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TMI Blog2021 (4) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as the CIT(A) erred in upholding the action of the Deputy Commissioner of Income-tax, Central Circle - 3(4), Mumbai (hereinafter referred to as the Assessing Officer) in issuing a notice under section 153A of the Act. The appellant contends that the notice issued under section 153A is ab initio void inasmuch as the jurisdictional conditions for the issue of the said notice have not been complied with and consequently, the assessment framed is bad in law and needs to be quashed. The appellant further, contends that the notice issued under section 153A is ab initio void inasmuch as no incriminating documents have been found during the course of search proceedings and consequently, the assessment framed is bad in law and needs to be quashed. 2. The Assessing Officer erred in not complying with the provisions of section 153D of the Act and, thereby rendering the entire assessment proceedings null and void. The appellant contends that on the facts and in the circumstances of the case and in law, the Assessing Officer ought to have complied with the provisions of section 153D of the Act and hence, the entire assessment proceedings is bad in law and thus, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition inasmuch as there is no capital gains that is bogus in nature and hence, the impugned addition ought to be deleted. The appellant further, contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition and the Assessing Officer has made the impugned addition only on the basis of surmises and conjectures and failed to bring any evidence on record to suggest that the appellant has incurred the impugned expenditure and hence, the impugned addition ought to be deleted. The appellant further, contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition inasmuch as the same is not arising out of any incriminating documents found during the course of search and hence, the impugned addition is vitiated in law. Upon perusal of grounds of appeal, it is evident that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income was filed by the assessee on 28/07/2010 at Rs. 43.97 Lacs. On the date of search, no assessment proceedings were pending against the assessee and accordingly, it was a case of non-abated assessment year. The main allegation of revenue was that the assessee introduced its own unaccounted money in the garb of bogus Long-Term / Short-term Capital Gains (LTCG / STCG). Accordingly, a search was carried out at premises of Shri Anil Agarwal, Karta of assessee-huf on 09/04/2015. His statement was recorded u/s 132(4) on 12/04/2015 during the course of search proceedings. A copy of the same is on record and we have perused the same. Shri Anil Agarwal is stated to be director in an entity namely M/s Comfort Securities Ltd. (CSL). M/s CSL is stated to be a registered stock broker with various stock exchanges. On the basis of statement, it was alleged by Ld. AO that many of the paper / bogus entities were allowed to become clients of M/s CSL and also allowed to do trading in shares so as to provide accommodation entry of bogus capital gains. Shri Anil Agarwal is stated to have become director, in individual capacity, of an entity namely Splash Media & Infra Ltd. (SMIL) in June, 2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing receipt of funds through banking channels. The transactions of sale as well as purchase were stated to be carried out through registered stock-broker namely M/s Comfort Securities Limited (CSL) on recognized stock exchange in online mechanism. 2.4 During the course of search proceedings, statement of Shri Anil Agarwal (Karta of assessee-HUF) was recorded on 12/04/2015 u/s 132(4), a copy of which is on record. Shri Anil Agarwal submitted that his concern M/s Comfort Securities Limited (CSL) had business nexus with various concerns. M/s CSL was, inter-alia, stated to have been rendering brokerage and consultancy services to M/s First Financial Services Limited (FFSL) and M/s Splash Media & Infra Ltd. (SMIL). M/s CSL did trading of various scrips including FFSL on behalf of its clients. However, it was alleged by Ld. AO that the clients had booked heavy losses in the trading of these shares since shares were purchased at high prices but sold when the prices were extremely low. It was alleged that trading so done was not a normal trading pattern. As against this, Shri Anil Agarwal maintained that the clients willingly purchased the scrips and trading so done by them was a pattern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of which has been extracted in para 3.4 of the assessment order. Shri Anil Agarwal maintained that M/s CSL provided consultancy services to FFSL. He also denied having met Shri Chandrakant Mane (director of FFSL). It was noted by Ld. AO that Shri Anil Agarwal took over M/s SMIL and became director of that entity on 24/06/2015. The said entity was stated to have been engaged in real estate development having project at Charkop, Kandivali, Mumbai. Regarding question of manipulation in share prices of SMIL, Shri Anil Agarwal submitted that since he became director only on 24/06/2015, he had no idea about the same. Further, entire process of trading took place in online mechanism through the stock exchange platform. He also denied having carried out any accommodation entries. 2.8 In para 5.2, Ld. AO upon perusal of share prices of SMIL noted that there was sharp rise in the prices which was not correlated and commensurate with the financials of the company. There was phenomenal increase in share prices which would defy any logic of shares trading pattern in primary or secondary capital market. In the said background, Ld. AO perused financial statements as well as returned income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments have been recorded have been used for providing entry of bogus LTCG /STCG /loss. Consequently, the claim so made by the assessee was to be rejected and sale proceeds of the shares were to be treated as undisclosed income of the assessee. 2.12 However, the assessee maintained that the short-term capital gains earned during the year were genuine and the same could not be treated as undisclosed income of the assessee. The assessee also controverted the conclusion of Ld. AO by submitting that SMIL had development rights in projects at Juhu and Kandivali in Mumbai and there was a bright chance for the company to increase profits. The attention was drawn to the fact that shares were purchased through recognized stock broker from stock exchanges and there was no preferential allotment to the assessee in a pre-arranged process as alleged by Ld. AO. Further, no violation regarding price manipulation was found by any authority. The shares were listed and trading took place in online mechanism and therefore, the assessee would not know the identity of the exit providers. The assessee also demanded cross-examination of exit-providers as per allegations of Ld. AO. It was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential shares to beneficiaries of bogus LTCG/STCG. The reported profits were also not commensurate with the price rise. The shares were rigged on the Stock Exchange. The price of Splash Media & Infra Ltd. has moved in absolute disregard to the general market sentiments. Various share brokers have confirmed the fact that the shares of Splash Media & Infra Ltd. have been used for providing entry of bogus LTCG/STCG. During this period of price rigging, the volume of the shares traded on each trading day was very low and on each day just 1-2 trades have been done with a constant rise in the price of the shares which was kept just short of the circuit limit for price rise as per the exchange guidelines. Various Exit Providers have confirmed that they have purchased the shares of Splash Media & Infra Ltd. to provide entries of bogus LTCG/STCG. The Statements on oath of Exit Providers constitutes a strong testimony in order to establish the manipulation of the said scrip leading to conversion of unaccounted income into bogus LTCG/STCG through accommodation entries by various beneficiaries including the assessee group. Shri Anil Agrawal has in response to Question No. 12 of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LTCG to the beneficiaries. Moreover, share brokers namely Shri Anuj Agarwal of Korp Securities and Shri Pravin Agarwal of Gateway Financial Services Ltd. admitted that the scrips of FFSL and SMIL were penny stock scrips. Therefore, heavy onus was on assessee to substantiate the genuineness of gain earned on these scrips. The allegation of price rigging would draw support from the fact that SEBI, in its final order dated 02/04/2018, found FFSL, assessee, its Karta-Shri Anil Agarwal and certain entities of the assessee group including M/s CSL to be guilty of rigging the share prices and restrained / prohibited them from accessing the market or trading for a further period of 3 years. 3.3 The admission made by the assessee in terms of decision of Hon'ble Apex Court in P. R. Metrani V/s CIT 2006 287 ITR 209 wherein it was explained that books of account, documents, money, bullion, jewelery or other valuable article thing or any statement recorded of the persons searched may be used as evidence for any proceedings under the act, would constitute incriminating material. Further, the statement given on oath u/s 132(4) would have evidentiary value as held by Hon'ble Allahabad High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf. It provides for the conditions upon which and the circumstances in which the warrants of authorization can be issued. Subsection (2) authorizes the authorized officer to requisition the services of any police officer or of any officer of the Central Government or of both to assist him for all or any of the purposes for which the search is conducted. Under subsection (4) the authorized officer can during the course of search or seizure examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such persons during such examination may thereafter be used in evidence in any proceeding under the Act." 5.8 Further, proceedings before the Income-tax authorities, as explained by the Allahabad High Court in Gargi Devi Jwala Prasad v. CIT [1974] 96 ITR 97, are considered to be of judicial nature where the issues are decided on the basis of evidences which can be oral or documentary. Oral evidences, inter alia, include statements which are made before the income-tax authority in relation to matter of inquiry and may include examination of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books and therefore cannot be treated as undisclosed transactions. Such an issue came up before the Hon'ble ITAT Ahmedabad in the case of N K Proteins Ltd (83 TTJ Ahd 904). The Hon'ble ITAT Ahmedabad held that it cannot be said that even if the material found during the course of search exposes the falsity of the entries made in the regular books of accounts, the consequent concealed income cannot be assessed as undisclosed income in Block Assessment. This decision of the Hon'ble ITAT Ahmedabad has also been approved by the Hon'ble Gujarat High Court. In the instant case, the falsity of the claim of LTCG was exposed in the search action and therefore, in principle the action of the AO of making the said additions while completing the assessment u/s 153A rws 143(3), cannot be faulted. 5.11 In view of the above detailed discussion, no infirmity is found in the action of the AO in undertaking said action u/s 153A rws 143(3) since there was sufficient evidence to incriminate the assessee in the form of statements recorded of Shri Anil Agarwal wherein he admitted that the scrips of FFSL, Rutron International Ltd., etc. were manipulated and also explained his role in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted in stock exchange through registered broker at prevailing market prices. The attention was also drawn to the fact that the statement so made by the assessee was already retracted which has grossly been ignored while making the assessment order and the retracted statement could not be the basis of the assessment. 4.3 The action of Ld. AO was further assailed by submitting that Ld. AO wrongly drew inference against the assessee on the basis of enquiry made by investigation wing in respect of some of the buyers who ultimately bought the shares sold by the assessee. The report of investigation wing was specifically demanded by the assessee for further comments and Ld. AO was requested to provide the list of beneficiaries to whom the accommodation entries were provided but the same was not done. Therefore, no adverse inference could be drawn against the assessee on the basis of these statements. 4.4 It was submitted that in assessee's case, the transactions were done though online trading platform through recognized stock broker and therefore, it could not be presumed that there could be any transfer of cash between the buyer and seller. Reliance was placed on the decision of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find that the persons who purchased SMIL shares from assessee during the year are all individual whereas enquires as stated to be carried out by investigation wing on six entities are corporate entities. Only one party i.e. Shri Rakesh Bansal who has purchased 1000 shares has been tainted by the investigation wing. 5.3 Proceeding further, the contents of statement given by Shri R.K.Kedia during search operations on 13/06/2014 were noted in para 6.20 of the order. In the said statement, Shri R.K.Kedia, inter-alia, admitted that FFSL and SMIL were paper companies being controlled and managed by Shri Anil Agarwal. Thereafter during survey on assessee group, statement of Shri Anil Agarwal was recorded. In reply to question No.25, Shri Anil Agarwal denied having done business of providing accommodation entries. However, he admitted to have helped Shri Raj Kumar Kedia in getting capital gain accommodation entries by purchase of shares of 3 entities viz. M/s Fact Enterprises Pvt. Ltd., M/s First Financial Services Ltd and M/s Rutron International Ltd. 5.4 In para 6.25, the fact of SEBI investigation on unusual price fluctuations in scrip of FFSL was noted. On the basis of the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the assessee was free to produce the said persons as part of his defense. The fact that the appellant has failed to produce any such person involved in the transaction clearly shows that it has no bona-fide case in the matter. The persons whose statements were relied upon by Ld. AO were examined by the Investigation Wing and there were very elaborate and detailed statements in that regard and the assessee was not able to rebut a single affirmation. Therefore, to ask for a physical presence of the persons is only to delay the matter and no basis to justify the same could be brought out by the assessee and therefore, the said request was rightly not been accorded to by Ld.AO. Further, large number of people have been involved in this dubious activity and for the department to be expected to make all the persons to be present in each and every case and at multiple locations all over the country is virtually impossible and the department could not be expected to do an impossible act. 5.7 The assessee's plea that the trades took place on screen based system and therefore, it would be wrong to presume that the assessee was provided a profitable exit by the exit providers, was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs and sold during the period 19/08/2009 to 23/09/2009 for aggregate consideration of Rs. 44.39 Lacs, thereby yielding short-term capital gain of Rs. 25.59 Lacs in the hands of the assessee. The aforesaid gain has duly been reflected by the assessee in its original return of income. During the year, the assessee has disclosed short-term gain of Rs. 43.02 Lacs on various scrips including gain on this scrip. Similarly, net Long-Term Capital gains have been reflected on other scrips also. The Balance Sheet of the assessee reveals that it has year-end investment in shares for Rs. 93.44 Lacs and another investment of Rs. 103.50 Lacs in share warrants. The perusal of the Balance Sheet would show that a substantial portion of assessee's capital has been ploughed back by way of investments. On the basis of all these facts, it could very well be concluded that the impugned transactions are not isolated transactions carried out by the assessee rather the assessee is a habitual investor and earn major part of its income from investment activities. 6.2 Undisputedly, the purchase transactions as well as sale transactions have taken place through online platform of stock exchanges through regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es could also not be sustained. 6.3 So far as the observations of Ld. AO as to financial and profitability of SMIL is concerned, we find that the sales transactions have taken place in online mechanism through recognized stock exchange wherein the identity of the buyer would not be known and there would be no privity of contract between the assessee and prospective buyers of shares. In online mode of trade, the prices would be guided by the buyer willing to buy the shares at certain prices and the seller willing to sell the shares at certain prices. The prices would be guided more by the market forces rather than the financials or other parameters. There would be buyers and sellers lining up on either side of a potential trade; one party willing to part with ownership and other party willing to acquire the ownership. When both the parties would agree upon a price, the trade is matched and that price would become new market quotation. Therefore, the financials of underlying entities, in such cases, would lose much relevance in so far as the price movement of scrip is concerned. Nothing adverse could be drawn against the assessee on the basis of the same. In fact, Shri Anil Agarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has allegedly mentioned that the assessee had given cash to anyone for getting capital gains with a request of cross-examination of those persons. It was specifically asked whether the assessee was named by any broker and operator and if so, the assessee be allowed cross-examination such persons. However, the aforesaid document as well as cross-examination was never provided by Ld. AO despite the fact that the said material / statement formed the very basis of Ld. AO's allegation / conclusion that the gains earned by the assessee were bogus in nature. 6.5 Evidently, the whole basis of disregarding assessee's transactions is the findings rendered by investigation wing in the case of Shri R.K.Kedia and various operators, entry providers and stock brokers. However, there is nothing in the orders of lower authorities which would prove the fact that the assessee-huf was so mentioned in the statements made by any of these persons; rather the basis of additions is the general observation / conclusion that the scrip of SMIL was penny stock entity. However, these statements are not backed by any cogent corroborative material on record to establish the assessee's involvement in price rigg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is that the assessee should have knowledge of the material that is going to be used against him so that he may be able to meet it. 6.7 The Ld. CIT-DR has submitted that the statement of Shri Chandrakant Mane & Shri Nirmal Singh Mertia (directors of FFSL) was confronted to the assessee by way of question nos. 11 & 12 in statement recorded from Shri Anil Agarwal on 27/08/2015. However, we find that the assessee, in reply, has denied having known these persons. Moreover, no opportunity to cross-examine these persons has ever been provided to the assessee. The statement of Shri Vicky Agarwal & Shri Hitesh J. Kanjar of M/s CSL, as placed in the paper-book by Ld. CIT-DR, is statement made during survey operations, which on standalone basis would not hold much evidentiary value. Moreover, upon perusal of the same, we find that none of these statements implicate assessee as the beneficiary of bogus capital gains. Similarly, the statement of Shri Anuj Agarwal of Korp Securities Ltd. recorded on 30/03/2015 and statement of Shri Pravin Kumar Agarwal of M/s Gateway Financial Services Ltd. recorded on 10/02/2015 are statements made during survey operations and the same do not name the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same. However, the said plea would not meet our approval in view of the fact that the adverse material as well as cross-examination was specifically demanded by the assessee and Ld. AO was under an obligation to do so to sustain additions in the hands of the assessee. 6.9 The proposition that that additions made purely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law stem from the decision of Hon'ble Supreme Court in Omar Salay Mohamed Sait V/s CIT (1959 37 ITR 151) wherein it was held that the suspicion however strong could not partake the character of legal evidence as held by Hon'ble Supreme Court in Umacharan Shaw & Bros. V/s CIT (1959 37 ITR 271). The additions made on mere presumptions could not be sustained and there must be something more than mere suspicion to support the assessment as per the decision of Hon'ble Apex Court in Dhakeshwari Cotton Mills Ltd. V/s CIT (26 ITR 775). The assessment should not be based merely on suspicion or guess work but on legitimate material from which reasonable inference of income could have been drawn. 6.10 So far as alleged admission by Shri Anil Agarwal is concerned, we find that the searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put as to LTCG earned on sale of scrip of FFSL. Upon perusal of the same, it could be gathered that Shri Anil Agarwal has not made any admission that the gains earned by the assessee-huf on sale of shares of SMIL and FFSL were bogus in nature. Proceeding further, it is to be noted that this statement also has been retracted immediately by way of an affidavit under the cover of letter dated 14/04/2015 by assessee to DGIT(Inv.), Mumbai, inter-alia, on account of the fact that the earlier statement was given under threat and undue influence by pressure. The retraction within such short span of time would drastically reduce evidentiary value of the statement particularly in view of the fact that the statement made on 12/04/2015 is not backed up by any corroborative incriminating material as found during the course of search operations. Therefore, firstly it could not be said that there was admission as to bogus nature of the transactions carried out by the assessee-huf and secondly, the statement made by the assessee, unless backed up by corroborative material, could not form the sole basis of making additions in the hands of the assessee. It transpires that another statement was recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee and for assessee's case, these statements could not be said to be incriminating material found during the course of search. The report of investigation wing, Kolkata identifying 32 stockbrokers with respect to 84 scrips, as referred to by the lower authorities, was received on 27/04/2015 i.e. much after the date of search on assessee and therefore, the same would also could not be said to be incriminating material found during the course of search on assessee. The Ld. CIT-DR has pointed out that a survey action was conducted u/s 133A on FFSL and many incriminating material was found therein which would constitute incriminating material to implicate assessee. However, we are unable to accede to this plea since this material could not be said to have been found during search on assessee-huf. Secondly, this material has been referred to in the statement of Shri Chandrakant Mane. The Karta of assessee-huf has all along denied having ever met Shri Chandrakant Mane. Therefore, this plea would not hold much water. The Ld. CIT-DR has also pleaded that the issue of incriminating material was raised for the first time before Ld. CIT(A) and Ld. AO had no occasion to deal with this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of continental warehousing (supra). 40. The learned departmental representative and the learned CIT appeals have tried to distinguish this decision from Hon'ble Bombay High Court by referring to Hon'ble Delhi High Court decision in the case of Kabul Chawla (supra). 41. In this regard we are of the considered opinion that the decision from honourable jurisdictional High Court in Continental Warehousing (supra) is clear and unambiguous. It was clearly held in that case that assessments which are not pending and which have attained finality, addition under section 153(A) cannot be done without reference to incriminating seized material. We may gainfully refer to the relevant order of the honourable High Court as under: "On a plain reading of section 153A, it becomes clear that on initiation of the proceedings under section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under section 132 or making requisition under section 132(4) stand abated and not the assessments/reassessments already finalised for those assessment years covered under section 153A. By a Circular No. 8 of 2003, dated 18-9-2003 (See 263 ITR (St) 61 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout reference to incriminating seized material. Honourable jurisdictional High Court has clearly mentioned that it is those assessments which are unabated, that is not pending, to which the above said ratio will apply. Assessments which are not pending are not only those which have been completed under section 143(3) but also those for which the time for issuing notice under section 143(2) have already elapsed. In other words the references is to those assessments in whose case assessment under section 143 (3) cannot now be done. It is not at all the case of the revenue that in the appeals which have been claimed as unabated here there was time for assessment under section 143(3). In this view of the matter, in our considered opinion, the submission of the learned counsel of the assessee succeeds that addition in the case of unabated assessment without reference to incriminating seized material for assessment u/s.153(A) is not sustainable on the touchstone of above said honourable jurisdictional High Court decision. Therefore, the learned CIT appeals and the learned departmental representative plea in trying to distinguish the same by reference to Hon'ble Delhi High Court decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has carried out synchronized trades for obtaining bogus LTCG. In our opinion, the said information/data is collected after the date of search and does not constitute incriminating material found and seized during the course of search. Keeping in view the said facts and circumstances, we are of the considered view that addition to the income of the assessee can only be made on the basis of incriminating record found during the course of search. In the present case, there is no such incriminating material and therefore, the AO has no jurisdiction to make addition in the unabated assessment. The case of the assessee is squarely covered by the decision of Hon'ble Bombay High Court decision in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), wherein the Hon'ble Bombay High Court held as under: - "a) Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of Rs. 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of Rs. 11,24,964/- under section 14A made by the Assessing Officer, as it was not based on incriminating material found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2019, 6520/MUM/2019, 6515/MUM/2019, 6516/MUM/2019, 6513/MUM/2019 & 6514/Mum/2019 are dismissed on account of jurisdictional defect. It could be noted that in the above matter also, except for statement u/s 132(4), there was no incriminating material. The statement was retracted by the assessee. Therefore, the bench held that addition on the basis of retracted statement, without there being corroborative material would not be sustainable as held in various decisions. Similar are the facts before us. Therefore, applying the ratio of aforesaid decisions, since the additions are not with reference to any incriminating material, the same would not be sustainable in the eyes of law. The Ld. CIT-DR has referred to the decision of Hon'ble Delhi High Court in the case of Smt. Dayawanti v. CIT [2017] 390 ITR 496 to counter assessee's submissions. Upon perusal of the same, we find that this case law is factually distinguishable since in that case incriminating material was found by the department along with confessional statements. The case law of Mumbai Tribunal in Hiralal Maganlal & Co. V/s DCIT 96 ITD 113, as cited by Ld.CIT-DR deals with an assessment framed u/s 158BC which is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt as to fulfillment of primary ingredients of Sec.68 viz. identity of the payer, their creditworthiness and the genuineness of the transactions. The source of credit received in the bank account could not be held to be unexplained unless it was established that assessee's own money was routed in his bank account in the garb of Capital gains. 6.14 We find that on identical set of facts, similar addition made by revenue was deleted by coordinate bench of this Tribunal in the case of Dipesh Ramesh Vardhan & ors. V/s DCIT (ITA Nos.7648/Mum/2019 & ors. dated 11/08/2020; authored by one of us) by observing as under:- 6. We have carefully heard the rival submissions and perused relevant material on record. So far as the factual matrix is concerned, there is no substantial dispute regarding the same. The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee's account during the month of March, 2012. The transactions took place through banking channels. The investments were duly reflected by the assessee in financial statements of respective years. The copie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Shri Vipul Bhat and the outcome of search proceedings on his associated entities including M/s SAL. However, there is nothing on record to establish vital link between the assessee group and Shri Vipul Bhat or any of his group entities. The assessee, all along, denied having known Shri Vipul Bhat or any of his group entities. However, nothing has been brought on record to controvert the same and establish the link between Shri Vipul Bhat and the assessee. The opportunity to cross-examine Shri Vipul Bhat was never provided to the assessee which is contrary to the decision of Hon'ble Supreme Court in M/s Andaman Timber Industries V/s CCE (CA No.4228 of 2006) wherein it was held that not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounts to violation of principal of natural justice because of which the assessee was adversely affected. The whole basis of making the addition is third party statement without there being any tangible material. It is trite law that additions merely on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee could not produce the concerned person of M/s SAL was rightly controverted by submitting that the aforesaid entity was not under the control of the assessee and the assessee was under no obligation to do so. The existence of M/s SAL is beyond doubt since it was a listed corporate entity and secondly, it was subject matter of scheme of amalgamation u/s 391 to 394. The scheme of amalgamation was duly been approved by Hon'ble Bombay High Court. Therefore, the existence of the said entity could not be doubted, in any manner. 10. The above conclusion is further fortified by the fact that in share sale transactions through online mode, the identity of the buyer of the shares would not be known to the assessee. Therefore, the adverse conclusion drawn by Ld. AO merely on the basis of the fact that the buyer of the shares were group entities of Shri Vipul Bhat, could not be sustained. The fact that there were independent buyers also would rebut the same and weaken the conclusion drawn by Ld. AO. 11. The Ld. AR has relied on plethora of judicial pronouncements in support of various submissions, which we have duly considered. These decisions would only support the conclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision of Hon'ble Delhi High Court in Pr.CIT V/s Smt. Krishna Devi & ors. (ITA Nos. 125/2020 & ors. dated 15/01/2021). We find that the ratio of aforesaid decisions is equally applicable to the fact of the present case before us. Conclusion 6.15 Finally, keeping in the facts and circumstances of the case, we are inclined to hold that impugned additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee's position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respectfully following the binding judicial precedents as enumera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L, assessee, its Karta-Shri Anil Agarwal and certain entities of the assessee group including M/s CSL to be guilty of rigging the share prices and restrained / prohibited them from accessing the market or trading for a further period of 3 years. However, as brought on record by Ld. AR, the aforesaid order of SEBI was under further challenge by the aggrieved parties before Securities Appellate Tribunal (SAT) wherein by order dated 27/09/2019 Hon'ble SAT has held as under: - 5. We have heard the learned counsels for the parties. The contentions of the appellants are that the WTM committed a manifest error in holding that the appellants were guilty in manipulating the prices of the scrips pursuant to the preferential allotment. 6. Without going into the merits as to whether the appellants were involved in the abnormal and huge rise in the price of the scrips by treating all entities connected to the company pursuant to the issuance of preferential allotment of shares, we are of the opinion that the appeals can be disposed of without going into the merits. 7. We find that the order of debarment as per the impugned order is of three years. These three years have already been under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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