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2017 (2) TMI 540

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..... directed against the order of ld. CIT(A)-5, Ahmedabad, dated 27.10.2015 vide appeal No.CIT(A)-5/Wd-10(2)/534/2014-15 arising out of order u/s 143(3) r.w.s. 147 of the IT Act, 1961 (in short the Act), framed on 18.03.2014 by ITO, Wd-10(3), Ahmedabad. Following grounds have been raised in this appeal :- 1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the notice issued by the Assessing Officer u/s.148 of the I.T. Act, 1961 which is illegal and bad in law and hence the same should be quashed. 2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the in passing assessment order u/s. 143(3) r.w.s.147 of the I.T.Act,1961 which is illegal and bad in law. 3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer in framing the assessment in gross violation of principles of natural justice and equity by not providing the statement of Shri Mukesh Choksi and other material and records on which reliance has been placed and therefore the same deserves to be quashed. 4. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the assessing of .....

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..... ns objecting to the reopening of the assessment and also denying allegations that it has availed any accommodation entry from Mahasagar Group. During the course of reassessment assessee s request for providing copy of statement of Mukesh M. Chokshi and opportunity to cross-examine him was declined by ld. Assessing Officer. 3. Ld. Assessing Officer after observing all the sequences of events and in the absence of evidences of nature and source of purchases and sales of shares as well as admission made by Mukesh Chokshi of assessee being involved in fictitious transactions, was of the view that assessee has been unable to prove the genuineness of the transactions and has not discharged the onus of burden primarily casted upon her and accordingly denied the claim of long term capital gain being exempt u/s 10(38) of the Act and added it back to the income of assessee and assessed the income at ₹ 2,78,815/-. 4. Assessee s appeal before ld. CIT(A) could not bring any relief and the same was dismissed confirming the addition made by ld. Assessing Officer. 5. Aggrieved, assessee is now in appeal before the Tribunal. At the outset ld. Authorised Representative (AR) submitted .....

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..... apital gain of ₹ 1,56,709/-. This long term capital gain arose on account of sale of shares of Talent Inforway through the broker company of M/s Alliance Intermediateries Network Pvt. Ltd. was amongst the group companies of 36 odd companies floated by Shri Mukesh M. Chokshi in the name of Mahasagar Securities Pvt. Ltd. Further during the course of search Mr. Mukesh M. Chokshi in his statement on oath has admitted that they are engaged in providing entries for taking profit or loss by showing purchase or sale of the shares and securities to various parties across India on which they charged certain commission from the beneficiary parties. We further observe that assessee has denied alleged allegation of being involved in taking accommodation entries and also made a request for providing a copy of statement of Mukesh M. Chokshi and opportunity of cross examination. It is undisputed fact revealed from the reassessment order that the request of assessee for providing copy of statement an opportunity to cross examine was declined by the Assessing Officer. Assessee has raised ground no.3 against the action of ld. Assessing Officer for not providing a copy of statement of Mukesh M .....

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..... tion 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. 15. The Hon'ble Apex Court held as under:- According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not gra .....

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..... 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 were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The dernat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could 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 transa .....

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..... its burden on the basis of statements recorded by it of the persons mentioned above. 18. We find that the assessee requested for cross-objection of the maker of the statement. Further, we find that the Assessing Officer also made an au^npt to allow the assessee opportunity to cross-examine the makers of the statement by issuing summons to them. However, the crossexamination could not take place because of failure on the part of the makers of the statements to appear on the appointed date. But strangely, thereafter, the Assessing Officer did ^ot take any step to allow effective opportunity to the assessee to cross-examine the makers of the statements. The Assessing Officer did not pursue the matter further. Thus, we find that the assessee was not allowed any real opportunity to cross-examine the persons who made the statement at the back of the assessee. In our considered view, in the circumstances, the statement of those persons cannot be read against the assessee. Our above view finds support from the decision of the Hon'ble Jurisdictional High Court in the case of (i) Heirs and Le^l Representatives of Late Laxmanbhai S. Patel Vs. Commissioner of Income Tax (supra) (i .....

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..... ered the said aspect and hence, the matter deserves consideration on the question raised. 5. As recorded by the Tribunal, the Tribunal found that the initial burden was discharged by the assessee. In our view, once the Tribunal upon the appreciation of the material found and recorded the finding of the fact that the assessee had discharged initial burden, such a finding of fact would be outside the judicial scrutiny in the appeal before this Court unless the finding of fact is perverse to the record. It is an undisputed position that the statement of the persons concerned which were recorded by the department, those persons were not made available for cross-examination, may be for one reason or another in spite of the attempts made by the department. Therefore the Tribunal has rightly found that the statement of those persons cannot be read against the assessee. 6. The attempt made to contend that the burden is upon the assessee to prove the identity of the person, creditworthiness of the person and the genuineness of the transaction are to be examined in context to the existence of the person concerned, the factum of actual money in possession of the person and having paid t .....

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