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TMI Blog2005 (11) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 3. Nistha Finance 2,000 63,230 Investment (I) Ltd. relating to Master Abhayjeet Kanwar (minor son) 26-11-1996 Total 25,06,535 3. The Assessing Officer during the course of assessment proceedings asked the assessee to furnish details of share transactions and found that sale of shares of Chirau Finance Investment Leasing Co. (CFIL) Ltd. was carried through Stock Broker M/s. J.K. Jain Company. The other shares of M/s. Nishtha Finance and Investment (NFI) (India) Ltd. were sold through Stock Broker M/s. Rekha and Co. The Assessing Officer issued summons to these Brokers. The summons to M/s. J.K. Jain and Co. were received back with the remarks. no such firm exists at the given address . In response to summons to M/s. Rekha Co. their authorized representative appeared but did not produce any books or records relating to sales affected on behalf of the assessee. The broker claimed that books of account were lost. In order to verify further facts, the Assessing Officer issued summons to two companies involved in transactions, namely, M/s. Chirau Finance Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 -do- 9. Rs. 1,16,760 4-2-1997 -do- 10. Rs. 72,000 29-3-1997 -do- 11. Rs. 72,000 29-3-1996 12848 (Abhayjeet) 7. The assessment was again taken up by the Assessing Officer on 17-2-2000 when Shri P.K. Kundra, Advocate appeared on behalf of the assessee. After discussion, he offered to produce broker Shri J.K. Jain for examination of the Assessing Officer. The offer was accepted. He was also required to produce all the persons to whom 50,000 shares of Chirau Finance Investment Leasing Ltd. were claimed to be sold by the assessee. However, the assessee did not comply with the above directions of the Assessing Officer, although several adjournments were granted to the assessee from time to time till 28-2-2000 as is recorded by the Assessing Officer at pages 4 and 5 of the assessment order. 8. The Assessing Officer accordingly concluded that claim relating to sale of shares was not substantiated by the assessee with any evidence. He also referred to entries in Bank Account No. 1102556 of M/s. J.K. Jain and Co. with Bank of Punjab, Karol Bagh, New Delhi from which money was remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch revealed that not a single transaction of shares of M/s. Chirau Investment Leasing Co. Ltd. took place in the relevant period at Delhi and Jaipur Stock Exchanges. There was a lone reported transaction at Kanpur Stock Exchange on 24-9-1996 at the rate of Rs. 61 per share. The above transaction was held as in genuine as the balance-sheets of the said company revealed that book value of shares of the company worked out to Rs. 9.84 and Rs. 9.80 respectively as on 31-3-1996 and 31-3-1997. Net profit of company for the year ending 31-3-1996 and 31-3-1997 was meagre amount of Rs. 1,662 and Rs. 2,685. The Assessing Officer therefore, refused to accept that the shares of the company could be sold at the rate of Rs. 60 per share. Likewise only one transaction of sale of shares of M/s. Nistha Finance Investment (India) Ltd. was found recorded and book value shown as on 18-12-1996 worked out to Rs. 5.15 per share. No AGM of that company was held nor any balance-sheet of company was prepared for the year ending 31-3-1996 and 31-3-1997. In the above circumstances, the Assessing Officer refused to believe that any prudent person would buy shares of above company at the rate of Rs. 36 per s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as source of the same remains unexplained. The learned CIT(A) further observed that Account No. 1102556 of M/s. J.K. Jain and Co. with Bank of Punjab, Karol Bagh, New Delhi, showed that entire money was remitted from the said Bank account to the bank account of the assessee relating to alleged sale of 4,400 shares of M/s. Chirau Investment Leasing Co. Ltd. The money in account No. 1102556 was transferred from account No. 1102283 in the name of M/s. Shubh Investment where cash was deposited immediately before remittance to the broker s account. It was further found that Shri Davender Kumar the alleged owner of M/s. Shubh Investment was not available at the address given to the bank nor his introductor Shri Mukesh Kumar was traceable at the address available in Bank record. Thus M/s. Shubh Investment was held to be a bogus account utilized to route the unaccounted money of the assessee. The learned CIT(A) further observed that the chart given by the Assessing Officer at pages 6 and 7 of the assessment order clearly showed that there was a direct date-wise link with the transfer of money from the bank account of M/s. Shubh Investment (bogus concern) to the bank account of bro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the so-called buyers were found at the given address. It is even more interesting to note that two of the partners of M/s. Amarjeet Associates have denied to have issued any such letter/certificate. Thus, it is clearly a case of false evidence in order to mislead investigation and to give an impression that a genuine transaction of sale of shares has been made through the stock brokers. With regard to the financial aspects of the so-called transaction, the chart given at pages 6 and 7 of the assessment order clearly shows that the amounts have been regularly deposited in cash in the bank account of M/s. Shubh Investment which is a proprietorship concern of Shri Davender Kumar. It has already been mentioned that M/s. Shubh Investment is a bogus concern and Shri Davender Kumar is not available at the address given in the bank record. The bank account of M/s. Shubh Investment contains cash deposits which have been transferred to the bank account of the broker M/s. J.K. Jain Co. from where the broker has issued cheques to the appellant. With regard to the so-called sale proceeds the dates of transaction of three bank accounts almost tally. The assessee has argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that sale of shares was fully supported by documentary evidence of vouchers issued by the brokers. The sale consideration was received through account payee cheques and this fact is not in dispute. Further shares were quoted in Stock Exchange as per evidence made available on pages 50 and 51 of the paper book. Turning to pages 50 and 51, we find that there is quotation of U.P. Stock Exchange, Kanpur dated 24th September, 1996 showing sale of Chirau Finance Investment and Leasing Co. Ltd. at the rate of Rs. 58 to Rs. 60. In the same manner sale bills were issued in case of sale of shares of Nishtha Finance and Investment (India) Ltd. The amount was received through account payee cheques. 15. Shri Talwar further submitted that the assessee cannot be held responsible for conduct of brokers through whom transactions were effected. Shares were sold in January and February 1997 whereas enquiries by Income-tax Department were conducted much later. The position could have been changed over the period. Even if it is held and presumed that share brokers were indulging in questionable and shady transactions that cannot affect the genuineness of transactions carried on by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2003] 262 ITR 493 (Delhi) - It is pertinent to note that it was not the case of the Assessing Officer that any amount found credited in the bank account of the two companies had direct or indirect nexus with the assessee Co. 4. CIT v. Carbo Industrial Holdings Ltd. [2000] 244 ITR 422 (Cal.)/ CIT v. Emerald Commercial Ltd. [2001] 250 ITR 539 (Cal.) - Loss claimed on account of sale of shares - Purchase and sale of shares effected through share brokers - Full details of transaction and names of share brokers furnished - Payment by account payee cheques not disputed - Failure of appearance of a broker even after issue of summons would not disentitle assessee from claim of loss. 5. CIT v. Currency Investment Co. Ltd. [2000] 241 ITR 494 (Cal.) - Loss on account of dealing in shares - Identity of purchaser and seller not disputed - Failure to produce broker through whom shares were sold does not affect genuineness of transactions - Loss on account of share transactions deductible. 6. CIT v. Mangal Chand [2002] 255 ITR 329 (Raj.) - Transfer of shares - Delivery of shares certificate along with blank transfer form without registration - Amounts to actual delivery with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions was received through account payee cheques but source of these payments was found to be from bank account in the name of Shubh Investment. One Shri Devender Kumar was shown to be the owner of the account but he was not traceable at the address given. Shri Mukesh Gupta who introduced him to the bank was also not available at the address given. This information was duly put to the assessee and it was not assessee s case that Devender Kumar or Mukesh Kumar were available or in existence and not fictitious entities as held by the Revenue authorities. Lakhs and Lakhs were credited to the accounts of the assessee as gains and therefore, it was for the assessee to prove that entries in these accounts were genuine. The suspicious surrendering credit entries were required to be removed by the assessee. The fact that amounts were received through cheque does not advance the case of the assessee when everything is shrouded by doubts and suspicion, which clearly showed that transactions were not genuine. Solitary entries in Stock Exchange could not be treated as regular quotations and were not entitled to any weight. These were manipulated and are required to be weighed alongwith other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the shape of brokers note, contract note, sale bills etc. have also been filed. The concern M/s. Rekha Co. was traced at the address made available to the Revenue authorities. In response to summon their representative also appeared but did not produce books of account. Now on account of non-production of books of account no adverse inference, in our considered opinion, can be drawn against the assessee. The revenue authorities have not placed any adverse material on record to justify the rejection of these transaction as non-genuine. Merely because some cash deposited in account of Rekha Co. is not explained, the entire case could not be rejected particularly when there is no finding that cash could not have been deposited by the said concern and transferred to the account of the assessee. There is no evidence filed on above point by the revenue authorities. The party also confirmed genuineness of transaction before the Assessing Officer without producing books of account. Therefore, in our opinion, case relating to M/s. Rekha Co. stands on a different footing than sale of shares of M/s. Nishtha Finance. Accordingly, above addition is directed to be deleted. 21. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f valuable articles is not found to be satisfactory by the Assessing Officer. The short question therefore, in the present case is whether assessee has offered satisfactory explanation relating to source of acquisition of money deposited in his account and that of his minor son. The assessee has explained that credit represented sale proceeds of 5,000 shares of M/s. Chirau Fin. Inv. Leasing Co. Ltd. In support of explanation certain credit notes evidencing that shares were sold through M/s. Jain and Co. were produced. The assessee further relied upon the fact that the sale proceeds were realized through account payee cheque. The Assessing Officer was entitled to; rather duty bound to examine genuineness of the transaction and record his satisfaction under the abovesaid statutory provisions. He, therefore called upon the assessee to produce Mr. J.K. Jain. When assessee failed to produce him, the Assessing Officer issued summons to Mr. J.K. Jain. But it was found that no such person was available at the address given. The assessee then furnished new address but no useful purpose could be served. Ultimately Shri P.K. Kundra, Advocate appeared before the Assessing Officer and underto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al amount was deposited in cash in bank account maintained in the name of Shubh Investments. The said deposits are the ultimate source of transfer of funds to the bank account of the assessee through the channel of J.K. Jain and Co. On enquiries it has been found that Shri Davender Kumar the alleged holder of the bank account is not available at the address given to the Bank. The same is the position of introductor, Shri Mukesh Kumar. Accordingly the account of Shubh Investment was held to be bogus utilized by the assessee to route his unaccounted money. No attempt was made by the assessee at any stage or proceeding to challenge and rebut the above factual finding by placing any evidence on record. Thus so-called transfer to the bank account of the assessee is from a bogus account owned by? The contention of the assessee that he is not liable to prove source of a source has no force as the Assessing Officer has established direct link of transfer of funds from bank account of Shubh Investments to the assessee. 27. In our considered opinion, revenue authorities in the present case has brought sufficient material on record to show that source of investment/credit in bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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