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TMI Blog2013 (6) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... ening has been made on the basis of presumption and not on reasons to believe, thus, no reasons recorded are in accordance with law. The reasons do not reflect that the A.O. has reason to believe that there is an escapement of income. Once it is found that the reasons are not in accordance with law, the reopening is bad in law. In favour of assessee. - ITA No.10/Agra/2011 - - - Dated:- 24-5-2013 - Shri Bhavnesh Saini And Shri A.L. Gehlot,JJ. For the Appellant : Shri Waseem Arshad, Sr. D. R. For the Respondent : Shri Anurag Sinha, Advocate ORDER Per A. L. Gehlot, Accountant Member:- This is an appeal filed by the Revenue against the order dated 01.10.2010 passed by the ld. CIT(A), Gwalior for the Assessment Year 2001-02. 2. The Revenue has raised the following ground of appeal :- Whether on the facts and in the circumstances of the case the Ld CIT (Appeals) has erred in deleting the addition of ₹ 29,56,142/- on account of accommodation entries received from M/s M.K.M. Finsec Pvt. Ltd. 3. The brief facts of the issue are that the A.O. made addition of ₹ 29,56,142/- on account of capital gain on shares from M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Investigation Wing as undisclosed income of the appellant without any basis or giving reasons for rejecting the submissions of the appellant. It is further seen that in case of the appellant, original order u/s 143(3) has been passed by the then AO on 15.3.04 whereby income declared at ₹ 2,29,900/- has been accepted, but short term capital loss of ₹ 1,59,55,183/- has been treated as loss from speculative business to be set off only against speculative business income as per section 73 of the I.T. Act. During the course of assessment proceedings, A.O. has not brought any adverse material on record whereby purchase of shares on 18.03.99 has been doubted by him. However, on the sale of these shares, entire sales receipts taken at ₹ 29,56,142/- has been assessed by the A.O. as income from undisclosed sources. 4.3 From the entire records and the assessment order, it is evidently clear that the AO's mind was overwhelmed and unduly influenced by the observation made regarding the search operations conducted by the Investigation Wing in the cases of share barkers and their companies and particularly the statement of its Directors as narrated by the A.O. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Mahesh Batra. However, when oral statements are pitted against said valid documentary evidence, it is well established legal position, that the documentary evidence has to prevail over. In this case, the statement recorded by the Investigation Wing, Delhi and relied on by the AO without offering the opportunity of cross- examination is pitted against the documentary evidences produced by the appellant to prove the purchase and sale of shares. Such documentary evidence has to be given precedence and also credence in the absence of any contrary material on record. The initial burden cast on the appellant has been duly discharged by him, who has been ascertaining the transactions to be genuine whereas AO has only the statement of the broker who has stated in general terms that the transactions carried out by its companies are not genuine. In my view, AO should have also exercised his powers u/s 31 to examine or cross-examine the parties. It is the AO alone who has to apply his mind and form his opinion which is independent and unguided by the opinion of the Officer Incharge of Intelligence Wing at Delhi. The statement has been recorded at the back of the appellant who has neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue but copy of statement of Shri Mahesh Batra has not been placed on record even inspite of last opportunity for this purpose given by us vide order sheet dated 07.03.2013. The CIT(A) has followed the orders of I.T.A.T., Agra Bench in the case of Shri Ashok Kumar Lavaniya, Prop. Bajrang Automobiles, Agra in ITA No.112/Agr/2004 vide order dated 30.05.2008. The same has been followed by I.T.A.T. Agra Bench in case of Shri Baijnath Agarwal, Prop. M/s. Baijnath Scrap Centre in ITA No.133/Agr/2005 vide order dated 13.04.2010. It has also been noticed that on identical set of facts the I.T.A.T., Allahabad Bench in ITA Nos.84 85/Alld/2013 in the case of Shri Ashok Kumar Arora vs. ITO vide order dated 13.05.2013 has decided the issue as under :- 13. We have heard the ld. Representatives of the parties and records perused. The important words under section 147 are 'has reason to believe' and these words are stronger than the words 'is satisfied'. The belief entertained by the ITO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court cannot of course investigate into the ade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the assessee. The relevant finding is reproduced as under :- 11. We have heard rival submissions and considered them carefully. After considering the submissions and perusing other material on record, we find that assessee deserves to succeed in his appeal. It is seen that assessee purchased shares of M/s Elite Capital Management Services (P) Ltd., 61,700 shares for a consideration of ₹ 92,550. These shares were purchased between 10th April, 2000 to 17th May, 2000. The payments were made in cash, copy of ledger account is placed at p. 228. The copy of certificate confirming the sale of shares to assessee is placed at p. 229 of the paper book. Copy of account of M/s Elite Capital Management Services (P) Ltd. certifying that 61,700 shares have been demated in the name of the assessee is placed at p. 320 of the paper book. Thereafter the assessee sold shares numbering 20,000 on 28th Aug., 2001 through M/s MKM Finse (P) Ltd., copy of which is placed at p. 231 of the paper book. Thereafter assessee sold further 41,700 shares, copy of the same is placed at p. 232. These shares were sold vide bill dt. 24th Aug., 2001. Payments have been received through acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shal Holding Capital Pvt. Ltd., 200 Taxman 186 (Delhi) (Mag.), on identical set of facts has held as under :- 6. We are of the view that the assessee had produced copies of accounts, bills and contract notes issued by M/s. MKM Finsec Pvt. Ltd. and had been maintaining books of account as per Companies Act. The assessee had also demonstrated the purchase and sale of shares over a period of time as seen from the balance sheet/s. In our opinion, the AO has simply acted on the information received from the Investigation Wing without verifying the details furnished by the assessee. The assessee has also produced best possible evidence to support its claim. Consequently the addition made by the AO cannot be sustained. 14.2 Hon'ble Allahabad High Court in the case of CIT vs. Sudeep Goenka in Income Tax Appeal No.468 of 2009, judgment dated 03.01.2013, held as under :- 7. We have considered the arguments of the counsel for the parties. The CIT(A) after considering entire evidence of record found that purchase and sale transactions were proved. He further found that payment of the sale price was made to the assessee through bank channel and not in cash as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential allotment directly from the companies and the purchases declared in the balance sheet of earlier years, which were accepted by the department. Shares were sold to the registered stock brokers and stock exchange. Brokers have confirmed that money was given through draft. Hon'ble Allahabad High Court, therefore, on consideration of these relevant considerations, confirmed the findings of the Tribunal that the sales are not sham transactions. According to the AO, the facts of these cases are identical to the case of the assessee, therefore, when in the identical cases of the family members of the assessee, additions have been deleted by the Tribunal and the order of the Tribunal have been confirmed by Allahabad High Court, therefore, on such reason itself, the departmental appeal is liable to be dismissed. Further, the assessee has filed proper evidences before the authorities below to show that shares of M/s. B.T. Technet Ltd. were allotted directly by this company @ 10/- per share and consideration was transferred through banking channel. All the allotment letters, drafts, certificates of the company are filed in the paper boo;. The profile of M/s. B.T. Technet is also fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation of facts and material on record rightly deleted the addition. Further, whatever material was collected at the back of the assessee was not forwarded to the assessee. Therefore, same cannot be read in evidence against the assessee. Since, it is departmental appeal and no material is produced before us to rebut the findings of the ld. CIT(A), therefore, we do not find any justification to interfere with the order of the ld. CIT(A) in deleting the addition. In the result, the departmental appeal fails and is dismissed. 14.4 In the case under consideration, we find that the assessee has furnished the relevant details like contract notes, delivery notes, sale of shares and purchase bill etc. and in the light of the fact, we find that the cases under consideration are squarely covered by the above orders including the order of I.T.A.T., Agra Bench in ITA No.226/Agra/2010 in the case of ITO vs. Shri Rakesh Khetrapal (supra). The judgement in the case of Areva T D, SA vs. Asstt. Director of Income Tax Others, 349 ITR 127 (Delhi) relied upon by the ld. Departmental Representative is distinguishable on facts. We follow the above order of I.T.A.T., Agra Bench and other ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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