TMI Blog2019 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... summons, the A.O. has neither issued any show cause notice nor imposed penalty u/s. 272A(l)(c) of the Act. The assessee has also provided his new address where he was presently staying for communication to the A.O. He has also requested for reasonable and adequate time for making compliance. We observe from the material placed on record that the A.O. has not further indicated the need for any personal examination of the assessee. The loss on the trading of the lands was occurred before the earning of profit on the sale of land by the assessee. We find that as per material on record the loss in trading of lands was occurred on 01/01/2013 whereas the profit on the sale of land was occurred on sale of land 24/01/2013. Considering the contention of the ld. counsel that it is open market trade and the price is as agreed upon by the purchaser and sellers as per their requirement based on different factors like need of liquidity of funds etc., we observe that the A.O. has raised a number of doubt about the genuineness of above cited transactions but has not proved with supporting materials that the transactions were bogus - A.O. has failed to establish with relevant material that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registration no 19001/2011 of Sub Registrar, Ahmedabad-2,Adalaj . Cost of the land in the Profit Loss account shown by the assessee was ₹ 1,58,85,350/- which during the year had been sold at ₹ 6,19,20,000/- . The sale was made on 24/01/2013 through Development Agreement registered by Sub Registrar, Ahmedabad - 8, Sola vide registration no 485/2013, as such, the assessee had earned business profit of ₹ 4,60,34,650/- ( 6,19,20,000-15885350) on this transaction. The assessee has debiting P L Account by showing Purchase of Securities for Rs-1,04,42,33,8937- and credited the P L against sale of the securities for ₹ 99,85,04,803/- only. Thus has shown loss of ₹ 4,57,29,090/- (1044233893-998504803) from security trading . 4. The A.O. has stated that the assessee has booked loss of ₹ 4,67,50,000/- in the 9.0% BOM securities purchased s for ₹ 50,02,23,288/- and shown sold for ₹ 45,35,73,288/-. During the course of assessment proceedings, the assessee was asked to furnish copies of documents in support of the purchase and sale of the securities as claimed by the assessee. In response the assessee has submitted copies of purchase and sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Lac Each unit) of 9% BOM LOWER TIER H BONDS (INE457A09199) OFF-market from Fortune Gilts Pvt Ltd at the rate of ₹ 100.02/- and you have immediately sold 500 units of the said bond OFF-market to Vitale Bio sciences Ltd at the rate of ₹ 90.67 on the same day .You have thus incurred loss on Off-market trading of 500 units of 9% BOM LOWER TIER -H BONDS (ME457A09199)-to Vitale Bio Sciences Ltd. 3. From the exchange data it is clear that the price of the Bond has never been traded at a rate less than ₹ 100 /- on that date. Under these circumstances, you are requested to justify the sale price of the bond with all supporting documentary evidences or show cause as to why the loss incurred on the sale of the said bonds should not be treated as in genuine loss and thereby disallowed. The hearing for this purpose is fixed on 21.3.2016 at 10.30AM. 8.. The assessee vide letter dated 17.3.2016 has given a reply in this regard and the relevant extract is as under:- From the exchange data it is clear that from the price of the bond has never been made at a rate less than ₹ 100 on that date, Kindly furnish us the relevant material to enable us to verify the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn by SEBI, which clearly shows that the intention of the assessee was mala fide from the very beginning of the transaction. The assessee has adopted the intra-day trade coupled with transfer of the units between various demat account within a single day to give it a color of genuineness which is not acceptable. The department has to take into consideration the price reflected in the exchange to determine suppression of sale or exaggerated purchase. It is pertinent to mention here that the National Stock Exchange of India Limited vide its letter dated 23/03/2016 mentioned that the BOM Bonds 2022 (INE457A09199) pertain to OTC (over the counter) trades reported by participants on the Exchange Corporate Bond reporting platform. (iii) Assessee failed to prove the necessity to sale and also sale at a much lower price than purchase, i.e. fails to prove the genuineness of the sale price. The assessee had tried to divert the focus of the undersigned by proving that the transfer was made through the Demat account. However, in the show cause the assessee was asked to prove the genuineness of the sale price in the given circumstances . which the assessee failed to establish.The onus is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings it has been observed that the payment of this loss had been made from the 'Unsecured Loans' taken from 'El-Dorado Biotech Pvt Ltd (PAN AABCE1885F) amounting to ₹ 48350000/-. It has also been observed that 'Shri Ajay Surendrabhai Pate! is of the director of (EL-Dorado Biotech Ltd' as well as the director of Fortune Gilts Pvt Ltd. It is pertinent to' mention here that it has been ascertained from Dy. Director of Income tax (Investigation), Unit-l(l) .Ahmedabad wherein they concluded that the transaction of El Dorando Pvt. Ltd with M/s Vitale Bio science Pvt Ltd are not genuine. vii. Further it has also been observed that Pratik R Shah, the director of the purchaser of the Bond- Vitale Bio Science Ltd. had admitted that he 'is engaged in providing accommodation entries to a number of persons/entities in the form of LTCG unsecured loans, bogus purchases etc. vide his statement on oath given by them before the DDIT (lnv.) Unit - 1(3), Ahmedabad - Relevant Que. No. 11 and 14 are as under;-. Q..11 in reply to Ques.No.9 10, you have stated that the investment shown to have been made by the Amrapali Group by your company M/s. Sarang Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Hon'ble Apex Court that it is-true that apparent must be considered real unless it is shown that there are reasons to believe that apparent is not real. If all that an assessee -who -wants to evade tax is to have some recital made in documents either executed by him or executed in his favour, then the door will be left -wide open to evade tax. The taxing authorities were not required to put on blinkers while looking at documents produced before them. They were entitled to look into the surrounding circumstances to find realty of recitals made in those documents. The above ratio laid down by the Hon'ble Supreme Court has been reiterated and applied by the Hon'ble Apex Court in the case of Sumati Dayal Vs CIT[214 ITR 801] (S.C.) The facts of the present case clearly reveals that such trading transactions of purchase and sale of shares, had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. The assessee resorted to readymade scheme for purchase and sale of Bonds. Such transactions are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the real market factors, xv. In the present case, there is an obvious and plain transaction of tax evasion which has been clothed with the smoke-screen of subterfuges, by the assessee. The facts of the instant case clearly reveals that such trading transactions of purchase and sale Of bonds had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability. Such transactions are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short term capital loss. Such transactions are mutually self-serving. It is mentioned that earning profit is a natural instinct /ingrained in human beings, unless of course, earning of loss is also a profitable proposition as is discernible from the fact-situation of the present case. The assessee restored to a preconceived scheme, to procure short term capital loss by way of price-differential, in the said bond transactions, not supported by market factors. Cumulative events in such transactions of shares reveal that the same are devoid of any commercial nature and fall in the realm of not being bonafide, in contents. In view of the above legal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtune Gils Pvt. Limited and sold to Vitale Bio-Science Limited meaning there by here purchaser party in first two case became seller in loss / transactions. (ii) The AO has observed that Fortune Gilts Pvt Limited has shown Nil Income during the year and Vitale Bio Science Limited has shown loss of ₹ 18,987 in Profit loss account meaning thereby when appellant has been incurring huge losses, it is gain to other party and still they are showing Nil income or meager income which also support the contention of AO that transactions have been made to claim losses and avoid taxes. (iii) The AO has also scanned confirmation of purchase and sale transactions in assessment order in which appellant has incurred losses. The AO has also made inquiry from Depositories, bank and NSE form which it reveal that The above transactions are not routed through exchange. The appellant has also summarized bank transactions along with timing at page 8 of assessment order. It is observed that even though appellant has been making purchase transactions in one bond forRs 50 crore, it has not made any single payment to seller or received amount towards sale consideration at one instance. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertinent to note /that when appellant is acquiring bond for ₹ 100 per bond and in few minutes, funds are transferred how market value has been reduced to ₹ 90.67 per bond. The appellant has not given any justifiable reason which can support its contention that transactions were genuine more particularly what was the reason for selling bond at such huge losses. There was no other circumstantial event which has triggered appellant to sale bond at losses. When same amount of bond is received from one party and transferred to other party and entire circle is completed in four minutes, there is no reason why appellant would sell such bonds at losses in four minutes. The appellant has only raised technical arguments in appellate proceedings which have no substance and this argument of AO has not at all dealt with. (vi) The AO has also issued summons to appellant to appear before him on 23/02/2016 for explaining locus standi on this issue and appellant has failed to attend the summons to explain his stand and later is asking from cross examination of third party when he himself has failed to appear, before AO in response to summons. (vii) The appellant has also arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be made applicable in present case. The decision of Punjab Haryana High court relied upon by appellant is on consistency principle and ratio of said decision is not applicable in present case. Even decision of Hon'ble Kolkatta ITAT cannot be made applicable in present case as in said case genuineness of transactions was not doubted whereas in present case, AO has doubted such genuineness and even appellant has not rebutted the observations of AO as stated supra hence said decision is not applicable in present case. (xi) Reliance is placed on decision of Hon'ble Delhi High court in the case of CIT Vs Abhinandan Investments Limited (Tax Appeal No 130/2001) dated 19/11/2015 wherein it is held as under: 38. It is now well established that although tax planning is permissible but a colorable device to avoid payment of tax would be impermissible. Justice Chinnappa Reddy in his concurring opinion in Mcdowell (supra) had held that in our view the proper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances which lead to McDowell's decision leave us in no doubt that the principle enunciated in the above case has not affected the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the framework of law, unless the same fall in the category of colorable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity. 41. Indisputably, the Assessee Is at liberty to arrange its affairs in a manner so as to mitigate its tax liability. Every action of the Assessee aimed at reduction of tax liability cannot be viewed with suspicion by the Revenue. The decision in the case of Mcdowell (supra) insofar as it relates to the issue of tax avoidance has now been explained to apply only to limited situations where an Assessee creates a colourable device or enters into a sham transaction to evade the tax, which is otherwise payable by him. 42. In Commissioner of Income Tax v. SakarlalBalabhai: (1968) 69 ITR 186 (Guj), the Gujarat Court explained the meaning of tax avoidance and observed that Tax avoidance p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies of the Jindal Group. It is at once clear that shares of listed corporate entities of the Group were sold and funds were raised. The sale of these shares had resulted in substantial capital gains in the hands of the investment companies of the Jindal Group including the Assessee and the investment companies were liable to pay tax on the gains so made, in order to avoid paying the tax, the investment companies Including the Assessee entered into transactions for renunciation of rights with related companies of the same group. These incestuous transactions were for no other business purpose but to contrive a loss in the hands of the companies such as the Assessee who had incurred a tax liability on account of the gains made. It is claimed that the transactions of sale of rights entitlement had resulted in a tax loss, although no real loss had been incurred by these companies inasmuch as the consideration received for sale of rights exceeded the original cost of their principal investment. The funds received from sale of shares which had resulted in capital gains - in the case of the Assessee the sale of shares of JSL - were transferred to other related companies includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribing to the PCDs and in the circumstances, it could not be disputed that the transaction was genuine. It was contended that such transaction were permissible in law and, therefore, the tax effect of such transactions would necessarily follow. It was further contended on behalf of the Assessee that it is permissible for an Assessee to part with its asset with a view to book a loss. In our view, it cannot be disputed that in a case where an Assessee transfers its income producing asset, there could be no objection by the Revenue on the ground that the same had resulted in reducing the tax liability of an Assessee. However, this would not hold good if it is found that the Assesse along with its inter-related parties that implemented transactions for no commercial purpose but to create a tax loss while at the same time ensuring that the benefits of the assets remain within the group. This would be an abuse of the corporate form and such transactions, even though implemented, cannot be considered to be other than a colorable device for avoidance of tax. 48. As explained by the Supreme Court in Vodafone International Holdings B.V. (supra) the question whether a scheme is a colora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial purpose but to create artificial loss, with a view to reduce tax liability - Transactions of shares were not governed by market factors prevalent at relevant time in such trade, but same were product of design and mutual understanding on part of assessee -Further, shares were related to unlisted company - Whether Assessing Officer was right in holding that assessee resorted to a preconceived scheme to procure short-term capital loss for purpose of neutralizing shortterm capital gains by way of price difference in share transactions not supported by market factors - Held, yes - Whether cumulative events in such transactions of shares revealed that same were devoid of any commercial nature and fell in realm of not being bona fide and, hence, impugned loss was not allowable - Held, yes [Para 8] [In favour of revenue] The Hon'ble Kolkata ITAT in the case of Edward Keventer (P.) Ltd.Vs DCIT 89 ITD 347 has held as under: Section 45, read with section 48, of the Income-tax Act, 1961 - Capital gains -Chargeable as - Assessment year 1993-94 - Whether under Act income-tax authorities are empowered to go behind transaction to find out real and if a tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit for tax I purposes - Held, yes - Whether, therefore, action of Assessing Officer, which had been confirmed by Commissioner (Appeals), in disallowing loss claimed by assessee-company, was justified and in order- Held, yes. (xii) The AO also observed that it is ascertained from DCIT, Investigation, Unit 1(1) wherein they have concluded that the transactions with El Dorando Pvt. Limited with Vitale Bio Science Pvt. Limited are not genuine. Even director of Vitale Bio Science Limited, Pratik R Shah has also admitted that he is engaged in providing accommodation entries to a number of entitles. On the other hand appellant has argued that cross .examination is not given of such party. It is observed that when AO issued summons to director of appellant to remain present in assessment proceedings, he has failed to appear before authority and now claiming deduction of artificial loss on technical ground. Even appellant has not submitted any confirmations of all the parties confirming that transactions with appellant are genuine. It is also observed that AO has not disallowed entire loss merely on statement of Mr Pratik Shah but has produced cogent evidences in assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the AO has not made any reference of the statement of Mr. Pratik R. Shah. He has further submitted that as per page no. 50 of the paper book in the show cause notice dated 14/03/2016 the AO has not raised any issue pertaining to the summon issued and thereafter completed the assessment. He contended that from these facts it is clear that the summons were issued to obtain documents and not for the purpose of any third party cross examination. All the required documents were placed in the record. He contended that the name of the assessee is no where referred in the statement as stated by the A.O in the assessment order and the sales/purchase transactions of the assessee were genuine transactions. He has also stated that the A.O. has not made any addition u/s. 68 by disproving that the borrowing were not guanine. He has further stated that the SEBI circular is related to stock exchange. He has contended that the sale on the floor of stock exchange may takes its own time and price given in the stock exchange screen shot was not the price as the opening price. He has also contended that in A.Y. 2008-09 2009-10 there were similar transactions taken place where the A.O. has granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase and sales of securities account, the appellant has shown net loss of ₹ 4,57,29,090/- in A.Y. 2013-14. As appended in Table-A at para 3.2 of the assessment order, out of four transactions of trading in securities, the appellant has earned profit of ₹ 10,20,910/- in three transactions and he incurred gross loss of ₹ 4,67,50,000/- in the rest transaction. Similarly, in A.Y. 2014-15 the assessee has shown loss of ₹ 3,62,95,000/- in the security trading. 1.2 The A.O. has disallowed the appellant's claim of business loss in trading in securities holding the same as non-genuine, rejecting the contentions of the appellant for the reasons stated in para 8/9 of the impugned assessment orders respectively. The appellant's submission vis-a-vis so called reasons assigned by the Ld. A.O. may be briefly stated as follows: (i) Reasoning of the A.O. That the appellant is selling an assets which have to be reported to one of the stock exchanges of the country authorized by SEBI. Submission of the appellant in rebuttal: (a) As submitted under letter dated 04/08/2017 (PBP 70) 09/12/2016 (PBP 25), the appellant having done off ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed u/s. 143(3) of the Act for A.Ys. 2008-09 2009-10. (iii) Reasoning of the A.O. That the assessee failed to prove business expediency. Submission of the appellant in rebuttal: The observation of the A.O. is a casual in nature for the reason that as is settled in law by catena of judicial pronouncement that for the business expediency, it is the assessee who is the best judge to take a prudent decision at a particular point of time and it is not left to the A.O. to decide the same by sitting in the arm chair of the assessee. during the course of assessment proceedings the appellant has submitted all the material details of transactions entered into by the appellant and the A.O. has not pin-pointedly detected nor brought any material on record to prove that the transactions is bogus. Only by viewing the sale at a lower rate than the purchase rate does not mean that the transaction is bogus. (iv) Reasoning of the A.O. That the assessee has not brought any concrete material i.e. valuation report or any evidence which could justify its sale price. Submission of the appellant in rebuttal: As submitted in the foregoing, the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order of A.Y. 2013-14. Similarly, PAN of all the connected persons are also noted in the said paragraph. They are in no way related parties to the appellant or the appellant has no interest in any of the companies mentioned above. None of the parties have been examined by the A.O. for enquiring genuineness of transactions before jumping into conclusion that the transactions of El-Dorado Biotech (P) Ltd. with M/s. Vitale Bioscience (P) Ltd. are not genuine, simply drawing so called support from DDI(Inv.). (vi) Reasoning of the A.O. That Vitale Biotech Ltd. has been held as one of the accommodation entry provider, as emerging from statement of one Shri Pratik R. Shah Director of Vitale Bioscience Ltd. Submission of the appellant in rebuttal: First and foremost, the A.O. has nowhere mentioned the date of statement, in whose case it was recorded and/or section of IT Act under which the so-called statement was recorded as stated. Secondly, the so-called statement has neither been provided by the A.O. to the appellant during the course of assessment proceedings nor the appellant has been afforded an opportunity of cross examination of the said person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed all that transactions are not genuine relying upon decision in the case of Mcdowell and co. Ltd. The A.O. has ignored/overlooked the material facts placed on record that all the transactions have been routed through Demat Account and all the payments have been made throughbanking channels and accepted by A.O. (b) It is an uncontroverted, undisputed accepted fact by the A.O. that Copies of deal confirmations for purchase and sales of securities are filed before the A.O. vide appellant's submission dated 11/01/2016 letter dated 02/12/2016 respectively for both the A.Ys. Further, transactions are settled through Demat Account and accounts are settled by on-line transfer of funds through net banking. (c) Vide para-8(ix x) of the impugned order, the A.O. has cited few case laws in his support. It is stated that the cases cited by the A.O. are old ones and distinguishable with the facts of the case of the assessee. The mentioned cases were rendered on totally different facts and cannot be applied to the fats of the assessee. Therefore, considering overall legal effect by placing reliance upon the said judgments is wholly irrelevant and inapplicable on the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir boundaries and confines would enable us to draw lines amongst the four corners. The term tax mitigation is simple, intelligible and unequivocal. It is positive term and refers to the assessee taking benefit or advantage of a provision which the tax code intends and wants to confirm. Deduction under Chapter VI-A, exemptions under Section 10A, 10AA, 10B etc. of the Act are all provisions relating to tax mitigation. If an assessee takes benefit or advantage by complying with the stipulated conditions therein to reduced his tax liability, it would be a case of tax mitigation. The test, if ardently applied, would contradict and would be irreconcilable with tax payers' right to arrange his affairs within the confines of law, which is prohibited or barred. Naturally, the dividing line between acceptable and abusive tax avoidance cannot be deduced or inferred from lowering of elimination of tax liability. The latter is the consequence of the tax effect. The assessee is well within his right to choose any one event between the two or more events and select an event to minimize or reduced his tax liability. The IT Act, per se, unless a provision so stipulates, does not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. With regard to A.O/s observation at para 6 of A.Y. 2014-15, a summons u/s. 131 was issued on 11/11/2016 to remain present in his office on 18/11/2016, it is stated that as may be verified from the copy of order sheet (PBP 57), there is no such reference of issuance of so-called summons on referred date. Without prejudice to the above in response to RTI application filed by the appellant the A.O. has provided a photo stat copy of alleged summons dated 11/11/2016.(PBP 71). However, the date of service and mode of service is not proved. Further, in the said so-called summons, the details with regard to sale/purchase of Bond were only called for. In fact the relevant details were already submitted under appellant's letter dated 02/12/2016 (PBP 23-24). In any case, there is no such default on the part of the appellant for complying with the requirement of the A.O. 1.4 Without prejudice further it is submitted that the appellant has been carrying on the business in purchase and sale of securities since inception and maintaining regular books of accounts and all the related records. In the assessee's own case the assessments for A.Y. 2008-09 and A.Y. 2009-10 hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been recorded, without appellant's submissions being vetted in proper perspective: During the course of appellant proceedings the appellant has submitted a fairly detailed written submissions dated 04/08/2017,(PBP 63) (PBP 88) respectively duly indexed paper book. The submission of the appellant having been reproduced at para 4.2 of the appellate order, for the sake of brevity the same is not repeated here. However, it is submitted that the Ld. CIT(A) has sustained the disallowance made by the A.O., merely agreeing with the views of the A.O.,' without appellant's submissions being vetted in proper perspective, giving reasons, briefly stated as follows (without repeating the applicable text narrated above): (i) Reason recorded by Ld. CIT(A): That in all the cases transactions are settled on same day and the purchase party in first two cases became seller in loss transactions. Submission of the appellant in rebuttal: It is submitted that the appellant has been dealing in securities that of Government Securities and Corporate Bonds etc. since couple of years. As stated in the foregoing, in the scrutiny assessments made in the recent past, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moved from one account to another account which suggest that the transaction are not of purchase and sale but claimed to have been made to obtain losses. Submission of the appellant in rebuttal: As contended by the appellant before the A.O. as well as CIT(A) that in similar nature of transactions, appellant has earned profit also and even if the A.O. is making disallowance of loss in off market transactions , then he ought to have disregarded the profit also in similar transactions. The Ld. CIT(A) has held that the profit earned by the assessee in such transactions should be given set off against loss incurred in one transaction. This goes to show that the Department has accepted off market transactions as genuine and valid where appellant has earned profit. There is no allegation that the delivery and payment in regard to transactions are not genuine. Hence, the observation of the Ld. CIT(A) is contrary to his own finding. (iv) Reason recorded by Ld. CIT(A): There was no circumstantial event which has triggered appellant to sale bond at losses. The appellant has raised only technical arguments in appellate proceedings which have no substance and this argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. had called for the following through the referred summons: Books of account/documents to be produced . 1. Copies of all bank accounts statements. 2. Copies of all Demat A/c along with copies of slips issued to depository allowing to transfer the bonds from your account to the buyers a/cs. (b) In response to the above, the assessee has already filed a compliance letter dated 22/02/2016 (PBP 37) whereby the appellant has submitted requisite details. Therefore, the observation of the A.O. that there was non-compliance of the referred summons is wholly incorrect. Without prejudice to this it is stated that the terms of reference has been altogether different one and even for alleged noncompliance of the summons, the A.O. has neither issued any show cause notice nor imposed penalty u/s. 272A(l)(c) of the Act. (c) As stated in para-8(vii) of the impugned Assessment Order, the proceedings in the case of the assessee have bearing upon the intimation received from the D.I.(Inv.), Ahmedabad having a reference of a statement of one Mr. Pratik R. Shah recorded by the D.I. (Inv.), Ahmedabad. However, neither a copy of the so-called statement is supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has failed to give justifiable reason for incurring looses and trading has not been carried out at prevailing market rate, the A.O. is bound to disallow such loss when it is artificial losses. Submission of the appellant in rebuttal: It is submitted that when in the same nature of transactions in rest of 3 transactions, the Ld.CIT(A) has accepted them being genuine which showed profit earned by the appellant, the Ld.CIT(A) is not justified in drawing an adverse inference in regard to transaction of incurring loss. Such inconsistency is impermissible for the reason that the revenue department cannot apply pick and choose method to consider particular transaction as genuine or non-genuine, when they are happened and effected in the same manner. (vii) Reason recorded by Ld. CIT(A): That A.O. is correct in observing that appellant has just performed touch and go transactions without any commercial expediency, referring to SEBI circular. Submission of the appellant in rebuttal: As submitted in the foregoing, it is need of the business one may enter into transaction at agreed price that of purchaser and seller. In market every movement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : As submitted in foregoing, the A.O. has not made any report of D.I. (Inv.) as part of record nor a copy is provided to the appellant. Similarly, neither a copy of statement of Shri Pratik R. Shah is provided to the appellant nor any cross examination is afforded by the A.O./Ld.CIT(A). Further, following vital facts emerge from para-S(vii) of impugned assessment order, referable to statement of Shri Pratik R. Shah: (a) The date of so-called statement is nowhere mentioned. (b) There is nothing stated as to in whose case and in the course of which proceedings and under which section of the IT Act, alleged statement was recorded. (c) In reply to question no. 11, said Shri Pratik R. Shah has confessed that he agreed and provided the accommodation entry to AFCSL. The appellant is no way connected with AFCSL group of companies. (d) In replying to question no. 14 referring to statement of one Shri Rakesh B. Patel, Shri Pratik Shah has agreed with him with reference to Shri Rakesh Patel's statement dated 23/11/2011. The so called information through statement dated 23/11/2011 relates to prior period i.e. A.Y. 2012-13. (e) In the referred para of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival contentions. The assessee is an individual engaged in the business in trading of securities, commodity trading and real estate. The assessee maintains regular books of account on mercantile basis which are got audited through Charted Accountants as required u/s. 44AB of the Act. During the course of assessment proceedings, the A.O. has noticed that assessee had sold a land for ₹ 6, 19,20,000/- which was purchased at ₹ 15,88,5,350/-. The A.O. noticed that the assessee has earned profit on sale of plot of land amounting to ₹ 4,60,34,650/- he also noticed that in the purchase and sales of bonds the assessee has shown net loss of ₹ 4,57,29,090/- . He has observed that the assessee had sold the 9% bond of Bank of Maharashtra 2022 which has been purchased at a full value and sold it in off market at a price lower than the price not constant with the price prevailing at the NSE and the assessee has failed to prove business expediency in respect of immediate sale of bonds as well as sale price of bonds. Thus the claim of the loss of the assessee was not allowed . The A.O. was of the view that trading transactions in securities has not been effected for comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny copy of any material or statement which can demonstrate that accommodating entries were also provided in the case of the assessee as the referred statement pointed out providing of entries in respect of Amarpali Group. The A.O. has not provided any such copy of statement or cross-examination to prove that the transactions carried out in the case of the assessee were not genuine. In the case of the assessee, the A.O. has not proved that documents were not genuine. 19. None of the parties has been examined with respect to genuineness of transactions. It was also submitted by the ld. counsel that trade in such bonds take place with reference to period of bonds credit rating of the issues etc and one may entered in to transactions at agreed price that of purchase and sale. It was also submitted that in the referred statement of Shri Pratik R. Shah, there was no any reference to the assessee to show that the bogus entries were provided to the assessee. It was also submitted by the ld. counsel that in compliance to summon u/s. 131 dated 11/02/2016, the assessee has already submitted all the requisite details vide letter dated 22/02/2016. Thereafter, there was no further reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also provided his new address where he was presently staying for communication to the A.O. He has also requested for reasonable and adequate time for making compliance. We observe from the material placed on record that the A.O. has not further indicated the need for any personal examination of the assessee. It was also noticed that the loss on the trading of the lands was occurred before the earning of profit on the sale of land by the assessee. We find that as per material on record the loss in trading of lands was occurred on 01/01/2013 whereas the profit on the sale of land was occurred on sale of land 24/01/2013. . We have also considered the contention of the ld. counsel that it is open market trade and the price is as agreed upon by the purchaser and sellers as per their requirement based on different factors like need of liquidity of funds etc. After considering the above facts, we observe that the A.O. has raised a number of doubt about the genuineness of above cited transactions but has not proved with supporting materials that the transactions were bogus In the light of the above facts and material after considering the detailed submission of both the sides we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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