TaxTMI 
TaxTMI 
2017 (7) TMI 1489
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....ed only to bring unaccounted money in the guise of exempted long term capital gains and accordingly the said amount is assessed as 'income from other sources'. The reasons for coming to the said conclusion by the AO were as under: 1. It is the claim of the assessee that he purchased 30,000/- shares of Cable Corporation of India Ltd., on 25/04/2006 for a consideration of Rs. 52,710 and sold the said shares on 31/10/2007 for a consideration of Rs. 10,23,061/- through M/s Alliance Intermediateries Net Work Pvt. Ltd. 2. The purchase of the said shares is through off market deal and not through stock exchange, whereas the sale is through stock exchange. 3. The assessee has furnished the account copy of the demat account wherein it was observed that the said shares were dematerialized only 4 days before they were actually sold. 4. The assessee is unable to furnish any other proof for purchase of shares except the bill issued by M/s Alliance Intermediateries & Network Pvt. Ltd. 5. M/s Alliance Intermediateries & Network Pvt. Ltd. is one of the concerns through which the Mahasagar group have issued accommodation bills of purchase and s....
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....s met out of the unaccounted income of the assessee. Thus, the said amount of Rs. 6,20,000/- is added to the income of the assessee as unexplained investment in house property. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). 4. As regards long term capital gains, the contentions of the Ld. AR were mentioned by the CIT (A) at pages 6 to 10 of his order. After considering the contentions of the assessee, the CIT (A) relying on the decisions, namely, i) CIT Vs. Durga Prasad, 82 ITR 540, ii) Sumati Dayal, 80 Taxman 89 (SC) and iii) CIT Vs. P. Mohan Kala, 291 ITR 273 (SC), held that the AO is justified in making the addition of Rs. 9,70,351/- treating the assessee's claim for exemption on long term capital gains as 'bogus' by observing as under: "5.3. The case of the assessee is that there are numerous gaps in the transactions as pointed out by the AO in the assessment order. However, the AR has not made good the above observations by producing supporting evidences even during the appeal proceedings also. Therefore, this is a case where the apparent is not real. It is further settled that mere transaction through bank wil....
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....s there was no reason to believe that Income has escaped assessment." 6. Ld. AR submitted that AO has treated the purchase and sale of shares as sham transaction, whereas, he submitted that in fact the assessee has bought the shares through stock exchange by paying proper charges. He brought to our notice the purchase note which is part of Paper Book at page No. 36. Further, he brought to our notice the copy of Group Demat a/c which is placed at page 21 of paper book. This transaction was routed through the above Demat A/c. He submitted that these transactions were shown as purchases in the AY 2007-08 and the same was accepted in that AY. He further submitted the copy of return of income for AY 2007-08, which was filed before the AO to show that the purchase transaction was proper and the same was accepted by the AO. 6.1 Ld. AR submitted that the AO merely relied on the statement of Mr. Mukesh Choksi and made the adjustment without giving proper opportunity to assessee to examine Mr. Mukesh Choksi. He contended that it is against the principles of natural justice. For this proposition, he relied on various judicial pronouncements. 6.2 Ld. AR further submitted that the....
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....SC), wherein the Hon'ble Apex Court held as under: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned 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....