TMI Blog2016 (12) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... rket which were accepted by the AO in the AY 2003-04 including the source of purchase out of speculation gain of ₹ 1,49,916/- and out of cash ₹ 8,383/-. Similarly sale of shares were also made through SEBI registered brokers. All the transactions of purchase and sales of shares were evidenced and supported with bills and vouchers of the brokers and confirmations from the brokers, acknowledgements of payments and receiving the sale proceeds by account payee cheques. The ld CIT(A) or AO could not bring any evidence on records to prove or rebut the evidences on records except the some enquiries which could not prove anything.We therefore set aside the order of CIT(A) on this issue and direct the AO to delete the addition Addition towards the cost of purchase of shares u/s 69C of the Act as unexplained expenditure - Held that:- The assessee has purchased the shares for a consideration of ₹ 1,58,299/- in the AY 2003-04 out of speculation income of ₹ 1,49,916/- and cash of ₹ 8,383/- and the investment was shown in the balance sheet as on 31.03.2003 and also the speculation income was shown by the assessee in her return of income as short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kun Construction Ltd ,purchase of Kailash Ficom Ltd. Under these circumstances we are inclined to set aside the order of CIT(A) on this issue and direct the AO to delete the disallowance. Disallowance of exemption u/s 54F of the Act out of long term capital gain on sale of shares - Held that:- The various reasons cited by the authorities below are that the assessee did not furnish the agreements with the builder qua the purchase of flat and also that the income by way of long term capital gain on sale of shares was found to be bogus. As we have decided the issue of long term capital gain on the sale of shares as genuine and deleted the additions under the head of other sources, we are of considered view that it would be fair and reasonable to restore the issue back to the file of AO to decide the matter afresh after affording a reasonable hearing to the assessee and the decide the issue of allowability of exemption u/s 54F of the Act accordingly as per facts and law. In view of our discussion hereinabove we set aside the order of CIT(A) on this issue and direct the AO to decide the issue afresh. - I.T.A. No.3028 to 3032/Mum/2011, I.T.A. No.3033 to 3037/Mum/2011, I.T.A. No.3038 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of commission/ service charges for arranging the capital gain. b. While sustaining the addition of ₹ 79,2371- the Learned CIT (A) failed to appreciate that the AO made the said addition without having any evidence on records but only on the basis of suspicion , surmise and conjecture. 4) Appellant craves leave to add, alter and/or modify the grounds of appeal on or before the date of hearings of the anneal. The assessee has also raised some additional grounds which read as under : Additional Grounds of Appeal The appellant submits the following additional grounds of appeal which are without prejudice to one another and without prejudice to the original grounds of appeal submitted earlier with the appeal: 1(A) On the facts and in the circumstances of the case and in the Hon'ble CIT(A) erred in confirming the treatment of the entire long-term capital gain of ₹ 15,06,271 on sale of shares as income from other sources for tax purposes by the learned AO by holding it as non-genuine, without there being any incriminating material found during search on this issue at all. The appellant prays that since in the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2012 that the assessee has raised some additional grounds in which the issue of jurisdiction was proposed to be raised. The ld AR submitted that the said issue of jurisdiction was not raised before the authorities below nor before the Hon‟ble Tribunal as the same was not advised by the earlier counsel of the assessee which was purely of legal nature. It was for the first time raised before the Tribunal which arose out of facts and assessment records before the authorities below. It was argued before us that since these grounds were of purely of legal nature concerning the jurisdiction of the AO make the additions and thus go to the very root of the matter. The ld AR was prayed for the admission of these grounds in interest of justice. In defence of his arguments the ld AR relied upon the decision of National Thermal Power Co Ltd Vs CIT(1998) 229 ITR 383(SC) and All Cargo Global Logistics Ltd Vs Dy. CIT (2012)137 ITD26 (Mum)(SB). 4. We have considered the rival submissions of the parties and case laws cited above and find that the issue of jurisdiction was not raised by the assessee before the authorities below because the assessee was not advised by the chartered account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from other sources as no incriminating material was qua the said income during the search. Therefore addition made in the assessment framed by the AO was without jurisdiction and therefore bad in law. According to the AR the addition made in the assessment so framed u/s 143(3) r.w.s. 153A of the Act was bad in law as the AO has no jurisdiction under statute and required to be deleted. In defence of his arguments and submissions the ld AR relied on the following decisions:- A) All Cargo Global Logistics Ltd V/s DCIT (2012) 137 ITD 287(Mum)(SB) B) Atithi N Patel V ACIT (order dated 22.8.2012 (ITA No.43 to 45 /Mum/2010 C) Hiren N Patel V ACIT (order dated 12.10.2012 (ITA No.39 to 41/Mum/2010 D) Gurinder Singh Bawa V DCIT (Order dated 16.11.2012 (ITA No.s 2075/Mum/2010 6. On the other hand the ld DR relied heavily on the orders of authorities below. 7. After considering the rival contentions and perusing the relevant materials placed before us, we find that the assessment in the year under consideration was not pending on the date of search. The return of income was filed on 21.03.2003 and no notice u/s 143(2) of the Act was issued till 31.3.2004 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years; Provided further that assessment or reassessment, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear sections 149, 151 and 153 which, inter-alia, deal with time limit, sanction for issue and time limit for completion of assessments and reassessments. All these are brought in section 153Aand specifically mentioned with an intent to bring them within the non obstante clause. Notwithstanding anything contained in these provisions where search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section132A after 31st day of May, 2003, that the Assessing Officer is in a position to and mandated to issue notice within the meaning of subsection (1) of section 153A. That is because the preceding Chapter, namely, Chapter XIII within which the powers of search and seizure and powers to requisition books of account are spelt out enable the Revenue to take care of cases where it effects a search and seizure. That search and seizure is effected and after the same is effected books of account, other documents, money, bullion, jewellery or other valuable article or thing is found as a result thereof that notwithstanding anything and within the meaning of the above provisions having been concluded, it is open for the Revenue to make an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the date of initiation of the search or requisition shall abate. We find that there is no divergence of views in so far as the provision contained in section 153A till the 1st proviso. The divergence starts from the second proviso which states that pending assessment or reassessment on the date of initiation of search shall abate. This means that an assessment or reassessment pending on the date of initiation of search shall cease to exist and no further action shall be taken thereon. The assessment shall now be made u/s 153A. The case of Ld. Counsel for the assessee is that necessary corollary to this provision is that completed assessment shall not abate. These assessments become final except in so far and to the extent as undisclosed income is found in the course of search. On the other hand, it has been argued by the Ld. Standing Counsel that abatement of pending assessment is only for the purpose of avoiding two assessments for the same year, one being regular assessment and the other being assessment u/s 153A. In other words these two assessments coalesce into one assessment. The second proviso does not contain any word or words to the effect that no reassessment shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in section 132 (1) empowers the officer to issue a warrant of search of the premises of a person where any one or more of conditions mentioned therein is or are satisfied, i.e. - a) summons or notice has been issued to produce books of account or other documents but such books of account or documents have not been produced, b) summons or notice has been or might be issued, he will not produce the books of account or other documents mentioned therein, or c) he is in possession of any money or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word incriminating document . Clauses (a) and (b) of section 132(1) employ the words books of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken into account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :- a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO, (b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing manner :- 58. Thus, question No.1 before us is answered as under : a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately ; b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means -(i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. 5. From the above proposition of law laid down by the Hon'ble Special Bench, so far as the assessee's case for assessment year 2004- 2005 is concerned, we find that the assessment for the assessment year 2004-2005 had attained finality and the same will not get abated. The addition in such a case can only be made on the basis of incriminating material found in the course of search and in the instant case, from the perusal of the assessment order as well as the order of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. ITA No 3030/Mum/2011 Assessment Year 2004-05. 14. Grounds of appeal taken by the assessee are as under : 1) a. On the facts and circumstances of the case as well as in Law the Learned AO erred in treating the Long term capital gain on sale of shares at ₹ 69,35,295/- as income from Other Sources. b. On the facts and circumstances of the case as well as in Law the Learned CIT (A) while confirming the addition erred in holding that the entire sale proceeds of shares credited in the books of the Appellant at ₹ 70,93,594/on account of alleged capital gain chargeable to tax u/s 68 of the IT Act and consequently enhancing the addition from ₹ 69,35,295- to ₹ 70,93,594/- . 2) On the facts and circumstances of the case as well as in Law the Learned CIT(A) erred in confirming the addition made by the AO u/s.69C of the I.T Act at ₹ 1,58,299/- being Unexplained expenditure incurred for purchase of shares. He failed to appreciate that the said shares were purchased in the earlier assessment year out of explained sources. 3) a. On the facts and circumstances of the case as well as in Law the Learned CIT(A) erred in confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase cost was stated to be met out of speculation income of ₹ 1,49,916/- which was wrongly declared as short term capital gain in AY 2003-04 and the balance of ₹ 8,383/- was paid in cash. The AO issued show cause notice to the assessee as to why the long term capital gain was not shown in the original return of income and why it should not be treated as concealed income of the assessee. The assessee submitted before the AO that the said long term capital gain was claimed exempt u/s 54F of the Act and hence not shown in the return of income. The AO noted that the assessee did not submit the computation of speculation income used for the purchase of shares, broker bill for purchase and sale of shares earning speculative income, no evidence qua purchase of shares of G Tech Soft Ltd and High Land Ind. Ltd and non submission of D-mat A/C and ultimately treated the long term capital on sale of shares as income from other sources by rejecting the submissions and replies of the assessee that the shares of two companies on which the assessee earned long term capital gain was shown as investments in the balance sheet of the earlier year i.e. AY 2003-04 and the same should not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94/- 4 2005-06 Rs.49 ,99,180/- Rs.49,83,050/- 5 2006-07 Rs.6,54,961/- Rs.7,25,513/- Ld.AR was specifically confronted on the above proposition vide note sheet entry dated 4.10.2010. He has not furnished any objections so far. In view of the above, additions made by AO are enhanced as discussed above. Ground No.2 is therefore dismissed and the disputed additions are enhanced from ₹ 15,06,271/- to ₹ 15,84,736/- for AY. 2002-03, ₹ 10,88,547/- to ₹ 11,38,317/ - for AY. 2003-04, ₹ 69,35,295/- to ₹ 70,93,594/-for Ay. 2004-05, ₹ 47,99.180/- to ₹ 49,83,050/- for AY 2005-06 and ₹ 6,54,961/- to ₹ 7,25,513/- for Ay. 2006-07. Penalty 271(1)(c) as already initiated by the Assessing Officer will now cover the enhanced income. 4. Ground No.2 of AY 2002-03 to AY 2005-06 and ground No.3 of AY 2006-07 4.1 As discussed in earlier para 2.3.24 ground No.2 of AY 2002-03 to AY 2005-06 and ground no.3 of AY 2006-07 are dismissed and the disputed additions are enhanced as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares purchased, date of purchase and sale, quantity purchased and sold with all supportive bills and vouchers issued by the brokers copies of which were placed from page no 68 to 78 of PB. The ld AR also submitted that the said speculation income was also accepted by the AO as STCG while framing the assessment order for AY 2003-04 a copy of which is placed at page no 5 to 11 of PB. Similarly the other documentary evidences qua cash payment of ₹ 8,383/- ( page no 81), copies of share certificate ( page no 82 to 90) , confirmations from brokers qua purchase of shares (page no 97 to 100), copies of bills for sales of shares issued by SEB registered brokers (page no 62 to 66) and bank statements of the assessee in which the sales proceeds were deposited by account payee cheques (page no 91 to 96 of PB) were brought to our notice. The ld AR argued that all the above evidences and records were before the lower authorities and the lower authorities have doubted the genuineness of the transactions while accepting the documents as it was not the case that all these documents were fake, forged and false. All the above documents proved that these shares were actually purchased in AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions were carried out through brokers who were not traceable as noted by the AO after issuing notices u/s 133(6) of the Act to these brokers. The BSE in reply to notice u/s 133(6) of the Act stated that many of brokers did not execute any share transactions on the said dates as stated by the assessee as observed by the CIT(A) in para 2.3.2 of appeal order. The shares prices in which the assessee claimed to have made gains shot up exorbitantly and astoundingly in a very short period without corresponding increase in the worth or intrinsic value as noted by the CIT(A) in para no 2.3.5 of the appeal order. The ld DR submitted that the SEBI investigated some of the brokers and even imposed penalties as observed by the CIT(A) in para 2.3.7 of appeal order. A search on Shri Narinder Shah proved that he was engaged in providing bogus entries of penny stocks at high prices and he gave detailed account of modus operandi during his own appellate proceedings which is noted by CIT(A) in para 2.3.7 and 2.3.9 of the appeal order. The ld CIT(A) also carried out enquiries from G. R. Pandya Share Brokers Pvt Ltd during the course of hearing of the assessee group of cases the outcome of which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown in the Balance Sheet as at 31.3.2003 beside showing the short term gain of ₹ 1,49,916/- and cash payments which were also examined by the AO framing the assessment for AY 2003-04 and accepted while framing the assessment u/s 143(3) r.w.s. 153A of the Act. However , the AO rejected the contention of the assessee of long term capital gain on sale of shares of ₹ 69 35,295/- and assessed the same as income of other sources for the reasons that the assessee has taken bogus entries of purchases and sales from the brokers who were engaged in the business of providing such entries and consequent capital gain was also bogus without doubting the bills and vouchers of sales and purchase of shares despite the fact the sources of investments were accepted by the AO in AY 2003-04 as stated hereinabove. The first appellate authority enhanced the assessment by treating the entire sale consideration of ₹ 70,93,594/- as income from other sources u/s 68 of the Act by making enquiries on the internet qua the said brokers despite all documentary evidences available before him. We find that the assessee has carried out all the shares transactions of purchase and sales through regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court has held that merely that the assessee has purchased and sold the shares of similar companies through same broker could not a ground for holding the transactions to be bogus and sham when the documentary evidences were produced to establish the genuineness of the claim. The shares were purchased and confirmed by the company to have handed over the shares bought by the assessee similarly the sale of shares were also evidenced by the documents though the purchases and sales were made off market at the prevailing rate in the market. The Hon‟ble court held that the mere fact that these transactions were off market could not be ground to treat the transactions as bogus or sham and upheld the finding of facts by the tribunal that the transactions were genuine. The Hon‟ble high court while upholding the tribunal decision considered and distinguished the decision of the Hon‟ble apex Court in case of Sumati Dayal Vs CIT (1995) 214 ITR 801(SC) by observing the in that case the assessee has claimed the income from horse races and a finding was recorded that the assessee has not participated in the horse races but purchased the winning tickets after the race wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee outside stock exchange and not through any registered broker - Assessee‟s claim was that these were off-market transactions - Whether since purchase and sale of shares outside floor of Stock Exchange is not an unlawful activity, it was not possible to hold that transactions reported by assessee were quite sham - Held, yes - Whether since books of account maintained by assessee clearly reflected purchase of those shares and since evidence on record fully established that assessee had purchased shares and had sold shares, sale proceeds of shares stood explained by assessee - Held, yes - Whether, therefore, addition in question was unjustified - Held, yes Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 2001-02 - Assessing Officer treated certain amount, credited in bank account of assessee‟s minor son, as unexplained investment under section 69 and added same to income of assessee - Whether since said amount represented realization of loan outstanding with one R‟, addition was not justified - Held, yes Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2001-02 - Assessing Officer treated certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciary who had availed bogus entries. We have noticed that the assessee had shown the investment in shares in the balance- sheet of the earlier assessment year and her return of income was accepted by the Department. We are of the opinion that once sales/purchase of shares is accompanied by this kind of evidences the genuineness of the said transactions cannot be doubted. Non-payment of STT cannot be and should not be basis for making addition of the section 68 of the Act. FAA has categorically held that all the necessary details about ITA No. 1772/Mum/2010 ITA No. 1774/Mum/2010 ITA No. 1775/Mum/2010 ITA No. 1788/Mum/2010 ITA No. 1789/Mum/2010 ITA No. 4460/Mum/2009 ITA No. 4792/Mum/2009 purchase and sale of shares were made available to the AO during assessment proceedings. We have perused the case laws relied upon by the AR. In the case of Mukesh R Marolia (supra) Hon'ble jurisdictional High Court has held as under: ....On further Appeal, the ITAT by the impugned order allowed the claim of the Assessee by recording that the purchase of shares during the year 1999-2000 and 2000-2001 were duly recorded in the books maintained by the Assessee. The ITAT has recorded a find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s listed in the appraisal report and it is stated to be involved in the modus operandi. It is on this material that the Assessing Officer holds that the transactions of sale and purchase of shares are doubtful and not genuine. In relation to assessee's role in all this, all that the Commissioner observed is that the assessee transacted through brokers at Calcutta, which itself raises doubt about the genuineness of the transactions and the financial result and performance of the company was not such as would justify the increase in the share prices. Therefore, he reached the conclusion that certain operators and brokers devised the scheme to convert the unaccounted money of the assessee to the accounted income and the assessee utilized the scheme. [Para 5] The Tribunal concluded that there was something more which was required, which would connect the assessee to the transactions and which are attributed to the promoters/directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the revenue. A copy of the DMAT account, placed before the Tribunal showed the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, insofar as assessee is not concerned with the activity of the broker and have no control over the same. We found that M/s Basant Periwal and Co. never stated any of the authority that transaction in M/s Ramkrishna Fincap Pvt. Ltd. on the floor of the stock exchange are ingenuine or mere accommodation entries. The CIT(A) after relying on the various decision of the coordinate bench, wherein on similar facts and circumstances, issue was decided in favour of the assessee, came to the conclusion that transaction entered by the assessee was genuine. Detailed finding recorded by CIT(A) at para 3 to 5 has not been controverted by the department by brining any positive material on record. Accordingly, we do not find any reason to interfere in the findings of CIT(A). Moreover, issue is also covered by the decision ofjurisdictional High Court in the case of Shyam R. Pawar (supra), wherein under similar facts and circumstances, transactions in shares were held to be genuine and addition made by AO was deleted. Respectfully following the same vis- -vis fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as we think, it to be so and in the absence of any other alternative case pleaded by him, it follows as a matter of course that the consideration for the sale passed from him. Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or Tribunal, Therefore the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact finding authority is made conclusive by law. 17. The fact that the assessee kept a separate account in respect of the income and expenditure relating to the premises in question is of little evidentiary value if one takes into consideration the past history of the case. At any rate what value should be attached to that circumstance is for the final fact finding body. 18. The circumstance that the assessee had at the very outset produced the sale deed and the trust deed before the Income-tax Officer is of no significance. Those documents formed the sheet anchor of the assessee's case. There was no particular virtue in the assessee's produci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onately considered the facts and circumstances of the case, relevant assessment order, the written submissions made and the arguments made by the Ld. AR. The Assessing Officer has given detailed reasons for coming into conclusion that the cost of purchase of shares of ₹ 78,465/-, ₹ 49,770/-, ₹ 1,58,299/-, ₹ 1,83,870/- and ₹ 70,552/for A.Y. 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07 respectively were unexplained expenditure incurred in the A.Yrs. 2002-03 to 2006-07. These reasons have been discussed in para 8 of the relevant assessment order and inter-alia, included: (a) the alleged speculation income through which the said penny stocks shares were purchased, were not disclosed in the original returns of income nor in response to the returns filed u/s.153C, .. (b) regarding the speculation income which was stated to have been credited to the P L Ac for A.Y. 2001-02, it was noticed by the Assessing Officer, that neither any business income was declared in that year nor any P L account was prepared (c) equity shares were allegedly purchased in cash, however, neither the copies of share broker bills nor the cash receipts nor the source of such expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer of ₹ 78,465/- for A.Y. 2002-03, ₹ 49,770/- for A.Y.2003-04, ₹ 1,58,299/- for A.Y. 2004-05, ₹ 1,83,8701- for A.Y. 2005-06 and ₹ 70,552/- for A.Y. 2006-07 u/s.69C is confirmed. Ground No.1 is accordingly dismissed. 31. The ld AR vehemently argued that the order of CIT(A) was against the facts on records as the assessee has purchased these shares in AY 2003-04 and not in the current year and therefore the no addition could be made u/s 69C of the Act in the current year when there was no iota evidence to suggest that the these shares were purchased in the current by ignoring the bills issued by the brokers and source of investments duly explained in AY 2003-04 and investments in shares were duly shown in the AY 2003-04 and sources also accepted by the AO while framing the assessment u/s 143(3) r w s 153A of the Act . Therefore the addition was bad in law and without jurisdiction. The ld AR without prejudice to the first arguments submitted that the investment in shares was not an expenditure but an investments therefore invoking provisions of section 69 C of the Act by the AO and its upholding by CIT(A) were bad in law as provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition. 34. The issue raised in the ground no 3 is against the sustenance of additions of ₹ 3,54,580/- by CIT(A) being commission payments to brokers @ 5% of sales consideration from sales of shares of 70,93,594/- made by the AO. 35. According to the AO the investigation wing of the department has information that the operator used to charge 5% commission of the total sales proceeds for arranging the bills, shares certificate and letter from the company transferring the shares in the name of beneficiary. Accordingly the AO issued show cause notice to the assessee as to why the commission @ 5% should not be added to the income of the assessee of the total sales proceeds of ₹ 70,93,594/- which was replied by the AR by submitting that no such commission was paid and the department found no evidence to this effect during the course of search. The ld AO rejected the contention of the assessee and added a sum of ₹ 3,54,680/- on account of commission alleged paid by the assessee to the brokers u/s 69C of the Act as unexplained expenditure by holding that all the transactions were bogus and not genuine. 36. The FAA confirmed the action of the AO by holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) of commission payments. The ld counsel of the assessee relied on decision of the coordinate bench in the case of assessee‟s family member Smt Kamlaben Pandit V/s ACIT in ITA No 822/Mum/2009(AY-2003-04) dated 26.02.2010 and prayed that the addition be deleted following the decision on similar facts. On the other hand the ld DR relied on the authorities below and submitted for upholding the same. 38. After considering the arguments of the rival sides and taking into account the materials on records as placed before us as also the decision of the coordinate bench, we find that the assessee has proved the genuineness of the transactions of sales and purchase of shares by producing the supporting evidences and the revenue has not brought anything contrary on records except guessing the practice of charging commission @ 5% of sales proceeds in case of bogus transactions. We find merit that nothing incriminating was found by the search team qua the commission payments and therefore addition of ₹ 3,54,680/-can not be sustained which is just a guess and hypothesis by the AO . The case of the assessee is also supported by the decision of the coordinate bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith BSE and the purchase consideration was discharged by two accounts cheques of ₹ 5,00,000/- dated 19.10.2005 drawn on Citi Bank and ₹ 3,34,924/- dated 2.12.2005 of HDFC. The assessee received refund of share money applied to Suzlon Energy Ltd on 14.10.2005 ₹ 19,39,530/- in Citi Bank and ₹ 11,64,720/- from Vasant Share Broker on 22.10.2005 in HDFC Bank and it was out of these funds the purchases of shares were made. The assessee produced before the AO the necessary bills and vouchers, bank statements which evidenced the payments for these shares to G.R. Pandya Share Broker. Similarly the sales proceeds were received in by cheque and deposited into the bank account the assessee and bills and vouchers were also produced before AO. The AO however not satisfied with the submissions of the assessee rejected the claim of assessee of short term loss of ₹ 6,54,961/- by holding that bank statement did not state the payment having been made to G R Pandya Share Brokering Ltd though there a payment of ₹ 3,34,925/- ,however, same could not be verified that it was made to said brokering firm. Second payment of ₹ 5,00,000/- could not be verified by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and sales of shares by the assessee furnished by the assessee, BSE records for sale of Shakun Construction Ltd ,purchase of Kailash Ficom Ltd. Under these circumstances we are inclined to set aside the order of CIT(A) on this issue and direct the AO to delete the disallowance. 48. Now we shall take up the appeals bearing ITA No.3033 to 3037/Mum/2011. Appeal No. Ground No. Decision 3033/Mum/2011 1 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 7 and 8 of this order. 2 and 3 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order 3034/Mum/2011 1 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order 2 Sec.54F which dealt with separately 3 4 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 4 Sec.54F dealt with separately 3041/Mum/2011 1 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 7 and 8 of this order 2 3 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order 3042/Mum/2011 1 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 7 and 8 of this order 2 4 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order 3 Allowed as per ITA No. 3032/Mum/2011 (AY-2006-07) vide para 47 of this order. 3043/Mum/2011 1 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 7 and 8 of this order 2 3 Allowed as per decision in ITA No. 3028/Mum/2011 (AY-2002-03) vide para 10 and 11 of this order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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