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TMI Blog2016 (11) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the AO to disallow the assessee’s claim of LTCG arising on sale of the aforesaid shares merely on the basis of the uncorroborated statement of Mukesh Choksi dated 11.12.2009 in respect of which no enquiry was carried out by the AO to establish the veracity thereof and without giving the assessee an opportunity to cross examine Shri Mukesh Choksi thereon. In this view of the matter and keeping in mind the principles of judicial consistency, we reverse the findings of the learned CIT(A) and AO and direct the AO to assess the LTCG declared by the assessee on sale of 7500 shares of Buniyad Chemicals Ltd. as declared at ₹ 7,78,861/- and allow the assessee exemption under section 54F of the Act. - Decided in favour of assessee - ITA No. 1737/Mum/2014 - - - Dated:- 9-11-2016 - Shri Jason P. Boaz, Accountant Member And Shri C.N. Prasad , Judicial Member Appellant by : Shri D.C. Saboo Shri Deepak S. Shah Respondent by : Shri C.V. Chandra ORDER Per Jason P. Boaz, A. M. This appeal by the assessee is directed against the order of the CIT(A)- 28, Mumbai dated 30.12.2013 for A.Y. 2004-05. 2. The facts of the case, briefly, are as under: - 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not relevant to escapement of income which are challenge by appellant. 5. CIT[A] has not any observation on the capital gain added to income. 6. Reopening u/s 147 is bad in law, notice u/s 148 is bad in law no application of mind by A.O. No independent enquiry were made by A.O. 7. CIT[A] has confirm order passed by A.O. by violating principle of natural justice. 8. CIT[A] has ignore fact that appellant purchase physical shares which were duly transfer in his name than send for demate. The sold shares has been debited in demate account. 9. A.O. has mentioned that bogus income if it is bogus income how it can be taxes as undisclosed income. 10. Notice under section 148 issued after 4 year so in reason recorded A.O. had come to conclusion that there is a failure on the part of the assessee to disclose material facts in the return. 11. A.O. has not proved nexus. A.O. has erred in disallowing transfer fee of ₹ 300000/ 12. Appellant craves your leave add alter and modify these grounds of appeal. 4. Grounds 1 to 3, 5, 7, 11 and 12 4.1 At the outset of the hearing, the learned A.R. of the assessee submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent nor was the assessee provided any opportunity of cross examination of Shri Mukesh Choksi. The learned A.R. contends that in view of the above, the AO s action in treating the assessee s LTCG of ₹ 7,78,861/- arising from sale of 7500 shares of Buniyad Chemicals Ltd. as unexplained investment in the purchase of property/flat at Jaldarshan Society, Mumbai based on the aforesaid statement of Shri Mukesh Choksi in the factual circumstances laid out above is not sustainable either in law or on facts. Consequently, the addition of commission paid @ 0.15% is also to be deleted. 5.1.4 In support of its contentions, the learned A.R. of the assessee placed reliance on the decision of the Coordinate Bench in the assessee s own case for A.Y. 2003-04 in ITA No. 4209/Mum/2014 dated 10.08.2016 wherein the assessee had declared LTCG of ₹ 43,52,980/- on sale of 53500 shares of Buniyad Chemicals Ltd. It is submitted that the AO based on the same statement of Shri Mukesh Choksi was of the view that the assessee had invested his own money from undisclosed sources into shares and added the same to the assessee s income. On appeal by the assessee, the learned CIT(A) vide order dated 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. We find that no independent inquiry seems to have been carried out to verify the veracity of the statement of Mukesh Choksi admitting to issuing bogus bills; especially when the assessee has denied the same in assessment and appellate proceedings and has submitted relevant bills and other details to establish the genuineness of his claim. In the light of the facts narrated above, the AO appears to have approached this issue with preconceived notions and a closed mind. When the AO has based his decision on the statement of Shri Mukesh Choksi, it was incumbent on him to have provided a copy of the same to the assessee and also to have provided him with opportunity for cross examination, before coming to a conclusion in the matter. The AO s failure to do so in the case on hand goes against the principles of natural justice and an addition/ finding rendered in this manner, as has been done in the case on hand, is not sustainable. 5.3.2 We find that similar/identical situation has been considered, inter alia, by the Coordinate Bench of the Tribunal in the case of Shri Kamlesh Mundra in ITA No. 6428/Mum/2012 at paras 6 7 thereof have held as under: - 6. We have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit to the same cost of purchase of shares and taxed the long term capital gain offered as short term capital gain only. As far as the date of purchase is concerned, the evidence on record indicate that the assessee had indeed earned speculation profit by sale of APTECH shares which the Assessing Officer has not doubted. Further the assessee also suffered speculation loss as stated above in February, 2001 and debit and credit entries pertaining to same broker were shown in the balance sheet in the return filed for the AY 2001- 2002 in August, 2001. There is also a mention of purchasing of shares of the company in the return. It is also on record that the said company vide letter dated 30- 6-2000 had transferred the shares in the name of the assessee with the folio No. 15021 and certificate Nos. 105744 to 105848. The Assessing Officer neither questioned the said company nor disproved the transfer of share certificates by 30/6/2000. The only basis for arriving at the conclusion that the transaction is not genuine is on the basis of the statement given by Mr. Mukesh Chokshi on 20-6- 2004/20-6-2002 before the DDIT (Inv.) with reference to certain transactions undertaken by Mr. Muke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow the transactions becomes a bogus one. There is no evidence except this oral statement which is also not submitted for crossexamination to prove/ disprove the transaction. Whereas the assessee furnished transaction details) the bank accounts) purchase and sale of other listed companies) speculation profit and loss and also evidence in the form of balance sheet filed much before the said shares were sold. The sale of shares was undertaken in December 2001 whereas the return for AY 2001-2002 was filed by August 2001 itself indicating the purchase of shares and outstanding amounts to M/ s. Golden Finvest Ltd in the statements. In view of the documentary evidence in favour of the assessee, we are unable to accept the contention of the Assessing Officer based on the statement which is also un supported by any other evidence to deny the benefit of purchase of shares by the assessee on 8-4-2000. Not only that the Assessing Officer has also gave credit for the same amount of purchase of shares at cost and did not treat the sale proceeds as bogus/unaccounted income. The only action taken by the Assessing Officer is to deny the assessee the benefit of long term capital gain and subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such and accept the same. 7. After analyzing the afore mentioned orders, we found that the issue contained in the present case are similar to the issues of afore mentioned cases. Therefore, keeping in view the principles of judicial consistency and while respectfully following the judgements passed by the coordinate bench, We also hold that in the present case by virtue of independent documents as referred in paper book the assessee has proved the genuineness of the share transaction and there was no justification to disallow the claim of the assessee in respect of long term capital gain merely on the basis of information received from DDIT which is based on admission of Shri Mukesh Chokshi. Therefore accordingly, we direct the AO to assess the long term capital gain declared by assessee as such and accept the same. 5.3.3 As submitted by the learned A.R. of the assessee the very same issue of the capital gain on purchase/sale of shares of Buniyad Chemicals Ltd. being treated as investment made in these shares out of undisclosed income of the assessee to avail the benefit of LTCG and exemption under section 54F of the Act was up for consideration before the Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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