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TMI Blog2016 (11) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ned at Rs. 17,90,880/-, wherein the assessee's claim for speculation profit of Rs. 15,03,799/- was held to be unexplained income under section 68 of the Act by the Assessing Officer (AO). On appeal, the learned CIT(A)-XIII, Mumbai dismissed the assessee's appeal vide order dated 05.02.2007 and therein upheld the AO's view treating the amount of Rs. 15,03,799/- as unexplained income under section 68 of the Act. On further appeal by the assessee to the ITAT, the Coordinate Bench of this Tribunal in its order in ITA No. 3006/Mum/2007 dated 09.03.2009 set aside the order of the learned CIT(A) and restored matter to the file of the AO with a direction to afford the assessee an opportunity to cross examine Shri Niraj Sanghvi whose statement was heavily relied upon by the AO and also to submit any other evidence to justify his claim. 2.2.1 In the second round, the AO in accordance with the directions of the Coordinate Bench in its order dated 09.03.2009 (supra) made available to the assessee a copy of the statement of Shri Niraj Sanghvi dated 07.03.2006 made before the ADIT (Inv), Unit D-2, Mumbai and also copy of submission dated 22.03.2006 filed by Mrs. Charu Sanghvi, Prop. Falgun Finv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely all the evidences in respect of the receipt of the Speculation profit, confirmation of the Broker, Bank Statement and all the other relevant papers and evidences in respect of the subject matter of the appeal. Your appellant submits that the actual application of provision of Section 68 is erroneous and irrelevant and hence the conclusion arrived by the CIT Appeal as well as the assessing officer is incorrect and hence the same is deserved to be deleted. In the facts and circumstances of your appellant's case your appellant submits that the said additions confirmed with regard to the Sec. 68 in the total income of your appellant to the extent of Rs. 15,03,799/- may please be deleted in full. Your appellant craves leave to add, to amend and / or to alter the Grounds of Appeal." 4. The hearings in this case were fixed on many occasions but they were adjourned as either none was present on behalf of the assessee or since the assessee sought adjournments of hearing. On one occasion the Bench did not function, the case was adjourned through intimation on the Notice Board. On 20.09.2016 when the case was called for hearing, again none was present to represent the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the learned CIT(A) upholding the AO's order in holding that Rs. 15,03,799/- shown as speculation profit was to be brought to tax in the assessee's hands as income from undisclosed sources. It would be in the fitness of things, at this stage, to extract hereunder the relevant portion of the order of assessment under section 143(3) r.w.s. 254 of the Act for A.Y. 2003-04 dated 16.12.2010 in respect of the manner in which this issue at para 5 thereof: - "5. In order to give effect to the said order of the Hon'ble I.T.A.T, notices U/s. 143(2) / 142(1) were issued on 08/09/2009 and duly served on the assessee. Further notice U/s. 142(1) was issued to the assessee on 18/11/2010 requesting to produce necessary evidence in connection with the share transactions like original contracts and demat statements, proof of amount received by cheque including Bank statement along with the Books of Accounts. In response to the same, the assessee's representative submitted that, the said details have been already furnished to your office. It was further requested to provide the copy of statement on oath U/s. 131 of the I.T. Act of Mr. Niraj Sanghvi made before the A.D.I.T (Inv) Unit I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or Brokers. Q 5. Do you want to say anything else? Ans. No. Please. Whatever stated above is true to the best of my knowledge and belief. I have gone through the statement and I confirm that, the statement is recorded correctly without any favour coercion or undue influence. Thereafter, Mr. T.S. Gada, CA, Authorised representative of the assessee was allowed to cross examine Mr. Niraj Sanghvi the extract, of the statement is as under. Q.1. Do you confirm the copy of accounts and transaction and information given by you in your letter dated 13/12/2010. Ans. Yes. Q.2. Do you confirm that, all transactions are in ordinary course of business? Ans. Yes. In view of the forgoing it is crystal clear that, the alleged transaction of sale of shares claimed by the assessee is only a paper transaction designed to evade payment of tax on legitimately due from him. There is no truth in the sale transaction claimed by the assessee as per the submission made by the sub broker M/s. Falgun Finvest during the original assessment proceedings vide letter dated 22/03/2006 and also confirmed by the Authorized representative as above. There is also no truth in the claim that, the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de profits except a marginal loss in these transactions, (4) assessee did not deposit any moneys as advance and/or deposit with the broker Falgun Finvest, Mumbai before or after entering any of the transactions, (5) the broker did not pay any security transaction tax even though the value of total transactions ran into lakhs of rupees entered into by the assessee, (6) assessee stopped making these speculative transactions after reaching a figure of Rs. 15,03,798/- on 21/01/2003 and did not enter into a single speculative transaction after 21/01/2003, (7) entries in the pass book of Falgun Finvest, Mumbai indicate credits of several lakhs of rupees from four current accounts maintained in the same branch of the bank before issue of payment cheques to assessee and other parties, (8) assessee has traded in speculation activity only on three days in October 2002, three days in November 2002 and five days in January 2003 and has not carried on any speculative activity on other days in these months and also prior to and later than this four months period, (9) assessee has traded both ways while entering into speculative transactions in different shares of several companies on the same da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds me to a conclusion that assessee had exchanged his undisclosed income through sub broker Falgun Finvest, Mumbai for "speculation income/profits in shares". It may be mentioned here that Mr. Niraj A Sanghavi husband of Charu N. Sanghvi proprietor of Falgun Finvest, Mumbai was a power of attorney holder of Charu N. Sanghavi and thus had all the authority to furnish all details about the business activity of his wife who had given him the power of attorney and therefore all the statements given by Mr. Niraj Sanghvi as power of attorney holder of Charu N. Sanghavi, proprietor of Falgun Finvest are valid and legally binding statements. It is also worth mentioning here that ITAT, Mumbai in paragraph 8 of its order dated 09/03/2009 has very clearly directed the Assessing Officer to give an opportunity to the assessee to cross examine Mr. Niraj Sanghvi whose statement was heavily relied upon by the Assessing Officer and to submit any additional evidence to justify his (assessee's) claim. And this opportunity was given by the Assessing Officer to the assessee on 15/12/2010 and assessee's Authorized Representative Mr. T. S. Gada - CA availed of the opportunity on 15/12/2010 and cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be placed on the primary evidence furnished by the assessee and not the secondary evidence furnished by the sub broker Falgun Finvest, Mumbai. These grounds of appeal are dealt with in following paragraphs: 4.5.3 Assessing Officer in the original assessment had relied on the statement furnished by Mr. Niraj Sanghavi husband of Charu N. Sanghavi proprietor of Falgun Finvest, Mumbai and ITAT, Mumbai in para 8 of its order dated 09/03/2009 had specifically dealt with and directed that an opportunity be provided to assessee to examine Mr. Niraj Sanghvi husband of Charu N. Sanghvi proprietor of Falgun Finvest and, therefore, these directions have been followed by the Assessing Officer and an opportunity to cross examine has been given to the assessee and availed of by the assessee's CA on 15/12/2010. Therefore, AO's action in following ITAT's directions in the assessment order is fully justified and upheld. Moreover, paragraphs 5.4 and 5.5 mainly highlight the primary evidence of the transactions entered into by the assessee and the treatments given by the assessee in his accounts, pass book and computation of total income on these basic details and documents furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of giving havala entries for a fee and concluded that in view of the facts on record, it is clear that the assessee laundered his undisclosed income through this sub-broker M/s. Falgun Finvest as speculation profit/income in shares. That Shri Niraj Sanghvi, husband and POA holder of his wife Smt. Charu Sanghvi, Prop. Falgun Finvest admitted to the same, both in his statement dated 07.03.2006 before the ADIT (Inv), Unit D-2, Mumbai and also in his statement before the AO on 15.12.2010 and confirmed the same when confronted in cross examination by the assessee's A.R. Shri T.S. Gada, CA, is a fact on record that has not been controverted by the assessee. The copy of Shri Niraj Sanghvi's statement sated 07.03.2006 given before the ADIT (Inv) relied on by the AO in the first round of assessment and opportunity to cross examination of Shri Niraj Sanghvi on 15.12.2010 were both duly given to the assessee as per the directions of the Coordinate Bench of this Tribunal in its order dated 09.03.2009 in the assessee's case. We find that the learned CIT(A) observed that M/s. Falgun Finvest in letter dated 13.12.2010 has confirmed that it had issued bills to the assessee in respect of cert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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