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2017 (4) TMI 863

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..... o 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 demat 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 transactions were genuine and therefore, no adverse inference should be drawn. In the light of the decisions of the Hon’ble Supreme Court 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 .....

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..... 151 of the Act. 6. The reasons recorded by the A.O. read as under:- As per the information received from investigation wing, Mumbai, the assessee has involved purchase of certain shares amounting to ₹ 2,30f059/- from M/s. Mahasagar Securities Group Co. which was revealed that Mahasagar Group is engaged in issue of bogus purchase bills for accommodation. Therefore, I have reason to believe that the income chargeable to tax has escaped assessment to the extent of bogus purchases exceeding Rs.one lac for the period relevant to A.Y. 2008-09. 3. You are, therefore, requested to co-operate in the proceedings and produce or cause to be produced before me at my office at above mentioned address on 11/11/2013 the accounts and/or documents as that may be necessary to produce in support of your explanation. 7. A careful reading of the afore-stated reasons for reopening of the assessment shows that the assessment has been reopened merely on the information received from Investigation Wing. 8. The Hon ble Jurisdictional High Court of Gujarat had the occasion to consider an identical issue in the case of Harikishan Sunderlal Virmani vs. Deputy Commissioner of Income .....

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..... ts changed is more say 4 or 5,it cannot be genuine mistake but a deliberate change. To this extent, Levenshtein Distance Analysis or digit edit analysis act as a clear indicator for genuineness in client code modification. In short, the longer the distance (i.e. number of digits changed), the lesser the chance of genuineness. Hence, the editing of client code above it is termed as deliberate change and establishes the non-genuineness and contrived nature of the code change. 4. In view of the above facts, I have reason to believe that the income to the extent of ₹ 1,19,848/- has escaped assessment, which required to brought under tax. Therefore, this case is a fit the proceeding u/s. 147 of the Act. 9. And on the aforementioned reasons, the Hon ble High Court observed as under:- 5.03. Thus from the reasons recorded, the reopening of the assessment is on the information / data supplied by the office of the Principal Director of Income Tax (Investigation), Ahmedabad and the information received from the Principal Director of Income Tax (Investigation), Ahmedabad vide his confidential letter dated 8/3/2016. From the information received, it appears that thou .....

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..... s of Section 147 of the Act. The impugned re-assessment proceedings deserve to be quashed and set aside. Accordingly, the impugned notice issued u/s. 148 of the Act and reopening of the proceedings for A.Y. 2008-09 cannot sustain and the same deserve to be quashed and set aside and are hereby quashed and set aside. Ground no. 1 is accordingly allowed. 11. For the sake of completeness of the adjudication, even on merits of the case, the additions do not survive. A perusal of the orders of the authorities below shows that the claim of capital gains was denied by the revenue authorities on the strength of the statement of Shri Mukesh M. Choksi and the materials found from the third party i.e. books etc. in the case of M/s. Mahasagar Securities group and Mukesh M. Choksi. The revenue authorities were of the strong belief Shri Mukesh M. Choksi was providing accommodations entries by issuing bogus bills of share purchases of companies which were not listed on the stock exchanges and, therefore, the capital gains discussed by the assessee are the outcome of fraudulent transactions and cannot be accepted as such. Accordingly, the gains were treated as undisclosed income of the assessee. .....

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..... ness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply .....

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