TMI Blog2017 (2) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. In the light of the decisions in the case of Andaman Timber Industries (2015 (10) TMI 442 - SUPREME COURT) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker’s contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account. The Assessing Officer is directed to treat the surplus as Long Term Capital Gains and allow the exemption as claimed by the assessees. - Decided in favour of assessee - ITA No. 810/Ahd/2015 811/Ahd/2015 ,812/Ahd/2015, 813/Ahd/2015 , 814/Ahd/2015, 815/Ahd/2015 , 922/Ahd/2015, 923 & 924/Ahd/2015, 925 & 926/Ahd/2015 - - - Dated:- 21-10-2016 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to various parties across India en which he charged certain commission from the beneficiary parties. The same information received by this office along with copy of statement of Shri Mukesh M. Chokshi recorded by the Department on oath u/s. 131 of the I. T. Act in which the details also pertain to you. On scrutiny of the data/details received in this office, it is ascertained that you were also involved for taking unverifiable/bogus beneficial entries from the group companies belongs to Shri Mukesh Choksi during the F. Y. 2005-06. Your total transaction involved is ₹ 2,77,740/- for taking unverifiable/bogus entries by showing purchase and sale of share and securities. 3. In this context, a letter issued to you on 17/10/2013 and duly served upon you on the same date. In the said fetter, reasons were furnished to you and requested to produce or cause to be produced before the undersigned the accounts and/or documents as that may be necessary to produce in support of your explanation. However, it is observed that you have not complied this letter till date. 4. In view of the above, you are requested to show cause in writing with as to why the transaction of ₹ 2,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through MCX). d) The assessee has not furnished any supporting evidences for purchase and sale of shares, such as nature and source of payment, payment receipts, the name and address of the party to whom payment was made for purchase of shares, copy of bills/invoices, copy of transfer forms, any details regarding any application made for demat of such shares, etc. e) There is no reason to disbelieve the statement of Shri Mukesh R. Chokshi that he was engaged in fraudulent billing activities in the business of providing bogus speculation profit/loss, short term/long term capital gain/loss, etc. and the relevant findings of the DDIT(Inv.), Mumbai in this regard that no company other than M/s Richmond Securities Private limited has traded thought our exchange. Thus, the transactions which have not been carried out though the stock exchange are illegal and fraudulent and are not eligible for claim of exempt income u/s. 10(38) of the I.T. Act. Thus, as stated above, there is no reason to give an opportunity to the assessee to cross-examine Shri Mukesh R. Chokshi and the materials found from the third party, i.e. books, etc. Therefore, I do not agree with the opinion of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee was returned back in cash. It is also not the case of the Revenue that the shares in question are still lying with the assessee, nor it is the case of the Revenue that the amounts received by the assessee on sale of the shares is more than what is declared by the assessee. 14. The entire assessment is based upon the statement of Shri Mukesh Choksi. It is an undisputed fact that neither a copy of the statement was supplied to the assessee nor any opportunity of cross-examination was given by the Assessing Officer/CIT(A). The Hon ble Supreme Court in the case of Andaman Timber Industries in Civil Appeal No. 4228 of 2006 was seized with the following action of the Tribunal:- 6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. 16. On the strength of the aforementioned decision of the Hon ble Supreme Court, the assessment order has to be quashed. 17. For the sake of the completeness of the adjudication, even on facts of the case, the orders of the authorities below cannot be accepted. There is no denying that consideration was paid when the shares were purchased. The shares were thereafter sent to the company for the transfer of name. The company transferred the shares in the name of the assessee. There is nothing on record which could suggest that the shares were never transferred in the name of the assessee. There is also nothing on record to suggest that the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X
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