TMI Blog2017 (11) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... formation and admission of Shri Mukesh Chokshi in this order. Therefore, we do not find any error in the findings of the ld. CIT(A) on this issue. Accordingly, this ground of the assessee is dismissed. - ITA No. 796/Ahd/2016 And ITA No. 797/Ahd/2016 - - - Dated:- 16-11-2017 - Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member For The Revenue : Shri G.C. Daxini, Sr. D.R. For The Assessee : Ms Urvashi Shodhan, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- These two different assessee s appeals for A.Y. 2004-05, arise from order of the CIT(A)-5, Ahmedabad dated 26-02-2016, in proceedings under section 147 r.w.s. 143(3) of the Income Tax Act, 1961; in short the Act . 2. As the facts in both these appeals are similar, we take ITA No. 796/Ahd/2016 as the lead case and decide both the appeals for the sake of convenience. 3. The assessee has raised following grounds of appeal:- 796/Ahd/2016 1. The Ld. Commissioner of Income Tax (Appeals)-S, Ahmedabad has erred in upholding reassessment proceedings U/s.147/148 of the I T Act, 1961 as valid for the asst. year 2004-05. The re-assessment proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. That the Ld. CIT (Appeals) has erred in directing to charge interest u/s. 234B of ₹ 1,61,503/- of the IT Act, which may be cancelled. 10. That the learned CIT (Appeals) has erred in confirming initiation of penalty proceeding U/s. 271 (1)(c) of the Act. 11. In view of the above and others that may urged at the time of hearing, it prayed that:- ( i) That the proceedings u/s. 148 be held to be invalid being against the principals of natural justice and addition of ₹ 5,59,500/- and the order passed by the learned A.O. may please be cancelled or quashed. ( ii) The additions of ₹ 5,59,500/- made to the income of the appellant as income from undisclosed source may please be deleted and deductions and reliefs as claimed may please be allowed. ( iii)That the Interest charged U/s. 234B of ₹ 1,61,503/- of the IT Act may be cancelled. ( iv)Penalty proceedings initiated u/s. 271(1)(c) may please be cancelled and notice be vacated. ( v) Such other relief or reduction as the facts and circumstances of the case so require be granted. 4. In this case, return of income declaring income of ₹ 2,92,496/- was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of statement recorded of Shri Mukesh Chokshi. 6. The assessee has shown the relevant income from Short Jerm Capital Gain in the return of income and hence there is no escapement of income. 7. The assessee has relied upon on following decision. [ a] Mukesh R. Morolia vs. Addl. CIT (2006) SOT 247 (Mumbai) [ b] ITO 14(3)-l, vs Smt. Navneet Mehta [ c] ACIT 14(3), Mumbai vs. Shri Ravindrakumar Toshniwal The assessing officer has not accepted the submission of the assessee on the ground that Shri Mukesh Chokshi admitted various companies floated by him were provided accommodation entries, one of which was M/s Golt Star Finvest Pvt. Ltd. The assessee has received long term capital gain on sale of share of Talent Infoway Ltd. through Gold State Finvest P. Ltd amounting to ₹ 5,59,500/-. It was observed that the purchase consideration was paid in cash and these transactions were actually carried out off market. The shares were demated to the demat a/c of the assessee only on 13th November, 2003 and were sold on 14th November, 2003. Consequently, the assessing officer has added ₹ 5,59,500/- as undisclosed income u/s. 68 to the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Shri Mukesh Chokshi group of companies and all the transactions routed through the aforesaid companies were admittedly non-genuine as per the statement of Shri Mukesh Chokshi himself. 4.17. The appellant has alternatively submitted that the appellant has returned short term capital gain of ₹ 5,3 3,747/- from sale of shares of Talent Infotech Ltd. and sale price of these shares ₹ 5,59,500/- is added as income from undisclosed sources, therefore, ₹ 5,33,747/- is requested to be reduced from income of appellant if addition of ₹ 5,59,500/- is sustained or else there shall be double taxation of income. 5. During the course of appellate proceedings before us, the ld. counsel has furnished paper book containing information relating to computation of total income, assessment order u/s. 143(3), notice u/s. 148 ,submission made before the assessing officer and CIT(A) etc. The ld. counsel has contended that ld. CIT(A) has erred in sustaining addition made by the assessing officer in spite of the fact that assessee has explained transactions with the supporting evidences. She has also placed reliance on the decision of Hon ble High Court of Gujarat in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the CIT(A) that off-market transactions are not permissible. The assessee has stated that the transactions were made with the help of professional mediators who are experts in off-market transactions. 70.4 When the transactions were off-market transactions, there is no relevance in seeking details of share transactions from Stock Exchanges. Such attempts would be futile. Stock Exchanges cannot give details of transactions entered into between the parties outside their floor. Therefore, the reliance placed by the assessing authority on the communications received from the Stock Exchanges that the particulars of share transactions entered into by the assessee were not available in their records, is out of place. There is no evidential value for such reliance placed by the assessing authority. The assessee had made it very clear that the transactions were not concluded on the floor of the Stock Exchange. The matter bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of ld. CIT(A). Revenue s ground stands dismissed. We further find that the decision of the Co-ordinate Bench of ITAT was confirmed by the Hon ble High Court of Gujarat vide Tax appeal no. 645 of 2017 dated 4th September, 2017. The Ld. Counsel has also placed reliance on the decision of the Co-ordinate Bench of the ITAT vide ITA Nos. 810 to 815,922 to 926/Ahd/2015 in the case of Pratik Suryakant Shah others on the identical issue. The relevant part of the decision is reproduced as under:- 13. Having heard the rival contentions, we have carefully perused the orders of the authorities below. As mentioned elsewhere, we have considered the facts in ITA No.810/Ahd/2015. We find that the assessee had purchased 3000 shares of Telant Info Ltd from M/s. Mahasagar Securities Pvt Ltd on April 2004. The consideration was paid and the payment of consideration is not in dispute. The shares of Telant Info Ltd were listed in the Bombay Stock Exchange at that point of time. The shares so purchased were sold through M/s. Alliance Intermediateries Network Pvt Ltd and the consideration was received by cheque. It would be pertinent to mention here that though the shares were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. ITA Nos. 810 to 815, 922 to 926/Ahd/2015 Shri Pratik Suryakant Shah others - Total 11 Appls AYs 2006-07 2008-09 18. In the light of the decisions of the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat account. 19. As mentioned elsewhere and as agreed by the Representatives of both the sides; since the facts are common in all the impugned appeals, all the appeals by the assessees are allowed. The Assessing Officer is directed to treat the surplus as Long Term Capital Gains and allow the exemption as claimed by the assessees. 20. In the result, all the appeals filed by the assessees are allowed . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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