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Income Tax Officer –4 (1) , Agra Versus Shri Ashok Kumar Bansal and vice-versa

2011 (2) TMI 1527 - ITAT AGRA

C.O. No.10/Agr/2010 (In ITA No.289/Agr/2009) - Dated:- 11-2-2011 - SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER Revenue by : Shri Vinod Kumar, Jr. D.R. Assessee by : Shri Roop Kishore Agarwal, Advocate ORDER PER P.K. BANSAL, A.M.: This appeal by the Revenue and the Cross Objection by the assessee have been filed against the order of the CIT(A) dated 09.04.2009. 2. The only issue involved in the appeal filed by the Revenue, and the Cross Objection did not press by the .....

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- MOTLEY SECURITIES (P) LTD 2670, Hudson Line, GTB Nagar, Delhi. Broker s Bill detail - NOTC-SAMAY/15/005 dt. 16.05.1998 Date of sale - 18.06.99 Rate and amount of sale - @ 55.50 per share 942429/- Broker s Name - JRD STOCK BROKER (P) LTD. 4866/24 Sheel Tara House, Ansari Road, Daryaganj, New Delhi. Details of Billing - No. D1-A-PC/1999013/6 dt. 26.06.1999 Mode of payment of sale - Account payee drafts. 4. The assessee submitted photocopy of the Daily Amar Ujala dated 16.05.1998 showing per shar .....

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lding of 17000 shares by the assessee was also submitted. Details of the broker through whom the purchases and sales of shares were made was also filed. The Assessing Officer was not satisfied with the explanation of the assessee. He, therefore, made the addition of 9,40,657/- by holding that the assessee could not prove the sale of shares and genuineness of the receipts of money under section 68 of the Income-tax Act, 1961 ( the Act hereinafter). The assessee went in appeal before the CIT(A). T .....

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e inferred that the transaction of purchase and sales of shares entered into by the assessee were either bogus or accommodation entry. As regards the observations of the Assessing Officer that the appellant could not produce the broker and the purchaser of the shares which made him treat the capital gain as the unexplained money is merely his own belief and has no basis. Appellant along with the return of his Income had made complete disclosure of the capital gain on the sales of these shares wh .....

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the same by selling the share through a broker of a recognized stock exchange. The appellant had discharged his onus by providing the documents/evidence in relation to the identity of the broker and the genuineness of the transaction. The AO has not brought evidence to show that such capital gain was a sham transaction and has not proved any linkage with the transaction of the assessee, which could further prove that the assessee's transactions were bogus or merely an entry. No efforts were .....

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se or untrue. The Agra Bench of Hon'ble ITAT in the case of Ashok Kumar Agarwal in ITA No. 129/Ag/2004 dated 3.4.2006 in the similar circumstances have cancelled the addition of long term capital gains on similar facts. Also, Hon'ble ITAT Agra Bench Agra on similar facts in the case of Vineet Khera and Memo Devi on 14.3.2008 and other cases have accepted such long term capital gains. Further, Hon'ble P&H High Court in the case of CIT Vs Anupam Gupta reported in 166 Taxmann 178 on .....

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y of the order of the Hon'ble ITAT Agra bench Agra in the case of Shri Ashok Kumar Lavaina ITA 112/Agra/2004 wherein Hon'ble Agra bench vide its order dated 30/05/2008 has upheld the modus operandi and also confirmed the long term capital Gain on the sale of shares as genuine. No adverse inference has been drawn by the Hon'ble Bench. Similarly in the present case I find no defect in share transactions being made by the appellant and as such no adverse inference is drawn. Appellant ha .....

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J.R.D Stock Broker (P) Ltd. Thus in view of the above position of facts and the law, I hold that on merit the addition of ₹ 9,40,657/- is wholly unjustified and is hereby deleted. 5. At the outset, the ld. A.R. pointed out that the case of the assessee is duly covered by the decision of this Tribunal in ITA No.129/Agr/2004 in the case of Shri Ashok Kumar Agarwal vs. ACIT in which the shares in dispute relates to M/s. Grives Hotels Limited now known as Kedia Infotech Limited. When the matt .....

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.2010 the Tribunal has confirmed the order of the CIT(A) deleting the addition so made. 6. The ld. D.R., on the other hand, did not deny that the case is not covered by the decision of Shri Ashok Kumar Agarwal or the decision of the Third Member as relied by the ld. A.R. 7. We have carefully considered the rival submissions and perused the material on record along with the orders of the Tax Authorities below. We have gone through the order of the Hon ble Third Member in the case of ITO vs. Smt. .....

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he sale price at which the shares were sold. In that case, this Tribunal, after considering all the aspects, has held as under :- 10. I have carefully considered the rival submissions alongwith the orders of the Tax Authorities below as well as the order of my ld. colleague Members. I noted that while passing the dissent order the ld. A.M. has mainly relied on its separate order passed in the case of Shri Baijnath Agarwal (ITA No.133/Agr/2005). I have gone through the order of Shri Baijnath Agar .....

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Shri Ashok Gupta, Director of M/s. JRD Stock Brokers Pvt. Ltd. who stated that as a matter of fact there was no actual purchase and sale of shares as was reflected in the contract notes issued by M/s. JRD Stock Brokers Pvt. Ltd. to the beneficiaries. In that case the assessee claimed Long Term Capital Gain of ₹ 25,14,770/- and claimed exemption under section 54EA of the Act. The LTCG was shown on account of sale of shares through the brokers. The assessee submitted the copies of bills, sh .....

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The broker pointed out that he was engaged in giving bogus entries for the purchase and sale of the shares on commission basis. When the matter traveled to the Tribunal, the Tribunal deleted the addition by observing as under:- (10) So in the given case also the department cannot treat the long term capital gains as assessee s income from other sources. There is no direct evidence. The statements of the brokers were recorded at the back of the assessee. An opportunity of cross-examination means .....

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arwal was not produced for cross-examination. From his statement no adverse inference can be drawn against the assessee. Shri Manoj Agarwal handed over a letter to D.D.I. (Inv) in which he stated that out of the total transactions, the transactions amounting to ₹ 100 crores were only book entries. So it follows as a necessary corollary that entire transactions were not in-genuine. He has also not named this assessee. With regard to Agarwal & Company, there are no adverse comments in th .....

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are used against the assessee. Irrespective of the fact that the statements were recorded at the back of the assessee and that the assessee was or was not afforded opportunity for cross-examination, when overwhelming documentary evidences are produced by the assessee, the burden shifts on the Revenue to explain away them. Every time the statements cannot help the department. How the above mentioned evidences could be ignored ? The Revenue has to give reasons for rejecting them. These are importa .....

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dences placed in the paper book of the assessee. (12) In the case of ITO vs. Smt. Kusumlata reported in (2006) 105 TTJ (Jd.) 265, copy placed at page no.4 of assessee s Paper Book (judgements relied), the Hon ble Jodhpur Bench has held as under :- For making addition under section 69, the Department is required to prove to the hilt that the impugned transactions are bogus. The burden cast on the Department is very high which is required to be discharged conclusively in this case; there is no suc .....

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J could not produce his books of account or the quoted rate of shares in stock exchange being less or the transactions being not reported by J to the stock exchange, would not make a transaction bogus. The stock exchange has intimated the A.O. that they are only having information of the transactions between two members of the stock exchange and not otherwise. In the present case, the transaction was between a member and a non-member and therefore, such transactions were not reported in the stoc .....

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mstances unerringly and reasonably raising an inference to that effect. The assessee made payment for the purchase from her own sources through banking channel. The shares were transferred in the name of the assessee and were held by her for more than one year. There is no relationship between the party from whom the assessee purchased the shares and the party to whom these were sold. The shares were delivered after its sale and the assessee did not remain in possession of those shares. From the .....

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es of the case, the CIT(A) has correctly come to the conclusion that the assessee has dealt in these shares and these transactions cannot be held bogus. The deletion of addition of ₹ 4,99,062/- is confirmed. (13) The above decision clearly helps the case of the assessee. (14) Credence cannot be given to the statements of the persons who themselves admit and have dubious dealings as against the documentary evidences produced by the assessee. (15) Moreover, when purchases have not been doubt .....

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umption could be drawn by the Assessing Officer merely on surmises and conjectures. The Tribunal took into consideration that it was only on the basis of a presumption that the Assessing Officer concluded that the assessee had paid cash and purchased the cheque. In the absence of any cogent material in this regard, having been placed on record, the Assessing Officer could not have reopened the assessment. The assessee had made an investment in a company, evidence whereof was with the Assessing O .....

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case of the assessee. In the case of the assessee, purchase of the shares has duly been proved and there is no dispute on the purchase of the shares being made by the assessee. The shares were purchased in earlier year. The shares were transferred in the name of the assessee as has been confirmed by the company when enquired by the A.O. The assessee has submitted before the A.O., copies of the contract notes, copies of the sales bills, statement of account from the broker, old address of the br .....

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e purchase of the shares was not in dispute. While in fact in assessee s case the purchase of shares is also not in dispute but rather the company has directly confirmed to the A.O. the purchase of the shares by the assessee in reply to the notice issued under section 133(6). The ld. A.M. was also the party to that decision. I noted that in this case the A.O. has doubted the sale consideration because the share price has increased tremendously. I noted that in the case of Ashok Kumar Lavania als .....

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e transaction being entered into. Subsequently he has accepted that he has issued the draft after receiving the cash. Again he said that the cash was routed through some bogus account but he accepted that the draft has been made from his account. Subsequently, again he pointed out that he received cash of ₹ 9,00,000/- and ₹ 5,00,000/- while he has issued draft of ₹ 5,99,500/- and ₹ 6,19,508/- respectively. What happened to the balance amount? Nothing has been brought on r .....

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ITR 345 (Delhi) and that of Kishan Chand Chellaram, 125 ITR 713 (SC) and that of Umacharan Shaw & Bros., 37 ITR 271 (SC). All those decisions lay down the proposition of the law that statement recorded at the back of the assessee cannot be used against the assessee until and unless the assessee has been given the opportunity to cross examine the person. Ld. D.R. was asked in the open Court whether any opportunity for cross examination was provided to the assessee in respect of the broker. Th .....

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and little value can be attached to what he stated either in his affidavit or in his cross examination by the Assessing Officer. His conduct neutralizes his value as a witness. A man indulged in double speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. 12. Further, as noted, the statement was recorded by the DDI, Investigation Wing, Agra and not by the Assessing Officer himself. Thus, the truthfulness of the statement remai .....

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5) also observed as under :- There is no doubt that the statement of Manoj Agarwal had evidentiary value but weight could not be given to it in proceedings against the assessee without it being tested under cross-examination. In the absence of statement being tested, it cannot be said that it should be believed completely to the prejudice of assessee. 14. Under these facts, I am of the opinion that the case of the assessee is duly covered by the Division Bench of this Tribunal in the case of Ash .....

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case also I have held that the assessee s case is duly covered by the decision of the Division Bench in the case of Shri Ashok Kumar Lavania in ITA No.112/Agr/2004. 16. I also noted from the Assessment Order and the order of the CIT(A) that while scrutinizing the evidence filed by the assessee and framing the order, their minds were influenced with the other consideration that the value of the shares has tremendously increased which was abnormal and indicates that the entire transaction is mana .....

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ssessee were quoted at M.P. Stock Exchange at almost similar rates at which they were sold. The assessee is only a small shareholder of the company. He is not the director of the company or of the stock exchange. Under these circumstances how he can manipulate the prices is beyond one s comprehension. It is pertinent that the issue of abnormal increase in prices of the shares has come up for consideration before the ITAT, Agra Bench in the cases of Smt. Memo Devi (ITA No.396/Ag/2004 - reported a .....

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per Economic Times dated 27.02.2007 from which it can be seen that some shares increased even by more than 100 times. 17. In almost similar circumstances the Hon ble Punjab & Haryana High Court in the case of CIT Vs. Anupam Kapoor (299 ITR 179) has also observed as under :- The Tribunal was right in rejecting the appeal of the revenue by holding that the assessee was simply a shareholder of the company. He had made the investment in a company in which he was neither a director nor was he in .....

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essee is not aware of about the buyer of the shares. He enters into transaction only through a share broker. Therefore, the observation of the A.O. that the assessee could not identify the buyer cannot be the basis of regarding the transaction to be non-genuine one. I also noted that the A.O. has been influenced with the fact that the assessee has delivered the blank transfer share certificates to the broker when the delivery of the shares were given. Since the deal has to take place between the .....

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Stock Exchange. Shares were sold at the prices quoted at the Stock Exchange at the relevant time. The payment of sale consideration also flown from the bank account of the broker where the fund came through clearing, not in cash. The decision of the lower authorities are influenced by the general observation of the Investigation Wing that arose a suspicion turned into conclusive proof in the minds of the authorities that everybody who has sold the shares at a high price has converted his unacco .....

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Kishan Chand Chellaram vs. CIT reported in 125 ITR 713 (SC) has observed that the amount cannot be assessed as undisclosed income of assessee in the absence of positive material brought by the Revenue to prove that the amount in fact belonged to assessee as the burden lay on the Revenue. 19. In almost similar circumstances the ITAT, Delhi C Bench in the case of ITO vs. Naveen Gupta (5 SOT 94), copy of which is placed by ld. A.R., has observed as under :- Nevertheless, it is also noteworthy that .....

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of the assessee but there is no cogent material or evidence to indicate that the impugned sale proceeds reflected unaccounted income of the assessee. 20. It was the duty of the A.O. to bring on record sufficient evidences and material to prove that the documents filed by the assessee were bogus, false or fabricated and the long term capital gain shown by him was actually his income from undisclosed sources. The only material to support such conclusion of the lower authorities is either the findi .....

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copy of which is placed in the compilation of the assessee, held as under :- 10. For making addition under s.69 of the Act, the Department is required to prove to the hilt that the impugned transactions are bogus. The burden cast on the Department under s.69C (sic-69) of the Act is very high which is required to be discharged conclusively in this case; there is no such evidence. The assessee has purchased shares from M/s Maheshwari Sons. These purchases are evidenced from the contract note. The .....

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d rate of shares in Delhi Stock Exchange being less or the transactions being not reported by Shri J.K. Jain to the stock exchange would not make a transaction bogus. The Jaipur Stock Exchange has intimated the AO that they are only having information of the transactions between two members of the stock exchange and not otherwise. In the present case, the transaction was between a member and a non-member and therefore, such transactions were not reported in the stock exchange. Further, the credi .....

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and reasonably raising an inference to that effect. 21. I have also gone through various other decisions on similar issue under the similar facts and I noted that this Tribunal had consistently accepted the genuineness of the share transaction. Those cases are as under :- ITO vs. Sunita Gupta - ITA No.881/Del/2004 (Delhi Bench SMC ) Dilip Gargh vs. ITO - ITA No.470/Agr/2004 Gopal Prasad Agarwal vs. ACIT - ITA No.128/Agr/2004 22. I also noted that the case of the assessee is duly covered by the d .....

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t discharged by them, the decision to uphold accepting of alleged profit on alleged share of M/s. Prasidh Exports Limited and M/s. K.L.P. Finance Limited as income from other sources instead of assessee has claimed the capital gain is a correct decision or not. The Hon ble Third Member has held as under :- The only reason to make the addition is that confirmation from the share brokers could not be filed by the assessee and summons issued to the said persons were not served and returned unserved .....

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d on his advice and had no contact thereafter. The reasoning that summons issued to the parties came back unserved cannot by itself be held against the assessee as whether the share broker continues the business or discontinues the same or changed the addresses or for that matter the companies whose shares were purchased and sold changed their premises or names as changed by virtue of being acquired by some other company the assessee cannot be held liable to stay in touch for all times to come. .....

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on the Department to produce him and make him available for cross-examination by the assessee. Similarly, the evidence that the companies were not in existence at the address available with the Department does not detract from the assessee s claim in view of the documents available on record. The discrepancy in the amounts to the expenditure of ₹ 53,356 was because of consistent statement by the assessee that the share broker made a short payment and disputed the remaining amount. The Dep .....

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