TaxTMI 
TaxTMI 
2017 (11) TMI 319
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the addition made to such returned income of Rs. 5,57,609/- be deleted and the total income be assessed at Rs. 25,82,669/- 2. The learned CIT (A) has erred in confirming the rejection made by the Asst. Commissioner of Income Tax against the OBJECTION raised by the appellant vide her letter dated 18.11.2013 to the Reopening proceedings pursuant to notice u/s 143 (2) r.w.s 147 of IT Act dated 25.03.2013. 3. The Ld. CIT (A) erred in law and on facts, in confirming the assessment proceedings taken up by the Asst. Commissioner of Income Tax and confirming the order passed by him, in serious violation of the provisions of natural justice on various counts including on account of: i) relying on the third party statements which were given under duress, ii) not examining the evidences produced by your appellant during the course of assessment and ignoring the same, 4. Without Prejudice to above, The Learned CIT(A) has erred in confirming the additions made by the Asst. Commissioner of Income Tax of Rs. 5,46,675/- towards bogus purchase of shares, as Unexplained Expenditure u/s.69C of the income Tax Act, 1961, whereas the CIT (A) has failed to consider the fact that, these purchas....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from Other Sources'. 5. Against the above order, the assessee appealed before the ld. CIT(A), challenging both the reopening as well as the merits of the case. By a very elaborate order, the ld. CIT(A) upheld the reopening. Despite raising the issue of reopening in the grounds of appeal, the ld. Counsel of the assessee has not pressed the ground relating to validity of reopening. Hence, the cogency of materials relied upon by the Revenue authorities for reopening the case remains unassailed. On merits of the case, the ld. CIT(A) confirmed the addition by holding as under: 2.4.18 In view of the facts noted above, it is amply clear that the appellant had failed to prove the purchase of shares of M/s. Maruti Infrastructure Ltd. and M/s. Sundaram Multi Pap Ltd., alleged to have been obtained earlier. In response to the query regarding the source of purchase, the appellant merely stated that it was supported by a broker's note from M/s. Alliance Intermediaries & Network Pvt. Ltd. However, in view of the statement of Shri Mukesh Choksi that he took money from the parties who came to him for accommodation bills on the basis of which he used to prepare bogus and backdated accounts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 and CIT v. Durga Prasad More [1971] 82 ITR 540. In the case of Durga Prasad More (supra), it has been held by the Apex Court that though an apparent statement must be considered real, until it was shown that there were reasons to believe that apparent was not the real. In a case where an authority relied on self serving recitals in documents, it was for the party to establish the proof of these recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out reality of such recitals. 2.4.22 It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore, onus is always on a person who asserts a proposition or fact, which is not self evident. The onus, as a determining factor of the whole case can only arise if the Tribunal, which is vested with the authority to determine, finally all questions of fact, finds the evidence pro & con, so evenly balanced that it can come to no conclusion, then, the onus will....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amination. An ITO occupies the position of a quasi-judicial Tribunal and is not bound by the rules of the Evidence Act, but he must act in consonance with natural justice, and one such rule is that he should not use any material against an assessee without giving the assessee an opportunity to meet it. He is not bound to divulge the source of his information. There is no denial of natural justice if the ITO refuses to produce an informant for cross-examination though if a witness is examined in the presence of the assessee, the assessee must be allowed to cross-examine him. The range of natural justice is wide and whether or not there has been violation of natural justice would depend on the facts and circumstances of the case." 2.4.25 The Supreme Court had also an occasion to consider the applicability of the principles of natural justice in R.S. Dass v. Union of India AIR 1967 SC 593. Referring to the same, the Supreme Court in Chairman, Board of Mining Examination v. Ramjee AIR 1977 SC 965, inter alia, held as follows : "Natural justice is no unruly horse, no lurking land mine, nor a judicial cure all. If fairness is shown by the decision maker to the man proceeded again....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was accepted by the Hon'ble Tribunal in ITA No.4625/Mum/2005 & 5000/Mum/2005 in its order dated 28.03.2008, I have no hesitation in holding that the appellant had engaged in bogus transactions to convert her undisclosed income into capital gain so as to avoid any taxation. 2.4.29 However, having come to the above conclusion, I also find that the Ld. adoed short term capital gain of ? a,61,629/- on sale of shares which were purchased through Brokers other than M/s. Alliance Intermediaries & Network Pvt. Ltd. without assigning any reasons as to how the said purchase was of a similar nature as the one made through the hawala concern of Mukesh Chokshi, viz. Alliance intermediaries & Network Pvt. Ltd. 2.4.30 It is trite law that no assessment can be framed merely on the basis of conjectures and surmises. In Smt. Sushila Suresh Malge vs. ACIT [2012] 26 taxmann.com 53 (Mum.), it was held as under: "There is already evidence on record that assessee's wife has been filing the returns much before the search and there were scrutiny assessments in her case as well. Just because her affairs are being looked after by her husband, it does not mean that she is benami. In case the As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the Assessing Officer has not made any efforts to link the cash received and deposited by Mr. Trivedi in his bank account was in fact paid by the assessee. In other words, the decision of the Assessing Officer in discarding the sale and holding that the amount received by the assessee from Mr. Trivedi represented the undisclosed income of the assessee is based on conjectures and surmises and is not based on any independent evidence gathered prior to or during the course of reassessment proceedings. In these circumstances, in the absence of any cogent evidence brought on record, the decision of the Tribunal in holding that the Assessing Officer has failed to establish the nexus between the cash amount deposited in the bank account of Mr. Trivedi is attributable to the cheque issued by Mr. Trivedi in favour of the assessee cannot be faulted. Consequently, the decision of the Tribunal in deleting the addition of Rs. 10,35,562 cannot be faulted." 2.4.33 In the case of Pooja Bhatt vs. ACIT 79 ITD 205 the Hon'ble Mumbai ITAT deleted the addition made on account of alleged on money paid for purchase of flat. The ITAT held as under: "There may be a strong suspicion of payment o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iding bogus accommodation profit/loss and short/long term capital gain/loss. On the basis of the documents seized during search at the premises of this hawala concerns, it was revealed that the assessee's name is exhibited in the list of dubious bills. Under these circumstances, the assessment was reopened. The ld. Counsel of the assessee has not pressed the issue arising to reopening. Hence, the cogency of documents relating to reopening remains unassailed. In response to query regarding the source of purchase, the assessee had merely stated that it was supported by paper work from M/s. Alliance Intermediaries & Network Pvt. Ltd. However, in view of the statement of Shri Mukesh Choksi that he took money from the parties who came to him for accommodation bills on the basis of which he used to prepare bogus and backdated accounts in the names of these parties for profit which in turn were shown to have been utilized for purchase of shares of the bogus companies floated by him, there is no gainsaying the fact that the appellant was completely involved in routing of her unaccounted income and converting it into alleged capital gain. In this regard, Ld. A.O. has given a finding of fact....