9911796707
TMI Blog2015 (12) TMI 1711X X X X Extracts X X X X X X X X Extracts X X X X ..... s that whether the assessee had paid cash money to Shri. Narendra Shyamsukha to arrange for bogus long term capital gains in shares of various companies and accordingly the sums so received by way of long term capital gains could be treated as unexplained cash credit u/s 68 of the Act. Since the issues involved are identical in nature for all the four parties except change in figure of long term capital gains, they are taken up together and disposed off by this common order for the sake of convenience. 2.1. The brief facts of this issue is that the assessee claimed long term capital gains from transactions in shares of M/s Continental Fiscal Management Limited and M/s Swastik Securities & Finance Ltd. There was a search and seizure operation u/s 132 of the Act conducted in the premises of one Shri Narendra Kumar Shyamsukha on 24.10.2006 wherein inter alia various incriminating materials were found and seized. One such seized document vide page numbers 7 to 10 of the loose paper bunch marked as NKS /3 seized from his premises revealed certain notings regarding certain persons including the assessee. In the course of search, the statement of Shri Narendra Kumar Shyamsukha was record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement, the transactions should not be termed as bogus. In the course of re-assessment proceedings, the assessee has filed all the documentary evidences which were not disputed by him. The Learned AO disbelieved the version of the assessee and made the addition u/s 68 of the Act in respect of sale consideration received by the respective assesses by making the following observations:- "The documents on which the assesee have relied upon only speaks about the process of transacting in listed shares and does not prove the genuineness of the transaction itself. The furnishing of particulars is not enough and mere payment by account payee cheque is neither sacrosanct nor can make a non genuine transaction a genuine one. Relied on Precision Finance vs CIT reported in 208 ITR 462 (Cal). I, therefore, infer that the activities of all members of the family including the assessee were a product of a design to receive the bogus entry of the L.T.C.G.. I, therefore, add the entire alleged L.T.C.G. as unexplained cash credit u/s 68 of the IT Act, 1961." 2.2. On first appeal, the Learned CITA dismissed the ground raised by the assessee and confirmed the addition made by the Learned AO. Aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cash money to Shri Narendra Shyamsukha, the learned CIT(A) glossed over the facts that the neither Shri Narendra Shyamsukha could adduce any evidence about receipt of cash money from the appellant nor could the AO get any evidence in that regard and also that the actual broker viz. Ahila Commercial P.Ltd had completely denied and knowledge of Shri Narendra Shyamsukha and also of receipt of cash money. 2(f) On the facts and in the circumstances of the case, the learned CIT(A) erred in invoking the provisions of Section 292C of the Income-tax Act, 1961, in raising presumption in respect of recordings in documents seized from the premises of a third party viz. Shri Narendra Shyamsukha, in the unrelated case of the appellant. 2(g) On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the addition of rs.14,02,678/- made u/s. 68 of the Act, on the basis of nil/insufficient materials and evidences." 2.3. The Learned AR argued that the Learned CIT(A) erred in holding that the assessee had paid cash money to one Shri Narendra Kumar Shyamsukha to arrange for bogus long term capital gains in shares of M/s Continental Fiscal Management Limited an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome by a third party. He further argued that since the seized documents were not found in the premises of the assesses, there is no onus on them to disprove the claim of Shri Narendra Kumar Shyamsukha that the transactions of long term capital gains listed in the seized documents are bogus. He further argued that according to the statement of Shri Narendra Kumar Shyamsukha, he was an intermediary between the broker, Ahilya Commercial Pvt Ltd and another person named as Suresh Kumar and that Suresh Kumar was an intermediary of beneficiaries on whose behalf bogus capital gain was booked. However, on the seized documents there is no mention of Suresh Kumar and further Shri Narendra Kumar Shyamsukha also did not provide the address of Suresh Kumar and hence there is no credibility that could be attached to the statement given by Shri Narendra Kumar Shyamsukha. He further argued that even during the course of cross examination proceedings, Shri Narendra Kumar Shyamsukha could not prove that the assesses had paid any cash to him or any other person. 2.4. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 2.5. We have heard the rival submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses herein) instead of proceeding in the hands of Shri Narendra Kumar Shyamsukha in whose premises the entire seized documents were found. We find lot of force in the arguments of the Learned AR that since the seized documents were not found in the premises of the assesses, there is no onus on them to disprove the claim of Shri Narendra Kumar Shyamsukha that the transactions of long term capital gains listed in the seized documents are bogus. 2.5.3. We find that the presumption u/s 292C of the Act would have to be applied only in the hands of Shri Narendra Kumar Shyamsukha in the facts and circumstances of this case . Strangely we find that no addition has been made in the hands of Shri Narendra Kumar Shyamsukha with regard to the subject mentioned capital gains as unexplained cash credit and the assessments have been completed in his hands by just accepting the commission income offered by him on all these transactions. The Presumption contemplated u/s 292C of the Act is not available against the third parties (ie the assesses herein). We place reliance on the decision of the coordinate bench of this tribunal in the case of Niranjan Kumar Agarwal vs ACIT in ITA No. 558 / Kol / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Shyamsukha nor is it a matter of their concern in what manner he had maintained his documents and what he records in these documents. 2.5.7. We find that the purchase of shares of M/s Continental Fiscal Management Limited and M/s Swastik Securities and Finance Ltd were duly disclosed in the balance sheets of the assesses as on 31.3.2003 and 31.3.2004 and the same has been accepted as genuine by the revenue. The payments for purchase of shares were made by account payee cheques. These shares were sold during the Asst Year 2005- 06 through a registered broker with Calcutta Stock Exchange who had given proper contract notes evidencing the sale of shares and made payment of sale proceeds to the assesses by account payee cheques. We also find that the revenue had not brought any evidence on record that the documents comprising of purchase bills, contract notes, delivery challans and demat account were found to be false or fabricated. We hold that the transactions cannot be treated as bogus merely on the basis of the statement of Shri Narendra Kumar Shyamsukha, unless some independent enquiry has been conducted and a finding has been drawn by the Stock Exchange that these transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe such transaction. In view of the above, it cannot be said that the findings of the Tribunal is perverse. When the finding is not perverse, no interference is called for. Hence for the assessee's claim for loss on sale of shares was allowable. 2.5.8. We find that the action u/s 68 of the Act has been taken merely on the basis of the statement of the third party. We find that the assessees have duly proved the identity, creditworthiness and genuineness of the broker from whom the sale proceeds of shares were received by the assesses and hence the resultant long term capital gains thereon cannot be doubted with. Hence there is no scope for making any addition u/s 68 of the Act in the facts and circumstances of the case. 2.5.9. This issue is squarely covered by the coordinate bench decision of this tribunal in the case of Ashok Kumar Gupta and Mrs Amita Gupta vs DCIT in ITA Nos. 500-502 / Kol / 2013 dated 2.6.2015. The relevant operative portion of the said order is reproduced herein below:- "6. I have heard the rival contentions and carefully gone through orders of the Tax Authorities Below. I noted the fact in each of the cases, the shares which has been sold by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D of the Rules could be made in the facts and circumstances of the case for the Asst Year 2005-06. 3.1. We have heard the rival submissions and perused the materials available on record. We find that though the provisions of Section 14A of the Act which provides for disallowance of expenditure incurred by the assessee for the purpose of earning an income which do not form part of the total income is brought in the statute book bny the Finance Act 2001 with retrospective effect from 1.4.1962, the computation of disallowance is provided in Rule 8D of the IT Rules. Rule 8D of the Rules came into effect from 24.3.2008. We find that the Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing case reported in 328 ITR 81 (Bom) had held that provisions of Rule 8D could be made applicable only from Asst Year 2008-09. The assessment year under appeal for all the assesses before us is Asst Year 2005-06 and hence the Learned AO erred in invoking Rule 8D of the Rules for making disallowance u/s 14A of the Act. We also find that there is absolutely no discussion in the entire assessment order for all the assesses regarding the following facts :- a) Whether there is any receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
