TMI Blog2022 (1) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange of cash between the assessee and the various exit providers could be proved. Therefore, the onus as casted upon revenue to dislodge the assessee s claim, remain un-discharged. The proposition that additions made purely on the basis of suspicious, conjectures or surmises could not be sustained in the eyes of law stem from the decision in Omar Salay Mohamed Sait [ 1959 (3) TMI 2 - SUPREME COURT] wherein it was held that the suspicion however strong could not partake the character of legal evidence as held in Umacharan Shaw Bros. [ 1959 (5) TMI 11 - SUPREME COURT] . The additions made on mere presumptions could not be sustained and there must be something more than mere suspicion to support the assessment as per the decision in Dhakeshwari Cotton Mills Ltd. [ 1954 (10) TMI 12 - SUPREME COURT] . 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. Addition u/s 68, in our considered opinion, is not sustainable in view of the fact that credit in assessee s bank account represents sale proceeds of shares sold in recognized stock exchange through registered stock b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny one year shall equally apply to the other year also. For the purpose of adjudication, AY 2012-13 is taken as the lead year. The appeal for AY 2012-13 arises out of the order of learned Commissioner of Income-Tax (Appeals)-51, Mumbai [CIT(A)], dated 20/08/2019 in the matter of assessment framed by learned Assessing Officer (AO) u/s 143(3) r.w.s. 147 of the Act, on 30/11/2017. The grounds raised by the assessee read as under: - I. Reopening of assessment 1. The Ld. CIT(A) erred in upholding the validity of reopening of assessment in the instant case; 2. The Ld. CIT(A) failed to appreciate that detailed enquiries on the issue of transactions in shares entered into by the Appellant were made by the Ld. AO during the course of original assessment proceedings under S. 143(3) read with S. 153A of the Income-tax Act, 1961, and as such the reopening of assessment was based merely on a change of opinion; 3. The Ld. CIT(A) failed to appreciate that the reopening of assessment was not initiated on the basis of any fresh, tangible material inasmuch as the report of the Kolkata Investigation Wing was dated April 27, 2015, whereas the original assessment under S. 143(3) read with S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . III. The order passed by the Ld. CIT(A) is vitiated by non-application of mind inter alia on account of the Ld.ClT(A),'s failure to consider various judicial pronouncements, including those of the Hon'ble Jurisdictional High Court and of this Hon'ble Tribunal which were cited during the course of appellate proceedings. As evident, the assessee is aggrieved by confirmation of certain additions u/s 68 69C in the impugned order. The assessee has also challenged the validity of assessment proceedings. 1.2 The registry has noted a delay of 22 days in the appeals, the condonation of which has been sought by legal heir of the assessee on the strength of sworn affidavit. It has been submitted that delay occurred due to the fact that the case records were voluminous. Keeping in view the period of delay, the bench formed an opinion that the delay was to be condoned. Accordingly, we proceed for adjudication of the appeals on merits. 1.3 The Ld. AR, drawing our attention to the documents as placed in the paper-book, assailed the additions on the ground that the additions are arbitrary and made on mere suspicion conjectures. It was submitted that there is no corrob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the exemption was denied during assessment proceedings and the gains were ultimately added to the assessee s income as unexplained cash credit u/s 68 of the Act. The assessee has also been saddled with addition u/s 69C for estimated commission @6% which is consequential to the main addition. 2.4 In defense of the genuineness of claim, the assessee submitted that transactions of sale and purchase of shares were carried out at recognized Stock Exchange through registered stock brokers. The investments were made for the purpose of capital appreciation since the assessee was a regular investor in shares. The investments so made were duly reflected in the books of account. It was further submitted that during earlier assessment proceedings u/s 153A, the assessee was called upon to produce the details of long-term capital gains. The complete details of the gains were submitted along with copy of broker notes and ledger copy of the assessee in the books of the broker. The gains so earned by the assessee were accepted by Ld. AO during those proceedings. Therefore, reopening was nothing but mere change of opinion. 2.5 On merits, the assessee submitted that the transactions were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificially rigged by the operator to accommodate beneficiaries seeking LTCG etc. There was huge increase in the price of the shares during the period of 24 months. Similar gains were shown to be earned by other family members also. Finally, applying the test of human probabilities and in the light of investigation wing findings, Ld. AO concluded that the gains were not genuine. Justifying the action in terms of various judicial pronouncements, Ld. AO treated the sale consideration as undisclosed income u/s 68. The assessee must have paid certain commission to obtain the same which was estimated @6% and further added to the income of the assessee u/s 69C. Appellate Proceedings 3.1 During appellate proceedings, the assessee challenged the validity of assessment proceedings on the ground that reopening was based merely on change of opinion. However, the same could not convince Ld. CIT(A) who opined that subsequent to completion of assessment proceedings, certain information was received by Ld. AO through departmental channels and the information was credible and actionable. The said material was sufficient to invoke the provisions of Sec.147 and no infirmity could be found i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties were found to be operated by entry providers whose statement was also recorded by investigation wing wherein admission of their being engaged in providing accommodation entries were made by those persons. 3.5 In the above background, Ld. CIT(A), in para 6.30, noted that the assessee purchased the shares when the scrip prices were at bottom and sold when the scrip prices were at its peak. All the exit provider were dummy entities of various entry providers. The assessee knowingly participated in the bogus LTCG scam. 3.6 The assessee documentation was to be rejected in terms of the decision of Hon ble Supreme Court in the case of Durgaprasad More (82 ITR 540) and Sumati Dayal (214 ITR 801) wherein it was held that the evidences were to be adjudged by applying the test of human probabilities and if something unusual was being claimed, the same was to be rejected. The other contentions of the assessee were also rejected. Finally, it was held that the assessee was not able to justify the investment decision and could not explain the spike in the prices of the scrip. Therefore, in the light of various judicial pronouncements, the action of Ld.AO in making additions u/s 68 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Upon perusal of all the aforesaid documents, it is quite discernible that the assessee had furnished all the requisite documentary evidences to substantiate the transactions and discharged the primary onus as required under law to establish the genuineness of the gains so earned during the year. No defect has been pointed out by the revenue in documentary evidences furnished by the assessee. Therefore, the onus had, thus, shifted on revenue to disprove assessee s claim and establish with cogent evidences that the transactions were non-genuine transactions through which assessee s unaccounted money has flown back to assessee in the garb of bogus capital gains. However, we find that except for general findings of investigation wing and third-party statements on the basis of which it has been alleged that the scrip of Unisys was penny stock, there is nothing in the kitty of the revenue to prove the assessee s involvement in manipulating the prices of the scrip. No exchange of cash between the assessee and the various exit providers could be proved. Therefore, the onus as casted upon revenue to dislodge the assessee s claim, remain un-discharged. 4.5 So far as the observations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 corroborative material. No effective investigation is shown to have been carried out by Ld. AO to dislodge the assessee s claim by bringing on record cogent evidences as well as confronting the same. We find that except for general allegations as narrated in the investigation wing report, there is no evidence which would link assessee s involvement in jacking up the prices of the shares with a view to earn artificial gains. The additions so made could not be sustained in the eyes of law as per the decision of Hon ble Apex Court in Kishanchand Chellaram V/s CIT (125 ITR 713) and also in M/s Andaman Timber Industries V/s CCE (CA No.4228 of 2006 dated 02/09/2015) wherein it has been 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in CIT V/s Maheshchandra G.Vakil (40 Taxmann.com 326; 25/09/2012) (iii) Hon ble Rajasthan High Court in CIT V/s Smt. Sumitra Devi (49 Taxmann.com 37; 24/02/2014) (iv) Hon ble Rajasthan High Court in CIT V/s Pooja Agarwal (ITA No.385/2011 dated 11/09/2017) (v) Hon ble Delhi High Court in Pr.CIT V/s Smt. Krishna Devi Ors.(ITA No.125/2020 ors. Dated 15/01/2021) We find that the ratio of aforesaid decisions is equally applicable to the fact of the present case before us. 4.10 Finally, keeping in the facts and circumstances of the case, we are inclined to hold that 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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