9911796707
TMI Blog2017 (10) TMI 1413X X X X Extracts X X X X X X X X Extracts X X X X ..... rbed. Uncontrovertedly, no incriminating material was found, therefore, respectfully following the aforesaid decisions, this legal issue is decided in favour of the assessee. Bogus long term capital gains on sale of shares - relaince on statement of interested party -Held that:- The sale of shares by the assessee and getting the sale proceeds by cheque is not in dispute. The assessee got the shares demated in the BSE, which is also not in dispute. The source of investment in the shares, as mentioned earlier, in earlier paras of this order is also explained by the assessee. Under these circumstances, it is an accepted principle of law that documentary evidence has to give precedence over the oral statement unless and until it is corroborated with documentary evidence. The whole case of the Revenue is based upon the statements, which is not corroborated with facts. Thus, we are of the view that addition cannot be sustained merely on the basis of statement ignoring the documentary evidences brought on record by the assessee. Both the directors of the broker, M/s. DPS Shares & Securities have stated that the alleged accommodation entries have been issued by them on the instructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition but on penalty also. - Assessee appeal allowed. - ITA NOs.1422 & 1423/Mum/2010, ITA NO.4655/Mum/2012, ITA NO.3479/Mum/2014 - - - Dated:- 3-10-2017 - Shri Joginder Singh, Judicial Member And Shri N.K. Pradhan, Accountant Member For the Appellant : Shri H.N.Singh CIT-DR Shri Rajat Mittal -DR For the Respondent : Shri Sashi Tulsian ORDER Per Joginder Singh (Judicial Member) This bunch of four appeals out of which the assessee is aggrieved for Assessment Year 2005-06 and 2006-07, whereas, in the appeals of the Revenue deleting the penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) has been challenged. First, we shall take up the appeal of the assessee for Assessment Year 2005-06 (ITA No.1422/Mum/2010), wherein, the assessee has filed application under Rule 11 of the Appellate Tribunal Rules 1963 by placing reliance upon the decision from Hon'ble Apex Court in the case of NTPC Ltd. vs CIT 229 ITR 383 (SC), which was followed by Special Bench of the Tribunal in the case of All cargo Global Logistics Ltd. vs DCIT (ITA Nos.5018 to 5022 and 5059/Mum/2010, challenging the confirmation of addition of ₹ 69,07,803/- made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and Securities Pvt. Ltd. to the effect that these transactions were not part of the official account and only accommodation entries were provided. On the basis of this statement, the Ld. Assessing Officer was of the view that the assessee obtained artificial capital gains by manipulating share transactions. However, the documents/ papers found and seized during the course of search did not corroborate the conclusion arrived at by the Officers that the transaction is shares of M/s Robinson Impex India Ltd. were not genuine. However, the Ld. Assessing Officer made the addition and the First Appellate Authority confirmed the same. 2.1. So far as, the issue of legality and consequent addition u/s 153A of the Act is concerned, we note that the assessee filed its return of income u/s 139(1) of the Act on 12/08/2005. The Department, in terms of section 143(2) of the Act has an option to peak up the proceeding by issuance of notice. However, no such notice was issued by the Ld. Assessing Officer. At the time of search on 18/01/2007, the proceedings for the impugned assessment year had become final as the period prescribed for issuance of notice u/s 143(2) had already expired. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix assessment years while the 2nd proviso states that the assessment or reassessment relating to the said six assessment years pending on the date of initiation of the search u/s. 132 of the Act shall abate . Therefore, in case where assessment has been abated the Assessing Officer can make addition even if no incriminating material has been found during the course of search. It thus follows that assessment or reassessments which are not pending (concluded) on the date of initiation of search shall not abate. Therefore when there is no abatement the AO can frame the assessment u/s. 153A of the Act only on the basis of incriminating material found during the course of search. In this respect it would be useful to take note of the following facts in the case of the assessee for the year under consideration. The relevant dates are summarized hereunder:- Sr. No. Particulars A.Y. 2005-06 1. Date of search 18/01/2007 2. Original return of income was filed on 12/08/2005 3. Order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 4. We first take up the issue relating to legal validity of addition made under section 153A of the Act because this is a basic issue having a bearing on outcome of the appeal. The assessee had raised the legal dispute before CIT(A). It was submitted that under the provisions of section 153A, in case, there was a search conducted in case of the assessee the AO shall assess or reassess the total income of six assessment years immediately preceding assessment year relevant to the previous year in which the search was conducted. The section also provides that assessment or reassessment relating to the said six assessment years pending on the date of initiation of search would abate. In the present case, it was pointed out, that assessment had been processed under section 143(1) and no notice under section 143(2) had been issued. Therefore, assessment had become final and was not pending and therefore, there was no question of abatement. In such a case, no addition could be made unless there was some material found during the course of search. Since no material was found during the course of search, no addition could be made legally under section 153A of the Act in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal jurisdiction as well as jurisdiction conferred on him under section 153A for which assessments shall be made for each of the six assessment years separately. b. In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search . 2.5. It is further noted that the Hon'ble Jurisdictional High Court of Bombay approved the decision of the Special Bench of the Tribunal vide order dated 21/04/2015 (Page Nos. 237-268 of the Paper Book II). The relevant portion of this order is reproduced hereunder:- 29. We are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only in relation to the legality and validity of the order of the Commissioner under section 263 of the IT Act. Had that been th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question. 31. We, therefore, hold that the Special Bench's understanding of the legal provision is not perverse nor does it suffer from any error of law apparent on the face of the record. 2.6. Similarly, on identical facts/issue, reliance can be placed upon the following judicial pronouncements:- (I) In the case of Nikki Agarwal v ACIT in ITA No 879/M/2011, the Hon'ble ITAT, Mumbai Bench (Page No. 278-295 of the Paper Book-II) held as under:- The following grounds of appeal were raised by the assessee in C.O. No 204/M/2013: 1. The Ld CIT (A) erred in law and facts in holding that the AO was empowered to make additions in the order passed u/s 153A of the Act in respect of completed assessment even in the absence of incriminating material found as a result of search. 2. The ACIT erred in law and as well as in the facts in making ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd, Supra, we have no difficulty in (i) upholding the issue of notice u/s 153A of the Act and (2) in disapproving the making of the impugned additions u/s 68 and 14A of the Act, which are not backed by the incriminating materials. In the absence of incriminating material, the role of the AO is only to reiterate the returned income filed in response to the notice u/s 153A of the Act. Accordingly, in substance, the common legal issue raised in the grounds for both the appeals of the assessee ( ITA NO 3389 3390/M/2011) is allowed. 7. From the above, it is evident that the arguments relating to the validity of the notice u/s 153 are disapproved. Consequently, we confirm the validity of the notice issued u/s 153A of the Act. However, considering the judgment of the Rajasthan High Court judgment in the case of Jai Steel (India) Ltd and other orders of the Tribunal (supra), we are of the opinion that the additions made by the AO in the absence of any incriminating material are not sustainable. Accordingly, additions are deleted and the ground nos. 2 raised by the assessee are allowed. 8. In the result, Cross Objection of the assessee is allowed. (III) In another case of B. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g . (IV) In another significant decision, the Mumbai Bench of the Tribunal in ACIT vs Pratibha Industries Ltd. (141 ITD 151) made an elaborate discussion by explaining the scope of the provision (Page no 312-354 of the Paper Book) and held as under:- 50. We find there is complete disharmony in the circumstance, because, the Act allows six assessments years to be open vide section 153A for being assessed or reassessed to ascertain total income, therefore, the AO is bound to pass an order sunder section 153A read with 143(3), which, according the Anil Kumar Bhatia (supra), Such determination in the orders passed under section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income . Therefore, the AO, accordingly has to stop short in these proceedings and restrict himself to the income already determined/assessed in the already concluded proceedings for the year(s), whether under section 143(1) or 143(3). Thus it is a case of valid notice under section 153A, with no undisclosed income to be clubbed with income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. On merits, the assessee has challenged the addition made on account of sale proceeds of shares under section 68 of the Income Tax Act instead of assessing the net capital gains earned thereon. 4. The additional ground so raised by the assessee is purely legal. Keeping in view the decision of Hon ble Supreme Court in the cases of National Thermal Power Corporation, 229 ITR 383 and Jute Corporation of India Ltd., 187 ITR 688, we accept the additional ground which is purely legal in nature for adjudication. 5. Rival contentions have been heard and records perused. Facts in brief are that the assessee is an individual earning income from salary, business, capital gains and other sources. He is an investor in shares and securities and also invests through initial public offer (IPO) or through secondary market. All gains arising from the same are offered by him as long term or short term capital gains depending on the period of holding and taxes are paid as per provisions of law. Search and seizure operations u/s 132(1) of the Income-tax Act, 1961 were carried out in premises of the assessee on the allegation that the assessee obtained artiflcial capital gain by manip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn was accepted u/s 143(1) on 31.03.2004 31.03.2005 N.A. 03.08.2006 4 Order passed u/s 143(3) No Order No Order 26.12.2006 No Order 5 Due date for issue of notice u/s143(2) for framing assessment u/s 143(3) 31.07.2003 30.09.2004 N.A. 31.08.2006 6 Status of Assessment on the date of search Concluded/Not Pending Concluded/Not Pending Concluded/Not Pending Concluded/Not Pending 7. Reliance was placed on the the decision of Mumbai Special Bench in the case of All Cargo Global Logistics Ltd vs Deputy Commissioner of Income-tax, Central Circle-44, Mumbai reported at 137 ITD 287. The relevant extract of the decision is as under: Thus, question raised before the Special Bench No. 1 is answered as under: a. In assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as above with regard to the ambit and scope of the powers conferred under section 153A of' the Act. Since we are not required to trace out the history and we can do nothing better than to reproduce the observations and conclusions as above that we are not repeating the same. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resort ing to those provisions, but even while exercising the power can he exercised where a search is initiated under sect ion 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st March, 2003. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words search and requisition appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of LMJ International Ltd. 119 TTJ 214 wherein it was held that where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. Items of regular assessment cannot be added back in the proceedings under s.153C when no incriminating documents were found in respect of the disallowed amounts in search proceedings. 11. In view of the above proposition of law, it was contended by the Ld. A.R. that since no incriminating material or evidence was found in course of search at the assessee s premises to support the AO s contention that impugned transactions in shares of various companies were not genuine, the addition made under section 153A has no legs to stand. 12. On the other hand, the Ld. D.R. vehemently argued that during the course of search, it was gathered that assessee had obtained artificial capital gain by way of share transaction of various stock companies. He further contended that the director of such company had also admitted in his statement that they have issued bogus accommodation bills for facilitating capital gain to the ultimate beneficiaries and for which they have not hande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years pending on the date of initiation of search under 132 or requisition under section 132A as the case may be shall abate. 15. We have considered the rival contentions and also deliberated on the judicial pronouncements referred by lower authorities in their respective order as well as cited by Ld. A.R. and D.R. during the course before us, in the context of factual matrix of the instant cases before us. From the record, we found that a search was carried out under section 132(1) on the assessee s premises on 18.01.07 on the allegation that assessee obtained artificial capital gains. However, nowhere in the assessment order the AO has stated any incriminating document, paper or evidence found during search in allegation of bogus capital gain. However, on the basis of statement of director of the companies from whom assessee has earned capital gain, the AO has made addition by declining assessee s claim of capital gain. The assessee had already filed income tax returns for all the assessment years under consideration showing the capital gains on impugned sale of shares and accepted u/s 143(l) of the Act for A.Y. 2002-03, 2003-04 and 2005-06 and u/s 143(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since no incriminating material was found during search, the addition so made was unjustified. Our view also find support in the case of Gurinder Singh Baba (supra), Pruthvi Industries 141 ITD 151, V.R. Machine Tools Pvt. Ltd. (ITA No.4174 to 4177/Mum/2013), Zeenat P Sanghvi (ITA No.8026/Mum/2010) order dated 19/12/2014 and Jignesh P. Shah (ITA No.1553 and 3173/Mum/2010) order dated 13/02/2015 along with the decision of the Coordinate Bench in the case of LMU International Ltd. (119 TTJ 214). The sum and substance and the ratio laid down in the aforesaid cases is that, where no incriminating material is found during the course of search relating to any Assessment Years, then the assessment for such year cannot be disturbed. Uncontrovertedly, no incriminating material was found, therefore, respectfully following the aforesaid decisions, this legal issue is decided in favour of the assessee. 3. So far as, the merits of the appeal is concerned, since, the issue is common for Assessment Year 2005-06 and 2006-07, it can be disposed off by this common order. The facts, in brief, are that originally for both the years under consideration, the details are summarized as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole issue revolves around whether, the impugned amounts of ₹ 65,78,860/- (Assessment Year 2005-06) and ₹ 15,23,130 (Assessment Year 2006-07), being sale proceeds of shares of M/s Robinson Impex Ltd. can be treated as unexplained cash credit u/s 68 of the Act. The assessee purchased 50000 shares of M/s Robinson World Wide Trade Ltd. (formerly known as M/s Robinson Impex (India) Ltd.) for ₹ 76,052/- through M/s DPS shares and Securities Pvt. Ltd. (BSE Clearing No. 151, SEBI Registration No. INB010986539), the copies of bill for the purchases as well as the ledger copy of broker are available at pages 121 to 123 of the paper book. The purchase of these shares was duly reflected by the assessee in the balance sheet for Assessment Year 2004-05, filed along with return of income of the said year. The copy of the return of income and list of investment for Assessment Year 2004-05 was filed with the income tax return reflecting 50000 shares of M/s Robinson Impex Ltd. are available at pages 124 to 129 of the paper book. The Bench asked the ld. counsel for the assessee with respect to source of the purchase cost of shares, it was explained that cost was settled against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he paper book). It is noted that out of these 50000 shares (purchase in Financial Year 2003-04) 43000 shares were sold on different dates during relevant Financial Year 2004-05 and balance 7000 shares were sold on different dates during Financial Year 2005-06 relevant to Assessment Year 2006-07. All these shares (50000) were sold through M/s Pruthvi Brokers and Shares Holdings Pvt. Ltd. resulting in Long Term Capital Gain of ₹ 65,135,500/- and ₹ 15,12,490/-. The details of which are summarized hereunder:- Date Broker s Name Purchase (Qty.) Purchase (Amt.) Sale (Qty) Sale (Amt.) 04.04.2003 DPS Shares Securities Pvt. Ltd. 43,000 65,360 Sale of Shares in A.Y. 2006-07 04.04.2003 Pruthvi Brokers Shareholders Pvt. Ltd. 1,000 1,94,088 Pruthvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 4,37,180 01.06.2005 Pruthvi Brokers Shareholders Pvt. Ltd 3,000 6,53,340 06.06.2005 Pruthvi Brokers Shareholders Pvt. Ltd. 1,000 2,16,030 Total 7,000 10,640 7000 15,23,130 Long Term Capital Gain 15,12,490 3.3. M/s Pruthvi Brokers and Shares Holdings Pvt. Ltd. is listed on Bombay Stock Exchange (BSE) under scrip code no 532154. The broker is assessed to income tax having PAN-AABCP3901B, SEBI registration No.INB011059830, clearing no.529, Service Tax No.AABCP3901BST001. Copies of sale bills issued by the broker are available at pages 138.1 to 138.15 (Assessment Year 2005-06) and 138.18 to 138.21 (Assessment Year 2006-07). The ledger copy in the paper books of Pruthvi Brokers and Shares Holdings Pvt. Ltd and confirmation of sale from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties from whom the purchase and sales of share transactions were made and prove the genuineness of transactions, particularly purchase party M/s DPS Share Securities Pvt. Ltd. (Para 4.1 of the Assessment Order). II. The assessee has not been able to prove from whom it has purchased the shares of M/s Robinson Worldwide. (Para 10.2.1 of the Assessment Order). III. The assessee has not been able to prove from whom it has received physical delivery of shares of M/s Robinson Worldwide in light of the statement of M/s DPS Share Securities Pvt Ltd (Para 10.2.2 of the Assessment Order). IV. It has not been able to prove with documentary evidence the actual date on which it has received physical delivery of shares since the de-mat delivery of shares has been received near about the date of sale of shares (Para 10.2.3 of the Assessment Order) V. The plea of the assessee that around 4-5 years back it was not mandatory to conduct transactions on the BSE is an afterthought. Moreover the assessee has not filed any documentary evidences to prove whether it had received any such permission from BSE for off market transactions (Para 10.2.4 of the Assessment Order) VI. En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldwide Trade, were not reflected. 3.5. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, now question arises whether the sale proceeds of shares of Robinson Worlwide Ltd. can be treated as unexplained cash credit u/s 68 of the Act for the years under consideration, it seems that the whole addition was made by the Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeal) is based upon the statement of the Directors of M/s DPS Shares Securities Pvt. Ltd., the Ld. Assessing Officer has also considered the statement of Shri Sujat C. Shah u/s 131 of the Act dated 18/01/2007 (page-19 of the assessment order), which is reproduced hereunder for analysis:- Q. 1. Please identify yourself Please also confirm that an oath has been administered on you and the consequences of giving a false statement is explained to you. Ans. I am Sujal Chandrakant Shah, S/o. Mr. Chandrakant K. Shah. I confirm that an oath has been administered on me and the consequences of giving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was done on the BSE floor. Q. 11 Whether the shares were listed on the BSE? Ans. These shares were not traded on the floor on BSE, as these shares were not listed on BSE. In the year 2003-04 and 2004-05 (F. Y), this companies were not listed in BSE. But the said companies were listed in BSE in 2005-06. I want to further clariji that when we issued the purchase bill at that time, the company was not listed in BSE. Q. 12 Please state, the name of the companies, for which you have issued bogus bills, as per the requirement of Shri Niaresh Saboo and Shri Naresh Jain or any other person. Ans. We have issued the bogus bills on the instructions of Mr. Naresh Jain and Naresh Saboo in only one company, which is M/s. Robinson Worldwide Ltd. Apart from this, I have issued some bills in M/s. Fasttract Entertainment Ltd. as per the directions from Mr. Sirish C. Shah, having address at Meghdoot Apt., Fourth Floor, Marine Drive, Mumbai. Q. 13 What is the quantum of shares of M/s. Robinson Worldwide Ltd and Ws. Fasttract Entertainment around 8-10 lac shares. Ans. As this matter is old, I don't exactly remember the quantum, but as per my memory, in M/s. Robinson Worldwide Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also explained by the assessee. Under these circumstances, it is an accepted principle of law that documentary evidence has to give precedence over the oral statement unless and until it is corroborated with documentary evidence. The whole case of the Revenue is based upon the statements, which is not corroborated with facts. Thus, we are of the view that addition cannot be sustained merely on the basis of statement ignoring the documentary evidences brought on record by the assessee. Our view finds support from the decision from Hon'ble jurisdictional High Court in the case of CIT vs Shri Om Prakash Jain ITXA no 1242 of 2008 (Born) where in the Hon'ble Bombay High Court has held as under (Page Nos 428-431 of the Paper Book -II). The relevant portion from the aforesaid order is reproduced hereunder:- 6. On behalf of the assessee, the learned counsel submits that when there was documentary evidence available, it was open to the learned Tribunal to come to the conclusion that the statement of the assessee which was retracted were given under duress or coercion. It is further submitted that in the case of Sanjay Jam, the Tribunal proceeded on the foot ing that the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to arrive at the figure of peak investment - Said paper falsifies the statement given at the time of search - No addition can be made merely on the basis of statement which is fully proved to be incorrect Thus there was no justification for making any addition on estimate basis. 3.10. If the aforesaid judicial pronouncements are kept in juxtaposition with the facts of the present appeal and analyzed, It is to be noted that both the directors of the broker, M/s. DPS Shares Securities have stated that the alleged accommodation entries have been issued by them on the instructions of third persons, Shri Naresh Saboo and Slui Shirish C. Shah. These statements are general in nature and no reference has been made to the assessee at all. Further, in his statement, Shri Pratik C. Shah has stated that he had not charged any service tax on the said transactions and has not paid service tax to the government. This shows that the broker, M/s. DPS Shares 8z Securities is an interested party and therefore no reliance can be placed on their statement. At this juncture, it would also be relevant to refer to the judgment of the Hon'ble Mumbai Tribunal in the case of Sri Bhagvandas Gordhand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee from MIs. Robinson Worldwide Trade Limited. The shares of the assessee were consolidated and the assessee was issued Jumbo share certificate. Thereafter, the said shares were dematerialized to de-mat account of the assessee held with Oriental Bank of Commerce (formerly known as Global Trust Bank). Such de-mated shares were sold through M/s. Pruthvi Brokers Shareholdings Pvt. Ltd. as can be seen from the sale bills submitted by the assessee. Further, the payments for the sale of said shares have been received by the assessee through account payee cheques. The Assessing Officer has further relied on the so-called cross-examination conducted in the case of the assessee. First and foremost, it is submitted by the assessee that directors of the broker, M/s. DPS Shares Securities Pvt. Ltd. have nowhere specifically stated in their respective statements that they have issued accommodation entries to the assessee. There is no live link between the statement and the assessee. They have simply stated that they issued accommodation entries on instructions of certain third parties. Further, no statements of such third parties have been confronted to the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1420/Mum/2010 (Page No. 419-427 of the Paperbook-II) dated 03/02/2016. It is worth mentioning that the Assessing Officer as well as the Ld. CIT(A) has not doubted the sales made by the assessee through d-mat account. It is a fundamental principle that there cannot be a sale without a purchase. Therefore, the fact of purchase made by the assessee cannot be doubted as the same has ultimately been resulted in conversion of shares in electronic form and credit of the same in the D- mat account. Once the shares are credited to the D-mat Account sales are effected through the stock exchange. The Assessing Officer has not brought out anything to remotely suggest that the sales made by the assessee are not genuine. In such a situation, reliance can be placed on the judgement of Hon 'Me Jharkhand High Court in the case of CIT vs. Arun Kumar Agarwal (HUF) Others in Tax Appeal No. 4 of 2011 dated 13.07.2012 (Page No. 499-508 of the Paperbook-II) wherein the Hon'ble High Court held as under: 10. We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enquiry repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,054/- and in the annexure showing the details of investment in MIs Robinson Worldwide Trade Ltd shares have been included at 15500 shares amounting to ₹ 26810.54. This purchase has to be treated as accepted because this balance sheet was filed in A. Y 2004-05 and no adverse inference has been taken in that year. These documents are available at pages 24 to 26 of the paper book The assessee had also filed the contract note for sale and purchase of shares generating speculating profit filed at pages 36 37 of the paper book. The contract note for purchase of 15500 shares of M/s Robinson Worldwide Trade Ltd from M/s. DPS Shares Securities Pvt. Ltd has been filed at page-38 of the paper book and the particulars read as under: The above particulars would not indicate that it was a bogus transaction. In any case, assessee has no need to know whether the transaction was bogus or not because even invoice has been issued by M/s. DPS Shares Securities Pvt. Ltd for purchase of these shares, copy of which is placed at page 39 of the paper book and delivery was also given which is at page 40 of the paper book Later on assessee filed an application for transfer of these shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the head capital gains. 3.15. In another case, the Mumbai Bench of the Tribunal, Late Smt. Kanchanben J. Shah vs. ITO, the ITA No. 6544/Mum/2011 dated 18/02/2016, (Page No 527- 540 of the Paperbook-II) has held as under: 4. Aggrieved by the orders dated 16. 08.201] of the CIT(A), the assessee filed appeal with the Tribunal. The Ld. Counsel for the assessee reiterated the submissions as made before the authorities below which are not repeated for sake of brevity. The Ld. Counsel for the assessee stated before us that the 10000 shares of Robinson Impex (India) Limited was purchased on 04-04-2003 vide physical delivery from DPS Shares and Securities Private Limited who are SEBI approved registered broker with BSE which are duly evidenced by contract notes issued by the said broker which is placed at page 29-30 paper bookfiled before the Tribunal. The id. Counsel stated before us said shares were transferred in favour of the assessee on 30-04-2003 vide share certificate issued by the company which is placed at page 30 of the paper book filed with the Tribunal. The Id. Counsel stated before us that payment of the said 10000 shares of Robinson Impex (India) Limited aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited has been accepted to be income assessable under the head 'long term capital gain'. The Ld. Counsel has also filed a tabulation showing similarity of facts between the case of the assessee and that of Jagdish H Shah(supra). The tabulation furnished by the assessee depicts the similarity in scrip involved, assessment year involved, the broker involved, enquiries by the AO from BSE , etc. . Apart there-from, it has also been pointed out that the same AO as well as the same CIT(A) have rendered the decisions on the same dates in the case of Jagdish H Shah(supra) as well as the assessee. Under these circumstances, it has been pointed out that the impugned orders of the lower authorities are unsustainable and that income from sale of the shares of Robinson Impex (India) Limited be accepted as long term capital gain as returned by the assessee. The reliance is also placed on the similar case on identical facts in the case of Nikunj J Shah v. ITO in ITA no. 6545/Mum/2011 whereby Mumbai Tribunal vide orders dated 31/07/2015 has accepted the income from sale of shares of Robinson Impex (India) Limited as income assessable under the head long term capital gain as returned. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely/or some discrepancies or adverse report by the SEBI It is found that the A0 has not brought out any material to establish the final outcome of the enquiry initiated by SEBI and specific shares purchased by the assessee in course of making investment. Therefore, it is not possible to take any adverse view on the basis of mere suspicion that SEBI had initiated some action and found the brokers violating the rules of SEBI The CIT(A) is further correct in holding that notwithstanding the observations of the AO that the purchases and sales of shares were made with reference to penny stocks which were purchased at a nominal price and sold at a very high price, since all the sale transactions were made through stock exchanges there is hardly any scopes for price manipulation, it is all the more so, since the assessee has paid STT. Even with regard to the observation of the assessing officer that the assessee before purchasing the shares the assessees did not take into account the financial standing of the companies, the CIT(A) was correct is observing that the share market is generally sentiment driven and the assessees cannot remain static. Even the absence of experience of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained that the transactions entered by him were genuine. Thus, the mere statement is not enough to fasten liability upon the assessee when the assessee is denying allegation contained in the statement and there is no corroboration of the statement, whereas, the stand of the assessee is corroborated with documentary evidence, which has not been disapproved by the Revenue, because, in the present case, every transaction of purchase and sale of shares of M/s. Robinson Impex Ltd has been duly accounted, documented and supported by documentary evidences. Further, the search action in the case of the ass essee has also not resulted in discovery of any evidence whatsoever to prove that the impugned transactions were not genuine. Thus, apart from an uncorroborated statement of third party, the Department has no evidence to dislodge the claim of the assessee. 3.18. It is also noted that the impugned additions were confirmed by the Ld. Commissioner of Income Tax (Appeal) on the following grounds. (i) The assessee was allegedly part of some penny stock scam involving booking of bogus capital gains detected by the Investigation Wing. (ii) The director of M/s. DPS Shares Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible evidence. The observation made by the Ld. Commissioner of Income Tax (Appeal), while affirming the additions is reproduced hereunder:- It is held that section 68 is squarely applicable in this case and since the appellant neither satisfactorily explained the purchases of penny stock nor the sales thereof the nature and source of the income credited to the books of account remain not properly explained. Therefore the alleged capital gain of ₹ 65,78,860/- is chargeable to tax u/s 68 of the Act. Whereas the Ld. Assessing Officer has charged such sum of ₹ 65,78,860/- as unexplained money in possession of the appellant, the same is confirmed as unexplained cash credit u/s 68 of the Act. 3.20. The above observation with respect to capital gain is factually incorrect, because, it is the sum total of sale proceeds received on sale of 50,000 shares of Robinson Impex (India) Ltd. The long term capital gains claimed by the assessee is ₹ 65,13,500/- for A.Y. 2005-06 and ₹ 15,12,490 for A.Y. 2006-07. Thus, the Ld. CIT(A) has treated the sale proceeds received on sale of shares of Robinson as unexplained cash credit u/s 68 of the Income-tax Act, 1961 for A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular source of income and a distinct PAN No. AABCP390113, its creditworthiness as a share broker is well established. Further, the payments for sale proceeds being made by M/s. Pruthvi Brokers Shareholdings Pvt. Ltd through regular banking channels, the pool account of M/s. Pruthvi Brokers Shareholdings Pvt. Ltd in Oriental Bank of Commerce (pages 141 to 152 for A.Y. 2005-06 and pages 167 to 171 for A. F. 2006-07 of the Paper Book) showing the impugned sale on behalf of the appellant and copy of Trade files received by M/s. Pruthvi Brokers Shareholdings Pvt. Ltd from the BSE (Copy enclosed at pages 153 to 166 for A. F. 2005-06 and pages 172 to 175 for A. Y. 2006-07 of the Paper Book) showing sale of Robinson shares all go to prove the capacity of M/s. Pruthvi Brokers Shareholdings Pvt. Ltd to conduct the sale transactions on behalf of the appellant.. Further, the ledger copy of the appellant in the books of M/s. Pruthvi Brokers (pages 138.16 to 138.17 for A. Y. 2005-06 and pages 138.22 to 138.25 for A. Y. 2006- 07 of the Paper Book) also proves its capacity to conduct the impugned share transactions on behalf of the assessee. Thus, the capacity to conduct the impugned sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the genuineness of purchase of 50,000 shares of M/s. Robinson Impex Ltd in A.Y. 2004-05 is concerned, we have already dealt with this issue in earlier paras of this order. The time limit for passing intimation u/s 143(1) of the Act was 31/03/2006 and for issuing notice u/s 143(2) of the Act was 31/08/2005 for making regular assessment. Thus the Assessing Officer had neither issued any notice u/s 143(2) of Act nor made any intimation uls 143(1) of the Act. Therefore, it is established that the concerned Assessing Officer accepted the purchase of 50,000 shares of M/s. Robinson Impex Ltd during the said year against disclosed sources. However, this shows that Assessing Officer duly accepted the genuineness of purchase of 50,000 shares of M/s. Robinson Worldwide Trade Ltd by the appellant during F.Y. 2003-04 (relevant to A.Y. 2004-05) against explained sources. Further, even after the search operation u/s 132 of the Act assessment u/s 153A of the Act for A.Y. 2004-05 was completed by the AO on 24/12/2008 at the returned figure thus accepting the purchase of 50,000 shares of Robinson against sale proceeds of PAN Packaging. Copy of the said order u/s 153A of the Act for A.Y. 2004- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of the assessee, the brokers may not have carried out my transaction through the stock exchange and it were off market transactions and intimation for which was not given to the stock exchange by the broker. But this is not sufficient to conclude that the transaction of purchase of shares was done by the assessee with the said brokers were not genuine transaction as no incriminating document or evidence indicating any doubtfulness in the bona-fides of the share transaction were found in the course of search. 3.27. It is noteworthy that on the date of purchase of shares of M/s. Robinson Impex India Ltd. the said shares were not listed in the BSE. This also explains the obvious reason behind the impugned purchase transactions being off-market. However, subsequently, on being listed, the sales of the said shares were carried out through the BSE and the BSE confirmed the sale transactions of the said shares of M/s. Robinson Impex Ltd under its client code No. D003. Even otherwise, it is pertinent to note here that the purported statement of Shri Pratik C. Shah, director of M/s. DPS Shares Securities Pvt. Ltd., being the sole so-called evidence so emphatically relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. Assessing Officer that on sales of Robinson shares the delivery was given to the pool account of the said MIs. Pruthvi Brokers Shareholdings Pvt. Ltd. and from this pool account the impugned shares of Robinson were delivered to the Bombay Stock Exchange, The BSE had confirmed the sale transactions of the said Robinson scrip 3.28. Thus, the Assessing Officer as well as the Ld. CIT(A) have indirectly accepted that the amount of ₹ 65,78,860/- credited in the bank account of the appellant represented the sale proceeds of shares of Robinson through identified source. Accordingly, there was no doubt regarding the nature and source of the said amount, consequently, no addition was called for u/s 68 of the Act, for A.Y. 2005-06 and A.Y. 2006-07. As such, even if for argument's sake, it is assumed without accepting that the purchase of 50,000 shares of Robinson on 04/04/2003 for ₹ 76,052/- against sale proceeds of PAN Packaging shares remained unexplained, the said aspect pertained to A.Y. 2004- 05 and had nothing to do with the assessment for A.Y. 2005-06 and A.Y. 2006-07. The undisputed sale of 50,000 shares of Robinson for ₹ 65,78,860/- and ₹ 15,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities Ltd. It is strange that the AO has made the addition under section 68 of the Act treating the entire sale proceeds of the 'said shares' received by the assessee through regular banking channels from stock broker registered with SEB1, M/s. Khambatta Securities Ltd, which facts have been confirmed by the said stock broker. In our considered view, in these factual circumstances, the assessee has discharged the onus required under section 68 of the Act as she has established the identity of the payer, source of funds received on sale of the same shares and the genuineness of the transaction. 3.4.3 The addition under section 68 of the Act in the case on hand, it appears, has been made only because the AO presumed the purchases of the 'said shares' of M/s. Shukun Constructions Ltd. were not made on the date as disclosed by the assessee, but was backdated and an arranged transaction, and not because there was any irregularity in the sale of the said shares. We find from the material on record that the purchases of the said shares were duly disclosed under the head investment in the audited Balance Sheet as on 31.03.2004 relevant to A. Y 2004-05. In this context w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain from sale of shares of company 'A' - Company listed on Delhi Stock Exchange - No material brought on record by the AO to show that assessee had surreptitiously introduced his unaccounted money in guise of sale proceeds - Sale proceeds could not be added under s. 68. The coordinate Bench of the Tribunal in the case of ACIT Vs. Claridges Investment Finance (P) Ltd. (2007) 18 SOT 390 (Mumbai) (Pages 644-706 of the Paper Book-11) held as under: Business Income - Business Loss - Assessee a share broker had share transactions with three Kolkata based brokers - Assessee 's transactions are supported by movement of shares as reflected in demat account, movement of money as reflected in bank account, entries in the books of account of assessee, prevalent market quotations of CSE, contract notes and delivery bills issued by Kolkata brokers and their statements in response to enquiries made by the AO and assessee had shown net profit of ₹ 16.18 crores - The conclusions of the AO that these transactions were shown only in order to generate loss or profit and were not genuine share transactions could not be reached for reason only of deficiencies and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus to prove the identity and the creditworthiness of the creditors and also that the loan transactions are genuine. In the absence of any material to disbelieve the evidence filed by the assessee, no case of addition for unexplained credits is made out by the Revenue and hence the addition is deleted. In the light of the foregoing discussion and the judicial pronouncements, mentioned hereinabove, we find that the purchase and sale of shares outside the floor of stock exchange is not an unlawful activity meaning thereby off market transactions are not illegal unless and until contrary material is brought on record. The assessee in the present appeal, got the shares de-mated on the Bombay Stock Exchange and the sale proceeds were received through banking channel, therefore, so far as, purchase of share is concerned (off market transaction), the details cannot be provided by the Stock Exchange and such stock Exchange can merely provide the details of sale. Therefore, there was no relevance in seeking the details of purchase transactions which were entered into between the parties outside the floor of the stock exchange. Therefore, the reliance placed by the Ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Colaba, remained unexplained. The sale proceeds of shares accounted by the assessee has been treated by the assessing authority as unexplained money. The sale proceeds of shares was ₹ 1,41,08,484. In the above circumstances, the said amount has been added by the assessing authority under section 69 of the Income-tax Act, 1961. Further as a consequence of the above finding, the Assessing Officer declined the claim of deduction made by the assessee under section 54E. In effect, the amount invested by the assessee in the purchase of residential flat at Colaba, Mumbai has been treated by the assessing authority as unexplained investment and further perpetuated by the refusal to grant deduction claimed by the assessee under section 54E, which ofcourse is only an inevitable consequence. There were another two credits in the bank statement of the assessee's minor son which totalled to ₹ 6,61,063. The Assessing Officer has added this amount also as unexplained investment under section 69. Another deposit of ₹ 2 lakhs was in the account of assessee's minor daughter. According to the assessee, the said amount was gifted to his daughter by his co-brother who is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he details of which were made available to the revenue authorities with evidence and also reflected in the return of income. 3. That the revenue authorities further erred in not having allowed deduction under section 54F in spite of the fact that out of the sale proceeds of shares amounting to ₹ 1,41,08,484 and office premises of ₹ 2,32,358, investment towards purchase of a flat was made and hence, in terms of section 54F of the Act, the assessee was entitled to deduction under that section. 4. That the revenue authorities acted capriciously in having disbelieved the source for purchase of shares out of long-term capital gains and agricultural income and wrongly invoked the provisions of section 69 of the Act ignoring the explanation and details of year-wise income from agriculture which was used for purchase of shares and in support of which cash book was filed before them and hence, the allegation of non-genuine transaction is baseless. 5. That the Assessing Officer and the Ld. CIT(A) grossly erred in having ignored the confirmations of brokers/sub-brokers/their assistant in respect of share transactions and invoked provisions of section 69 on mere suspicion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The purchases were made during the period from February to August 1999 i.e., during the previous year periods relevant to the assessment years 1999-2000 and 2000-01. All the 2,14,600 shares were sold by the assessee during the period April 2000 to February 2001, which is the previous year relevant to the assessment year under appeal. The shares were sold through M/s. Richmond Securities Pvt. Ltd., and M/s. Scorpio Management. The assessing authority made enquiries regarding the bona fides of the purchase and sale of those shares. He had issued notice and summons to the concerned parties to explain the nature of transactions they had with the assessee. The Assessing Officer has discussed the details of the enquiries conducted by him in a detailed manner in the assessment order. As a result of the enquiries, Assessing Officer sought to disbelieve the purchase of shares recorded by the assessee for the following reasons : (I)That Radha Ashok, the Broker has informed that he never sold any shares to the assessee. (II)That Sandeep D. Shah, proprietor of Rushab Investments stated in his statement recorded under section 131 that he never sold any shares to the assessee. (III)Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, particularly when all the shares transacted are quoted shares. When the share transaction is not through Stock Exchange, greater responsibility is there with the appellant and more particularly when it is not conducted through a registered broker. If such off-market transactions are recognized, then what is the necessity of conducting transactions through Stock Exchange ? What is the need of the regulatory authority like SEBI. On appreciation of the evidence collected by the Assessing Officer, both the purchase and sales claimed to have been made by the appellant are found to be non-genuine. Hence, the addition made by the Assessing Officer on this account under section 69 of the Act is quite justified. It is, therefore, confirmed. 7.2 Regarding the next addition of ₹ 6,61,063, it was made under section 69 as unaccounted investment against the credits reflected in the bank account of the assessee's minor son, Master Pratik. In the course of assessment proceedings, the Assessing Officer has noticed that the assessee had shown a sum of ₹ 35,490 under the head 'Income from other sources'. This interest income came out of the bank account of assessee&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee regarding purchase and sale of shares, but also to be noted that no incriminating document or evidence indicating any doubtfulness in the bona fides of the share transactions were found in the course of survey. It is the case of the learned counsel that survey was done by the department without any prior notice and almost surprisingly and therefore, what was found in the course of survey should be accepted on its face value. 8.4 That the assessee had submitted number of evidences before the assessing authority to prove the genuineness of the share transactions. The assessing authority had relied on the negative replies received from Bombay Stock Exchange, the National Stock Exchange and the Interconnected Stock Exchange of India to reject the explanations of the assessee without recognizaing the basic fact that those share transactions were off-market transactions and obviously there would be no records regarding those transactions with those stock exchanges. The assessing authority was making enquiries with those Stock Exchanges knowing that the enquiry results would be futile. Such negative answers cannot be used against the assessee as positive evidence. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Assessing Officer has erred in appreciating the statements given by Shri Satish Mandovara. Shri Satish Mandovara is the proprietor of M/s. Rushab Investments which is different from the other Rushab Investments referred to by the Assessing Officer. As the proprietor of M/s. Rushab Investments he has been filing returns of income. It was also stated by him that he got shares of the concerned companies transferred in the name of the assessee. The learned counsel further submitted that the above evidence proved beyond any reasonable doubt that the assessee had actually purchased and sold shares. 8.8 In fact, denial of Shri Sandeep D. Shah any transaction with the assessee, the learned counsel submitted that he had categorically stated that as Proprietor of M/s. Rushab Investments, the business was discon- tinued with effect from 1997, whereas, in fact the impugned shares were purchased by the assessee from M/s. Rushab Investments during the accounting years 1998-99 and 1999-2000. He explained that during this period Shri Satish Mandovara carried on the business in the name and style of M/s. Rushab Investments and he has categorically confirmed the sale of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compounded by the fact that the entire transactions were made outside Stock Exchange. They were all off-market transactions. When all the above facts are read together, it is, to be clearly seen that the assessee has made up a story regarding the purchase and sale of shares so as to make out a case of non-existing capital gains. 9.2 He stated that the off-market transactions as stated by the assessee was not proper. Radha Ashok, the Broker has confirmed in his statement before the assessing authority that he never sold any shares to the assessee. Shri Sandeep D. Shah, Proprietor of M/s. Rushab Investments made a similar statement before the assessing authority. Bills of Ami Securities were forged and unused bank bills were utilized by the assessee to give a true picture of transactions. The broker has been expelled from the Stock Exchange much before transactions took place. In the above circumstances, it is, to be seen that the assessee has failed to establish the identity as well as the creditworthiness of the brokers involved in the case. 9.3 The learned Commissioner further contended that it is clear from the statement of Mr. Mangesh Chokshi, Proprietor of M/s. Richmond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been declaring agricultural income in his returns of income for the assessment years from 1990-91 to 2001- 02. The total agricultural income returned by the assessee up to the assessment year 1999-2000 was at ₹ 7,57,883. The amount invested in the purchase of shares as on 31-3-1999 was ₹ 4,48,160. The cash available with the assessee by way of agricultural income was much higher than the investment made by the assessee in the purchase of shares as on 31-3-1999. After making the investments in the shares, the assessee had a surplus cash balance of ₹ 3,09,000 as on 1-4-1999. Thereafter, the assessee has further returned an agricultural income of ₹ 66,000 for the assessment year 2000-01. The amount invested in the purchase of shares in the year ending on 31-3-2000 was ₹ 2,57,020. Again the assessee had a cash balance thereof of ₹ 1,18,771. Therefore, it is, very clear that the investment made by the assessee in shares during the previous periods relevant to the assessment years 1999-2000 and 2000-01 was supported by cash generated out of agricultural income. The above agricultural income have been considered in the respective assessments. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the relevant period in which the assessee transacted in shares, persons like Radha Ashok and Sandeep D. Shah were not carrying on their business of brokers as in the manner they carried on the business in the past. Even their Stock Exchange Memberships were cancelled. It was Shri Satish Mandovara who was carrying on the business mainly for and on behalf of Shri Mangesh Chokshi, Director of M/s. Richmond Securities Pvt. Ltd. Those two persons have categorically admitted before the assessing authority that they had dealings with the assessee in respect of the share transactions. They have confirmed the transactions stated by the assessee that he had with them. These positive statements made before the assessing authority supported the case of the assessee. There is no force in the action of the assessing authority in relying on the negative statements of the other parties whose role during the relevant period was either irrelevant or insignificant. Therefore, in the facts and circumstances of the case, it is, our considered view that certain statements relied on by the assessing authority do not dilute the probative value of the statements given by other persons in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were also found recorded in the books of account. The department has no case that the survey was a staged enactment. A survey is always unexpected. So, it is not possible to presume that the assessee had collected certain fabricated documents and kept at his business premises so as to hoodwink the survey party to lead them to believe that the assessee had entered into share transactions. Atleast such an inference is not possible in law. The department has no defence against the forcible argument of the learned counsel that the survey conducted by the department has out and out upheld the contention of the assessee that he had purchased and sold shares. We find that this solitary evidence collected in the course of survey is sufficient to endorse the bona fides of the share transactions made by the assessee. 10.9 Therefore, in short on the basis of the internal evidences available with the assessee and the fact that the sale proceeds were collected through bank accounts and coupled with the external evidence of survey and statement of parties, we have to hold that the sale proceeds of ₹ 1,41,08,484 has been explained. Therefore, the said addition is deleted. 11. As we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee received the amount is not in dispute. It was neither the case of the Revenue that the shares in question were still lying with the assessee nor it was the case of the Revenue that the amount received by the assessee on sale of shares was more than what was declared by the assessee. It is also noted that the ratio laid down by the Tribunal in the case of Green Infra Ltd. vs. ITO (2013) 38 taxmann.com 253 (Mum) wherein the assessee collected share premium on allotment of shares of face value of ₹ 10/- each at a premium of ₹ 490/- per share. The assessee credited the said amount in the Balance Sheet under the head Share Premium Account by claiming that it was a capital receipt not exigible to tax. The learned Assessing Officer taxed the share premium under section 56(1) r.w.s. 68 of the Act as income from other sources. The question before the Bench was since the entire transaction relating to allotment of shares was done through banking channel and the assessee invested sale premium in its three subsidiary companies section 68 is not applicable and the case was decided in favour of the assessee. The Revenue challenged the decision before the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self makes no grievance of the identity of the subscribers. So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the Books of Accounts and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98% of the shares is held by IDFC Private Equity FundII which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings. (c) Mr.Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of ₹ 490/ per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of Section 68 of the Act and found on facts that it is not so hit. Therefore, Section 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 4. So far as, the addition of ₹ 3,28,943/- on account of payment of commission by the assessee for obtaining accommodation entry in respect of sale of shares through share broker (Assessment Year 2005-06) and identically ₹ 76,156/- for Assessment Year 2006-07, on account of alleged commission paid toward purchase of Long Term Capital Gains, is concerned, on the broad reasoning contained in the earlier paras of this order, while disposing off the alleged addition made u/s 68 of the Act, we find that the Ld. Assessing Officer added these impugned amounts, being 5% of ₹ 65,78,860/- (Assessment Year 2005-06) and ₹ 15,23,130/- (Assessment Year 2006-07) as unexplained money in possession of the assessee as commission (remuneration). As per the Ld. Assessing Officer the assessee must have paid these impugned amounts for engineering Long Term Capital gains on sale of shares of M/s Robinson Impex Pvt. Ltd., which was affirmed by the First Appellate Authority by making the following observation:- I have carefully and dispassionately considered the facts and circumstances of the case. I have already confirmed such findings given by the Ld. Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of 5% of the sale proceeds during A.Y. 2005-06 and A.Y. 2006-07 by way of alleged undisclosed remuneration does not arise. The Assessing Officer has only disputed the purchase of shares for ₹ 76,052/- against sale of shares proceeds of PAN Packaging during A.Y. 2004-05 on the basis of statement of director of M/s. DPS Shares Securities Pvt. Ltd. which, as explained earlier, has no relevance for disproving the sale transactions conducted through M/s. Pruthvi Brokers Shareholdings P. Ltd during A.Y. 2005-06 and A.Y.2006- 07. Further, the alleged statement of Shri Pratik Shah, being the sole so-called evidence relied upon by the Assessing Officer, also does not, in any manner hint at any such payment of unaccounted remuneration of 5% on sale proceeds by the assessee. The ratio laid down in S.F. Wadia-vs-ITO (19-ITD-306) that the burden of proving that the assessee has incurred any unexplained expenditure which is assessable u/s.69C of the I.T. Act is on the Department. Similar views have been taken in the cases of Yogeshwar Prasad (16-TTJ-175) Naren Singh Bhatti (40-TTJ-381) and Pradip C. Patel (58-TTJ-409). In the instant case, this burden has not been discharged. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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