TMI Blog2007 (12) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Hon'ble Supreme Court in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd.[ 2007 (5) TMI 197 - SUPREME COURT] . We, therefore, uphold the action of AO in assuming jurisdiction for framing reassessment under s. 147. Accordingly, the cross-objection raised by assessee is to be dismissed. Bogus transactions - We find that after the assessee having furnished proof for purchase, sale, registration of shares in her name duly supported by market quotations etc., the AO ignored the same on the basis of statement of the share broker, namely, Shri Satish Goel through whom the assessee has sold the shares. The purchase of shares were in the earlier years and the same transaction is not found to be bogus. Thus, the assessee has proved the purchase of shares at least. The transfer of shares were held to be bogus on the basis of statement of chartered accountant/company law consultant of Globe Commercial Ltd. Similarly, the statement of Shri Satish Goel as recorded by Dy. Director of IT, Gurgaon, though made available to the assessee but the objection raised thereagainst has not been considered. The statement of a person may give rise to conduct further enquiry but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inv.), Gurgaon and based on the result of his enquiry found that Shri Satish Goel, proprietor M/s R.K. Aggarwal Co., Karol Bagh, New Delhi was issuing bills for the bogus purchase/sale of shares and after receiving cash was issuing cheques. The assessee was found to be receiving cheques from the bogus bank account of M/s R.K. Aggarwal Co. from Corporation Bank, New Delhi. Accordingly, on the basis of such investigation carried out, assessment was reopened. The assessee submitted that original return filed may be treated as filed in response to notice under s. 148. The copy of reasons recorded were supplied to the assessee. Before issue of notice under s. 148, following reasons were recorded. As per detailed investigation carried out by Dy. Director of IT (Inv.) Gurgaon and intimated vide letter No. Dy. Director of IT(Inv.)/GGN/02-03/1272 dt. 17th March, 2003, the assessee had shown bogus long-term capital gains on account of sale/purchase of shares. One Shri Satish Goel, Prop. M/s R.K. Aggarwal Co., 1748/55, Naiwala, Karol Bagh, New Delhi had been operating bank account No. CA 3097, Corporation Bank, Karol Bagh, New Delhi. He was operating as broker in respect of sale/pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO, Shri Satish Goel first admitted that all the transactions undertaken from his bank account are bogus. He received cash from the beneficiaries and issued drafts/cheques by depositing that in his bank account. For arranging such transactions, he receives premium as his commission. The drafts were issued as sale proceeds of share while in actual, no transaction in sale has taken place. The AO also examined Shri G.K. Aggarwal, chartered accountant and Shri C.P. Rajendran, company law consultant of M/s Globe Commercial Ltd., the company whose shares were purchased/sold by the assessee. The chartered accountant appearing for the company submitted that only 55 transfers have taken place. It was submitted that company is listed at Delhi Stock Exchange. They also submitted that the trading in the scrip at Delhi Stock Exchange between 1995-2000 are for 1,400 shares only for two transactions at ₹ 4 per share. In Magadh Stock Exchange, only 4 transactions of 100 shares have taken place at ₹ 50 per share. The AO, therefore, concluded that the transaction of purchase/sale of shares are bogus transactions. There is neither purchase nor sale of shares. Even the shares registered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration Bank, Karol Bagh, New Delhi were not genuine. The assessee received the cheques/drafts only from the said account which was admitted by Shri Satish Goel as bank account for routing bogus transactions. The assessee was supplied with the copies of statement recorded by Dy. Director of IT (Inv.) on the basis of which he formed an opinion that all transactions are bogus. The summons issued to Shri Maheshwari through whom the assessee has purchased shares was returned unserved. Therefore, the assessee was asked to produce the parties to prove genuineness of purchase of shares. A party coming with unclean hands cannot claim equity. The assessee had submitted that the address of M/s Globe Commercial is A-48, Nirman Vihar, Delhi whereas the genuine company exists in Jallundhar and the said company has stated that no transfer of its shares took place. Even the purchase of shares were out of cash funds which leaves much to be proved about even genuineness of purchase. She further submitted that in identical situation, Tribunal, Delhi 'H' Bench in ITA No. 2060/Del/2005 in the case of Century 21 Portfolio vs. ITO by its order dt. 5th April, 2007 has not only upheld the reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the newspaper 'The Economic Times' dt. 23rd April, 1996. It is submitted that at Magadh Stock Exchange under the column 'permitted securities' the shares of Globe Commercial Ltd. were quoted at ₹ 50 per share. Thus, though the company is listed at Delhi Stock Exchange, yet Magadh Stock Exchange allows the share transaction as permitted securities to deal in. Thus, the assessee has not only furnished the proof of actual purchase/sale of shares but has also shown that the rate at which the transaction has taken place is at the market price based on the newspaper quotations. Even the shares were duly transferred in the name of assessee. When the buyer and seller confirm the transaction, the IT Department has no role to disbelieve the same. He further submitted that on identical facts, the Tribunal in the case of ITO vs. Rajiv Aggarwal (2004) 89 TTJ (Del) 1095: (2004) 139 Taxman 170(Del), has held that the transaction is a genuine one and the CIT(A)'s order deleting the addition was upheld. He submitted that none of the witnesses of the Revenue whose statements were recorded either by the Dy. Director of IT or by the AO were produced for cross-examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped assessment. It may be noted that under similar circumstances, Hon'ble Delhi High Court in the case of CIT vs. Vipin Batra (2007) 212 CTR (Del) 557: (2007) 293 ITR 389(Del) has upheld the validity of reassessment and directed the Tribunal to deal with the case on merits. When the original assessment was completed under s. 143(1)(a), the AO has no occasion to form an opinion in such original assessment which can be said to have changed while reopening the assessment. This view is fortified by the decision of Hon'ble Supreme Court in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30: (2007) 291 ITR 500(SC). We, therefore, uphold the action of AO in assuming jurisdiction for framing reassessment under s. 147. Accordingly, the cross-objection raised by assessee is to be dismissed. 9. As regards addition made treating the transaction as bogus, we find that after the assessee having furnished proof for purchase, sale, registration of shares in her name duly supported by market quotations etc., the AO ignored the same on the basis of statement of the share broker, namely, Shri Satish Goel through whom the assessee has sold the shares. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the documents discovered and the statements of MA, a block assessment was made in respect of MA and the company on 29th Aug., 2002 under the provisions of s. 158BC of the IT Act, 1961. Subsequently, block assessment proceedings were initiated against the assessee and completed on 28th Nov., 2004, under the provisions of s. 158BD of the Act. During the assessment proceedings, the assessee requested the AO time and again to permit it to cross-examine MA on the basis of whose statement proceedings had been launched and from whose possession the documents were recovered, so that the assessee could prove its case. The request was not acceded to by the AO. The Tribunal held that the AO was functioning as a quasi judicial authority and was under an obligation to adhere to the principles of natural justice. Several requests were made by the assessee, but MA was not made available for cross-examination. On appeal to the High Court : Held that the Tribunal was right in its view that in the absence of MA being made available for cross-examination, despite repeated requests by the assessee, his statement could be relied upon to its detriment. In view of the above principle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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