DY.C.I,T. CENT. CIR -6(2), MUMBAI vs. SHRI ASHOK B. JIWRAJKA, MUMBAI

4. The assessee has raised the following grounds in the cross objection No. 64/Mum/2022 and 67/Mum/2022 which are as follows:-

“1. In the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals), Mumbai has erred in upholding the action of Ld. Assessing Officer in proceeding with the assessment for the relevant unabated Assessment Year 2012-13 even when there were no incriminating materials found during the course of impugned search proceedings; thereby holding contrary to the ratio laid down by Jurisdictional High Court in the case of CIT vs Continental Warehousing Corporation (Nhava Sheva) Ltd. 58 taxmann.com 78 and several other judicial pronouncements.

2. The respondent craves leave to add, alter, delete or modify the above grounds of cross objection.”

6. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 12.07.2021 deleted the impugned addition by holding that the assessee has justified the purchase and sale transaction of the alleged penny scrip with documentary evidences.

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka 8. The learned Departmental Representative ('ld. DR' for short) for the revenue contended that the assessee has failed to disprove that the said transaction is bogus which was only for the purpose of availing bogus LTCG by transacting in the alleged penny scrips. The ld. DR further stated that the financials of the Radford Global Limited did not show any substantial activities and the funds of the said companies were raised through preferential allotments which was not utilized for the business expansion and was merely for advancement of loans and investments. The ld. DR contended that it was merely for the purpose of rigging the price of the shares through manipulation of the stock market in which various share brokers were involved whose statements were duly recorded by the ld. AO, where they have admitted to the modus operandi of providing bogus LTCG/STCG. The ld. DR also contended that the ld. CIT(A) has failed to consider these statements which were recorded during the course of the assessment and had erred in deleting the impugned addition. The ld. DR relied on the decision of Calcutta High Court in the case of Principal Commissioner of Income-tax Vs. Swati Bajaj [2022] 139 taxmann.com 352.

Jiwrajka, Dilip B. Jiwrajka and various other were found to be beneficiaries of bogus accommodation entries, where the ld. AO had details of various exit providers and share brokers who were involved in the rigging of the share prices. The details of the transaction entered into by the assessee through stock exchange are tabulated herein under:

Sr. Name of Penny Stock No. of No. of shares Amount spent Amount No. Shares sold on purchase of received on sale purchased shares of shares on stock exchange 1. Radford Global Ltd. (*) 1250000 (*) 98972911.05 2. Global Infratech & Finance Ltd. (*) 1000000 (*) 36098000 (formerly known as Asianlac Capital and Finance Ltd.) 3. Shree Shaleen Textiles Ltd. (*) 75000 (*) 46321656.4 4. Dhenu Buildcon Infra Ltd. (formerly (*) 50000 (*) 78405367.3 known as Hingir Rampur Coal Company Ltd.) 5. Unisys Softwares and Holding 150200 150200 19370393.6 33270973.3 Industries Ltd.

The Ld. AO made an addition @30% on the sale consideration u/s 68 of the Act after reducing the income that was already offered by assessee @15%. The Ld. CIT(A) deleted the impugned addition by relying on various decisions holding that the transaction was substantiated with documentary evidences by the assessee.

12. It is observed that during the search and survey action conducted in the case of Radford Global Limited and M/s. Global Infratech and Finance Limited Services, the assessee along with various other persons were found to be beneficiaries of the bogus LTCG and some of the beneficiaries for bogus loss who were exit providers in the case of First Financial Services Ltd. Various statements of such accommodation entry providers were also recorded during the search action who is said to have admitted to the modus operandi of the impugned transactions. It is also observed that the SEBI order dated 19.12.2014 had stated that the shares of Radford Global Limited has been manipulated and rigged for the purpose of availing accommodation entries by way of bogus LTCG through preferential allotment and trading in shares of Radford Global Limited was suspended by BSE w.e.f. 31.12.2014. During the assessment proceeding the Ld. AO recorded the facts that the assessee was unaware of the basic facts of the companies , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka such as existence of the office premises, directors and the financial of the companies in which he had made investment in the shares of the said companies. The assessee has earned LTCG in some of the shares and STCG in certain shares which are alleged to be penny scrips. The Ld. AO had disregard the assessee’s contention for the reasons that the shares prescribed by the assessee were through preferential allotments which are private placements and the assessee was unable to establish the complete process of the preferential allotment failing which the Ld. AO held that the assessee was part of the entire scheme of preferential allotment, price manipulation for availing accommodation entry of bogus LTCG/STCG. The Ld. AO further held that though payments has been made by banking channels and sale of shares through recognized stock exchange, the assessee has failed to corroborate that the same are genuine transactions, when the assessee was unaware of the existence and financial of the companies in which he had made investments which according to the Ld. AO was beyond the human probability.

Further, it has been reiterated that the assessee was unable to justify the astronomical raise in the price of the shares which further is said to strength the suspicion of the Ld. AO that these are penny scrips intended for merely taking bogus LTCG/STCG. Though the Ld. AO could not establish the cash trail, he relied on the circumstantial evidences along with statements of various parties involved in the rigging of the prices of alleged scrips.

13. Per contra the first appellant authority relied on the fact that the assessee was a regular investor and had invested in other shares as well and that there was no evidence of cash movement from the assessee to neither the brokers nor to the exist providers, which , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka was also corroborated from the statement of various parties who had not disclosed any such thing that they had received cash from the assessee. The Ld. CIT(A) has also stated that in the case of the shares of Unisys Software and Holding Industries Ltd. and Rander Corporation Limited there was no off-market transaction and the sale was routed through BSE for which Security Transaction Tax (STT) was also paid. The Ld. CIT(A) also relied on various decision in support of the assessee’s contention.

14. In the above factual matrix of the case, it is observed that similar transactions was also made by the assessee’s brothers Shri Dilip B. Jiwrajka and Shri Surendra B. Jiwrajka, where it is said that they had made investments in the shares of all these companies alleged to be penny scrips by the Ld. AO in those assessee’s cases. Pertinently the coordinate bench in both these cases had decided these issues in favour of the assessee both on the legal grounds as well as on the merits. The relevant finding of the coordinate bench in the case of Shri. Surendra B. Jiwrajka which inturn had relied on the decision of Shri. Dilip B. Jiwrajka is cited herein under for ease of reference.

“12. While examining the issue of the existence of incriminating material for initiating proceedings under section 153A of the Act in the unabated assessment years, i.e. 2012-13 and 2013-14, in the similar factual matrix in Shri Dilip B. Jiwrajka (supra), the coordinate bench of the Tribunal observed as under:- 13. The next aspect to be considered is to understand the meaning of the expression “incriminating material” or evidence. As rightly noted by Ld. CIT(A), there is no definition set out in the Act and the meaning of this term has to be discerned from its judicial interpretation made by different judicial forums. We understand that there can be several forms of incriminating material or evidence. In order to constitute an incriminating material or evidence, it is necessary for the AO to establish that the information, document or material, whether tangible or intangible, is of such nature which incriminates or militates against the person from whom it is found. Some common forms of incriminating material are for instance, where the search action u/s 132 of the Act reveals information (oral or documented) that the assets found from the possession of the assessee in form of land, building, jewellery, deposits or other valuable assets etc. do not corroborate with his returned income and/or there is a material difference in the actual valuation of such , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka assets and the value declared in the books of accounts. Further, incriminating evidence may also constitute of information, tangible or intangible which suggests or leads to an inference that the assessee is carrying out certain activities outside books of accounts which is not disclosed to the Department. Incriminating material also comprises of document or evidence found in search which demonstrates or proves that what is apparent is not real or what is real is not apparent. In other words, if an assessee has recorded transactions in his books or other documents maintained in the ordinary course then in order to hold the material or evidence found in the course of search to be incriminating in nature, then seized document should lead to conclusion that the entries made in the books of the assessee do not represent true and correct state of affairs. Rather the evidence unearthed or found in the course of search should establish that the real transaction of the assessee was something different than what was recorded in the regular books and therefore the entries in the books did not represent true and correct state of affairs i.e. the assessee has undisclosed income/expense outside the books or that the assessee is conducting income earning activity outside the books of accounts or all the revenue earning activities are not disclosed to the tax authorities in the books regular maintained or the returns filed with the authorities from time to time etc. The nature of the evidence or information gathered during the search should be of such nature that it should not merely raise doubt or suspicion but should be of such nature which would prima facie prove that real and true nature of transaction between the parties is something different from the one recorded in the books or documents maintained in ordinary course of business. In some instances, the information, document or evidence gathered in the course of search, may raise serious doubts or suspicion in relation to transaction reflected in regular books or documents maintained in the ordinary course of business, but in such case the AO is not permitted to straightaway treat such material to be 'incriminating' in nature unless the AO thereafter brings on record further corroborative material or evidence to substantiate his suspicion and conclude that the transaction reflected in regular books or documents did not represent the true state of affairs. Until these conditions are satisfied, it cannot be held that every seized material or document or information is incriminating in nature justifying the additions in unabated assessments.

14. In view of the above legal position, let us now proceed to examine whether the additions/disallowances which the AO made in the orders of the unabated AYs impugned in this appeal (AY 2012-13 & AY 2013-14) was based on or made with reference to any incriminating material/information gathered in the course of search. From the assessment orders, it is clearly discernible that the additions were not based on any document/material/detail/asset found or unearthed in the course of search. Neither the AO nor the Ld. CIT(A) has referred to any document found or seized in the course of search to justify the impugned additions. Even the Ld. CIT(A) notes that the impugned additions were not based on any document or material found and seized in the course of search. Instead, according to Ld. CIT(A), the Investigating authorities were in possession of 'information" regarding dubious transactions having been undertaken in these four (4) scrips. This 'information' was purportedly obtained based on certain search or survey action conducted upon , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka different persons/individuals by other tax officers in some unconnected proceedings. Based on this 'information", search action u/s 132 of the Act was conducted upon the assessee and according to Ld CIT(A), based on analysis of books of accounts, recording of statements etc., certain information came to light which constituted 'incriminating evidence' against the assessee. The Ld. CIT(A) also referred to the third-party statements of the purported entry operators/exit providers as 'incriminating material' qua the assessee.

15. It is noted by us that the information' referred to by the Ld. CIT(A) was the inputs received by the Investigating authorities from the SEBI and other Investigation Wings of the Department. The AO has noted at Para 4.3 of the impugned order that the SEBI had passed an interim order dated 19-12-2014 in the matters of the scrip, M/s Radford Global Ltd this scrip (not pertaining to AY 2012- 13 & AY 2013-14 ie un-abated assessment years we are dealing with legal issue) and the assessee was found guilty therein of manipulation and rigging of prices on this scrip on stock exchange. Based on these inputs, search action u/s 132 of the Act was conducted upon the assessee on 09- 04- 2015 to unearth the modus operandi of the assessee. As already noted by us earlier, the Investigating Officer at Q Nos. 6 & 16 had enquired about the genuineness of the transactions in the shares of M/s Radford Global Ltd, in light of the aforesaid SEBI interim order, to which the brother of the assessee had offered to tax the capital gains as income under the head 'Other Sources' and accordingly offered to withdraw exemption claimed u/s 10(38) of the Act. Similarly, enquiries were made in relation to shares of M/s Global Infratech & Finance Ltd and M/s Shree Shaleen Textiles Ltd and the assessee is noted to have admitted and offered to tax the capital gains derived on these shares also as his taxable income under the head 'Other Sources'. It is noted that, the assessee had dealt in these shares in AYS 2014-15 & 2015-16 viz., the abated years, and therefore these enquiries clearly did not relate to the unabated AYS ie AY 2012-13 & AY 2013-14 which presently we are dealing. The assessee we find to have neither sold nor received proceeds from these scrips in unabated AYS 2012-13 & 2013- 14. The shares in question in the unabated AYS are M/s Rander Corporation Ltd, M/s Unisys Software & Holding Industries Ltd, M/s Dhenu Buildcon Ltd and M/s Wagend Infra Ventures Ltd. We find that neither any enquiry nor any question was put to the Shri Surendra Jiwrajka in relation to the transactions conducted in the shares of M/s Rander Corporation Ltd, M/s Unisys Software & Holding Industries Ltd and M/s Wagend Infra Ventures Ltd. Having regard to the foregoing sequence of events & facts, we find ourselves in agreement with averment made by the Ld. AR of the assessee that, there was no incriminating 'information' gathered in relation to these three (3) scrips prior to the date of search as alleged by the Ld. CIT(A). If that had been the case, then the assessee would have surely been questioned regarding the veracity of the transactions in these shares as well. The very fact that the assessee was interrogated regarding his transactions in shares of M/s Radford Global Ltd, M/s Global Infratech & Finance Ltd and M/s Shree Shaleen Textiles Ltd(which pertaining to abated AY's ie AY 2014- 15 & AY 2015-16), but he was not questioned in relation to shares of M/s Rander Corporation Ltd, M/s Unisys Software & Holding Industries Ltd and M/s Wagend Infra Ventures Ltd shows that there was no 'inputs' or 'information' received by the , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka Investigating authorities prior to the date of search nor was any incriminating 'information' gathered from the assessee in the course of search. As far as the shares of M/s Dhenu Buildcon Ltd (formerly known as Hingir Rampur Coal Ltd) is concerned, it is noted that although the Investigating officer is noted to have questioned the assessee but in the answers given to Q Nos. 37 & 47, Shri Surendra Jiwrajka (brother of assessee) did not admit of any wrong doing. Also, unlike the questions which were put in relation to the shares of M/s Radford Global Ltd in the backdrop of the inputs received from SEBI, it is noted that the relevant Questions Nos. 37 & 47 posed by the Investigating Officer were general in nature and there was no reference to any 'information' gathered from SEBI or any other Department of Investigation Wing. In fact, it is noted by us, that like Dhenu Buildcon Ltd, similar questions at Q Nos. 48 & 58 were put to the assessee regarding his transactions in the shares of M/s KGN Industries Ltd to which similar replies were furnished by the assessee. Upon enquiry by the Bench, it was gathered that the AO had accepted the genuineness of the capital gains earned by the assessee in the shares of M/s KGN Industries Ltd. There is nothing brought on record by the AO or the Revenue as to what was the distinguishing 'incriminating information' in the possession of the Department when based on same line of enquiry, they accepted the genuineness of the transactions in shares of M/s KGN Industries Ltd but disbelieved the genuineness of the transactions in the shares of Dhenu Buildcon Ltd. On the overall conspectus of the facts, as discussed in the foregoing, we thus hold that the fundamental reasoning given by the Ld. CIT(A) viz., existence of prior incriminating information (from SEBI/Inv Wing) against the assessee, to justify the validity of the additions made in the unabated assessments framed u/s 153A/143(3) of the Act for AYS 2012-13 & 2013-14 was flawed and based on irrelevant facts not pertaining to the un-abated AYS.

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka 17. In this regard, we may gainfully refer to judgment of the Hon'ble Delhi High Court in the case of CIT Vs Best Infrastructure (India) Pvt Ltd (397 ITR 82). In this case along with assessee's search, simultaneous search was also conducted upon Mr. T who admitted to providing accommodation entries to the assessee in form of share application monies, in lieu of cash. Relying on the statement of Mr. T, the AO made additions u/s 68 in the assessments framed u/s 153A for unabated AYS 2005- 06 to 2009-10. On appeal the Hon'ble High Court reiterated the settled legal position that unless there is incriminating material qua each of the AYs in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law. In view of the aforesaid legal position, the Hon'ble High Court observed that the director of the assessee had admitted undisclosed income only in relation to the year in which search was conducted and no income was admitted in relation to any of the earlier six years. It further observed that no incriminating material was found from the assessee's premises which could justify the additions made u/s 68 of the Act. As regards the statement of Mr. T, the Hon'ble High Court noted that that not only the assessee had denied not knowing the said person but even the Revenue never afforded the opportunity of his cross examination to the assessee. It was further observed that Mr. T had also subsequently retracted his statement. For the reasons aforesaid, the Hon'ble High Court held that the statement of Mr. T could not be considered to be incriminating evidence justifying the inference against the assessee in relation to unabated assessment.

"8. We have heard the rival submissions. We find it would be necessary to address the preliminary issue of whether the addition could be framed u/s 153A of the Act in respect of a concluded proceeding without the existence of any incriminating materials found in the course of search. At the outset, it is evident from the categorical findings of the Id CITA that there is absolutely no incriminating materials found during the course of search regarding the share capital and share premium received by the assessee company during the year under appeal except the fact that the modus operandi of raising of such capital was discovered in the search action. We find that the ld CITA was only harping on the admission made by certain parties at the time of search without corroborating the same with material evidences found during the course of search. In this regard, the instructions issued by the Central Board of Direct Taxes (CBDT in short) in F.No.286/2/2003-IT(Inv) dated 10.3.2003 would be relevant to be looked into wherein it is mentioned that while recording statement during the course of search and seizure and survey , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka operations, no attempt should be made to obtain confession as to the undisclosed income. For the sake of convenience and clarity, the relevant instructions dated 10.3.2003 issued by CBDT is reproduced hereunder:- To All Chief Commissioners of Income tax (Cadre Contra) & All Directors General of Income Tax Inv. Sir, Sub:- Confession of additional Income during the course of search & seizure and survey operation regarding Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search& seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on' collection of evidence of income which leads to information on what has not been disclosed or is notlikely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.

Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders Yours faithfully, Sd/- (S. R. Mahapatra] Under Secretary (Inv. II)

We find that there is absolutely no corroborative evidence found in the course of search by the search team or material evidence brought on record by the ld AO or by the ld CITA in order to give credence to the statement recorded during search. Hence we hold that no addition could be made merely by placing reliance on the statement recorded during search.”

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka 20. For the reasons set out above, we are therefore of the view that there was no incriminating material or information gathered in the course of search (pre/post search) in relation to the transactions conducted by the assessee in the shares of M/s Rander Corporation Ltd, M/s Unisys Software & Holding Industries Ltd, M/s Dhenu Buildcon Ltd and M/s Wagend Infra Ventures Ltd and in that view of the matter the additions made by the AO u/s 68 & 69C of the Act in the unabated AYs 2012-13 & 2013-14 is held to be unsustainable on both law as well as on facts. Accordingly the grounds raised by the assessee in the cross objections stands allowed.”

13. Since, in the present case, no difference in facts has been pointed out by the Revenue, therefore, respectfully following the decision of the coordinate bench of the Tribunal cited supra, we uphold the plea of the assessee that there was no incriminating material or information found during the course of the search in relation to the transactions conducted by the assessee during the assessment years 2012-13 and 2013-14. Therefore, in light of the law laid down by the Hon’ble Supreme Court in Abhisar Buildwell (P.) Ltd. (supra), the grounds raised in assessee’s cross objections for the assessment years 2012-13 and 2013- 14 are allowed.

14. Accordingly, the appeals by the Revenue for the assessment years 2012-13 and 2013-14 have been rendered academic and therefore are dismissed as infructuous.

15. Insofar as assessment years 2014-15 and 2015-16 are concerned, the same are admitted to be abated assessment years. We find that while dealing with a similar factual matrix in the case of assessee’s brother in Shri Dilip B. Jiwrajka, the coordinate bench of the Tribunal vide order dated 29/11/2022 cited supra deleted the additions made by the AO under section 68 and section 69C of the Act, observing as under:- “29. We have considered the rival submissions and perused the material available on records. It is noted that the main plank urged by the Ld. CIT, DR and also in the grounds raised before us, is that the Securities Exchange Board of India („SEBI‟) had passed adverse interim orders in the cases of M/s Radford Global Ltd & M/s Global Infratech & Finance Ltd on 19-12-2014. The AO noted that in these orders, SEBI had suspected that the prices of these shares have been manipulated and that these shares had been used to provide accommodation entry. Pursuant to these inputs received from the SEBI, the Revenue identified assessee as one of the beneficiaries of bogus LTCG in the shares of M/s. Radford Global Ltd & M/s. Global Infratech & Finance Ltd. Accordingly, search action u/s 132 of the Act was conducted upon him on 09-04-2015. Although the assessee was not available at the time of search due to illness, the statement of his brother Shri Surendra Jiwrajka was recorded u/s 132(4) of the Act wherein he had averred that he was in charge of the financial affairs of the assessee. When confronted with these SEBI‟s adverse interim actions/ orders, Shri Surendra Jiwrajka is noted to have acceded to the Investigating Officer‟s proposal of offering the capital gain derived in these shares as income from other sources and forego the exemption claimed u/s 10(38) of the Act, (as the SEBI had suspected the assessee of manipulation in the prices of these scrips). According to the Ld. CIT, DR, having regard to these interim orders passed by the SEBI in 2014 and the consequent statement given by the assessee‟s brother in the course of search u/s 132(4) of the Act , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka offering to tax the gains derived on these shares, was sufficient evidence to justify the impugned additions before us. He therefore urged that the order of Ld. CIT(A) deleting these additions be reversed.

“10. Considering the fact that there are no adverse findings against the aforementioned 82 entities with respect to their role in the manipulation of the scrip of Radford, I am of the considered view that the directions issued against them vide interim orders dated December 19, 2014 and November 9, 2015 which were confirmed vide Orders dated October 12, 2015, March 18, 2016, and August 26, 2016 are liable to be revoked.

11. In view of the foregoing, I, in exercise of the powers conferred upon under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11, 11(4), and 11B of the SEBI Act, hereby revoke the Confirmatory Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 qua aforesaid 82 entities (paragraph 9 above) with immediate effect.

12. The revocation of the directions issued vide the abovementioned orders (at paragraph 11) is only in respect of the entities mentioned at paragraph 9 of this , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka order in the matter of Radford Global Limited. As regards remaining entities in the scrip of Radford, violations under SEBI Act, SCRA, PFUTP Regulations, etc. were observed and SEBI shall continue its proceedings against them. Hence, the directions issued vide Orders dated October 12, 2015, March 18, 2016 and August 26, 2016 against the remaining 24 entities shall continue. This revocation order is without prejudice to any other action SEBI may initiate as per law.” Thus, there is no evidence that the appellant has indulged in the manipulation of share price of Radford Global Limited.”

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.

5. I have been further directed to request you to closely observe /oversee the actions of the officers functioning under you in this regard.

6. This issues with approval of the Chairperson, CBDT.” 34. For the above reasons therefore, we reject the Ld. CIT, DR‟s reliance on the statement of assessee‟s brother u/s 132(4) of the Act to justify the impugned addition/s before us.

From the details available on records, the undisputed factual matrix in this case is that the appellant has share transactions as under: Radford Global Limited: The appellant was allotted 2,50,000 shares of Radford Global Limited through preferential allotment on 16.02.2012. These shares were purchased at Rs.15/per share (Rs.10/- face value and a premium of Rs.5/-). The purchase price was paid by the appellant though banking channels. These shares were credited in the demat account on 31.03.2012 which was held with the SEBI registered broker. These shares were further split in the ratio of 1:5 on 29.01.2013. Thus, after the split, the appellant held 12,50,000 (250000 x 5) shares. The appellant sold 12,50,000 shares during the period 01.04.2013 to 24.06.2013. The shares were sold through the SEBI , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka registered broker. The sale consideration of Rs. 9,88,14,684 was received through banking channels.

Global Infratech & Finance Ltd (formerly known as Asianlac Capital and Finance Ltd)

The assessee was allotted 1,00,000 shares of Global Infratech & Finance Ltd (formerly known as Asianlac Capital and Finance Ltd)through the preferential allotment on 19.01.2012.These shares were purchased at Rs.15/per share (Rs.10/- face value and a premium of Rs.5/-). The purchase price was paid by the appellant though banking channels. These shares were credited in the demat account on 13.03.2012 which was held with the registered broker. These shares were further split in the ratio of 1:10 on 13.12.2012. Thus, after the split, the appellant held 10,00,000 (100000 x 10) shares.The appellant sold 10,00,000 shares during the period 08.04.2013 to 12.04.2013. The shares were sold through the SEBI registered broker. The sale consideration of Rs 3,86,53,409/- , was received through banking channels. Shree Shaleen Textiles Ltd. The appellant was allotted 7,500 shares of Shree Shaleen Textiles Ltd through preferential allotment on 15.11.2011. These shares had been purchased at Rs.205/- per share (Rs.10/- face value and a premium of Rs.195/-). The purchase price was paid by the appellant through banking channels. These shares were credited in the demat account on 10.01.2012. Subsequently, bonus shares were issued in the ratio of 19:1 on 30.03.2012. After that the shares held by the appellant stood at 1,50,000 (7,500 x 20). These shares were further split in the ratio of 1:5 on 06.03.2013 and, therefore, the number of shares held by the appellant was 7,50,000 (1,50,000 x 5). 7.50.000 shares was sold by the assessee during the period 31.07.2013 to 24.12.2013. The shares were sold through the SEBI registered broker. The sale consideration of Rs 4,51,46,145/- was received through banking channels.”

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka Global Infratech & Finance Ltd, (formerly known as M/s. Asianlak Capital and Finance Ltd.), he pointed out that in the year of preferential allotment of shares, the turnover of the company had grown from Rs.8.90 lacs to Rs.191 lacs representing growth of 2046.07%. Correspondingly, the profit had increased from Rs.6.91 lacs to Rs.11.39 lacs representing growth of 64.83%. Thereafter, in FY 2012-13 the revenues had gone up to Rs.1515.58 lacs (increased by 693.50%) and the profit had increased to Rs.155.63 lacs (increased by 12.66%). Inviting our attention to the assessment order, the Ld. AR pointed out that the AO himself had taken note of the fact that the returned income of this company had increased from Rs.11.38 lacs in AY 2012-13 to Rs.155.62 lacs in AY 2013-14 and Rs.233.26 lacs in AY 2014-15. According to the Ld. AR, therefore, the financials of the company and its growth clearly reflected its bright future prospects which would entice investors to invest into the company‟s shares.

, 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka 44. And further, the Ld. AR also pointed out that the statements of the [brokers/entry-operators] relied upon by the AO were recorded on various dates connected with some other proceedings which were in no way connected with the search action conducted upon the assessee. The Ld. AR therefore contended that, the circumstances under Shri Surendra B. Jiwrajka ITA no.2431/Mum./2021, C.O. no.66/Mum./2022 ITA no.2432/Mum./2021, C.O. no.65/Mum./2022 ITA no.2433/Mum./2021 & ITA no.2434/Mum./2021 Page | 20 which the makers of the statement had made the statements and in what context did they give these statements is also not discernible. According to him, it is also not known whether the makers of these statements have given the same under threat, coercion, inducement, etc, [making it un-reliable]. Admittedly, we note that these statements were recorded in the absence/ behind the back of the assessee. Therefore, if the AO intended to use it against the assessee, then he ought to have summoned them and recorded their statements [if possible in the presence of assessee] and brought out clearly the role of assessee in any wrong doing and thereafter give a copy of the adverse material/statement and allow the assessee to cross-examine the maker of the adverse statement; and then if the AO finds that the maker of the adverse statement could withstand the cross examination of assessee, then AO could be justified to act against the assessee on the basis of incriminating oral evidence or it cannot be used against the assessee [because the assessee did not have any means to determine the veracity or correctness of the averments made in these statements]. Moreover, as noted by us in the earlier paras, none of the persons in their statements had admitted of having any transactions with the assessee. On the same lines, as discussed above, the AO relied on statements of other entry operators. On examination of these statements, we are satisfied that, in none of the statements has any of them admitted of having any transactions or providing accommodation entries to the assessee nor has the AO brought on record any material to link these entry operators / exit providers with the counter parties to whom the shares were sold by the assessee. We therefore hold that the AO was unjustified in making additions u/s 68 & 69C of the Act based on the unsubstantiated and irrelevant statements of entry operators / exit providers qua the assessee.

by the Revenue in its appeal for the assessment years 2014-15 and 2015-16 are dismissed.”

15. On perusal of the above said decision it is evident that there is no change in the facts of the assessee’s case with that of his brothers cases, where it is observed that the coordinate bench has considered the fact that the SEBI order has exonerated the assessee by stating that the assessee was not involved in the price rigging of the shares, taking this to the advantage of the assessee. Subsequently, the Ld. AR also placed on record the decision of the Hon’ble Jurisdictional High Court in the case of Surendra B. Jiwrajka in of 2024 dated 12.11.2025, in the appeal filed by the revenue where the Hon’ble High Court held that there was no perversity in the finding of both the Ld. CIT(A) and the ITAT on the issue of incriminating material has laid down by the Hon’ble Apex Court in the case of PCIT Vs.

Abhisar Buildwell (P.) Ltd [2023] 454 ITR 212(SC) and also on the fact that there was no fault in both the authorities having taken cognizance of the SEBI order in exonerating the , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka assessee. The relevant extract of the decision of the Hon’ble High Court is cited herein under for the ease of reference.

“9. We have considered the rival contentions and perused the record.

10. In our opinion, in the facts of the present case, this Appeal raises no substantial questions of law and therefore does not deserve to be admitted.

raised by the revenue for AY 2012-13 and 2014-15 on the basis of the law laid down by the Hon’ble , 2352, 2353 & 2351/Mum/2021 (A.Y. 2012-13 to 2015-16) C.O. No. 64 & 67/Mum/2022 (A.Y. 2012-13 & 2013-14) Ashok B. Jiwrajka Apex Court in Abhir Builwell (P.) Ltd (Supra) and thereby allow the cross objection filed by the assessee for AY’s 2012-13 and 2013-14 and dismiss the revenue’s appeal for AY 2014- 15 and 2015-16 on the aforementioned observation.

18. In the result, the appeals filed by the revenue are hereby dismissed and the cross objections filed by the assessee are allowed.

Order pronounced in the open court on 23.12.2025