TMI Blog2005 (8) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... rely paper transactions for the purpose of giving entries of capital gains. The AO having jurisdiction over the respondent received information from Asstt. CIT, Central Circle-I. Ludhiana, vide his letter No.7, dt. 12th April, 2001 informing the AO that Mrs. Ranjeet Kaur had made transaction of 15,800 shares of M/s Classic Global Impex Ltd. On the basis of this information, the AO initiated proceedings under s. 158BD. The assessee had objected to initiation of proceedings under s. 158BD. So however, the AO rejected the objections. The assessee also asked the AO to give the reasons for issuing notice under s. 158BD, in response to which the AO vide letter dt. 6th June, 2003 informed the assessee that the reasons have been recorded before the issue of notice under s. 158BD and that the assessee was at liberty to inspect the file and satisfy herself on this ground. The assessee was also asked to establish the genuineness of the transaction made in shares of M/s Classic Global Impex Ltd. The assessee not having furnished sufficient evidence to establish the genuineness of the purchase or sale of the shares, the AO on the basis of evidence recorded in paras 3 to 5 of the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed the assessment on the aforesaid ground he did not consider it necessary to record the finding in regard to the satisfaction recorded under s. 158BD as well as on the merits of addition. 6. The Revenue is aggrieved and in appeal before us. The learned Departmental Representative pointed out that in the course of search of M/s Classic Global Impex Ltd., incriminating material was found to establish that the share transactions claimed by various persons including the assessee were bogus. Since the assessee had also shown transaction of 15,800 shares of the said company, the AO was justified in issuing notice under s. 158BD. According to the learned Departmental Representative, the assessee had disclosed capital gains simply for the purposes of claiming deduction under s. 54F to explain the source of investment in the construction of the house property. It was accordingly, pleaded that the order of the CIT(A) may be set aside and that of the AO restored. 7. The learned counsel for the assessee, on the other hand, reiterated the contention advanced before the CIT(A) that once the assessee had disclosed the income in the original return, the AO is precluded from taking actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of the concerned persons for commission. The assessee had also shown transaction in respect of the above company of 15,800 shares. The assessee had disclosed capital gains from sale and purchase of said shares in the regular return filed for asst. yr. 2000-01 but had simultaneously claimed deduction under s. 54F in respect of the investment in residential house property. The important question that has been raised before us is that when the assessee had disclosed the capital gains in the return of income, can it be said that there was undisclosed income which was chargeable to tax under the block assessment procedure. It may appear that since the assessee had disclosed the capital gains, in other words, disclosed the income rather than suppressing the income, there could not be undisclosed income for the purpose of bringing the same to tax under Chapter XIV-B of the IT Act, 1961. However, when the entire facts are taken into account, it becomes abundantly clear that but for this claim of purchase and sale of shares and the bogus capital gains, the investment made by the assessee in the house property remains unexplained for which the assessee would be liable to tax as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Act. Respectfully following the above judgments, and after gong through the entire gamut of the submissions of the learned counsel on this issue, I am convinced that the said transactions (having been duly disclosed in the regular return of income for the asst. yr. 2000-01) did not fall within the description of 'undisclosed income'. Consequently, I am unable to uphold the action of the AO in assessing the said gains as 'undisclosed income' Since the appeal on this issue has succeeded, therefore, I do not consider it necessary to dilate upon the other issues, namely, the justifiability of the 158BD satisfaction, as well as the merits of the case, which have become academic and hence infructuous in nature in view of the above decision." 11. It has already been pointed out that the decision of the CIT(A) is also sought to be supported by the decision of the jurisdictional High Court in the case of CIT vs. Smt. Geeta Gupta in IT Appeal No. 249 of 2003, order dt. 23rd Jan., 2004 on behalf of the assessee. 12. On going through the aforementioned decisions relied upon by the CIT(A) and also the decision of the Hon'ble Punjab Haryana High Court in the case of CIT vs. Smt. Geet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments relate to the transactions disclosed in the original return. In this case, the assessee had disclosed the capital gains and the investments in the house property in the regular return of income. However, as a result of search in the case of M/s Classic Global Impex Ltd. the transactions in shares disclosed by the assessee in the return of income have been found to be bogus. It is on the basis of incriminating documents found in the course of search that the transactions, disclosed by the assessee are found to be bogus and consequently the investment made in the house property claimed to have been met out of the said capital gains has remained unexplained and accordingly, addition would be justified on account of undisclosed income. As pointed out earlier, the bar under s. 158BC/158BD, in regard to the transactions disclosed in the return/balance sheet or during the assessment proceedings, applies on such transactions in respect of which no incriminating document is found in the course of search. This distinction has been overlooked by the CIT(A). We, therefore, taking the totality of the facts and circumstances of this case into consideration, set aside his order in regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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