KEVAL H SETH,MUMBAI vs. ITO WARD 16(2)(1), MUMBAI

PER PAVAN KUMAR (JM) The assessee has filed the appeal against the order of the CIT(A)-16 Mumbai passed u/s 250 of the Income Tax Act. The assessee has raised the following grounds of appeal:- 1. In the facts and circumstances of the case the learned CIT (Appeals) erred in confirming the action of the learned assessing officer in re-opening the assessment under section 147 by issuing notice under section 148 of the Income Tac Act, 1961 which is without application of mind because the statement dated 03.02.2010 provided by the learned assessing officer to your appellant based on which the reasons were recorded and notice under section 148 was issued does not mention anything about transaction in Shares

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opened and addition have been made which is against the principle of natural justice 8. That the appellant craves leave to add. to alter, amend, modify, substitute, delete and/or rescind all or any of the GROUND OF APPEAL on or before the final hearing, if necessity so arises.

2.At the time of hearing the Ld.AR submitted that the assessee is not pressing the grounds of appeals no.1 & 2 on the validity of reassessment U/sec147 of the Act and made endorsement in the appeal memo. Accordingly, the grounds of appeals no.1 & 2 of the assessee are withdrawn and are dismissed.

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has escapement the assessment and issued notice u/s 148 of the Act and the assessee was provided the reasons for re-opening of the assessment. In compliance to notice, the assessee has filed a letter dated 06.08.2013 to treat the return of income of filed on 31.10.2007 as due compliance to notice u/s 148 of the Act and the assessee has also filed objections on the re-opening of the assessment. 4. Subsequently, the AO has issued notice U/sec 142(1) of the Act along with the questionnaire to submit the details of transactions of sale and purchase of 85000 shares of Talent Infoway Ltd through M/s Alliance intermediateries &Network Private Limited and M/s Vijay Bhagwandas &Co. Incompliance,the Ld. AR of the assessee appeared and filed the details vide letter dated 22.01.2014 referred at Para 7 of the order as under:

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The During the course of assessment proceedings on 20.1.2014, your honour has provided a copy of the statement of shriMukeshChokshi as recorded by DDIT on 03.02.2010 and in this connection our client has instructed us to request your honour to allow us to cross examine Shri MukeshChokshi..

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a reply dated 14.02.2014. The Assessing Officer has observed that the share transactions are not genuine. The assessee has filed a letter on 20.03.2014 referred at Para 10 of the Assessment order as under: 10. --"On 12.02.2014 Our representative Mr. J.P Purohit Tax Consultant had attended your good office to Cross Examine Shri MukeshChokshi, with reference to the statement dated 03.02.2010 provided by your honour, based on which the reasons were recorded and notice u/s 148 was issued to re- open the assessment, however since MukeshChokshi was not available for cross Examination and instead filed a mere letter confirming the statement given earlier, we would like to submit that the same has no evidentiary value.

During the course of re-assessment proceedings all the necessary details viz Broker' Bills, Contract Notes, Bank Statements, DematAccoount Statement and the Delivery Slips showing that it was a market transaction and therefore the transaction of Long Term Capital Gains of Rs.54,60,291/- is a genuine transaction.

In view of the above submissions, we request your honour to kindly drop the re- assessment proceedings".

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u/sec69C of the Act which works out to Rs. 14,684/- and also made disallowance of other expenses aggregated to Rs25,687/- and assessed the total income of Rs.34,94,654/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 28.02.2014. 7. Aggrieved by the order, the assessee has filed an appeal before the CIT(A) challenging the validity of assessment on the jurisdictional issue and merits of the case. Whereas the CIT(A) considered the grounds of appeal, submissions and findings AO and has upheld the validity of reassessment proceedings and enhanced the assessment dealt at Para 5.4 of the order and dismissed the asssessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal.

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certificates in respect of purchases, bank transactions details, contract notes and other vital details in the paper book and judicial decisions and prayed for allowing the assessee appeal. Contra, the Ld.DR supported the order of the CIT(A). 9. Heard the rival submissions and perused the material on record. The sole matrix of the disputed issue is that the CIT(A) has enhanced the addition in respect of addition of long term capital gains on sale of shares and sustained the estimated commission overlooking the submissions and evidence filed before the authorities in support of transactions of purchase and sale of shares made by the assessee. The assessee has purchased 85000 shares of M/s Talent Infoway Ltd in financial year 2004-05 for Rs.25,23,499/- and the said physical shares certificates were sent for dematerlisation (Demat) to DP Stock Holding Corporation of India. Whereas the assessee has sold 85000 shares in the financial year 2006-07 through SEBI registered NSE brokers (i)55000 shares were sold on 28.04.2006, 08.05.2006 and 09.05.2006 through M/s Alliance Intermediateries and Network Pvt. Ltd for Rs. 51,59,703/- And (ii) 30,000 were shares sold on 02.06.2006, 05.06.2006 and 06.07.2006 through M/s Vijay Bagwandas and Co for Rs. 28,24,087/-.The Ld. AR has demonstrated the evidences in support of sale through SEBI registered stock brokers. Whereas the AO has accepted the purchase of shares and doubted the sale of shares

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transactions. The Ld. AR demonstrated the evidence in support of sale of shares with the sale note, delivery instructions, bank statement reflecting the credits of sale proceeds, demat account for the debits on account of sales, and share certificates transferred in the name of the assessee. The contentions are that the assessee has filed documentary evidence to the justify the geniuses of the purchase and sale of shares and the long term capital gains.

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managing the affairs of MSPL (supra) and Alliance Intermediatries&Network Pvt. Ltd. (supra), had clearly admitted in his statement recorded under oath during the course of the search & seizure proceedings on 11.12.2009, that he was engaged in the business of providing accommodation entries, and no genuine purchase and sale transactions of shares were carried out by him. We find that Sh. MukeshChoksi (supra) in reply to Q.No. 2 of his aforesaid statement, had inter alia made a mention of the aforesaid two companies, viz. MSPL and Alliance Intermediaries & Network Ltd., and therein admitted that he was engaged in the business of providing accommodation entries through various companies floated by him, all of which were being run by him from the office at 6th Road, Santacruz (East), Mumbai, as well as demonstrated the modus operandi of his said business. The relevant extract of the aforesaid statement of Sh. MukeshChokssi (supra), which had been heavily relied upon by the A.O for drawing of adverse inferences as regards the genuineness of the Purchase/Sale transactions of M/s Talent Infoway Ltd, and will have a strong bearing as regards adjudication of the issue under consideration, is reproduced hereunder:- “Q.No. 2. Kindly state your educational qualifications and the nature of business being carried out by you at Block N. H, Shree Sadashiv CHS Ltd., 6th Road, Santacruz, Mumbai -55. Ans.2. I am a Chartered accountant by training, having completed my Chartered accountancy in 1978. I am engaged in the business of providing the accommodation entries through various companies floated by me like Mahasasgar Securities P. Ltd., Mihir Agencies P. Ltd., Alliance Intermediaries & Network P. Ltd., Gold Star Finvest Pvt. Ltd etc., which all are run by me from the office at 6 Santacruz (East) above. In brief the various businesses activities carried out by my companies are as below: i). Speculation Profit adjustment entries. ii). Short term Profit adjustment entries. iii). Long term Capital gains adjustment entries. iv). Share application adjustment entries.

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the observations of the lower authorities, that in the backdrop of the admission made by Sh. MukeshChokshi (supra) in his statement recorded u/s 131, there can be no doubt as regards the state of affairs of his business, but then this leads us to the issue that as to whether such a stand alone statement of the aforesaid person could be used for drawing of adverse inferences as regards the genuineness and veracity of the share transactions carried out by the assessee through him. We are of the considered view that as the name of the assessee was figuring in the list of the persons who had transacted share transactions through the aforesaid companies, viz. Mahasasgar Securities P. Ltd. and Alliance Intermediaries & Network P. Ltd., therefore, in the backdrop of the fact that the said respective companies were found to be carrying on the business of providing accommodation entries by the department, therefore the said facts would undoubtedly suffice and be a clinching basis for the A.O to form a bonafide ‘belief’ that the assessee being a beneficiary, too would have fudged the transactions, therein vesting with him the necessary jurisdiction to initiate reassessment proceedings in the hands of the assessee u/s 147 of the ‘Act’. We however are unable to persuade ourselves to subscribe to the view that such information arrived at on the basis of the stand alone statement of the aforesaid person, viz. Sh. MukeshChokshi (supra), falling short of any corroborative evidence would however justify drawing of adverse inferences as regards the genuineness of the share transactions in the hands of the assessee. We thought are also not oblivious of the settled position of law, as per which a very heavy onus is cast upon the assessee to substantiate the LTCG on sale of shares, as projected by her in the return of income for the year under consideration. Thus to be brief and explicit, though the reopening of the case of the assessee in the backdrop of the aforesaid factual matrix cannot be faulted with, however such stand alone information, i.e the statement of Sh. MukeshChokshi (supra), cannot be allowed to form the sole basis for dislodging the claim of the assessee in respect of the LTCG reflected by her in the return of income for the year under consideration. We would not hesitate to observe that the lower authorities which have hushed through the facts to arrive at a conclusion on the basis of principle of preponderance of human probability, had however absolutely failed to appreciate that the said principle could have been validly applied only on the basis of a considerate view as regards the facts of the case in totality, and not merely on the basis of the stand alone statement of the aforesaid third party, viz. Sh. MukeshChoksi.

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(i). The lower authorities had chosen to act solely on the basis of the statement of Sh. MukeshChoksi (supra), for arriving at and thereafter justifying the adverse inferences drawn as regards the share transactions carried out by the assessee through the aforesaid companies,viz. Mahasasgar Securities P. Ltd. and Alliance Intermediaries & Network P. Ltd. We are of the considered view, that as observed by us at length hereinabove, though the statement of Sh. MukeshChoksi (supra) would validly form a basis for reopening the case of the assessee, however such a stand alone statement cannot be permitted to form the sole basis for dislodging the claim of the assessee in respect of LTCG arising from Purchase and sale of shares of M/s Talent Infoways Ltd. carried out by her through the aforesaid companies.

(ii). That as Sh. MukeshChoksi (supra) on whose statement heavy reliance was placed by the A.O for dislodging the claim of the assessee, was the witness of the department, therefore a very heavy onus was cast upon the department to have dislodged the aforesaid claim of the assessee on the basis of concrete and irrebutable evidence, and prove to the contrary, which however we find had not been done.

(iii). That still further we find that a very heavy reliance had been placed by the lower authorities on the statement of Sh. MukeshChoksi (supra), however we find that neither the latter had raised any allegation in respect of the state of affairs of the assessee, nor any reference of the assessee does figure anywhere in the statement of the aforesaid person.

(iv). Though the department had placed heavy reliance on the statement of Sh. MukeshChoksi (supra) for drawing of adverse inferences in the

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hands of the assessee, but the fact that the said person might have came forth with a self serving statement and had projected wrong facts in order to keep himself in comfort zone and avoid stringent action of different departments, say tax evasion etc., cannot be ruled out.

(v). That the possibility of the assessee having carried out genuine share transactions through the aforesaid companies, viz. Mahasagar Securities P. Ltd. and Alliance Intermediaries & Network P. Ltd., in the absence of any material proving to the contrary, could not be summarily discarded.

(vi). That though the aforesaid Sh. MukeshChoksi (supra) was a witness of the department, and we find that the A.O had acted upon the stand alone statement of the said person, but despite such heavy reliance having been placed by the lower authorities on the aforesaid statement, no Cross examination of the said person had been facilitated to the assessee.

(vi). That the A.O while observing that the share transactions of the assessee had not been carried out through Stock Exchange, had however failed to appreciate that the same being off-market transactions, thus no adverse inferences on the said count was liable to drawn in the hands of the assessee.

(vii). That as the assessee had carried out the sale of shares after dematerializing them, therefore the genuineness of the sale transaction cannot be doubted.

(i). That the assessee had submitted before the lower authorities that she had purchased 10,200 shares of M/s Talent Infoways Limited on 06.04.2004 from MSPL for a consideration of Rs.16,143/-, and to

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substantiate the said fact had placed on record a copy of the Contract note, dated. 15.04.2004, which therein evidenced the said purchase transaction (Page 9-10 of ‘APB’)

(ii). That the assessee explaining the source of the aforesaid investment of Rs.16,143/- (supra) made for purchase of 10,200 shares of M/s Talent Infoways Ltd., had therein submitted that the same comprised of profit of Rs.15,974/ which was generated by her from speculative transactions carried through MSPL, while for the balance amount of Rs.168/- was paid in cash, for which receipt was received from the broker. The assessee had placed on record a copy of the Contract note, dated. 06.04.2004 (Page 11- 12 of ‘APB’), therein evidencing the aforesaid speculation income, as well as the copy of the aforesaid receipt for Rs. 168/- (Page 14 of ‘APB’)

(iii). That the assessee placed on record the copy of her account in the books of account of M/s MSPL, which therein duly corroborated the explanation of the assessee as regards the purchase of the shares of M/s Talent Infoways Ltd., as well as the source thereof. (Page 15 of ‘APB’).

(iv). That the assessee had placed on record the copy of the letter from M/s Talent Infoways Ltd., dated. 29.05.2004, therein confirming the transfer of shares bearing Certificate Nos. 105604 (distinctive nos. 0000565001 to 0000570000), Certificate No. 105605 (distinctive nos. 0000585001 to 0000585000) and Certificate Nos. (distinctive nos. 0004420001 to 0004420200) in the name of the assessee. (Page 17 of ‘APB’).

(v). That the assessee had placed on record the copy of the Contract notes for sale of shares in the months of September and October, 2005. (Page 18-28 of ‘APB’).

(vi). That the assessee had placed on record the copy of the bank statement evidencing receipt of payment for sale of shares. (Page 29 - 31 of ‘APB’). (vii). That the assessee had placed on record the copy of STT paid statements on the shares of M/s Talent Infoways Ltd. (Page 32-34 of ‘APB’).

(viii).That the assessee had placed on record the copy of her account in the books of account of M/s Alliance Intermediateries& Network Pvt. Ltd.,

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which therein duly corroborated the explanation of the assessee as regards the sale of the shares of M/s Talent Infoways Ltd. (Page 35 of ‘APB’).

(ix). That the assessee had placed on record the copy of delivery instructions of shares to the depository for dematerialization of the shares. (Page 36 - 39 of ‘APB’).

(x). That the assessee had placed on record the copy of her return of income alongwith the computation of income for A.Y. 2005-06, which duly reflected the speculation income of Rs. 15,975/-, as well as revealed the fact as regards purchase of 10,200 shares of M/s Talent Infoways Ltd, alongwith the source of purchase of the same.

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inescapably disprove the genuineness of the said documents which were brought on record by the assessee We find that the A.O had rather chosen to merely rely on the stand alone statement of Sh. MukeshChoksi (supra) and taking the same as gospel truth, had therein drawn adverse inferences in the hands of the assessee by merely referring to the said statement of Sh. MukeshChoksi (supra). We though do not approve of the reliance placed by the A.O on the stand alone statement of Sh. MukeshChoksi (supra) for drawing of adverse inferences in respect of the share transactions carried out by the assessee during the year under consideration, but rather find that even no cross examination of Sh. MukeshChoksi (supra), whose statement was so heavily being relied upon by the A.O, was ever provided to the assessee. We find that the failure on the part of the A.O to provide cross examination of the person, relying on whose statement adverse inferences are drawn in the hands of the assessee goes to the very root of the validity of such adverse inferences drawn in the hands of the assessee, had been looked into by the Hon’ble High Court of Bombay in the case of : CIT-13 Vs. M/s Ashish International (ITA No 4299 of 2009; dated. 22.02.2011), wherein the order of the Tribunal was affirmed by the Hon’ble High Court. We thus in the backdrop of our aforesaid observations, are neither able to persuade ourselves to subscribe to the adverse inferences drawn by the lower authorities in respect of the share transactions of the assessee by referring to the stand alone statement of Sh. MukeshChoksi, as the same as observed by us hereinabove, suffer from serious infirmities, and as such cannot be summarily accepted, nor are able to dislodge the genuineness of the purchase and sale of shares of the aforesaid 10,200 shares of M/s Talent Infoways Ltd., which we find had been duly substantiated by the assessee on the basis of material made available on record, which we find had not been dislodged by the lower authorities. We thus in the backdrop of the totality of the facts of the case are unable to find ourselves to be in agreement with the view arrived at by the lower authorities. We thus set aside the order of the CIT(A), and delete both of the additions of Rs. 9,36,164/- and Rs. 46,808/- made by the A.O, which thereafter were sustained by the CIT(A). The appeal of the assessee is allowed.

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of Talent Info way Ltd and granted relief to the assessee observed at Page 2 Para 3 to Para 9 of the order read as under:

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“3. Rival contentions have been heard and record perused. Grievance of assessee in both the years pertains to decline of long term capital gain on sale of shares on Goldstar Finvest Pvt. Ltd., and M/s. Alliance Intermediaries Pvt. Ltd., and adding the same u/s.68 of the IT Act.

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“6.1 We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. From the copy of the share certificate, Demat account, share transfer form filed in the Paper Book, we find the assessee has purchased 9500 shares of Kushal Software Ltd. from M/s. Handful Investors Pvt. Ltd. We find the Assessing Officer treated the sale of such shares by the assessee through M/s. Gold Star Finvest Pvt. Ltd. as bogus on the ground that Mr. Choksi and his broking company were engaged in giving false share transaction bills. However, from the copy of the statement of Mr. Choksi, a copy of which is filed in the Paper Book, we find Mr. Choksi has not specifically mentioned the name of the assessee for obtaining benefit on sale of such bogus shares. The learned DR also could not point out from the statement of Shri Choksi that he has taken the name of the assessee for obtaining any benefit on issue of such bogus bills. Considering the totality of the facts of the case and considering the fact that the assessee had purchased the shares which were duly transferred to the Demat account, and, in absence of any allegation against the assessee by Mr. Choksi it cannot be said that the sale of the shares is bogus. In this view of the matter, we hold that the sale transaction entered into by the assessee is genuine transaction. Since the Assessing Officer has not disputed regarding the purchase of house property and since the assessee fulfils the conditions for treating the profit on sale of such shares as long term capital gain and fulfilled the conditions for allowability of deduction u/s. 54F, therefore, we set aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee. This ground by the assessee is accordingly allowed.

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“11. Having heard both the parties and having considered their rival contentions, we find that the AO has treated the said transactions as bogus transactions on the ground that

a) The sale transactions were not on the floor of the ASEL but were off market transactions;

b) The address of the M/s Buniyad Chemical Ltd and M/s Talent Infoway Ltd. was the same and the contact person for M/s Buniyad Chemical Ltd. on the floor of ASEL was Shri MukeshChokshi.

c) Mr. MukeshChokshi had stated that the sale proceeds have been paid to the assessee through the funds provided by the assessee.

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Shah [cited supra], to which one of us i.e. the Judicial Member, is a party. In these facts and circumstances of the case, we do not see any reason to interfere with the order of the CIT[A] and the same is upheld.

14 In the result, revenue's appeal is dismissed.”

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basis of statement of M.M.Chokshi. The precise observation of Tribunal was as under:-

“9. I have heard rival submissions and considered them carefully. After considering the submission and perusing the material on record, I found that in case of Shri RavindrakumarToshwniwal (supra) and in case of Mukesh R. Marolia, decided in ITA No. 456/2007, vide order dated 07.09.2011, the shares for Marolia were purchased through M/s. Gold Star Finvest Ltd. and after considering the statement of Mr. Chokshi, the Benches held that the transactions done by the assessee were genuine and nothing was found against these assessees. The decisions of the Tribunal have been confirmed by the Hon’ble Jurisdictional High Court in both of these cases. Copies of these orders are placed on record at pages 18 & 41, respectively. In the case of assessee, facts are similar and nothing was found against the assessee. The statement of Mr. MukeshChokshi was recorded sometime in the year of 2009, whereas transaction of purchase and sales were held in assessment year 2002-03 & 2003-04. Taking into consideration all these aspects and taking into consideration the various decision of the Tribunal, which have been confirmed by the Hon’ble Jurisdictional High Court, I hold that the transaction for purchase and sale of shares in the present case also cannot be held as bogus as no material was found against the assessee directly. 10. In view of the above facts and circumstances of the case, I delete both these additions i.e. Rs.3,09,310/- and Rs.15,466/-“ It is pertinent mention that in the case hand also, nothing specific has been found against the assessee. Considering the similarity facts involved in the case of the present assessee, we hold that the transaction of purchase of sale of shares cannot be held as bogus as no material has been found

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against the assessee directly. Since the additional disallowance has been deleted on merits, the issue of adjudicating the validity of reopening/reassessment proceedings is not required.

3.8 I have considered the submissions of the Appellant, impugned assessment order and the material

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available on record. During the course of the appellate proceedings the Appellant furnished the details of the share transactions made during the year alongwith the ledger account of Alliance Intermediaries, sales bills of shares sold through Kotak Securities, scripwise details of shares purchased and sold and bank statements. On a perusal of the same, it appears that the Appellant had entered into the transactions with M/s. Alliance Intermediaries & Network Pvt. Ltd for the purchase of shares as under :-

Script Shares Purchased No of Shares Shares Sold No. of from through Shares Alchemist Ltd. Alliance 90000 Kotak Securities 90000 intermediaries Ltd. Micro Techno Alliance 5000 Kotak Securities 5000 Ltd. intermediaries Ltd. Aptech Ltd. Balance b/fd 10500 Kotak Securities 10500 Ltd. Sundaram Multi Alliance 30000 Kotak Securities 30000 intermediaries Ltd. Jai Corp Alliance 1050 Balance c/fd intermediaries Hindustan Zinc Alliance 2200 Kotak Securities 2200 intermediaries Ltd.

These shares were transferred to Kotak Securities account and thereafter, sold through Kotak Securities.

3.9 The Appellant also bought on record that "all the shares sold through Kotak Securities could not have been sold had they not been genuinely purchased by the Appellant. Even if it is assumed that the shares were first sold through Kotak Securities then the Appellant would have had to purchase the shares to square off the transactions. Your Honour may kindly note from the datewise scrip report that the Appellant has not purchased the same shares subsequently after the date of sale. Thus, it can be safely and easily concluded that the sales have taken place after purchases only and that all purchases are genuine."

The sale of the shares can be evidenced from the scripwise details of shares purchased and sold.

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3.10 Further, as regards the observation of the AO that the Appellant had transferred shares to Kotak few days before the sale, the Appellant submitted that :-

a. In this regard, at the outset, the Appellant firstly wishes to clarify that it is entirely upto the Appellant's choice and prerogative as to how and when the shares should be transferred from one demat account to another. The share may be transferred from one demat account to another demat account either immediately on purchase or after holding them for some period or just before executing the sales transaction. This transfer of shares from one demat account to another cannot change the holding period of the shares or challenge the genuineness of the transaction. This prerogative is entirely of the Appellant and the fact that all the gains/profit have been computed correctly and offered to tax as per the tax laws relieves the Appellant of all the obligations that may arise out of the purchase/sale transaction.

b. Secondly, the very fact that the Assessing Officer has stated that the shares were transferred to Kotak few days before sale, clearly implies that the Appellant had made genuine purchased. If the purchased would have been bogus (as alleged by the Assessing Officer), the shares could not have been transferred to Kotak Securities demat account.

c. Thus, the Assessing Officer is contradicting his own statements by first holding that the shares purchased are bogus and then admitting to the fact that the shares are transferred to Kotak Securities account few days before sale."

3.11 The Appellant has substantiated the genuineness of purchases by submitting the scrip wise sales details which 27

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clearly reflects that the sales made were no short sales (i.e. sales made prior to purchases) as no square off entries have been made subsequently. Kotak Securities would not have allowed or considered such short sale transactions until they were squared off during the year. The very fact that no purchases of the same scrip have been made subsequently to reflect the covering of the sales made, clearly indicates that the sales have been made only after purchases. The Appellant has purchased the shares through Alliance and sold through Kotak Securities. The Appellant has also submitted the ledger account of Alliance with the bank account statement evidencing the details of payments made for the share transactions effected through Alliance. Further, the Appellant also drew the attention to the case of Shri Roopchand H. Mehta v. ITO 14(1)(2), ITA No.5027/Mum/2007 wherein the Mumbai Bench GSMC) has held that the statements made by Mr. MukeshChokshi is not worthy to be accepted as in the cross examination he has admitted that the transactions are genuine and thereafter, he again controverted the same. The Appellant has also relied on the decision of the jurisdictional Hon'ble Bombay High Court in the case of ADIT v. Miss LataMangeshkar, 97 ITR 696 wherein it has been held that where the evidence suffered from severe infirmities, the additions cannot be made in the books of the assessee merely on the basis of the entries found in the third party books. The statement of Mr. MukeshChokshi states that he had mainly issued accommodation entries through M/s. Alliance Intermediaries & Network Pvt. Ltd, Goldstar Finvest and Mahasagar Securities. The AO has relied on the said statement without verifying the fact of the quantum and value of the entries entered into by the Appellant with M/s. Alliance Intermediaries & Network Pvt. Ltd and the entries already recorded by the Appellant for which all the supporting details and documents were provided by the Appellant to the AO. Further, the AO has been unable to verify the details claimed by Mr. MukeshChokshi through M/s. Alliance Intermediaries & Network Pvt. Ltd of the accommodation entries provided through the National Stock Exchange of India. In view of 28

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these facts, the addition made by the AO is not justified and accordingly I direct the AO to delete the addition of Rs.85,90,257/- made to the total income. These grounds of appeal are Allowed.

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assessee and further she has purchased the shares by making payment through banking channels. It was not denied that the demat account shows the transactions of purchase and sale of shares. All these facts show that the very reason, on which the AO made the impugned addition would fail. The various case laws relied upon by the assessee support her claim. Accordingly we are of the view that the LdCIT(A) was justified in deleting the impugned addition made by the AO.

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department and treated the long term capital gains on sale of shares as not genuine. Further, the A.O. has not made any enquiry or independent investigation and relied on the statement. The fact remains that the assessee has submitted the requisite details in respect of purchase and sale of shares and were not disproved. Further as discussed in the above paragraphs, the Honble Tribunal dealt on the same scrip of share and granted the relief. Accordingly, considering the facts, circumstances, ratio of judicial decisions, submissions, evidences and rely on the judicial precedents and set aside the order of the CIT(A) on these disputed issues and direct the assessing officer to delete the additions and allow the grounds of appeal in favour of the assessee.

Order pronounced in the open court on12.06.2023.

/s Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Mumbai; Dated: 12.06.2023 Shubham Lohar Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File 31

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BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai