TMI Blog2022 (3) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure u/s 132 in case of the assessee. The requirement for making the addition under section 153A in the assessment years where the assessment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, the additions made by the AO while passing the assessment order under section 153A for the assessment year 2010-11 are not sustainable and accordingly the same are liable to be deleted. Addition u/s 68 - The assessee brought on record the evidence in the shape of bills, allotment of shares, payment through banking channel, dematerializing of the shares in the Demat account of the assessee and sale of the shares through Stock Exchange from the Demat account of the assessee. The documentary evidence which can be independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 139(1), in the absence of any supporting documentary evidence cannot be regarded as a good evidence for addition. Hence, we do not find any error or illegality in the impugned order of the ld. CIT (A) qua this issue. This covers the Ground Nos. 1 to 7 of the Revenue s appeal. - ITA No. 753/JP/2019, ITA No. 748/JP/2019, ITA No. 750/JP/2019, ITA No. 150/JP/2020, ITA No. 149/JP/2020 - - - Dated:- 24-2-2022 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Revenue : Shri S. Najmi, (CIT D/R) For the Assessee : Shri S.R. Sharma (CA) And Shri R.K. Bhatra, (CA) ORDER PER: SANDEEP GOSAIN, J.M. These five appeals by the revenue are directed against five separate orders of ld. CIT (A)-4, Jaipur for the assessment years 2011-12, 2012-13 2014-15 dated 26.03.2019 and 08.11.2019 passed under section 143(3) read with section 153A of the I.T. Act, 1961. These appeals are arising from a search and seizure action carried out on 07.01.2016 in case of Dilip Manihar Group, Jaipur under which all these five assessees are covered. Since common issues are involved in all these appeals ( except in ITA No. 149/JP/2020 for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 153A only on the basis of some incriminating material unearthed during the course of search which were not produced or not already disclosed. 7. Whether on the facts and in the circumstances of the case and in law, the CIT (A) is right in not accepting the decision of Hon ble High Court, Jaipur in the case of Shri Roshan Lal Sancheti, Bhilwara (Raj) wherein the Hon ble Court as held that it must be held that statement recorded u/s 132(4) of the IT Act and later confirmed in statement recorded u/s 131 of the IT Act, can t be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reason able time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidences. 8. The appellant crave, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The brief facts of the case are that the assessee is an Individual deriving income from house property, capital gain and other sources. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Gain exempt under section 10(38) in the return filed for this year. The return was processed under section 143(1) and no notice under section 143(2) was issued and hence assessment under section 143(1) completed. 2.1. Thereafter, there was a search and seizure action under section 132 of the Income Tax Act, 1961 carried out by the Department in the case of Dilip Manihar Group, Jaipur on 07.01.2016 in which the assessee along with other family members are covered. In the search action no incriminating document or any undisclosed cash, jewellery etc. were found with assessee and nothing was seized from assessee nor any undisclosed income was found and admitted by assessee. During the course of search and seizure proceedings, the Authorized Officer found copies of Incometax returns from Bitthal Das Parwal of himself, his wife Smt Saroj Parwal, the assessee and his HUF and questioned him about the Long Term Capital Gain earned on some scripts which was claimed exempt under section 10(38) of the IT Act, 1961 in some of the returns. In the scripts of Splash Media and First Financial Services Ltd. such gain was declared in those returns for which Authorized Officer suspected that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 68 of the IT Act and included the same in income of appellant (taxable @ 30% as provided under section 115BE) and further included in income an amount of ₹ 2,83,123/- under section 69C as undisclosed expenditure alleging that appellant would have paid commission @ 1% to broker for obtaining said accommodation entry of said LTCG. The assessee challenged the action of the AO before ld. CIT (A) and submitted that there was no incriminating material found during the course of search and seizure. Therefore, in the absence of any incriminating material found during the course of search and seizure action, the addition made by the AO in the proceedings under section 153A is not sustainable in law. The assessee relied upon various judgments including the judgment of Hon ble Jurisdictional High Court in case of Jai Steel (India) vs. ACIT, 259 CTR (Raj.) 281. The ld. CIT (A) after considering the facts as well as the precedents on the point held that the addition made by the AO for the assessment year under consideration without any incriminating material found during the course of search and seizure action is not sustainable. The ld. CIT (A) considered the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A is in accordance with the law. Thus the ld. CIT D/R has submitted that when the assessee himself has stated in the statement recorded during the course of search and post search enquiry that the Long Term Capital Gains shown by him as well as by other family members are bogus accommodation entries availed by the assessee and his family members, the said statement itself is an incriminating material sufficient for framing the assessment under section 153A of the Act. The ld. CIT D/R placed reliance on the judgment of Hon ble Supreme Court in the case of B. Kishore Kumar vs. DCIT 234 Taxman 771 (SC), and judgments of Hon ble Jurisdictional High Court in the case of Principal CIT vs. Roshan Lal Sancheti in DB IT No. 47/2018 dated 30.10.2018 and M/s. Banna Lal Jat Constructions Pvt. Ltd. vs. ACIT in DB IT No. 140/2018 dated 31.08.2018 and submitted that income is to be assessed on the basis of statement of the assessee without scrutinizing the documents. 4. On the other hand, the submissions of the ld. A/R are as under : 4.1 In respect of Ground Nos. 3 to 7, the ld. A/R submitted that on the facts and circumstances of the case the Ld. Assessing officer has grossly erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed .. Rajasthan HighCourt in the case of Jai Steel (India) vs ACIT reported in 259 CTR (Raj.) 281 .. The requirement of assessment or reassessment under the said section has to be read in the context of sections 132 or 132A, in as much as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the context of the abated assessment under second proviso which is required to be assessed. . . Para 26 of the Judgement: The plea raised on behalf of the assessee that as the first proviso provides for assessment of the total income in respect of each assessment year falling within the six assessment years, is merely reading the said provision in isolation and not in the context of the entire section. The words assess or reassess have been used at more than one place in the Section and a harmonious construction of the entire provision would lead to an irresistible c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the surrender. - The AO has pin pointed the report of SEBI wherein the trading activity of the company was restricted for a short period of time. - The AO has pin pointed the movement in share price, which according to him is abnormal The Ld. A.O. in assessment proceedings put much stress on the statement recorded in course of search from assessee to support said additions made in assessment of assessee. In case of Pr. CIT Vs. Best Infrastructure (2017) 397 ITR 82 (Delhi.) the Hon'ble Delhi High Court held that even statement recorded in course of search u/s 132 (4) do not by themselves constitute incriminating material and unless there is incriminating material for each of assessment years in which addition are made the A.O. could not proceed u/s 153A. Thus the assumption of jurisdiction by Ld. A.O. u/s 153A to make addition on the basis of statement of assessee is not sustainable in law. 4.2. In this connection it is also submitted that it has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of the assessee on 2nd July, 2015. Therefore, even the sole basis of assessments framed under section 153A of the Act is the information received from Investigation Wing Kolkata and statement of one Shri Anand Sharma, who is stated to be an entry operator and managed various concerns/companies including M/s.Royal Crystal Dealers, one of the loan creditors of the assessee. Except the said statement and report of the Investigation Wing Kolkata, the AO has neither referred to or was having in possession of any material to indicate that the unsecured loans shown in the books of accounts as well as partners capital received by the assessee are nothing but assessee s own unaccounted and undisclosed income routed back in the garb of unsecured loans and partners capital. There is no dispute that these transactions of unsecured loans and partners capital contribution are duly recorded in the books of accounts and disclosed in the return of income which were already completed as the assessments for these four assessment years were not pending on the date of search, therefore, it is manifest from the record that during the course of search and seizure under section 132 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the assessee. The requirement for making the addition under section 153A in the assessment years where the assessment was not pending on the date of search and the proceedings are in the nature of reassessment is essentially the incriminating material disclosing undisclosed income which was not disclosed by the assessee. In the case in hand, the AO himself has not claimed any incriminating material found during the search and seizure in the case of the assessee. Accordingly, in the facts and circumstances of the case and in view of the binding precedents on this issue in which the SLP filed by the revenue was also dismissed by the Hon ble Supreme Court, the additions made by the AO while passing the assessment orders under section 153A for the assessment years 2010-11 to 13-14 are not sustainable and accordingly the same are liable to be deleted. We order accordingly. Thus the crux of the above decision is that in case of completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, in the case of assessee no such incriminating documents were found except the summary statement recorded during the course of search. Accordingly the facts of the said cases relied upon by the ld. D/R are distinguishable in assessee s case. 4.4. The ld. A/R thus submitted that in view of above position of law, since no incriminating documents were found as a result of search and no assessment was abated, addition made by A.O. is not justified and deserves to be deleted. The assessment made by Ld. A.O. is wrong and bad in law and without jurisdiction deserves to be set aside. 5. In respect of Ground No. 1, the ld. A/R submitted that the acquisition of shares in question were duly recorded in the books of account and the transaction of purchase was supported by the documentary evidence of bills, transfer of shares in the name of the assessee and the payment of purchase consideration by the assessee through banking channel. All the payments were made by the assessee through banking channel and there is no payment in cash. Further, the shares were dematerialized in the Demat account of the assessee and therefore, holding of the shares by the assessee since the year 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,83,09,544/- on sale of STT paid listed shares before A.O. in assessment proceedings for the assessment year under consideration. Thus the long term capital gain income earned by the assessee is completely verifiable from the above said documents and the exemption clamed is also as per provisions of I. T. Act, 1961. For ready reference and sake of convenience the relevant provisions of section 10 (38) of I. T. Act, 1961 regarding capital gain income are submitted herein below : - Section 10 (38): Exempted Income: - any income arising from the transfer of a long term capital asset, being an equity share in a company or a unit of an equity oriented fund (or a unit of a business trust) where (a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No.2) Act, 2004 comes into force, and (b) such transaction is chargeable to securities transaction tax under that Chapter; (c) For claiming the benefit of exemption u/s 10(38) of Act three requirement needs to be fulfilled. First the share should be held for more than 1 years. Secondly it should be listed and sold on recognized stock exchange and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange and STT should have been paid on such acquisition subject to notified transaction without STT listed in Notification No. 1789 (E) dated 05-06-2017. In the case of assessee the STT was paid on the shares purchased and accordingly the capital gain on sale of shares sold during the year under consideration is exempt from tax under section 10(38) of the I.T. Act, 1961 as claimed in ITR. 5.4. It is further submitted that when there is no allegation by Ld. A.O. that assessee ever approached any broker or entry operator for any bogus entry for long term capital gain or he has provided any entry to the assessee then, the Ld. A.O. is not justified on drawing adverse inference against the assessee on the basis of the price of the shares quoted in the stock exchange. The reliance is placed upon the decision of Hon'ble Supreme Court in case of Lalchand Bhagat Ambika Ram vs. CIT 37 ITR 288, CIT vs. East Coast Commercial Co. Ltd. (1967) 63 ITR and it is submitted that the Hon'ble Supreme Court has held that the suspicion or presumption howsoever strong it may appear to be to true needs to be corroborated by some evidence to establish a link that the assessee has brought back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts also not examined/verified by A.O. Thus it cannot be held only on suspicion or doubt that the transactions made by assessee were non-genuine. 5.6. The ld. A/R submitted that as regards the reports of SEBI and STT, these are general reports about Stock Exchange and of shares transactions to a HUF person or persons. The Courts/Tribunals have held that orders passed by the SEBI have different objectives such as orderly conduct of share markets and investors protection. Such orders cannot be held conclusive as regards the genuineness of the transactions under the IT Law. In this regard, it may be noted that stock market operations are subject to different regulations and the interest of general public is protected by prohibiting the market intermediaries from indulging in unfair trade practices like rigging the price of a particular scrip in collaborated manner. It has also been held that such orders cannot be of any assistance to the cause of the Revenue. Thus such reports of SEBI or STT cannot be attributed to assessee without any material or evidence that assessee also followed the same modus operandi. Therefore, merely on the basis of SEBI orders, share transactions cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared for the Revenue. 6. According to us, not allowing the assessee to crossexamine the witnesses by the Adjudicating Authority though the statements 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 amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the 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 crossexamination of the said dealers could not have brought out any material whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as obtained under pressure, duress and in disturbed medical condition on which the A.O. has placed heavy reliance. In this connection it is submitted that in the statement Shri Bitthal Das Parwal stated that he earned cash income of ₹ 7,32,86,297/- from real estate transactions which was used in taking entry of Long Term Capital Gain in different names including assessee. It is submitted that in course of massive search carried out at residential and business premises of assessee and his family members no document, loose paper, diary or evidence or any writing could not found for such precise huge real estate transaction generating said income and nor any document, loose paper, diary or any evidence was found for obtaining those un-genuine LTCG. This makes it abundantly clear and evident that there were no real estate transactions which earned income to him and that was used in taking entry of long term capital and his statement u/s 132 (4) and statement in post search proceedings was obtained under pressure and duress in mental disturbed condition to which assessee admitted just to buy peace and avoid litigation even though when all the necessary and proper documents in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of shares suffered STT, brokerages, etc. and therefore eligible for exemption u/s 10 (38) of the Income Tax Act. The reliance is also placed upon the decision of Hon'ble jurisdiction High Court in case of CIT vs. Smt. Pooja Agarwal in DBIT appeal No. 385/2011 dated 11.09.2017 as well as decision of Hon'ble Madras High Court dated 11.08.2017 in case of M/s Lalitha Jewellery Mart P. Ltd. vs. DCIT. 5.14. Therefore, when the Assessing officer has not brought any material on record to show that the assessee has paid over and above the purchase consideration as claimed and evident from the bank account then, in the absence of any evidence it cannot be held that the assessee has introduced his own unaccounted money by way of bogus long term capital gain. The Hon'ble Jurisdiction High Court in case of CIT vs. Smt. Pooja Agarwal (supra) has upheld the finding of the Tribunal on this issue in para 12 as under: - 12. However, counsel for the respondent has taken us to the order of CIT (A) and also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Settlement Commission in the case of Sh. Sushil Kumar Purohit. Copy of the order of settlement commission was submitted. The A.O. has failed to counter the objections raised by the appellant during the assessment proceedings. Simply mentioning that these findings are in the appraisal report and appraisal report is made by the Investing Wing after considering all the material facts available on record does not help much. The A.O. has failed to prove through any independent inquiry or relying on some material that the transactions made by the appellant through share broker P.K. Agarwal were non-genuine or there was any adverse mention about the transaction in question in statement of Sh. Pawan Purohit. Simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish the transactions made by the appellant were non genuine. Considering all these facts the share transactions made through Shri P.K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain made by he appellant before the A.O. is not approved. The A.O. is therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Section 10(38), in a pre-planned manner to evade taxes. The AO extensively relied upon the search and survey operations conducted by the Investigation Wing of the Income Tax Department in Kolkata, Delhi, Mumbai and Ahmedabad on penny stocks, which sets out the modus operandi adopted in the business of https://itatonline.org ITA 125/2020 and connected matters Page 8 of 10 providing entries of bogus LTCG. However, the reliance placed on the report, without further corroboration on the basis of cogent material, does not justify his conclusion that the transaction is bogus, sham and nothing other than a racket of accommodation entries. We do notice that the AO made an attempt to delve into the question of infusion of Respondent s unaccounted money, but he did not dig deeper. Notices issued under Sections 133(6)/131 of the Act were issued to M/s Gold Line International Finvest Limited, but nothing emerged from this effort. The payment for the shares in question was made by Sh. Salasar Trading Company. Notice was issued to this entity as well, but when the notices were returned unserved, the AO did not take the matter any further. He thereafter simply proceeded on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the broker did not respond to the notices. Be that as it may, the CIT(A) has only approved the order of the AO, following the same reasoning, and relying upon the report of the Investigation Wing. Lastly, reliance placed by the Revenue on Suman Poddar v. ITO (supra) and Sumati Dayal v. CIT (supra) is of no assistance. Upon examining the judgment of Suman Poddar (supra) at length, we find that the decision therein was arrived at in light of the peculiar facts and circumstances demonstrated before the ITAT and the Court, such as, inter alia, lack of evidence produced by the Assessee therein to show actual sale of shares in that case. On such basis, the ITAT had returned the finding of fact against the Assessee, holding that the genuineness of share transaction was not established by him. However, this is quite different from the factual matrix at hand. Similarly, the case of SumatiDayal v. CIT (supra) too turns on its own specific facts. The above-stated cases, thus, are of no assistance to the case sought to be canvassed by the Revenue. 13. The learned ITAT, being the last fact-finding authority, on the basis of the evidence brought on record, has rightly come to the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough demat accounts maintained with various agencies, the shares were purchased and sold through recognized broker and the sale considerations were received by account payee cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG.We find that in the instant case, the addition has been made only on the basis of the suspicion that the difference in purchase and sale price of these shares is unusually high. The revenue had not brought any material on record to support its finding that there has been collusion / connivance between the broker and the assessee for the introduction of its unaccounted money. 5. Roshan Raja (ITAT Mumbai) 2016 TaxPub (DT) 2777 (Mum Trib) Held: Where assessee claimed the income from long term capital gain on sale of listed equity shares and subject to STT as exempt under section 10 (38), no adverse finding had been rendered in respect of the direct material evidence placed on record in respect of its transactions. The addition under section 68 was not justified and therefore, A.O. was directed to accept the LTCG income shown as exempt under section 10 (38). 6. In the case of Pavillion Commercial P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions were provided to several clients - On basis of same, he alleged that transactions in scrip of KAFL were manipulated by entry operators and share prices were hiked artificially to earn LTCG, thus, he treated said LTCG as bogus under section 68 and, accordingly, made additions to income of assessee - It was noted that assessee had paid amount to SEPL for purchase of shares through account payee cheque - Purchase bill and copy of bank statement showing payments made for purchase of shares were available on record - Further, assessee had sold shares in recognized stock exchange through a registered share and stock broker and received sale consideration by account payee cheque - Copies of contract notes in respect of sale of shares, copy of bank statements showing receipts against sale of shares were also available on record - Whether once assessee produced all relevant evidence to substantiate transaction of purchase, dematerialization and sale of shares, same could not be held as bogus LTCG transactions merely on basis of report of Investigation Wing, wherein there was a general statement of providing bogus long term capital gain transactions to clients without stating an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2013 onwards on various dates through M/s Anand Rathi Shares Stock Brokers Ltd. The assessee has produced all the relevant evidence to show the allotment of shares, payment of consideration through cheque at the time of allotment of shares dematerialization ofthe shares and thereafter, sale of shares from the D-mat account. The Assessing Officer has not produced any material or record to controvert the evidence produce by the assessee.Considering all these facts the Hon ble ITAT held that the order of the Assessing officer treating the long term capital gains bogus and consequential addition made to the total income of the assessee is not sustainable deleted the same. 12. The Hon'ble jurisdiction ITAT, Jaipur Bench, Jaipur in case of Vivek Agarwal Vs ITO (2017) 292/JP/2017 dated 06-04-2018. The brief facts of the case are that the assessee is an individual has claimed exempt income of ₹ 4,78,38,157/- under the head Long Term Capital Gains on account of shares. The AO while passing the assessment order under section 143(3) has held that the long term capital gains claimed by the assessee is bogus as the assessee has arranged the accommodation entries from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deleted. In view of the order of CIT (A) which is correct on facts of the case and in law and accordingly the ground(s) of appeal raised by department has no merit and deserves to be dismissed. 6. In respect of Ground No. 2, the ld. A/R submitted that the addition of ₹ 2,83,123/- made u/s 69C for alleged commission is wrong in law. The addition u/s 69C of the Act can be made if expenditure is actually incurred and evidence of incurring such expenditure is available on record. No addition u/s 69C can be made notionally alleging expenses would have been made. There is no material or evidence of paying any commission by assessee nor there is any evidence to whom the same was paid and hence addition made u/s 69C is wrong and bad in law. The assessee contends that LTCG earned is a genuine transaction and brokerage paid to Share Broker for the transactions are recorded. The addition is thus wrong and deserves to be deleted. 7. We have heard and considered the rival submissions as well as the relevant material on record. After the search and seizure action under section 132 of the IT Act, 1961 carried out on 07.01.2016 in the case of Dilip Manihar Group in which the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus we find that the assessment framed by the AO for this assessment year is solely based on the statement of the assessee recorded under section 132(4), confirmed under section 131 of the IT Act and the statement recorded by the Kolkata Investigation Wing of the Department of third party. Though the AO has made reference to the financial status of these companies as well as share price movement over the period, however, these shares were purchased and sold by the assessee on on-line through recognized stock exchange and due STT etc. were paid on purchases and sales of the shares. Thus the said shares are listed in the Stock Exchange and the share prices of these shares are available in the public domain and particularly at the record of the Stock Exchange. Thus nothing has been detected or found by the AO by conducting any enquiry but these facts are matter of record available in the public domain. Therefore, except the statements as referred by the AO, there is no other material or incriminating material either found during the search or received by the AO even at the time of assessment proceedings. Hence the assessment framed for the assessment year 2011-12 which was not pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the first and second proviso have to be considered. Further, for answering the above issues, guidance will have to be sought from Section 132(1) of the Act, as Section 153A of the Act cannot be read in isolation, inasmuch as, the same is triggered only on account of any search/requisition under Sections 132 or 132A of the Act. If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and, found in the course of search, such books of account or other documents have to be taken into consideration while assessing or reassessing the total income under the provisions of Section 153A of the Act. Even in a case where undisclosed income or undisclosed property has been found as a consequence of the search, the same would also be taken into consideration. The requirement of assessment or reassessment under the said section has to be read in the context of Sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of such search or requisition, then the question of reassessment of the concluded assessments does not arise, which would require more reiteration and it is only in the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re pending. In such cases where the assessment already stands completed, the AO cannot reopen the assessment or reassessment already made without following the provisions of section 147, 148 and 151 of the IT Act determining the total income of the assessee. Hence it is held that in the proceedings under section 153A in as much as in case nothing incriminating is found on account of search or requisition, then the question of reassessment of concluded assessment does not arise which require more reiteration and it is only in the context of abated assessment under second proviso which is required to be assessed. Following this judgment of the Hon'ble Jurisdictional High Court, the Hon'ble Delhi High Court in case of CIT vs. Kabul Chawla, 380 ITR 573 (Del.) has held that in the absence of any incriminating material the completed assessment can be reiterated and the abated assessment or reassessment can be made. There are series of decisions on this point wherein this view as taken by the Hon'ble Jurisdictional High Court in case of M/s. Jai Steel (India) vs. ACIT (Supra) is reiterated and reaffirmed. Without multiplying the precedents to avoid the over-burdening of this o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the nature of reassessment. The Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla while analyzing the provisions of section 153A read with section 132 of the Act has observed in para 37 and 38 as under :- 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i . Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii . Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessments can be interfered with by the AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of document or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The Hon ble Delhi High Court has reiterated its view in case of Principal CIT vs. Kurele Paper Mills (supra) in para 1 to 3 as under :- 1. The Revenue has filed the appeal against an order dated 14.11.2014 passed by the Income Tax Appellate Tribunal (ITAT) in 3761/Del/2011 pertaining to the Assessment Year 2002-03. The question was whether the learned CIT (Appeals) had erred in law and on the facts in deleting the addition of ₹ 89 lacs made by the Assessing Officer under Section 68 of the Income Tax Act, 1961 ('ACT') on bogus share capital. But, the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A of the Act. 2. The Court finds that the order of the CIT(Appeals) reveals that there is a factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra ). As far as Anil Kumar Bhatia ( supra ) was concerned, the Court in paragraph 24 of that decision noted that we are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We therefore express no opinion as to whether Section 153A can be invoked even under such situation . That question was, therefore, left open. As far as Chetan Das Lachman Das ( supra ) is concerned, in para 11 of the decision it was observed: 11. Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or Information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and 132A of the Act, it is apparent that: (a) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was not borne out from the scheme of the said provision which was in the context of search and/or requisition. The Court also explained the purport of the words assess and reassess , which have been found at more than one place in Section 153A of the Act as under: 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that was assessed, section 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under subsection (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. ** ** ** 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the Respondent, that there are several distinguishing features in that case which makes its ratio inapplicable to the facts of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was: We and our family firms namely M/s. Assam Supari Traders and M/s. Balaji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions therefore were not baseless. Given that the assessing authorities in such cases have to draw inferences, because of the nature of the materials - since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factual surmise that is logical and plausible. These findings do not call for interference. The second question of law is answered again in favour of the revenue and against the assessee. 69. What weighed with the Court in the above decision was the habitual concealing of income and indulging in clandestine operations and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a phased manner. This was not done by manipulating the account books of the Assessee as alleged by the Revenue. This would have been evident had the return been picked up for scrutiny under Section 143(3) of the Act. This, therefore, was not material which was subsequently unearthed during the search which was not already available to the AO. Consequently, the additions sought to be made by the AO on account of security deposits were rightly deleted by the CIT (A). Thus the essential corollary of these decisions is that no addition can be made in the proceedings under section 153A in respect of the assessments which were completed prior to the date of search except based on some incriminating material unearthed during the search which was not already available to the AO. It is pertinent to note that the SLP filed by the revenue against the decision of Hon ble Delhi High Court in case of Principal CIT vs. Meeta Gutgutia was dismissed vide order dated 2nd July, 2018. There are series of decisions on this issue including the decision of Hon ble Jurisdictional High Court in case of M/s. Jai Steel India vs. ACIT (supra) wherein the Hon ble High Court has held in para 23 to 30 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to subsection (1) of Section 153A says that such proceedings shall abate . The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the requisition was made. (Emphasis supplied) 24. The said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequences that arise thereafter. In the present case after deducting bogus gifts in the regular assessment proceedings, the proceedings for penalty were drawn under Section 271(1)(c) of the Act. The material found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty. (Emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. 28. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 that it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided. 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents for these four assessment years were not pending on the date of search, therefore, it is manifest from the record that during the course of search and seizure under section 132 of the Act in the case of the assessee no material much less the incriminating material was unearthed or any undisclosed income which was not disclosed in the books of accounts was detected or found. The only incriminating material which was referred by the AO is pages 21 to 26 of Annexure AS-1 in respect of long term capital gain earned by Shri Rajendra Agarwal and his family members. The said long term capital gain was disclosed by Shri Rajendra Agarwal in his statement under section 132(4) and, therefore, it was surrendered and offered to tax by Shri Rajendra Agarwal and his family members in the year of search. The AO himself has not made any addition in the hand of the assessee on account of long term capital gain which was found during the course of search and seizure. Thus, except the material disclosing the long term capital gain in the hand of Shri Rajendra Agarwal, no other incriminating material either found or referred or is the basis of the addition made by the AO while framing the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urden of proof is fluid for the purposes of Section 68. Once assessee has submitted basic documents relating to identity, genuineness of transaction and creditworthiness then AO must do some inquiry to call for more details to invoke Section 68. b. The assessee firm has filed confirmation letters and this office has carried out further enquiry to examine the reality of the transactions. An enquiry was sent to the Investigation Directorate Kolkata and it has been established that these investor or lender Companies are controlled by the entry operators. The statements of various entry operators are sufficient evide4nces to show that the unsecured loan and partner s capital are assessee s own undisclosed income brought into the books of the assessee under the garb of unsecured loan and partner s capital. c. The department has carried out search over the assessee group and during the course of search action u/s 132 of the I.T. Act, 1961, the incriminating documents seized during search proceedings vide pg no. 21 to 26 of Annexure AS-1 of Party B-1, wherein the details of year-wise LTCG earned by Shri Rajendra Agrawal and his family members, is maintained, which during search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2009-10 is assessed at ₹ 70,02,98,459/- u/s 153A read with section 143(3) of I.T. Act, 1961. The form ITNS-150 showing calculation of tax and interest chargeable, if any, is attached herewith and forms a part of this Order. A notice of demand u/s 156 of the Act and challan for payment of tax, if payable, is hereby issued. Penalty notice u/s 274 rws 271(1)(c) is issued separately. The entire finding of the AO is based on the information received from the Investigation Wing Kolkata and statement of Shri Anand Sharma. The ld. CIT (A) though has not disputed the legal proposition on this issue, however, the contention of the assessee was turned down merely on the ground that the SLPs filed by the revenue in the cases of Kabul Chawla (supra) and M/s. All Cargo Global Logistics (supra) etc. have been admitted for decision by the Hon ble Supreme Court. The relevant part of the finding of the ld. CIT (A) in para 3.2.2 and 3.2.4 at pages 35 and 36 are as under :- 3.2.2 As per the provisions of this section where a search is initiated u/s 132 of the Act, the A.O shall issue a notice requiring the person searched to furnish his return of income in respect of each assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 20.09.2021 involving the similar issue as in the case of present assessee. We find support from the order of the Chandigarh Bench, wherein after taking into consideration and discussing various case laws, CBDT Circular bearing no. 286/2003 dated 10.03.2003 which has been further explained in the subsequent circulars in respect of disclosure of LTCG, upheld the order of the ld. CIT (A) and deleted the additions made by the AO. 7.1. Therefore, neither in the assessment order nor in the order of the ld. CIT (A) there is any mention or finding that the additions have been made by the AO on the basis of any incriminating material found during the course of search and seizure in the case of the assessee. The AO has solely relied upon the report of the Investigation Wing and statement of one Shri Anuj Agarwal recorded by the Investigation Wing during the survey under section 133A of the Act. Therefore, even if the information/report of the Investigation Wing Kolkata is considered as a relevant evidence, the same cannot be regarded as incriminating material unearthed during the course of search and seizure under section 132 of the IT Act in case of the assessee. The requirement for m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, broker s note, STT paid evidence and bank account were filed by the assessee during the course of assessment proceedings. Thus the transaction of Long Term Capital Gain is fully verifiable from the documentary evidences. Further, the Legislature has also made amendment in section 10(38) with effect from 01.04.2018 (A.Y. 2018-19) stating that long term capital gains from transfer of listed equity shares acquired on or after 01 October, 2004, would be exempt from tax under section 10(38) of the IT Act only if the Securities transaction Tax (STT) was paid at the time of acquisition of such shares. 10.1. Previously, to claim the exemption u/s 10 (38) only the requirement was the transaction of sale is undertaken on or after 01 October, 2004 and is chargeable to STT under Chapter VII of the Finance (No.2) Act, 2004. It means irrespective of manner of acquisition, the exemption u/s 10 (38) was allowed with only condition that the transaction of sale is undertaken on or after 01 October, 2004 and is chargeable to STT. However, department noticed that exemption provided under section 10(38) is being misused by certain persons for declaring their unaccounted income as exempt long-ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, there is no direct evidence brought on record by the A.O. to hold that the assessee introduced his own unaccounted money by way of bogus long term capital gain and also there is no evidence whatsoever on record that assessee paid cash to obtain LTCG. 10.5. It is submitted that the Ld. A.O. only on the basis of report of Investigation Wing of department at Kolkata is holding the transaction of sale of said shares Splash Media Infra Ltd. as bogus and also on suspicion of high rise in price of shares in stock market on online trading. The speculation on part of the department is with the intent to implicate everyone who has ever traded in this company Splash Media Infra Ltd. to their investigation. No details / statement were recorded which may reflect any wrong doing on the part of assessee and hence all the generalized report gathered is being extrapolated to all the share holders of this company without any corroborative material. The assessee is not a party reported in the alleged dubious dealings,if anyhe has no nexus with the company whose shares purchased nor with its directors or operators. he is not connected with the activity of Broker who handled transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffairs is real unless the contrary is proved (Kalva Vs. Union of India 49 ITR 165 (SC), CIT Vs. Daulat Ram 87 ITR 349, 360-61 (SC). The presumption is in favour of good faithand non-concealment of income and the initial burden of finding some material in support of finding of concealed income is on department (CIT Vs. Swami 241 ITR 363). 10.8. Further in course of assessment proceedings assessee specifically made a request to A.O. that cross examination of concerned persons who have admitted on oath before different authorities of the department entire scheme of providing accommodation entries in the form of bogus LTCG as stated in assessment order which Ld. A.O. not allowed. 10.9. It is submitted as now it is settled law on the issue that no adverse inference can be drawn against the assessee without providing cross examination opportunity to the concerned assessee against whom an adverse inference is to be drawn by the department on the basis of third party statement. Andaman Timber Industries Vs. CCE Kolkata II (2016) 55 Taxworld (SC). 10.10. The assessee submits that the right to cross examine the third party whose statement is relied by department is principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. 10.11. The Hon'ble ITAT Jaipur Bench, Jaipur recently in case of Pramod Jain, Jaipur vs DCIT, Cir-3, Jaipur and other con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, are later retracted by the concerned assesses while filing returns of income, 10.13. It is settled law that the assessee has right to retract the statement given if it remains unproved from any cogent material and is rather not supported with corroborative material and evidences. Where there is a specific ground taken for retracting a statement, that it was made under pressure, such a statement cannot be the sole basis, unless corroborated. Gajjam Chand Yellappa v I.T.O. (2015) 370 ITR 671 (T AP).In the case of CTI v Naresh Kumar Agarwal (2014) 369 ITR 171 (T AP) it was held that, where the assessee retracts the statement admitting undisclosed income on the plea that it was recorded under threat or coercion, with no evidence to support the admitted income, the burden of proof is on the Assessing officer to establish his conclusion. A statement which is not substantiated cannot be taken as binding on the assessee. CIT v Balasubramanian (P) (2013) 354 ITR 116 (Mad.). Therefore reliance made by A.O. on such statement is uncalled for. 10.14. The assessee has furnished all the evidences in support of its claim showing the investment in the shares and purchases of the shares has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like copy of contract note regarding purchase and sale of shares of Limtex and Konark Commerce Ind. Ltd., assessee s account with P. K. Agarwal Co. share broker, company s master details from registrar of companies, Kolkata were filed. Copy of depository a/c or demat account with ALankrit Assignment Ltd., a subsidiary of NSDL was also filed which shows that the transactions were made through demat A/c. When the relevant documents are available the fact of transactions entered into cannot be denied simply on the ground that in his statement the appellant denied having made any transactions in shares. The payments and receipts are made through a/c payee cheques and the transactions are routed through Kolkata Stock Exchange. There is no evidence that the cash has gone back in appellant s account. Prima facie the transaction which are supported by documents appear to be genuine transactions. The A.O. has discussed modus operandi in some sham transactions which were detected in the search case of B.c. Purohit Group. The A.O. has also stated in the assessment order itself while discussing the modus operandi that accommodation entries of long term capital gain were purchased as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case , we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought back all the relevant material to substantiate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly, we delete the addition made by the AO on this account. The Delhi High Court of Delhi in a very recent decision of PCIT Vs Smt. Krishna Devi (ITA No. 125/2020 Dated 15-01-2021) held that:- On a perusal of the record, it is easily discernible that in the instant case, the AO had proceeded predominantly on the basis of the analysis of the financials of M/s Gold Line International Finvest Limited. His conclusion and findings against the Respondent are chiefly on the strength of the astounding 4849.2% jump in share prices of the aforesaid company within a span of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the evidence brought on record, held that the Respondent had successfully discharged the initial onus cast upon it under the provisions of Section 68 of the Act. It is recorded that There is no dispute that the shares of the two companies were purchased online, the payments have been made through banking channel, and the shares were dematerialized and the sales have been routed from de78 mat account and the consideration has been received through banking channels. The above noted factors, including the deficient enquiry conducted by the AO and the lack of any independent source or evidence to show that there was an agreement between the Respondent and any other party, prevailed upon the Page 9 of 10 ITAT to take a different view. Before us, Mr. Hossain has not been able to point out any evidence whatsoever to allege that money changed hands between the Respondent and the broker or any other person, or further that some person provided the entry to convert unaccounted money for getting benefit of LTCG, as alleged. In the absence of any such material that could support the case put forth by the Appellant, the additions cannot be sustained. 12. Mr. Hossain s submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f purchase and sale of shares could not be treated as non-genuine. 14. The decisions of the Hon'bleCalcutta High Court in the case of CIT Vs Carbo Industrial Holdigns Ltd. (244 ITR 422) and CIT Vs Emerald Commercial Ltd. (250 ITR 549) are relevant to the issue where the Hon'ble High Court has held that where the payments are made by Account Payee Cheques and the existence of the brokers is not disputed share transactions cannot be held to be bogus. 15. Findings in Bhagwati Prasad Agarwal Exchange shows that the name of the assessee is not appearing in respect of the transactions-in-question. The tribunal found that the chain of transaction entered into by the assessee have been proved, accounted for, documented and supported by evidence. The assessee produced before the Commissioner of Income Tax (Appeal) the contract notes, details of his DEMAT account and, also, produced documents showing that all payments were received by the assessee through bank. We do not, therefore, think that this appeal involves any substantial question of law requiring interference by this court under section 260A of the Income Tax Act, 1961. The appeal is, therefore, summarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction invalid. 19. I.T.O. vs. Indravadan Jain (HUF) (ITAT Mumbai) 27/05/2016 Held: merely because the investigation was done by SEBI against broker or his activity, assessee cannot be said to have entered into ingenuine transaction, in so far as assessee is not concerned with the activity of the broker and have no control over the same. 20. The Hon'ble jurisdiction ITAT, Jaipur Bench, Jaipur in case of Pramod Jain Vs. DCIT and others vide order dated 31-01-2018 (ITA No. 368 372/JP/2017) upheld the same legal view and deleted the addition u/s 68 by treating it as unexplained credit by holding LTCG exempt u/s 10 (38) claimed by assessee as bogus by holding In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the A.O. is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income in the shape of long term capital gain. On the other hand, the assessee has brought all the relevant material to substantiate its claim that transactions of the purchase and sale of shares aregenuine. Even otherwise the holding of the shares by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and consideration had been received through banking channels, assessee had successfully discharged onus cast upon him by provisions of section 68. 23. The Hon'ble jurisdiction ITAT, Jaipur Bench, Jaipur in case of Meghraj Singh Shekhawat Vs DCIT 443 444/JP/2017 dated 07-03-2018 Brief facts are that the assessee is an individual and engaged in the business of retail sale of IMFL/Beer. During the assessment proceeding the AO noted that the assessee has shown long erm capital gain of ₹ 1,32,56,113/- which is claimed as exempt u/s 10(38) of the Act on saleof shares of M/s Rutron International Ltd. The AO received information from Investigation Wing, Kolkata that during the search conducted u/s 132 of the Act on 12.04.2015 at the business premises of one Shri Anil Agarwal Group it was found that Shri Anil Agarwal isone of the promoters of M/s Rutron International Ltd. The shares were sold by the assessee from his D-mataccount through the broker M/s Anand Rathi Share and Stock Brokers Ltd. and therefore, the assessee denied any involvement of availing the bogus of long term capital gain. Consequently the AO made an addition of ₹ 1,32,56,113/- to the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical issue it was found that when the payment of purchase consideration paid through cheque directly to the company and the subsequent merger of the company as per the scheme of merger approved by the High Court, then the transaction and sale of shares in question cannot be held as bogus. The AO has passed the impugned order on the basis of the statement of Shri Deepak Patwari which is identical as in the case of Shri Pramod Jain others vs. DCIT. Accordingly following the order of the Coordinate Bench of this Tribunal, we hold that the addition made by the AO is merely based on suspicion and surmises without any cogent material to controvert the evidence filed by the assessee in support the claim. Further, the AO has also failed to establish that the assessee has brought back his unaccounted income in the shape of long term capital gain. Hence we delete the addition made by the AO on this account. The following judgements of Courts are also relied : - Asstt. CIT v. Kamal Kumar S. Agarwal (Indl.) [2012] 20 taxmann.com 338 (Nag.) CIT v. Shyam R. Pawar [2015] 54 taxmann.com 108/229 Taxman 256 (Bom.); I.T.O. v. Smt. Aarti Mittal [2014] 41 taxmann.com 118 (Hyd. Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion but for the year in which the assessee acquired the shares in question. The assessee also brought on record the evidence in the shape of bills, allotment of shares, payment through banking channel, dematerializing of the shares in the Demat account of the assessee and sale of the shares through Stock Exchange from the Demat account of the assessee. The documentary evidence which can be independently verified and the correctness of the same cannot be questioned being the payment made by the assessee through banking channel reflected in the bank account statement as well as dematerializing of the shares in the Demat account proving the fact of holding of the shares by the assessee in the Demat account. The evidence produced by the assessee has established at least two facts that the assessee was holding the shares in his Demat account and the payment for purchase consideration was made through banking channel which is also not disputed by the AO. The AO has not brought on record any material to controvert or disprove these evidences of payment through banking channel, holding of the shares in the Demat account of the assessee, sale of shares from the Demat account through Stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at repeated questions were asked about the genuineness of the loans taken by the assessee during the financial year 2009-10 relevant to the assessment year under consideration and the assessee has given the answer and stated that all these loans are genuine and taken through banking channel and the assessee also repaid these loans prior to the date of the search. These transactions are very much part of the regular books of account of the assessee. However, the search team again put question to the assessee as question No. 77 in which the assessee has stated that the assessee has checked the details of the loans from M/s Dipnarayan Vyapar Pvt. Ltd. for which the assessee received cash and the same was declared as undisclosed income for the year of the search. We find that prior to that the assessee was also asked question No. 34 to 36 and question No. 39. Even after the statement recorded U/s 132(4) of the Act, the Investigation Wing again summoned the assessee U/s 131 of the Act for conducting post search enquiry and the statement of the assessee was recorded on 30/05/2013 wherein in response to question No. 12, the assessee clarified that the earlier statement of the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for continuously for two days and hoping the cooperation from the department, he said that he received cash against the said loan which was declared as undisclosed income for the year of search. The Investigation Wing was still not satisfied with the statement of the assessee and again called the assessee for further investigation on 30/5/2013 and thereafter on 21/6/2013. The assessee was again put the question about the loan taken from M/s Dipnarayan Vyapar Pvt. Ltd., in reply, the assessee explained that on repeated instances of the investigation team and due to exhausted mind, the assessee given an incorrect reply to question No. 77 recorded U/s 132(4) of the Act on 05/4/2013 and again stated that after verifying the books of account, the said loan was taken on interest and was also repaid both the transactions are through banking channel. Thus, having regard to the background of the circumstances in which statement of the assessee regarding said transaction of loan from M/s Dipnarayan Vyapar Pvt. Ltd. was recorded and finally statement recorded in post search inquiry we are of the view that the assessee finally clarified the issue in the statement recorded U/s 131 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv . Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v . In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra ) was concerned, the Court in paragraph 24 of that decision noted that we are not concerned with a case where no incriminating material was found during the search conducted under Section 132 of the Act. We therefore express no opinion as to whether Section 153A can be invoked even under such situation . That question was, therefore, left open. As far as Chetan Das Lachman Das ( supra ) is concerned, in para 11 of the decision it was observed: 11. Section 153A (1) (b) provides for the assessment or reassessment of the total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search took place. To repeat, there is no condition in this Section that additions should be strictly made on the basis of evidence found in the course of the search or other post-search material or Information available with the Assessing Officer which can be related to the evidence found. This, however, does not mean that the assessment under Section 153A can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at: ( a ) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; ( b ) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material; and ( c ) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. 34. The argument of the Revenue that the AO was free to disturb income de hors the incriminating material while making assessment under Section 153A of the Act was specifically rejected by the Court on the ground that it was not borne out from the scheme of the said provision which was in the context of search and/or requisition. The Court also explained the purport of the words assess and reassess , which have been found at more than one place in Section 153A of the Act as under: 26. The plea raised on behalf of the assessee that as the first proviso provides for assessment or reassessment of the total income in respect of each assessment year falling within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 153A of the Act seeks to assess the total income for the assessment year, which is clear from the first proviso thereto which provides that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. The second proviso makes the intention of the Legislature clear as the same provides that assessment or reassessment, if any, relating to the six assessment years referred to in the sub-section pending on the date of initiation of search under section 132 or requisition under section 132A, as the case may be, shall abate. Sub-section (2) of section 153A of the Act provides that if any proceeding or any order of assessment or reassessment made under subsection (1) is annulled in appeal or any other legal provision, then the assessment or reassessment relating to any assessment year which had abated under the second proviso would stand revived. The proviso thereto says that such revival shall cease to have effect if such order of annulment is set aside. Thus, any proceeding of assessment or reassessment falling within the six assessment years prior to the search or requisition stands abated and the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. ** ** ** 19. On behalf of the appellant, it has been contended that if any incriminating material is found, notwithstanding that in relation to the year under consideration, no incriminating material is found, it would be permissible to make additions and disallowance in respect of an the six assessment years. In the opinion of this court, the said contention does not merit acceptance, inasmuch as. the assessment in respect of each of the six assessment years is a separate and distinct assessment. Under section 153A of the Act, assessment has to be made in relation to the search or requisition, namely, in relation to material disclosed during the search or requisition. If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. In this regard, this court is in complete agreement with the view adopted by the Rajasthan High Court in the case of Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent, that there are several distinguishing features in that case which makes its ratio inapplicable to the facts of the present case. In the first place, the Assessees there were engaged in the business of Pan Masala and Gutkha etc. The answers given to questions posed to the Assessee in the course of search and survey proceedings in that case bring out the points of distinction. In the first place, it was stated that the statement recorded was under Section 132(4) and not under Section 133A. It was a statement by the Assessee himself. In response to question no. 7 whether all the purchases made by the family firms, were entered in the regular books of account, the answer was: We and our family firms namely M/s. Assam Supari Traders and M/s. Balaji Perfumes generally try to record the transactions made in respect of purchase, manufacturing and sales in our regular books of accounts but it is also fact that some time due to some factors like inability of accountant, our busy schedule and some family problems, various purchases and sales of Supari, Gutka and other items dealt by our firms is not entered and shown in the regular books of accounts maintained by our firms. 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were not baseless. Given that the assessing authorities in such cases have to draw inferences, because of the nature of the materials - since they could be scanty (as one habitually concealing income or indulging in clandestine operations can hardly be expected to maintain meticulous books or records for long and in all probability be anxious to do away with such evidence at the shortest possibility) the element of guess work is to have some reasonable nexus with the statements recorded and documents seized. In tills case, the differences of opinion between the CIT (A) on the one hand and the AO and ITAT on the other cannot be the sole basis for disagreeing with what is essentially a factual surmise that is logical and plausible. These findings do not call for interference. The second question of law is answered again in favour of the revenue and against the assessee. 69. What weighed with the Court in the above decision was the habitual concealing of income and indulging in clandestine operations and that a person indulging in such activities can hardly be accepted to maintain meticulous books or records for long. These factors are absent in the present case. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: ( a ) the assessments or reassessments, which stand abated in terms of II proviso to Section 153A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; ( b ) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and ( c ) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of Section 153A says that such proceedings shall abate . The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said judgment also in no uncertain terms holds that the reassessment of the total income of the completed assessments have to be made taking note of the undisclosed income, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed vs. ACIT (88 DTR 1) [Raj HC] 2) Kabul Chawla vs. ACIT 380 ITR 573 (Del HC 3) Continental warehousing Corporation 374 ITR 645 etc. 7.3 I have perused the order of the AO and submissions made in this regard. Perusal of assessment order passed u/s 143(3)/153A shows that all the additions made by the AO are not relatable to any seized material. I also find that for the A.Yr the assessment stood completed on the date of search. 7.4 The issue of additions made by the AO in the assessment u/s 143(3)/153A without any reference to incriminating seized material was considered by the Hon ble Rajasthan High court in the case of Jai Steel limited vs. ACIT (88 DTR 1). The Hon ble court was of the view in case of completed assessments no addition can be made if no incriminating seized material is found during the course of search. The relevant observation of the judgment is reproduced below: In the firm opinion of this Court from a plain reading of the provision along with the purpose and purport of the said provision, which is intricately linked with search and requisition under Sections 132 and 132A of the Act, it is apparent that: (a) The assessments or reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has to be made under this Section only on the basis of seized material. v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have claimed that they have been forced to confess the undisclosed income during the course of search and seizure and survey operation. Such confessions, if not based upon the credible evidence, are later retracted by the concerned assessees while filing returns of income. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording the statement during the course of search and seizure and survey operations, no attempt should be made to obtain confession as to the undisclosed income. The Board has again issued a Circular dated 18th December, 2014 and advised the Taxing Authorities to avoid obtaining admission of undisclosed income under coercion/undue influences. Thus in the absence of any incriminating material found during the course of search and seizure action, the confession as recorded during the course of search and seizure action has no evidentiary value. It is also pertinent to note that if a confession revealing certain information or disclosing certain transactions which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 cannot be considered as an incriminating material found and seized during the search. 5. Whether on the facts and in the circumstances of the case and in law, the CIT (A) was justified in holding that the assessee filed retraction against the statement given u/s 132(4) during the search as well as post search proceedings, however the retraction was filed after 8 months without supporting evidences and also not reported during the search proceedings. 6. Whether on the facts and in the circumstances of the case and in law, the CIT (A) is was justified in allowing the appeal of the assessee holding that in absence of any incriminating material, the completed assessment can t be interfered with by the AO and completed assessment can be interfered with the AO while making assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search which were not produced or not already disclosed. Although the same was accepted in the statement recorded under section 132(4). 7. The appellant craves to add, amend, alter or forego any ground(s) of appeal either before or at the time of hearing of the appeal. 16. Grounds no. 1 and 3 to 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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