TMI Blog2017 (5) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be accepted as genuine and subsequent sale thereon cannot be considered as bogus, on presumptions and assumptions. In view of that we have no hesitation in holding that the capital gains declared by the assessee should be assessed as capital gains only. We are not in agreement with the action of the A.O. either for reopening of assessment or for treating the transactions as bogus, since the very basis for reopening the assessment was not provided to the assessee nor an opportunity was given to cross-examine the socalled Mr. Chokshi. There is no basis for treating the said transactions as not genuine. Considering the documents placed on record and the case law relied, we have no hesitation in directing the A.O. to accept the long term capital gains and short term capital gains declared by Smt. Sarita Devi and short term capital gains declared by Ms. Nitika Kumari under the head “Capital Gains” only. - Decided in favour of assessee. - ITA.No.1228/Hyd/2016, And ITA.No.1229/Hyd/2016 - - - Dated:- 5-5-2017 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER, AND SHRI B. RAMAKIOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri K.C. Devdas For The Revenue : Shri A. Sitarama Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication received from Mumbai. It was the contention of AO that the said company through whom assessees herein have transacted was not registered with BSE or NSE and that the transactions have not been routed through the De-mat account of the respective assessees. 3. Before the CIT(A), it was contended that (1) reopening of assessment is bad in law on the reason that there was no tangible material to come to conclusion that the transactions are bogus; (2) the cross-examination was not provided to the assessee (3) there was no approval from the Joint Commissioner whereas Commissioner seems to have approved the reopening of assessment. (4) that the reasons were not communicated in spite of requesting. The Ld. CIT(A) rejected all the contentions and held that the reopening of the assessment is valid. 4. Coming to the merits of the addition, Ld. CIT(A) examined the detailed contentions of the assessee on the transactions and held that the entire gross receipts cannot be brought to tax and directed the A.O. to tax only the capital gains received. In the case of Smt. Sarita Devi capital gains offered of ₹ 31.58 lakhs, which consists of ₹ 24.83 lakhs long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents collected behind the back of the appellant was relied upon without giving a copy of the same and therefore the entire reassessment proceedings are bad in law, invalid and must be quashed. 8. Without prejudice to ground No.7, the learned CIT(A) failed to note that Mr. Choshi the witness of the department was not produced for cross examination in spite of specific request and therefore the entire reassessment proceedings has no legs to stand and must be quashed. 9. The Hon ble CIT(A) failed to note that entire transactions in the purchase and sale of shares were genuine and therefore ought to have clearly held that the long term capital gains on sale of shares of ₹ 24,83,473 was exempt u/S.10(38) of the I.T. Act and ought to have taxed the surplus of ₹ 6,74,3S6 as short term capital gains as enjoined in section l11A of I.T. Act and erred in holding that the aggregate amount of capital gains at ₹ 31,57,829 was taxable under the head other sources . 10. The appellant denies its liability to be assessed to the levy of interest U/s.234A and Interest u/s.234B. 11. The appellant craves leave to add, amend, or alter any or all the above ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to reopening of assessment. It was submitted that there was no tangible material to come to conclusion that the transactions are bogus. There is no denial of the fact that assessees have entered transactions with sub-broker and purchases are accepted particularly pertaining to long term capital gain declared by the assessee Smt Sarita devi in earlier year and the consequent sales were also to be accepted. In fact, it was submitted that there are many mistakes committed by the A.O. in the assessment order not only to amounts involved but also nature of transactions. It was submitted that A.O. had brought to tax an amount of ₹ 2,20,68,890 in Smt Sarita devi assessment whereas the assessee s total sales during the year was only ₹ 90,75,213. He referred to the triplication of the same transaction of sale thereby the amount has become so much. A.O. without examining the validity of the data brought to tax the entire amount of ₹ 2.20 crores whereas after explaining the facts to the Ld. CIT(A), the Ld. CIT(A) accepted that the total sales are only ₹ 90,75,213. 7. In the case of Smt. Nitika Kumari even though it was submitted that the total transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deepa Rock Drills Hyderabad vs. ITO, Ward- 3(1), Hyderabad (ITA.No.459/Hyd/2014 dated 28.08.2014). 2. CIT, Mumbai vs. Mukesh Ratilal Marolia SLP (Civil) No.20146/2012 dated 27.01.2014. 9.1. There are other cases also running from sl. No 37 to 70 of the paper book which do not require separate adjudication as the issues are more or less similar to the above cases. 10. We have considered the rival contentions and carefully perused the evidence placed on record and orders of the authorities. It was admitted by the order of AO and CIT(A) that some communication was received from CCIT, Mumbai that Mr. Chokshi has given a statement that he has provided accommodation entries. How those statements are relevant to the assessee or whether any transactions of the assessees were specifically stated is not forthcoming either from the orders of the authorities or from the documents furnished before us. In fact, neither the statement of Mr. Chokshi was provided to the assessees nor the cross-examination was allowed. The same was not even on record. Even though Ld. CIT(A) gave a finding that the assessment was reopened on the basis of the communication of the CCIT, whether there was any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was reopened, the said proceedings were dropped without taking any adverse view. Consequently, the purchases shown in that year in the balance sheet has to be accepted as genuine and subsequent sale thereon cannot be considered as bogus, on presumptions and assumptions. In view of that we have no hesitation in holding that the capital gains declared by the assessee should be assessed as capital gains only. 11. As seen from the orders, the A.O. has treated the entire sale consideration received as bogus and brought to tax the entire amount as stated to have communicated to him. The Ld. CIT(A) examined this aspect and gave finding that the transactions in the case of Smt. Sarita Devi are not to the extent of ₹ 2.20 crores and restricted the sale amount to the extent of ₹ 90.75 lakhs correctly. She also gave correct finding that the entire gross receipts cannot be brought to tax and only the gain can be taxed. Similarly in the case of Ms. Nitika also, the correct amount was determined and amount to be taxed was the short term capital gain received by assessee. To that extent findings of Ld. CIT(A) are correct. It is to be noted that the Revenue has not come in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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