TMI Blog2016 (6) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... corroborative value to be the basis for coming to an adverse view in the case on hand, since it was recorded behind the assessee’s back, from a person who was not involved in the purchase of the said shares and also since the assessee was not afforded opportunity for rebuttal of the same and to cross-examine the said person. Since no adverse finding has been rendered in respect of the direct material evidence placed on record in respect of her transactions of purchase and sale of the ‘said shares’ of M/s. Shukun Constructions Ltd. which stand duly disclosed in her audited Balance Sheets filed with the return of income of assessment years 2004-05 and the current year under consideration. In this factual and legal matrix of the case, as discussed above, we find that the addition of ₹ 95,12,812/- under section 68 of the Act made and confirmed by the authorities below to be unsustainable and therefore direct the AO to delete the said addition and accept the LTCG income of ₹ 93,00,012/- shown as exempt under section 10(38) of the Act. - Decided in favour of assessee - ITA No. 3801/Mum/2011 - - - Dated:- 27-4-2016 - Shri Jason P. Boaz, Accountant Member And Shri Sandee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the order of assessment for A.Y. 2005-06 dated 31.12.2007, the assessee preferred an appeal before the CIT(A)-30, Mumbai. The learned CIT(A) dismissed the assessee s appeal vide the impugned order dated 24.02.2011 upholding the addition made by the AO under section 68 of the Act. 3.1 Aggrieved by the order of the CIT(A)-30, Mumbai dated 24.02.2011 for A.Y. 2005-06, the assessee has preferred this appeal before the Tribunal raising the following revised grounds of appeal: - I - Appeal Ground No.1:- That on facts and circumstances of the case and in law, the ld. C.I.T. (Appeals) has erred in confirming the addition made by the ld. Assessing Officer u/s. 68 of the I.T. Act,1961 at ₹ 95,12,812/- on the basis of amount found credited in the bank account of appellant without adjudicating the legal plea raised that assessee appellant was neither required under the provisions of the tax law nor has maintained any books of accounts for the assessment year under appeal hence addition made u/s.68 is bad in law. 2 - Appeal Ground No-2:- That without prejudice to appeal ground no. 1, the ld. C.I.T. (Appeals) has erred in confirming the addition made by the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduction of the order of assessment and the conclusion was rendered summarily without any proper reasoning; i.e. basically it was a non-speaking order. 3.2.2 The learned A.R. for the assessee submitted that the assessee had furnished all the necessary documents as required to establish the genuineness of the purchase and sale transactions of the said shares of M/s Shukun Constructions Ltd., such as copy of brokers contract notes for purchase of shares and also confirmation thereof, copy of physical share certificates, copy of letter for split of shares, D-MAT statement of assessee with Stock Holding Corporation of India (SHCIL) evidencing the dematerialization of the said shares in the assessee s name almost three months before the sale of the said shares, copy of contract note of stock broker for sale of the said shares through Bombay Stock Exchange (BSE), evidencing the payment of Securities Transaction Tax (STT) thereon, price movement evidence of stock on BSE on which the said shares were listed and traded and also copy of the bank statement of the assessee evidencing the receipt of sale proceeds of the said shares through regular banking channels. The learned A.R. for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations and allegations of the AO that the purchase of the said shares is back dated and so arranged to enable the assessee to claim exemption from LTCG thereon. It was also submitted by the learned A.R. for the assessee that the assessee had purchased the said shares through M/s. Falgun Finvest, an authorised sub-broker duly registered with SEBI, who had given the delivery of the said shares in physical form through off market trade with appropriate transfer forms and these physical share certificates were lodged for transfer in the name of the assessee. It is submitted that copies of the said share certificates duly transferred in the name of the assessee were placed before the AO and forms part of the records of assessment. These facts, the learned A.R. for the assessee contends, are part of the corroborative documents which are placed at additional Paper Book (pages 1 to 7) which further highlights the erroneous basis adopted by the AO to hold that purchases of the said shares were back dated. The concerned return of income having been filed by the assessee for A.Y. 2004-05, i.e. the year in which the said shares were purchased, within the due date as per section 139(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the proposition that denial of opportunity to the assessee to cross-examine the witness, whose statement was the basis of the order of assessment, is a serious flaw rendering the order a nullity in as much as it amounted to violation of the principles of natural justice since the assessee was adversely affected, the learned A.R. for the assessee placed reliance on the decision in the case of Andaman Timber Industries (2015) 281 CTR 241 (SC). 3.3 Per contra, the learned D.R. for Revenue placed strong reliance on the orders of the authorities below. The learned D.R. submitted that the addition under section 68 of the Act made by the AO was after detailed analysis of the facts of the case and the learned CIT(A) has correctly confirmed the same. It was prayed that the impugned order of the learned CIT(A) be upheld. 3.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record, including the judicial pronouncements cited. From a perusal of the Paper Book (pages i to viii and pages 1 to 72) containing copies of written submissions, copies of documents placed before the authorities below, we find that documents pertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, as contended by the assessee, there is no evidence on record to show that any action or enquiry was carried out either by the SEBI or BSE in respect of the alleged manipulation or propping up of the price rate movement of the said shares of Shukun Constructions Ltd., as has been assessed by the AO. We find from the details filed by the assessee on record in pursuance of the query by the AO in the course of assessment proceedings, that the shares of Shukun Constructions Ltd. is listed on BSE and that the sale transaction of the said shares by the assessee is at the rate quoted on the date of sale has been confirmed both by BSE and the concerned stock broker M/s. Khambatta Securities Ltd. It is strange that the AO has made the addition under section 68 of the Act treating the entire sale proceeds of the said shares received by the assessee through regular banking channels from stock broker registered with SEBI, M/s. Khambatta Securities Ltd., which facts have been confirmed by the said stock broker. In our considered view, in these factual circumstances, the assessee has discharged the onus required under section 68 of the Act as she has established the identity of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the AO. 3.4.5 The assessee has placed before us a compilation of judicial pronouncements, the ratio of which has been placed reliance upon in furtherance of her case. In the case of Andaman Timber Industries (2015) 281 CTR 214 (SC) the Hon'ble Apex Court has held that denial to the assessee of the right to cross-examine the witness whose statement was made the basis of the impugned order is a serious flaw which renders the order a nullity in as much as it amounted to violation of the principles of natural justice because of which the assessee was adversely affected. In our considered view, this judgement of the Hon'ble Apex Court supports the case of the assessee in the case on hand as she was not afforded any opportunity of cross-examination of Shri Niraj Sanghvi whose statement was a basis for the AO making the addition under section 68 of the Act. This finding of ours is in addition to our earlier finding (supra), that the statement of Shri Niraj Sanghvi has no legal sanctity or evidentiary value as he was not the person through whom the said shares of M/s. Shukun Constructions Ltd. were purchased. 3.4.6 Another case relied upon by the assessee is of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale thereof; confirmation of the transactions of buying and selling of the said shares by the respective stock brokers, receipt of sale proceeds through banking channels, etc. As observed earlier in this order, we are of the view that the statement recorded from Shri Niraj Sanghvi on 31.12.2007, the day the order of assessment was passed, would have no evidentiary or corroborative value to be the basis for coming to an adverse view in the case on hand, since it was recorded behind the assessee s back, from a person who was not involved in the purchase of the said shares and also since the assessee was not afforded opportunity for rebuttal of the same and to cross-examine the said person. We are also of the view that the ratio and the factual matrix of the decisions in the cited case, i.e. Jatin Chhadwa (supra), Harkhchand K. Gada (HUF) others (supra) and Andaman Timber Industries (supra) would be applicable and support the case of the assessee since no adverse finding has been rendered in respect of the direct material evidence placed on record in respect of her transactions of purchase and sale of the said shares of M/s. Shukun Constructions Ltd. which stand duly disclosed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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