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TMI Blog2006 (4) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Chhugamal Rajpal v. S.P. Chaliha [ 1971 (1) TMI 9 - SUPREME COURT] , the initiation of proceedings are held vitiated and notice so issued under section 148 is directed to be quashed and assessment made is annulled. Having annulled the assessment, I do not consider necessary to render any decision in the merits of other grounds in appeals. In the result, both the appeals stand allowed. - B.R. Jain, Accountant Member Dr. Rakesh Gupta and Ashwani Taneja for the Appellant. Ms. Pramila Sharan for the Respondent. ORDER These appeals by the assessees arise against the orders dated 27-8-2004 and 26-8-2004 of the learned Commissioner of Income-tax (Appeals)-XXV, New Delhi, raising the following identical grounds :- 1. That having regard to the facts and circumstances of the case the ld. CIT(A) has erred in law and on facts and in confirming the decision of the Assessing Officer in reopening of the assessment under section 147, more so when statutory conditions prescribed under sections 145 to 151 of the Act were not complied with. 2. In any view of the matter and in any case, reopening of the impugned assessment is bad in law and against the facts and circumstances of the case. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry of long-term capital gains after paying the equivalent amount in cash (plus premium for taking the accommodation entry) to the broker Shri Satish Kumar Goel, Proprietor of M/s. R.K. Aggarwal Co. The Assessing Officer was informed that Shri Satish Kumar Goel had admitted to this fact in a confessional statement dated 14-2-2000 which was deposed by him on oath before the Investigation Wing of the department at Gurgaon. The Assessing Officer was informed that the subject company M/s. Globe commercials Ltd. had also appeared before the DDI (Inv.), Gurgaon through its authorized representatives and it had categorically confirmed that the name of the present appellant Smt. Vinita Jain did not figure in its share transfer records. The Company had unambiguously denied that the subject 4300 shares were ever transferred in its records to the name of the appellant. Lastly, the Assessing Officer was informed that the subject shares of M/s. Globe Commercials Ltd. had not at all been transacted either on the Delhi Stock Exchange or on the Magadh Stock Exchange. On receipt of the said information, the Assessing Officer invoked his powers conferred by section 47 of the Act. 4. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essees contends that the action taken under section 147 of the Act cannot be held valid for several reasons. Firstly that the Assessing Officer did not record any reasons for formation of belief that the income of the assessee has escaped assessment. It is only in the proforma for obtaining the approval of Commissioner of Income-tax, the reason for the belief that income has escaped assessment in the case of Smt. Vinita Jain are stated as under :- As per information received from DDIT(Inv.) Gurgaon, the assessee had taken bogus entry of capital gains ₹ 2,12,635 on 27-6-95 (assessment year 1997-98) by paying cash along with some premium and taking cheque of same amount. Likewise reasons taken in the proforma sent in case of Sh. Atul Jain are as under:- As per information received from DDIT (Inv.) Gurgaon, the assessee has taken bogus entry of capital gains ₹ 1,08,845 on 22-6-1996 (assessment year 1997-98) by paying cash alongwith some premium and taking cheque of same amount. 7. These reasons do not disclose satisfaction of the Assessing Officer. Furthermore, the Assessing Officer did not carry out any independent enquiry himself to find out whether the transaction of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wla v. ITO [2005] 94 ITD 1 (Delhi) (SB) the assessment so made is liable to be quashed. 10. On merit, Shri Gupta contends that the revenue has raised no doubts about the genuineness of shares purchased by the appellant. These assessees in fact had discharged the initial burden that lay upon them by bringing on record the documentary evidence to establish the fact that the shares factually held by them stood sold at the prevalent market rate. Broker note share quotations alongwith evidence for purchase sale of shares had been brought on record. The payment was received through an account payee cheque. The Assessing Officer, however, acted on the basis of oral evidence given by Shri Satish Goel, broker or Globe Commercial Ltd. before the investigating authority. The appellant was not even confronted with the testimony of these persons nor any opportunity allowed to cross-examine any of them. If a regard is had to the judgment of Apex Court in Kishin Chand Chela Ram v. CIT [1980] 125 ITR 713, such statements cannot be taken as legal material. The onus that lay upon revenue to show that capital gains is bogus has not been discharged. The addition so sustained is therefore liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his superior authority. Such an action of the assessing authority cannot be held vitiated. She further contends that the assessment in this case was completed much before the expiry of period of twelve months from the date of reply filed by the assessee in response to notice under section 148 of the Act. If the notice under section 143(2) was not served, then that at best could be held to be a procedural irregularity and matter can be sent back to Assessing Officer to take action from the stage from where irregularity supervened. 13. On merit, the learned DR supports the findings reached by Ld. CIT(A) that the onus that lay upon the appellant has not been discharged. The appellant s name did not appear in the records of Globe Commercial Ltd., whose shares are claimed to have been transacted for alleged capital gains. The company had also denied of assessee s name in its records. If the assessee failed to prove the genuineness of the transaction carried by it, there lay no burden on revenue to bring any further material after the very transaction was found bogus by taking accommodation entry only. A prayer, therefore, was made to uphold the decision taken by the authorities below. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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