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TMI Blog2015 (3) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... . With this preliminary backdrop we take up the appeal & CO filed by the assessee in the case of Brij Bhushan Singal for A.Y. 2004-05. The grounds of appeal of the revenue is for A.Y. 2004-05 is as follows: 1. "The order of the ld. CIT(Appeals) is not correct in law and facts; 2. On the facts and circumstances of the case, the ld. CIT(A) has erred in law in deleting the addition of Rs. 42,18,037/- made by the AO on account of unexplained credits received by the assessee as accommodation entry from Sh. S.K. Gupta. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." And in the CO preferred by the assessee, the following grounds have been preferred: 1. "That the order dated 11.02.2013 passed u/s 250 of the Income Tax Act, 1961 by the ld. Commissioner of Income Tax (Appeals)-1, New Delhi is against law and facts on the file inasmuch as he was not justified in rejecting the stand of the assessee that the order passed by the ld. AO is without jurisdiction and bad in law as the jurisdiction u/s 153A has been vitiated. 2. That the order dated 11.02.2013 passed u/s 250 of the Income Tax Act, 1961 by the ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s above As above 21.05.04 5,00,000/- Ch. No. 431990 dt. 16.05.04 3 As above As above 21.05.04 5,00,000/- Ch. No. 431997 dt. 17.05.04 4 As above As above 31.05.04 8,00,000/- Ch. No. 433714 dt. 25.05.04 5 As above As above 05.08.03 5,00,000/- Ch. No. 436601 dt. 01.08.03 6 As above As above 05.08.03 5,00,000/- Ch. No. 436602 dt. 01.08.03 7 As above As above 29.11.04 2,77,795/- Ch. NO. 238678 dt. 27.11.04 8 As above As above 13.07.06 25,00,000/- Ch. No. 307075 dt. 10.07.06 9 As above As above 13.07.06 25,00,000/- Ch. No. 307074 dt. 10.07.06 10 As above As above 26.07.06 6,24,235/- Ch. No. 009314 dt. 14.09.06 5. To the said query the assessee replied vide letter dated 27/10/2011 that the payments mentioned except that of serial no. 7 has been received from M/s Sino Securities Pvt. Ltd. and the entry at serial no. 7 does not pertain to the assessee. Along with the said reply, the assessee forwarded the confirmation and bill in respect of the transaction entered between him and M/s Sino Securities Pvt. Ltd. (sharebroker) and the payments received were duly enclosed for the perusal of the AO. However, dissatisfied with the reply of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gain arising from the sale of shares does not find any mention in the assessment order. As the two sets of transactions, i.e. unexplained credit/income charged by the revenue and capital gain offered by the appellant, arise from the same transaction, only one of these amounts can be taxed. As the appeal herein against addition of Rs. 42,18,037/- as unexplained credit/income has been allowed, the corresponding capital gain shall be charged if not charged already in the returned income of the appellant. Further, the applicable rate at which the capital gain is to be charged shall be re-verified in view of the dispute relating to capital gain on unlisted securities and the rate applicable (i.e. 10% offered by the appellant and 20% charged by revenue). I may mention here that the securities in question were listed on the Calcutta Stock Exchange Ltd., though these may not be very well known listed companies. The AO is directed to check these aspects at the time of giving effect to this order, and act in terms of the directions given above in accordance with the law." 7. According to the ld. CITDR, the CIT(A) erred in deleting the addition made by the AO on account of the unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR also pointed out the fact that Sh. S.K. Gupta has admitted before the Income Tax Settlement Commission the entire modus operandi in providing accommodation entries to various entities including the assessee. Therefore, according to the ld. DR the AO rightly made the addition while computing the total income of the assessee as mandated by section 153A of the Act. 9. On the other hand, ld. AR Sh. Ashwini Kumar, C.A, submitted that the ld. CIT(A) has rightly held that there was no evidence other than the statement of Sh. S.K. Gupta, that too which has been taken behind the back of the assessee; and further submitted that neither the copy of the said statement of Gupta which the AO has relied upon to make the impugned addition has been provided to the assessee for rebutting the same nor his request to cross examine shri. S.K. Gupta was heeded to by the AO . So the ld. CIT(A) has found merit in the ground raised by the assessee. Further according to the ld. AR, the ld. CIT(A) has examined the records/documents filed by the assessee before the AO, which included the contract notes, copies of the bills in respect to the purchase of shares made through M/s Sino Securities Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailed the opportunity given to him vide question no. 7 of questionnaire dated 12/07/2011 to cross examine Sh. S.K. Gupta. We find that the AO's said finding is contrary to the evidence/request made by the assessee to provide him an opportunity to cross examine vide his letter dated 27/10/2011 to AO. In the remand report also, the AO could not say anything about the said request made by the assessee before the AO. Therefore, the CIT(A)'s finding that the statement of Sh. S.K. Gupta incriminating the assessee was not provided to him nor an opportunity was granted to cross examine the said Sh. Gupta is against natural justice and, therefore, the ld. CIT(A) was justified in coming to a conclusion that the said evidence even if incriminating the assessee, could not have been the basis for making the impugned additions. We also take note of the fact that the ld. CIT(A) had made a finding that the shares which were purchased and sold by the assessee through the said share broker was listed companies of Calcutta Stock Exchange though not well known companies. We also take note of the fact that the assessee had duly reflected in its return filed in the concerned assessment years the long t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and, therefore, realization of the said assets cannot be said to be the accommodation entry availed by the assessee. It is only the replacement of the one asset with another asset i.e. the shares were liquidated and cash was realized. The capital gain/capital loss which arose out of such transactions was duly disclosed in the return of income. We find force in the arguments of the ld counsel. The realization of the shares into cash cannot be said to be availing of the accommodation entry especially when the purchase of those shares have not been doubted by the revenue. Further the purchase and sale of the share are duly supported by the documentary evidence and the purchase consideration paid by the assessee by cheque as well as sale consideration was received by the cheque. The AO has not found any of these documents to be fake. The only reason for treating the transactions of sale of shares as accommodation entry is the purported statement of Shri S.K. Gupta, which survey team obtained in the year 2007. Admittedly such statement was record behind the back of the assessee and the assessee was never allowed any opportunity to cross-examine him. Moreover from the statement of Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried to impress upon us that because of the passage of time and the consequential non-availability compounded with the chances of certain records having been misplaced/defaced/destroyed, subsequently when the bank accounts were analyzed for the purpose of filing details during the course of post-search assessment proceedings that the error was discovered and the corresponding rectification entries passed. As such, therefore, the AR contended that as such it cannot be said that the said FDRs were in the nature of unexplained credit, specially considering the fact that the same pertain to the period prior to 01.04.2003 and it was only because of the compilation of the error that the same could not be incorporated in the statement of affairs as on 31.03.2003. 13. We have heard both the parties and have perused the records and we find that the assessee during the section 153 proceedings before the AO could not produce any documents to substantiate the receipts on account of FDR receipts of Rs. 6,76,673/- in her capital account. The AO's finding that no such credit is appearing in the bank account statement provided by the assessee and since assessee could not produce any documents sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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