TaxTMI 
TaxTMI 
2021 (3) TMI 342
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.... 3. The Commissioner of Income Tax (Appeals) has failed to appreciate that the addition of Rs. 20,00,00,000/- as undisclosed income is not warranted in the facts and circumstances of the case. 4. The Commissioner of Income Tax (Appeals) has failed to appreciate that at any rate, even assuming that the appellant offered Rs. 20 Crores as undisclosed income, it can only be related to the company or the partnership firm as the case may be and cannot be added as undisclosed income in his individual capacity. 5. The Commissioner of Income Tax (Appeals) failed to appreciate that the statement recorded during the time of survey under Sec.133A does not have any evidentiary value. 6. The Commissioner of Income Tax (Appeals) ought to have deleted the addition of Rs. 20 Crores made by the assessing officer in view of the binding orders of the CBDT circular F.No.286/2/2003-IT(lnv) dated 10.03.2003 and F.No.2861981201 3-IT (lnv. II) dated 18.12.2014. 7. The Commissioner of Income Tax (Appeals) erred in upholding an addition made merely on a statement said to have recorded under Sec 132(4) by invoking the principles of promissory estoppels which cannot b....
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....r Sec10(38) is presumed to be real unless contrary is established by the Department, which onus the department has not discharged. 19.The Commissioner of Income Tax (Appeals) has erred in upholding the addition made by the Assessing Officer in adding the sum of Rs. 10,17,000/- towards excess jewellery found during the course of search. 20. The Commissioner of Income Tax (Appeals) failed to appreciate that In the absence of any material being found during the time of search, the assessing officer erred in making additions ,made based on extraneous documents. 21.The Commissioner of Income Tax (Appeals) erred in upholding assessment order which was founded on the basis of the survey to make additions in block assessment. 22.The Commissioner of Income Tax (Appeals) erred in upholding the assessment order which is based only on suspicion and in the absence of any evidence being found as a result of such. 23. For that the appellant objects to the levy of interest under section 234B. 3. The brief facts of the case are that the assessee is the Proprietor of M/s. A.K.Exports (hereinafter 'AKE'), who is engaged in the business of trading of gol....
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....sum of Rs. 30 crores as additional income for the assessment years 2014-15 & 2015-16. 4. The assessee has filed his return of income for the assessment year 2015-16 on 14.11.2015, but failed to disclose additional income of Rs. 20 crores offered during the course of search, in the statement recorded u/s.132(4) of the Act. The AO based on the statement recorded and documents found during the course of survey in M/s. BB Jewellers & Manufacturers and statement recorded during the course of search, completed the assessment by making additions towards undisclosed income of Rs. 20 crores offered/ surrendered during the course of search in the statement recorded u/s.132(4) of the Act, deemed dividend of Rs. 76,19,00,000/- u/s.2(22)(e) of the Act, disallowance of exemption claimed u/s.10(38) of the Act amounting to Rs. 16,24,68,072/- and addition on excess jewellery found during the course of search for Rs. 10,17,000/-. The AO has made additions towards undisclosed income of Rs. 20 crores on the ground that although the assessee has surrendered undisclosed income during the course of search u/s.132(4) of the Act, for not explaining various discrepancies noticed in respect of excess wast....
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....not convinced with the explanation of the assessee and according to him, the reasons given by the AO for making additions towards undisclosed income was supported by statement recorded during the course of search, where the assessee has admitted/ surrendered undisclosed income for failure to offer explanation regarding various discrepancies noticed during the course of search. The ld.CIT(A) had extensively discussed the issue in light of concepts of Doctrine of promissory estoppels and Doctrine of legitimate expectations, to come to the conclusion that when one party by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then once the other party has taken him at his word and acted on it, the party who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relationship as if no such promise or assurance has been made by him. Accordingly, rejected the explanation of the assessee and confirmed additions made towards voluntary surrender of additional income of Rs. 20 crores. The ld.CIT(A) has also taken support from the decision of the Hon'ble Ju....
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....o the company or the partnership firm, as the case may be and cannot be added as undisclosed income in his individual capacity. The ld.AR further submitted that the statement recorded during the course of survey in the case of M/s. BB Jewellers & Manufacturers does not have any evidentiary value because the sum mentioned in the loose sheets found during the course of survey on 12.03.2014, in the premises of Shri D. Padmanabhan, represents amounts advanced and since it had not been recorded in the books of LJM and the same was offered in different assessment years starting from assessment year 2012-13 to 2014-15. The ld.AR further submitted that the CIT(A) ought to have deleted the addition in view of the binding orders of the CBDT circular, where it was categorically clarified that during the course of search and survey, the Departmental officials should concentrate on gathering evidence instead of taking admission of undisclosed income. In this case, if you see the discrepancies found during the course of search, all discrepancies including excess wastage claimed on melting of old gold and loose sheets found during the course of survey is relating to LJM and the assessee does not ....
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....f the Act and such statements were recorded in light of various discrepancies noted in respect of loose sheets found during the course of search, excess wastage claim on melting of old gold, etc. Therefore, the admission of the assessee did not require any interference in the absence of any material or evidence or any retraction by the assessee. 7.4 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below along with various case laws cited by both the parties. Admittedly, addition made towards undisclosed income was on the basis of 132(4) statement recorded during the course of search from the assessee. Although, the AO has assigned various reasons to come to the conclusion that there are enough materials, which suggest undisclosed income but nowhere, said materials were linked to admission taken during the course of search for undisclosed income. No doubt, statements recorded under various provisions of the Income Tax Act are a vital tool in the hands of the Income Tax Authorities in their thrust to establish certain factual and legal positions. Further, admission is an extremely important piece of evidence....
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..... 7.5 In light of above legal background, if we examine the facts of the present case, we find that during the course of search, a statement was recorded from the assessee on 27.10.2014, where he has explained all discrepancies noticed during the course of search. He had also clarified statement given by Shri D. Padmanabhan and explained that Shri D. Padmanabhan is not aware of the financials or accounts of the company. He, further, clarified that there is no discrepancy in the accounts of the company regarding excessive wastage claim by the Department. Although, he has explained each and every discrepancy found during the course of search, but in order to buy peace of the Department, he offered undisclosed income of Rs. 20 crores. In this context, the question before us is, whether the admission made by the assessee towards undisclosed income is supported by any evidenced collected during the course of search or mere admission to buy peace with the Department. On going through various papers filed by the assessee including statements recorded during the course of search, we find that whatever discrepancies noticed by the Department is neither belonging to the assessee nor conne....
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....on adhoc basis. Therefore, in our considered view, the AO as well as the CIT(A) were erred in coming to the conclusion that undisclosed income admitted during the course of search / survey is supported by necessary evidences. 7.6 We further noted that although the AO has relied upon statement of the assessee given during the course of search, but Question Nos.4, 5 & 6 of the sworn statement recorded on 27.10.2014 referred to the transactions of the company LJM. Question No.7 which deals with old gold purchase also refers to the transactions of LJM. It is relevant to note that the assessee is only a wholesale dealer of gold and gold ornaments, whereas LJM is into retail business, which is running a number of showrooms in various places. The old jewellery is purchased during exchange only by LJM. The loss on old gold purchases for the financial year 2013-14 referred to in the said question also therefore refers to only the company LJM. Similarly, Question Nos.8, 9 & 10 also referred to transactions of LJM. Once again Question Nos.14, 15 & 16 refers to the transactions of the company. Only Question No.19 & 20 refers to the transaction of the assessee with Shri D. Padmanabhan. It is....
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....ndisclosed income of Rs. 30 Crores for two assessment years. In this case the AO as well as the ld. CIT(A) has gone only on the basis of statement of the assessee made u/s 132(4) of the Act, without any corroborative evidence which shows undisclosed income. In our view the addition made by the AO and Confirmed by the ld. CIT(A) is purely on suspicious and surmise manner, but not based on any evidence. In our considered view, suspicion however strong cannot take place of evidences which can be used against the assessee. This principle is supported by the decision of Hon'ble Supreme Court in the case of Umacharan Shaw & Bros vs. CIT(1959) 37 ITR 271(SC). 7.8 Coming back to the case law relied upon by the ld.CIT(A). The ld.CIT(A) has heavily relied upon the decision of Hon'ble High Court of Madras in the case of Kishore Kumar, which came to be confirmed by the Hon'ble Supreme Court. We have gone through the case law relied upon by the CIT(A) and found that in that case, there were print out statements found at the time of search, based on which the declaration was made. Under those facts in para 7 of the judgment, the Hon'ble High Court has upheld that "in that case on hand, loo....
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..../s. Mariyam Creations and the same time a creditor in the books of LJM. M/s. Infinity Jewellers and M/s. Mariyam Creations have balance due to LJM in their books. M/s. AK Exports is selling various items to LJM from which, they are drawing more than Rs. 90 crores. During the impugned assessment year, the major creditors of M/s. AK Exports are M/s. Infinity Jewellers and M/s. Mariyam Creations, which have among themselves extended credit to the tune of Rs. 76.19 crores. During the course of assessment proceedings, the assessee explained to the AO that these are independent entities doing business separate business and whatever transactions between the parties are normal business transactions of either payment for purchase ort sale of gold and gold jewellery. 8.2 The AO was not convinced with the explanation furnished by the assessee towards share application money invested in LJM and according to him, the assessee has circuitous transactions among certain firms with the motive of diverting funds of LJM to M/s. AK Exports, which in turn are ploughed back in the share application money / share premium of the company. According to the AO, the two concerns M/s. Infinity Jewellers and....
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....clusion of the AO that the assessee had indirectly borrowed funds of the company through books of M/s. Infinity Jewellers and M/s. Mariyam Creations on mere conjectures and surmises without appreciating the fact that the funds were transferred in the normal course of business and for purchase and sales transactions, and hence, cannot be treated as dividend in the hands of the assessee u/s.2(22)(e) of the Act. The ld.AR further submitted that M/s. AK Exports is an independent proprietorship firm engaged in the business of purchase and sale of goods and in the process sold goods to LJM as a captive business unit. Similarly M/s. Infinity Jewellers and M/s. Mariyam Creations are two third party entities from whom M/s. AK Exports purchases gold and gold ornaments. Likewise, LJM is a separate entity engaged in retail sale of gold jewellery. All these concerns are operating independently at different locations and carried out their business activities in accordance with law, for which necessary compliances to statutory authorities were made. The AO and the ld.CIT(A), merely for the simple reason that the assessee is proprietor of M/s. AK Exports has propounded the theory that the amounts ....
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....s than 10% of the voting rights shall be treated as deemed dividend u/s.2(22)(e) of the Act. It is a well settled principle of law by the decision of various courts that any payment by a company in the normal course of its business to a related concern in which shareholder is a member or partner does not come under the ambit of provisions of section 2(22)(e) of the Act. In fact, the Central Board of Direct Taxes in its Circular No.19 of 2017 dated 12.06.2017 had examined the issue and issued directions to its field officers while examining the issue of deemed dividend u/s.2(22)(e) of the Act, in light of the decisions of various courts and clarified that trade advance which are in the nature of commercial transactions would not fall within the ambit of the word advance u/s.2(22)(e) of the Act. 8.7 In this legal background, if we examine the facts of the present case as brought out by the ld.AO and the ld.CIT(A), we find that the AO has treated a sum of Rs. 76,19,00,000/-, which is the cumulative credit balance in the books of M/s. AK Exports due to M/s. Infinity Jewellers and M/s. Mariyam Creations as deemed dividend u/s.2(22)(e) of the Act. As, we have already noted in previous....
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.... place, huge turnover in thousands of crores are achieved. Therefore, for this reason, the conclusion arrived at by the AO that these are not commercial transactions but circuitous transactions carried through group firms for diverting funds of the company to the Director is incorrect and unfounded under law. 8.9 We further noted that one another point made out by the AO is that there is no testing facility available for both these concerns. We find that the reason given by the AO is not acceptable because there is no requirement of having testing facility by each and every buyer and seller of gold and gold jewellery. Further, hall marking for 916 purity is done at the testing centre which is separate and certification is done by them. Purchase and sale of gold and gold ornaments by these two concerns is only after hall mark certification issued by the testing centre. Therefore, there is no necessity for testing by the assessee when purchase and sale of gold ornaments are already tested from a separate testing laboratory. Therefore, in our considered view, it is illogical for the AO to expect the testing facilities by the assessee or the two concerns M/s. Infinity Jewellers and ....
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....self. Therefore, on this count also the addition made u/s.2(22)(e) of the Act, is not sustainable under law. Therefore, in our considered view, the AO has made addition only based on the formulated theory that the assessee avails the benefit in the nature of loans and advances in the capacity of shareholder. In order to consider any payment under the provisions of section 2(22)(e) of the Act, the first and foremost limb is that there should be some benefit arising out of the said transactions to the shareholder. In the present case, there is no personal benefit at all to the assessee. The AO himself accepts the fact that the funds were utilized during the course of business and therefore, this transaction at any point did not get out of the business circle at all. The provisions of section 2(22)(e) of the Act, is a deeming provision and should be construed strictly. It is an established fact that the said transaction took place during the course of business and there being no personal/individual benefit accrued to the assessee and hence section 2(22)(e) of the Act cannot be invoked. Had it been the case of the AO that the assessee had directly borrowed loans and advances from th....
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....730, at Para 7 held; "7. Law on this point is clear. In the event transactions between a shareholder and a company in which the public are not substantially interested and the former has substantial stake, create mutual benefits and obilgations, then the provision of treating any sum received by the shareholder out of accumulated profits as deemed dividend would not apply. The company in the instant case fits the description conceived in the aforesaid provision to come within the ambit of Section 2(22)(e) of the Act. The controversy which falls for determination is whether the sum received by the assessee formed part of running current account giving rise to mutual obligations or the payment formed one-way traffic, assuming the character of loan or advance out of accumulated profit". A Co-ordinate Bench of this Court in the case of Pradip Kumar Maihotra V. CIT (2011) 15 taxmann.com 66/203 Taxman 110/338 ITR 538(CaI) has laid down the factors for testing the transactions between a company and its shareholder in the fight of the aforesaid provision :-".... C) The Kerala High Court in the case of CIT Vs Malayala Manorama Co. Ltd - 405 ITR 595, at Para 25 held; ....
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....pany and not the person beneficially entitled to the shares. We are therefore, of the view that it is only where a loan is advanced by the Company to the registered shareholder and the other conditions set out in Section 2(22)(e) of the Act are satisfied, that amount of loan would be liable to be regarded as deemed dividend within the meaning of this section. e) The lndore bench of the tribunal in Asian Business Connections (P) Ltd Vs. DCIT - 101 Taxmann.com 455, relying on the various decisions at Paras 36, 37 held at Para 39, which is extracted below; "36. Similarly in the case of CIT v. Creative Dyeing & Printing (P.) Ltd. 120091 184 taxmann.com 483/318 ITR 476 (Delhi) Hon'ble High Court held "that the section 2(22)(e) can be applied to 'loans or advances' simplicitor and not to those transaction carried out in the course of business as such. In the course of carrying of business transaction between the company and the stockholder the company may be required to give advance in mutual interest. There is no legal bar in having such transaction. What is to be ascertained is what is the purpose of such advance. If the amount is given as an advance simplicitor or as....
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.... gone through the case law relied upon by the ld. Counsel and found that the facts of this case is altogether different from the facts of present case, where the assessee was substantial shareholder of the company and the company has sold flat to the assessee and major portion of price remains unpaid at the end of the previous year. Under those facts, the Hon'ble High Court came to the conclusion that amount due to the company as an advance to the director falling within the mischief of section 2(22)(e) of the Act. In this case, the concern in which assessee is a proprietor is engaged in the business of buying and selling goods and has continuous transactions with the assessee company in the normal course of business. Therefore, we are of the considered view that the case law relied upon by the ld.DR is distinguishable on facts and hence not applicable to the facts of the present case. 8.14 In this view of the matter and considering facts and circumstances of this case and also by following the case laws discussed herein above, we are of the considered view that commercial transactions in the books of M/s. AK Exports due to M/s. Infinity Jewellers and M/s. Mariyam Creations c....
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.... preferred an appeal before the CIT(A) but could not succeed. The Ld. CIT(A) for the detailed reasons recorded in his appellate order confirmed the addition made by the AO by holding that long term capital gain derived from sale of equity shares is an arranged transaction between the assessee and the entry providers to claim the benefit of exemption provided u/s.10(38) of the Act, but not a genuine transaction of purchase and sale of shares. The ld.CIT(A) has discussed the issue in light of various judicial precedents including the decision of Hon'ble Supreme Court in the case of Mc Dowells reported in 154 ITR 148 to arrive to a conclusion that the assessee had adapted a colorable device to avoid tax payable to the exchequer by way of bogus long term capital gain. Accordingly, sustained additions made by the AO by holding that the transactions between the assessee and the company were mere accommodation entries to benefit the assessee by claiming exemption u/s.10(38) of the Act. 9.3 The ld.AR for the assessee submitted that the ld.CIT(A) has erred in upholding the addition made by the AO, towards long term capital gain as undisclosed income from other sources without appreciatin....
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....ann.com 330. 9.5 We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. We have carefully considered reasons given by the lower authorities to reach to a conclusion that long term capital gain derived from sale of equity shares of Mahavir Advanced Remedies Ltd., has unexplained income of the assessee and find that the reasons given by the AO and affirmed by the ld.CIT(A) is not based on any facts but purely on conjectures, suspicion and surmises. We further noted that the AO as well as the CIT(A) have gone on the wrong premises by assuming that the assessee is one of the beneficiary of organized rocket of bogus transactions of long term capital gain without any reference to information collected during the course of investigation carried out by the Directorate of Investigation, Kolkata and to the assessee. Although, the AO has extensively discussed the issue in light of modus operandi of the persons involved in the rocket of bogus long term capital gain but nowhere, he has referred to any piece of evidence collected during the course of investigation to the assessee and the company share in which assessee h....
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....gation that the assessee may be one of the beneficiary of the organized rocket of bogus long term capital gain. The ld.CIT(A) while confirming the addition stated that the assessee had not made any attempt to cross examine the persons whose statements have been relied upon by the AO. But, a bare look at the assessment order itself would show that no statement from any person had been referred. In fact, there is IOTA of reference to any incriminating material in the assessment order. Hence, the question of cross examination of any of the witness does not arise. Further, the AO as well as the CIT(A) had referred to investigation in the order of assessment in respect of companies situated in Kolkata. The AO has also mentioned that the assessee had not shown how he came in contact with such a company, which is far a place. But, the evidence placed before us shows that the authorities failed to note that the company is situated in Chennai and there is no link to any of Kolkata companies involved in the bogus long term capital gain scam. Since, the company situated in Chennai and also present for more than 21 years, the assessee felt that the prospect of pharmaceutical industry would be ....
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....company in which the assessee invested is situated very much in Chennai and is a Long-standing company and the assessee was optimistic of the industry in which the company was operating. The assessee has filed documents with respect to the transaction before the AO during the course of Assessment Proceedings. But, the AO totally ignored the genuine documents produced before him and passed the Assessment Order on a sweeping statement without any material evidence or fact on record. The AO has merely stated the modus operandi of how, the transaction took place without considering the facts of the present case. He had instead passed a general statement on the lines of suspicion and surmises without any vital material evidence against the Assessee. From the above, it is very clear that the observations of the AO in his assessment order on the basis of report of investigation wing, Kolkata is a general observation of modus operandi of certain brokers who are involved in alleged scam of LTCG, but it cannot be a conclusive evidence to draw an adverse inference against the assessee of having benefited from so called alleged scam. No doubt, an alleged scam may have taken place. But, it h....
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....chase and sale of the shares. Thus, these documents are only support the statement already made by the Assessee in the course of the Assessment Proceedings which statement is not disputed by the AO. 9.10 The AO disallowed the exemption claimed u/s.10(38) solely based on the investigation report by SEBI pertaining to certain cases based from Kolkatta wherein share prices rigged substantially over a period of time. Merely on suspicion and surmises, this disallowance was made without any corroborative evidence. The AO failed to bring on record any evidence indicating bogus transactions. The essential requirements for a claim u/s. 10(38) are that; the income should arise from a sale of LTC Asset; that LTCA is an equity share in the company or unit of an equity oriented fund or unit of business trust; The transaction of sale entered comes on or after FA 2004 came into force; Such transaction is subject to Securities Transaction Tax. In this case, the genuineness of the transaction is not disputed by the lower authorities at all. All these transactions are through proper banking channels, Dematted and subjected to securities transaction tax. When the pre-requisite conditions impose....
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....pulation in the scrip of Kailash Auto so as to ascertain the violation of securities laws. Upon completion of investigation by SEBI, investigation did not find any adverse evidence/adverse findings in respect of violation of provisions of the PFUTP Regulations in respect of the following 244 entities (against whom directions were issued vide the interim order and/or confirmatory orders) warranting continuation of action under section 11B/r/w 11 (4) of the Act. The details of the 244 entities are as follows." b) The Kolkatta Bench of the Tribunal in the case of Vipul Patel Vs ITO - 110 Taxmann.com 215 at Para 10 held; "8. Coming back to the instant case, it is noted that the assessee had purchased 1,10,000 equity shares of Panchshul Marketing Ltd. on 16.08.2012 from MIs. Shivsakti Exports Pvt. Ltd. Later M/s. Panchshul Marketing Ltd. was merged with MIs. KAFL and there was change of management and control of M/s. KAFL Ltd. pursuant to scheme to arrangement sanctioned by the Hon'ble High Court at Allahabad. It is also noted that the purchase of aforesaid 1,10,000 equity of M/s. Panchshul Marketing Ltd. was made by account payee cheque of Dena Bank, vide cheque No. 9....
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....onging to the clients for the purpose other than, the purchase of shares on behalf of the clients. Therefore, the subject matter of the enquiry has no connection with the transaction of bogus long term capital gain. The decisions replied upon the Id. DR in case of Sanjay Bimalchand Jain (supra) is not applicable in the facts of the present case as the said decision is in respect penny stock purchase by the assessee from a persons who was found to be indulged in providing bogus capital gain entries whereas in the case of the assessee the shares were allotted to the assessee by the company at par of face value. Hence, in view of the facts and circumstances when we hold that the order of the Assessing Officer treating the long term capital gain as bogus and consequential addition made to the total income of the assessee is not sustainable. Hence, we delete the addition made by the AO on this account d) The Kolkatta Bench of the Tribunal in the case of Navneet Agarwal Vs ITO - 97 Taxmann.com 76 at Para 11 held; "11. The assessee in this case has stated the following facts and produced the following documents as evidences: 1. The assessee had made an ....
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....ere. 6. The assessee also questioned the statement of Shri Mukesh Choksi and strongly contended that no adverse view should be taken merely on the strength of the statement of a third party whose statement has not been confronted to the assessee, nor any opportunity is given to cross-examine. f) The Mumbai Bench of the Tribunal in the case of Ramprasad Agarwal Vs ITO - 100 Taxmann.com 172 at Paras 9 & 10 held; "9 Similar in the case in hand the assessee has produced the relevant record to show the allotment of shares by the company on payment of consideration by cheque and therefore, it is not a case of payment of consideration by in cash. But the transaction is established from the evidence and record which cannot be manipulated as all the entries are part of the bank account of the assessee and the assessee dematerialized the shares in the 0-mat account which is also an independent material and evidence cannot be manipulated. Therefore, the holding of the shares by the assessee cannot be doubted and the finding of the AO is based merely on the suspicion and surmises without any cogent material to show that the assessee has introduction his unaccounted i....
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....ecisions relied upon by the DR would do no good on the peculiar plethora of evidences in respect of the facts of the case in hand and hence the judicial decisions relied upon by both the sides, though perused, but not considered on the facts of the case in hand h) The Kolkatta Bench of the Tribunal in the case of Smt. Madhu Killa Vs ACIT - 100 Taxmann.com 264 at Para 16 held; "15 .......The assessee had purchased 25000 shares of MIs. NFGL on 13.06.2012 at a cost price of Rs. 128.25 per share and remitted Security Transaction Tax (STT) of Rs. 4007.81 and at a total cost price of Rs. 32, 16,000/- (see contract note placed at page 6 of paper book). Thus we find that the AO erred in finding that the assessee had made the purchase not through Stock Exchange but it was an off market transaction. We find that the assessee had purchased through registered broker M/s.M. Prasad & Co. who was registered stock broker of the Bombay Stock Exchange and on 13.06.2012 assessee purchased 25000 shares at Rs. 28.25 per share on which STT was paid and the total transaction of Rs. 32,21,213. 10 was paid through account payee cheque to the registered broker and the shares were deposited....
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...., if purchased the share from that broker innocently and bonafidely and if he show his bona tide 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 bona fidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame 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". j) The Hyderabad Bench of the Tribunal in the case of ITO Vs Aarti Mittal - 149 lTD 0728, relying on Arun Kumar Agarwal (HUF) (supra) at Para 23 held; 23. We have heard both the parties and perused the material available on record. We have also gone through the written ....
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....he material evidence placed on record by the assessee and in the light of the discussion of the factual and legal matrix of the case as discussed from para 3.1 to 3.4.7 of this order (supra), we are of the considered opinion that the authorities below, i.e. AOICIT(A) have made the addition under section 68 of the Act merely on presumptions, suspicions and surmises in respect of penny stocks; disregarding the direct evidences placed on record and furnished by the assessee in the form of brokers contract notes for purchases and sales of the 'said shares' of M/s. Shukun Constructions Ltd., copies of the physical share certificates and her D-MAT account statement establishing the holding of the shares in her name prior to the sale thereof; confirmation of the transactions of buying and selling of the 'said shares' by the respective stock brokers, receipt of sale proceeds through banking channels, etc. As observed earlier in this order, we are of the view that the statement recorded from Shri Niraj Sanghvi on 31.12.2007, the day the order of assessment was passed, would have no evidentiary or corroborative value to be the basis for coming to an adverse view in the case on hand, since it....
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....shed the fact that the shares were purchased on the market rate through recognised broker, it cannot be said that the price of the shares were artificially hiked for earning higher income. The Revenue authorities cannot ignore the material available on record merely because somebody has provided accommodation entry to somebody. The assessment proceeding being a judicial proceeding, the authorities below cannot take into consideration the extraneous matter, which is not relevant to the issue arises for consideration. When the fact that the purchase and sale of shares through recognised stock broker is established and the shares were purchased and sold at market rate, this Tribunal is of the considered opinion that both the authorities below are not justified in disallowing the claim of the assessees. Accordingly, orders of both the authorities below are set aside and the additions made by the Assessing Officer in respect of both the assessees are deleted". 9.12 In this view of the matter and considering facts and circumstances of this case and also by following the judicial precedents of number of cases, we are of the considered view that the AO as well as the ld.CIT(A) ....