TMI Blog2023 (11) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... ial or information required by assessee. Taking into account these aspects, we are of the considered view that there is a need on the part of assessee to submit purchase-bill or other evidence of purchase and the AO has to rectify his contradictory finding after taking into account assessee s submission.There has to be a finding on source and mode of investment. There is also a necessity to verify the status of 1,300 shares sold in AY 2014-15. Furthermore, there is a strong necessity on the part of AO to supply search-material to assessee. Thereafter, the AO would take a fresh call on the issue. Therefore, this ground is fit for remitting back to the file of AO and we do so. Appeal of assessee is partly allowed for statistical purpose. - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER For the Appellant : Shri Pawan Ved, Advocate For the Respondent : Shri Ashish Porwal, Sr. DR ORDER Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 14.01.2019 passed by learned Commissioner of Income-Tax (Appeals)-II, Indore [ Ld. CIT(A) ], which in turn arise out of assessment-order dated 13.10.2017 passed by learned ITO-1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is a legal ground in which the assessee claims that the assessment is null and void since it has been made u/s 143(3) though it must have been made u/s 153C on the basis of search-material. 8. To address this issue, Ld. AR firstly carried us to Para No. 7 to 10 of assessment-order; these are re-produced below for immediate reference: 9. Then, he carried us to a Table containing date-wise chronology of proceedings of present case, compiled by him and filed on Page No. 2 of Paper-Book, as under: 10. Referring to Para No. 7 to 10 of assessment-order and the chronological events of proceedings, narrated in foregoing paragraphs, Ld. AR submitted the case-history as follows: (i) A search was conducted by Indore Unit of Investigation Directorate of Income-tax Department upon one Moira / Nyati Group on 17.06.2015. Based on material/information found during search, the Joint Director of Investigation, Indore forwarded a report dated 13.04.2016 to assessee s AO. From this report, the assessee s AO found that Shri Nishant Nyati of Nyati Group was engaged in providing managed and synchronized shares transactions for number of beneficiaries for arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxpayer u/s 143(3)/144 of the Act based on the search executed in some other taxpayer s case, whether it is to be considered as a search case or non-search case under Vivad se Vishwas? Answer : Such case is to be considered as a search case. Ld. AR submitted that the Govt./CBDT has also understood that if the assessment-order had been framed in the case of an assessee u/s 143(3)/144 on the basis of search executed in other s case, it would be considered as a search case . This, according to Ld. AR, fortifies assessee s stand that the present case must have been treated by AO as a search-case and the assessment must have been made u/s 153C. 13. Per contra, Ld. DR strongly opposed the submission of Ld. AR on following premises: (i) Firstly, he referred to the very same Table of chronological event of proceeding, re-produced earlier, and submitted that against date marked as 13.04.2016, the Ld. AR/assessee has himself mentioned: Report of this date was received by LAO that the LTCG of the assessee was bogus as revealed from search. This is possibly the basis for selection of case for scrutiny. Ld. DR submitted that the assessee is just speculating that the sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder clearly exhibits that the case had been selected for scrutiny under CASS (Computer Aided Scrutiny Selection); and (iii) that Para No. 7 of assessment-order also speaks clearly that the AO made just additional or ancillary use of the report of search received from Jt. DIT(Inv), Indore. Therefore, it is a case where normal scrutiny has been conducted by AO and there is nothing to suggest that the situation and condition of section 153C is satisfied. Regarding the reliance placed by Ld. AR on FAQ No. 70 of CBDT Circular No. 21/2020 (supra), we firstly observe that the said clarification was given by CBDT for a different objective i.e. the eligibility for Vivad Se Vishwas Scheme, Computation of tax liability, Procedures for scheme, etc. That clarification is nothing to do with applicability or non-applicability of section 153C or 143(2)/143(3). Furthermore, the first sentence of FAQ clearly states If the assessment order has been framed in the case of a taxpayer under section 143(3)/144 of the Act based on the search executed in some other taxpayer s case The situation mentioned in this sentence itself admits that the assessment of X person can validly be made u/s 143(3)/144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper-Book. He submitted that the AO is not having any evidence to discredit the assessee s documents or even to prove that the assessee was involved in price manipulation and thereby generate bogus gain. He also argued that the AO has mentioned that the transaction was bogus and made with an intention to convert black money into white. If this is so, the AO s conclusion must be that black money was available with the assessee in the year of purchase itself and in that case, the addition could not have been made in current year. He submitted that the issue is also covered by numerous decisions of ITAT benches in favour of assessee. A brief of several decisions is filed on Page No. 8 to 20 and Page No. 24 to 57 of Written-Submission. Reliance is also placed on CIT Vs. Odeon Builders (P) Ltd. 418 ITR 315 (SC) where it was held that if the assessee has submitted purchase bills, transportation bills, copy of accounts, VAT and income-tax returns of dealers and payments were also made through cheque, the purchase transactions cannot be treated as bogus. Lastly, Ld. AR also made a strong contention that the assessee has also applied to AO on multiple occasions, vide application dated 06.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR that search-material was not provided to assessee. 20. We have considered rival submissions of both sides and perused the record. On a careful consideration, we find several loose ends. Firstly, we find that the AO has raised a strong doubt on the first stage of transaction i.e. purchase of shares on the premise that the assessee has not submitted purchase-bill. The Ld. DR for the revenue has also emphasized this very point in very strong terms. In this regard, when we read carefully the assessment-order, we find that the AO has made two contradictory findings in Para No. 4 and 5 of assessment order as under: Para No. 4 of assessment-order: During the course of scrutiny proceedings statement of the assessee was recorded u/s 131 of the I.T. Act and she was requested to furnish copy of purchase bill of the shares of Kappac Pharma. The assessee submitted the copies of purchase bill. Para No. 5 of assessment-order: On verification records it is seen that purchase bills are not produced by the assessee. The assessee only produced copies of share certificate transferred in her name. Therefore, the purchase is not verifiable. During the course of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late forum? These vital aspects are not coming to us. Last but most important point, we also observe, is that the assessee is strongly contending that the department has not provided search-material to him despite multiple applications by assessee. In fact, in one of the application date 20.11.2020 (re-produced earlier), the assessee has also intimated to AO that if the information is not supplied, he will request the ITAT to take an adverse view. For this point, we take note that the AO has himself mentioned in Para No. 9 of assessment-order that the assessee s name figured in the list of beneficiaries of bogus gain. Therefore, when the assessee s name is included in such list, the AO ought to have supplied the search-material to assessee at least when the assessee is repeatedly demanding. Though the Ld. DR had defended AR s submission by taking support of Q.No. 36 of the statement of assessee u/s 131 (re-produced earlier) but a careful reading of the same reveals that though the AO might have shown report of search to assessee but the AO has ultimately raised general question on the working of share broker and in reply the assessee has denied of having any knowledge. The question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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