TMI Blog2018 (4) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... he shape of long term capital gain. Hence we delete the addition made by the AO on this account. - Decided in favour of assessee - ITA No. 292/JP/2017 - - - Dated:- 6-4-2018 - SHRI VIJAY PAL RAO, JM AND SHRI BHAGCHAND, AM For The Assessee : Shri S.L. Poddar (Advocate) For The Revenue : Shri J.C. Kulhari (JCIT) ORDER PER VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 27.03.2017 of ld. CIT (A)-I, Jaipur for the assessment year 2013-14. The assessee has raised the following grounds of appeal :- 1. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of ₹ 4,78,38,157/- on account of the long term capital gain treating the same as undisclosed income of the assessee whereas the assessee has shown the long term capital gain income exempt u/s 10(38) of the Income Tax Act, 1961. 2. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of ₹ 4,78,38,157/- without providing opportunity to the assessee for cross examination and rebutting the material collected at the back of the assessee. 3. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the said company M/s. Paridhi Properties Ltd. was amalgamated with M/s. Luminaire Technologies Ltd. and consequently the assessee was allotted 100000 shares of M/s. Luminaire Technologies Ltd in lieu of the shares of M/s. Paridhi Properties Ltd. These shares were then dematerialized on 25th October, 2012 as reflected in the demat account. The ld. A/R has referred to the demat account wherein the shares are credited and dematerialized. Subsequently, the assessee sold these shares between the period 20th November, 2012 to 13th March, 2013 through Stock Exchange and the sale was effected from the Demat account of the assessee. The copies of contract notes in respect of sale of the shares are placed at pages 6 to 52 of the paper book. Thus the ld. A/R has contended that when the acquisition of the shares as well as the sale of shares are duly reflected from the evidence produced by the assessee then the action of the AO to treat this transaction as bogus is without any basis and merely on presumption and assumption of facts by relying on the statement of Shri Deepak Patwari recorded by the Investigation Wing, Kolkata. The ld. A/R has relied upon the decision of the Coordinate Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee cannot be doubted and hence the acquisition of the shares of the assessee cannot be treated as a bogus transaction. Nobody can have the shares in his own name in demant account without acquiring or allotment through due process hence, except the purchase consideration paid by the assessee holding of shares cannot be doubted when the assessee has produced all the relevant record of issuing of allotment of shares, payment of share application money through bank, share certificate and demat account showing the shares credited in the demat account of the assessee on dematerialization. The said company M/s Paridhi Properties Ltd. was subsequently merged with M/s Luminaire Technologies Ltd. vide scheme approved by the Hon ble Bombay High Court order dated 27.07.2012. Hence, the assessee got allotted the equity shares of M/s Luminaire Technologies Ltd. as per swap ratio approved in the scheme and consequently the assessee was allotted 5 lacs share of ₹ 1/- each on M/s Luminaire Technologies Ltd. The evidence produced by the assessee leave no scope of any doubt about the holding of the shares by the assessee. 8. As regards the purchase consideration when the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee is ready to bear the cost of his travelling in this regard. It is manifest from the assessee s reply to show cause notice that the assessee had specifically demanded the cross examination of Shri Deepak Patwari however, the Assessing Officer did not offer the opportunity to the assessee to cross examine Shri Deepak Patwari. Further, the AO asked the assessee to produce the Principal Officers of the M/s Gravity Barter Ltd. and M/s Paridhi Properties Ltd. However, in our view if the Assessing Officer wanted to examine the principal Officers of those companies he was having the authority to summon them and record their statements instead of shifting burden on the assessee. It is not expected from the assessee individual to produce the principal Officers of the companies rather the AO ought to have summoned them if the examination of the officers were considered as necessary by the AO. Hence, it was improper and unjustified on the part of the AO to asked the assessee to produce the principal Officers of those companies. As regards the non grant of opportunity to cross examine, the Hon ble Supreme Court in case of Andaman Timber Industries vs. CCE (supra) while dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. Therefore, the statement of witness cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the order a nullity. The Mumbai Special of the Tribunal in case of GTC Industries vs. ACIT (supra) had the occasion to consider the addition made by the AO on the basis of suspicion and surmises and observed in par 46 as under:- 46. In situations like this case, one may fall into realm of 'preponderance of probability' where there are many probab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The theory of 'preponderance of probability' is applied to weigh the evidences of either side and draw a conclusion in favour of a party which has more favourable factors in his side. The conclusions have to be drawn on the basis of certain admitted facts and materials and not on the basis of presumption of facts that might go against assessee. Once nothing has been proved against the assessee with aid of any direct material especially when various rounds of investigation have been carried out, then nothing can be implicated against the assessee. Therefore, when the Assessing Officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. The Hon ble Jurisdiction High Court in case of CIT vs. Smt. Pooja Agrawal (supra) has upheld the finding of the Tribunal on this issue in para 12 as under:- 12. However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of Tribunal and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement of Sh. Pawan Purohit there is no mention of Sh. P. K. Agarwal. It was also submitted that there was no mention of Sh. P. K. Agarwal in the order of Settlement Commission in the case of Sh. Sushil Kumar Purohit. Copy of the order of settlement commission was submitted. The AO has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all thematerial facts available on record does not help much. The AO has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohi. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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