TaxTMI 
TaxTMI 
2013 (4) TMI 873
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....ssessee is an individual. A search action u/s.132 of the Act was conducted on 16-06-2009 at the business and residential premises of different members/associate concerns of the Kalika Group of Jalna. The assessee was one of the members of the above group. In response to notice issued u/s.153A the assessee filed his return of income on 20-07-2011 declaring total income at Rs. 35,63,110/-. During the course of assessment proceedings the Assessing Officer noted from the computation of income, capital account of the assessee and other details furnished by him that the assessee had shown capital gain of Rs. 20,67,286/- on sale of shares and claimed the same as exempt u/s.10(38) of the Income Tax Act. From the various details furnished by the assessee during the course of assessment proceedings the Assessing Officer noted that the assessee has purchased the shares of a less known and traded stock of Fast Track Entertainment Ltd. He noted that the shares were purchased off market and dematerialised later on before the same were sold. After selling the shares the profit has been claimed as exempt u/s.10(38) of the Act. From the various details furnished by the assessee he noted that the sh....
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....business concerns. Therefore, it is obvious that in the manipulation mentioned above they have involved jointly. The Assessing Officer noted down the details of persons who have done such exempt income from other 3 families, i.e. Ghanshyan Goyal family, Anil Goyal family and Naresh Jindal family the details of which are as under : Sr.No. Name of the person Income offered A.Y. 1 Arun Agrawal (Indl.) 12,55,640/- 2005-06 2 Narendra Agrawal (Indl) 12,32,475/- 2005-06 3 Arun Agrawal (HUF) 12,82,673/- 2005-06 4 Narendra Agrawal (HUF) 9,85,688/- 2006-07 5 Shrikishan Agrawal (HUF) 10,03,355/- 2005-06 6 Leeladevi S. Agrawal 12,90,536/- 2005-06 He, therefore, was of the opinion that the claim of exemption of income of the assessee was a bogus claim and no real capital gain arose to the assessee. He, therefore, confronted the same to the assessee and asked him to explain as to why the claim of exempt income should not be rejected. It was submitted by the assessee that he has earned income from sale of shares and the holding period of such shares is more than 12 months. The details of contract notes of....
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....e course of the search." 7. The learned counsel for the assessee referring to Page 4 of the Paper Book submitted that the assessee has purchased 23500 shares of Fast Track Entertainment Ltd. at a cost of Rs. 43,800/- on 25-06-2003. Referring to Page 30 and 31 of the Paper Book he drew the attention of the Bench to the contract note for purchase of such shares. Referring to Page 23 and 24 of the Paper Book he submitted that the assessee in the balance sheet as on 31-03-2004 and 31-03-2005 has shown the purchase of shares of Fast Track Entertainment Ltd. under the head "investment". Referring to Page 26 of the Paper Book he submitted that the assessee has received letter from M/s. Fast Track Entertainment Ltd. on 07-10-2003 wherein 23500 shares are duly transferred in the name of the assessee. Referring to page 27 of the Paper Book he submitted that the assessee has received letter from M/s. Fast Track Entertainment Ltd. on 17-03-2004 to get the shares dematerialised. Referring to page 28 of the Paper Book he drew the attention of the Bench to the share certificate for 23,500 shares in the name of the assessee. Referring to Page 33 of the paper book he submitted taht the shares....
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....re reported in 72 ITR 807. 9. The ld. Counsel for the assessee in his rejoinder submitted that all the aspects argued by Ld. Departmental Representative has been considered by the Hon'ble Tribunal in the peety group of cases. He submitted that merely because some body has offered the long term capital gain as business income the same cannot be a ground by the revenue for considering the long term capital gain as business income in the case of the assessee. 10. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee as per documents produced has purchased 23,500 shares of Fast Track Entertainment Ltd off market on 25-06-2003 for a consideration of Rs. 43,800/- paid in cash. There is also no dispute to the fact that the shares got dematerialised on 07-03-2005. There is also no dispute to the fact that the assessee in his balance sheet as on 31-03-2004 and 31-03-2005 (copies of which are placed at Paper Book 23 to 24 respectively) has shown such shares under the head....
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....s Pvt. Ltd., wherein mild steel bars are manufactured. 14.1. Returns of income for A.Ys. 2002-03 to 2005-06 were filed u/s.139(1) of the Act accompanied by all requisite documents and were processed u/s.143(1) for each of the years under consideration. In the returns for each year, assessee had shown an income under the head Long Term Capital Gains pertaining to sale of shares held as investment which was accepted as such by the Department. 14.2. In respect of above, stand of the assessee has been thata) Regular books of accounts are maintained by all the members of the Peety family right from the beginning. Copies of Balance Sheet, P & L A/c and computation of income for the assessment years under consideration are attached as pages 1 to 30 of Paper Book-I. b) The purchases and sales of shares in question were duly accounted for in the regular books of accounts for the years in which the purchases/sales were made. c) The purchase and sale of the shares were evidenced by their having been shown in the Annual Accounts attached with the regular returns of income for relevant year/years. d) The shares which were held as investment are liste....
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.... 132 and some of the contract notes were also seized by the raiding party. The above bills reveal that the sale was effected through the electronic trading platform of recognized Stock Exchange. There is no dispute with regard to date of sales which is a matter of record. o) The sale consideration of the sale of shares is received through regular banking channels in the form of account payee cheques/drafts and the same were credited in regular bank account maintained by the assessee. p) The transactions were duly recorded in the books of the share brokers. q) Shares sold have been actually delivered and routed through Demat accounts identifying the brokers to whom the delivery of the shares were made. r) The debit entries in the Demat Account evidences the delivery of the shares. s) Copies of contract notes, Sales bills, broker account, client ledger in the books of broker, Bank statements, Demat Account and BSE Stock Price list are submitted as Pages 33-60, 174-202, 257-262, 278-291, 334-387,419-440, 462-503 & 523- 528 of the Paper Book-I. 14.3. All the above details indicate that the transactions in shares were well regulated ....
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....ney of the company. It was contended that prior to the search, the returns of income for the A.Ys. 2002-03 to 2005-06 had already been filed u/s.139(1) of the Act accompanied by all the requisite documents and processing u/s.143(1) of the Act stood completed. During the course of search no incriminating materials were found relating to these years which could have been added back in the proceedings u/s.153A. The details regarding the transaction in shares for each of the year under consideration were very well placed before the Department in the computation of income of each year and no query was ever raised by the Department. There was nothing in the intimation u/s.143(1) to indicate any deficiency with regard to the assessee's claim of transaction in shares, the income shown and the evidences furnished in respect thereof. 14.6. The additions made u/s. 153A were based on the statement of some brokers which were recorded behind the back of the assessee without producing them before the assessee for cross examination despite specific request. Under peculiar circumstances assessee offered this amount in his statement recorded u/s. 132(4) though as such nothing incriminating ....
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....ls of shares and deposits held by him for all the years under consideration. Copies of bank statements, Contract notes/Broker notes, Purchase Bills of shares were also submitted. A copy of the letter dated 24.08.2007 is attached as Pages l-3 of the Paper Book- II. b) In reply to notice dated 5.09.2007, details of purchase and sale of shares held on long term basis were submitted. A copy of the statement is attached as Pages 32, 61, 173, 203, 256, 277, 263, 292, 333, 390, 461 & 509 of the Paper Book-I. c) In reply to notice dated 15.10.2007, details of Long term Capital gains and Short Term Capital Gain earned by the assessee for the various assessment years was submitted. A copy of the statement of Long term Capital gains for each of the year is attached as Pages 31, 172, 255, 332 & 460 and of Short term Capital gains is attached as Pages 417 & 521 of the Paper Book-I. d) In reply to notice dated 2.11.2007, details of purchase and sale of shares held on short term basis were submitted. A copy of the statement is attached as Pages 418, 441, 522 & 529 of the Paper Book-I. e) The Demat statements of various banks were submitted on 10.12.2007. ....
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....d as business income/adventure in the nature of trade if at any point of time the transactions were found to be genuine. d) That the A.O. was not justified in treating the purchases of shares of Fast Track and Pranneta Industries Ltd. as not genuine. e) That the A.O. was not justified in rejecting the claim of the assessee in respect of capital gains. f) That the A.O. was not justified in charging interest under section 234A, 234B and 234C of the Income tax Act, 1961. g) That the A.O. was not justified in initiating penalty proceedings under section 271(1)(c) of the Income tax Act, 1961. 14.13. In appeal, the concerned CIT(A)-I, Nagpur, vide his Appellate Order dated 18.06.2008 allowed the appeal of the respondent for all the years under consideration, thus reversing the Assessing Officer's findings on the issue. The same has been agitated before us on behalf of the Revenue. The various issues have been argued before us. Each of the grounds taken by the Department and the respondents arguments in respect thereto are dealt as under: 14.13.1. Let us first analyse whether the provisions of section 153A of the Act has been....
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....rse of search could not be said to be evidence "found as a result of search", though the same may be "obtained during the search". In case an addition is intended to be made as the undisclosed income on the basis of such statements, it has to be first proved that these statements are relatable to "such evidence." The only evidence relied upon by the Assessing Officer is the statement of Sri Surendra S Peety recorded in the course of search. There is nothing on record to suggest that any incriminating document or material was discovered as a result of search. Above statement was made without having the benefit of referring to any document in certain state of mind and was made on the assertion of the department that they have evidence against the assessee by way of some statements of brokers which were not made available to the assessee. Therefore, the respondent could not be held liable on the basis of a mere statement which was made under exceptional circumstance as mentioned above. As such, the validity of such statement, which is in no manner related to any evidence or materials found in the course of search in assessee's premises, is in itself not justified. 1....
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....inating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were not found to be in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) did not arise. The Explanation to section 132(4) permitting such examination came into effect only from April 1, 1989. Even if it were held that the statement of the managing director fell under the Explanation to section 132(4), the Tribunal had recorded a finding of fact to the effect that the statement of the managing director or that of other partners had no evidentiary value as they were not supported by any documentary proof. No question of law arose from the order of the Tribunal. d) Mumbai Bench in the case of Deepchand & Co. vs. ACIT [1995] 51 TTJ 421 held that statements recorded during course of search proceeding which continued for an unduly long period could not be considered to be free, fearless and voluntary. Additions cannot be sustai....
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....) In the absence of corroborative evidence, there is a possibility of valid retraction in the return of income filed subsequent to search. e) It recognizes that a mere confession by an oral statement would not suffice unless there is enough evidence to corroborate such confession. 14.14. On the basis of the above factual discussion, not much reliance should be placed on statements made by the assessee during the course of search because no corresponding seized material was found in the course of search to justify the additions in question. The verbal statement of the assessee without any connection with the other materials found during the search cannot be considered to be materials found during the search. Relevant income tax returns for the past years were filed prior to the search in the normal course suo moto disclosing the particulars of subject additions which stood accepted u/s 143(l) of the Act. Assessment as contemplated u/s 153A is not a de novo assessment and additions made therein, has to be necessarily restricted to undisclosed income unearthed during search. There is nothing on record to suggest that any corroborative evidence was found to justify th....
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....session of the Assessing Officer relates to some oral statement of some brokers who alleged, without substantiating, that the purchases and sales were by way of accommodation entries. Thus, the statement given by the assessee should not bind him on the face of the overwhelming nature of evidences available in the record of the department and those produced by the assessee in the absence of any other adverse evidences produced by the department to supporting its stand. The measure of search is to unearth documents revealing concealed income and wealth. Since interrogation is not an object of the search, it is expected that a respondent is not put to pressure into making an admission and the statement should not go beyond what is discovered in course of search from the premises of the assessee. In the case of the assessee, there is nothing on record to suggest that any incriminating evidence was found in connection with the share transactions from the residential and office premises of the Peety group. The entire declaration pertaining to the shares transactions were arrived at only on the basis of the statements recorded of the brokers and the returns of incomes filed during the reg....
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....Haryana High Court in the case of Kishanlal Shivchand Rai 88 ITR 293 (P&H), has held that it is an established principle of law that a party is entitled to show and prove that an admission made by him previously was in fact not correct and true. It was incumbent upon the Inspecting Assistant Commissioner to have afforded the assessee full opportunity to prove his assertions. The Inspecting Assistant Commissioner proceeded to impose penalty solely on the basis of the fact that the amounts were surrendered by the assessee at the time of the assessment. Even treating the surrender as an admission of the concealment of undisclosed income, the Inspecting Assistant Commissioner could not deny the assessee its right to prove that the fact of surrender was not such admission and that the so-called admission was in fact wrong and the surrender was made solely to avoid botheration as stated by the assessee. Similar view has been taken in Pullangode Rubber Produce Co. Ltd. (supra) and Deepchand & Co. (supra). We also find that ITAT Mumbai Bench in Pushpa Vihar vs. ACIT (1994) 48 TTJ 389 (Bom), held that in surrounding circumstances, it cannot be concluded that what the assessee said originall....
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....vailable to the assessee on 25.12.2007 which happened to be a public holiday. The opportunity for cross examination was afforded to the respondent on 26.12.2007 and assessee was directed to be present at the office of the Director of Investigation at Scindia House, Ballard Estate, Bombay. Despite all inconveniences caused due to constraints of time, the respondent along with his Authorized Representatives were present but the department failed to produce their witnesses. Another opportunity was given on 31.12.2007 at the same premises and yet again the department failed to produce the witnesses. Thereafter an email was sent to the concern Assessing Officer requesting him not to rely on these ex-parte statements while framing the order and determining the income of various members in the group. 16.1 Thus affording of opportunity for cross examination was an empty formality and only to technically comply with the respondent's request which could never materialize. However, there was no whisper in the said order as to the request of the assessee for cross examination and its results which was crucial for fastening a liability against the assessee. It reveals that the auth....
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....addition on the basis of surrender during search or survey, it is sine qua non that there should be some other material to correlate the undisclosed income with such statement. Adverting to the facts of the instant case, only to the extent of Rs. 21.14 lakhs there is a material to co-relate with the admission, representing the excess stock found at the time of survey. Evidently the surrender made by the assessee at the time of survey to that extent and offered for taxation in the return of income is in order. But insofar as the amount in dispute to the tune of Rs. 28. 85 lakhs is concerned, such surrender was specifically made "towards any other discrepancy". There is no mention in the assessment order of any such discrepancy found as a result of survey throwing light on the undisclosed income. Even the Departmental Representative could not point out any material showing the existence of undisclosed income earned by the assessee which was unearthed during the course of survey. There is nothing on record which could correlate such additional income offered by the assessee during the course of survey with any other discrepancy. There is no basis for sustaining the addition in questio....
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.... laid down the law that where a person who has given an affidavit was not cross examined, it would not be open to challenge the correctness of the statements therein. Here, Shri Mukesh Choksi was not allowed to be cross examined despite assessee's request nor was he cross examined by the A.O. vis-a-vis the affidavit. Therefore, in our opinion, the A.O. could not have brushed aside such affidavit. Hence no mistake can be seen in the order of the Ld CIT(A) in following the decision of this Tribunal in the case of Mukesh R Marolia(supra)." 16.6. In the case before us, the transactions in question routed through authorized channel, carried out at prevalent market rates and supported by proper bills and documents. The assessee has discharged the onus cast upon him by furnishing before the Assessing Officer all necessary documents, being bills and contract notes, in support of the purchases and sales made by him. The Assessing Officer is supposed to negate the documentary evidence produced in favour of the transactions of purchase and sale of shares which has not been done by the Assessing Officer. The Assessing Officer is not supposed to wash away on assumptions and arbitra....
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....aw a conclusion that since there were no purchases, the sale of the shares made through them were not genuine. Any document has to be taken as a whole and the Assessing Officer should not pick and choose those parts of the statements which suits him and totally reject those parts of the same statements which are in support of the assessee. Therefore, either the Assessing Officer should not rely on the statements at all or if he uses these statements as evidence against the assessee then he should read it as a whole and also accept those parts of the statements which support the assessee. One of the most significant evidence which has been conveniently ignored in the assessment order relates to transaction with Trimiti Investment from whom bulk of shares pertaining to G Tech Info, Highland Industries, Fast Track Entertainment and Database Finance were purchased. Prior to search, statement of Dhaval Shah and during the course of post search enquiries, the statement of its Director Shri Sourin Mehta were recorded by the department and its books were a subject matter of scrutiny. They have confirmed all the transactions with the Peety Family and have also confirmed that the payments fo....
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.... As you were sub-broker & had arranged these shares for Peety family from these brokers. Hence why it shall not be presumed that the bills issued by your concern Trimiti Inv. & Fin. Services Pvt. Ltd., cannot be treated as back dated & bogus. A. Our concern has not issued bogus bills. 16.9. The extract of the above statement shows that the transactions with Trimiti Investment were not bogus. Therefore, any documents with this concern should not be suspected unless there is anything otherwise on record. Moreover, during the course of assessment proceeding, the statement of Shri Sourin Mehta was before the Assessing Officer which was accepted as no adverse inference has been drawn with regard to this transaction in the assessment order. As stated above M/s.Trimiti Investments through whom majority of transactions of purchases were effected has stated that the transactions are genuine. There is no discussion about the statement of this broker in the assessment order. Thus, the selective use of evidence by the Assessing Officer is not justified. 16.10. The assessee is not concerned with the modus operandi of the broker's trading with its other clients. As....
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....tered broker is proved by documentary evidence filed on record. The payments of sale proceeds of 20,000 shares were received by the assessee by account payee cheques. It was found that the transaction has been entered into through a registered broker at prevalent market price and was supported by documentary evidence. The transaction of sale and purchase of shares had been confirmed by the share broker both in his statement recorded u/s.131 of the Act and also by an affidavit filed before the Assessing Officer. In these facts, the Tribunal held that no case of addition u/s.68 of the Act is made by Revenue against the assessee and the fact of purchase and sale is proved by documentary evidence filed before Assessing Officer. 16.11. In case of Shri Acchyalal Shaw ITA No.1977/KoI/2008, the ITAT Kolkata Bench has held as under: "In our considered opinion, suspicion cannot replace the real evidential document. Simply by arguing it to be a case of manipulation the Revenue is not supposed to succeed in their contention without proper evidence. Holding this view of the matter on the factual matrix and respectfully following the case laws cited above, we allow the assessee....
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....t all. There must be something more than suspicion to support the assessment. It was held that a suspicion however strong may not take the place of proof. Therefore the assessment made by the Assessing Officer which is predominantly influenced by uncorroborated evidence deserves to be set aside. In case before us as against the evidence and material available with the assessee to prove the transactions of Long Term Capital Gain, the Assessing Officer tried to analyze the transactions of only two scrips namely Fast Track Entertainment (paras 13 to 24 of the assessment order) and Prannet Industries (paras 26 to 28) and concluded that the transactions of all scrips of all the assessees and for all the years were not genuine which is not justified. 18. A search assessment u/s. I53A should be evidence based. A search is authorized to unearth undisclosed assets or transactions resulting in income which are not recorded in the books of account of a person. Therefore, a search puts in motion the process of assessment of the undisclosed income of a tax payer which is not disclosed to the department. In other words, items of regular assessment normally should not form a part of a se....
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....see's claim with regard to capital gain in each year remains unaltered as per the computation filed along with the return. 18.2. Moreover, the computation of income filed by the assessee in the original return as well as in the returns filed u/s 153A shows that the day trading profit has been included in the total taxable income for the relevant year. The same has been accepted by the AO while making his own computation in the impugned orders. This clearly establishes the source of investment in purchases of the relevant year as claimed by the assessee whereas in the discussions on the issue of capital gain the AO has expressed his reservation about the original date of purchase and has doubted these very transactions which are financed through day trading profit only, as stated above day trading profits are declared in each year when the same accrued to the assessee. In this manner the AO blows hot and cold at the same time which cannot be accepted." Picking up the entire sale proceeds on account of share transactions separately and adding it u/s.69A would establish that the assessee was found in possession of this amount which was not disclosed in his books of accoun....
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....ealing profit were held as genuine by the Assessing Officer, he should have also accepted the capital gains reflected in the very same books of accounts. While arriving at an adverse conclusion against the assessee, the Assessing Officer seems to be deliberately relied only on those evidences and enquiry results which were against the assessee while diluting the significance of other evidences which were in favour of the assessee. 18.3. It is settled legal position that seized material has to be read and accepted as a whole and it is not permissible to pick and choose or make further estimate therefrom unless and until there is cogent evidence in support of undertaking such an exercise. The settled principle is that documents found in search should be treated as genuine with respect to all entries recorded therein. The Revenue is not justified in taking a view that only part of the contents is correct. Entire document should be read as a whole and contents of the documents should be treated as correct or rejected as a whole. Therefore, when the department can accept transactions relating to share trading profit, there is no reason as to why it should not accept the transac....
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....en by assessee is not up to the satisfaction of the Assessing Officer regarding its nature and source of acquisition. The assessee has recorded the sale proceeds and purchase consideration in their books of accounts and very well explained its nature and source of acquisition. Assessee group have sold the shares through registered brokers who are known and identifiable income tax payee, received money from them through appropriate banking channels which are duly confirmed by them. Such additions made by treating the sale proceeds of shares as unexplained income and not recorded in books of accounts and adding it u/s. 69A of the Act is not justified. 18.6. The Hon'ble MP High Court in the case of Man Mohan Sadani vs. CIT (2008) 304 ITR 52 (MP) has held that the entire sale proceeds cannot be regarded as profit or treated as undisclosed income of the assessee. On the contrary, it is the net profit rate which has to be adopted in such cases. Further Hon'ble MP High Court in CIT vs. Balchand Ajit Kumar (2003) 263 ITR 610 (MP) has taken similar view. The Hon'ble Gujarat High Court in CIT vs. President Industries (2002) 258 ITR 654 (Guj) held that the amount of sales....
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.... c) The activity is not in the usual line of business of the group. d) The investment was made out of their respective capital accounts. e) The investments were made by them as ordinary investors. f) In all cases delivery of shares were taken and transactions were not speculative in nature. g) The holdings had continued for a fairly long time. h) In the books and returns filed, the shares were shown as investment and not as stock in trade which was accepted by the department for a long period of time. Since the amounts received were realization of capital, it was clearly a capital receipt. i) There was no concept of venture or organized trade attached with the activity. There was no organization associated with trade. A business requires greater activity and a greater organization which were conspicuously absent in these cases. j) There is no element of adventure or trade in the shares transaction. k) Although the department carried out search, no evidence was found to indicate that the transactions were carried out in the capacity of a trader. 19.1. All these factors have to be cumulatively ta....
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.... nature of trade and the profit arising from sale of the shares was not assessable as income from business. 19.4. In this background, it is clear that the Assessing Officer was not able to establish that the assessees were engaged in adventure in the nature of trade. The CIT(A) while rejecting the propositions made by the Assessing Officer, to treat the share transactions as an adventure in the nature of trade has stated in para 19.3 of his order as under (pages 85 & 86): "I would reiterate that the AO, in the instant case, was unduly governed by his, wish to bring the entire sale receipts of shares under the maximum rate of tax. In the process he has ignored the fact that the Income Tax Act lays down specific laws/method to compute different heads of income with varying tax slabs/rates. Once the AO decided to approach the issue with this mind set he started looking for various methods to achieve this purpose. Originally in the assessment he taxed the entire receipts as unexplained receipts u/s. 69A which is legally not tenable. Thereafter, he came up with a new theory of assessment so that if his proposition to tax the receipt at maximum rate u/s. 69A fails he ca....
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....essee purchased 30,000 shares on April 8, 1999 and sold them on July 7, 14, 21, 2000. The assessee offered long-term capital gains on sale of shares which was accepted by the Assessing Officer in the respective assessments. Subsequently, there was a search action in the case of various assessees belonging to a group and the group offered additional income of Rs. 2 crores, out of which Rs. 3 lakhs were offered in the hands of the assessee for the assessment year 2004-05 and Rs. 7 lakhs in the assessment year 2005-06. The Assessing Officer on the basis of the seized material issued notice under section 153A of the Income Tax Act, 1961, for assessment year 2001-02 and subsequently passed an assessment order under section 153A read with section 143(3) computing the total income disallowing the long-term capital gain and adding the entire sale proceeds received on sale of shares amounting to Rs. 10,14,324 as income from undisclosed sources under section 68 of the Act. The Commissioner(Appeals) held that section 68 of the Act was not applicable to the facts of the case and accordingly deleted the addition. The appeal filed against this order was dismissed by the Tribunal. On appeal: ....
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.... and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I. and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a sham transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case. 11. At this junction, it would be relevant to mention here that it is not disputed by the Revenue before us that the shares of these assessees were already shown in the earlier Balance Sheet submitted by the assessees, and therefore, in that situation, how the revenue condemned the transaction even on the ground of steep rise in the share. ..." 19....
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.....3. We find the Mumbai Bench of the Tribunal in the case of Shri Jafferali K Rattonsey vs. DCIT reported in 2012-TIOL-236-ITAT-MUM, has held as under: "9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. In the instant case the A.O. made addition of Rs. 5,09,25,802/- as unexplained cash credit holding the sale of shares by the assessee as bogus. While doing so he relied heavily on the statement given by Mr. Mukesh Choksi wherein he has stated that the transactions of purchase of shares are not carried out through them and the name of his company has been wrongly used and no transaction mentioned in the ledger has been carried out through them. The A.O. had also another proposition that the total purchase price on the date of dematerialisation comes to Rs. 44110775/- which becomes unexplained investment in shares. After deducting the investment in shares from sale price the short term capital gain comes to Rs. 80,03,027/-. However, since he considered the entire receipt on the sale of shar....
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....questions and answers of Mr. Mukesh Choksi recorded by the A.O. on 24.12.2008, copy of which is placed at paper book page No. 19 to 23 are as under. Q No. 7:- Do you know Shri Jafferali K. Rattonsey and Smt. Hamida Rattonsey? Ans. No. I do not know them. Q No. 8:- I am showing you the ledger account of Mahasagar Securities Pvt. Ltd. in the books of Shri J.K. Rattonsey and Smt. Hamida J. Rattonsey. From this account it is seen that the assessee have carried out regular transaction with Mahasagar Securities Pvt. Ltd. Pl. confirm the ledger account furnished by the assessee with the copy of ledger account of J.K. Rattonsey and Smt. Hamida J. Rattonsey appearing in the books of Mahasagar Securities Pvt. Ltd. Ans.: I have seen the ledger and on the perusal of the same I found that the transactions are not carried out through us. It seems that our name has been used and no transaction mentioned in the ledger have been carried out through us. Mahasagar Securities have no relations with the J.K. Rattonsey and Smt. Hamida J. Rattonsey. 9.3. On the basis of the above statement of Mr. Mukesh Choksi the ld. CIT(A) upheld the alternate proposition of....
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.... the same. 9.5 From the above, it is clear that Mr. Mukesh Choksi is double speaking in his statements i.e. one given before the A.O. and the one during cross examination before the A.O. Under these circumstances one has to see the evidentiary value of a person making double speaking. We find the Hon'bleCalcutta High Court in the case of Eastern Commercial Enterprises (supra) has held that a man indulging 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. We find the co-ordinate bench of the Tribunal in the case of Mrs. Uttara S. Shorewala (supra) (in which one of us - the Accountant Member is a party) following the decision of Hon'ble Calcutta High Court upheld the order of the ld. CIT(A) in holding that the A.O. cannot make any addition in the assessee's hands despite the assessee not having made any payment to the entities mentioned by Shri Choksi, whose statement is being relied upon by him. The CIT (A) also noted that Mr.Mukesh Choksi has been vacillating right through and has given different versions at different stages of the proceedings and therefore his evidence was unreliable. ....
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.... ITO vs. Mrs.Rasila N Gada & Ors., in the consolidated order dated 8th August, 2012, has held as under: "5.1. After perusing the material available we are of the opinion that considering the facts and circumstances of the case, the order passed by the FAA does not suffer from any legal infirmity. Hon'ble Bombay High Court in the case of Sharada Credit and Mukesh R Marolia has upheld the orders of the ITAT, Mumbai. In those cases it has been held that shares purchased/sold in the off market cannot be considered illegal transactions. We find that the AO had not afforded opportunity of crossexamination of Shri Mukesh Choksi to the assessee. It is noteworthy that Sh. Choksi had not named the assessee in his statements as the beneficiary who had availed bogus entries. We have noticed that the assessee had shown the investment in shares in the balancesheet of the earlier assessment year and her return of income was accepted by the Department. We are of the opinion that once sales/purchase of shares is accompanied by this kind of evidences the genuineness of the said transactions cannot be doubted. Non-payment of STT cannot be and should not be basis for making addition of the se....
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....dinating benches of the Tribunal we hold that purchase and sale of shares by the assessee was a genuine transaction, and hence, addition made by the AO cannot be endorsed. Upholding the orders of the FAA, we dismiss the appeals filed by the AO." 19.5.5. We find the Nagpur Bench of the ITAT in the case of ACIT vs. Kamal Kumar S.Agrawal & Ors., reported in 133 TTJ 818, has held as under: "The assessee earned capital gains during the period covered by s.153A proceedings. It is also noted that all such transactions have been taken into consideration while filing the returns for these years in the normal course and the Department has also accepted the nature of such transactions. It is very important to note that no incriminating material has been found during the course of search which could have cast doubt on the genuineness of the transactions or could have indicated that it was a case of assessee's own undisclosed money utilized in the execution of such transactions. Voluminous documentary evidences have been filed by the assessee to prove its claim which support the genuineness of the transaction. However, the AO has utilized the statements of the persons who were....
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....ons and the interest of general public is protected by prohibiting the market intermediaries from indulging in unfair trade practices. The order of the SEBI relied on by the Revenue is mainly on the aspect of price rigging in such manner. Hence, the same cannot be of any assistance to the cause of the Revenue. Thus, on the basis of appreciation of facts and circumstances of the case as a whole and considering the documentary evidences on record, the share transactions cannot be considered as ingenuine/sham and, therefore, the sale proceeds of such share transactions cannot be taxed under s.68. As regards the plea of the Revenue regarding treatment of share transactions as an adventure in the nature of trade taken during the course of appellate proceedings for the first time, in the course of assessment proceedings, the AO has taken a definite stand of such transactions being bogus or sham. Hence, such plea has rightly been rejected by the CIT(A) after examining the scope of the powers of the CIT(A) as well as role of the AO in the scheme of Act. Under the scheme of the Act, income is to be assessed under different heads depending upon the source/nature of such income and i....
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....s suspended by SEBI. (ix) Broker's husband is a relative of the family. (x) Absence of relevant entries" in the records of Calcutta Stock Exchange. (xi) It was held that since the assessee received sale consideration and the same is against the sale of shares, addition cannot be made u/ s. 68 of the I. T. Act. It was further held that from the date of transfer of shares in the demat account of the assessee and its sale, period of holding is to be counted. The plea taken by the assessee that the assessee has purchased the shares off market was not accepted at this stage. Accordingly, the facts of this case are entirely different from the facts of the instant case. The various other decisions relied on by the Ld. Departmental Representative as well as the Assessing Officer also do not apply to the facts of the present case. 19.6. Considering the totality of the facts of the case and relying on various decisions cited supra and considering the elaborate discussion by the Ld. CIT(A) we find no infirmity in his order accepting the Long Term Capital Gains and Short Term Capital Gains declared by the assessee. Accordingly, the order of the CIT(A) is....
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.... assessee namely Mr.Arun Goyal had received a gift of Rs. 15 lakhs during the assessment year under consideration. However, the amount so received was offered to tax later on during the course of survey action u/s.133A. Since the gift so received was from a person who is not a relative of the assessee nor he has any business connections with the assessee, therefore, the AO asked the assessee to justify the gift so received from the said person. The assessee submitted that it has explained the source of investment and the asset acquired by furnishing the details of gift along with the copy of Demand Draft copy of gift deed etc. 14. However, the AO was not convinced with the explanation given by the assessee. He noted that the brother of the assessee Mr.Anil Goyal has already offered receipt of such gift from a non relative as his own income. The family of the assessee has been in receipt of gifts from their relatives based in USA. It is very strange that in addition to such gifts the assessee also received a gift from a person who is not distinctly related nor having any personal or business connection. In the gift deed, it has been mentioned that the same is out of love and affe....
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.... above facts, I am of the considered view that the A.O. is justified in treating the said gift as non-genuine and making addition of Rs. 15,00,000/-. The addition is also justified in view of the provisions of section 56(v) of the Act which have been introduced in the statute by Finance Act (No.2), 2004 w.e.f. A.Y.2005-06. In view of the above facts and discussion, the addition of Rs. 15,00,000/- is, therefore, confirmed. Ground Nos.2, 3 & 5 are dismissed." 16. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : "1. The learned Commissioner of Income Tax (Appeals) erred in confirming the action of the Assessing Officer in treating the gift of Rs. 15,00,000/- received by the appellant as income of the appellant from undisclosed sources. 2. The learned Commissioner of Income Tax (Appeals) further erred in confirming the gift received by the appellant as income from undisclosed sources merely on the basis of similar gift declared as income by Shri Anil Goyal. 3. The learned Commissioner of Income Tax (Appeals) further erred in confirming the gift received by the appellant as income from undisclosed sour....
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.... invoked the provisions of section 56(v) which was introduced by The Finance Act 2004 and is applicable to any sum of money exceeding 25000 received from any person on or after 01-09-2004. Since in the instant case the gift has been received on 24-05-2004 which is much before 01-09-2004, therefore, no addition can be made u/s.56(v) of the Income Tax Act. He accordingly submitted that the addition made by the AO and sustained by the CIT(A) should be deleted. 17.1 The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and the CIT(A). 18. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. The only dispute in the impugned appeal is regarding taxability of the gift of Rs. 15 lakhs received by the assessee from one Sri Jadhumani Pradhan. We find the Assessing Officer disallowed the claim of gift on the ground that (1) the donor is not a relative of the assessee, (2) the brother of the assessee Sri Anil Goyal had already offered the receipt of such gift during the assessment year under consideration as his own income (3) apart from receivin....