TMI Blog2022 (1) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... unnecessary to go into the merits of the addition made herein. The entire remand report of the ld. AO had already been reproduced herein supra. We hold that when the ld. AO had given a favourable report in his remand proceedings, then fairly the Revenue ought not to have preferred any further appeal before this Tribunal as there could not be any grievance for them. We draw support in this regard on the decision of the Hon ble Madras High Court in the case of Smt. B.Jayalakshmi [ 2018 (8) TMI 208 - MADRAS HIGH COURT] as categorically held that when the Assessing Officer had accepted the contentions of the assessee in the remand report, the Revenue could not be aggrieved by filing further appeal and since this fact had not been taken cognizance by the Tribunal in that case, the Hon ble Madras High Court had remanded the matter back to the Tribunal for fresh consideration. Admittedly, such conclusion was drawn by the ld. AO after carrying out detailed investigations and enquiries carried out with various parties as mandated. We find that the ld. CIT(A) granted relief based on the said remand report apart from giving relief on merits. We are not giving any opinion on the mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee LLP filed the return of income for AY 2015-16 on 31/08/2015 declaring total income of Rs. Nil. The assessee had shown exempt income of Rs.67,95,98,197/- on sale of shares of SAL. The predecessor company purchased 14,96,290 shares of SAL for a total consideration of Rs.29,92,580/-@2/- per share and the said shares became investments of the LLP after conversion, alongwith other assets and liabilities of the company. Out of the total shares purchased, the assessee sold 13,35,538 shares during the AY 2015-16 and 1,40,952 shares during the AY 2016-17. The total sale consideration received on sale of 13,35,538/-shares during the AY 2015-16 amounted to Rs.68,22,69,273/- and the assessee declared the net capital gain of Rs.67,95,98,197/-, which was claimed as exempt u/s.10(38) of the Act by the LLP in the return of income. 2.2. During the assessment proceedings, the ld. AO felt that the facts of this case have similarity with the enquiries conducted by the Investigation Wing of Income Tax Department, Kolkata. After quoting statement of one Shri. Vipul Vidur Bhat, in whose case a search was conducted by the Investigation Wing of Mumbai and citing the modus operandi mentioned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transaction Tax (STT). Accordingly, it was pleaded that the long term capital gain arising on sale of such listed shares would be eligible for exemption u/s.10(38) of the Act. We find that the ld. AO had primarily made the addition only based on the original statement recorded from Shri Vipur Vidhur Bhatt, ignoring the fact that the said statement had been duly retracted by him by way of filing an affidavit before the Investigation Wing within a reasonable time. Infact, Shri Vipul Vidhur Bhatt, being department s witness, was also produced for cross examination of the assessee by the ld. AO, during the course of assessment proceedings as stated supra. In the said cross examination proceedings, Shri Vipul Vidhur Bhatt had stood on the retraction statement made by him and reaffirmed the contents thereon. Later, we find that the ld. AO had resorted to make re-examination of Shri Vipul Vidhur Bhatt who reiterated what was stated by him in the cross examination proceedings. Despite that, the ld. AO, proceeded to rely on the original statement recorded during search of Shri Vipul Vidhur Bhatt and made an addition on account of sale proceeds of shares of SAL u/s.68 of the Act in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply. Sir, it is further submitted that the assessee firm or any of its partners are not connected or related with any of their promoters or Directors of the Company M/s. Sunrise Asian Limited or any of the so-called entry operator. As a matter of fact, the assessee firm or any of its partners never indulged any such questionable activity nor has been part of any modus operandi as stated by the A.O. in the assessment order. It is further submitted that investment in a Company with weak fundamentals can be for several reasons such as professional advice, reasonable price for Shares, foreseeable turnaround, past pricing and volume patterns and just market rumor about phenomenal movement in Share price of a particular scrip Moreover, the mere fact that the Shares were sold at a high price cannot be termed as conclusive proof or a ground for an allegation that the assesses has converted some unaccounted money through accommodation entries as alleged by the A.O. in the assessment order. The Learned A.O. in the assessment order relied upon the purported statements of various alleged operators on the basis of which the Learned A.O. had drawn adverse inferences in the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on can be made on the basis of surmises, suspicion and conjectures. In the case of Umacharan Shaw Bros, v C.I.T. (1959) 37 ITR 271 (SC), the Hon'ble Supreme Court held that suspicion however strong, cannot take place of evidence. The Hon'ble Supreme Court in the case of CIT (Central) Kolkata v. Daulat Ram Rawatmull reported in 87 ITR 349 held that the onus to prove that the apparent is not the real is on the party who claims it to be so. The burden of proving a transaction to be bogus has to be strictly discharged by adducing legal evidences which would directly prove the fact of bogusness or establish circumstances unerringly and reasonably raising an inference to that effect. 2.7. The assessee relied on the following decisions in support of its contentions before the ld. CIT(A) :- a) Decision of the Hon ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT reported in 37 ITR 288(SC) wherein it was held that assessment could not be based on background on suspicion and in absence of any evidence to support the same. b) Decision of the Hon ble Punjab and Haryana High Court in the case of PCIT vs. Prempal Gandhi in ITA No.95 of 2017 dated 18/02/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the name of the assessee LLP or the erstwhile company or name of any partner as beneficiaries of entries provided by him. Further the ld CIT(A) also observed that the statements recorded from alleged brokers during the search at Mumbai (which had been heavily relied upon by the ld. AO), do not directly M/s. Liberal Realtors Limited Liability Partnership link the assessee with any of said companies or persons, much less with Kolkata operators. None of the persons whose statements were recorded stated that the assessee was involved in price rigging of the shares or that any partner of the LLP gave cash to any of them which they deposited in the bank accounts and which had come back to the assessee in the form of long term capital gain. Accordingly, the ld. CIT(A) concluded on merits that when name of the assessee was not at all mentioned by anybody in the respective statements recorded during the search either by Mumbai or at Kolkata, the inference drawn by the ld. AO could only be construed as a surmise. The ld. CIT(A) also observed that there is no direct or circumstantial evidence to hold that the assessee had unaccounted income / cash which was given to various entry operators ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced reliance on various decisions of various High Courts to drive home the point that statement recorded during search which is not backed by any corroborative evidence cannot be basis for making any addition in addition thereto. He also relied on certain case laws where the statements once retracted would lose its evidentiary value. Further, the ld. CIT(A) also placed reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Mukesh Ratilal Marolia in ITA No.456 of 2007 dated 07/09/2011. In that case, the ld. AO had held that long term capital gain shown by that assessee was unexplained since the broker had confirmed in a statement before that AO though he never sold any shares to that assessee. However, taking note of the evidence as available on record, the Tribunal held that the ld. AO had not disproved the genuineness of the transactions and granted relief. The said decision of the Tribunal was upheld by the Hon ble Bombay High Court. The Revenue had preferred a Special Leave Petition (SLP) before the Hon ble Supreme Court which was dismissed in SLP (Civil) No.20146/2012 dated 27/01/2014. Similar was the decision rendered by the Hon ble Delhi Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be that the ld. AO had indeed accepted the entire transactions together with its evidences as proper and genuine. We deem it unnecessary to go into the merits of the addition made herein. The entire remand report of the ld. AO had already been reproduced herein supra. We hold that when the ld. AO had given a favourable report in his remand proceedings, then fairly the Revenue ought not to have preferred any further appeal before this Tribunal as there could not be any grievance for them. 3.1. We draw support in this regard on the decision of the Hon ble Madras High Court in the case of Smt. B.Jayalakshmi vs. ACIT reported in 407 ITR 212 (Mad). The relevant operative portion of the said judgement is reproduced hereunder:- 14. The following substantial questions of law was framed for consideration in the tax case appeals: Whether the Income Tax Appellate Tribunal is right in disallowing the claim of agricultural income of the assessee, which having failed to appreciate the evidence available on record by traversing beyond the scope of the records and against the findings given by the various statutory and judicial authorities as also the admissions made in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r contention was raised with regard to the loan of Rs.2,00,000/- from Mrs. S. Saraswathy. With regard to the order of the Assessing Officer treating the agricultural income as non-agricultural income, the applicants filed certificate from VAO to the effect that her agricultural income was around Rs.7,00,000/- per annum and that she had taken 30 acres of land in the village on lease from Mr. Danushkodi and his son D. Muthukumar and paying lease rent of Rs.75,000/- per year to Mr. Danushkodi and Rs.15,000/- per year to Mr. D. Muthukumar. 16. Further, coconut trees were grown in about 17 acres and paddy was cultivated in the remaining 13 acres. This contention raised by the applicant was rejected by the Assessing Officer on the ground that the applicant had not furnished any details such as crop cultivated, area under cultivation, productivity, agricultural income tax paid, sale bills pertaining to agricultural produce and proof for expenditure incurred. Further, the agreement for taking 30 acres of land on lease had not been registered; the return of income admitting agricultural income was filed only after the search by CBI. The Assessing Officer thus added the aforesaid amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's appeals, the question which was required to be considered is whether the Tribunal is right in disallowing the claim of agricultural income of the assessee, having failed to appreciate the evidence available on record and traversing beyond the scope of the records and findings given by authorities as also the admission made in the remand report by the Assessing Officer himself. Thus, what was required to be considered, was the effect of the findings given by the authorities more particularly, the admission made in the remand report by the Assessing Officer himself. Thus, a subsidiary substantial question of law, which would arise out of the substantial question of law framed is whether the Revenue was entitled to maintain an appeal as against the order of CIT (A), which itself was based upon a remand report 25.11.2002. If the answer to this subsidiary question of law is answered in favour of the assessee, then the appeal filed by the Revenue before the Tribunal has to be not maintainable in the light of the decisions quoted above. Though such a question was not specifically framed, the effect of the findings given by the authorities and more particularly, the admission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crept in while making out interest under Section 139(1)(iii). Thereafter, the Income Tax Officer issued a notice to the assessee proposing to rectify the mistake under Section 154 and calling upon the objections of the assessee. The said notice expressly referred to the tax effect which would result as a consequence of the rectification. The mistake was that instead of treating the assessee as an unregistered firm for the purpose of calculating the interest, the Income Tax Officer had treated the assessee as a registered firm. The assessee appeared before the Income Tax Officer and stated that he had no objection to revision proposed by the Income Tax Officer. Thereafter, the Income Tax Officer passed an order rectifying the mistake under Section 154 of the Act. Notwithstanding the admission before the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner of Income Tax. The appeal was dismissed upholding the order of the Income Tax Officer. The assessee preferred further appeal to the Income Tax Appellate Tribunal. The Tribunal also dismissed the appeal. It is thereafter, at the instance of the assessee, the above question was referred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the question framed namely as to whether the appeal before the Tribunal was competent, was required to be decided. That apart, since the issue touches upon the jurisdiction of the Tribunal to entertain an appeal, the Tribunal ought to have first answered the said question before proceeding to take up the other issues. 23. As already noticed, the Tribunal verbatim repeated the order passed by the Assessing Officer, dated 29.03.2001, and ignored the remand report, dated 25.11.2002 and the findings rendered by the CIT (A) based on such remand report. Thus, if such is the situation, the appeal itself would have been incompetent. Hence, this question, which touches upon the jurisdiction of the Tribunal, has not been considered by the Tribunal, we are inclined to review the judgment and remand the matter to the Tribunal for fresh consideration. 24. In the result, the Review Petitions are allowed and the judgment dated 30.09.2013, in Tax Case (Appeal) Nos.819 to 821 of 2010 is reviewed and recalled and the appeals stands disposed of, by remanding the matter to the Tribunal to decide the question of its jurisdiction to entertain the appeals filed by the Revenue against t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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