TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 293
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....4. The AO noticed that there was an investigation carried out by the Directorate of Investigation throughout the country in which it came to light that there was an organized racket of generating bogus entries of long-term capital gain which is exempt. The modus operandi was to buy shares of companies controlled by the operators at a less price and thereafter rig the price of the stock to a high level and sell the shares and declare long-term capital gain. According to the investigation carried out by the department, the operators were dummy paper companies and the long-term capital gain declared and claimed as exempt was nothing but assessee's own money which has to be added u/s. 68 of the Act. 5. Based on the above said investigation carried out by the Directorate of Investigation, Kolkata, and the statements of various operators, entry providers and stock brokers admitting accommodation entries of long term capital gain, the AO was of the view that the long-term capital gain declared by the assessee has to be treated as unexplained cash credit and added to the total income of the assessee. Accordingly, the AO treated the long term capital gain as unexplained cash credit u/s. 68....
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....s:- "3.3 Per contra, the learned DR for Revenue submitted that on similar facts and circumstances as in the case on hand, issue for consideration is covered by the decisions of the Bengaluru ITAT in the cases of Arvind Kumar Moochand in ITA No.509/Bang/2017 and Pukhraj Hasmukhlal in ITA No.1927/Bang/2017 wherein the Tribunal has restored the issue to the file of the AO having observed that the additions were made based on reports of the Investigation Directorate at Kolkata and statements of various persons without confronting OR making them available to the assessee for rebuttal. In those cases, the Tribunal restored the matter to the file of the AO with the direction to confront the matter to the file of the AO with the direction to confront the assessee with the reports / documents / statements proposed to be used against the assessee, allow rebuttal thereof and cross examination of parties on whose testimony is proposed to be relied upon and the matter be adjudicated afresh after affording the assessee adequate opportunity of being heard and to also file details / submissions in this regard. 3.4 In Rejoinder, the ld.AR for the assessee did not dispute the proposition put for....
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....n'ble Delhi High Court noticed that the ITAT Delhi had given the following observations with regard to violation of principles of natural justice in such cases:- "11. ................. Regarding failure to accord opportunity of cross examination, we rely on judgment of Prem Castings Pvt. Ltd. Similarly, Tribunal in case of Udit Kalra, ITA No. 6717/Del/2017 for assessment year 2014-15 has categorically held that when there was specific confirmation with Revenue that assessee has indulged non-genuine and bogus capital gains obtained from transactions of purchase and sale of shares, it can be good reason to treat transactions as bogus. differences of case of Udit kalra attempted by Ld. AR does not add any credence to justify transactions. Investigation Wing has also conducted enquiries which proved that assessee is also one of beneficiaries of transactions entered by Companies through multiple layering of transactions and entries provided. Even BSE listed this company as being used for generating bogus LTCG. On facts of case and judicial pronouncements will give rise to only conclusion that entire activities of assessee is colourable device to obtain bogus capital gains. Hon'b....
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....nted to the Assessee, that the findings of the revenue authorities as well as the Tribunal were concurred findings of facts which does not call for interference. 12. Further reliance was also placed by the ld. DR on the decision of the ITAT Bangalore Bench rendered in the case of Shri Rameshchand Kothari v. ACIT in ITA No.699/Bang/2019 for AY 2014-15, order dated 28.08.2019, wherein the Tribunal observed as follows:- "5. We are conscious of the principle that, without opportunity of cross- examination, such statements cannot be relied upon against any person. However, such right, as held in various decisions by Hon'ble Supreme Court, is not an absolute right and depends on the circumstances of the case and the statute concerned as held in State of J&K Vs. Bakshi Gulam Mohd. AIR 1967 (SC) 122, and Nath International Sales Vs. UOI reported in AIR 1992 Del 295. In case of T. Devasahaya Nadar V. CIT reported in (1964) 51 ITR 20 (Mad) it has been held that; "it is not an universal rule that any evidence upon which the department may rely should have been subjected to crossexamination, if the assessing officer refuses to produce an informant for cross-examination by the assessee the....
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....f persons which has been relied upon by the Investigation Agency. We also find that the Hon'ble High Court of Karnataka has given similar directions in the case of Mrs. Chandra Devi Kothari (supra) wherein also the issue was with regard to long term capital gain on sale of shares being treated as unexplained cash credit u/s. 68 of the Act by the revenue. In the light of the aforesaid directions, we set aside the order of the CIT(Appeals) and remand the question of treating the long term capital gain as unexplained cash credit to the AO for fresh consideration as directed by the Tribunal in the case of Shri Ramesh Kumar Shah (supra). We make it clear that all issues raised by the assessee in this appeal are also left open for consideration. 15. We have considered the decision cited by the ld. DR and we find that that the decision rendered in the case of Sumant Poddar (supra) by the Hon'ble Delhi High Court is on the facts where the assessee did not produce evidence of contract notes issued by the share broker. This fact is noticed in para 8 of the Hon'ble Delhi High Court's order. In the present case there is no such deficiency of non production of required documents. 16. As far a....