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2021 (10) TMI 77
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....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 assessee, Shri Sanjay Singhal HUF has also filed appeals against reopening of ....
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....r 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 Appellant by relying on statements of various persons and data without affording any opportunity to cross examine su....
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....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, Falsification of accounts, Criminal Misconduct and use of Forged Documents. 3. During the course of investigation by ED, statements of Sri Sanjay Singal were recorded where he reiterated his earlier admission that the LTCG claimed to have been earned by him and his family members was a mere accommodation entry. 4. In the backdrop of this ....
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....ce 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 counsel for the Revenue as well as the ld.counsel for the assessee. It is pertinent to note here that hearings of these appeals were commenced on 21.6.2021. The ld.counsel for the assessee has concluded his arguments on 21.6.2021. After conclusion of the arguments of the ld.counsel for the assessee, the ld.senior counsel for the Revenue brought to our notice an application of the department for admission of additional evidence. The....
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.... 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 written submissions and ld.counsel for the Revenue filed written submission dated 29.6.2021, and the ld.counsel for the assessee has filed written submissions on 2.7.2021. Since we have taken cognizance of the Revenue's application in verbatim, we therefore deem it appropriate to take of objections filed by the assessee as well. The objection reads as under: "1. That the Respondents have preferred an Application under Rule 29 of ....
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....9;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 which they have objected to the hearing of the said matter before this Hon'ble Tribunal by averring a nonuniform approach taken by the ITATs for certain questions of law which would have a cascading impact for the abated AYs, the present Application for the admittance of Additional Evidence had been filed that has nothing to do with the issue of the Special Bench and has everything to do with the case on merits. There is thus a lack of clarity in how the Department....
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.... 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 situations prescribed under Rule 29 applies to the Department in the present case since situation No, I arises only at the direction of the Tribunal and situation No.2 applies only to an assessee (if the assessee is able to show that sufficient opportunity had not been provided by the lower authorities) - then the present Application has been filed without jurisdiction, rendering the same to be null and void in law. 9. Without prejudice to the above, on the merits of this Application and the additional evidence c....
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....t 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 Kolkata ITAT in the decision of in M/s. SPML Infra Ltd. vs. DCIT, ITA No. 1228/Kol/2018 that has held as follows: "14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assesses company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement reco....
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....he 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 evidence that was not on the record of the A.O. during the course of the search assessments, cannot now be utilised as admissible evidence in order to fasten liability against the Appellants under the Income Tax Act, especially since such material that has been recorded post the completion of the search, cannot possibly be subject to the rigours of Sec.142 of the Act. In other words, statements that have been recorded by the ED under the PMLA, cannot be utilised in the form of evidence for the purpose of the Income Tax Act at the stage of the appellate authority (i.e., the ....
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.... 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 the case of L.G. Electronics India Pvt. Ltd. vs. ITO, ITA 5140/DEL/2011 (Special Bench, decision dated January 2013) the D.R. therein sought permission to file additional evidence being copies of orders passed by TPO in the assessee's own case for A.Y 2008-09 along with written submissions of the assessee before the TPO and statements of employees of the assessee. See Para 8.1. E. Per the Hon'ble Bench, the Department was seeking to invoke Rule 29 for filing certain material that was already in the knowledge of the assessee therein, and therefore, technically the same was held to be not in the nature of additional....
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....itness 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 SCC178, the Hon'ble S.C. has clearly held that statements recorded by the ED cannot be termed to be statements that are recorded during the course of a judicial proceedings to enable their utilisation in Income Tax Act proceedings. This is because the statements recorded by the ED do not have the procedural safeguards that exist under the CrPC when the statement is recorded before a Magistrate. Thus any confession made before the ED cannot be suo motu considered as evidence to fasten liability under the Income Tax Act, especially when such statements have been retracted. The relevant excerpts of the said decision are quoted hereunder: "28. Coming to the FERA, i....
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....pportunity 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 Application for admission of the statements of Sanjay Singhal as additional evidence. As held in the decision of KTMS Mohamed & Ors. (supra), inculpatory statements that have been subsequently repudiated cannot be utilised across different proceedings emanating under different Statutes. The Hon'ble S.C. has also held that a statement that has been subsequently retracted cannot be utilised in its original form, by giving a go by to the retraction brought on record. Therefore the very reliance on the statements of Sanjay Singhal as 'evidence' in itself, let also as admissible additional evidence before this Hon'ble Tribunal for the purpose of sustaining an addition made under the Incom....
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....ord 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 information comes to the possession of the AO that income has escaped, he could reopen the assessment by issuance of notice under section 148 of the Act. Similarly, during the course of assessment proceedings, section 142 of the Act contemplates power of the AO for collecting the information and other material from the assessee. In the present appeals, assessments were framed long back; appeals were pending in the Tribunal since 2018. Evidence was alleged to be placed on record were statements recorded way back in 2016 and 2019. By placing such statement on record, a new line of discovery of facts required to be unearthed. All these persons would be required to be called upon and cross-examination is required to be made. It....
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....ose 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 artificial distinction between these appeals vis-s-vis the earlier orders of the ITAT on the same point. In substance these are not the evidence required by the ITAT for just decision of the appeals. In view of the above discussion, the application of the Revenue is rejected. Now we take the appeals for adjudication: 11. For the facility of reference, we are taking the facts from the appeal of Shri Sanjay Singal mainly and any variation on facts would come to our notice, we will note them. The assessee in the present case is an individual and a key person of the group known as BSPL Group. The brief facts as alleged by the Revenue are as under: 12. There were search and survey operations under section 132/133A of ....
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....s 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 (Aangdia) in the remark column by whom Shri SCS received the cash amount. The name of the assessee and his associates was also appearing in this sheet in coded form. 17. Against the receipt of cash from the assessee, the name of cash courier (Aangdia), Shri Pintu alias Chintan (Praveen Kumar Jain) was appearing. This fact was also corroborated in the independent search and seizure operation carried out under section 132 of the Act by the Directorate of Investigation, Mumbai in case of Shri Praveen Kumar Jain. During search, the books and other records were found and impounded. On comparison of these impounded documents with the cash and cheque sheet maintained by SCS, it was noticed by the AO that the entries of the assessee group were matching. Shri Praveen Kuma....
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....fronted 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 sale of PIL shares. 22. Subsequently, one more search and seizure operation under section 132 of the Act dated 13 June 2014 was also carried out by the Directorate of Investigation, Delhi in the case of Shri RK Kedia, a broker wherein it was admitted that he has arranged the bogus long-term capital gain on the request of the assessee. For this purpose, Shri RK Kedia used to receive cash from the office of the assessee through Shri Alkesh Sharma and Suresh Gupta, employees of the BSPL group. Likewise, in the course of search and seizure operation, certain loose papers of incriminating nature were found which were named as Extract E-14 Annexure A 27. The relevant page bearing No. 64 to 70 of such seized documents contained details of the sale, purchase of shares and receipts and payment of cash r....
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.... ) 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 Shri Jagdish Prasad Purohit who admitted in the course of search conducted under section 132 of the Act on various dates i.e. 19th November 2011, 12th February 2013, 17th December 2013 and 21st January 2015 in a statement furnished under section 132(4) of the Act, that he was engaged in providing accommodation entries. For this purpose, he has used several companies including M/s Blue Circle Services Ltd. The financials of M/s Blue Circle Services Ltd were very weak and showing a meagre income. Thus the rise in the price in the shares of M/s Blue Circle Services Ltd from Rs. 4 to 75-80 during 2010 to 2014 was not justified. However, the trade volume of shares of M/s Blue circle services Ltd has been recorded at Rs. 1387.66 crores during such period which was done through the several brokers. Most of the brokers at different point of time have admitte....
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....s, 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 and Dhiren Hasmukhalal Vora have offered the same to tax voluntarily before the settlement commission. The relevant finding of the AO is recorded on page 104 to 106 of the assessment order. It was also seen from the BSE data that majority of share were sold within a minute of putting the sale request. However, the assessee and his family members have not disclosed the additional income admitted by them in the course of search for Rs. 250 crores. 29. In view of the above, the AO issued a show cause notice to the assessee, proposing to treat the amount of impugned long-term capital gain as unexplained cash credit under section 68 of the Act. 30. In response to such show cause notice, the assessee submitted that he acquired the shares of PIL as share warrant which were subsequently converted into equity shares. Consequently the shares were dematerialised a....
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....d 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 contended that he or his family is not involved in any manner in the activity of price manipulation but acting as normal investor. Therefore, he is not answerable to any finding with regard to the manipulation in the prices of the shares by those persons who are not connected to him in any manner. Similarly, he also contended that whatever document impounded from the premises of third party or from Shri RK Kedia were not prepared by him or his family members. Likewise his or his family members names were not appearing on those document. Thus no inference can be drawn against him. 35. However, the AO disregarded the contention of assessee by observing that the onus is upon the assessee to justify, based on the documentary evidence, that the impugned long-term capital gain is genuine. There were several evidences recovered in the course of search under section 132 of the Ac....
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....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 undertaken sham transactions in the form of long-term capital gain. Likewise, these seized documents are not available in public domain and therefore nobody can access to them as these relate to the transactions carried out by the assessee group. Thus all the transactions are linked with each other. The statement recorded of Shri RK Kedia is backed by plethora of incriminating documents which were seized during the search proceedings. As such the statement of Shri RKKedia supports and incorporates the evidences found during the search. Therefore, the contention of the assessee that the statement of Shri RKKedia is not reliable as he is changing his statement is of no significance. 37. The disclosure made by the assessee for Rs. 250 crores on behalf of the group was based on the documents found during the search proceedings at various places. The entries recorded in those documents i.e.....
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....e 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 recorded under section 132(4) of the Act using any coercion. As such all the statements were furnished by the entry operators/companies admitting their involvement in the activity of accommodation entries which was based on the incriminating materials. Furthermore, there was the consistency among the statements furnished by the parties under section 132(4)/131(1A) of the Act admitting the fact that they were engaged in providing the accommodation entries to the beneficiaries including the assessee. 41. There were series of documents found during the search wherein the entries for receipt of cash were recorded. All these entries of cash receipt were matching with the seized documents which were found at different places during the independent searches. Besides the cash transactions, there were banking transactions also recorded which were matching with the books of accounts of entities of ent....
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.... 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. 59,85,99,451/- on account of bogus long term capital gain and Rs. 3,81,28,694/- on account of commission charges. 44. Aggrieved assessee preferred an appeal to the learned CIT (A) 45. The assessee before the learned CIT (A) submitted that the transactions for the purchase and sale of the shares of the alleged companies were backed by the necessary supporting evidences such as the contract notes, Demat Accounts, banking statement showing payment for purchase and proceeds against sale received in bank etc. However, the AO has not pointed out any defect in such documents which were produced before him during the assessment proceedings. The AO has merely treated the impugned long-term capital gain as bogus and therefore unexplained cash credit on the basis of reports received from the directorate of investigation wing. As such, the Directorate of investigation wing in the course of search proceedings conduc....
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....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/price is determined on the demand and supply of the script. As such the price of the script depends upon various factors such as the field in which the company is operating, the competition that the companies is facing, the difficulty for making the entry in the particular field, the background of the promoters, Govt. policy, budget proposals, future plans etc. 50. Furthermore, the assessee was nowhere involved in the jacking up of the price of the companies as discussed above. There is no allegation brought on record by the revenue suggesting that the assessee was involved in any manner in rigging up the price of the alleged companies. The AO while treating the impugned long-term capital gain as bogus in nature has referred to various statements and documents seized in the course of search from the place of the 3rd parties. As such there was no iota of evidence found from the premises of the assessee suggesti....
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.... 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 Shri RK Kedia as recorded from the documents found from his premises. Admittedly, the investment in PIL and other companies was made as per the advice of Shri RK Kedia and therefore it might be possible that Shri RK Kedia was expecting some commission on such investments. However, Shri RK Kedia has never demanded any commission from the assessee. Therefore, it is best known to Shri RK Kedia, what was the purpose for maintaining such record. 55. The assessee has sold the shares of PIL to various companies numbering into 141 and there were only 21 companies out of such 141 companies belonging to the group of SCS. In other words, several companies to whom the shares were transferred were not the part of the entities of Shri SCS. Therefore, there is no question of treating the sale of shares to other companies as unexplained cash credit under section 68 of the Act. Once the transaction of selling shares to the companies othe....
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.... 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 value of Rs. 60.12 crores were allegedly purchased by the companies controlled and managed by Shri Praveen Agarwal, an entry operator, which constitutes 37% of the total value of the shares sold. Thus it can be inferred that the remaining 63% of the total value of the shares were sold to other parties in respect of which no doubt was raised by the AO. Furthermore, all the transactions have been carried out through the stock exchange regulated by the SEBI, where the seller and the buyer's do not know each other and seller or buyer doesn't having any control on such transactions. Thus it cannot be said that the transactions of shares trading was carried out in synchronised manner. 59. With respect to the allegation of the AO for the weak financial and no business activity in the case of M/s Blue Circle Services Ltd, the assessee repeated the same arguments which have been elaborated in the preceding paragraph. In sum and substance....
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.... 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 evidencing that the assessee has paid cash against the sale of shares in order to take the accommodation entries. Thus, it is hard to believe the contention of the assessee that its group was indulged in the share trading activity as the investor only. 63. The incriminating documents found during the search proceedings pertaining to the particular A.Y. only but the assessee has carried out identical transactions in the immediate preceding year also. Thus, it can be concluded that the transactions of the earlier year was also bogus in nature. Usually, the bogus transactions are fabricated in such a way that they appear to be correct based on the documentary evidence. But such evidence has to be evaluated in the light of other vital information available on record which was found in the course of search of other parties. If a transaction is genuine then all other information available on record would also support and indicate the genuineness of th....
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....ppellant. 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 the Act based on statements of brokers/entry providers is also upheld for the reasons recorded in the assessment order at para 12.4. Accordingly, additions made by the AO are confirmed and the grounds of appeal are dismissed." 66. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal. 67. The ld.counsel for the assessee while impugning order of the ld.CIT(A) appraised us chronology of events, and in this connection he took us through page no.1 and 2 of the consolidated written submissions filed by him, which is running into 175 pages. In order to appreciate the facts in more scientific way, we deem it necessary to take note of list of events incorporated by the ld.counsel for the assessee in his submission, which reads as under: Dates Particulars 03.03.2010 Search u/s 132(1) (S&S) on 03.03.2010 at the residential and business premises of the Directors and related persons of the Bhushan Power & Steel Group (BPSL Grou....
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....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 upon 19.10.2011, 12,02.2033, 17.12.2013 Statements of Jagdish Prasad Purohit recorded u/s 1317 132(4) in course of S&S u/s 132(1) in the case of various companies allegedly controlled & managed by him - Assessee(s) not named anywhere in such statements 11.10.2013 Search at the premises of Praveen Kumar Jain (Pintu) by DIT(Inv), Mumbai, admitted on oath that he was in the business of providing accommodation entries and used to collect cash from angadias on behalf of SCS and would then pay SCS the same amount in cheque - seized documents relied upon mainly account of SCS in books of PKJ viz. SHIR ledger - statements dt.l 1.10.2013 relied upon - Assessee(s) not named in any of the seized documents or statements. 21.02.2014/ 22.02.2014 S&S operation u/s 132(1) at BPSL group by DIT(Inv), Faridabad including residential & office premises of the Assessees herein (the impugned search) - docs seized from premises of BPSL and relied upon by the AO: 'Annexure HD of data backup', Annexure A-13, pgs 4 to 7 & pgs ....
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....d 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 12.12.2014 (SS & ARS) & 29.01.2015 (SS(HUF)), 12.08.2015 (ANS) Notice u/s 153A dt. 12.12.14 (SS & ARS), 29.012015 (SS(HUF) & 12.08.2015 (ANS) for the AY 2008-2009 to 2013-14 issued 19.02.2015 & 08.09.20I5 Assessee filed submissions dated 19.02.15 (in the case of SS & ARS) & 08.09.2015(in the case of ANS) in response to notice u/s 153A -validity of initiation of proceedings u/s 153 A for unabated years in the absence of incriminating materials challenged - Adhoc offer of additional income (not backed by any incriminating materials) was not reflected in the returns of income of the Assessee group on the strength of CBDT Circular Nos. F. No. 286/2/2003-IT (Inv.) dt 10-3-2003 and F, No. 286/98/2013-IT dt. 18.12.2014. 10.08.20 15 & 08.09.2015 Notice u/s 143(2) dt. 10.08.2015 issued Notice u/s 142(1) dt. 12.08.2015 - seeking details of exempt LTCG claimed in ITR, ledger of purchaser/seller in the books of the Assessee & cash flow statement 20/21.10.2015 SCNsdt.20.10.2015 (for AY 201 1-12 to 2012-13) issued. 09.11.2015 SCN dt.. 09.1 1.2015 (u/s 14....
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....1414/Del/2018 and other appeals have been placed on record. Similarly, order of the Tribunal in the case of Shri Brij Bhusan Singal and others Vs. DCIT in ITA No.1415 to 1417/Del/2018 dated 7.12.2018 have also been placed on record. According to the ld.counsel for the assessee, the issues are identical, and there is no disparity on the facts, and therefore, the Tribunal is required to follow its view taken in the case of other family members by the coordinate bench. We took cognizance of these facts and proceed to take note of further submissions raised by the assessee as under: i) The Assessees have filed their returns of income for the years under consideration on various dates. During the said years, the assessees earned Long Term Capital Gains (LTCG) in various scrips on which Securities Transaction Tax (STT) had been duly paid and having complied with all the requisite conditions, they claimed the LTCG as exempt u/s 10(38) of the Act. The ld. A.O, proceeded to add back the entire proceeds arising on sale of shares u/s 68 and alleged unaccounted commission expenses u/s 69C to the income of the Assessee(s) for the relevant years relying on various arguments/so-called evidences....
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....tions including, lock in, if any subject to which the shares are to be issued. In the given backdrop, the Assessee(s) herein cannot be faulted for relying on a commercial proposition which was duly compliant with law, including approval of S.E.B.I. To disregard the activities conducted by a Company as dummy when almost its entire spectrum of activities has been pre-scrutinized and approved by various agencies, including the capital market regulator S.E.B.I would be disregarding the functioning of bodies operating under a law enacted by the Parliament of India. iv) The shares allotted by the companies were listed and traded on the stock exchange. These shares were subsequently credited to the respective DEMAT Accounts of the Assessee(s) herein. After being held by the Assessee(s) for a period of more than 12 months, their sales were affected through registered brokers on the NSE/BSE in accordance with prescribed regulatory procedures, rules and applicable laws whereby both the limbs of the transaction viz. purchase and sale of shares got duly authenticated. The sale proceeds for the sale of shares were received through normal and regular banking channels from the stock broker thro....
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....y of stock market investor on the basis of market gossip, information and feedback received from various professionals, friends, relatives & other acquaintances mainly Sri R.K. Kedia, who were actively involved and had adequate knowledge of securities market, the Assessee(s)' perception and anticipation as to future price movements etc. with a view to earn profits from the appreciation, whether long term/ short term in the prices of the underlying shares. In order to evidence the said transactions, all relevant documentary evidences in the form of share purchase documents, DEMAT Accounts, Share certificates, contract notes and bank statements evidencing the relevant entries regarding receipts against sale of shares etc. were duly filed before the Revenue Authorities. The same are also placed in Paper Book No. 3 filed separately in the case of each Assessee for each year under consideration before the Hon'ble Bench. vii) In the aforesaid backdrop, the ld.counsel for the assessee countered various arguments both legal and factual put forth by the Revenue Authorities in making the impugned additions as under: 69. RELIANCE ON THIRD PARTY STATEMENTS RECORDED U/S 133A/132(4) W....
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....e feature in such list Further, Sri Jagdish Prasad Purohit has nowhere stated that he was providing any LTCG accommodation entries through the companies allegedly controlled & managed by him. Further, as elaborated subsequently, the Hon'ble Delhi ITAT in the case of Sri Brij Bhushan Singal & Ors Vs. ACIT (supra) has given a specific finding wherein Shri RK Kedia has been categorically held to be unreliable person and his statements and the documents seized from his premises have been held to have no evidentiary value considering the inconsistencies displayed by him. iii) The impugned additions w.r.t the transactions resulting in exempt LTCG have been made by the A.O u/s 68 of the Act. Section 68 of the Income-tax Act, 1961 is attracted where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory. Under the provisions of section 68 of the Act, the primary onus to explain the nature and source of the amount so found credited is on the assessee. However, once the assessee proves the identity of credits by either furnishing Per....
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.... non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. The Assessee must be supplied the contents of all such evidences, both oral and documentary, so that he can prepare the case against him. This necessarily also postulates that he should cross examine the witness on whose statement the AO relies to hold the sale or purchase of shares as sham or not genuine. vi) It is trite that if an Authority is relying on the testimony of a witness, the assessee is required to be afforded an opportunity to cross-examine him failing which the testimony cannot be utilized against the assessee. If this procedure is not followed, then there would be a case of denial of natural justice to the assessee and the addition on the basis of such statements/ material cannot stand. Addition on account of accommodation entry cannot be made on basis of unconfronted oral statement(s) of third party(ies). The ld.counsel for the assessees in support of his contentions relied upon the following judicial authorities: (i) Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR 241 (SC) ....
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....dus 'operandi with respect to the shares of few companies being allegedly utilized for the purpose of providing accommodation entries in certain cases. Thus, mere acceptance by third parties of their involvement in providing accommodation entries of various natures to different persons wherein the name(s) of the Assessee(s) has/have not been implicated cannot form the basis for making additions u/s 68 & 69C of the Act in the Assessee(s) case unless a definite case is proved against the Assessee(s) after providing him/them due opportunity of cross-examination of the alleged deponents. viii) It is pertinent to note that the third party statements which were relied upon by the A.Os were not recorded by the A.O in course of the assessment proceedings in the case of the Assessee(s) herein but were pre-existing statements recorded by the Investigation Wing. Such statements, as judicially opined (infra), cannot form the basis of assessment in the case of the Assesses u/s 153A without conducting a proper enquiry and examination during the assessment proceeding itself. To support his contentions, the following decisions are relied upon: i) ITO Vs. M/s. Softline Creations (P) Ltd. (i....
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....te using the longest arm of the Revenue in the form of search action u/s 132(1) against the Assessee(s) herein. The A.O has categorized the various alleged documentary evidences seized in course of search in the case of the third parties under the following broad sub-heads: * W.R.T the shares of M/s. Prraneta Industries Ltd: The A.O has mainly relied upon the alleged documentary evidences seized from the premises of Sri Sirish Chandrakant Shah (SCS) (mainly 'Kedia 2 sheet', 'cheque sheets' & 'cash sheets'), Sri Praveen Kumar Jain (Pintu) (mainly 'SHIR Ledger') and Sri R.K. Kedia (Annexure A- 27, Extract E-14 comprising mainly of 'Deepu Ledger') in course of independent search actions in their cases. It may be noted that the names of the Assessee(s) herein do not feature in any of the said seized documents. The said documents apparently indicate some transactions interse between the various alleged entry/exit operators. Further, some of these documents allegedly contain few cheque/RTGS entries to and from BPSL group companies which stand duly disclosed in the regular books of account of BPSL group companies and hence cannot be considered as ....
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.... Agarwal (with respect to which no opportunity of cross examination was allowed to the Assessee(s) despite categorical request), nothing has been implicated against the Assessee(s) herein or with respect to the LTCG transactions carried out by the Assessee(s). Thus, what has been essentially relied upon by the A.O is third party documentation in respect of which no opportunity of cross examination of the person controlling/owning such documents was allowed to the Assessee(s). As such, nothing adverse can be implicated against the Assessee(s) herein on the basis thereof. * Coming to the legal validity and evidentiary value of third party documents, at the outset, it is clarified that these hard/soft data were not seized from the possession and control of the Assessee(s) and have not been shown to belong to the Assessee(s) herein. Accordingly, presumption u/s.132(4A/292C w.r.t. these seized material is not applicable to the assessees herein. 71. As observed earlier, the ld.counsel for the assessee has placed on record, the detailed combined discussion with respect to present assessee, and the main submissions made by him are as under: i) At the outset, the ld.counsel for the ass....
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.... payment thereof were received through banking channel i.e. account payee cheques/RTGS from the stock broker. It is pertinent to note that there is no human interaction between the parties, in respect of impugned transactions, as the same were done through web-based on line application. All the transactions are carried out by the assessee were fully documented in the form of contract notes/bills of relevant brokers. Copies of these contract notes/bills of brokers are annexed in the paper book. vi) The assessee has no control over or aware of the parties/entities who buy and sell the shares. The transactions are entered into by the assessee on the basis of information and feedback received from various professionals, market gossips and looking to the general market conditions. The ld.AO has no room for doubt the transactions entered into by the assessee, because the assessee has filed all supporting evidences in the form of DEMAT accounts, share certificates, contract notes, bank statements. vii) It is further submitted that while framing the assessment, the AO has strongly relied on the statement of alleged third parties recorded under section 132(4)/133A in the course of searc....
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....ed assessment years. 73. The ld. DR further appraised us that the facts/ particulars of the case of Shri Brij Bhushan Singal, the father of the assessee, bearing ITA Nos. 1415 to 1417/Del/2018 for the AYs 2013-14 to 2015-16 order dated 7-12-2018, relied by the learned AR for the assessee in support of his claim, are different in terms of law and facts from the specifics of the present cases. For this purpose, the learned DR has highlighted certain factual differences as detailed under: i. In the assessment of Shri Brij Bhushan Singal, there was no disclosure made by him in the statement furnished under section 132(4) of the Act with respect to any undisclosed income whereas in the present case there was a disclosure of Rs. 250 crores on account of bogus long-term capital gain in the statement furnished under section 132(4) of the Act which was subsequently affirmed in a statement posts search dated 6 March 2014 detailing the breakup of the undisclosed income of Rs. 250 cores. Such statement was never retracted but the impugned income was not offered to tax in the returns of income. Such non-disclosure of income cannot be equated with the retraction of the statement. As such ther....
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....le Supreme Court. Had this judgement being available at the time of passing the order in the case of Shri Brij Bhushan Singal before the Delhi bench, the outcome would certainly have been different. ii. The predominant reason for allowing the appeal in the case of Shri Brij Bhushan Singal by Delhi bench of ITAT was that the opportunity of cross examination was not provided. Thus, the evidence relied upon by the Revenue for holding the long-term capital gain as bogus, were discarded. But at the same time it is important to note that the Hon'ble Supreme Court in many cases has held that the opportunity of cross examination is not necessary where the addition has been made based on the documentary evidence. However, such decisions of the Hon'ble Courts were not made available to the co-ordinate bench (Delhi) at the time of hearing. Otherwise, the fate of the case of Shri BrijBhushanSingal would have been different. iii. It was also submitted that the Hon'ble Punjab and Haryana High Court in the case of Smt. KusumLataThakral Vs. Commissioner of income tax in ITA No. 253 of 2009 dated 24th of July 2019 has stated in unequivocal terms that the necessity of giving the cross examinatio....
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....ssee that he has given such statement/admission of income under stress or coercion is not believable/ acceptable. There were various statements of brokers, entryoperators and other players who accepted to have been involved in providing accommodation entries by way of dubious techniques with the purpose of avoiding the tax liability. These statements were not retracted rather these were reaffirmed and restated before the authorities under PMLA. Likewise Shri RK Kedia the broker of the assessee indeed made a retraction but soon thereafter filed an affidavit to by re-affirming with this original statement. Furthermore, all the statement furnished by Shri RK Kedia or other witnesses like Sirish C Shah, JagdishPurohit were backed by the documents and other materials recovered during the search proceedings. All these documents were duly cross checked, cross tallied which establishes the complete chain depicting the flow of transaction. Thus the statements were duly supported by the incriminating documents. The learned DR further submitted that once the assessee admitted to the unexplained income, it can be disputed at higher forum without retracting such statement before appropriate aut....
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....s should be adopted in the given facts and circumstances after evaluating the surrounding circumstances. The learned DR further contended that the assessee has not brought anything against the concurrent finding of the authorities below that these companies were managed and controlled by the entry-operators to provide the accommodation entries in the market. These concurrent findings were based on various statements and the documents found during the search proceedings. Therefore such concurrent findings should not be hampered based on finding given in the case of Shri Brij Bhushan Singal. In a situation where there were several differences in fact and circumstances of both the cases as discussed, the decision given in case of other assessee earlier assessment year in own case of assessee cannot be relied for the reason that decision in those batches of appeal were pronounced on the question of jurisdiction and not on the basis of merits. It is settled law that decision of a court is precedent only for the issue which has been decided in such order. The learned DR in support of his contention relied upon the judgment of Hon'ble Supreme Court in case of Sun Engineering Limited repor....
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....these orders have also been noticed by the Tribunal viz. Bhagirath Aggarwal Vs. CIT, CIT Vs. Nova Promoters & Finlease P.Ltd. and CIT Vs. N.R. Portfolio P.Ltd. (supra) and most of these decisions have been considered by the Tribunal which are part of this order. The Tribunal thereafter did its own research and tabulated some sixty two judgments which will be discernible in the finding of the Tribunal, which we are going to take note on this point. Therefore, we are fully convinced that there is no disparity on facts though some artificial attempts have been made at the end of the ld.counsel for the Revenue because of novelty of eloquence possessed by Shri G.C. Srivastava for persuading us to believe that facts are distinguishable, but we fail to persuade ourselves to concur with him. Therefore, at this stage, we deem it appropriate first to take note of question framed by the Co-ordinate Bench in the cases of father of appellant no.1 and others which reads as under: 25. "It is not in dispute that assessee has furnished all the details such as purchase bills, allotment details, demat accounts, bank statements , details of payments by cheques and sale on BSE electronic platform, pr....
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.... adverse inference against the assessee is drawn on the basis of the statement of these persons, an opportunity to cross-examine them may kindly be provided. The learned AO issued summons to 15 other parties under section 131 of the act to appear on 26/12/2016, however, none appeared on the appointed date. Therefore, the learned assessing officer stated that finding in this case is not merely based on the oral statements given by these entry operators, but it is also based on documentary evidences recovered during the course of search in form of electronic data. It was further held by him that these statements corroborate the evidences found. Then he stated that the main person of the group Mr. Neeraj singal during the course of his statement recorded on 24/4/2015 was asked to cross-examine Shri Raj Kumar Kedia however, in answer to question number 25 he stated that he does not want to crossexamine Mr. Rajkumar Kedia, Shri Manish Arora or Shri Ankur Agarwal. The learned assessing officer further stated that cross-examination cannot be right and it is not required by law. For this proposition, he relied upon the decision of the Hon'ble Allahabad High Court in Moti Lal Padmapat Udyog....
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....that the assessment for the assessment year 2012-13 although was not framed u/s 143(3) of the Act, however, the time to issue the notice u/s 143(2) of the Act had already expired before the search took place on 13.06.2014. Therefore, for the purpose of Section 153A of the Act, processing of the return of income u/s 143(1) of the Act was also an assessment. As such the assessment for the assessment year 2012-13 was also unabated. It is well settled that the addition u/s 153A of the Act can only be made on the basis of incriminating material found during the course of search. In the present case, no incriminating material/document was found during the course of search. The AO made the additions on the basis of the statement of the third parties recorded u/s 132(4) of the Act on the basis of alleged entry in hard/soft data seized from premises of third parties in the course of search action in their cases. In the present case, copies of the Panchanama are placed at page nos. 1 to 58 of the assessee's compilation. From a bare perusal of the Panchanama of the assessee, it may be seen that nothing incriminating was found in the course of search. It is also apparent from the search docume....
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....rom their statements and one person, namely, Sh. Raj Kumar Kedia first retracted on 14.10.2014 and thereafter withdrew the retraction vide letter dated 31.03.2015. Therefore, no reliance can be placed on the testimony of the said person who was indulging in double speaking and taking contrary stands." In the above paragraph, the coordinate bench has already given a finding that the persons whose statements were recorded at the times of search, later on retracted from the statement and thereafter further withdrew the retraction. Therefore, no Reliance can be placed on the testimony of the said persons who are taking contrary stands. It was further held that on the appointed date, it could not be said that the opportunity to cross-examination was provided to the assessee although; the statements of third parties were used against the assessee. The coordinate bench thereafter referred the decision of Hon'ble Calcutta High Court in the case of CIT Vs Eastern Commercial Enterprises (1994) 210 ITR 103 and circular issued by the central board of direct taxes and further held in para number 117 of the decision as under:- '117. From the aforesaid Circulars, it is clear that the assess....
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....order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material, which would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cro....
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....ecision of the Hon'ble Supreme Court in case of M. Pirai Choodi vs. ITO 334 ITR 262, wherein the Hon'ble Supreme Court while considering the decision of the Hon'ble MP High Court in 302 ITR 40 has held that not granting an opportunity of cross-examination to the assessee is merely an regularity and therefore the High Court was not correct in cancelling the order of the adjudicating authority. Therefore, Hon'ble Supreme Court thought it fit to set aside the matter to the adjudicating authority with a direction to grant opportunity of cross-examination to the assessee. Before us, an issue arises that whether the matter should be set aside to the file of the learned assessing officer to grant assessee an opportunity of cross-examination of all the witnesses whose statements have been used by the learned assessing officer in the assessment order for the purpose of making the addition under section 68 of the act or to annul the assessment order itself. On careful perusal of the decision of the Hon'ble Supreme Court, it is noted that such direction were given by the Hon'ble Supreme Court in the case of writ petition filed by the assessee before the Hon'ble High Court and therefore Suprem....
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....ained such records for purchase of shares. Therefore, there is no infirmity in these two statements. Further, another two excel sheets found from Mr. Agarwal by the name of Job.xls and Comm.xls does not show the name of the assessee. Therefore, there is no linkage available with those documents with the assessee. Further, the argument of the assessee also find support that it was found from Mr. Agarwal therefore, it is owned by him and belongs to him. Therefore, it is for him to explain who owns this Pen drive. Further, those documents do not show any unaccounted income flowing from the assessee to anybody. In the second file Comm. xls, the learned assessing officer has noted that names of the person such as R. K. Kedia HUF and others are mentioned. According to the AO All, these persons are accommodation entry providers as stated by Shri Raj Kumar Kedia in his statement. Based on these findings, the learned AO reached at the conclusion that Bush and steels Ltd family has taken accommodation entry of long-term capital gain from Raj Kumar Kedia and other entry operators. Firstly, in that particular file, there is no reference of any name of the family of the assessee. All these entr....
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.... link/nexus of the alleged cash trail. We, therefore, by considering the totality of the facts and the various judicial pronouncement discussed in the former part of this order are of the view that the additions made by the AO and sustained by the ld. CIT (A) u/s 153A of the Act in the absence of any incriminating material found during the course of search u/s 132(1) of the Act in respect of unabated assessment years i.e. the assessment years 2010-11 to 2012-13 were not justified. Accordingly, the same are deleted. 122. A similar view has been taken by the Hon'ble Jurisdictional High Court in the case of CIT Vs Rajesh Kumar (2008) 306 ITR 27 (Del.) (supra) wherein it has been held as under: "That the material collected by the Department behind the back of the assessee was used against him without disclosing the material or giving an opportunity to cross-examine the person whose statement had been used by the Department against the interest of the assessee. There was violation of the principles of natural justice." 123. Similarly, the Hon'ble Delhi High Court in the case of CIT Vs Dharam Pal Prem Chand Ltd. (2007) 295 ITR 106 (supra) held as under: "That the Assessing Officer ....
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....ssessee has earned the long-term capital gain as well as in case of the assessee. First Such order relied upon is interim ex parte orders dated 19/12/2014 passed in case of M/s First financial services Ltd and M/s Redford global Ltd. The learned CIT-A was also heavily harping upon the orders of the SEBI for confirming the addition. In interim order in Redford global Ltd, dated 19/12/2014 assessee was restricted to access the securities market till further directions. Subsequently, on 20/09/2017, SEBI passed an order in that company holding that there are no adverse findings against the aforementioned 82 entities, which included the family of the assessee, and the assessee himself with respect to their role in the manipulations in prices of the script of the company. Therefore, it revoked the original order passed on 19/12/2014. Similarly, in case of first, financial services Ltd; the learned assessing officer took note of interim order passed on 19/12/2014. SEBI passed t final order on 02/04/2018. Vide para number 74 and 90 of that order[WTM/GM/EFD/ 1 /2018-19], SEBI has given a clean chit to the assessee and his family members as under:- "Singal Group 70. Brij Bhushan Singal....
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....before various courts were filed in the years 2006 and 2007. These disputes were finally settled by way of a compromise in November 14, 2011 and terms of settlement were fully implemented by February 2012. Appropriate disclosures in this regard were also made to the exchanges at that time. Post settlement, the complaints and litigations filed before various forums were withdrawn. It has been also stated that owing to the family dispute, Brij Bhushan Singal, Uma Singal, Niraj Singal and Ritu Singal had no role to play in the affairs of Marsh Steel Trading Ltd. and Vision Steel Ltd. in which Aarti Singal (wife of Sanjay Singal) was a director. It has been submitted that since material disputes existed during the relevant period, it can not be alleged that the funds received from FFSL by Marsh Steel Trading Limited and Vision Steel Limited, which are controlled by Mr. Sanjay Singal and his family members, came to Brij Bhushan Singal group. 73. With regard to the fund transaction between Neeraj Singal and Pine Animation Ltd., it has been submitted that Rs. 80,00,000/- was paid as consideration amount for allotment of 8,00,000 preference shares on December 12, 2012 and Rs. 40,00,000/....
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....of Income Tax (Inv.), as the background of this order states. 90. In the ultimate analysis, I am driven to the conclusion that such fraudulent schemes are conceived and executed by a set of core entities which are connected and which are bound by the common objective of making wrongful gains by manipulating the market and undermining its integrity. In this process, certain entities are lured into the artifice with the promise of quick returns but their roles do not extend to price manipulation or facilitating such manipulations by means of fund transfers or any other activity of abetment. The whole scenario covering various entities with different motives makes it imperative for the regulator to step in and secure the market place by weeding out those entities which have misused the securities market and meting out deterrent penalties on such entities. 91. The limitations in an investigation of this magnitude was realized and the SEBI Board had decided in December 2016 to restrict its scope of actions to those entities that are connected to the company involved in the price manipulation, i.e. LTP contributors and the company and its directors if connection or relationship is ....
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....nt requested SEBI to investigate has given a clean chit to the assessee and his family. Therefore, reliance on SEBI interim order was misplaced and even otherwise now do not survive in view of subsequent final orders of SEBI. 32. The learned AO also heavily relied upon the cash trail of the bank accounts of the purchaser companies. He stated that cash was deposited in several bank accounts and after 3- 7 layers same reaches the bank account of the companies. From such cash coming through several bank accounts to the bank account of purchaser companies was used for buying the shares held by assessee. Stock exchange trading is screen based, it is not possible to know who the buyer, and seller is. Only prices offered along with quantity is shown. Anybody who bids for purchase or sale of those shares can enter in to trading. It is an electronic trading platform whenever an assessee buys or sales the share, in either case identity of the other party, i.e. buyer or seller nor the timing at which the shares are purchased or sold by the other party are known beforehand unless it is a synchronized trading. No such allegation is made by the ld AO nor has SEBI found it so. Assessee has sol....
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....iry of their demat holding is also made. Further, there is no finding that prior to purchases of those shares whether throe companies have deposited margins also as per Stock exchange and SEBI Norms. There is nothing placed on record to show that those companies are debarred from trading in securities or not. All these investigations / finding of ld AO have many loopholes, which remains unanswered. In the statement of the director of the penny stock company stated that the preferential allottees are involved in market manipulation of the prices of the script, however, it is contrary to the order of the securities and exchange board of India. Such references available in the statement of Director of Rander Corporation at Q No. 13. Further, the claim of the ld AO is that the companies whose shares are purchased are not carrying on any business whereas, in answer to Q No. 32 Shri Kushal Praveen Shah Director of Anukaran Commercial Enterprise Ltd has given the detailed description of the business been carried out by that company. He has stated that out of 15 crores the Rs. 1.5 crore was for acquisition of the shares and further Rs. 13.5 crores were deposited to BMC to carry out some in....
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....y through various layers, they should have been responsible in their own cases to show the genuineness of those funds. Assessee cannot be compelled to show the same. In view of this, the allegation of the cash trail of the buyers of those shares remains unproved and merely an allegation. 33. Next, claim of the assessing officer that many beneficiaries of the bogus long-term capital gains have disclosed the above sum as their undisclosed income. According to us, If some other parties have obtained the bogus long-term capital gain in their own case, in some of the case even the SEBI, while exonerated the assessee and his family, has implicated some of the parties who obtained the bogus long-term capital gain, but it does not lead that assessee is also sailing into the same boat. Even otherwise, there are thousands of entities who have earned the long-term capital gain in those scripts, which are challenged by the ld AO who are also exonerated by the SEBI by various orders, along with the orders passed in case of the assessee and his family members or individual orders. Hence, cases are also that in those persons case their claim of LTCG is not challenged. Interestingly the ld AR a....
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....upreme Court in case of some of Sumati Dayal vs. CIT, 125 CTR 124. The learned authorized representative vehemently opposed the same and stated that long-term capital gain were originally disclosed by the assessee in his return of income for earlier assessment years for assessment year 2010 - 11 and 2011 - 12, which were assessed under section 143 (3) of the income tax act. Therefore, it is not the case of the revenue that there are no positive evidences produced by the assessee. Even in those cases, the assessee has produced the complete details of the purchase, share applications, payment by cheque, sale on a stock exchange, receipt of sale consideration and most importantly the holding period of those shares in the balance sheet of the assessee's which were accepted by the revenue for all those years. He therefore submitted that the theory of preponderance of probabilities invoked by the learned assessing officer is merely a conjecture and surmises. He further stated that when the originally the assessees are assessed under section 143 (3) of the act, long-term capital gain were accepted after detailed enquiries, now it cannot be said that the capital gain earned by the assessee....
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....o such evidences were found during the course of search and all those evidences which are relied upon by the learned revenue authorities have been held by the coordinate bench in assessee's own case to not to be an incriminating material which can impact the taxable income of the assessee and his family members. Even the investigation made by the Securities and Exchange Commission of India has also held that assessee is not at all involved in the manipulation of the prices of those scripts. The revenue has also not shown us any security and exchange Board of India's order which even implicated the share broker, which is alleged to have arranged these long-term capital gains fraudulently for the assessee. At least something would have been unearthed from such highlevel investigation by two Central Government authorities. Further whatever evidences were found by the revenue; they were not confronted to the assessee for rebutting the same. Statements recorded of several persons by revenue were not allowed to be cross-examined by the assessee. In this situations, only on the theory of preponderance of probabilities addition cannot be sustained. The theory of "preponderance of probabili....
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....n view of this, it is apparent that assessee has produced overwhelming evidences that were not found to be false. In view of this, the reliance by the learned AO on the decision of the honourable Supreme Court is misplaced. Therefore In view of this we do not subscribe to the opinion of the learned assessing officer that on the preponderance of the probabilities the income should have been taxed in the hands of the assessee. 35. The ld AR has submitted the plethora of judicial precedents where in it has been held that in such circumstances, addition u/s 68 of the act cannot be made and such income is chargeable to tax as a long-term capital gain only. He submitted that all these decisions are also rendered on similar facts where the broker was tainted; cross-examination was not afforded, changing statements of broker, Allegation of accommodation entry provider etc. He further submitted that almost all the authorities have held that either the assessment is invalid on account of violation of principles of natural justice or on the complete documentation furnished or on the basis of changing statements of broker or on inadequate evidences or the facts that such evidences are not r....
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.... high Court 17 COMMISSIONER OF INCOME TAX VERSUS PUSHPA MALPANI IT Appeal No. 50 of 2010 2010 (11) TMI 799 Rajasthan High court 18 Smt. Bharti Arvind Jain vs. ITO 6102/Mum/2016) Mumbai ITAT 19 ITO vs. M/s Indravadan Jain HUF 4861/Mum/2014 Mumbai ITAT 20 Swati Mall V ITO Ward 36(2) 7/12/2018 Kolakatta ITAT 21 Vaishal Suryakant Shah V ITO 9 CCH 106 Ahmedabad ITAT 22 Sunita Jain V ITO 49 CCH 330 Ahmedabad ITAT 23 DCIT central circle V PRB Securities P Ltd 5/12/2018 Kolakata ITAT 24 Prakashchand BhutoriaV ITO 53 CCH 275 Kolkata ITAT 25 Ramprasad Agarwal V ITO 30/11/2018 Mumbai ITAT 26 Aditya Vikram Sureka HUF V ITO Kolkatta 28/11/2018 Kolakat ITAT 27 Rashmi maheshwari V ITO 28/11/2018 Delhi ITAT 28 Mohanlal Agarwal HUF V ITO 26/11/2018 Delhi ITAT 29 Jaishree Bamboly V ITO 8/11/2018 Chennai ITAT 30 Simi Verma V ITO 6/11/2018 Delhi ITAT 31 Manojkumar Gupta V ITO 5/11/2018 Delhi ITAT 32 Madhu Killa V ACIT 2/11/2018 Kolkata ITAT 33 Kanthilal Kamla Bai V ITO 29/10/2018 Chennai ITAT 34 K Praveenkumar HUF V ITO 29/10/218 Chennai ITAT 35 RukmaniDevi ....
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....s are purchased and address of brokers are also the same. Brokers who sold the shares did not respond to the inquiries of the learned assessing officer. Therefore, on the appreciation of the facts, coordinate bench held that the income has been correctly taxed by the AO as business income of the assessee whereas the assessee claimed it to be a long-term capital gain. The assessee challenged the case before the honourable High Court and it was held that there is no substantial question of law arising. Firstly speaking the case before us is not of chargeability of long-term capital gain as business income or as a long-term capital gain. Nevertheless, the issue is whether the sale of shares resulting into profits in the hands of the assessee, which are held for more than 12 months, is chargeable to tax as long-term capital gain or as undisclosed income of the assessee. The case of the assessee is supported by the purchase bills, payment by cheques and sale by assessee on recognized stock exchange 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 broke....
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....nt to one of the representative, whose name could not be recollected for sending money to the broker when it was the first deal with the broker. Further, the shares were also not transacted through any recognized exchange as apparently the shares were traded of a petty private limited company. In addition, the assessee could not prove the requisite source of investment during the relevant period of investment. The facts of the case before the coordinate bench are clearly distinguishable and do not apply to the facts of the case before us. In view of this, reliance on this decision by revenue is also misplaced. 39. The third decision relied upon by the learned departmental representative is of Bangalore bench SMC where the shares were purchased off market by the assessee despite having the shares of the company listed on the stock exchange. Therefore, the facts of this case are also clearly distinguishable from the facts before us. 40. The fourth decision relied upon is 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 quotatio....
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....ed before us, There was an off market purchase by the assessee and the assessee could not substantiate with documentary evidences the transaction of purchase and sale of the shares. In many of the cases cited there were predated contract note issued by the broker and the payment for purchase of the shares is made in cash and that too off market. , In some of the cases, there was no payment by cheque for acquisition of the shares but there was an adjustment of profits earned by the assessee through those brokers, who generated profits in cash in the name of the assessee and purchase price of the shares adjusted by the broker against that payment to be made to those assessees. In such circumstances, the additions have been confirmed by the coordinate benches. Therefore, the facts of those cases are clearly distinguishable. 43. The four parties we like to state that despite searches carried out on the assessee based on pre search inquiries coupled with the search 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 reli....
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....is bound with his disclosure which was not retracted. On the other hand, the ld.counsel for the assessee made reference to CBDT Circular Bearing no.286/2003 dated 103.2003 which has been further explained in the subsequent circulars. The Board has emphasised that no disclosure be taken from the assessee and endeavour be made for collection of the material because according to the Board the Department used to take voluntary disclosure under section 132(4) of the Act and stopped further investigation. This type of declaration later on retracted by the assessee nor honoured in the return filed by them, and the department failed to corroborate such disclosure. Thus, according to him, there is no disparity of such event on this point. No doubt, the disclosure or admission made under section 132(4) of the Act during the course of search proceedings is an admissible evidence but not conclusive one. This presumption of admissibility of evidence is a rebuttable one, 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 b....
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.... of the Revenue, and held that if opportunity is not being granted to the assessee, then that part of the evidence has to be excluded. While persuading us to ignore this finding of the Co-ordinate Bench, the ld.counsel for the Revenue put emphasis on the judgment of Hon'ble Punjab & Haryana in the case of Smt.Kusum Lata Thakral Vs. CIT, 185 Taxman 237. The facts in this case are that the assessee has received gift in cash. According to the Revenue, in order to prove gift as genuine, the assessee has to prove identify of the donor, genuineness of the transaction and creditworthiness of the donor. The assessee proved identity, but failed to prove genuineness and credit-worthiness. Donor has denied advancing of any gifts to the assessee, and in that background the assessee argued that she should have been given an opportunity to cross-examine that donor. This plea has been rejected and the Hon'ble Court has observed that there is no necessity to grant opportunity. 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,....