 weeks as per Economic Times dated 27.02.2007 from which it can be seen that some shares increased even by more than 100 times." 17. In almost similar circumstances the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Anupam Kapoor (299 ITR 179) has also observed as under :- "The Tribunal was right in rejecting the appeal of the revenue by holding that the assessee was simply a shareholder of the company. He had made the investment in a company in which he was neither a director nor was he in control of the company. The assessee had taken shares....
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....f shares. Hon'ble Supreme Court in the case of Kishan Chand Chellaram vs. CIT reported in 125 ITR 713 (SC) has observed that "the amount cannot be assessed as undisclosed income of assessee in the absence of positive material brought by the Revenue to prove that the amount in fact belonged to assessee as the burden lay on the Revenue. 19. In almost similar circumstances the ITAT, Delhi 'C' Bench in the case of ITO vs. Naveen Gupta (5 SOT 94), copy of which is placed by ld. A.R., has observed as under :- "Nevertheless, it is also noteworthy that the A.O. has failed to establish that in lieu of the aforesaid sale proceeds, the assessee has surreptitiously introduced his unaccounted money in the bank account. After having perused the entire material that is available on record, there is no averment, much less any evidence, with the Revenue in this regard. While there may be enough grounds with the AO to carry out the impugned verification exercise to test the efficacy of the transactions resulting in long term material gains in the hand of the assessee but there is no cogent material or evidence to indicate that the impugned sale proceeds reflected unaccounted income of the asse....
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....is by clearance. Therefore, the allegation of the AO that the amount was deposited in cash has no basis. The assessee has accepted having invested her funds on the advice of her father-in-law. The burden of proving a transaction is always on the person asserting it to be bogus and this burden has to be strictly discharged by adducing legal evidence of a character which would either directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect." 21. I have also gone through various other decisions on similar issue under the similar facts and I noted that this Tribunal had consistently accepted the genuineness of the share transaction. Those cases are as under :- ITO vs. Sunita Gupta - ITA No.881/Del/2004 (Delhi Bench 'SMC') Dilip Gargh vs. ITO - ITA No.470/Agr/2004 Gopal Prasad Agarwal vs. ACIT - ITA No.128/Agr/2004 22. I also noted that the case of the assessee is duly covered by the decision of the Third Member in the case of Smt. Sunita Oberoi vs. ITO (Agra) (TM) ITA No.273/Agr/2004 A.Y. 1995-96 dated 07.08.2009, 30 DTR (Agra) (TM) (Trib.) 474 in which on difference of opinion on the question under the simil....
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....the companies were not in existence at the address available with the Department does not detract from the assessee's claim in view of the documents available on record. The discrepancy in the amounts to the expenditure of Rs. 53,356 was because of consistent statement by the assessee that the share broker made a short payment and disputed the remaining amount. The Department has thus proceeded entirely on suspicion and surmises if seen in the light of the orders of the Tribunal. The claim of the assessee in regard to the first issue is to be allowed." 23. Thus, in view of the aforesaid discussions, the decisions of the third member, the decisions of the coordinate benches, totality of the facts and circumstances and evidence on record, I am of the considered view that the action of the CIT(A) was not correct in confirming the assessment of Rs. 12,19,538/- as the income from undisclosed sources as against the sale consideration of shares declared by the assessee. The CIT(A) was not justified in rejecting the claim of Long Term Capital Gain of the assessee from sale of shares. I accordingly direct the Assessing Officer to assess the income declared from the sale of shares under t....
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....राशि पर कà¥à¤² बà¥à¤¯à¤¾à¤œ रà¥.1,55,035/- शेयरà¥à¤¸ की बिकà¥à¤°à¥€ पर दीरà¥à¤˜à¤•à¤¾à¤²à¥€à¤¨ पूंजीगत लाठरà¥. 49,47,778 /- तथा VDIS 97 में खà¥à¤²à¤¾à¤¸à¤¾ की गयी जà¥à¤µà¥ˆà¤²à¤°à¥€ की बिकà¥à¤°à¥€ पर दीरà¥à¤˜à¤•à¤¾à¤²à¥€à¤¨ पूंजीगत लाठ49,27,976 /- दरà¥à¤¶à¤¾à¤¯à¤¾ गया है। लेनेदारों तथा बैंक को दिठगये बà¥à¤¯à¤¾à¤œ रà¥. 47,190 / - ( 36750+10440) की कटौती घटाने के पशà¥à¤šà¤¾à¤....
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....¤à¤µà¤‚ 20.6.2001 दà¥à¤µà¤¾à¤°à¤¾ वांछित सूचना à¤à¤µà¤‚ विवरण पà¥à¤°à¤¸à¥à¤¤à¥à¤¤ किà¤, जिनà¥à¤¹à¥‡à¤‚ देखा गया। विचार विमरà¥à¤¶ के पशà¥à¤šà¤¾à¤¤à¥ करदाता की आय निमà¥à¤¨à¤µà¤¤à¥ संगणित की जाती है :- शà¥à¤¦à¥à¤§ लाठ(वà¥à¤¯à¤•à¥à¤¤à¤¿à¤—त लाà¤à¤¹à¤¾à¤¨à¤¿ खाते के अनà¥à¤¸à¤¾à¤°) 99,98,599 घटाà¤à¤: (पृथक विचार हेतà¥) 1. शेयरà¥à¤¸ की बिकà¥à¤°à¥€ पर दीरà¥....