TMI Blog2011 (10) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax (Inv.) wherein it was stated that a detailed inquiry was conducted in the case of Mr. T. C. Kothari, M/s Gold Star Finvest Pvt.Ltd. and M/s. Richmond Securities P.Ltd., broker companies. The broker companies and Mr. I.C. Chokshi facilitated a number of parties by way of issuing bogus capital gain bills. This fact has been admitted by Mr. Chokshi vide his statement dated 26.4.2002 and further admitted that he had issued bogus bills of share transactions and charged the commission accordingly. The parties paid him cash equivalent to the bills amount and received cheques from the broker companies. In this way, both the parties acted purely in their manual pecuniary interest. Ultimately, resulted in tax evasion by the ultimate beneficiaries of such transactions. The AO observed that the assessee has adopted the same method and has shown long term capital gain of ₹ 1,94,849/-. A notice u/s 148 of the Income Tax Act, 1961 (in short the Act) was issued to the assessee on 29.4.2005 after obtaining the approval of the Jt,CIT, Range 21(2), Mumbai. In response to the notice, the assessee has stated that the return of income filed on 11.7.2001 may be treated as filed in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd. with a specific trade no. and order no. for sale of shares of Rashel Agro Limited as per the rates prevailing on that date with the Interconnected Exchange of India Ltd. Even the contract note and bill for sale of those shares issued by the Richmond Securities are not signed by Mr. Mukesh Choksi. This proves that these transactions are totally different from those referred by Mr. Mukesh Choksi in his statement. Under these circumstances, it proves that our transactions were for sale of shares and payment received was as sale consideration for these shares. Further Mr. Mukesh Choksi s statement has no connection with our transaction we had with Richmond Securities Pvt.Ltd. We therefore request you to treat our transactions of capital gain as genuine transactions and accept our claim of capital gain as per return of income filed with you. Without prejudice to the above, if your honour is not satisfied with the above explanation, we may request your honour to facilitate us to cross examine Mr. Mukesh Choksi or his statement. The AO further observed that the assessee has also filed contract note of purchase and sale of 8200 shares of Rashel Agro Tech. Limited. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case is for the FY 2000-01 relevant to the assessment year 2001- 02, therefore, the statement relied on by the AO is not at all applicable to the facts and circumstances of the assessee s case. He further submits that in the reasons recorded by the AO u/s 148, it was mentioned that the assessee has taken short /long term capital gain of ₹ 3,23,559/- on the sale and in support a photocopy of the cheque of Citi Bank dated 17.8.2000 for ₹ 3,23,559.75 was given to the assessee and on that basis the assessee s case was re-opened u/s 148 of the Act. However, no such transaction was entered into by the assessee inasmuch as it does not belong to the assessee. He further submits that in the assessment order, the AO has not made addition of ₹ 3,23,559/- but the addition on sale of 8200 shares of ₹ 3,89,050/- has been made. He, therefore, submits that the proceedings initiated by the AO u/s 148 are not valid in law. He therefore submits that in view of the documentary evidence submitted by the assessee, the assessee has entered into the genuine transaction of sale of shares, therefore, the AO has erred in making the addition of ₹ 3,89,050/- The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o filed all documentary evidence to show that he has sold 8200 shares of Rashel Agro Tech.Limited through broker along with share transfer certificate from the company M/s Rashel Agro Tech.Limited appearing at page 13 of the assessee s paper book. No contrary material was brought on record by the Revenue to controvert the above factual matrix of the case. There is no live link between the reasons recorded by the AO and the addition made by the AO. We do not find any merit in the submissions of the learned DR that the plea taken by the assessee is new plea which does not borne out from the order of the ld. CIT(A). However, we find that all these submissions are duly mentioned in paragraph 4 of the assessment order which have also been extracted in paragraph 2 of this order, thus the assessee has not taken any new plea, therefore, the plea taken by the ld. DR is devoid of any merit and the same is, therefore, rejected. 8. In the case of CIT V/s (1) Kelvinator of India Ltd. (2010) 320 ITR 561(SC), the hon ble Supreme Court observed and held (page 564): On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of formation of any such belief being recorded in the reasons, it not open for the Assessing Officer to express formation of such belief for the first time by way of affidavit-in-reply filed in the court. 10. In the case of CIT V/s Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom), the Hon ble Bombay High Court has held (page 247): 22 ..However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee. 11. Applying the ratio of the above decisions to the facts of the present case, we are of the view that there is no live link between the reasons recorded by the AO and the addition made and also in the absence of any tangible material to show that the transactions of 8200 shares of Rashel Agro Tech. Limited amounting to ₹ 3,89,050/- are not genuine, we are of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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