TaxTMI 
TaxTMI 
2020 (1) TMI 149
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.... assessees to colour their unaccounted cash as accounted money in the form of long term capital gains. Accordingly, the Assessing Officer issued notice u/s.148 of the Act on 21.03.2016 and during the course of assessment proceedings, the Assessing Officer found that the following long term capital gains claimed by the assessee is bogus. Name of the company Date of sale Sale price Date of purchase Purchase cost Capital Gains Sepctacle Ltd (formerly Khaitan Weaving Mills) TCS LTD and Kotak Bank 13.03.2009 20.03.2009. 25.03.2009 653430 438375 694840 18.06.2007 18.06.2007 18.06.2007 97774 66487 102965 5,55,655 3,71,888 5,91,875 The Assessing Officer taking note the following information issued show cause notice dated 28.11.2016. ''6. The de-mat statement of the assessee was obtained as per which the shares were credited to the account of the assessee only on 06.3.2009, 12.03.2009 and 19.03.2009 and was debited the same day itself. This is contrary to the date of purchase mentioned by the assessee as on 18.06.2007 in the computation of long term capital gains shown in para above. 7. The fact that the ....
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.... sheets impounded at this premise (ANN/ES/LS/IMPJ. please explain the contents? Ans: The loose sheets which are shown to me contains the lists of the names and addresses of the persons and also the details of the unaccounted cash given by them to me at various dates. 7. please explain about the usage of the above cash after receipt. Ans : once the cash is received by me .1 generally deposit the above money in the above mentioned bank accounts. This money ,I use it for purchasing various shares from the above mentioned share brokers. 8. please explain the motive/purpose for which various individuals give their unaccounted money to you? Ans: The individuals have done this to convert their unaccounted money into accounted one. 9. Please explain in detail how the unaccounted cash given by them are converted into accounted money? Ans: These individuals by claiming long term capital gains which is actually exempt and by showing income through intraday share transactions, convert their unaccounted money as accounted one. The whole process is explained below. a) I prepare bogus contract notes in the names of various in....
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....said depository participant. It is seen that the said shares were transferred from the pool account of one Ms. Leela Surara on 06.03.2009,12.03.2009 and 19.32009, and the same were transferred back to the pool account on the same date. It is evident that you pool account on the same date. It is evident that you have not purchased the shares and it is only a sham transaction through which unaccounted cash has been brought into as accounted one''. Calling upon the assessee as to why the bogus long term capital gains should not be disallowed. In response of which assessee vide letter dated 05.12.2016 sought to cross examine the said Ms. Leela Surana, the broker. However, the Assessing Officer denied the assessee the opportunity of cross examination and completed the assessment by making the above additions. 3. Being aggrieved, an appeal was preferred before ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer, wherein it was held as follows. ''5.9 I have examined the facts of the case in the light of the cross examination proceedings, remand report and the submissions of the appellant. The re-assessments proceedings were conducted on the bas....
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....sees including the appellant. 5.13. ARs argument that along with Smt. Leela Surana, Mr Dinesh Kumar Surana was also allowed to be present and thus the cross examination proceedings were a 'mockery' is not correct and cannot be accepted. It is clearly mentioned in the proceedings that Shri Dinesh Kumar Surana was also allowed to be present along with Smt. Leela Surana. Similarly, AO allowed the AR of the appellant to conduct the proceedings on behalf of the appellant. Smt. Leela Surana was personally present throughout the proceedings and she has signed the statement related to the proceedings. There is no infirmity in the proceedings and the case laws relied on by the AR of the appellant are irrelevant to the facts of the case. 5.14. As held by the ITAT in (2017) 83 Taxmann.com.107(Madras) 2017, in a case (Nitesh Chajjed Vs ITO, Chennai) where facts are same, reopening proceedings in this case are valid. In the case of back dated contract note and purchase of shares by cash, on similar facts of that of appellant, ITAT Mumbai in the case of ITO vs Shamim M.Bharwoni 69 Taxmann.com 65(2016) held that AO rightly rejected assessee's claim and added amount in q....