TMI Blog2014 (10) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale is supported by contract note/sale bill corresponding bank statement and confirmation of account by broker - without giving a finding that M/s CMS Securities Ltd. was still broker inspite of statement of Shri Mukesh Kumar Gupta that the licence of M/s CMS Securities was cancelled in the year 1998, how the CIT(A) can say that the transaction of sale of shares was made through broker - There is no mention in the order of CIT(A) that the distinctive numbers of the shares purchased and sold were made available before him – the shares of M/s B.T. Technet Ltd. were purchased by the assessee in AY 2000-2001 but still he has not mentioned the distinctive numbers of the shares - It is also not mentioned as to whether the shares were standing in the name of the assessee or not. The address of the company is also not available in the order of CIT(A) - It is also not coming out as to whether the delivery of shares was given by the assessee at the time of sale in physical form or through DEMAT account - No enquiry was made from the concerned company as to whether any shares were standing in the name of the assessee during AY 2000-01 to present AY i.e. 2002-03 and whether the shares we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 11.09.2007. 4. BECAUSE 'non-disposal' of the appellant's objection to the validity of initiation of proceedings under section 147 had a vital bearing on the very maintainability of the assessment order dated 11.09.2007 and the CIT(Appeals) was not justified, either on facts or in law, in holding that the arguments of the appellant on both the accounts are lacking in merit and in dismissing the same. 5. BECAUSE reliance on the decision of the Hon'ble apex court in the case of Raymond Woolen Mills Vs. ITO reported in (1999) 236 ITR 34 by the CIT(Appeals) is wholly misplaced as the said judgment had been delivered on altogether different facts and context. 6. BECAUSE on a due and consideration of the submissions made by the appellant, the CIT(Appeals) should have held that the assessment order dated 11.09.2007 was nonest and invalid in the eyes of law. 7. BECAUSE the order appealed against is contrary to the facts/ law and principles of natural justice. 3. Learned A.R. of the assessee has submitted written submissions and for deciding the appeal of the assessee, Para 10 to 14 of the written submissions are relevant and hence, the same are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dea in laying down the law in the above referred judgment of the apex court is to give an opportunity to the assessee to know as to what is the decision on his objections, which decision has also to be arrived at after giving an opportunity to the assessee. In the present case, the assessee has been denied this opportunity. Nor only that but in the first three writ petitions what we find is that a common order has been passed on the objections as well as for the reassessment. In the fourth matter, the assessment order does not disclose any decision on the objections at all the undoubtedly no such decision has been given separately on the objections. Having noted this scenario, in our view the proper course will be to interfere with the assessment orders passed in all four matters by the concerned officer. We are aware that when an alternative remedy is resorted to, the writ jurisdiction is not to be exercised, but that is a rule of sell-limitation. The orders challenged in the present matter are clearly against the law laid down by the apex court and, therefore, the exercise of writ jurisdiction is called for. That being so, we allow all these petitions and quash and set aside t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 148 are available on page No. 1 to 4 of the paper book. 5.1 From the reasons recorded by the Assessing Officer in the present case, it is seen that full details are available regarding DD No, date and amount issued in favour of the assessee. It is also mentioned in Para No. 3 of the reasons that the investigating authority has also examined and recorded the statement of Shri Mukesh Kumar Gupta, Director of the company and his wife Smt. Sushila Gupta. It is also mentioned that the copy of the statements are available on record and during the course of statement, Shri Mukesh Kumar Gupta confessed that he had been providing entries to various individuals and used to charge commission approximately @0.25%. The Assessing Officer further noted that Shri Mukesh Kumar Gupta stated that he used to receive cash amount from the persons who used to seek entries from him and against these cash receipts, he used to give them cheque/DD. In the same reasons, it is further noted by the Assessing Officer that Smt. Sushila Gupta has stated that the membership of M/s C.M.S. Securities Ltd. was suspended by National Stock Exchange due to sale of bogus shares and thereafter, they started issuing dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court that information received by the Assessing Officer from Director of Income-tax (Inv.) that the assessee has introduced unaccounted money being extremely scanty and vague and cannot be regarded as a material or evidence that prima facie shows or establishes escapement of income more so as the Assessing Officer did not apply his mind to the information and examine the basis of the information and therefore, the proceedings u/s 147 are not maintainable. The facts in the present case are different. In the present case, the information received is not scanty and vague but the information is very specific along with the DD no., date and amount etc. and the Assessing Officer has not acted merely on the basis of information but he has examined the records of the assessee and given an observation in the reasons recorded itself that these drafts were deposited in the bank account of the assessee in the present year but no income on account of capital income has been disclosed by the assessee. Hence, in the light of these specific facts and findings, this judgment of Hon'ble Delhi High Court is not applicable in the present case. 7. Similarly the second judgment of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, these judgments are not applicable in the present case. 9. There is no other objection of the assessee regarding validity of the reassessment proceedings and hence, on this issue, we do not find any reason to interfere in the order of CIT(A). 10. In the result, the appeal of the assessee stands dismissed. 11. Now we take up the appeal of the Revenue i.e. I.T.A. No.255/Lkw/2010 for assessment year 2002-03. In this appeal, the Revenue has raised the following grounds: 1. The learned CIT(A) has erred in law and on facts in allowing the appeal in favour of the assessee and directing the Assessing Officer to delete the addition and treat the amount of ₹ 32,40,265/- as long term capital gain instead of income from undisclosed sources assessed under the head income from other sources without appreciating the facts of the case and material brought on record by the Assessing Officer. 2. The CIT(A) has failed to appreciate that the assessment order was passed u/s 144/147 of the Income Tax Act as the assessee failed to attend before the Assessing Officer. The CIT(A) has considered additional evidences from the assessee without giving opportunity to the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orementioned appeal 1. Copy of letter of allotment and delivery of shares BT Technet Limited filed alongwith the return for the assessment year 2001-02 sold through various brokers during the assessment year 2001-02 39-40 3. Copy of contract note/ sale bill for sale of shares of BT Technet Ltd. filed along with the return for the assessment year 2001-02 42-46 4. Copy of statement/ confirmation of account by the brokers M/s Dilip Kumar Bhandari and M/s Bhutani Associates. 47-51 5. Copy of corresponding bank statement. 52-54 17. In appeal not only copies of the said documents had been placed before the CIT(A) it was also submitted that assessment made on the basis of statements said to be of culpable nature as given by the other parties, without giving the appellant an opportunity of cross examining them, is vitiated and in support of the said contention various decisions were referred to and relied upon, which include the following judgments:- (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struck down as invalid on that score alone - Maneka Gandhi V Union of India AIR 1978 SC 597, Gangadharan Filial V AGED (1980) 126 ITR 256 at pp 365 to 367 (Ker). In other words, the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity when a competent court of authority hold such an order as invalid or sets it aside, the impugned order becomes null and void - Nowabkhan Abbaskhan V State of Gujarat AIR 1974 at p 1479. In the light of these decisions, the additions made by the Assessing Officer in violation of the principles of natural justice had to be set aside as void only insofar as the additions by way of cash credits alone were concerned, which were separable from the other additions in the order that were not challenged. 19. In view of the documentary evidences placed on record, for purchase of shares (which were out of preferential allotment of shares in the company concern) and sales thereof as supported by the contract notes issued by the brokers who are duly registered with Stock Exchange and decision of various benches of IT AT as also of the Hon'ble High Court the CIT(A) has held that deposit in the bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (in ITA No.237/Agra/ll passed by Agra Bench of the Hon'ble ITAT dated 18.1.2013, appearing at pages 72 to 80 of this compilation) (iv) CIT vs. Neeraj Kumar Jain (ITA No.295 of 2010 passed by Hon'ble Allahabad High Court vide judgment and order dated 02.01.2013, appearing at pages 81 to 82 of this compilation); (v) CIT vs. Udit Narain Agarwal (ITA No.560 of 2009 passed by Hon'ble Allahabad High Court vide judgment and order dated 12.12.2012, appearing at pages 83 to 87 of this compilation); (vi) CIT vs. Shyam Sunder Agarwal (ITA No.533 of 2009 passed by Hon'ble Allahabad High Court vide judgment and order dated 29.11.2012, appearing at pages 88 to 89 of this compilation); (vii) CIT vs. Subodh Kumar Jain (ITA No.474 of 2009 passed by Hon'ble Allahabad High Court vide judgment and order dated 19.11.2012, appearing at pages 90 to 91 of this compilation); (viii) CIT vs. Smt. Jamnadevi Agarwal reported in (2010) 328 ITR 656 (Bom.), appearing at pages 92 to 97 of this compilation). 20. In view of the submissions made above, it is respectfully prayed that your honours be pleased to uphold the order of the CIT(A) and dismiss the revenue's appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in M/s Anu Securities Ltd., one of the associate companies M/s CMS Securities Ltd. through which shares were sold. The copy of the statement of Mr. Mukesh Kumar Gupta has been filed in paper book before me (page 29). From the said statement of Mr. Mukesh Kumar Gupta. It is clear that no specific transaction relating to the appellant has been stated to be carried out in exchange of rotation of the funds of the appellant. It is also stated by Mr. Gupta in the said statement that -- Maine apke dwara dikhai gai list ko dekha aur uski apne a/c no. 81 se milan kiya. Is sambandh me mujhe yeh kaha nahi ki in DD ke tithi va amount to milan karne hai parantu jahan taq vyaktiyo ke nam of station ka swal hai yeh mai abhi bata nahi pawoonga kintu mere apne bankse magaya hai vah sahi hi hoga. (In Roman script) 13. It has further been stated that -- Yeh ki jo bhi parti mere pas cash lekhar DD ayi usne mujhe yaha bataya ki maine kharidne va bechne sauda kisi anya vyakti se samajhkar liya hai chunki mujhe likha ke I.Tax Department hamare transaction^ko genuine nahi manega atah aap rhujhe^cash ke dadle me karke apndbill de dejiye. Chunki mujhe unki vishwashniya kdbhi seller buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. Summary rejection of explanations of the appellant and bringing the case of appellant in the ambit of bogus transaction of the capital gains of CMS Securities Ltd., without specific evidence and material relating to the appellant was not justified. It is also true that the cross examination of Mr. Gupta of CMS Securities Ltd. and the relevant basis for questioning the transaction was not offered to the appellant at the assessment stage. Even if, it was not required in an order u/s 144 to provide opportunity to the appellant, the AO was required and duty bound to satisfy himself separately. 16. Looking at the general, vague and ambiguous material relied by AO in this behalf, as noted above, the arguments of the appellant on the various issues of the assessment made, (as enumerated above from point No. 1 to 26 above) have merit with reference to the order of assessment passed by the AO and facts and circumstances of this case. 17. Finally, relying on the decisions in various cases cited above, I find that the assessment made by AO is erroneous and based on presumption. It is also noticed that the AO has made the addition of ₹ 32,40,265/- on account of unexplained inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2002. In view of these discussions, the AO is directed to delete the addition of ₹ 32,40,265/-. Thus, Grounds No. 2, 4, 5, 6 and 7 of appeal are allowed. 14.1 From the above paras from the order of CIT(A), we find that it is stated by CIT(A) in Para 12(ii) of his order as reproduced above that the transaction of sale of shares was made through different brokers and M/s CMS Securities Ltd. happens to be one of such brokers. The transaction of sale is supported by contract note/sale bill corresponding bank statement and confirmation of account by broker - 3 brokers in this case. We fail to understand that without giving a finding that M/s CMS Securities Ltd. was still broker inspite of statement of Shri Mukesh Kumar Gupta that the licence of M/s CMS Securities was cancelled in the year 1998, how the CIT(A) can say that the transaction of sale of shares was made through broker. There is no mention in the order of CIT(A) that the distinctive numbers of the shares purchased and sold were made available before him. It is stated by CIT(A) in Para 18 of his order that the alleged shares of M/s B.T. Technet Ltd. were purchased by the assessee in assessment year 2000-2001 but stil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale of shares and since the address of the company was not provided, the Assessing Officer was not in a position to gather this information. We are of the considered opinion that even after ignoring this statement, the addition made by the Assessing Officer is justified. Regarding the sale of shares, the only argument is that it is supported by contract note and bank transactions. When the assessee is not providing details of distinctive numbers, market rate, address of the concerned company and the fact of transfer having placed in the records of the concerned company after the stated date of sale, it cannot be said that the assessee has been able to establish that this amount was received against sale of shares. In the light of these facts where the assessee is not able to establish the claim that this amount was received against sale of shares, various judgments cited by Learned A.R. of the assessee are not applicable in the facts of the present case. Even before us, the assessee has furnished the contract note bill etc. but there also, the distinctive numbers of shares are not available. On page No. 43 of the paper book is bill of purchase of shares dated 09/02/2001 and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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