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TMI Blog2020 (8) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... derance of probabilities. We find that in instant case addition in dispute is not solely on the basis of the statement of the persons and the Assessing Officer has relied on other materials. The statements of the persons who controlled the business of providing accommodation entry have been corroborated with the material, surround circumstances and preponderance of probability. We accordingly uphold the finding of the CIT(A) on that issue in dispute. The relevant grounds of the appeal of the assessee are accordingly rejected. - I.T.A. 203/2020 & C.Ms. 16898/2020 and 16899/2020 - - - Dated:- 29-7-2020 - HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE SANJEEV NARULA Appellant Through: Mr. Deepak Kapoor and Mr. Saurabh Soni, Advocates. Respondent Through: Mr. Kunal Sharma, Senior Standing Counsel with Ms. Zehra Khan, Advocate for the Revenue. JUDGMENT SANJEEV NARULA, J. (Oral): 1. The present appeal under Section 260-A of the Income Tax Act, 1961 ( the Act ) is directed against the order dated 07.01.2020 ( impugned order ) passed by the Income Tax Appellate Tribunal ( ITAT ), Bench-G, New Delhi in ITA No. 1593/Del/2019 for the Assessment Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid order by arguing that ITAT has committed a grave error having failed to take into consideration that transactions related to shares of aforenoted three listed companies, were carried through its registered share broker-M/s. Elite Wealth Advisors Ltd., on Bombay Stock Exchange, which is a recognised stock exchange. He argues that there was no possibility of any nexus between buying and selling brokers since the appellant carried out transactions through a registered broker. Learned counsel further argues that the assessee has discharged the onus and substantiated STCL arising out of sale transactions of the aforenoted three companies by sufficient documentary evidence produced before the AO, CIT(A) and the ITAT. None of the documents produced were rebutted or contradicted by the authorities. The appellant has discharged the onus and substantiated STCL and in these circumstances the additions are not sustainable. Once the ITAT held that Section 68 is not applicable, since it was a case of cash debit and not cash credit, the burden of proof was on the revenue to sustain the addition by leading cogent evidence. The income-tax department failed to gather and produce any cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue which has been raised by the assessee that it has not been confronted with the statements of various parties relied upon by the Assessing Officer. The assessee has also contended that opportunity of cross-examining those parties/persons was not provided to the assessee. According to the assessee, this resulted in the violation of the principle of natural justice and thus assessment should be held void ab intio. However, in our opinion, not providing opportunity of cross-examination may be in the nature of irregularity which is curable but not an illegality leading to annulling of the assess1nent. Further, the ld. CIT(A) in Para 4.1 of the impugned order has held that addition has not been made solely on the basis of the statement of those persons/parties. The relevant part of the order of Ld. CIT(A) is reproduced as under: 4.1 I have considered the submission of the appellant and observation of the AO made in the assessment order on the issue. The appellant has stated that it has not been allowed cross-examination of parties on the basis of whose statement, the addition has been made. On this issue it is observed from the assessment record that the AO has made the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based solely or mainly on the basis of such statement, in that eventuality it is incumbent on the Assessing Officer to allow cross-examination. Adverse evidence and material, relied upon in the order, to reach the finality, should be disclosed to the assessee. But this rule is not applicable where the material or evidence used is of Collateral Nature. 4.9 We find that the Assessing Officer in the assessment order has referred to the general modus operandi of the bogus accommodation entry and thereafter, he has further referred to statement of the parties who has provided accommodation entry through managing and controlling the shares of the companies, in which the assessee has also transacted. The Assessing Officer thereafter asked the assessee to justify the rationale behind investment in these penny stock companies not having financial worth, however, the assessee failed to justify the same. The Assessing Officer provided as why the investment in the shares transacted by the assessee was not justified in view of the comparison of the other shares available. The Assessing Officer also pointed out the price fluctuation in the shares of the companies over a period, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of Suman Poddar (supra), observed that Shares of Cressanda Solutions Ltd. have been identified by the Bombay Stock Exchange as penny stock used for obtaining bogus Long Term Capital gain and no evidence of actual sale except contract notes issued by the share broker were produced by the assessee. The Hon'ble High Court accordingly dismissed the appeal of the assessee as no substantial question of law involved. 7. Thus, Tribunal has in depth analyzed balance sheets and profit And loss accounts of Cressanda Solutions Ltd. which shows that astronomical increase in share price of said company which led to returns of 491% for Appellant, was completely unjustified. Pertinently, EPS of said company was ₹ 0.01/- as in March 2016, it was Rs. - 0.01/- as in March 2015 and -0.48/- as in March 2014. Similarly, other financial parameters of said company cannot justify price in excess of ₹ 500/- at which Appellant claims to have sold said shares to obtain Long Terms Capital Gains. It is not explained as to why anyone would purchase said shares at such high price. Tribunal goes on to observe in impugned order as follows: 10. With such financials and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Telecom India Pvt. Ltd., wherein, it was stated that bank statement is not sufficient enough to discharge burden. Regarding failure to accord opportunity of cross examination, we rely on judgment of Prem Castings Pvt. Ltd. Similarly, Tribunal in case of Udit Kalra, ITA No. 6717/Del/2017 for assessment year 2014-15 has categorically held that when there was specific confirmation with Revenue that assessee has indulged in ITA 841/2019 Page 8 of 10 nongenuine and bogus capital gains obtained from transactions of purchase and sale of shares, it can be good reason to treat transactions as bogus. differences of case of Udit Kalra attempted by Ld. AR does not add any credence to justify transactions. Investigation Wing has also conducted enquiries which proved that assessee is also one of beneficiaries of transactions entered by Companies through multiple layering of transactions and entries provided. Even BSE listed this company as being used for generating bogus LTCG. On facts of case and judicial pronouncements will give rise to only conclusion that entire activities of assessee is colourable device to obtain bogus capital gains. Hon'ble High Court of Delhi in case of Udit Kalra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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