TMI Blog2011 (12) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order of the AO be restored. 3. That the appellant craves leave to add or delete or alter or modify any ground during appeal proceedings. 4. The Department has filed appeal before the Hon ble ITAT on identical issues in other cases. Grounds in assessee s cross-objection: 1. That the Ld. CIT(A) has rightly deleted the addition of ₹ 19,40,000/- + 38,000/- made on a/c of long term capital gain of shares and commission thereon under the facts or circumstances of the case. 2. That the Authorities below has erred in law and on facts in making disallowances @ 10% amounting to ₹ 13,830.00 out of expenses 138830/- under the facts and circumstances of the case. 3. That the authorities below has erred in law and on facts in assuming jurisdiction u/s. 147 and that too without complying with the statutory conditions as prescribed u/s. 147 to 151 of the Act and has thus erred in framing the impugned reassessment order. 2. For the sake of convenience, we first take up the appeal of the Revenue. The brief facts relating to the issue in dispute are that the assessee filed its return of income on 22.08.2000 showing total income at ₹ 193,985/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961. In the return of income filed on 22.08.2000, the assessee has shown sales of shares for ₹ 19,47,400/- without details evidences, thus, total sales are believed to be the bogus in view of information received from Investigation Wing, Agra. Similarly, the sale of gold coins for ₹ 1,65,60,750/- shown is also without any evidence on records which needs verification. Similarly, sale of silver bullions is required to be verified. Notices u/s. 142(1) and 143(2) of the Act were issued on various dates as mentioned in assessment order. On some of the dates the authorized representative and coparcener of the assessee-HUF Shri Rajeev Agarwal attended and furnished written replies. Copy of above reasons recorded was supplied to the learned authorized representative of assessee on 26.06.2006. Statements of Shri Rajeev Agarwal were recorded on 17.12.2006 and 23.11.2006, the relevant extracts of which have been reproduced by the Assessing Officer at page 4 to 8 of the assessment order. The assessee claimed to have received four bank drafts dated 20.10.99, 24.01.1999 and 19.02.2000 each for ₹ 4,99,000/- and bank draft dated 19.02.2000 for ₹ 4,43,080/- tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as expenses for arranging such accommodation entries vide assessment order dated 28.12.2006 passed u/s. 147/143(3) of the Act. Aggrieved by this order, the assessee went in first appeal wherein the assessee challenged the validity of proceedings initiated u/s. 147 of the Act as well as the impugned additions on merits. The ld. first appellate authority after considering the contentions of the assessee on both the issues, held the initiation of proceedings u/s. 147 as valid, but deleted the additions in dispute on merits by observing in para 3.19 to 3.21 of the impugned order dated 17.03.2010 as under : 3.19 I have considered the relevant facts and rival contentions and my observations are as under : The AO has no denied that the purchase of the impugned shares in the preceding year stood disclosed in the return of the appellant. The AO addressed a requisition u/s. 133(6) of the Act dated 03.11.2006 to M/s. Kaushambhi Finvest Lease Company Ltd., F-89/11, Okhala Industrial Area, Phase-I, New Delhi-110020. The fact of the said letter is not clear from the records. From the letter dated 19.12.2009 addressed by M.P. Stock Exchange Ltd. to M/s. Kaushambhi Finvest Leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. first appellate authority was not justified in deleting the addition without appreciating the facts that the assessee failed to get the impugned share transactions verified from the books of account nor could be able to produce any of the persons involved in the purchase and sale of shares. The summons issued to the share brokers returned back undelivered and the statements of Rajeev Agarwal and Shri Rakesh Gupta recorded by the department were in sharp contradiction to the true state of affairs attending the case. It was contended that the ld. first appellate authority has not appreciated the fact that the assessee could not be able to prove the genuineness of purchase of shares and alleged receipt of their sale proceeds. He relied upon the detailed order of the Assessing Officer passed u/s. 147 read with section 143(3) of the Act. 4. On the contrary, Dr. Rakesh Gupta, the ld. counsel for the assessee contended that from the reasons recorded it stands proved that no enquiry has been made by the Assessing Officer independently and the notice has been issued merely at the behest of the Investigation Wing and the entire exercise is based on pure guess and suspicion. Such gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrovered. The Assessing Officer while furnishing the remand report sought by the ld. CIT(A) on the submissions of assessee, has also not made any adverse remarks on the documentary evidence furnished before the authorities below. The ld. counsel for the assessee also drew our attention towards a letter dated 19.12.2009 addressed by M.P. Stock Exchange Ltd. to Kaushambhi Finvest Lease Company Ltd. in support of the selling rate of shares on the date of sale, i.e., on 08.09.1999. On the strength of these arguments, the ld. counsel for the assessee stated that the ld. first appellate authority has committed no error while deleting the impugned additions and therefore, the appeal filed by the Revenue may be dismissed. Reliance has been placed on the following decisions : (i). Baijnath Agarwal vs. ACIT, 113 TTJ (Agra) (TM) 129 (ii). CIT vs. Smt. Paramjit Kaur, 311 ITR (P H) (iii). CIT vs. Sfil Stock Broking Ltd., 325 ITR (DEL) 285 (iv). Sarthak Securities Co.(P) Ltd vs. ITO 329 ITR 110(Del.) (v). CIT vs. Indian Sugar General Ind. Export Import Corpn Ltd., 8DTR (Del) 112. (vi). Signature Hotels (P) Ltd. vs. ITO, WPC No. 8067/2010 (Delhi High Court) 5. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed sources burden on the Department is very heavy to establish that the alleged receipt was actually income of the assessee from undisclosed sources. 6. It is also worthwhile pointing out that the assessee purchased the impugned shares for ₹ 98,440/- in the assessment year 1999-2000 and the return of income filed by the assessee for that year reflecting the purchase of the impugned shares stood accepted by the department. Copy of return is available at page 56 of the assessee s paper book. The assessee had also furnished copy of purchase bill of the impugned shares from M/s. Batra Investments and photocopies of share certificates, copies of which are placed at page Nos. 50 to 58 and 69 to 258 of the paper book. Therefore, in our opinion, it is now not open to the Assessing Officer to disbelieve the purchase of the same shares during the year in dispute on the basis of a general enquiry made by the Investigation Wing. It is not the case of the Revenue that the company whose shares were traded by the assessee-HUF was a non-existent or bogus company or that the shares in question were not physically in possession of the assessee particularly when the assessee had furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case that the assessee s own money in cash traveled into the broker s bank account and the same routed back to the assessee through the banking channels as also speak the reasons recorded. This effort of the Assessing Officer, in our opinion, is based on his guess. It is settled principle of law that the person who alleges is liable to discharge his onus to prove the allegation. In such state of affairs, heavy burden lies on the Revenue to prove that the money of the assessee took such a route to the assessee, which the Revenue failed to discharge in the instant case. The Assessing Officer has not brought any positive evidence on record to support his conclusion and to prove the allegation that the money received by assessee as sale consideration of shares, actually flowed from assessee and were his unaccounted money. Thus, we find that the conclusion of the AO is based on the assumptions bereft of any evidence in possession of the Assessing Officer. In our considered opinion, a suspicion, howsoever strong it may be, cannot substitute a proof simply because the assessee did not produce the concerned persons before the AO even though there is no material on record to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on some material having live link between the material in possession and the formation of belief as to the escapement of income. In the instant case, there was no material on the basis of which the Assessing Officer could form a belief of escapement of income nor is there any live nexus between the reasons recorded and the belief formed by Assessing Officer as to the escapement of income. Mere suspicion cannot be made basis for issuance of notice u/s. 148 and the reasons to believe escapement of income should be bona fide and not mere a pretence. There is no application of mind of the AO or any independent enquiry by him. Therefore, the jurisdiction assumed u/s. 147 and reopening of the assessment is not sustainable at all and the ld. CIT(A) has wrongly held the proceedings as validly initiated. Reliance is placed on the following decisions : (i). Ganga Saran Sons Pvt. Ltd. vs. ITO, 130 ITR 1(SC) (ii). S. Narayanappa vs. CIT 63 ITR 219 (SC) (iii). Phool Chand Bajrang Lal vs. ITO 203 ITR 456 (SC) (iv). Indian Oil Corporation vs. ITO, 159 ITR 956 (SC) (v) CIT vs. Ram Lal Manohar Lal 158 ITR 9 (Del.) (vi) CIT vs. Jamnadas Dwarkadas Co. 209 ITR 1 (Bom) (vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment framed is void ab initio. 11. On the contrary, the ld. DR relied upon the order of the ld. first appellate authority on this count and submitted that there was sufficient material in possession of the Assessing Officer against the assessee which led him to record the reasons and to form the belief as to the escapement of income. The information received from the Investigation wing contained the transactions of fictitious entries of capital gains, name of the assessee listed in the list of beneficiaries, identification of bank accounts of assessee and the entry provider, which all constitute material for the belief of escapement of income entertained by the Assessing Officer. It was also submitted that substantial evidence were given to the assessee by the AO to substantiate that notice u/s. 148 was properly served. Moreover, after issuance of notice u/s. 148 within the period of limitation, its service is not required by law to be made within that period of limitation for initiating proceedings u/s. 147 of the Act. 12. We have heard both the parties and have perused the material on record and we find that substantial evidence were brought on record by the ld. Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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