TMI Blog2017 (3) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... n relying upon statement of someone has to prove it and especially when it is challenged by another party. We have not come across the statement of MMC where he has included the name of the assessee to whom he or the group concerns had issue fictitious bills or bills for claiming non-genuine profit/ loss.MMC has given a general statement disclosing broader outline of the transactions entered into by him and the group entities. He had never stated that all the transactions entered into by group were non genuine. His statement was a good lead to take the investigation further and make specific queries. But it was not done. We are left with the general statement of MMC on side and on the other side are the facts like payment/receipt of share transaction value through banking channels, transfer of shares in and from the D-mat account, FAA’s finding that the sale was not in doubt, non observation of principle of natural justice by not providing cross examination of MMC.If all these facts and circumstances are weighed in the scale of reasoning, it would tilt in favour of the assessee. We are of the opinion that there was no justification on part of the FAA to direct the AO to tax the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction through touch and go technique. He asked the assessee as to why STCG should not be treated as undisclosed income of the assessee u/s.68 of the Act. In its reply the assessee argued that in the statements of MMC his name was not appearing.He asked for cross examination of MMC. As per the AO the DDIT (Inv.)had sent a list of persons who had purchased bogus bills or had claimed bogus profit/ loss,that in that list name of the assessee was appearing. The AO issued summons u/s. 131 of the Act to MMC.but he did not appear.Considering the circumstantial evidences and human probability ,the AO held that the transactions entered in by the assessee were not 100%genuine.Accordingly,he held that STCG of ₹ 6.05 lakhs shown in the books of account was to be treated as undisclosed credit/income of the assessee u/s.68 of the Act. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).Before him,the assessee challenged the re-opening stating that there was no tangible material to issue notice u/s.148 of the Act,that the assessee was not allowed cross examination of MMC. After considering the assessment order and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee,that the assessee had asked for cross examination of MMC.He referred to the case of Smt. Ananya Singh (ITA/6493/Mum/2014-AY 2005-06 dt.11.03.15) and stated that facts of both the cases are identical,that in that matter also the assessee had purchased shares of KCL, that the FAA enhanced the addition to ₹ 12.27 lakhs as against addition of ₹ 2.08 lakhs made by the AO.The Departmental Representative(DR)supported the order of the FAA. 6. We have heard the rival submissions and perused the material before us.We find that the assessee had purchased 1.74 lakhs shares of KCL for ₹ 26.29 lakhs through Alliance,that he sold those shares for ₹ 32.34 lakhs -through another broker,that he had shown profit of ₹ 6.05 lakhs under the head capital gains,that transaction was through D mat account,that payment for purchasing the shares and the sales proceeds were made through banking channels, that the AO had treated the transaction as business income as against STCG, claimed by the assessee,that during the appellate proceedings,the FAA made enhanced the income of the assessee,.We find that notice u/s. 148,in the matter was issued after four year and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification on part of the FAA to direct the AO to tax the entire sale proceed of shares in the hands of the assessee during the year under consideration.Similarly,the AO was not justified to hold the STCG as business transaction.The assessee was not dealing in the shares and securities and the shares of KCL were held by him as investment and not as stock in trade.Here,we would like to refer to the case of Smt. Ananya Singh (supra).We find that the facts of that case are identical to the facts of the case under consideration.The order of Ananya Singh (supra), reads as under : 2. Rival contentions have been heard and perused material on record. The fats in brief are that a search and seizure action u/s.132 of the I.T. Act 1961 was conducted by the investigation wing of the income tax department, in the case of M/s. Mahasagar Securities Pvt. Ltd. on 25.11.2009. Shri Mukesh M. Choksi and Shri Jayesh K. Sampat were the director of M/s. Mahasagar securities Pvt. Ltd and its related group of 34 odd companies out of which the prominent are being M/s. Alliance intermediaries and net work Pvt. Ltd, M/s. Mihir Agencies Pvt. Ltd, M/s. Gold Star finvest Pvt. Ltd, M/s. Richmond Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuinely purchase the shares, our attention was invited to the copies of purchase bills and contract notes of Karuna Cables Ltd. places at pages 8-17 of the paper book. Our attention was also invited to the copy of ledger account for the period from 1/4/2004 to 31/3/2005 and 1/4/2005 to 31/3/2006 in the books of the assessee and confirmation of broker Alliance Intermediaries and Network Pvt. Ltld., as placed at pages 18-20 of the paper book. The Ld. AR also highlighted copy of demat statement of ICICI bank and copies of Sale Bills and Contract Notes for sale of shares of Karuna Cables Ltd. to substantiate its claim for genuine purchase and sale. Assessee invited our attention to the ledger account copy of the broker Ramjidas Nagarmal Cons. P. Ltd. in the books of the assessee for the period from 1/4/2004 to 31/3/2005. Copy of the Bank Statement of ICICI Bank showing payment and receipt in respect of purchase and sale of shares. 8. In view of the above documentary evidences, it was contended by Ld. AR that the assessee purchased 67,200 shares of Karuna Cables Limited from M/s. Alliance Intermediaries Network Ltd. (Alliance) for ₹ 10,15,405/-. The said shares were sold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove sale transaction is not genuine. With regard to the statement of Mr. Mukesh Chokshi recorded, it was contended by Ld. AR that in the statement of Mr. Mukesh Chokshi, the assessee was not named. Further, during the course of assessment proceedings, the assessee had requested the ld. AO to allow an opportunity to cross examine Mr. Mukesh Chokshi. However the Ld. AO could not make available Mr. Mukesh Chokshi for cross examination. 13. Ld. AR brought our attention to the decision of coordinate bench of the Tribunal in the cases of Mrs.Rasila N. Gada ors. decided in ITA No.1773/Mum/2010 other connected appeals, vide consolidated order dated 8-8-2012, wherein in almost identical facts and in relation to the additions made on the basis of the statement of said Mr. Mukesh Choksi, the Tribunal has the action of the CIT(A) in deleting the additions by observing as under :- 5.1. After perusing the material available we are of the opinion that considering the facts and circumstances of the case, the order passed by the FAA does not suffer from any legal infirmity. Hon'ble Bombay High Court in the case of Sharada Credit and Mukesh R Marolia has upheld the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is some discrepancy in the statement of the Director of M/s. Richmand Securities Pvt. Ltd. regarding the sale transaction, the Tribunal relying on the statement of the employee of M/s. Richmand Securities Pvt. Ltd. held that the sale transaction was genuine. In these circumstances, the decision of the ITAT in holding that the purchase and sale of shares are genuine and therefore, the Assessing Officer was not justified in holding that the amount of ₹ 1, 41, 08, 484/-represented unexplained investment under Section 69 of the Income Tax Act, 1961 cannot be faulted. We are of the opinion that the facts of the case of Mukesh R Marolia are similar to the facts of the cases under consideration. Respectfully following the orders of the Hon'ble High Court and the coordinating benches of the Tribunal we hold that purchase and sale of shares by the assessee was a genuine transaction, and hence, addition made by the AO cannot be endorsed. Upholding the orders of the FAA , we dismiss the appeals filed by the AO. Facts of the present case are being identical to the above case and also in view of our observations made above, the impugned additions in this case are not cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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