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TMI Blog2025 (1) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ,74,19,148/- made u/s 68 of the Act, without appreciating the facts that the Sh. Anil Kedia & Sh. Soumen Sen, an entry operator in his statement, recorded u/s 131(1) of the Act, had accepted that Nikki Global Finance Ltd was a penny stock and providing accommodation entries in the form of LTCG to the various beneficiary and the assessee is one of the beneficiary. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 20,22,574/- u/s 69C of the Act on account of commission paid for procuring the above transaction without appreciating the facts that the Sh. Anil Kedia & Sh. Soumen Sen, an entry operator in their statement, recorded u/s 131(1) of the Act had acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from where certain papers/documents belonging to the assessee were found and seized. Due to the search conducted u/s 132 in this case, notice u/s 153A of the Act was issued on 15.03.2021 requiring the assessee to furnish return of income for the year under consideration being one of the six assessment years preceding to the assessment year in which search was conducted. It has been mentioned in the assessment order that the assessee has shown Long Term Capital Gain, exempt u/s 10(38) of the Act, amounting to Rs. 6,73,58,676/- on account of sale of shares of Nikki Global Finance Limited. That the assessee had purchased 74140 shares of Nikki Global Finance Limited during the financial year 2006-07 for a total consideration of Rs. 8,42,321/-an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for providing accommodation entries in the form of LTCG to various beneficiaries. It has also been stated in the assessment order that Nikki Global Finance Limited was having market price of share at around 134 on 09 April 2012 and had gone up to Rs 938.75 in 20 months December 2013. Thereafter the AO has analyzed the financials of t company whose shares the assessee has sold and had claimed exempt LTC and has observed that the exceptional price movement of Nikki Global Finance Limited was not commensurate with the financials of the company. In view of the above the AO arrived at a conclusion that that the assessee had taken accommodation entry in form of sale of shares amounting to Rs. 6,74,19,148/- and has added the amount u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce during the course of search conducted on the appellant, but was found in action conducted five years prior to the search. Also there is no mention of incriminating evidence found during search to suggest that the appellant had paid 3% commission amounting to Rs 20,22,574/- for obtaining the accommodation entry. 8.5 The position of law that addition can be made only on the basis of incriminating material etc. found during search, has been laid down by the Hon'ble jurisdictional High Court in the case of CIT vs. Kabul Chawla (2016) 380 ITR 0573 and plethora of subsequent judicial pronouncements as relied upon by the appellant. The Hon'ble Delhi High Court in the case of Kabul Chawla reported in 380 ITR 573 has held that the completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Delhi High Court in the case was dismissed by the Hon'ble Supreme Court. There are plethora of judicial pronouncements after the above verdicts that unabated assessments can be interfered with u/s 153A only on the basis of incriminating material/documents/evidence discovered during the course of search. 8.6 Accordingly, I am of the view that the addition on account of sale of shares treating the same as accommodation entries and the commission charges paid, by AO is not justifiable. Respectfully following the legal pronouncements as discussed above, it is held that the additions made by the AO were contrary to provisions of law. In view of the above, the additions made by AO of Rs. 6,74,19,148/- on account of sale of shares and o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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