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2016 (12) TMI 1890 - AT - Income TaxAddition u/s.68 - treating the STCG declared by the Assessee as being unexplained cash credits - purchase of the assessee is bogus - CIT-A deleted the addition - HELD THAT:- As gone through the relevant record and impugned order and we find that (a) assessee had purchased concerned shares through “off-market trade” however ISE, BSE and NSE informed AO that no transaction has taken place in the name of assessee. (b) Concerned shares were kept in pool account which shows that such shares were not purchased by assessee. (c) Shri Mukesh Cokshi, director of Mahasagar Securities Pvt. Ltd. (“MSPL”) had admitted in his statement recorded u/s.131 that MSPL is engaged in the business of providing bogus bills for capital gain. When transactions are “off-market”, it is not possible for stock exchanges to provide details in respect of the same. Further, off-market transactions are not at all illegal at all and concerned share were duly purchased by assessee and it is an undisputed fact that such shares came to the demat a/c of assessee from IL&FS securities. In fact, such shares have been subsequently sold through broker “Krone Research and Brokerage Pvt.Ltd.” Therefore, question of raising doubt as to purchase of shares by assessee is not sustainable. Shri Mukesh Chokshi stated in his statement that (MSPL) was engaged in providing accommodation entries for speculation/delivery profit. Assessee has only purchased shares from MSPL which has been doubted by AO whereas “sales” have been made through “Krone Research & Brokerage Pvt. Ltd.” which has been accepted. Had the assessee obtained accommodation entries from MSPL as to purchase of shares, concerned shares might have been even sold through MSPL which is not the case. Assessee has neither been provided with the copy of statement of Shri Mukesh Chokshi based on which impugned addition has been made nor has the assessee been given an opportunity to cross examine Mukesh Chokshi. In absence of cross-examination, no addition could have been made based on statement of Mukesh Chokshi recorded behind assessee’s back. Assessee has placed on record affidavit of Mukesh Chokshi so as to prove that assessee has genuinely purchased shares form MSPL which has not found to be incorrect by Ld.AO.In absence of cross-examination of deponent with reference to statement made in affidavit, it is not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit. Same has been held in the matter of “Glass Lines Equipment Co.Ltd [2001 (7) TMI 61 - GUJARAT HIGH COURT] Shares have been purchased against payment duly supported by the contract notes and shares have been found to be credited in the assessee’s demat a/c and on sale of such shares, the same were debited from demat a/c of the assessee and assessee has received payment through banking channel and sale of shares on the floor of BSE has been found to be genuine and also found to be confirmed by the BSE. There is nothing in record to even remotely suggest that such shares were never transferred in the name of the assessee. Had it been the case, assessee couldn’t have sold the same from his demat a/c. Shri Mukesh Choksi himself admits in his affidavit that MSPL had acquired the concerned shares on behalf of the assessee which were later on transferred to assesse’s demat a/c and payment in respect of the same was received from the assessee and particularly the contents have not been controverter by AO, so it can be presumed that whatever have been stated therein in the affidavit of Mukesh Choksi is seems to be credited. So in our considered opinion that CIT(A) has rightly deleted the addition made by the Ld.AO. Both the appeal of revenue are dismissed.
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