TMI Blog2021 (4) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Therefore, the bench held that addition on the basis of retracted statement, without there being corroborative material would not be sustainable as held in various decisions. Similar are the facts before us. Therefore, applying the ratio of aforesaid decisions, since the additions are not with reference to any incriminating material, the same would not be sustainable in the eyes of law. The impugned additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the provisions of section 153D of the Act and hence, the entire assessment proceedings is bad in law and thus, the assessment order needs to be quashed. 3. The CIT(A) erred in upholding the action of the Assessing Officer in addition of ₹ 44,39,566 under section 68 of the Act, holding the sale proceeds of Splash Media Infra Limited to be non genuine and thereby not allowing claim of short-term capital gains of ₹ 25,59,895 on sale of such shares. The appellant contends that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in considering the transaction of sale of shares of Splash Media Infra Limited to be non genuine inasmuch as the said shares have been purchased during an earlier year are investments; the same being sold shall necessarily give rise to capital gains and the impugned shares being short-term capital asset, the capital gains ₹ 25,59,895 are short-term capital gains; accordingly, the impugned addition under section 68 of the Act is not justified. The appellant further, contends that on the facts and in the circumstances of the case and in law, the CIT(A) ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search and hence, the impugned addition is vitiated in law. Upon perusal of grounds of appeal, it is evident that the assessee has challenged the validity of assessment framed u/s 153A on legal grounds inter-alia by pleading that no incriminating material was found during the course of search proceedings. The assessee has also assailed the quantum additions on merits. 1.3 We have carefully considered the rival submissions, oral as well as written, as made during the course of hearing before us. We have also perused relevant material on record including orders of lower authorities. The judicial pronouncements as cited during the course of hearing have duly been deliberated upon. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. The Ld. AR has assailed the impugned additions, inter-alia, by pleading that the additions have been made merely on the basis of suspicion, conjectures surmises and on the basis of third-party statements without there being any cogent / corroborative material on record to substantiate the additions. The Ld. CIT-DR Shri Rajiv Harit, on the other hand, submitted that the gains earned by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains. Shri Anil Agarwal is stated to have become director, in individual capacity, of an entity namely Splash Media Infra Ltd. (SMIL) in June, 2015. This entity is now known as Luharuka Media and Infra Limited as is evident from orders of lower authorities. 2.2 In response to notice u/s 153A dated 08/08/2016, the assessee offered the same return of income as originally offered at ₹ 43.97 Lacs. The statutory notices were issued in due course wherein the assessee was directed to file the requisite details and information. During assessment proceedings, it transpired that the assessee-HUF sold shares of two entities namely M/s First Financial Services Limited (FFSL) and M/s Splash Media Infra Ltd. (SMIL) during various previous years relevant to AYs 2010-11 to 2015-16. The shares of SMIL have been sold during AYs 2010-11 to 2012-13 whereas the shares of M/s FFSL have been sold during AYs 2013-14 2014-15. The gains earned on sale of these scrips in the shape of Long-Term Capital Gains (LTCG) were claimed to be exempt u/s 10(38) whereas Short-Term Capital gains (STCG) earned on these shares were offered to tax at concessional rate of 15% u/s 111A. However, the gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading so done was not a normal trading pattern. As against this, Shri Anil Agarwal maintained that the clients willingly purchased the scrips and trading so done by them was a pattern of transactions through the stock exchange to obtain bogus Long-Term Capital Gain and Short-Term Capital Losses by the beneficiaries. In reply to question nos. 8 9, the modus-operandi adopted by entry operators to provide LTCG / STCL was enumerated. Shri Anil Agarwal made admissions to have earned unaccounted commission of ₹ 20 Lacs and agreed to offer the same over and above regular source of income. No reply was given against question of capital gains earned from the scrip of FFSL by assessee-HUF. Subsequently, he was also confronted with the fact that Shri Anuj Agarwal of Korp Securities and Shri Pravin Agarwal of Gateway Financial Services Ltd. (share broking firms based at Kolkata) have confirmed on oath that the scrips of FFSL and SMIL were penny stock scrips. But no reply was furnished by the assessee against the same. 2.5 On the basis of statement given by Shri Anil Agarwal, Ld.AO concluded that Shri Anil Agarwal accepter his role as a facilitator of arranging accommodation entries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in share prices which would defy any logic of shares trading pattern in primary or secondary capital market. In the said background, Ld. AO perused financial statements as well as returned income of SMIL for various years and tabulated the same in paras 6 to 6.4 of the assessment order. 2.9 It transpired that SMIL had allotted warrants to non-promoters on preferential basis. These warrants were later on converted into equity shares at ₹ 83/- per share. These shares were listed on stock exchange on 29/10/2009 after which there was sharp rise in the prices. There was bonus issue in the ratio of 3:1 on 23/12/2009. Later on the shares were split in the ratio of 1:10 on 29/07/2010. Thereafter, there was phenomenal rise in share price up-to 25/01/2011 despite the fact that there was no corporate announcement to justify the sharp rise in the prices which would lead to a conclusion that the price-rise was achieved by manipulation and rigging through controlled trade in miniscule volume. 2.10 The exit providers of the scrip of SMIL was identified which are tabulated in para 7.4.1 of the order. The investigation report with respect to some of the exit providers alleged that thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... online mechanism and therefore, the assessee would not know the identity of the exit providers. The assessee also demanded cross-examination of exit-providers as per allegations of Ld. AO. It was submitted that the shares were received in demat account of the assessee and transactions of sale / purchase of the shares took place through banking channels. The assessee also demanded whether there was any mention in the report of the investigation wing that the assessee had given cash to anybody for getting such long term capital gains and if so, the opportunity to cross verify such person be provided to the assessee. 2.13 However, Ld. AO maintained the allegations that the assessee obtained accommodation entries in the form of bogus STCG and the entire transaction was a colorable device to route unaccounted income in the regular books of account. The assessee invested into share of unknown entity whose financials would not justify the investments. There was no reasonable justification of making the investment. The share prices rose astronomically defying all logic of stock market price movements. The accommodation entry providers confirmed the modus-operandi and admitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said scrip leading to conversion of unaccounted income into bogus LTCG/STCG through accommodation entries by various beneficiaries including the assessee group. Shri Anil Agrawal has in response to Question No. 12 of his statement recorded on 12.04.2015 stated that apart from the brokerage income of M/s. Comfort Securities Ltd., he had earned cash commission of ₹ 20,00,000/- from the business of providing accommodation entries of bogus capital gains in penny stock companies. 2.15 In the light of above conclusion, the assessee s claim of STCG was rejected and the entire sales proceeds of ₹ 44.39 Lacs as received by the assessee on sale of shares was brought to tax as unexplained cash credit u/s 68. To procure these entries, the assessee must have paid some commission in cash which was estimated at 6%. Accordingly, estimated commission of ₹ 2.66 Lacs was also added to the income of the assessee. 3. Appellate Proceedings 3.1 During appellate proceedings, the assessee, by way of additional ground, contested the validity of assessment made u/s 153A pursuant to search conducted u/s 132. It was submitted that undisclosed income was to be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment recorded of the persons searched may be used as evidence for any proceedings under the act, would constitute incriminating material. Further, the statement given on oath u/s 132(4) would have evidentiary value as held by Hon ble Allahabad High Court in Gargi Devi Jwala Prasad V/s CIT (1974 96 ITR 97) and Delhi High Court in Dhingra Metal Works (328 ITR 384). 3.4 In view of admission made by Shri Anil Agarwal that the scrip of FFSL was being manipulated and keeping in view his role in LTCG scam as well as the role of certain exit-providers who were the clients of M/s CSL for which mandatory physical verifications were never carried out, has to be considered as incriminating evidence to implicate the assessee. Finally, legal arguments raised by the assessee, in this regard, were dismissed with following observations: - 5.7 As noted earlier, in course of the search action on 09.04.2015, Shri Anil Agarwal admitted that the scrips of FFSL etc are being manipulated and also explained his role in the LTCG/STCG scam as well as the role of certain exit providers, who were clients of M/s. Comfort Securities Ltd. for which mandatory physical verifications were never carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial nature where the issues are decided on the basis of evidences which can be oral or documentary. Oral evidences, inter alia, include statements which are made before the income-tax authority in relation to matter of inquiry and may include examination of the assessee itself. Also, the statement on oath recorded in course of the search action u/s 132(4) has been held to be of evidentiary value by the Hon'ble Delhi High Court in the case of Dhingra Metal Works (328 ITR 384) and the Hon'ble Kerala High Court in the case of Paul Mathews (263 ITR 101) as against statement on oath recorded u/s 133A. 5.9 In view of the aforesaid judicial decisions, the statement on oath recorded of Shri Anil Agarwal wherein he admitted that the scrips of FFSL etc are being manipulated and also explained his role in the LTCG scam as well as the role of certain exit providers, who were the clients of M/s. Comfort Securities P. Ltd, for which mandatory physical verifications were never carried out, has to be considered as incriminating evidence to implicate the assessee. This is all the more essential considering that there were a number of developments prior to the search action in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking said action u/s 153A rws 143(3) since there was sufficient evidence to incriminate the assessee in the form of statements recorded of Shri Anil Agarwal wherein he admitted that the scrips of FFSL, Rutron International Ltd., etc. were manipulated and also explained his role in the LTCG scam as well as the role of certain exit providers who were the clients of M/s. Comfort Securities P. Ltd. for which the mandatory physical verifications were never carried out. Further, a parallel ledger account of the unaccounted transactions of the Assessee Group with R.K. Kedia were found from the premises of R K Kedia in course of his search action. Moreover, in the statement given by R K Kedia in his search, Shri Anil Agarwal was identified as a Scrip Operator for the scrips of SMIL, FFSL, etc and which was also accepted by Shri Anil Agarwal in the statement recorded in his simultaneous survey action. Accordingly, the additional Grounds of Appeal being Ground Nos. 6 to 9 are dismissed. 4. Assessee s Submissions to Ld. CIT(A) on merits 4.1 During appellate proceedings, the assessee drew attention to the documentary evidences which were in the shape of purchase / sale contract note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments. 4.4 It was submitted that in assessee s case, the transactions were done though online trading platform through recognized stock broker and therefore, it could not be presumed that there could be any transfer of cash between the buyer and seller. Reliance was placed on the decision of Hon ble Bombay High Court in CIT V/s Lavanya Land Private Limited (83 Taxmann.com 161) which held that in the absence of any material to show exchange of cash, no addition could be made. The conclusions drawn by Ld. AO were based merely on suspicion, surmises and hearsay. The suspicion howsoever strong could not partake the character of legal evidence as per ratio of Hon ble Supreme Court in Lalchand Bhagat Ambica Ram V/s CIT (1959 37 ITR 288). The entire case of the revenue rested on the presumption that the assessee ploughed back its own unaccounted money in the form of bogus capital gains. However, this suspicion needs to be corroborated with cogent evidences which was not done and therefore, the action of Ld. AO could not be sustained under law. 4.5 Finally, it was submitted that since the assessee discharged the primary onus of substantiating the transactions, the onus to disprov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in getting capital gain accommodation entries by purchase of shares of 3 entities viz. M/s Fact Enterprises Pvt. Ltd., M/s First Financial Services Ltd and M/s Rutron International Ltd. 5.4 In para 6.25, the fact of SEBI investigation on unusual price fluctuations in scrip of FFSL was noted. On the basis of the same, it was opined by Ld. CIT(A) that the assessee, its Karta and various entities of the assessee group including M/s Comfort Securities Ltd, and M/s Comfort Intech Ltd, were all involved in the LTCG scam where they manipulated the prices of the various penny stock scrips. The assessee carried out all the transactions though M/s Comfort Securities Ltd. which was also found to be involved in LTCG scam in the final report of SEBI in the case of the scrip of FFSL. It was also a fact that the assessee group has subsequently officially acquired substantial stake in SMIL. Thus it was held that the assessee knowingly brought and sold shares of SMIL, a penny stock company, solely for the purpose of claiming bogus LTCG/STCG. 5.5 Therefore, the documentary evidences, in the opinion of Ld. CIT(A), as furnished by the assessee were to be rejected applying the test of human prob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiple locations all over the country is virtually impossible and the department could not be expected to do an impossible act. 5.7 The assessee s plea that the trades took place on screen based system and therefore, it would be wrong to presume that the assessee was provided a profitable exit by the exit providers, was also rejected by observing that online trading by itself could not be sacrosanct, if the cumulative facts of the case points towards large scale manipulation of the same as observed by Hon ble Supreme Court in SEBI V/s Kishore R. Ajmera (2016 6 SCC 368) and again reiterated in SEBI V/s Rakhi Trading Pvt. Ltd. [2018] 207 Com Cases 443 (SC). 5.8 Proceeding further, Ld. CIT(A) observed that the assessee has also not been able to explain the unusual increase in the prices of the scrip of SMIL and also could not justify investment decision in the scrip and therefore, the claim was rightly rejected as held in various judicial pronouncements and in the background of SEBI order dated 02/04/2018 which found the assessee, its Karta, M/s Comfort Securities Limited and other entities of assessee group guilty of manipulating the scrip of FFSL and restrained/debarred the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, it could very well be concluded that the impugned transactions are not isolated transactions carried out by the assessee rather the assessee is a habitual investor and earn major part of its income from investment activities. 6.2 Undisputedly, the purchase transactions as well as sale transactions have taken place through online platform of stock exchanges through registered stock broker. These transactions have been subjected to Securities Transaction Tax (STT). The transactions are duly evidenced by contract notes issued by assessee s share-broker M/s CSL, demat statement evidencing movement of shares, bank statements evidencing movement of funds through banking channels. The sale transactions are evidenced by sale contract notes. The sale consideration has duly been received through banking channels and the shares have moved out of assessee s demat account. All these documents have duly been furnished by the assessee before Ld. AO. The same has also been placed before us in the paper-book (Page nos. 63 to 93 of assessee s paper-book). No defect or discrepancy has been pointed out by any of the lower authorities in assessee s documentation. All these evidences as well as d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ownership. When both the parties would agree upon a price, the trade is matched and that price would become new market quotation. Therefore, the financials of underlying entities, in such cases, would lose much relevance in so far as the price movement of scrip is concerned. Nothing adverse could be drawn against the assessee on the basis of the same. In fact, Shri Anil Agarwal has become director of this entity on 24/06/2015 and this entity is said to be engaged in real estate development having projects at Mumbai. Hence, this entity could not be said to be merely a dummy entity. Further, the impugned transactions have taken place much before the period when Shri Anil Agarwal has become director of SMIL. Hence, the aforesaid observations as well as conclusion of Ld. AO would not be much germane as to the adjudication of the issue. 6.4 Proceeding further, it could be observed that the primary reason to doubt the genuineness of assessee s transactions is search action findings of the investigation wing, Delhi in the case of Shri R.K.Kedia group. A copy of statement given by Shri R.K.Kedia is available in the department s paper-book. In the statement on oath made by Shri R.K.K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower authorities which would prove the fact that the assessee-huf was so mentioned in the statements made by any of these persons; rather the basis of additions is the general observation / conclusion that the scrip of SMIL was penny stock entity. However, these statements are not backed by any cogent corroborative material on record to establish the assessee s involvement in price rigging of shares of SMIL. No collusion between the assessee and alleged entry providers or operators or exit providers is shown to have existed. Another noteworthy point is that no opportunity to cross-examine the persons making adverse statement was provided to the assessee despite being specifically pointed out before lower authorities. There is no admission or evidence based finding that any cash got exchanged between the assessee and any of the alleged bogus entities. It is trite law that no additions could be made merely on the basis of suspicion, conjectures or surmise. The addition thus made purely on the basis of third-party statement recorded at the back of the assessee could not be sustained in the eyes of law unless the same are confronted to the assessee and the same are backed by any corrob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n perusal of the same, we find that none of these statements implicate assessee as the beneficiary of bogus capital gains. Similarly, the statement of Shri Anuj Agarwal of Korp Securities Ltd. recorded on 30/03/2015 and statement of Shri Pravin Kumar Agarwal of M/s Gateway Financial Services Ltd. recorded on 10/02/2015 are statements made during survey operations and the same do not name the assessee-huf to be the beneficiary of bogus capital gains. The statement of remaining share-brokers / exit providers as placed by Ld. CIT-DR in the paper-book was neither confronted to the assessee nor an opportunity of cross-examination have ever been provided to the assessee and therefore, these are to be disregarded. Further, these statements have not been substantially referred to by Ld. AO or Ld. CIT(A) in their respective orders while adjudicating the issue and therefore, would not carry much weight at this stage of appellate proceedings. In our considered opinion, merely because the scrip of SMIL has been alleged as a penny stock, the same alone would not be sufficient to taint the gains earned by the assessee-huf unless a link or assessee s collusion with the entry / exit providers was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omething more than mere suspicion to support the assessment as per the decision of Hon ble Apex Court in Dhakeshwari Cotton Mills Ltd. V/s CIT (26 ITR 775). The assessment should not be based merely on suspicion or guess work but on legitimate material from which reasonable inference of income could have been drawn. 6.10 So far as alleged admission by Shri Anil Agarwal is concerned, we find that the search action on Shri R.K.Kedia group triggered survey action on M/s CSL on 10/04/2015 wherein statement of Shri Anil Agarwal was recorded. In the statement, It was submitted that M/s CSL was acting as stock-broker in various stock exchanges and stated to have provided brokerage and consultancy services to many entities including FFSL and SMIL. In reply to question No.21, it was submitted that KYC of the customers is regularly verified. Nothing adverse is admitted so far as the gains earned by assessee-huf is concerned. Subsequently, a search action was carried out by department in the case of the assessee-huf on 09/04/2015 wherein statement on oath of Shri Anil Agarwal was recorded u/s 132(4) on 12/04/2015. A copy of the same is on record. In the statement, it was reiterated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng material as found during the course of search operations. Therefore, firstly it could not be said that there was admission as to bogus nature of the transactions carried out by the assessee-huf and secondly, the statement made by the assessee, unless backed up by corroborative material, could not form the sole basis of making additions in the hands of the assessee. It transpires that another statement was recorded from Shri Anil Agarwal on 27/08/2015 during the course of assessment proceedings. In reply to question No.21, the assessee denied having indulged in providing accommodation entries. Shri Anil Agarwal maintained that M/s CSL provided consultancy services to FFSL. He also denied having met Shri Chandrakant Mane (director of FFSL). He also denied having manipulated share prices of SMIL. It was further submitted that entire process of trading took place in online mechanism through the stock exchange platform. He also denied having carried out any accommodation entries. Therefore, there is no admission by Shri Anil Agarwal in this statement also which is related to gains earned by assessee-huf. 6.11 So far as the SEBI report dated 02/04/2018 is concerned, the same is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during search on assessee-huf. Secondly, this material has been referred to in the statement of Shri Chandrakant Mane. The Karta of assessee-huf has all along denied having ever met Shri Chandrakant Mane. Therefore, this plea would not hold much water. The Ld. CIT-DR has also pleaded that the issue of incriminating material was raised for the first time before Ld. CIT(A) and Ld. AO had no occasion to deal with this issue during the assessment proceedings. We find that additional ground, being legal ground, could be taken-up by the assessee for the first time before appellate authorities. The ground was validly admitted and delved into by Ld. CIT(A). No infirmity could be found in the action of Ld. CIT(A) in adjudicating the same. So far as the incriminating material in the form of assessee s own statement is concerned, we find that firstly no admission as alleged by lower authorities was made and secondly, the said statement stood retracted immediately on 14/04/2015. Therefore, since the statement stood rejected immediately after making thereof, the same would lose substantial evidentiary value. In such a case, the onus would be on revenue to establish that the earlier admissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A, it becomes clear that on initiation of the proceedings under section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under section 132 or making requisition under section 132(4) stand abated and not the assessments/reassessments already finalised for those assessment years covered under section 153A. By a Circular No. 8 of 2003, dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/ reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under section 153A, the assessments/reassessments finalised for the assessment years covered under section 153A stand abated cannot be accepted. Similarly on annulment of assessment made under section 153A(1) what stands revived is the pending assessment/reassessment proceedings which stood abat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned counsel of the assessee succeeds that addition in the case of unabated assessment without reference to incriminating seized material for assessment u/s.153(A) is not sustainable on the touchstone of above said honourable jurisdictional High Court decision. Therefore, the learned CIT appeals and the learned departmental representative plea in trying to distinguish the same by reference to Hon ble Delhi High Court decision and honourable Supreme Court decision in the case of Rajesh Jhaveri (supra) doesn t succeed. 44. It may not be out of place here to mention that it is specifically provided in section 153A that assessment or reassessment if any relating to any relevant assessment year or years referred to in this subsection pending on the date of initiation of search under section 132 or making of requisition under section 132A as the case may be shall abate. This makes it further abundantly clear that only those assessments which are pending abate. Hence sanguine provisions of the act read with honourable jurisdictional High Court decision as above make it abundantly clear that the assessments which do not abate and assessment and addition under section 153 A wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... va Sheva) Ltd. (supra), wherein the Hon ble Bombay High Court held as under: - a) Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in deleting the addition of ₹ 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of ₹ 11,24,964/- under section 14A made by the Assessing Officer, as it was not based on incriminating material found during the course of search. d) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of ₹ 3,91,55,000/- under section 68 of the Act in respect of share application money and addition of ₹ 11,24,964/- under section 14A made by the assessing officer without appreciating the fact that the decision of continental warehousing corporation the decision in the case of All Cargo Global Logistics have not been accepted by the department and an SLP has been filed in the Supreme Court in both the cases decided by the High court i.e. Continental Warehousing Corporation as well as all Cargo Global Logistics vide appeal civil 8546 of 2015 and SLP civil 5254-5265 of 2016 respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Hon'ble Delhi High Court in the case of Smt. Dayawanti v. CIT [2017] 390 ITR 496 to counter assessee s submissions. Upon perusal of the same, we find that this case law is factually distinguishable since in that case incriminating material was found by the department along with confessional statements. The case law of Mumbai Tribunal in Hiralal Maganlal Co. V/s DCIT 96 ITD 113 , as cited by Ld.CIT-DR deals with an assessment framed u/s 158BC which is not the case here. In the case law of Hon ble Kerala High Court in CIT V/s O.Abdul Razak (350 ITR 71), there was clear admission by the assessee which was duly supported by the documents. The Hon ble High Court held that in view of clear admission of the assessee corroborated by the documents, the burden on the department ceases to exist. On the retraction being filed by the assessee, there is a burden cast on the assessee to prove the detraction or rather disprove the admissions made. It is not a shifting of the onus but a new burden cast on the assessee to disprove the earlier admissions having evidentiary value. As noticed earlier, retraction made by the assessee can only be considered as a self serving afterthou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord. So far as the factual matrix is concerned, there is no substantial dispute regarding the same. The perusal of record would reveal that the assessee purchased certain shares of an entity namely M/s STL as early as September, 2011. The shares were converted into demat form in assessee s account during the month of March, 2012. The transactions took place through banking channels. The investments were duly reflected by the assessee in financial statements of respective years. The copies of financial statements of M/s STL for FYs 2009-10 2010-11 which led to investment by the assessee in that entity was also furnished during the course of assessment proceedings. Subsequently, M/s STL got merged with another entity viz. M/s SAL pursuant to scheme of amalgamation u/s 391 to 394 of The Companies Act, 1956. The Scheme was duly approved by Hon ble Bombay High Court vide order dated 22/03/2013, a copy of which is on record. Consequently, the shares of M/s STL held by the assessee got swapped with the shares of M/s SAL and new shares were allotted to the assessee during June, 2013 pursuant to the approved scheme of amalgamation. M/s SAL is stated to be listed public company Group A s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounts to violation of principal of natural justice because of which the assessee was adversely affected. The whole basis of making the addition is third party statement without there being any tangible material. It is trite law that additions merely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law as held by Hon ble Supreme Court in Omar Salay Mohamed Sait V/s CIT (1959 37 ITR 151). The suspicion however strong could not partake the character of legal evidence as held by Hon ble Supreme Court in Umacharan Shaw Bros. V/s CIT (1959 37 ITR 271). Therefore, we find that onus as caster upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The allegation of price rigging / manipulation has been levied without establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the shares would not be known to the assessee. Therefore, the adverse conclusion drawn by Ld. AO merely on the basis of the fact that the buyer of the shares were group entities of Shri Vipul Bhat, could not be sustained. The fact that there were independent buyers also would rebut the same and weaken the conclusion drawn by Ld. AO. 11. The Ld. AR has relied on plethora of judicial pronouncements in support of various submissions, which we have duly considered. These decisions would only support the conclusions drawn by us that once the assessee has discharged the onus of proving the genuineness of the transactions, the onus would shift on the revenue to dislodge assessee s claim and bring on record contrary evidences to rebut the same. Until and unless this exercise is carried out, the additions could not be sustained in the eyes of law. 12. To enumerate the few, the Hon ble Bombay High Court in CIT V/s Shyam S.Pawar (54 Taxmann.com 108 10/12/2014) declined to admit revenue s appeal since the revenue failed to carry forward the inquiry to discharge this basic onus. The co-ordinate bench of this Tribunal in Mukesh R.Marolia V/s Addl. CIT (6 SOT 247 15/12/2005) held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on record, any cogent material to sustain those additions, could not be discharged by the revenue. The whole basis of making additions is third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respectfully following the binding judicial precedents as enumerated in the order, the additions made by Ld. AO and confirmed by Ld. CIT(A), are not sustainable in the eyes of law. Therefore, we are inclined to delete the same. We order so. Consequentially, the addition of estimated commission also stands deleted. Ground Nos. 1, 3 4 stands allowed. No argument has been urged with respect to Ground No.2 which is related with fulfillment of requirement of provisions of Sec.153D and therefore, this ground stand dismissed. The appeal stand partly allowed. ITA Nos. 5513 5514/Mum/2019, AYs 2011-12 2012-13 7.1 The facts in both these years are pari-materia the same. The assessment for both the year has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants were guilty in manipulating the prices of the scrips pursuant to the preferential allotment. 6. Without going into the merits as to whether the appellants were involved in the abnormal and huge rise in the price of the scrips by treating all entities connected to the company pursuant to the issuance of preferential allotment of shares, we are of the opinion that the appeals can be disposed of without going into the merits. 7. We find that the order of debarment as per the impugned order is of three years. These three years have already been undergone by the appellant pursuant to the impugned ex parte order dated December 19, 2014 restraining them from accessing the securities market, etc. As on date four years and ten months have elapsed and the appellants are still debarred from accessing the security markets etc. We find that the WTM has not considered the period of debarment already spent from the date of the ex parte interim order till the date of passing of the order while considering the quantum of penalty. We are, thus, of the opinion that the debarment period spent by the appellants from the date of the ex parte impugned order till today is sufficient. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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