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TMI Blog2017 (5) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... him. In these circumstances, the AO was not justified in making addition in the hands of assessee, without allowing the assessee to crossexamine Mr. Mukesh Choksi, whose statement was relied upon for making the above additions. Thus restore the matter to the file of AO with a direction to first confront the statement of Mr. Mukesh Choksi to the assessee and allow him to cross examine - Appeal of assessee is allowed for statistical purposes. - ITA No.487/Bang/2017 - - - Dated:- 19-5-2017 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER For The Appellant : Shri Saurabh T. Jain, CA For The Respondent : Smt. Swapna Das, Jt.CIT(DR)(ITAT)-2, Bengaluru ORDER This appeal is preferred by the assessee against the order of CIT(Appeals) inter alia on the following grounds:- 1. In the impugned order, the Assessing Officer (A.O') erred in law and on facts in determining the total income of the Appellant at ₹ 25,03,900 as against ₹ 1,97,900 as computed by the Appellant. 2. That in the impugned order, the A.O erred in arriving at a 'total demand of ₹ 15,77,200 including interest u/s 234A of ₹ 61,976 and u/s 234C of ₹ 7, 35,965. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of any such fraudulent activities happening. 6. The appellant begs to submit that she has purchased shares of M/s Jai Corporation Limited from Alliance Intermediaries Network Limited for which a contract note was given to the appellant. The same is forming part of this appeal. We are unable to understand on how the CIT(A) while passing the order in Para 7 has stated that the share were purchased at a price below the listed price. We beg to submit that the shares of Jai Corp Limited were purchased at the listed price only and the contract note and BSE price on the date of purchase is enclosed. 7. Your attention is invited to the Para 7 of the order of the C!T(A) where the CIT(A) has stated certain facts which are irrelevant to our case and were not even raised by the assessing officer. The CIT(A) goes on to state that the shares were purchased off the market and at a price lower than the market value. We bring to your notice that none of these matters were mentioned in the assessment order passed by the ITO and the CIT(A) has concluded on the same without even calling for any of the above mentioned details. We are unable to understand on what basis the CIT(A) has conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and corroboration of the evidence by the A.O b. The Rajasthan High Court, in the case of Kan Singh Rathore D.D.ITA No. 192/2014 has also held that an unconfronted reliance on a statement made by the third parties cannot be considered as basis for making an addition to the income. The appellant must also be given a fair opportunity to examine the evidence relied upon by the A.O. c. The High Court of Gujarat in case of Commissioner of Income-tax-I Vs. Maheshchandra G. Vakil [2013]40 taxmann.com 326 (Gujarat) held that Where assessee proved genuineness of share transactions by contract notes for sale and purchase, bank statement of broker, demat account showing transfer in and out of shares, as also abstract of transactions furnished by stock exchange, Assessing Officer was not justified in treating capital gain arising from sale of shares as unexplained cash credit. d. High Court of Gujarat in case of Commissioner of Incometax- I Vs. Himani M Vakil [2013J10 taxmann.com 326 (Gujarat) held that where assessee duly proved genuineness of share transactions by bringing on record contract notes for sale and purchase, bank statement of broker and demat account s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has discharged its onus of proving the fact that shares were purchased by the assessee in the year 2002 which were dematerialized in the Demat account of the assessee on 23/5/2003 and therefore these shares were held by the assessee up till the same were sold from the Demat account of the assessee. The transaction of holding shares are reflected in the Demat account and the sale of shares are also through Demat account and consequently the. transaction cannot be doubted as sham or bogus transaction. g. High Court of Rajasthan at Jodhpur in case of CIT Vs. Smt Sumitra Devi in ITA 54/2012 has held that:- True it is that several suspicious circumstances were indicated by the AO but then the findings as ultimately recorded by him had been based more on presumptions rather than on cogent proof. As found concurrently by the CIT(A) and the ITA T, the AO had failed to show that the material documents placed on record by the assessee like broker's note, contract note, relevant extract of cash book, copies of share certificate, de-mat statement etc. were false, fabricated or fictitious. The appellate authorities have rightly observed that the facts as noticed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere with the order of the CIT[A] and the same is upheld. 12. Further, we refer to the case of Vitrag Metal (P) Ltd v/s ITO, (2016) 46 ITR 201 (the 'statement' of one of the directors of the investing company which is a general 'statement' and not a specific 'statement' and also that on the basis of the 'statement' it cannot be presumed that accommodation entry has been given.. ': therefore it can not be presumed that transaction occurred was mere accommodation entry. Mum- Trib where it states that . addition cannot be made merely on the basis of 13. It can be noticed that the entire basis for the impugned order is the sworn statement of Mr. Mukesh Choksi. Referring to case of Jayshree Devi Kothari v/s ITO, The Jurisdictional High Court of Karnataka, it is stated that Unless petitioner is given opportunity to have his say in this matter with regard to the said statement and its content, it cannot be said that assessee was given opportunity of being heard in this matter. Hence, it has to be held that impugned order is passed without providing any fair reasonable opportunity of being heard to the assessee . 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from Other Sources. 16. The only reason for making addition was that during the course of search Mr. Mukesh Choksi admitted that he is a name lender and arranging profit/loss/share application and etc, to various person. It is also an undisputed fact that transactions with this company are well supported with the documents and were done through bank. Merely because Mr. Mukesh Choksi is indulged in clandestine activities would not make the transactions with the assessee non genuine. 17. The A.O has in his order erred in computing the gross total income of the assessee. The A.O has directly summed the incomes of the appellant totalling to ₹ 25,03,900 as the taxable total income of the assessee without allowing exemption on sale of Long term capital gain on which STT was paid u/s 10(38). 18. The A.O erred in levying interest of ₹ 61,976 under section 234A of the Act. 19. The A.O erred in computing interest under section 234B of the Act at ₹ 7,35,965. The Appellant submits that the above grounds are independent and without prejudic e t o on e another . The Appe ll an t c r aves leave to add to or alter, by deletion, subst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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