9911796707
TMI Blog2019 (10) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... said person has not been allowed cross examination by assessee, even though various requests were made by assessee. As such, the transaction of the assessee was duly supported by relevant documentary evidences without there being any rebuttal by lower authorities; the addition made by the Assessing Officer by treating the LTCG as bogus is unsustainable Unexplained expenditure on commission - As transaction of long term capital gains derived by the assessee as genuine and as such, further addition made by the Assessing Officer on account of alleged commission is consequential and is also liable to be deleted - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 (38) in the return of income to the tune of ₹ 1,93,56, 813/-. The assessee in the course of assessment proceedings submitted complete set of evidences of purchase of shares made by the assessee along with sale contract notes together with bank statements and Demat statements before the AO evidencing the entire transaction being routed through regular disclosed bank statement of the assessee. The aforesaid details as submitted by assessee before lower authorities are tabulated as under: Particulars Date of Investment 25.03.2012 No. of Shares purchased 20000 Purchase price per share ₹ 10 per share Total purchase consideration paid ₹ 2,00,000/- Date of shares sold 11.03.2014 (6000 shares) 14.03.2014 (600 shares) 18.03.2014 (300 shares) 20.03.2014 (5000 shares) 20.03.2014 (5700 shares) 22.03.2014 (2400 shares) Sale Price per share ₹ 970.10 ₹ 988.10 ₹ 985.30 ₹ 985.40 ₹ 985.40 ₹ 978.60 Total sale consideration ₹ 1,95,56,813/- Long Term Capital Gain Declared ₹ 1,93,56,813/- DOCUMENTS SUBMITTED BEFORE AO AND CIT(A) IN ORDER TO SUBSTANTIATE THE LONG TERM CAPITAL GAIN OF A SUM O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover up the true nature of the transactions, as it is revealed that the purchase and sale of shares are arranged transactions to create bogus profit in the garb of LTCG by well-organized network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or a commission. 6. Before us, the Ld Counsel for the assessee, Mr. Salil Aggarwal submitted that the assessee had filed before the AO and CIT(A) various documentary evidences in order to substantiate the genuineness of the LTCG so declared during the impugned assessment year and no defect, error or any flaw in these evidences has been pointed by the AO as well the Commissioner of Income Tax (Appeals) and thus, he contended that the entire addition needs to be deleted on the ground of lack of investigation/ enquiry and also due to failure to provide any fallacy in the documentary evidences so submitted by assessee and on the aforesaid proposition reliance was placed on the judgments of jurisdictional High Court in the case of CIT vs Fair Finvest Ltd. reported in 357 ITR 147 and PCIT vs Laxman Industrial Resources Ltd. reported in 397 ITR 106. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss examination was also raised before ld. CIT (A) vide submission dated 02.08.2017 (Pg 87 to 90 of PB - I), which was accepted by ld CIT (A), after which, the matter was remanded to the file of AO for providing opportunity of cross examination to the assessee (Pg 91 of PB - I). However, ld AO vide his remand report dated 15.11.2017 showed his inability to summon Sh. Vikrant Kayan and requested ld CIT (A) to issue commission and ensure presence of Sh. Vikrant Kayan (Pg 92 to 94 of PB - I). However, the ld. CIT (A) once accepted that the assessee need be given an opportunity of cross examination of the so called alleged entry operator, makes a summersault and records in his order that the AO was not required to allow the appellant the opportunity to cross examine (Pg 27 of CIT (A) order). Thus, it was submitted that as the alleged entry operator has not been produced for cross examination, even though specific request for the same was made by assessee before ld. AO and CIT (A), as such, the assessment so made is vitiated in law and addition so made is liable to be deleted as such. Reliance was placed on following judgments in support of the aforesaid proposition: (i) Kishinchand C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of order of Hon'ble ITAT Kolkata in the case of Prakash Chand Bhutoria vs ITO in ITA No. 2394/Kol/2017 dated 27.06.2018. * Copy of order of Hon'ble ITAT Delhi in the case of Mukta Gupta vs ITOin ITA No. 2766/Del/2018 dated 26.11.2018. * Copy of order of Hon'ble ITAT Kolkata in the case of Mahavir Jhanwar vs ITO in ITA No. 2474/Kol/2018 dated 01.02.2019. * Copy of order of Hon'ble ITAT Delhi in the case of Sh. Rajev Agarwal & sons vs ITO in ITA No. 872/Del/2018 dated 21.01.2019. * Copy of order of Hon'ble ITAT Delhi in the case of Sanjeev Jain vs ITO in ITA No. 3381/Del/2017 dated 15.01.2019. * Copy of order of Hon'ble ITAT Delhi in the case of Smt. Jyoti Gupta vs ITO in ITA No. 3510/Del/2018 dated 06.11.2018. * Copy of order of Hon'ble ITAT Delhi in the case of Vidhi Malhotra vs ITO in ITA No. 93/Del/2018 dated 20.12.2018. * Copy of order of Hon'ble ITAT Delhi in the case of Smt. Simi Verma vs ITO in ITA No. 3387/Del/2018 dated 06.11.2018. * Copy of order of Hon'ble ITAT Delhi in the case of Smt. Shikha Dhawan vs ITO in ITA No. 3035/Del/2018 dated 27.06.2018. * Copy of order of Hon'ble ITAT Delhi in the case of Sh. Amitabh Bansal vs ITO in ITA No. 7802 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench as to whether, department is in possession of "Annexure A and B", as has been mentioned by Sh. Vikrant Kayan in the said statement, wherein he has mentioned about beneficiaries. For this purpose, the matter was kept part heard. On 28.05.2019, the ld. CIT DR produced a report from AO dated 20.05.2019, wherein two Annexure, "A and B" were produced before the Bench. The ld. CIT DR though accepted that in 'Annexure - B', the name of assessee is absent but is not relevant as far as the case of assessee is concerned. However, 'Annexure - A' contains the name of assessee, at page no. 13 of the said annexure. His main plant of his argument was that, since the name of assessee is appearing in Annexure - A, this proves that assessee was beneficiary of accommodation entry from Sh. Vikrant Kayan and as such, the order so passed by ld CIT (A) need be sustained in the instant case. Further, he had placed heavy reliance on the judgment of Hon'ble Jurisdictional High Court in the case of Udit Kalra (supra). 11. In rejoinder, the ld. Counsel for the assessee submitted his arguments, which can be summarized as below: (i) That the ld. DR is factually incorrect on various aspects, as fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain misplaced, as first of all no question of law was formulated by Hon'ble Delhi High Court in the said case and thus, the same is only dismissal in limine and on this proposition reliance is placed on the judgment of Hon'ble Supreme Court in the case of CIT vs Rashtradoot (HUF) reported in 412 ITR 17. (vii) Even on facts, the said order in the case of Udit Kalra vs. ITO is distinguishable as in that case the company was into consistent losses, whereas, the scrip in which assessee has dealt is a high turnover and dividend paying company. That further, the interim order of SEBI in the case of TTL has been cooled down by subsequent order of SEBI. Thus, the growth in prices of TTL was backed by sound financials and as such, the case of Udit Kalra vs. ITO relied by ld. DR is clearly distinguishable on facts and is not applicable to the facts of assessee. Rather the case laws so relied by assessee are directly applicable to the facts of assessee which have not been rebutted by ld. DR. (viii) As far as, "Annexure A and B" so submitted by ld CIT DR, he submitted that ld DR has himself admitted that 'Annexure B' is not relevant to the case of assessee, as nowhere, the name of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial performance of the company. As pointed out by the Ld. Counsel, the financials of TTL are available in public domain which has also been filed before us and from perusal of the same; we find that the said company has a steady growth and is showing high turnover company and has been duly declaring dividends. The financial statements from AY 2014-15 to AY 2017-18 have been placed by ld Counsel in the PB II at pages 325 to 370, which further proves the fact that TTL is not a penny stock or a loss making company, rather the said company has high turnover ranging from ₹ 117 crores to ₹ 154 crores. Thus, we hold that the finding of ld. AO and CIT (A) that the prices of the company TTL are not backed by its financial statements is factually incorrect and is contrary to material available on record. 14. Further, the authorities below and Ld. CIT DR have also drawn heavy support from the investigation report of the Kolkata Investigation Wing and the statement of Sh. Vikrant Kayan. On going through the record, we find that the statement of Sh. Vikrant Kayan was provided to the assessee at the fag end of assessment, i.e., on 27.12.2016 and immediately thereafter the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e numbers or details of any cash received or details of commission received with respect to alleged accommodation entry. On a query raised by the Bench as to why Vikrant Kayan will mention his own name in the list of beneficiaries of accommodation entries, the ld. DR was not able to provide a suitable answer. Thus, reading and scrutiny of the said annexure, makes it clear that the same is not containing the list of beneficiaries, it just contains the list of shareholding, which is also available in public domain as TTL is a listed company. Thus, here we tend to agree with the submission of ld. AR that Annexure - A so relied by ld DR rather supports the case of assessee, as the same shows at page no. 13 that assessee was a genuine investor in TTL and was holding 0.08% of shareholding of TTL. Even if it can be said that Annexure B might be list of beneficiaries, then, there is no mention about the assessee in that list. Thus, we find that nowhere, the lower authorities or ld DR have been able to substantiate their allegation that the assessee is beneficiary of alleged accommodation entries from TTL. Rather, the documents so supplied by Revenue, supports the case of assessee and corro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law was formulated by Hon'ble High Court of Delhi in the said case and there is only dismissal of appeal in limine and the Hon'ble High Court found that the issue involved is a question of fact. Thus, the judgment of the Hon'ble High Court has to be seen if similar facts are permeating in the present appeal also and if there is difference on facts, then the judgment cannot be applied. In the judgment of Hon'ble Apex Court in Kunhayyammed vs State of Kerala reported in 245 ITR 360 and also in CIT vs. Rashtradoot (HUF) reported in 412 ITR 17, the Hon'ble Apex Court have held that if the High Court has not admitted the question of law, and has dismissed the appeal, then it is a case of dismissal in liminie. Even on merits and facts, the judgment of Udit Kalra vs ITO (supra) is distinguishable as in that case the company was into consistent losses, whereas, the scrip in which assessee has dealt is a growing and high turnover company and dividend paying company. As TTL was having turnovers of ₹ 117.39 crores (AY 2014-15); ₹ 150.59 crores (AY 2015-16); ₹ 154.88 crores (AY 2016-17); and ₹ 146. 23 crores (AY 2017-18). The financial statements of said company are ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus by the Revenue only on the basis of suspicion and probability and without finding any defect in the various documentary evidences filed by the assessee and further, the finding recorded by ld CIT (A) on page 26 of his order that the addition has been made on independent analysis of the documents, is contrary to material available on record. As on perusal of the order of assessment, we find that no independent inquiry was made with regards to alleged entry operator Sh. Vikrant Kayan. Whereas, the sole basis of making the impugned addition was statement of Sh. Vikrant Kayan, which too was recorded behind the back of assessee by DIT (Inv) Kolkata and the statement alone cannot be the conclusive evidence to nail the assessee and hence needs to be excluded for consideration as the said person has not been allowed cross examination by assessee, even though various requests were made by assessee. As such, the transaction of the assessee was duly supported by relevant documentary evidences without there being any rebuttal by lower authorities; the addition made by the Assessing Officer of ₹ 1,93,56,813/- by treating the LTCG as bogus is unsustainable. In view of our above finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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