TaxTMI 
TaxTMI 
2018 (7) TMI 1807
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....king an addition of bogus sundry creditors of Rs. 31,13,200/- and an addition u/s 68 of Rs. 1,64,81,148/. 3. Aggrieved, assessee carried the matter in appeal. The Ld First Appellate Authority granted part relief. Further, aggrieved assessee is before us 4. We have heard Shri S. Jhajhoria along with Shri Sujoy Sen, the ld. counsels for the assessee and Shri S. Dasgupta, the Ld Addl. CIT-DR on behalf of the Revenue. On careful consideration of all the facts and circumstances of the case, on perusal of papers on record and case law cited, we hold as follows:- 5. Ground No.1 is general in nature. 6. Ground No.2 is against disallowance of business loss of Rs. 91,08,921/- which consists of trading loss of Rs. 66,99,200/- and business expense of Rs. 30,09,721/-. The Assessing Officer discussed this issue at pages 2 to 3 in para-5 of his order. The AO disbelieved the contention of the assessee that it had sold 3,20,000 unquoted shares of RDB Two thousand Plus Ltd (i.e. name of the company) @ 29.25 per share for the total consideration of Rs. 93.60 lakh. These shares were purchased at a total cost of Rs. 1,54,59,200/- @ 48.31 per share. The shares in question were purchased from....
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....is no bar on selling shares on loss anywhere in the Income Tax Act, 1961. f. The purchasers of the said shares (M/s Kripa gents P Ltd & M/s SKUPS Films P Ltd) had already advanced substantial amount towards purchase of shares and since 2012 they have no charged any interest on this advance. g. Since the assessee has enjoyed the interest free advance for near about 3 years, it comes to a business sense that the shares for which advances were received should be dealt in price bracket and Income tax department has never interfered when a buyer and seller both confirmed the transactions independently to the Ld AO as replied u/s. 133(6). h. There was no reason to disallow the expenditure as claimed by the appellant either, by the Ld AO." 8. The Ld CIT(A) at page 10 para-7 held as under:- "7. I also find that all the submissions made by the appellant during the course of the appeal point towards the elaborate documentation, meaning thereby that the appellant has produced papers relating to application for the shares, the allotment of the shares, the share certificates, payments by cheque and the necessary papers filed before the Registrar of compani....
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....ious year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case, there is prima facie, evidence against the assessee viz. the receipt of money, and if he fails - to rebut, the said evidence being un-rebutted, can be used against him by holding that itw4as a receipt of an income nature." In the case of Sajjan Das & Sons vs. CIT (2003) 264 ITR 435 (Delhi), their Lordships of the High Court of Delhi, while considering a case in which gifts were received by the assessee through banking channels laid importance on the capacity of the donor for making the gift and his identity as well as importance of relationship between the donor and done in determination of genuineness of gift held as under:- That a mere identification of the donor and showing the movement of the gift amount through banking channels was not sufficient to prove the genuineness of the gift. Since the claim of the gift was made by the assessee, the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make a gift and that it had actually been received....
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....proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. But in view of section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie evidence against the assessee, viz., the receipt of money, and if he fails to rebut the same, the said evidence being un-rebut, can be used against him by holding that it is a receipt of an income nature. While considering the explanation of the assessee, the department cannot, however, act unreasonably. ... ... Having regard to the conduct of the appellant as disclosed in her sworn statement as well as other material on the record, an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. The majority opinion after considering surrounding circumstances and applying the test of human probabilities had rightly concluded that the appellant's cl....
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....will also be worthwhile to consider the nature of burden of proof on the AO for proving a fact or circumstances in the income tax proceedings. The questions raised about the tax liability by the AO are to be answered by the assessee by furnishing reasonable and plausible explanations. If assessee is not forthcoming with proper or complete facts or his statement or explanation is contradictory, drawing of suitable inferences and estimation of facts is inevitable. Courts generally will not interfere with such estimate of facts, unless the inferences or estimates are perverse or capricious. 6.15 The assessee's technical contentions about admissibility and reliance on material available on the AO's record are in the nature of contentions challenging criminal or civil liabilities in a court of law. We are dealing with a process of adjudication of assessee tax liability i.e. assessment under Income Tax Act rather than conducting criminal or civil court proceedings. As held by the Hon'ble Supreme Court in the case of SS Gadgil (supra) no 'lis' is involved In adjudication of tax liability. The assessee's contention that there was no new material before the AO after the CIT(A)'....
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....ve disputed the claim of the assessee that the price at which the assessee sold the share is commensurate with the book value of the shares. The documentation produced proves that the transaction of sale has taken place during the year. Ld. DR before us could not controvert the submission made by assessee on the book value arrived at for the purpose of the sale. The shares in question were part of the stock-in-trade of the assessee. This closing stock disclosed by the assessee has not been disturbed. The books of account maintained by the assessee have not been rejected. The buyers of the shares have recorded the purchase of the shares and have responded to direct enquiry made by the AO u/s 133(6) of the Act and confirmed the transactions. The shares are reflected in their balance-sheet. The factum of transfer of shares cannot be disputed, in view of evidence filed by the assessee. All the companies are legal entities and transactions with these companies cannot be held as non-genuine, simply because they are group companies or as certain directors are common. Documentary evidence and facts cannot be ignored and the theory of human conduct, preponderance of probability etc. cannot ....
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....63,17,500/-. These shares were sold to M/s RDB Two thousand plus Ltd. on 02.07.2013 for Rs. 83,77,500/-. The assessee filed the ledger copy, bank statements and copies of share certificate as evidence of sale and the purchase of shares evidence the transfer of the shares in the records of company M/s Turtle in motion were filed. To a query the assessee explained that he had sold immovable property to his wife and the purchase cost of share had been adjusted against the sale proceed of the property. The Assessing Officer doubted the genuineness of the transactions. He accepted the sale value of the unquoted share as Rs. 83,77,500/-. He came to the conclusion that the source of purchase of share form S.R Bansal was not explained. Hence the expense of Rs. 26,77,200/- was disallowed and added back. On appeal the Ld. CIT(A) did not pass a speaking order. We find that the assessee has submitted copies of the bills evidencing the fact that the shares were sold by Shri S.R. Bansal. Copies of share certificate evidencing transfer of share from Shri S.R. Bansal to the assessee were filed. Both the parties are income tax assessees and have reported these transactions. If the purchases of the ....
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....rties, was fulfilled, since the transfer was to close relatives. He held that bona fide evidence, to the effect that the transferee had taken possession of the property, in part performance of the contract, is not filed by the assessee. He held that the sale of property to his daughter and wife is definitely a suspicious transaction of dubious nature. He added the sale consideration u/s.68 of the Act. 16. The Assessing Officer acknowledges that the sale consideration was made by cross account payee cheque from to the bank account of the daughter of the assessee. He was of the view that payment by cheques do not prove the genuineness of the transactions. He also held that notice issued u/s 133(6) of the Act to the daughter was returned back. Learned CIT(A) agrees with the findings of AO and upheld the addition made u/s. 68 of the Act. 17. Aggrieved, assessee is before us. The Ld. counsel for the assessee submits that there is no bar under the Income Tax Act to transfer property to close relatives. The transfer has taken place at the market value and the consideration was paid by way of cross account payee cheque. Tax was deducted at source on this sale consideration as require....
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....3(6) of the Act. The Revenue Authorities have not brought out any contrary evidence on record to rebut the evidence filed by the assessee. When the parties to the contract have confirmed that the possession of the property has been handed over, a contrary view cannot be taken on this fact without evidence. The Hon'ble Supreme Court in the case of Lalchand Bhgat Ambica Ram vs. CIT (1999) 37 ITR 288 (SC) had referred to another judgment of the Hon'ble Supreme Court in the case of M/s Oman Sahow Mohamed Sait (1959) 37 ITR 151 (SC) and held that no addition can be made on the basis of surmises, suspicion and conjectures. In the case of Umacharan Shah & Bros vs. CIT 37 ITR 271 (SC) it was held that suspicion however strong cannot take the place of proof. Thus, we delete the entire addition made u/s 68 of the Act as unwarranted. In the result, Ground No.5 is allowed. 22. Next ground in respect of addition of Rs. 31,13,200/- made by the AO on the ground that same is bogus liability. 23. After hearing rival contentions, we find that the liability in question pertains to the mother of assessee, Smt. Saran Kumai Bansal. Subsequent to her demise, the liability devolved on her hu....