TaxTMI 
TaxTMI 
2021 (10) TMI 77
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....stt.Year 2013-14 & 2014-15 iv) Shri Sanjay Singhal (HUF) Asstt.Year 2011-12 to 2014-15 3. Though we will refer the facts in detail, but at this stage, it is important to note that search under section 132(1) of the Income Tax Act, 1961 was carried out by the Department at the business premises of the assessee-group i.e. Bhusan Power & Steel Group ("BSPL" for short) along with residential/ business premises of its directors and other related entities/ persons on 3.3.2010 and 21.2.2014 for A.Y.2014-15. The second proviso to section 153A contemplates that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this section i.e. section 153A(1) pending on the date of initiation of search under section 132 or making of requisition under section 132A as the case may be, shall abate. It is further observed that apart from present nine appeals, eight more appeals i.e. ITA Nos.706, 707, 709/Chd/2018 filed by Shri sanjay Singhal for the Asstt.Year 2008-09, 2010-11, 2012-13; and ITA No.712, 713 & 715/Chd/2018 also filed by Smt.Aarti Singhal for the Asstt.Year 2008-09, 2010-11, 2012-13. Similarly, the asse....
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....s. 56,12,10,020/- representing the sale proceeds of listed equity shares held by the Appellant for more than 12 months by invoking the provisions of Sec. 68 of the Act by ignoring the relevant specific facts and circumstances of the case and by relying on extraneous arguments and evidences, including in particular, circumstantial evidence, which has no bearing and applicability to the case. 3. That the Ld Commissioner of Income Tax (Appeals}-3, Gurgaon was not justified to uphold the action of the Ld. Assessing Officer in treating the transactions relating to purchase and sale of equity shares as ingenuine transactions. 4. That the Ld Commissioner of income Tax (Appeals)-3, Gurgaon further gravely erred in upholding the action of the id. Assessing Officer in making an addition of Rs. 3,53,37,680/- on account of alleged commission expenses paid by the Appellant for arranging the alleged entries in respect of Long Term Capital Gains by invoking the provisions of Sec. 69C of the Act on sheer presumptive basis. 5. That the Ld. Commissioner of income Tax (Appeals)-3, Gurgaon while adjudicating the appeal, has dismissed various grounds of appeal raised by the A....
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.... assesses whose appeals are pending before Hon'ble ITAT as mentioned above, under Prevention of Money Laundering Act, and has filed criminal charges against members of the group. During such investigations, statements of all those agencies/entities who were involved in providing bogus Long Term Capital Gains to the assesses, including the statement of Sri Sanjay Singhal, were recorded. The copies of such statements are made available to the Assessing Officer now, I have been instructed to file copies of these statements and other documents before your Honours as additional evidence with a prayer for the admission of the same. A brief submission on the reasons for filing the additional evidence and their relevance to the present case is as under: 1. Crucial documents have been received from the Enforcement Directorate (ED) in the cases of M/s. Bhushan Group wherein a FIR has been filed by ED against the companies in the Bhushan Group, including Bhushan Power and Steel managed by Sh. Sanjay Singal. (Page 1 of the Annexure) 2. The FIR, under the Indian Penal Code, 1860 and Prevention of Corruption Act, 1988, alleges Criminal Conspiracy, Cheating, Falsifi....
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....lso recorded by ED who not only reiterate what was stated by them earlier but also throw a great deal of light on the bogus nature of these transactions. (Pages 31-68 of the Annexure) 5. These pieces of evidence could not be filed earlier as either these did not exist at the relevant time, or it was not in possession of the Income tax Department. 6. Nonetheless, these pieces of evidence have a direct bearing on the merits of the case as these relate to those very issues which are the subject matter of present appeals. 7. The list of documents prayed for admission as additional evidence is contained in a separate Annexure/Paper-book (68 Pages). It is, therefore prayed that these documents may kindly be admitted as additional evidence in the aforesaid cases, and these may be considered at the time of hearing of the appeals on merits. This is being filed in digital mode and physical copy would also be made available if required. Revenue shall be obliged for the act of kindness. Thanking Your Honours Sd/- (G.C. Srivastava) Advocate Special Counsel for Revenue...." 7. Qua this application, we have heard the ld.senior c....
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.... at the second appellate stage, more so, in the capacity of a respondent, he relied upon the decision of Special Bench in the case of LG Electronics India P.Ltd. in ITA No.5140/Del/2011. He also relied upon the decision of Hon'ble Supreme Court in the case of Jyotsna Suri Vs. ITAT & Ors., 9 SCC 211. He further relied upon judgment of Hon'ble Delhi High Court in the case of HL Malhotra Vs. DCIT, ITA No.211/2020 dated 22.12.2020. He placed on record copies of these decisions. 8. Since interlocutory application was pressed after conclusion of the arguments of the ld.cousnel for the assessee, therefore, at the time of hearing we permitted both the parties to give their submissions in writing on the admission of additional evidence as well as consideration of them on merit after admitting, if taken on record. In other words, we have invited the arguments of the ld.counsel for the assessee as well as Revenue on merit of this material, but subject to condition that in case application of the Revenue for admission of additional evidence is rejected, then no such submissions would be considered. Thereafter, after conclusion of hearing an opportunity was provided to both the sides to file....
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....on merits by creating hurdle after hurdle, first with the application for the constitution of the Special Bench, and now with the application for the filing of additional evidence. 5. The Appellants submit that the application of the Department u/s 255(3) for the constitution of a Special Bench in the aforesaid matters had been heard by this Hon'ble Bench in the month of May 2021, upon which, this Hon'ble Bench posted the matter before the Hon'ble President of the ITAT with their comments. The Hon'ble President, ITAT then posted the matter for hearing on the 8th of June 2021. All of a sudden on 7th June 2021, the Special Counsel of the Department files the present Application for admittance of additional evidence, just one day before the date of hearing. No such mention of this Application is even made before the Hon'ble President during the course of the hearing dated 8th June 2021. The Department is therefore blowing hot and cold/approbating and reprobating at the same time, since even before the hearing could have been concluded before the Hon'ble President ITAT vis-a-vis their Application for the constitution of the Special Bench in whi....
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....itness to be examined or an affidavit to be filed - in order to enable the ITAT to pass orders or for any other substantial cause. Here, this Hon'ble Bench, never sought the present additional evidence (that has been recorded by the ED under a different Statue altogether) to be caused to be produced by the Department. Therefore a suo moto filing of additional evidence by the Department when the matter has been listed for final adjudication and disposal is bereft of jurisdiction since the same has not occurred pursuant to a direction of this Hon'ble Bench on the grounds that such additional evidence is required to enable the passing of the orders in the present Appeals or for any other substantial cause. 8. Thus the present Application is bound to be dismissed on the grounds of jurisdiction alone since the Special Counsel has been unable to substantiate how the Department is even covered under Rule 29 to enable the filing of such additional evidence. The admissibility of the same is thus a secondary question that only arises when the Department can adequately show under which of the two situations (specified under Rule 29) it falls under. Since neither of the situat....
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....nce collected pursuant to the enquiry conducted u/s 142(2) which is proposed to be utilized during the assessment, shall first be put to the assessee to provide him/her with an opportunity of being heard before the same is utilized by the A.O. to make an addition/disallowance u/s 143(3). Sec.l42(3) utilizes the word 'shall' therefore rendering the same to be by no means discretionary. Thus the mandatory intermediary step prescribed u/s 142(2) cannot be given a go past, in order to utilise such information/evidences adversely against the assessee without the latter's rebuttal. The same if done, is a direct violation of the procedure of enquiry prescribed u/s 142 that inherently encompasses the Principle(s) of Natural Justice. Thus, in the case at hand, the present Application towards admitting such additional evidence that has been recorded under the PMLA, 2002 has been preferred by the Department in complete ignorance of the specific procedure laid down under Sec. 142 of the Act to consider evidence as admissible evidence for the purpose of making an assessment under Sec. 143(3). Reliance in this regard is made to the decision of the coordinate Bench of the Kol....
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....r attempt at deviating the procedural fetters prescribed u/s 142, the Special Counsel has filed such additional evidence, by completely ignoring that the very same rigours of Sec. 142 will also apply to such additional evidence that has been recorded by a separate governmental department (the ED) under a separate Statute (the PMLA). 13. The Appellants thus submit that without fulfilling the mandate of Sec. 142, the evidence cannot be considered as admissible evidence on record, in order to fasten liability unto the assessee u/s 143(3). This is more so because the additional evidence seeking to be admitted vide the present Applications are statements that have all be recorded u/s 50 of the PMLA, 2002 post the completion/finalisation of the search assessments u/s 153A/143(3) in the case of all the Appellants, that were assessed to tax vide the impugned assessment orders (all) dated 28.03.2016. Thus when the additional evidence, especially the statements of Sanjay Singhal specified therein (that have been recorded on 07.10.2016 and 03.10.2019 by the ED) have all been recorded post the finalisation of the search assessments in the case of all the Appellants - then such evidenc....
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....Delhi H.C., decision dated 14.01.2011) the application for the filing of additional evidence had been moved by the assessee on the ground that the assessee could not produce these records before the lower authorities due to non- retrievability of e-mail on the date because of technological difficulties. See Para 15. B. In the said case the Hon'ble Bench has clearly held that the question of admitting additional evidence arises when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent to the Appellate Court coming in its way to pronounce judgment, and only then can the expression "to enable it to pronounce judgment" be invoked. The provision does not apply where with existing evidence on record the Appellate Court can pronounce a satisfactory judgment. See Para 14. C. Per the Hon'ble Bench, the Tribunal looked into the entire matter and arrived at a conclusion that the additional evidence was necessary for deciding the issue at hand. It is thus clear that the Tribunal found the requirement of the said evidence for proper adjudication of the matter and in the interest of the substantial cause. See Para 15. D. In th....
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.... they are not inconsistent with the provisions of the PMLA vis-a-vis arrest, search and seizure, attachment, confiscation, investigation and prosecution and all other proceedings under the Act. 17. Thus even if a statement recorded u/s 50 of the PMLA is not equated to a statement recorded under Sec. 161 r/w 162 of the CrPC, it is obvious that in order to sustain a conviction under the PMLA a criminal trial ensues to prosecute the accused. This is in line with the protection awarded to an individual under Art.20 in respect of the conviction of offences, where Art.20(3) specifies that no person accused of any offence shall be compelled to be a witness against himself. Thus a mere statement recorded u/s 50(2) of the PMLA is not 'evidence* in itself even for the purpose of prosecuting the accused under the PMLA, let alone under the Income Tax Act, that has its own separate procedure in place for collecting and admitting evidence u/s 142 before the same can be adduced and utilised by the A.O. to make an impugned addition u/s 143(3) of the Act. 18. Further, as per the decision of the Hon'ble S.C. in the case of KTMS Mohamed & Ors. vs. UOI, (1992) 3 SCC1....
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....assing the other such a stand cannot be a legally permissible because admissibility, reliability and the evidentiary value of the statement of the inculpatory statement depend on the benchmark of the provisions of the Evidence Act and the general criminal law. " [Emphasis Supplied] 19. The Appellants submit that the case of KTMS Mohamed & Ors. (supra) has direct applicability to the case at hand, more so because the statement of Sanjay Singhal that had been recorded by the E.D. has been retracted by him, vide Retraction Letter dated 20.12.2019 from Tihar Jail. In the said statement, Sh. Sanjay Singhal has emphasised that he was pressurised by the ED officers, and was given no such opportunity to read and/or understand the papers signed and/or statements recorded and signed, all of which was taken under the threat and pressure of arrest. In fact, Sh. Sanjay Singhal also states that when he refused to sign any further documents/statements, they arrested him on 22.11.2019. He has also emphasised on the pressure and trauma of the entire incidence. This retraction has not been brought to the notice of this Hon'ble Bench by the Department while making the present....
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....the parties. In other words, for just decision of any appeal, if some material is required by the Tribunal, then that material could be taken up on the record. As observed by the Special Bench of ITAT in the case of LG Electronics (supra) additional evidence can be permitted if the evidence does not raise any new area of dispute, if the evidence has relevance to the issue. A perusal of the application filed by the Revenue would reveal that the Revenue intends to place on record copies of the statement recorded by the ED i.e. including the statement of the assessee as well as Shri R.K. Kedia, Praveen Kumar Jain and Shri Sirish Chandrakant Shah. We have taken into consideration the material sought to be placed on record by the Revenue vis-à-vis scope of Rule 29 of the ITAT Rules. It is pertinent to observe that the Income Tax Act provides a complete frame work for scrutinising the return and passing assessment order. The Act itself contemplates certain safeguards for protecting rights of the assessee i.e. return could be scrutinized within the time frame by issuance of notice under section 143(2) of the Act. If the time limit is expired, then only on the basis of new informati....
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....n record. Therefore, the Tribunal does not feel, in any manner that these are the materials, which should have been placed on record for just decision of the appeals, rather we are of firm view that permitting to place on record such material would cause prejudice to the assessee. As far as case law relied upon by the ld.counsel for the Revenue is concerned, they only postulate that ITAT has the power to permit Revenue to produce additional evidence in the capacity of respondent also. There is no dispute with regard to the above proposition. In given case Tribunal can feel that certain details possessed by the Revenue are necessary for just decision of the appeal then, it can direct the Revenue for production of those details. Thus, these cases are not applicable on the facts of the present appeals. It is also pertinent to mention that the assessee has duly demonstrated in the reply extracted above as to why these evidences should not be taken on record. We have gone through the reply and emphasizing more particularly on para no.15 to 18 demonstrating the eventual value of these statement. We are satisfied that by way of this application a fatuous attempt is being made to create ar....
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....as alleged that Shri SCS has converted the unaccounted money of various parties/beneficiaries by providing long-term capital gain to them which was exempted under section 10(38) of the Act by manipulating in the price of the shares of PIL. All these facts narrated above were duly admitted by Shri SCS in the statement furnished under section 132(4)/131-IA of the Act which was recorded at different point of time. 14. The statement of Shri Om Prakash Anandilal Khandewal (OPK), the director of PIL, was also recorded under section 132(4) of the Act wherein he had admitted that PIL was a paper company, having no business and was used by Shri SCS for generating bogus long-term capital gain to extend the benefit to the parties. The statement of Shri OPK was also confirmed by Shri SCS. 15. In the course of search at the premise of SCS, among other documents, two documents in the form of MS Excel file namely CASH & CHEQUE SHEET and KEDIA-2 were found. CASH & CHEQUE SHEET 16. The cash & cheque sheet contains date-wise details of receipts of cash from the beneficiaries and cheque payment of accommodation entries to them in coded-form. There was also the name of cash courier (Aangdi....
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....that he has provided accommodation entries in the name of long-term capital gain to the group of the assessee through the broker, Shri RK Kedia. 20. Further, receipts of cash recorded in kedia-2 sheet were also matching with the books/ records maintained by Shri Parveen Kumar Jain alias Pintu which were impounded by the Directorate of investigation of Mumbai as mentioned in previous paragraph. 21. Similarly, a search and seizure operation under section 132 of the Act subsequently and simultaneously was carried out at the premises of the assessee group and Shri RK Kedia dated 21st February 2014 by the Directorate of Chandigarh. In the search proceedings at the premises of the assessee, various loose papers were found and impounded which were incriminating in nature. The assessee was also confronted with the statements of various persons recorded under section 132(4)/131-1A of the Act along with the documents found during the search in the case of Shri SCS and Praveen Kumar Jain. The statement under section 132(4) of the Act was also recorded of the assessee wherein he admitted to disclose additional income of Rs. 250 crores on account of bogus longterm capital gain through the....
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.... 24. It was noticed by the AO that the assessee, through Shri RK Kedia, has taken long-term capital gain on the sale of the shares with respect to 10 companies which were included in such 31 companies, as discussed in preceding paragraph. Regarding such companies, the details were found and impounded from the premises of Shri RK Kedia, containing the transactions of sale/ purchase of shares and dealing of cash. This fact was admitted by him that these companies were engaged in providing accommodation entries. The list of 10 companies from which assessee earned long term capital stand as under: SI. No. Name of the company 1. DB (International) Stock Brokers Ltd. 2 Blue Circle Services Ltd. 3 Unisys Software &Holding Indust. Ltd. 4 Nouveau Multimedia Ltd. 5 Action Financial Services ( India ) Ltd. 6 Global Infratech & Finance Ltd. now known as Asian Lak Capital & Finance Ltd. 7 Rutron International Ltd. 8 Rander Corporation Ltd. 9 Matra Kaushal Enterprises Ltd. 10 Grandma Trading & Agencies Ltd. 25. It was further found that one of the companies namely M/s Blue Circle Services Ltd was controlled and managed by Shr....
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....ed in the statement furnished under section 132(4) of the Act at the time of search under section 132 of the Act dated 13th September 2012. 26. It was further observed by the AO that similar modus operandi was used in respect of the remaining 9 companies with respect of which the assessee has shown bogus long-term capital gain. The list of such companies has already been discussed in the preceding paragraph. The necessary documents in connection with such bogus long-term capital gain which were seized from the premises of RK Kedia were provided to the assessee. 27. The AO also found that there was an investigation carried out by SEBI in respect of certain companies which were alleged in the manipulation of the price of their scrips. There were 17 companies found by SEBI which were engaged in the manipulation of the price. Out of such 17 companies, 8 companies are those from where the assessee has shown long-term capital gain as discussed above. 28. There were certain other assessee's/beneficiaries who have taken long-term capital gain on the sale of PIL and other companies as admitted by them in their respective assessment. One of group namely Shri Uday Hasmukhalal Vora an....
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....t of Shri RK Kedia was not reliable as he was changing his stand frequently. The assessee further contended that the statement furnished by him under section 132(4) of the Act admitting an income of Rs. 250 crores dated 21st February 2014 cannot be relied upon as it was given under the pressure of the search team. 33. The shares were sold to the unknown parties. Likewise all the counterparties/purchasers of the shares were not among the list of 212 companies which were allegedly engaged in providing accommodation entries and controlled by Shri SCS. There cannot be any adverse inference on the observation that the shares were sold within a minute after putting the sale request made by the assessee. 34. With regard to long term capital gain earned by the assessee and his associates from the companies other than PIL, the assessee made similar argument that he did not know any of the persons who was allegedly controlling those companies or involved in activity of accommodation entry. Their statements were recorded behind his back. Thus, he requested for cross verification and also requested to point out specific charges made out of their statement. The assessee similarly contende....
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.... and controlled by SCS. 36. There were many operators who were involved in jacking up the price of certain companies and providing accommodation entries to the beneficiaries. This fact of involving various brokers in the activity of accommodation entries has already been elaborated in the preceding paragraph. Therefore, contention of the assessee that the shares of PIL were also sold to other companies which were not managed and controlled by SCS does not make the transaction genuine. It is for the reason that there was a syndicate which was operating in tandem for generating the bogus long-term capital gain. It is very unusual that majority of the trades were executed within the minute after placing the order. It is possible only when the buyer and the seller are artificially synchronised for carrying out the transactions. There were certain documents found during the course of search marked as"Kedia -2", "cash and cheque sheet" from the premises of Shri SCS and other documents/records etc from the premises of Shri RK Kedia and Praveen Kumar Jain which were exactly matching with the records of the assessee. Therefore these documents conclusively prove that the assessee has unde....
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....are a sham transaction. 39. There were various direct and circumstantial evidence available on record indicating that the prices of the shares of the impugned companies were rigged up in an organised manner by the network of the various entry-operators. All the transactions of purchase and sale of the shares of these companies on the stock exchange were carried out in synchronised manner. Most of the time transaction gets completed immediately after putting the bid on the stock exchange. 40. There were various search and seizure operations as well as survey operations on various companies, brokers, sub-brokers, employees etc. who have furnished the statement under section 132(4) of the Act by admitting that they were engaged in providing accommodation entries to the beneficiaries. Some of the names of these persons are Shri SCS, Praveen kumar Jain, RK kedia, Manish Aroroa, OPK etc. The statements of these persons were backed by various incriminating documents found from their premises. Thus the statements corroborate the fact that the group of the assessee had been engaged in taking the accommodation entries from various entry operators. Likewise, none of the statement was re....
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....reponderance of probability cannot be ignored in the given facts and circumstances, especially on the basis of the documents and the statement recorded of various persons during various search proceedings as discussed above. All the companies which have been used for the purpose of generating the long-term capital gain on the sale & purchase of the shares were financially weak and having no business transaction. Thus, no prudent businessman will take the risk by making the investment in the shares of such companies. Therefore, the preponderance of probability suggest that the assessee has entered into such transaction with view to convert unaccounted money with the help of entry provider in the form of bogus long-term capital gain which is also supported by the plethora of evidence gathered in various searches, statements and surrounding facts and circumstances. Accordingly, the AO treated entire long term capital gain earned by the assessee for A.Y. 2008-09 to 2014-15 as unaccounted/unexplained money u/s 68/69C being bogus long-term capital gain and commission expenses thereon. Thus the AO for the year under consideration i.e. A.Y. 2014-15 made additions for a sum of Rs. 59,85,99,....
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....l gain within the parameters of the provisions specified under section 10(38) of the Act. 48. The sale and purchase of the scripts listed on the stock exchange are regulated by SEBI, internal control/guidelines of the stock exchange. Furthermore, a company before listing shares in a stock exchange has to face various hurdles for compliance of the conditions specified by the stock exchange as well as SEBI. Therefore, treating the impugned longterm capital gain as bogus in nature would be a disgrace of such authorities which came into existence through the Parliament of India. Further in such a highly regularised and formalized system of trading, rigging or manipulating the transaction is almost impossible. 49. The word penny stock has not been defined anywhere in any of the Act. However, penny stock refers to the scripts of small companies. The trading of shares of such small companies cannot be viewed with prejudicial mind. Accordingly, any gain arose out of the trading of shares of such small companies cannot be termed as bogus in nature. The rise in the price of the shares in market is not always based on the company's financial position, profit/growth rather its value/pric....
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....by Shri RK Kedia. There can be some internal dealing between them which can be clarified by them only. It has already been submitted that it has not provided any cash of whatsoever to any party. Therefore the cash transactions recorded in the documents found from the premises of the 3rd party namely Shri SCS , RK Kedia and Praveen Kumar Jain which were also matching/correlating with the respective records maintained by them are not known by him. For what purpose they were recording the transactions, they can only clarify. Furthermore, in none of the document the name of the assessee group was shown. The assessee also made same arguments with respect to the CASH AND CHEQUE SHEET found from the premises of Shri SCS. 53. The cash trail found by the AO with respect to the parties namely Shri SCS , RK Kedia and Praveen Kumar Jain pertained to the period 28th of June 2011 to 27th August 2011 whereas the assessee has made the last sale of shares of PIL dated 3rd May 2011 much prior to the cash trail as pointed out by the AO. Therefore, no reference can be made to such documents. 54. It was also submitted that the assessee has not made any payment of commission or agreed to pay to Sh....
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....ed by Shri Jadish Purohit and Praveen Agrawal. Similarly, these two persons did not even admitted in the statement that they have helped each other in generating the bogus longterm capital gain. Likewise, the allegation of the AO that Shri Jagdish Purohit was controlling the affairs of the company namely M/s Blue Circle Services Ltd was not correct as his name was not appearing in the list of Board of Directors of the company. The assessee further contended that his name is not appearing on the documents seized from the premises of Shri RK Kedia which were marked as annexure 2 and the backup data. The transactions recorded therein or between Shri RK Kedia and Jagdish Purohit without having any reference to the assessee. Furthermore, the transactions recorded in these seized documents pertained to the financial year 2012- 13 whereas the assessee has sold the shares of M/s Blue Circle Services Ltd in the financial year 2011-12. Accordingly, it was contended that the assessee has no role in the documents seized during the search proceedings. 58. The assessee has sold the shares in the case of M/s Blue Circle Services Ltd worth of Rs. 170 crores. Out of Rs. 170 crores, the shares va....
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....in in such short period of time without any manipulation. 61.1 The assessee himself has admitted to have generated long-term capital gain for Rs. 250 crores in the statement furnished under section 132(4) of the Act after confronting various documents of incriminating nature and the statement recorded of various persons. Thus, the admission by the assessee in itself is a vital piece of evidence that the group of the assessee has generated huge bogus long-term capital gain. The admission for disclosing the income was made by the assessee based on the incremental documents found during the search as well as the statements recorded of various persons and therefore the argument of the assessee that the admission was made to buy the peace of mind or it was given under coercion/pressure has no relevance. 62. The banking transactions and shares transactions appearing in the sheet marked as Kedia -2 are matching with the bank statement and BSE data of the assessee group company. At the same time, such sheet was also containing the details of the cash transactions as well as the commission charges. Therefore, the transactions reflected in such sheet has to be seen as a whole evidencin....
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....n view of the facts and circumstances borne out of the assessment order and Legal precedents as discussed above, I am of the view that documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions to create bogus profit in the garb of tax exempt LTCG by well-organized network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or commission. In view of the above discussion, I am of the considered view that share transactions leading to LTCG by the appellant are sham transaction entered into for the purpose of evading tax. Accordingly it held that the AO has rightly added the said amount of Rs. 62,66,38,865/- as undisclosed income of the appellant. Since arranging such accommodation entry necessarily entails payment of commission to entry providers, the AO's action in quantifying and adding such unexplained expenditure at Rs. 3,93,17,170/- u/s 69 of....
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....paid from/to various parties including BPSL group - statements dt. 12.11.2012, 05.02.2014, 30.04.2014, 18.11.2014 & 11.02.2015 recorded - Assessee(s) not named in any of the seized documents or statements. 27.12.2012 Survey at premises of BPSL Group by DIT(Inv), Chandigarh - BPSL Group Concerns made another voluntary disclosure of Rs. 70.36 Crs for AY 2013-14 wrt unexplained credits, cash payments for land purchase and interest disallowance (and interest disallowance in the hands of BSPL was 9 crs) - nothing incriminating with respect to LTCG found. 09.04.2013 S&S by DIT(Inv) Ahd in the case of Sirish Chandrakant Shah (SCS) - Alleged that BSPL has received a huge amount of accommodation entries from the cartel of Cos. managed and controlled by SCS. and various other entry operators. Documentary evidence in this regard - Kedia 2 (excel sheet), Cash & Cheque Sheets (tabulated data found at Pg.7/146 of the A.O Order) - noticeably, the names of Assessee(s) do not feature in any of these seized documents - statements of SCS, his employees, dummy directors etc. relied upon -statements of SCS dt. 13.04.2013, 03.06.2013, 05.06.2013, 11.06.2013, 25.11.2013 & 13.01.2014 relied up....
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....amining seized materials. 13.06.2014 S&S operation u/s 132(1) carried out once again by DIT(Inv), Delhi at the premises of RKK & at the residential premises of Manish Arora (employee of RKK) - alleged hard/soft data seized -statements of R.K. Kedia & Manish Arora recorded. In course of his statement recorded on 13.06.2014 which continued upto 16.06.2014, RKK changed the stand taken by him earlier on 22.022014 and interalia stated that he had arranged bogus LTCG accommodation entries for various members of the Singal Family 14.10.2014 Sri R.K. Kedia once again reverted to his original stand and retracted from his statement dated 13.06.2014 stating that the said statement was recorded under extreme pressure and he was forcibly made to sign certain typed statements without being allowed to go through the same and that he was never engaged in the business of providing accommodation entries. 26.03.2015 Due to the continuous pressure created by the Department, Sri R.K. Kedia without any explicable reason whatsoever, once again vacillated from his original stand and re-retracted the retraction filed by him on. 14.10.2014 by filing a letter & affidavit dated 26.03.2015....
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....-09, 2011-12, 2012-13 in the cases of Shri Sanjay Singal and Smt.Arti Singal have been decided by the Tribunal vide its order dated 7.2.2020. Similarly, the appeals of the assessee, Shri Sanjay Singhal HUF for the Asstt.Year 2011-12 and 2012- 13 have also been decided. The stand of the ld.counsel for the assessee is that in the group of BBS group large number of appeals came to the Tribunal. Out of which many appeals have been decided. The Tribunal has segregated those appeals under two compartments viz. the appeals pertaining to those assessment years whose assessment years have not been abated i.e. unabated year, because according to the Tribunal scope of those appeal altogether different than the scope of assessment years where assessment proceedings have been abated. According to the ld.counsel for the assessee, the issues involved in these appeals are common, whether involve unabated or abated years. The evidences collected by the Revenue are also common, and all those evidences were collected from the premises of the third party. The orders of ITAT dated 31.10.2018 in the case of Shri Brij Bhusan Singal in ITA No.1412 to 1414/Del/2018 and other appeals have been placed on rec....
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....ential allottee of shares is not required to attend any Board meetings, there being a complete divergence between the management and ownership, a company being a body corporate, having a separate legal entity. The process of preferential allotment which is invariably spread by the word of mouth, the possibility of personal contact between the promoters/management and preferential allottees is miniscule. iii) Various statutory/regulatory bodies such as S.E.B.I, the Stock Exchanges etc. are involved in the process of preferential allotment of shares as well as the follow up of public issue. The entire process involves a multi-stage, rigorous, coordinated and time bound process involving comprehensive due-diligence, vetting of documents, background check of promoters, compliance with well-laid out guidelines and parameters etc. A company intending to go in for a public issue can allot shares by way of preferential allotment only after getting the approval of S.E.B.I. In the entire process, S.E.B.I also approves the list of persons/ entities to whom shares are to be allotted on preferential basis, also incorporating therein the terms and conditions including, lock in, if any s....
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....the entire transaction is a demand and supply game over which neither the buyer nor the seller has any control. The transactions carried out by the Assessee(s) stand fully documented and evidenced by contract notes/ bills of the relevant brokers issued in the form and manner as prescribed by the regulatory authorities, copies of which are duly enclosed in Paper Book No. 3 filed separately in the case of each Assessee for each of the years under consideration. vi) It is submitted that the Assessee(s) herein were neither aware nor could be aware of the persons/ entities buying the shares sold by them. There was no way formal, informal or even collusive whereby they could control the sales of shares to ensure their sales to a particular person/entity. The Assessee(s) herein did not have any kind of relationship or control over the said companies save as that of passive investor and were not involved in the management thereof at any point of time. The Assessee(s) had no role whatsoever in the capital market operations of the scrips or influencing to any degree or extent their stock market prices. The transactions were entered into by the Assessee(s) in the capacity of stock ma....
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....rolled by SCS Sri Satyaprakash Goel Director of Avance Technologies Ltd, alleged to be controlled by SCS Sri Raj Kumar Kedia Alleged entry operator Manish Arora Employee of Raj Kumar Kedia Jagdish Prasad Purohit Person allegedly controlling the following cos: 1. Blue Circle Services Ltd. 2. Unisys Software & Holding Ltd. 3. Global Infratech Ltd. Deepak Patwari Alleged exit provider Praveen Agarwal Alleged exit provider ii) It may be noted that in most of the statements (barring the statement of RKK & his employee Manish Arora), the Assessee(s) herein have not even been named/implicated. It is also pertinent to note that although Sri Jagdish Prasad Purohit has been alleged to be managing & controlling the affairs of Blue Circle Services Ltd. & Global Infratech Ltd., as per the information collected from the website of the Registrar of Companies, Sri Jagdish Prasad Purohit was not even a director in the said companies and accordingly had no locus standi w.r.t the said companies. Further, on a perusal of the statements of Sri Jadgish Prasad Purohit, it may be seen that he has given a list of the companies controlled & managed by hi....
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....e A.O. disbelieved the genuineness of the transactions carried out by the Assessee(s) and the truthfulness of the documentary evidences furnished in support thereto citing reference to third party statements & third party evidences gathered in course of separate search actions in the cases of third parties. The Assessee(s) herein vehemently denied the allegations framed on the basis of the impugned third party statements & data and made a categorical request for allowing him/them an opportunity to cross-examine the persons whose statements & seized documents were intended to be used against the Assessee(s). However, no such opportunity was provided to the Assessee(s) in complete denial of principles of natural justice, thus nullifying/neutralizing the referral value of such alleged third party evidences relied upon by the A.O. and consequently resulting in conclusion of the successful discharge of onus u/s 68 in the favour of the Assessee(s). v) The two main principles of Natural Justice are firstly 'nemo judix in causa sua' or 'nemo debetesse judex inpropria causa sua, that is, "no man shall be a judge in his own cause"- and the second rule is 'audi altera....
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.... (xvii) P. S. Abdul Majeed, (Kerala) (1994) [209 ITR 821] (xviii) Prarthana Construction (P) Ltd. [2001] 70 TTJ 122(Ahd Trib) (xix) CIT Vs. S.M Aggarwal 292 ITR 43 (xx) Straptex India (P) Ltd. Vs. DCIT [2003] 84 ITD 320 (Mum) (xxi) R.W. Promotions (P.) Ltd. v. Asstt. CIT [2015] 61 taxmann.com 54 (Bom.) (xxii) Obulapuram Mining Co, (P.) Ltd. v. Dy. CIT 160 ITD 224 (Bang. - Trib.) (xxiii) CIT v. Indrajit Singh Suri [2013] 33 taxmann.com 281/215 Taxman 581 (Guj.) (xxiv) Smt. Sunita Dhadda v. Dy. CIT [2013] 33 taxmann.com 639 (JP.- Trib.) (xxv) Cannon Industries (P.) Ltd. v. Dy. CIT [2015] 59 taxmann.com 65 (Mum.- Trib.) vii) In the instant case also, most of the third party statements & evidences relied upon by the A.O viz. the statements of alleged dummy directors of various companies, alleged employees of Sirish Chandrakant Shah, statements of Om Prakash Anandilal Khandelwal, Praveen Kumar Jain, Praveen Agarwal, Jagdish Prasad Purohit, Satish Saraf, Yogendra Kumar Gupta, Jayesh Raichand Thakkar, Sri Satyaprakash Goel, Deepak Patwari etc. are very generic. Apart from the fact that these persons were not ....
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....(Mum) (Trib) xiv) PCIT Vs. RMG Polyvinyl (I) Ltd. (2017) 83 taxmann.com 348 (Delhi HC) xv) PCIT Vs. Meenakshi Overseas (P) Ltd. (2017) 82 taxmann.com 300 (Delhi HC) xvi) Gee Cee Cycle Balls Pvt. Ltd. Vs. ITO, ITA No. 867/Del/2013 dt. 30.10.2015 xvii) CIT Vs. Goel Songs Golden Estate Pvt Ltd. ITA No. 212/2012 dt. 11.04.2012 xviii) CIT Vs. Vrindavan Farms (P) Ltd. ITA No. 71,, 72, 85/DeI/2015 dt. 12.08.2015 xix) Dwarka Gems Ltd. ITA No. 71/Jp/2017 (ITAT Jaipur) xx) Nirmala Agarwal Vs. ACIT (ITA No. 995 & 996/Jp/2016) (ITAT Jaipur) ix) Drawing support from the above cited judgments, it is submitted that in the instant case, the addition made by the AO u/s 68 & 69C primarily relying on third party documentation and third party statements recorded by the Investigation Wing without - (i) conducting an independent enquiry & investigation by examining the alleged deponents/departmental witnesses during the assessment proceedings (ii) allowing cross-examination of the deponents to the Assessee(s) and (iii) discrediting the evidences furnished by the Assessee(s) - is bad-in-law and hence not sustainable. 70. Re: Relia....
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....dia on 13.06.2014, i.e. almost four months after the search action in the case of the Assessee(s) herein on 22.04.2014 although the simultaneous search action on Sri R.K. Kedia on 22.04.2014 had not resulted in discovery of any incriminating material against the Assessee(s) herein. As per the categorical finding and ruling of the Hon'ble Delhi ITAT in the case of Sri Brij Bhushan Singal & Ors Vs. ACIT (ITA Nos. 1415-1417, 1479-1481, 1483- 1484/Del/2018) (as also elaborated subsequently), no reliance can be placed on documents seized from the premises of Sri R.K. Kedia who has been specifically held to be an unreliable person indulging in double speaking especially when no opportunity to cross examine him or his employee was provided to the Assessee(s). The A.O has also relied on certain data (excel sheets in hard disk marked PAL/HD/1) seized from the premises of one Praveen Agarwal (alleged exit provider) in course of separate search action in his case. The said data however does not relate to the Assessee(s) herein or to the issue of LTCG under the present appeals. These allegedly record certain cheque/RTGS entries to BPSL group companies which stand duly accounted for in the ....
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....he assessee was directed to appear on a particular date to cross-examine the parties, but they were not available on the specified date. Therefore, the impugned assessments were framed by the AO in gross violation of principle of natural justice. To support this contentions, the ld.counsel for the assessee relied upon various cases laws, including judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. CIT, 281 CTR 241 (SC). iii) The assessee has earned LTCG out of the preferential allotment. While denying the claim of the assessee, the ld.AO construed without any basis that the assessee has relation with the promoters of the said companies and entry providers, and therefore, preferential shares were issued to the assessee. In fact the preferential shares issued to the assessee was in accordance with the rules and regulations of the SEBI, and the allotment of such shares has been vetted by the SEBI which did not signify any connection of the assessee with the promoters of the company. iv) The shares of company was listed and traded in the stock exchange, and the shares were credited to the respective DEMAT accounts of the assessee. After a p....
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....statement recorded under section 132(4), which was further retracted on 26.3.2015. Therefore, his statement is not trustworthy and has little evidentiary value for the adjudicating authority to proceed on with it. In this regard, the ld.counsel for the assessee relied upon various case laws viz. judgment of Hon'ble Kolkata High Court in the case of CIT Vs. ester Commercial Enterprises, 201 ITR 103, ITAT decision in the case of DCIT Vs. Bhola Nath Radha Krishna, ITA No.5149/Del/2012, and Smt.Smita P. Patel Vs. AFCIT, 159 TTJ 182 etc. Unless statements are corroborated with incriminating material seized during the course of search, the same cannot be used against the assessee to draw an adverse inference. vii) In sum and substance, the ld.counsel for the assessee reiterated that no concrete evidence has been unearthed in the course of search in the cases of the assessee herein to conclusively establish that the assessees herein had booked bogus LTCG or that their own unaccounted money was routed through transactions in shares of the said scrips or that they had made any compensatory payments to the buyers of the said scrips. 72. The Ld. DR while appraising us with the fac....
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....ent which was confronted to him. iii. All the entry-operators, brokers and their accomplices have reaffirmed and restated before the income tax authorities and before the other authorities under PMLA that they were engaged in providing accommodation entries for bogus longterm capital gain. But it is not so in the case of Shri Brij Bhushan Singal. iv. The assessee in the past has also admitted that he has earn unaccounted income which was introduced in the company in the form of share capital and premium. Such unaccounted income was offered to tax on different occasions by the assessee. Thus, there remains no doubt that the assessee was in the habit of adopting such dubious techniques for laundering the unaccounted income. However in the case of Shri Brij Bhushan Singal, there is no such history available on record. Likewise, the learned DR has also highlighted certain legal/ technical difference between the case of the assessee viz a viz Shri Brij Bhushan Singal as detailed under: i. The Hon'ble Supreme Court the case of NRA Iron &Steel (P.) Ltd reported in 103 taxmann.com 48 has categorically held that the onus to justify the nature and of source of t....
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....ee to explain nature and sources of credit under section 68 of the Act. The primary onus is to furnish the details with respect to the identity, creditworthiness and genuineness of the parties under the provisions of section 68 of the Act. Once the assessee furnish primary explanation then burden shift on Revenue to make further enquiry and point deficiency in primary explanation. Upon such enquiry, thereafter the burden once again shifts on the assessee to explain satisfactory with regard to nature and source of credit. In the case on hand, based on the materials gathered during the search proceedings conducted at premises of various entry operators and brokers and the statements collected of various entry-operators and their accomplices were confronted to the assessee and therefore he admitted to make a disclosure of Rs. 250 crores. The statements gathered during the search proceedings of various persons were not retracted rather the statements were also reiterated during the proceedings under PMLA. However, the assessee has not brought anything on record based on materials to dispel the results of the enquiries conducted by the revenue. As such, the onus was upon the assessee to....
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....venue officers by stating that there should not be any force/coercion for the admission of any income on the assessee. As such, there has to be other materials available on record for the income of the assessee besides the statements recorded during the search and survey operations. In the present case, there are enough materials besides the statements of various parties including the assessee proving that the assessee has earned bogus long-term capital gain. There were many glaring facts that the companies, in whose scrip the assessee has generated bogus longterm capital gain, were neither carrying out sufficient business operations nor having any future business plan. Therefore, any abnormal rise in the price of the script that too within a short period of time cannot be justified. In such facts and circumstances there is more onus upon the assessee to justify the nature and source of credit and genuineness of the transactions. Likewise there were investigation reports from SEBI wherein it was alleged that these companies were involved in artificially jacking up the price. In such facts and circumstances, the transactions cannot be justified merely on the basis that it was carrie....
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....sel for the assessee. 78. We have perused this detailed order running into 173 pages. We will be reproducing major part of this order vide which the Tribunal has applied its mind on the details brought on its notice. To our understanding there is no variation in the facts and circumstances and nature of evidence. The department has cited more than 35 judgment before the ITAT in the case of Shri Brij Bhusan Singal and citations of all these judgments have been noticed in para 21 of internal page no.91 of the order. Thereafter, the Tribunal has reproduced comments of the assessee on all the judgments which have been given in tabulated form and these comments have been noticed in page no.93 to 144. We find that ld.cousnel for the Revenue has placed on record copies of following judgments before us. i) Sh. Brii Bhushan Singal & others - Unabated Years Rainish Jain v. Commissioner of Income-tax ii) Kantilal C. Shah. V.ACIT iii) ACIT v. Hukum Chand Jain iv) Ms. Privanka Chopra v. DCIT v) Bhagirath Aggarwal v. CIT vi) Gopal S. Pandith v. DCIT vii) CIT v. Vegetable Products viii) Smt. M.K. Raieshwari v. ITO ....
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....d parties without granting cross-examination of those parties. ii. Whether without providing the copies of the statements as well as the cross examination of alleged exit providers, such evidences can be used against the assessee for making addition. iii. Whether the interim orders of The SEBI relied up on by the ld AO implicate the assessee for making addition u/s 68 of the act on alleged bogus long-term capital gains. iv. Whether Cash Trails of The buyers of the securities as stated by the ld AO makes the long-term capital gain of the assessee bogus. v. Whether the disclosure of some other persons as their undisclosed income of Long-term capital gain affects the case of the assessee also. vi. Whether de hors all the above facts addition in the hands of the assessee u/s 68 of long term capital gain can be made 26. On the first issue of Cross-examination, it is apparent that ld AO has made addition based on the statement of Shri R.K. Kedia (alleged entry provider), Manish Arora (employee of Sri R.K. Kedia), alleged exit operators, directors of penny stock companies etc. recorded by various officers of the Department. The Assesse....
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....vision of opportunity to cross-examination of certain persons were not found fatal to the assessment. Against this, the assessee has also put his case that nonprovision of cross-examination opportunity is fatal to the assessment. In this background, whether the assessee has been granted the opportunity of the cross-examination or not is required to be seen. The fact, which has not been denied by the learned authorised representative that Mr. Neeraj Singal in his statement dated 24/4/2015 was offered an opportunity to cross-examine Mr. Rajkumar Kedia. However, in answer to question number 25, he refused and stated that he does not want to cross-examine Sri R. K. Kedia or Shri Manish Aurora or Shri Ankur Agarwal. Apparently, the search took place on 13/06/2014 and first notice was issued under section 153A on 8/9/2014. The first notice under section 143 (2) and 142 (1) was issued on 25/7/2016. Therefore, at the time when the statement of Sri Neeraj single was recorded on 24/4/2015, It was not known whether the statement of Mr. Rajkumar Kedia, Manish Aurora, et cetera would be used against him or not. Therefore, apparently at that particular time assessee did not thought it fit to cro....
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....ed upon the statement of Sh. Raj Kumar Kedia his employee Sh. Manish Arora, Sh. Ankur Agarwal, an employee of BSL and Sh. Chandrakant Mahadev Jadhav. However, Sh. Raj Kumar Kedia retracted his statement on 14.10.2014 (copy of which is placed at page nos. 446 to 451 of the assessee's compilation). Thereafter, he filed letter dated 31.03.3015 withdrawing his retraction, copy of which is placed at page nos. 452 to 455 of the assessee's compilation. Therefore, he was changing his stand as such his statement cannot be considered to be reliable. Similarly, Sh. Ankur Agarwal also retracted his statement vide letter dated 20.12.2016 which is placed at page no. 190 of the assessee's compilation. Similar was the position with regard to the statement of Sh. Chandrakant Mahadev Jadhav recorded on 13.06.2014, the said statement was also retracted vide letter dated 24.11.2016. Now question arises as to whether the addition can be made u/s 153A of the Act in the absence of any incriminating material emanating from search u/s 132(1) of the Act, only on the basis of the statement recorded u/s 132(4) of the Act, particularly, when the opportunity to cross-examination of the witness whose statement w....
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....y to cross-examine was not afforded to the assessee..." Thus, it is apparent that the assessee has not been granted an opportunity of the cross-examination of Sri R. K. Kedia and Shri Manish Arora. The learned authorised representative has relied upon the decision of the Hon'ble Supreme Court where in relying on case of state of Madhya Pradesh vs. Chintaman sadashiv Waishampayan AIR 1961 SC 1623 wherein in para number 11, It has been held referring another decision in Union of India vs. TR Varma "stating it broadly and without intending it to be exhaustive, it may be observed that the rules of natural justice require that the party should have the opportunity of producing all relevant evidence on which he relies, that the evidences of the appellant should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no material should be relied on against him without he is being given an opportunity of explaining them." It was further stated that it is hardly necessary to emphasize that the right to cross-examine the witnesses who give evidences against him is a very valuable right, and if it appears....
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....of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause notice." In the present case, also the assessee soug....
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.... raised the same issue before the learned CIT A that crossexamination has not been provided to the assessee despite asking for the same. The learned CIT A has also brushed aside the above argument of the assessee without giving any plausible reason. Therefore, when the assessee has not exhausted all the judicial process before reaching to the higher forum, but has bypassed them by invoking the different rights, then in such circumstances, the violation of the principles of natural justice, such as not granting of opportunity of the crossexamination, becomes any regularity and not an illegality. However, when the assessee has exhausted all the remedies available to him by exercising his right of the judicial process, then in such circumstances violation of the principle of natural justice, such as not granting an opportunity of crossexamination of the witness becomes an illegality. Therefore, in such circumstances, the order/addition made based on the statement of third parties and no opportunity has been granted to the assessee for their cross-examination despite repeated requests, addition deserves to be deleted. 27. The second issue relates to the evidence and data seize....
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....e search of Shri Raj Kumar Kedia cannot be used against the assessee, unless the assessee is given an opportunity of cross-examination of the men with respect to the documents found relating to the assessee or where the names of the assessee are mentioned. On this issue also the coordinate bench in assessee's own case, has held that such material found from third-party who was not allowed to be cross-examined by the assessee cannot be relied upon:- "121. In the present case also, the AO made the additions on the basis of the statements of third parties recorded u/s 132(4)/133A of the Act and third parties evidences/documentation. However, no live nexus with the incriminating material found in the course of search in the case of the assessee was established. The statements of the third parties were recorded behind the back of the assessee but the opportunity of cross-examination of such parties was not allowed to the assessee, even the statements were retracted later on. It is well settled that the presumption u/s 132(4A)/292C of the Act, is available only in the case of the person in whose possession and control, the documents are found but it is not available in respect o....
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....several occasions to cross-examine the analyst even agreeing to pay the necessary expenses, the report could not automatically have been accepted. Since the Assessing Officer did not permit the correctness or otherwise of the report to be tested, there was a clear violation of the principles of natural justice by him in relying upon it to the detriment of the assessee. Even if the strict rules of evidence may not apply to assessment proceedings, the basic principles of natural justice would apply to the facts of the case." 124. On a similar issue, the Hon'ble Madhya Pradesh High Court in the case of Prakash Chand Nahta Vs CIT (2008) 301 ITR 134 (supra) held as under: "That as the Assessing Officer had not summoned R in spite of the request made under section 131 of the Act, the evidence of R could not have been used against the assessee and in the absence of affording a reasonable opportunity of being heard by summoning the said witness the assessment order was vitiated." 28. On this issue, Hon Rajasthan High court in case of CIT vs. Sunnita Dhadha, against which special leave petition has been dismissed by the Hon'ble Supreme Court, clinches the issue in favour of the ass....
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....t Brij Bhushan Singal, Neeraj Singal and Uma Singal were preferential allottees. FFSL transferred Rs. 1 crore and Rs. 50 lakh to Marsh Steel Trading Ltd and Vision Steel Ltd respectively by way of investments in these companies on September 19, 2011. One entity named Aarti Singal, a relative of Brij Bhushan Singal, Neeraj Singal, Uma Singal and Ritu Singal (hereinafter referred to as 'the Singals') was a director in Marsh Steel Trading Ltd and Vision Steel Ltd during the relevant period. It has been mentioned in the SCN that as per the disclosures made on BSE, Aarti Singal was a promoter in Bhushan Steel Ltd till quarter ending September 30, 2011 along with Sanjay Singal, Brij Bhushan Singal, Neeraj Singal, Uma Singal and Ritu Singal. Therefore, it was alleged that these entities are connected among themselves and the aforesaid transfer of Rs. 1.50 crore out of the allotment proceeds towards investments in Marsh Steel Trading Ltd. and Vision Steel Ltd resulted in an indirect transfer of allotment proceeds to the Singal group allottees. 71. Marsh Steel Trading Ltd. and Vision Steel Trading Ltd. have submitted that the amount of Rs. 100 lakh received by Marsh Steel Trading L....
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....information and feedback received from various professionals, friends and other persons who are actively involved and having adequate knowledge of the securities market. 74. I find that during the course of proceedings, Marsh and Vision were represented jointly and Brij Bhushan Singal, Uma Singal and Neeraj Singal were jointly represented, as part of two factions of the family. It is seen from the SCN that these entities have been implicated becauseof receipt of funds by Marsh and Vision from FFSL and Aarti Singal's association as a director in Bhushan Power and Steel Ltd. which transferred Rs. 6.50 crore to in March 2012 to Ranisati Dealers, which was a major buyer or exit provider to the preferential allottees. The preferential allotttes have adequately explained as to how they are unconnected to Ranisati and how there was a settlement family-wise with respect to Bhushan Power & Steel Ltd. Likewise, with respect to Marsh and Vision, it has been brought out that the fund transfer by FFSL was equity investment and not otherwise. In view of this, I find that that none of these entities can be proceeded against, namely, Brij Bhusan Singal, Uma Singal, Neeraj Singal, Marsh St....
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....sions of the entities and the stage at which the entities stand today, I am inclined to continue with the debarment and restraint orders against certain entities, including the company and its noticee directors, and certain other entities who are observed to be liable in the relevant parts of this order, based on their connection with the company; or market manipulation; or their role as conduits in fund transfer to the market manipulators. Accordingly, I am inclined to pass orders against various noticees as shown under the head 'Directions'. ............ 93. As against the remaining noticees, the interim directions issued vide interim orders dated December 19, 2014 and August 11, 2015 and confirmed vide confirmatory orders dated April 20, 2015, June 02, 2016, June 14, 2016 and August 25, 2016 shall stand revoked, with immediate effect. ...... 95. The Hon'ble SAT had directed SEBI to pass final orders in the instant matter on or before 31st of March, 2018. However, due to intervening holidays from 29th of March to 1st of April, 2018, the same is being passed on the 2nd April, 2018, in due deference with the orders of the Hon'ble Tribunal. It is ....
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....y stock exchange after the payment of the securities transaction tax, payments are settled by the settlement mechanism of the stock exchange to the broker, and in turn the broker makes payment to the seller, the assessee. Money comes in to the bank account of the broker through settlement mechanism of stock exchange. As it is apparent from the order of the securities and Exchange Board of India, No such transactions entered into by the assessee are not at all the synchronized transactions .There is no involvement alleged of the selling broker of the assessee involved in such synchronized trades. of on the Bombay stock exchange. There is no such finding given by the securities and exchange Board of India or Bombay stock exchange / National Stock exchanges as per its surveillance scheme and mechanism. Further, there is no evidence gathered by the assessing officer that the cash deposited in the bank account of the multiple companies is given by assessee. There is no funding pattern available, wherein the name of the assessee appears. Furthermore the notices issued by the assessing officer under section 133 (6) were either remained unserved or not responded by those companies, for whi....
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.... (such statement was retracted and then once again confirmed). However, in the statement of Shri Jagdish Purohit there is no reference of any work carried out with Shri Raj Kumar Kedia. The ld AO has merely stated that as Mr. Jagdish Purohit is an accommodation entry provider and as Mr. Raj Kumar Kedia has named Mr. Jagdish Purohit, without corroborating has linked assessee's case with Jagdish Purohit. The ld AO has also stated by the statement of Shri Devesh Upadhaya noted that one Mr. Bikash Surekha was involved in trading of many scripts and also held that Mr. Sanjoy Dey was operating the terminal and then entering into synchronize trading. However, none of these persons was examined to ascertain that how they have entered into synchronized trading. Necessarily such synchronized trading has to be with the broker of the assessee. No such link was established. Furthermore, merely because of the matching of the transaction with stock exchange the ld AO reached at the conclusion that there is a synchronized transaction. Surprisingly, no such synchronized trading was referred to SEBI. On this issue on synchronized trade no orders of SEBI were placed before us under SEBI (prohibition ....
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....s discussed. It shows that SEBI issued an elaborate interim order in respect of 12 entities connected with LTCG booking. These are First Financial Service Ltd, Kailash Auto Finance Ltd, Kamalakshi Finance Corp Ltd, Kelvin Fincap Ltd, Mishka Finance and Trading Ltd, Moryo Industries Ltd, Pine Animation Ltd, Radford Global Ltd, Eco Friendly Food Processing Park Ltd, Esteem Bio Organic Food Processing Ltd, Channel Nine Entertainment Ltd and HPC Biosciences Ltd. However, in none of these interim orders the assessee was found to be involved in any of the wrong doings. Such orders of SEBI are also elaborately discussed in this order itself. Therefore, merely because some of the persons have disclosed the LTCG earned by them as dubious, does not improve or hamper the case of the assessee and his family members. 34. The next issue discussed by the learned assessing officer was with respect to the preponderance of the probabilities in para number 4.12 of the assessment order. The learned assessing officer noted that in the instant case, there are many statements duly supported by the evidences that the individuals of Bhushan steel Ltd group has received bogus long-term capital gain....
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....mitted that it was argued before the bench in appeal from earlier years that no incriminating evidences were found during the course of search. The order is awaited. He further stated that the preponderance of probabilities would come into play only when the basic test of direct and factual evidences fails. He stated that in the present case the complete evidences have been placed by the assessee before the revenue authorities, they are not found to be false but only allegation has been made that transactions are sham. He further stated that the decision relied upon by the learned AO of honourable Supreme Court is quite distinct on its fact. On careful analysis of the evidences placed before us, findings rendered by the lower authorities, we proceed to consider the taxability of the long-term capital gain earned by the assessee under section 68 of the income tax act whether in situations like this, one may fall into realm of "preponderance of probability" where there are many probable factors, some in favour of the assessee and some may go against the assessee. However, the probable factors have to be weighed on material facts so collected. Here, in this case, material facts strong....
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....n favour of a party which has more favourable factors in his side. The conclusions have to be drawn based on certain admitted facts and materials and not based on presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. The reliance placed by the learned AO on the decision of the honourable Supreme Court is clearly distinguishable. So far as the facts of that case with the case on hand before u are compared, in that particular situation before the honourable Supreme Court where the assessee was constantly earning money from the jackpot, further was not having any losses, it was confessed before the settlement commission that the expenditure incurred or the losses suffered by the assessee have been adjusted against the unaccounted income of the assessee, books of the assessee did not show in that particular case any drawings for purchase of tickets and incurring travel expenditure to 3 different cities prior to the date of winning of the jackpot races. The assessee has given up the wi....
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....inating material on which addition can be made. We also have found that the facts of the issue before us are also similar to the facts dealt with by those judicial authorities. 36. As the issue involved before us is of chargeability of long term capital gain as undisclosed income of the assessee u/s 68 of the act, we have also conducted some research and found that now many high courts and coordinate benches have held in favour of the assessee. In one of the cases, SLP filed by the revenue against the order of the Honourable Bombay high court has also been dismissed by Honourabel Supreme Court. Many of the decision of the coordinate benches have also discussed the facts similar to the issue before us. Such recent cases are listed here under:- serial number Title of the case Appeal number/ date of decision authority rendering that decision 1 CIT V Shreyashi Ganguli ITA 196 of 2012 Cal High court 2 Classic Growers Ltd V CIT ITA 129 of 2012 Cal High court 3 CIT V Lakshamangarh Estate & Trading co Limited 40 taxmann.com 439 Cal high court 4 CIT V Rungta Properties Limited ITA No 105 of 2016 Cal High court 5 CIT ....
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....34 K Praveenkumar HUF V ITO 29/10/218 Chennai ITAT 35 RukmaniDevi Manpuria V DCIT 24/10/2108 Kolkatta ITAT 36 Bishwanath AGarwal V ITO 16/10/2018 Kolkata ITAT 37 Bhanshali Finacom P Ltd V DCIT 10/10/2018 Kolkatta ITAT 38 Sanjay Mehta V ACIT 28/9/2018 Kolkatta ITAT 39 Mina Mehta V ITO 28/9/2018 Kolkatta ITAT 40 Vikas Jhawar V ITO 26/9/2018 Kolkatta ITAT 41 Neelam Agarwal V ITO 26/9/2018 Kolkatta ITAT 42 Rajkumar Goenka V ITO 26/9/2018 Kolkata ITAT 43 Shobhit Goel V ITO 25/9/2018 Delhi ITAT 44 Kaushlaya devi V ITO 19/9/2108 Hyderabad ITAT 45 Amit Shah V ITO 26/9/2018 Kolkatta ITAT 46 Deepak Bhattad HUF V ITO 19/9/2018 Chennai ITAT 47 Arunkumar Bhaiyya V ITO 30/8/2018 Delhi ITAT 48 ITO V Kapil Mittal 29/8/2018 Jaipur ITAT 49 DCIT V Saurabh Mittal 29/8/2018 Jaipur ITAT 50 Sikha Dhawan V ITO 27/6/2018 Delhi ITAT 51 Meghrajsingh Sehawat V DCIT 7/3/2018 Jaipur ITAT 52 DCIT V Vimleshkumar Singh 15/1/2018 Raipur ITAT 53 ACIT V Pratiksha Shah 03/10/217 Mumbai....
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....change through a registered broker receiving the sale consideration through the settlement mechanism of the exchange by cheque. There is no doubt on the brokers who purchased shares and on the brokers who sold the shares. In the case before the honourable Bombay High Court, addition was on account of absence of any information coming from the broker who sold the shares when enquired by the AO. In the present case, the AO did not raise any question to the broker who sold the shares. It is in fact, the broker who sold the shares logged in to his terminal and sold the shares on electronic online platform of the exchange. It is not the case of the assessee that the shares have not been sold by the assessee on the stock exchange. Here, the learned assessing officer is challenging the whole cycle of the transaction, starting from purchase of the shares by the assessee from the market or on preferential allotment of shares of some of the companies and subsequently holding it and selling it on stock exchange at prevailing prices as sham transaction as an attempt to convert the unaccounted money of the assessee in the form of non-taxable long-term capital gain. Further, in the case before t....
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....in case of Chandan Gupta vs. CIT, 229 taxman 173 (Punjab and Haryana). In that, particular case the assessee expressed its inability to produce the broker and the AO conducted inquiries on his own. The quotations were also from a Gujarati diary the prices could not be substantiated by the assessee. In the present case, the assessee has produced all the evidences before the assessing officer and the learned AO did not press upon the assessee to produce anybody instead of that he went by the standard modus operandi as understood by him. Even in the present case before us whether the modus operandi is the thinking of the learned AO or has he been directed by somebody is not known. The prices at which the transactions of sale of shares have taken are market rate and there is no allegation as the shares were listed on stock exchange. Therefore, the facts of the case cited by the learned departmental representative are clearly distinguishable. 41. The 5th decision relied upon by the learned CIT DR is with respect Balbir Chand maini vs. CIT [340 ITR 161]. In that particular case, on examination of the broker the books of accounts of the broker could not be produced by him to show....
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....earch on Mr. Raj Kumar Kedia and recording statements of so many persons the ld AO knowing fully well that failure to grant cross examine will make all these enquiries fruitless. Further, there are loopholes in the evidence relied upon by the revenue of not referring the issue of synchronized trading to the SEBI. Certain times the conviction under the SEBI Act would have been more stringent then the liability under the Tax laws. Further, though the AO was having reasonable evidences but has unnecessarily took the burden on him of proving that long term capital gain earned by the assessee is bogus instead of first asking assessee to prove that the above income is exempt u/s 10(38) of the Act. After granting full opportunity to the assessee to adduce as many evidence as assessee could have produce and then should have carried out vast powers bestowed upon him under the Income Tax Act, 1961 of examining the details furnished by the assessee. The ld AO could have also asked the assessee to produce all the persons whose statement AO was relying upon. However, the ld AO has unnecessarily taken the onus of proving long-term capital gain as bogus instead of first asking assessee to prove t....
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.... and if an assessee is able to demonstrate with the help of some material that such admission was either mistaken, untrue or based on misconception of facts, then solely on the basis of such admission no addition is required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of addition, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The CBDT is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not wi....
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....unity. We have perused this proposition, but it is not applicable to the facts of the present case. It is pertinent to observe that onus was upon the assessee to prove that the gifts are genuine and in order to discharge that onus, it was incumbent upon the assessee to produce the donor. Those donors should be witness of the assessee, and even if denial of the donor is excluded, then also the assessee failed to discharge her onus to prove genuineness of the gifts. In other words, non-granting of cross-examination of the donor had not impacted case of the Revenue, because it is the assessee who has to first prove genuineness of the gifts and it should be the endevour of the assessee to bring donor in the witness box and take a declaration from him about giving of gifts. Thus, it was not duty of the Revenue to call for the donor and then provide an opportunity to the assessee; because that exercise will not take the case any further in favour of the assessee. At the most the denial of donor could be ignored that it was not positive evidence used by the Revenue for rejecting the explanation of the assessee. The Tribunal has held that the assessee failed to prove genuineness of the gif....