TaxTMI 
TaxTMI 
2016 (8) TMI 1201
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.... is a pre requisite condition for issuing notice and reopening the assessment. 3. The learned Commissioner of Income Tax (A) is not justified in the facts and circumstances of the case, in confirming the addition of Rs. 19,73,735/- made by Assessing Officer u/s. 69A of the I.T.Act". 2. Briefly stated facts are that assessee is an individual and runs a business of brass hardware. There were originally survey operations on 17-02-2006 and thereafter assessee filed return of income on 31-06-2006 admitting an income of Rs. 3,78,873/-. Scrutiny assessment u/s. 143(3) of the Income Tax Act [Act] was completed on an income of Rs. 9,49,400/- on 05-07-2007 making certain additions. Thereafter, consequent to search and seizure operations in M/s. Ma....
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....o cross examination of the person on whose statement the proceedings were initiated was also not provided with reference to the merits of the additions. It was stated that: a. There are purchase bills with service tax payment; b. Contract note for purchases are placed on record; c. Cash receipts accepting the purchase consideration by the seller were placed on record; d. Schedule of investment as on 31-03-2005 shows the shares held by assessee and the return was filed earlier; e. Demat details of M/s Karvy were placed on record; f. Sale of shares, receipt of sale proceeds through Cheques and confirmation through banks were on record. On the basis of evidence, it was contended that trading through off-market transaction was not ....
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....ddition made is justified? These two were inter-linked. The merits of additions will be considered first. There is no dispute that assessee has purchased 21,500 shares of the said company through a broker dt. 15-04- 2004 for a consideration of Rs. 32,050/- paid on 20-04-2006 and 21-04-2006 of Rs. 20,000 and Rs. 12,050 to M/s. Mahasagar P. Ltd., The cash receipts are on record. Thereafter, assessee sent these shares for dematerialisation on 25-10-2005 and Demat was completed by M/s. Karvy Share Broking Pvt. Ltd., on 29-11-2005. The account copy also indicates a debit of 21,500 shares on 07-12- 2005 and closing balance was NIL. The sale of shares happened on 05-12-2005 through Goldstar Finvest Pvt. Ltd., and monies were received in Indus Ind....
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....The AO treated the transactions as bogus. It was the contention of Ld. Counsel that the veracity of so called statements from Shri Mukesh Choksi cannot be accepted as he was repeatedly stating so, but no action seem to have been taken so far. Moreover, in 2007 itself the said Shri Mukesh Choksi confirmed the transactions and how they became bogus in 2013 was not forthcoming. In the absence of cross-examination of Shri Mukesh Choksi, his statement that those companies are indulging in bogus transactions cannot be accepted as genuine. Moreover, there are series of actions on Shri Mukesh Choksi and at the relevant point of time, there were statements from him which does not implicate the transaction of assessee. How they can become bogus at th....
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....actions cannot be doubted. This is the principle laid down in Rajendrakumar Toshnival case(supra) which was upheld by Hon'ble Bombay High Court. Assessee has disclosed the transactions as such. At best AO could have doubted the purchase on that date since cash payments were made, but cannot doubt the purchases as such and transfer to Demat account and sale there on. Therefore, the sale proceeds cannot be brought to tax u/s. 69A. 7.4. In view of the above discussion, on the basis of the facts on record, I am of the opinion that the action of AO in treating the sale proceeds received through banking channels cannot be treated as 'unexplained money' u/s. 69A. Therefore, the addition of the amount stands deleted. 7.5. Even though the basi....