TMI Blog2023 (11) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) was issued by the new incumbent AO i.e. Deputy Commissioner of Income Tax Central Circle 5 (2) within the permitted time - transfer u/s 127 - HELD THAT:- No provision of law was shown to us by the learned authorized representative. We drew attention of the learned authorized representative to the provisions of section 129 of the income tax act which provided that Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor. AR referred to his written submission and the various judicial precedents cited. We find that the provisions of section 129 of the act is clear in this case and there is no scope for taking the interpretation as pointed out before us by the learned authorized representative. It is not the case of the assessee that he has not been heard by the new incumbent prior to making the assessment order. Therefore, the argument of the learned authorized representative is in clear violation of the provisions of section 129 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledge of the assessee. Therefore, the assessee produced the retraction statement and affidavit of the same person. Therefore so far as the cross examination of Mr. Bhatt is concerned, when assessee is aware about his retraction statement and his statement originally given implicating the assessee, the assessee could have himself produced Mr. Bhatt. Even otherwise, there is a statement recorded of that person during the course of assessment proceedings, which is also known to the assessee. The assessee does not make any request for cross-examination when his statement was recorded. Later on assessee makes a request for his cross-examination. Therefore there is no violation of principle of natural justice in not giving the cross examination of Mr. Vipul Bhatt. There is no provision in the income tax act to give an internal communication to the assessee such as appraisal report. Therefore, we reject this argument also. However while deciding the issue on the merits of the case; we will deal the same once again. Accordingly ground of the appeal to that extent stated above, is dismissed. Addition of annual value with respect to the house properties - HELD THAT:- As there is no c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Pavan Kumar Gadale, JM For the Assessee : Shri Pradip Kapasi CA For the Revenue : Shri Mahesh Akhade CIT DR ORDER PER BENCH :- 01. These are seven appeals filed by the assessee from assessment year 2010 11 to 2016 17 against appellate order passed by The Commissioner Of Income Tax (A) 46, Mumbai (the learned CIT A) wherein appeal filed by assessee against assessment order passed by The Deputy Commissioner Of Income Tax, Mumbai (the learned AO) is dismissed confirming the addition of income from house property for all these seven years, disallowance of exemption under section 10 (38) of The Income Tax Act , 1961 [ The Act] for assessment year 2014 15 and 2015 16 and further confirming undisclosed income for assessment year 2010 11. 02. Both parties before us stated facts that all these seven appeals involve common issues on identical facts and circumstances; therefore, they argued it together taking lead year as assessment year 2015 16. Therefore, we dispose of all these seven appeals by this common order. 03. Assessee is an individual and is assessed to income tax showing income derived from salaries, house property, capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56,899/ ₹ 56,899 and ₹ 73,722 of all these properties. Accordingly two additions were made to the total income of the assessee (1) undisclosed income of ₹ 198,000 and {2} income from property of ₹ 203,727/ . Total income was determined at ₹ 8,298,197/ . 07. For assessment year 2011 12, as assessee was found to be owner of all the four properties as were stated in assessment year 2010 11, annual value of the same were computed at RS 2,15,107 and total income was assessed at ₹ 8,950,047/ . Except the income from house property there was no other additions for this assessment year. 08. For assessment year 2012 13 the income from house property with respect to the same 4 properties were added to the total income of the assessee computed at ₹ 227,625/ and total income was computed at ₹ 2,17,99,055/ . Thus, the total income was increased only by income from property. 09. For assessment year 2012 13 income from house property with respect to the same four properties owned by the assessee as well as one more property at big splash was computed and added to the total income of the assessee. Income from HOUSE property with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferential allotment, exit providers, repayment of loan by the assessee in an orchestrated manner to give the sale of the shares colour of genuine long-term capital gain. This was based on the statement of the parties in the search of assessee resulting to consequential search on Mr. Bhatt and Mr. Jani. During assessment proceedings, assessee tried to explain by producing several documents and judicial precedents to state that the long-term capital gain earned by the assessee is genuine. The learned AO on the basis of the statement of Mr. Vipul, Mr. Kalpesh, Mr. Piyush, CA of the assessee, assessee himself, daughter of the assessee Ms Priya, found that the long-term capital gain is bogus. He also noted that the assessee as well as his family members do not have any knowledge about the company but has earned long-term capital gain in the same script of huge amount (₹ 37 crores). He also enquired about the company sunrise Asian limited and found that the company does not have any substance of business as well as any reason for unusual rise in the share price, which is confirmed by the parties that they have rigged share price of that company with a view to give exit to many bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be summarized as under:- Assessment year Date of filing of return of income under section 139 (1) Returned income (in Rupees) Return filed under section 153A of the act Income returned under section 153A of the act (in Rupees) Income assessed as per assessment order (in Rupees) 2010 11 9/3/2011 7,896,470 6/1/2017 78,96,470 82,98,197 2011 12 18/05/2012 8,734,940 12/1/2017 8,742,530 89,50,047 2012 13 8/9/2012 21,571,430 6/1/2017 21,571,430 2,17,99,055 2013 14 31/7/2013 24,838,080 6/1/2017 2,48,38,080 2,52,67,303 2014 15 28/7/2014 28,394,060 6/1/2017 2,83,94,060 13,80,72,957 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders, he passed up appellate order for assessment year 2010 11 on 26/10/2021, on 15/3/2021 for assessment year 2011-12, 2012 13 and 2016 17 and on 31/3/2021 for assessment year 2013 14 to 2015 16. He confirmed the order of the learned AO in toto. Therefore, assessee is in appeal before us. 017. Therefore all these appeals are preferred by the Assessee challenging :- i. No incriminating material found in search so no addition could be made in case of concluded assessments ii. The Assessment where the intimation is passed u/s 143 (1), despite time limit available for issuance of notice u/s 143 (2), such are concluded assessments and cannot result in to any addition even in such assessment years without any incriminating material iii. Income from house property cannot be added to the total income is absence of any incriminating material iv. Even if the balance sheet found is an incriminating material, property disclosed there in are all accounted , therefore no addition u/s 22 can be made as such balance sheet cannot be treated as incriminating material v. Even in the computation of Income from house property there is a dispute with respect to annual value, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Therefore, it is apparent that assessment up to assessment year 2014 15 can only be disturbed, if there is any incriminating material found during the course of search qua that AY. If for assessment year 2010 11 till 2014 15, there is no incriminating material found during search, then the assessing officer is empowered to make the total income assessment of the assessee taking into consideration incriminating material found as well as other material available with him. 020. In response to notice under section 153A of the act issued to the assessee on 6/12/2016 the return of income was filed on 6/1/2017 reiterating the return of income already filed under section 139 (1) of the act filed on 31/8/2015 wherein the total income was returned at ₹ 2,44,38,590/-. Thereafter the case of the assessee was centralized by The Principal Commissioner of Income Tax 15 by an order dated 15/11/2016 under section 127 of the act. It is the claim of the assessee that such order was passed without giving any opportunity of hearing to assessee and further copy of the order was also not given to the assessee despite several request made. 021. The learned assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enging additions on merits and violation of principles of natural justice. We have carefully considered all the evidences and judicial precedents placed before us. Judicial precedents would be dealt with at appropriate grounds of appeal, if found relevant. 024. As per ground number 1, assessee has challenged the invalid application of section 153A of the income tax and the additions made by the learned assessing officer were also challenged stating that the learned assessing officer has exceeded his jurisdiction to make an addition to the total income of the assessee without there being any incriminating material found during the course of search. The assessee has also raised the several issue with respect to, which assessment year is a concluded assessment and shall not abate on issue of intimation under section 143 (1) of the act. 025. Before us, the assessee challenges stating that the additions were made without having any incriminating material found during the course of search. Ld AR submits that :- i. These assessments are framed in pursuance of notice under section 153A for all these years without there being any incriminating material found, seized relied upon. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental representative vehemently opposed argument of the assessee and stated that a) there was a balance sheet, which was found during the course of search which was not at all disclosed earlier to assessing officer, from which it was found that assessee is owner of several properties other than the property for which annual value has been disclosed by the assessee, and therefore the revenue came to know only during the course of search that there are some other properties, whose annual value is subject to taxation under section 22 of the income tax act. Thus, there is incriminating material available with respect to addition under head of income from house property. He submits that whether the property is acquired from known sources or not is not relevant for taxation u/s 22 of the Act. Had those properties found unaccounted those additions would have been under other sections. b) With respect to addition in case of long-term capital gain exemption u/s 10 (38) of the Act, he submits that there was a search on assessee on 4/2/2016. During search, it was found that assessee and his family has taken huge long-term capital gain in case of sunrise Asian Limited, a company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to Q 37 of statement of Mr. Kalpesh Manharlal jani where 12 folders were found. He referred to Statement of Mr. Vipul Bhatt where in Q 58 he referred to 17 files of 3400 pages where in annexure 14 of 284 pages is completely about Moraj Group including assessee and his family members. He referred to Q 77 of his statements, which has 325 annexure of more than 7000 pages, which includes exit providers including exit providers in case of assessee. All these incriminating material is found during the course of search. f) He further submits that incriminating material is unearthed during search is related to penny stock and Income from House property in the form of balance sheet also where it is recorded and found that assessee has not disclosed income from house property and made an incorrect claim of exemption u/s 10 (38 ) of the Act. g) He submits that it is of no consequences if the same are referred to in assessment order or not. The only issue to be tested is whether there is any incriminating material or not found during search for making addition. It is there in this case. h) Thus, He further stated that the claim of the assessee that there is no incriminating ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat those immovable properties are disclosed in the balance sheet of the assessee and the assessee before the lower authorities never disclosed such balance sheet and therefore, unearthing balance sheet of the assessee, during the course of search itself is the incriminating evidence. Thus, there is reference of material found during the course of search, which suggests that the income of the assessee is required to be adjusted upwardly. It is the case of the revenue that assessee did file return of income for earlier years as well as for this year, prior to search and these properties or the balance sheet were not disclosed by the assessee for earlier years. The assessee does not deny these facts that balance sheet was found during the course of search and it was earlier not disclosed to the LD AO prior to search. 026. The honourable Supreme court in Abhisar Buildwell Pvt Ltd [ Supra] has held that [ 1] in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the total income taking into consideration the incriminating material unearthed during the search and the other ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is made. The issue that also arises is that whether with respect to the claim of the exemption of capital gain under section 10 (38) is there any incriminating material found during the course of search. The fact shows that the search took place on the assessee wherein it was found that assessee has earned huge tax-free capital gain in trading of sunrise Asian limited. Based on this information the search took place on the director of that company Mr. Kalpesh Manharlal Jani, which resulted into a consequential search on Mr. Vipul Bhatt wherein huge evidences were found that the total capital gain earned by the assessee as well as the family members are completely orchestrated to give the colour of genuineness. From statement of Mr. Vipul Bhatt, name of CA of the assessee was found i.e. Mr. Piyush Rasiklal Shah, who also confirmed the material as well as scheme. With respect to the long-term capital gain exemptions claimed by the assessee there is incriminating material found during the course of search itself, which is coupled with the evidences found from Mr. Bhatt, statement of CA of the assessee, statement of Mr. Bhatt himself, which is also corroborated by the assessee, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enches. A question was specifically raised to learned AR that despite time limit available for issue of notice under section 143 (2) of the act on the date of search, can it be said that merely issue of an intimation prior to the date of search makes the assessment for that year as concluded assessment year which shall not abate. The learned authorized representative argued that on the basis of the above two decisions of the coordinate benches it can be considered as concluded assessment which does not abate. 036. We find that the claim made by the learned authorized representative is based in paragraph number 6.1 of the decision of the coordinate bench in case of Arihant reality Ltd [2022] 141 taxmann.com 249 (Mumbai - Trib.)[05-04-2022] wherein it has been held that The scheme of the act provides for abatement of pending proceedings as on the date of search. It is not in dispute that the assessment for the Asst Year 2009-10 was originally completed u/s 143(1) of the Act and hence it falls under concluded proceeding, as on the date of search. We find that the reliance placed by the learned authorized representative on this decision is incorrect for the reason that the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of search for issuance of notice under section 143 (2) of the act. 040. Accordingly, we hold that assessment year 2010 11 to assessment year 2014 15 are unabated assessment years, which has been disturbed by the learned assessing officer, based on the incriminating material found during the course of search. For all these unabated assessment years, the addition is made with respect to the undisclosed income, income from house property and bogus long-term capital gain which are all based on the independent incriminating material found during the course of search relevant to those assessment years. Assessment year 2015 16 is not a concluded assessment year and therefore shall abate and assessing officer can make addition even in absence of incriminating material found during the course of search. Accordingly, we dismiss ground no 1 of the appeal. 041. Now coming to the second issue of change of jurisdiction, which is raised as per ground number 4 of the appeal, the learned authorized representative referred to page number 43 44 of his fact sheet. It is specifically argued by the learned authorized representative that no order was passed under section 127 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned authorized representative. In this case, the transfer is within one city and there is no requirement of giving any opportunity of hearing to the assessee in such circumstances. There is an administrative order passed under section 127 of the act therefore the claim of the learned authorized representative that there is no such order passed is not correct. Further the copy of the order was already given to the assessee, irrespective of the legal argument whether such order is required to be provided or not, during the course of remand proceedings. The assessee raised several arguments, which have been dealt with by the learned CIT A we do not find any merit in argument of the assessee that prior to the change of jurisdiction within the same stating, the assessee should have been granted an opportunity of hearing. That is not the mandate of the law. Thus, we dismiss Ground no 4 of the appeal. 044. Per Ground no 5, assessee has also raised an issue that no notice under section 143 (2) was issued by the new incumbent. This was raised as per ground number 5 of the appeal memo. The learned authorized representative specifically referred to page number 45 of his fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice is required to be issued every time under section 143 (2) of the act if there is change in person holding that post and that too within the time permitted, when different persons has assumed charge on transfers etc. Thus simply speaking the claim of the assessee is that if the assessing officer is Mr. X, after issuing notice under section 143 (2) of the act within time, he is later on transferred and Mr. Y assumes the charge, Mr. Y should also issue a fresh 143 (2) notice to the assessee and that too within the time permitted. On query, no provision of law was shown to us by the learned authorized representative. We drew attention of the learned authorized representative to the provisions of section 129 of the income tax act which provided that Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor. The learned authorized representative referred to his written submission and the various judicial precedents cited. We find that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The claim of the learned authorized representative is mentioned at page number 49 of his fact sheet. The learned authorized representative states that the appellant has requested for issue of summons under section 131 or notices under section 133 (6) to the various persons whose alleged statements were relied upon or were required to be relied upon by the learned assessing officer in assessing the total income. The assessee has also asked for an opportunity of cross-examination as per letter dated 18/11/2017. It was categorically stated that the addition with respect to the denial of exemption of long-term capital gain under section 10 (38) of the act has been denied on the stated statement of Mr. Vipul Bhatt who has retracted the statement on 9/2/2016 by filing an affidavit dated 2/9/2016 and 8/9/2017. He therefore submitted that the statement of Mr. Vipul Bhatt cannot be relied upon by the learned assessing officer. However, the learned assessing officer has relied on that statement. It was further stated that the AO has also relied upon the appraisal report for making an addition and that too without making any enquiry whatsoever to ascertain the reliability or veracity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee which assessee has done by producing the affidavit of Mr. Vipul Bhatt along with his retraction statement. Therefore, there is no violation of any of the principles of natural justice by the learned assessing officer. 053. We have carefully considered the rival contention and perused the orders of the lower authorities. With respect to the claim of the assessee that assessee requested for issue of summons under section 131 or notices under section 133 (6) to the various parties whose statements have been relied upon by the learned assessing officer, fact clearly shows that the assessing officer has referred to the statement of Mr. Bhatt, which was in the knowledge of the assessee. Therefore, the assessee produced the retraction statement and affidavit of the same person. Therefore so far as the cross examination of Mr. Bhatt is concerned, when assessee is aware about his retraction statement and his statement originally given implicating the assessee, the assessee could have himself produced Mr. Bhatt. Even otherwise, there is a statement recorded of that person during the course of assessment proceedings, which is also known to the assessee. The assessee does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year, vacancy allowance could not be granted which is in accordance with the law. He submits that the deduction for Municipal taxation and maintenance charges are already inbuilt when the rate of return of the cost of acquisition of the property is chargeable to tax. 056. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the identical issue including the arguments of the both the parties arose in the case of the daughter of the assessee Mrs. Priya Gurnani wherein as per order dated 8/11/2023 the issue is dealt with as under:- 029. Fact shows that assessee is owner of various premises. Those premises are required to be taxed under the head income from house property as per the scheme of the act. The claim of the assessee is that the assessee is owner of 3 premises of which 2 premises are self occupied. Further, the remaining premises remained vacant as the same were held for letting out or sale and could not be let out during the year. The assessee has paid regular municipal taxes and maintenance thereon. The claim of the assessee is that there was no liability to any notional income under section 22 under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in stating that the learned assessing officer has not attempted to determine the standard rent. Even assessee could also not do that despite being the owner of the property. Therefore, now the option left is to determine the annual value of the property. The claim of the assessee is that in view of the decision of the honourable Bombay High Court in case of Tiptop Typography [48 taxmann.com 19], the LD AO should have determined on standard rent. In the present case, the standard rent has not at all been determined by the BMC and therefore no fault can be found with the assessing officer to determine the so. Further in case of Tiptop Typography in paragraph number 33 the honourable High Court has noted that However, in all the appeals before us, the factual position is that the property or part thereof is let or given on leave and license basis. , Fact was that the properties were let out during the year. This is not the case of the properties owned by the assessee. Thus the property was not let, therefore the provisions of section 23 (1) (b) and (c) does not apply. The case of the assessee falls under section 23 (1) (a). Therefore, the annual value of the property would be the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not let out during the whole of the year and therefore there is no question of granting any vacancy allowance to the assessee. This is the mandate of the decision of honorable Punjab and Haryana High Court in 76 taxmann.com 349. The SLP filed by the assessee against that decision has also been dismissed. In view of that precedent, we do not find any merit in the claim of the assessee for allowability of vacancy allowance. 031. In view of the above facts, ground number 2, is allowed partly. 057. As there is no change in the facts and circumstances of the case of the assessee and the daughter of the assessee except the amount of taxation determined with respect to each of the property, we following the decision in case of Mrs. Priya Gurnani direct the learned assessing officer to grant deduction of standard deduction at the rate of 30% of annual value under section 24 of the act and upheld the action of the learned assessing officer in taxing the income of the above properties on all other issues. Accordingly, ground number 2 of the appeal of the assessee is partly allowed. 058. Ground number 3 is with respect to the addition on account of sale proceeds of ₹ 109 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2011 and for the shares held by appellant started on 30.01.2013 (Active Trading-Large volume). (Pg. 471 to 485 of PB) Said shares were then sold by your appellant through Registered Stock Brokers -Anand Rathi Share Stock Brokers Ltd.. F6 Finserve Pvt. Ltd. on various days during the period from 18.11.2013 to 25.02.2015 on issue of electronically generated contract notes by Exchange. (Pg. 490 to 508 of PB) . Contract notes evidencing sale of shares, brokerage and demat charges and STT paid by assessee. Notice dt. 09.05.2018 had been issued by BSE wherein a list of companies had been delisted. The said notice contained the name of Sunrise Asian Limited. Affidavit of Issuing Company dt. 17.06.2019 for confirmation of purchase of shares by the appellant and other details. (Pg. 440 to 445 of PB). Appellant vide letters dt. 20.01.2017, 23.11.2017 and 18.12.2018 and to DDI vide letters dt. 18 02.2016 and 27.06.2016 during the course of assessment proceedings had furnished direct evidence available in his possession to the Ld. AO in support of the fact of the genuineness of the sales proceeds. (Pg. 28-30, 31, 35 to 40 of PB). The appellant during the year out of own funds had invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involving Sri Vipul Bhatt and sunrise Asia Ltd it has been held that the assessee has discharged onus by filing evidence in support of genuineness of transaction of purchase and sale no addition could be made on the basis of statement of Shri Vipul Bhatt. f) He further submitted that the assessee has discharged onus of proof by submitting the plethora of evidences, which has not been thrown back to the assessee by the learned assessing officer. To support his case, he referred to several judicial precedents wherein the learned assessing officer failed to throw the onus back on the assessee, addition was not sustained. g) With respect to the price rise is submitted that the shares were quoted at a price of about ₹ 500 since financial year 2012 13 which rose to 565 in the following year and then to ₹ 615 in the next following area year and ₹ 608 in the year thereafter. Therefore, the shares had good price in the stock exchange and higher than the selling price of the assessee. h) He submitted that the shares were dematerialized and held in that form for a fairly long period that also proves that genuineness of the transaction. i) It was also the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that how he came to know about the preferential offer of that company and whether he has attended any of the meetings of the above company at the time of amalgamation, allotment, annual general meetings etc. when the assessee has invested along with his other family members such a huge amount in a company, and assessee is not aware or could not show any of the notices of the meeting or his attendance, the transaction is proved to be stage-managed. i) Claim of the assessee that investment was paid by the assessee out of business receipts is devoid of any merit because the sources of the funds are out of the memorandum of understanding of land purchased by the Moraj group. This is evident from the statement of Mr. Bhatt Mr. Shah and also the books of accounts of the various companies. j) He submits that assessee has produced many evidence with respect to the existence of Santoshima Tradelink private limited but when the learned assessing officer sent notices under section 133 (6) of the act, this company was not found. He further referred to SEBI order paragraph number 4 point 1 wherein the sunrise Asian limited was mentioned at serial number 1 wherein it has been sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee himself has been used along with the evidences found. r) He in the end submitted that more than 10000 pages of incriminating documents are found, special annexure 14 relates to transaction of Moraj Group only. Details of Exit providers are also found. If that is not enough to prove that transaction is not genuine, no tons of material can help the case of revenue. s) He said what inquiry ld AO is required to carry of fake and non-genuine evidences. He submits that all the evidences, statements, preponderance of probabilities, failure to discharges onus; everything is against the assessee in this case. t) He submitted that the bogus long-term capital gain transactions are also carried out only at the stock exchange and therefore it does not have any credence when the exit providers are identified and confessed that the beneficiaries are provided exit through the gate of stock exchange. u) Payment of shares by cheque and receipt of sale consideration by cheque neither helps the case of the assessee nor is a proof of the genuineness of the transaction. v) It is undisputed that the price rise in the shares of the company is devoid of any merit specially whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found in this details. The assessee submitted all the details with respect to the acquisition of the shares and sale of those shares at each of the stage of the process of acquisition and sale. The assessee further relied upon the plethora of judicial precedents, wherein it has been held that where assessee proves genuineness of the said transaction by producing contract for sale and purchase of the shares, bank statement of the brokers, Demat account showing transfer in and out of the shares and also the transaction is at the stock exchange, no addition can be made in the hands of the assessee. ii. Assessee further relied upon several judicial precedents showing where Sri Vipul Bhatt and the same company in which the assessee has earned long-term capital gain, the addition is deleted. iii. The onus of proof is discharged by the assessee and therefore, no addition should have been made in the hence, of the assessee, where the learned AO has not thrown back the onus on the assessee. iv. Share price of that company was ₹ 500 approximately in financial year 2012 13 which rose to Rs. 565 in the subsequent year and then to ₹ 615 in the later year. Therefore, share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved incorrect by the assessing officer v. He further stated that in some of the cases involving Mr. Bhatt, wherein this company is directly involved in giving the loan, the coordinate benches have held that no addition could have been made. Further loans advanced by the group companies on the basis of unsubstantiated statement and report, Where the borrower has discharged its burden by filing adequate evidences. addition deserves to be deleted. 088. The learned departmental representative vehemently submitted that :- a. statement of the assessee, the statement of Mr. Bhatt, statement of Father of the assessee, the manner of earning of the capital gain, huge capital gain of ₹ 37 crores earned by the assessee and her family in the single company shares, none of the family members are aware about what the company is doing, Shabby share knowledge of the assessee and her family members, clearly proves that the capital gain earned by the assessee is bogus. With respect to the addition, it was submitted that the issue is squarely covered against the assessee by the decision of the honourable Calcutta High Court in case of Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta)/[ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at price those shares are sold, despite assessee and her family earning bogus exempt gains of Rs 37 crores. It is a fit case that preponderance of probability shows that the claim of the assessee is bogus. h. He further stated that annual average income of the assessee is Rs 10 lakhs Per Annum. The assessee has earned Rs 10 Crores as Long- term capital gain. How it is possible that assessee does not know, how these income is earned. He referred to the statement of the assessee recorded u/s 132 (4) of the Act and stated that assessee does not know anything about the company; She even could not answer who is Mrs. Rukhsana and her role in the transactions. i. He submits that there are many orders of ITAT where in the addition based on the statement of Mr. Vipul Vidhur Bhatt of Penny stock of same company is upheld. Therefore, the claim of the AR that there are decisions in case of several assessees where same entry operator is referred , is of no consequences. j. He also submitted that SEBI has levied fine of Rs 1 Crore on 86 entities for fraudulent trading for the same period. Thus, it proves that trading of the assessee is bogus and manipulated. The Trading period is 16 Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is necessary to analyze what he says on these transactions. Assessee has not furnished the complete statement of Mr. Vipul Vidhur Bhatt in its paper book but has submitted complete affidavit of retraction statements. Ld DR has placed before us the complete statement of Mr. Bhatt which runs in to several pages containing 90 questions and most of questions are answered stating how Moraj Group has used accommodation entries in the form of loans, capital gains etc through him. 092. Statement of Mr. Vipul Vidhur Bhatt is recorded on 9 February 2016 under section 132 (4) of the income tax act. We have carefully perused the statement. In answer to question number 12, he replied that he is maintaining the books of accounts of all the bogus entities, which are managed and controlled by him. In response to question number 14, he categorically states that he is an entry operator and bogus accommodation entry provider. In response to question number 15, he categorically states that sunrise Asian limited is a listed company, which is a paper/bogus company, and he is using this entity for providing bogus accommodation entries to the various beneficiaries. He controls the entire activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing the bogus long-term capital gain accommodation entries unaccounted cash was taken from the beneficiaries and the same was routed into the accounts of some companies/firms/individuals managed and controlled by him and thereafter the routed funds were used to purchase the shares of sunrise Asia Ltd held by the beneficiaries of bogus long-term capital gain. His answers to question number 23 29 explain his modus operandi. In response to question number 29, he also mentions the name of several other persons who are with him for providing this entry. In answer to question number 30, he also refers to a chartered accountants Mr. Sandeep Maroo and other chartered accountants giving the mobile numbers. In response to question number 31, he refers to the name of Mr. Piyush rasiklal Shah who introduced Mr. Mohan Gurnani family to him for providing bogus long-term capital gain. He also gave the date -wise reference in question number 34, how the share prices of sunrise Asian limited were rigged up after preferential allotment in Santoshima Trade link Ltd. In response to question number 35, he referred to being in control of several entities, which are used for routing, and layerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of sunrise Asia Ltd reached up to a desired level, Mr. Piyush Shah after consulting Mr. Mohan Gurnani and Ms Priya Gurnani asked me to sell the shares. I used to receive RTGS/ cash which was used to purchase the shares of Gurnani family through my controlled entities. 093. Further, in response to question number 49, he explained that what is the amount of cash that has been received by him for giving accommodation entry of long-term capital gain to Gurnani family members. He explains that he used to get cash picked up from the office of Moraj group and many times received RTGS [ reversal of loan repayment of old accommodation entries provided to the group] in bank account of the entities controlled and managed by him. Usually, he received RTGS which were actually the reversal of the entry of unsecured loans and it was used to purchase the shares of sunrise Asian limited. Sometimes, the shares were sold and the unsecured loans were returned after the sale of shares. This was done as per the mutual convenience. Further, in response to question number 50, he gives the name of the various persons of the Gurnani family, how many shares allotted to them, what is the sale price an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded wherein it is mentioned that Piyushbhai c/o Moraj . Similar entries were found at page number 195 where a sum of Rs 2.46 cores were received in the name of same persons were Mentioned. The total annexure A 14 was explained that these sums were received as RTGS from Moraj group which were used to purchase shares of the Gurnani family. In response to question number 61, he further mentioned the details of several intermediaries used by him. In this question, he refers to the name of PiyushBhai who is a chartered accountant and who has taken the unsecured loan from Gurnani group and introduced him with the Gurnani group family members. After that in his reply to several questions, he explains each and every exit providers for providing accommodation entries. In response to question number 77, he refers to 343 entities, which are related to various bogus accommodation entry entities to various beneficiaries are shown. In response to question number 78 88, he explains the various exit providers. In question number 87, he also gives the names of various entities, which have the several trades from assessment year 2009 10 to the date of his statement. He submits their permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tating that he does not know Shri Vipul Bhatt and he has never met him. In response to question number 8, he categorically states that though he does not have any direct relation with Mr. Vipul Bhatt but his CA Mr. Piyush Shah has arranged the loans and advances. In response to question, number 15, he submits that he came to know about sunrise Asian India Ltd through his broker and chartered accountants advise of Shri Piyush Shah. In response to question number 16 about the business activity of sunrise Asian limited, he submits that he does not remember exactly however the investment was based on advice of Mr. Piyush Shah. In response to question number 17, he explains that the brokers through whom he sold the shares, these same brokers appeared in the statement of Mr. Vipul Bhatt also. It is this details at question number 18. In response to question number 21, he says that he does not know anything about the penny stock and he has never heard these words. However in question number 22, he says that CA Piyush Shah who is known to him for the last two decades but now he has been withdrawn from the work. He was also questioned about the petition filed before settlement commission an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant shri Piyush Shah iii. Confirmation of statement of Mr. Mohan and Priya about Shri Piyush Shah iv. ignorance of the assessee and her father about the company its working or even where about of the company x. non service of 133 (6) notices to companies xi. pending information from BSE xii. association with the chartered accountant who operated and worked as link between Assessee group and Accommodation entry providers, xiii. approaching settlement commission and withdrawal of application later xiv. Acquisition of shares of company through private places held to be part of scheme explained by Mr. Bhatt xv. Holding shares in Demat account by the assessee and same parties for demat mentioned in the statement of Mr. Bhatt xvi. Transaction of transferring share from one demat account to another where shares could have been sold from any demat account particularly when those demat agencies were mentioned as part of scheme by Mr. Bhatt xvii. Synchronized trade pattern of putting order on stock exchange platform and in seconds trade takes place in a non descript company xviii. Identification of exit providers controlled by Mr. Bhatt xix. Trail of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in the trading of the shares of these companies, which are all classified as penny stocks companies. Therefore, the argument of the assessee that the copy of the investigation report has not been furnished, the persons from whom statements have been recorded have not been produced for cross examination are all contention which has to necessarily fail for several reasons which we have set out in the proceedings paragraphs. To reiterate, the assessee we not named in the report and when the assessee makes the claim for exemption the onus of proof is on the assessee to prove the genuinity. Unfortunately, the assesses have been harping upon the transactions done by them and by relying upon the documents in their hands to contend that the transactions done were genuine. Unfortunately, the test of genuinity needs to be established otherwise, the assesses are lawfully bound to prove the huge LTCG claims to be genuine. In other words if there is information and data available of unreasonable rise in the price of the shares of these penny stock companies over a short period of time of little more than one year, the genuinity of such steep rise in the prices of shares needs to be establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which they give the appearance of creating. Further by referring to the decision in Vodafone International Holdings (supra), it is submitted that the revenue cannot start with the question as to whether the transaction was a tax deferment/avoidance but the revenue should apply the look at test to ascertain its true legal nature and that genuine strategic planning had not been abandoned. Further the revenue has to establish on the basis of facts and circumstances surrounding the transactions that the impugned transaction is a sham or tax avoidance. In this regard Mr. Bagaria also referred to the decision in the case of Hill Country Properties Ltd. (supra) and also the decision Duke of Westminster (supra). 0100. It is surprising to note that assessee wants a cross examination of Mr. Vipul Bhatt, accommodation entry provider. Assessee is not aware about the statement of Mr. Bhatt confessing everything, but in possession of his retraction affidavit completely. He appeared before LD AO also till that time assessee would never wanted to question him. Assessee never attempted to produce Shri Piyush Shah or Rukhsana. She never wanted to dispute the factum of loan taken as accommoda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... channel and therefore it is a mandatory condition. It is nobody s case that that the shares can be sold at the exchange and the brokers will pay seller cash. Therefore as these are the mandatory conditions, those does not weigh much in deciding whether the transaction is genuine or not. 0103. Price rise of shares of Sunrise Asian Limited Mr. Vipul Bhatt in his original statement has already stated how he has arranged the price rigging in the shares of the above company starting from ₹ 62 to ₹ 600 plus. There was no corporate announcement supporting the price or profitability of Sunrise Asian Ltd. Till date nobody except Mr. Vipul Bhatt knows what is the business of this company! 0104. So far as the issue of independent enquiry is concerned, when all the documents are proved to be a make-believe evidences for claiming the exemption under section 10 (38) of the act or section 68 of the Act , we do not find that any inquiry is required, despite everything coming out in the statement of Mr. Vipul Bhatt , Piyush Shah, Mohan Gurnani, and Priya Gurnani. If assessee wants to dispute them, it is for her to show that transaction is not non-genuine. 0105. SEBI order reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of stock Exchange. However in the present case it was acquired in preferential allotment that too was investigated by SEBI and found to be Fraudulent. 0108. Decision of Honourable Bombay high court in case of Shyam Pawar [Income Tax Appeal No. 1568 of 2012, Income Tax Appeal No. 1569 of 2012, Income Tax Appeal No. 1570 of 2012], Income Tax Appeal No. 1571 of 2012 dated December 10, 2014 was also relied up on. In that case it was held that The Tribunal concluded that there was something more which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. In this case the statement of Mr. Vipul Vidhur Bhatt specifically names the assessee family and order of SEBI on preferential allotmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere notices issued u/s 133 (6) , invest Rs 1 Cr in 2012 and earns Rs. 10 crores in 2015- 16 [ her family earns whopping Rs 37 Crores] is really a fantastic story. This needs to be rejected at threshold itself not only because preponderance of probability is against the assessee but also the facts found form Vipul Bhatt [ documentary evidences i.e. various annexure] proves that story is fake . 0111. Now we come to Para no 78 of that decision where the decision of Honourable supreme court in case of Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) was considered. Honourable court held that :- 78. In Sumati Dayal, the appeals were filed by the assessee against the order passed by the Income Tax Settlement Commission. On the aspect of burden of proof, it was pointed out that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act, lies upon the assessee. With regard to the effect of Section 68 of the Act, it was held that where any sum is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly gives an idea how closely and how long he is associated with the group providing accommodation entries. He names the concern of the assessee and her family members as if he is associated with the group for a long time. 0115. In view of this, even if we ignore the original statement given by the accommodation entry provider and his retraction later on, those evidences still remain which needs to be examined, now, independently to ascertain whether the amount of loan taken by the assessee and the amount of long- term capital gain earned by the assessee is genuine or non genuine. 0116. In view of the above facts, we set-aside ground number 2 and 4 of the appeal back to the file of the learned assessing officer with a direction to the assessee to show the genuineness of the trade and unsecured loan with respect to the documents found as stated in the statement of various parties, exit entry providers details, Demat agencies and the cash trail found. It is also the duty of the assessee to produce before the AO of her chartered accountant (who statement is not retracted), Ms. Rukhsana who is stated to have been involved in transferring the cash for the long-term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground number 2 of the appeal of the assessee for assessment year 2015 16, which is partly allowed. Accordingly, this ground of appeal is also partly allowed. c) Ground number 3 is with respect to the addition of ₹ 198,000 is income from undisclosed sources. We find that as per paragraph number 5 of assessment order the learned assessing officer has discussed this issue that on the basis of page number 56 there is an unaccounted income of ₹ 198,000 based on the loose paper found during the course of search. The assessee explained that as those pages does not have any dates but merely because the tax recorded in that seized documents has some dates, the cash is also related to that accounting. In addition, that accounting is 1998-99 financial year and accordingly there cannot be any addition for assessment year 2010 11. The learned assessing officer held that assessee has not been able to corroborate any wooden is in support of his claim and there was no reason for the assessee to maintain such document for an old financial transaction which was assessee not able to substantiate. Accordingly, the addition was made. When the matter reached before the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dismissed that ground stating that interest charged is mandatory and consequential in nature. For the same reason we also dismiss ground number six of the appeal. i) Ground number seven is general in nature wherein specific arguments have been raised, therefore it is dismissed. j) Ground number eight is against the violation of natural justice principles by the learned assessing officer, same is identical to ground number eight of the appeal of the assessee for assessment year 2015 16 which we have partly allowed and covered in our decision for ground number 3 of the appeal of the assessee for assessment year 2015 16. However, for this year there is no such issue of taxation of capital gain on penny stock, therefore this ground of appeal is dismissed. k) In the result ITA number 2089/M/2021 for assessment year 2010 11 is partly allowed. 065. ITA number 710/M/2021 is filed by the assessee for assessment year 2011 12. This appeal has identical grounds except ground number 3 in the appeal for assessment year 2010 11 where there is an undisclosed income addition of ₹ 198,000/ . a) Ground number 1 is with respect to the application of provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2012 13 and 2013 14 with identical reasoning. Accordingly, ITA number 711/M/2021 and ITA number 712/M/2021 of the assessee for assessment year 2012 13 and 2013 14 are partly allowed. 067. ITA number 709/M/2021 is filed by the assessee for assessment year 2014 15 having identical grounds in the appeal of the assessee compared to appeal for assessment year 2015 16. We have already disposed of appeal of the assessee for assessment year 2015 16 partly allowing the same. Therefore, for the reasons given in the appellate order for assessment year 2015 16, the appeal of the assessee is partly allowed for assessment year 2014 15 also. 068. ITA number 718/M/2021 is filed by the assessee for assessment year 2016 17 raising identical grounds as raised in appeal of the assessee for assessment year 2010 11, 11 12, 12 13 and 13 14, those have been disposed of by us by partly allowing the appeal. Therefore, for the reasons given by us in disposal of those appeals, for similar reasons we partly allow the appeal of the assessee for assessment year 2016-17 also. 069. Accordingly, all the seven appeals filed by the assessee are disposed of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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