TaxTMI 
TaxTMI 
2025 (5) TMI 501
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.... except the change in figures. For the sake of brevity and convenience, all the appeals are disposed of through this consolidated order. (1.2) The grounds of appeal are as under: - IT(SS)A. No.431/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any 'seized' material whatsoever, much less any 'incriminating' material. There is no indication of any reference throughout the assessment order ab....
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....s of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional non-observance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainments (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identit....
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....ssioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing." IT(SS)A. No.435/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that no assessment for the year under consideration was pending, the assessing officer could not have assumed jurisdiction under section 153A of the Income Tax Act, 1961. The law in this regard is now well settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BU....
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....ral justice. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alone viz. intentional non-observance of principles of natural justice, the assessment order as well as the consequential appellate order are liable to be quashed. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in upholding the order passed by the Assessing Officer denying the Assessee an exemption under Section 10(38) of the Income Tax Act, 1961 and adding back the Long-Term Capital Gain of Rs. 22,60,570/under Section 68 of the Income Tax Act, 1961 derived from the sale of shares of Shant Sheorey 52 Week Entertainm....
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....ue cannot be allowed to approbate and reprobate in the same breath. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 1,21,135/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 11) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the Assessing Officer wrongly initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961. 13) The Assessee craves leave to add, alter, amend, modify or withdraw any ground or grounds of appeal before or at any time during the course of hearing." IT(SS)A. No.432/LKW/2023 1. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Inc....
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....x Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate the statement of Sh. Naresh Jain under Section 132(4) of the Income Tax Act, 1961. 5. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was not provided with an opportunity to cross-examine Sh. Naresh Jain or his associates, basis whose statements, the addition under Section 153A was done. It is submitted that despite requesting for such opportunity before the Assessing Officer as well as the Commissioner of Income Tax (Appeals), no cross-examination was afforded to the Assessee, which resulted in flagrant violation of the principles of natural justice and equity. It is submitted that the assessm....
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....ax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 10) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip from open market, in order to derive Long-Term Capital Gain. Given such extenuating circumstances in the present case, the modus operandi as alleged in the statement of Sh. Naresh Jain (contained in the report of the DIT (Investigation) Mumbai) did not apply to the facts of the case and therefore, the additions made were liable to be quashed. 11)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the Appellant was a regular investor, and not only invested in the shares of M/s Risa International Ltd. to derive Long Term Capital Gain but also traded in it. It is submitted that while the trading profit/loss from the sale ....
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....much less any 'incriminating' material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which formed the basis of passing order under Section 153A of the Income Tax Act, 1961. Thus, the addition made under section 153A of the Income Tax Act is invalid when there is no incriminating material to support it. 3. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that No jurisdiction could be assumed by the Assessing Officer under Section 153A of the Income Tax Act, 1961, by merely relying upon the statement of Sh. Naresh Jain and his associates, recorded under Section 132(4) of the Income Tax Act, 1961, since such statements, which were recorded much after the date of search, could not by themselves constitute incriminating material found during the search. Furthermore, there is not an iota of corroborative evidence brought on record either by the Assessing Officer or the Commissioner of Income Tax (Appeals) to verify/corroborate ....
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....Tax Act, 1961 derived from the sale of shares of M/s Monotype India Ltd. (a listed company), without considering and appreciating the documentary evidence furnished by the Assessee. 8. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee squarely discharged its onus of proving the identity, genuineness and creditworthiness in relation to the Long-Term Capital Gain derived by it, by filing all documentary evidence viz. contract notes, DEMAT account details, details of Securities Transactions Tax, bank details, details of broker etc. Neither such evidence was rebutted by the Assessing Officer or the Commissioner of Income Tax (Appeals), nor were they rejected / doubted. 9) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has failed to appreciate that the addition under Section 68 of the Income Tax Act, 1961 was wholly unwarranted and arbitrary given the fact that the Assessee had purchased the scrip fro....
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....ircumstances of the case and in law, the Commissioner of Income Tax (appeals) has erred in failing to appreciate that in the absence of any incriminating material found during the course of search and given the fact that the assessment proceedings for the year under consideration had already been completed vide order dated 22.05.2017 under Section 143(3) of the Income Tax Act, 1961, the assessing officer could not have assumed jurisdiction under section 153A of the income tax act, 1961. The law in this regard is now well-settled by the Hon'ble Supreme Court in the case of PCIT, CENTRAL-3 V. ABHISAR BUILDWELL (P.) LTD., (2023) 150 TAXMANN.COM 257 (SC). 2. BECAUSE on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) has erred in failing to appreciate that the assessment order passed under section 153A of the act does not make reference to any 'seized' material whatsoever, much less any 'incriminating' material. There is no indication of any reference throughout the assessment order about any seized material and consequently, there is no clarity on what incriminating material was found during the year under assessment, which form....
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....equity. It is submitted that the assessment order as well as the consequential appellate order are liable to be quashed on this ground alone viz. intentional no bservance of principles of natural justice. 6. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was nowhere named by Sh. Naresh Jain or his associates, whose Statements formed the basis for making additions. It is therefore submitted that the additions having been made on the basis of conjectures and surmises, Ought to be quashed. 7. BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in failing to consider that the Assessee was also not provided with a copy of the report of DIT (Investigation) Mumbai, solely based on which the assessment order under Section 153A of the Income Tax Act, 1961 was passed. It is submitted that the Assessee was merely confronted with certain paragraphs of the report during the course of assessment proceedings and not allowed to examine the report in its entirety in order to defend its case. On this count alon....
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....it/loss from the sale of shares of M/s PFL Infotech Ltd.has been accepted by the Assessing Officer as business income, the exemption under Section 10(38) of the Income Tax Act, 1961 with respect to the same scrip has been disallowed on a totally misconceived notion. Thus, the Assessing Officer, as also the Commissioner of Income Tax (Appeals) have erred in applying two different yardsticks for the same scrip. It is well-settled that the Revenue cannot be allowed to approbate and reprobate in the same breath. 12) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in making an estimated addition of a sum of Rs. 80,155/- as commission paid to derive Long Term Capital Gain, under Section 69C of the Income Tax Act, 1961. 13) BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has erred in confirming the order of the Assessing Officer in charging interest under Sections 234A, 234B, 234C, 234D and 244A of the Income Tax Act, 1961. 14)BECAUSE, wholly without prejudice to what has been stated above, the Commissioner of Income Tax (Appeals) has err....
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....sessee belong to a group wherein they are dealing in shares and have the broking license for BSE, NSE and MCX. They have been dealing in shares as part of their trading activity as well as have made investments therein. In case of scripts for which there is an allegation that Mr Naresh Jain has provided bogus profits we have prepared a list in case of each and every assessee for the alleged scripts the details there of are enclosed. It is to mention that the purchases of shares were made in different entities of the group and in most of the cases the same was taken as turnover of share trading account and income has been offered for tax at normal rates. In case of PFL Infotech shares had been purchased in the case of different entities details breakup is enclosed here with. The brief sale and purchase of shares year wise is as under PFL Particulars AY 2013-14 AY 2014-15 2015-16 Purchase Soles Purchase Sales Purchase Sales Quantity 2,03,327 2,03,317 2,41,366 1,74,118 62,134 1,30,392 Value 86,35,187 94,70,135 3,28,45,371 6.07,70.726 3,67,88,348 7,15,87,130 Trading Profit 8,34,495 3,33,1....
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....g done between the two parties which in present case was preferential allotment of shares in favour of the assessee at any time but in present case there are no preferential allotment of shares in favour of the assessee or any of the associates all the purchases were made through stock exchange transaction for which necessary evidence have been file. With regards to exponential rise in the price of share we have to simple rely on the fact that there has been a Trading profit in the share of PFL of Rs 3,33,19,904 in AY 2014-15 for which there is no issue as out of total holding of 241,366 shores in 2014-15 sales of 174118 was made in same year leaving a balance 67,248 shares In hand on 31.3.14 out of which 65,784 shares which could not be sold in the year were carried forward and sold in subsequent year which resulted in a LTCG in the hand of three individuals viz. Mrs Meena Agarwal, Mrs Anuradha Mittal and Mrs Rupali Mittal. And the maximum no of shares were in case of Meena Agarwal so we find that there was a substantial LTCG amount in case of Mrs Meena Agarwal for Rs 3,27,03550 and simultaneously there was a trading profit of Rs 3,23,655 on shares which had less period o....
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.... arranged exit for my self in this scrip by asking Ravikant Chaudhary of ASL Capital Holdings Put to purchase when I sell the same. The brokers who have helped me in front running and rigging the prive of this scrip are Globe Capital Markets Ltd (Delhi), Karvy Stock Broking Ltd (Hyderabad), Fair Intermediate Investment Pvt Ltd (Lucknow) ASL Capital Holding Pvt Ltd. (Chennai) 2 Steel exchange Ltd The brokers who have helped me in frontrunning and rigging the price of this scrip are Karvy Stock Broking Ltd Guiness Finance and Leasing Pvt Ltd (Kolkata), Globe Capital Markets Ltd, Fair Intermediate Investment Pvt Ltd 3. Monytypeindia Ltd The brokers who have helped me in frontrunning and rigging the price of this scrip are Fair Intermediate Investment Pvt Ltd, Eureka Stock and Share Broking Services Ltd (Kolkata) and others, I have arrange for prospective beneficiaries in this scrip. 4. 52 weeks entertainment Ltd Centre> The brokers who have helped me in frontrunning and rigging the price of theis scrip are Fair Intermediate Investment Pvt Ltd. Shiraram Insight Shere Brokers Ltd (Mumbai/Kolkata), Koushik Shah Shares and securities Pvt Ltd.(Mumbai) Shirish C S....
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.... Similarly in case of Steel Xind there was only trading profit of 1,31,06,853 in AY 13-14 whereas there was LTCG of Rs 3,82,924. Looking to the loss and profit in same script. If there was some understating then there would have been only LTCG and No trading loss/profit as may be seen from the charts of each entity. Again, in the case of Sant Sheroy shares the said script was purchased in 2009-10 and after a long period of more that 7 years the same were sold and as the holding period was more than 7 years the some cannot be stated to be a bogus transaction merely because Mr Join has alleged that he had taken the assistance of Fair Intermediate to jack up the price. If the assessee and his companies had assisted Mr Jain to jack up the price of the said script then they must have traded in the same but we do not find that the assessee had its associate companies have traded in the said script. It is very interesting that the entire allegation are based upon the statement of one Mr Naresh Join but there is no corroboratory evidence to support his statement both found in search as well as on record. Moreover, it is a well known fact that in case of penny stocks there is a p....
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.... in the same script. The assessee could not explain the reasons for such exponential rise in the price of shares when the company was not having any net worth or business which could be taken as the reason for the same. (2.3) Aggrieved, the assessee filed appeal in the office of the Ld. CIT(A). Vide impugned appellate order, the learned CIT(A) dismissed the appeal of the assessee and confirmed the aforesaid additions of Rs. 29,58,183/- and Rs. 63,740/-. During the appellate proceedings in the office of the Ld. CIT(A), the assessee made similar submissions. The relevant portion of the impugned order of the Ld. CIT(A), containing the submissions of the assessee are reproduced as under: - "3.3 The appellant has taken following grounds in appeal, which are as under: - (i) The Learned Assessing officer erred in law as well as on facts, in making an assessment u/s 153A of completed assessments in absence of any incriminating material for the year found during the search and not restricting the proceeding only to the seized material/evidence found during the course of search. (ii) That under the facts and circumstances of the case, the AO erred in making addi....
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.... 143(1) and the intimation order was issued on 11.11.2017 accepting the total income at Rs. 507490/-. At the outset, it must be noted that there has been no incriminating material found in the case of the Appellant (as will be elaborated in the later part of this submission), and therefore the assessment made u/s 153A of the Act for A.Y. 2017-18 (which was already processed u/s 143(1) on 11-11-2017) is illegal and bad in law. Ground-1: The Learned Assessing officer erred in law as well as on facts in failing to appreciate that return was duly processed for A.Y. 2017-18, no assessment is permissible under Section 153A of the Act, de hors any incriminating material found/impounded during the course of search. Submission for Ground No 1: 1. As stated above, in the absence of any "incriminating material' found during the course of search, which pertain to the unabated A.Y. 2017-18, no assessment can be made under section 153A of the LT. Act, 1961. Therefore, the order passed by the Assessing Officer u/s 153A is bad in law and deserves to be quashed. 2. Your kind attention is invited towards the decision of the Hon'ble Delhi High....
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....on only on the basis of seized material." 5. Reliance is also sought to be placed in the case of Filatex India Ltd. v. CIT, [2014] 229 Taxman 555 (Delhi), wherein it was held that: "31. What distinguishes the decisions both in CIT Vs. Cheten Das Lachman Dasand Filatex India Ltd Vs. CIT-IV in their application to the present case is that in both the said cases there was some material unearthed during the search, whereas in the present case there admittedly was none. Secondly, it is plain from a careful reading of the Said two decisions that they do not hold that additions can be validly made to income forming the subject matter of completed assessments prior to the search even if no incriminating material whatsoever was unearthed during the search" 6. That, recently by its order dated 6th July 2015 in ITA No. 369 of 2015/Pr. CIT v. Kurele Paper Mills (P.) Ltd.), the Hon'ble Delhi High Court, declined to frame a question flaw in a case where, in the absence of any incriminating material being found during the search under Section 132 of the Act, the Revenue sought to justify initiation of Proesailit under Section 153A of the Act and make an addition und....
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....onnection to arranged capital gains and statement of brokers recorded, it is observed that commission at 2% has been charged for providing arranged capital gains to various parties. As the assessee is one of the beneficiaries and sale consideration of Rs. 31,37,039/- which was arranged, an amount of Rs. 63,740/- i.e. 2% of Rs. 31,37,039/is treated as unexplained investment for the financial year source of which remains unexplained and the same is added u/s 69C of the Act" a) No addition u/s 69C of the Act can be made on the statement of a third party. The Delhi Bench of ITAT in the case of Bhatia Diamonds Pvt Ltd Vs. ITO [ITAT Delhi] dated 05.04.2019 held that addition under section 69C:on the basis of statement of third party without granting opportunity of cross-examination to assessee was not valid as it amounted to violation of principle of natural justice and against the law: b) The Ld AO interlinked the two different sections while making an addition le. Section 69 -(unexplained investment) and 69C (unexplained expenditure). However, both the Sections cannot be attracted as per the facts of the case of the Assessee. Before invoking section 69 or 69C, the con....
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....se of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return 'required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the Previous year in which such search is conducted or requisition is made: - Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling ....
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....om the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (a) or clause (b) of this section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly. (2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed, (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. 153C. Assessment of income of any other person.-Notwiths....
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....153A, the only requirement is to ask the assessee to file return of income for relevant six years covered by section 153A and after filing of return of income, the assessment to be made by the AO will be assessment or reassessment has to be determined afterwards and not at the time of issue of notice u/s 153A. In this view of the matter, we find no merit in this technical objection raised by the assessee and the same is rejected. 55. Accordingly, the action of the AO in issuing notice u/s. 153A in these assessment years 2009-10 to 2012-13 is justified. This ground of the assessee is therefore dismissed." 6.5.1. In the case of Commissioner of Income Tax v. Orma Marble Palace (P.) Ltd. [2019] 110 taxmann.com 435 (Kerala) in IT APPEALNO. 19 OF 2011, six question of law has been raised: Whether the Tribunal was correct in having affirmed the order of the CIT (i (Appeals) confining the additions made with respect to under-invoicing of sales to the assessment year 2000-01 when there was indicated a consistent practice of such under-invoicing? Whether the Tribunal was correct in having held that there could be no (i) estimation carried out for the other....
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....e answered in favour of the Revenue and against the assessee. We hence set aside the order of the Tribunal and the first appellate authorit an confirm the under-invoicing of sale bills at Rs. 90,50,924/-." 6.5.3 Against the above order of Hon'ble High Court the Assessee SLP has been dismissed by the Hon'ble Apex Court. 6.6.1. Even in the case of Commissioner of Income-tax (Central)-Ill v. Kabul Chawla 2015] 61 taxmann.com 412 (Delhi), the Hon'ble HIGH COURT OF DELHI vide order dated 28-08-2015, one of the legal position propounded that notice u/s 153A has to be issued for six previous years of search. Once a search takes place under section 132, notice under section 153A(1) will have to be mandatorily issued to the person searched (i) requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. Assessments and reassessments pending on the date of the search shall (ii) abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. The Assessing Officer will exercise normal assessment powe....
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....19, therefore, there is no lacuna in issuing notice u/s 153A of the Act. 6.7.1 In the case of Canara Housing Development Co v. Deputy Commissioner of Income-tax, Central Circle-i(1), Bangalore [2014] AS taxmann.com 98 (Karnataka) vide order dated 25-07-2014, the Hon'ble HIGH COURT OF KARNATAKA, while deciding the issue related with 263 has held that once proceedings under section 153A is initiated, pursuant to search, order of assessment in respect of Six years stands reopened and, therefore, in absence of any valid assessment order in existence, revision proceedings under section 263 cannot be initiated in such a case. It has been further held that condition precedent for application of section 153A is that there should be a search under section 132; however, initiation of proceedings is not dependent on any undisclosed income being unearthed during such search. 6.7.2..... 6.7.3 6.8.... 6.9... 6.19 The Hon'ble Allahabad Bench has decided the same issue vides order dated 04.05.2022 in the case of ACIT, Central Circle, Allahabad vs Sunshine Infrastate Private Limited, Allahabad (PAN-AANCS9247H)in the ITA. No.103/Alld/2017....
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....hat everything i.e. from purchase of stock to receiving of cheque for its sale was done in a systematic and organized manner to give it a real and legal colour by a group of persons (being the operators). He, therefore, on consideration of the circumstantial evidences, natural human conduct and preponderance of probabilities reached a conclusion that the apparent in this case was not real and that these financial transactions were no real but sham ones and the entire edifice was a colourable device used to evade tax. In view the fact that the appellant failed to prove the source of the credit and genuineness of the credit of the entire sum received in the garb of alleged capital gains, the Assessing Officer proceeded to add the entire sum of Rs 29,58,183/- (Net Long Term Capital Gain) as unexplained cash credit under section 68 of the IT Act. 7.3 During the appellate proceedings, the appellant submitted her written submission vide letter dated 18.02.2023 in support of her claim. The appellant primarily contends that as the purchase of the impugned shares have been effected by payment of cheque through banking transaction and as the sales are corroborated by contract notes,....
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.... Platform. Further, it is noted from the graph that when organized work of entry providing through Long Term Capital Gain was finished, share prices are continuing at lowest level since then. These facts justify that in share rigging there were involvements of various persons as stated in the Investigation report and Assessing Officer has also discussed in the assessment order. On perusal of graph it is clear that the volume of trade jumps manifold immediately when the market prices of shares reach at optimum level so as to result in LTCG assured to the beneficiaries. This maximum is reached around the time when the initial allottees have held the shares for one year or little more and thus, their gain on sale of such shares would be eligible for exemption from income Tax. On perusal of graph, it is clear that the price of the share falls very sharply after the shares of LTCG beneficiaries have been off loaded through the pre-arranged transactions on the Stock Exchange floor/portal to the Short Term Loss seekers or dummy paper entities. 7.7.1 Thus it is clear that the share of M/s Monotype India (Monot) has been rigged through in-paper-only jama-kharchi companies to provid....
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....en into consideration by the authorities below. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence." 7.10 In identical circumstances, the Nagpur bench of the ITAT in the case of Sanjay Bimalchand Jain Vs ITO in I.T.A. No. 61/Nag/2013 observed as below "All the authorities below, in particular the Tribunal, have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him under Section 68 of the Act, by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz., realisation from the debtors of the erstwhile firm, in the opinion. of the assessing officer, was not Satisfactory. It is well settled that in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assessee of ....
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..../without there being any reason on record. This unexplained spurt in the value of unknown company shares is beyond preponderance of probability. It has been held by Hon'ble Apex Court in the case of Durga Prasad More and Sumati Dayal that the tests of human probabilities have also to be applied by the authorities below. In the case of Sumati Dayal 214 ITR 801, it was held that during the year 1970-71 (pertaining to the assessment year 1971-72) between April 6, 1970, and March 20,1971, the appellant claims to have won in horse race a total amount of Rs. 3,11,831/- on 13 occasions out of which ten winnings were from jackpots and three were from treble events. Similarly in the year 1971-72, the appellant won races on two occasions and both times the winning were from a jackpot. These receipts were tested on the touch stone of human probability and it was found that apparent was not real. That it was contrary to statistic al theory and experience of the frequencies and probabilities. The exceptional luck enjoyed by the assessee was held to be beyond preponderance of probability. Hence, the Hon'ble Apex Court has affirmed the view that it would not be unreasonable to infer ....
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....umbai Tribunal in the case of Ratnakar M. Pujari Vs ITO in I.T.A. No.995/Mum/2012 observes as follows "We have considered the rival contentions and also perused the material available on record including the case laws cited by the parties. We have observed that no scrutiny assessment has been framed for the impugned assessment year by the Revenue u/s 143(3)of the Act originally, while based on information received from Addl.CIT(Inv.), Unit-V, Mumbai that the assessee is indulging in non-genuine and bogus capital gains from transaction of sale and purchase of shares of M/s Shiv Om Investment and Consultancy Limited which was penny stock company and pre-dated contract notes were issued by the Brokers to manipulate and introduce long term capital gains in favour of the assessee which are exempt from tax u/s 10(38) of the Act leading to escapement of income from taxation ; which led to issue of notice dated 07-04-2008 u/s 148 of the Act which is within four years from the end of the relevant assessment year, the receipt of afore-stated information from Addl. CiT(Inv) in our considered view is fresh and tangible material which has live link and nexus with the formation of belie....
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....received through cheque of; Shares being sold through stock exchange are not of any help to the assessee for claiming the exemption as long term capital gains as the allegation of the Revenue is that the assessee has in collusion with the Brokers has manipulated and camouflaged the entire transactions of sale and purchase of shares in getting issued pre-dated contract notes for purchases of shares for which payments were also made for these purchase in cash and hence these purchases never existed at that relevant time. It is the allegation of the Revenue that the entire sale and purchase of shares were manipulated by the assessee in collusion with the brokers in order to earn tax free exempt long-term capital gains on sales of shares u/s 10(38) of the Act whereby unaccounted cash of the assessee has been introduced in disguise in lieu of sale proceeds of shares. Keeping in view facts and circumstances of the case and as per our discussions and reasoning as set out above, we find no infirmity in the orders of the learned CIT(A) which we uphold and sustain. The assessee relied upon the decision of the ITAT, Hyderabad in the case of ITO v. Smt Aarti Mittal (2014) 41 taxmann.com 118(Hy....
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....ances of the case, we are also of the opinion that the purchase as well as the sale transactions of the scrips in question was not genuine. The reason for taking this view is that the purchase rate had not tallied with the rate as per BSE website and that the purchases have also been made in cash. Only paper transactions have been made because there was no evidence of physical delivery of the shares. The AO was right in asking the details of the dividend if any received during the holding period. But no such information was provided at any stage of proceeding. Even, the entries in the Demat Account were not sacrosanct because the AO had found on investigation that those were all 'off market" transactions. It was also noted by the AO that Hon'ble {TAT Mumbai Bench had held that those companies were nothing but entry providers. Rather, it was proved beyond doubt that Mahasagar Group Was engaged in the business of issuance of fraudulent bills. We therefore, affirm the findings of the Revenue Authorities and dismiss the ground of the assessee." 7.14 The Hon'ble ITAT Chandigarh rendered decision in the case of Shri Abhimanyu Soin Vs ACIT, Circle-Vil, Ludhiana, vide ITA ....
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....e human probability and beyond the business logics of any enterprise. By making such observations, the Hon'ble ITAT, relying on the decisions of Hon'ble Apex Court in the case of Sumati Dayal Vs. CIT and CIT Vs. Presicison Finance Pvt. Ltd. 208 ITR 465 (Cal.), dismissed the appeal of the assessee. The addition made by the AO u/s. 68 of the Act was upheld by the Hon'ble ITAT. 7.15 In a decision dt. 12.10.2018, the Hon'ble ITAT Banglore had an occasion of adjudicating a similar issue in the case of Smt. M.K. Rajeshwari Vs. ITO, ITA No.1723/Bang./2018. In the said case the issue involved was disclosure of super profits as LTCG from dealing in penny stocks, and claiming exemption u/s 10(38) of the Act on such profits. In the said case the assessee acquired the share of M/s. Mahavir Advanced Remedies. Though the said script was listed on the stock market, the assessee purchased the shares offline through an intermediary. The AO observed that the financial worth of the company was very poor and there was no prudency in making investment in such shares. There were also reports of SEBI on manipulation of the said script. Within a short span of two years the assessee so....
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....e Ld. Sr.(DR)for Revenue made request for adjournment stating that the Ld. CIT (DR)was not available. Yesterday, also hearings could not take place in respect of cases assigned to LD CIT (DR), as she was not present in Court Room, yesterday also. Further, on 17.04.2025 no Departmental Representative was present in the court room, as a result of which no appeals could be heard including some in which last Opportunity was given by way of hearing on 17.04.2025. It is not known why alternate arrangements for representation on behalf of Revenue are not being made when the Ld CIT (DR) is/was not available today and on the aforesaid dates. The Bench feels that the tendency on the part of the Ld Departmental Representative to abstain from appearing from hearing, without ensuring that alternate arrangements are made for representation on behalf of Revenue, is unhealthy and must not be accepted. The Ld Counsel for assessee stated that issues in dispute were covered in favour of the assessee by order of the Hon'ble Supreme Court, and in view of the foregoing, no useful purpose would be served by delaying the disposal of the appeal by adjourning the case one more time, especially as hearings h....
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....lation by the aforesaid Mr Naresh Jain in the price movement of the stocks, even then, the assessee being a genuine investor who earned Long Term Capital Gain as a reward for holding the shares for a long period of many years, without being party to any manipulations in price movement of shares; there was no cause for any adverse view against the assessee. He also contended that the additions made by the Assessing Officer in the assessment order, and the impugned order of the Ld. CIT(A) confirming the aforesaid additions, caused undue harassment and was nothing but abuse of legal process by Revenue. The Ld. Counsel for the assessee relied on the following case laws and instruction of Central Board of Direct Taxes: S. No Name of the case Hon'ble Court Citation 1 Abhisar Buildwell (P) Ltd Supreme Court 150 taxmann 257-2023 2 CBDT Instruction CBDT Instruction 1 of 2023 3 Kishore Kumar Mahapatra Supreme Court 298 taxmann 648 - SC-05/04/2024 4 Kishore Kumar Mahapatra Orrisa High Court (2024) 162 taxmann.com 4 (Orissa) 5 Adaman Timber Industries Supreme Court 62 taxmann.com 3 - 2015 6 Hemantkumar mansukhlal....
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....er: "14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments shall stand abated; (iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unaba....
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....upra), Pr. CIT vs. Saumya Construction 387 ITR 523 (Guj), CIT vs. Continental Warehousing 374 ITR 645 (Bom.), Smt. Jami Nirmala vs. Pr.CIT 437 ITR 673 (Orissa), CIT vs. Veerprabhu Marketing Ltd. 388 ITR 574 (Cal.), Pr.CIT vs. Delhi International Airport (P.) Ltd. 443 ITR 574 (Kar.), Pr.CIT vs. Meeta Gutgutia 395 ITR 526 (Delhi), Dr. A. V. Sreekumar vs. CIT 404 ITR 642 (Ker.), Pr. CIT vs. Smt. Daksha Jain 2019 (8) TMI 474 (Rajasthan), etc.; courts took a view in favour of Revenue in cases reported as CIT vs. Rajkumar Arora (supra), CIT vs. Mahndipur Balaji 447 ITR 517 (All.), CIT vs. K. P. Ummer 413 ITR 251 (Ker.), Sunny Jacob Jewellers and Wedding Centre vs. DCIT 362 ITR 664 (Ker.), E. N. Gopakumar 75 taxmann.com 215 (Kerala), etc. The issue has now been finally settled by decisions of Hon'ble Supreme Court in the aforesaid cases of Principal Commissioner of Income-tax vs. Abhisar Buildwell (supra) and Dy. CIT vs. U. K. Paints (Overseas) Ltd. (supra) wherein view in favour of assessee has been taken. (C.2.1) In the present appeals before us, the additions have been made by the Assessing Officer in assessment orders passed u/s 153A of the IT Act. Further, we have alread....