INCOME TAX OFFICER 23 3 6 MUMBAI, MUMBAI vs. SANJAY V JAIN HUF, KALBADEVI

ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nThis appeal by the revenue and cross-objection by the\nassessee are preferred against the order dated 25/03/2025 by\nNFAC, Delhi [hereinafter 'the ld. CIT(A)'] pertaining to AY 2013-14.\n2.\nThe grievance of the revenue reads as under:-\n“1. \" Whether the facts and circumstances of the case and in law, Ld. CITA) has\nerred in deleting the entire addition of Rs.65,72,502/- made by the AO u/s.68 r.ws\n115BBE of the I. T. Act on account of unexplained accommodation entries in the\nform of bogus LTCG and STCL ?\"\n2. \" Whether the facts and circumstances of the case and in law, Ld. CIT(A) has erred\nin deleting the entire addition of Rs 65,72,502/-made by the AO, by ignoring the fact\nthat Assessment was re-opened u/a.147 of the Act, on the basis of post-search\ninformation gathered out of search and seizure action conducted by office of the\nDGIT(Investigation Wing) Mumbai, on Shri. Naresh Manakchand Jain and his\nseveral associates, who have admitted in recorded statement that his syndicates were\ninvolved in rigging the prices of various scrips on stock exchange for providing\nentries of LTCG/Losses to various beneficiaries, who intended to bring unaccounted\nincome into their books of accounts without paying taxes and assessee was found to\nbe one of the beneficiary, obtained accommodation entries LTCG/ Losses from Shri\nNaresh Manakchand Jain, who has controlled and managed such transaction to\ngenerate paper tail only?\"\n3. \" Whether the facts and circumstances of the case and in law, Ld. CIT(A) has erred\nin deleting the entire addition of Rs.65,72,502/- made by the AO, without\nappreciating the facts of involvement of assessee with Shri. Naresh Manakchand Jain\n& his associates, by entering into accommodation transactions, which was an\narranged transaction which involve the series of preconceived steps and lack of\ncommercial content and totally an artificially structured transaction entered in to\nwith the sole intent to evade taxes?\"\n4. \" Whether the facts and circumstances of the case and in law, Ld. CIT(A) has erred\nin deleting the entire addition of Rs.65,72,502/- made by the AO, without\nappreciating the nature of the transactions by accepting the documentation presented\nby the assessee at face value, without adequately considering the underlying\nfraudulent intent and the orchestrated steps taken to present these transactions as\ngenuine. The assessment of the true character and intent behind these transactions\nwas crucial and has been overlooked?\"\n5. Whether on the facts and circumstances of the case and in law the La. CIT(A) has\nerred in ma considering the fact that the direct and circumstantial evidences in view\nof the decision of Durga Prasad More (1971) 82 ITR 540 (SC) and Sumatt Dayal\n(1995] 80 Тахтапп. 89/SC) /1995] 2014 ITR 801 (SC)/ (1995) 125 CTR 124(BC)\nrendered by the Supreme Court, where it was held that Honible Court and Tribunal\nhave to judge the evidences before it by applying the test of probabilities, the\nsurrounding circumstances which exercise had been done by the Assessing Officer?\"\n6. \" Whether on the facts and circumstances of the case and in law, the Id. CIT(A)\nhas erred in deleting the entire disallowance claimed as exemption of LICG. by\nignoring the fact that in such cases, where there was a suspicious or bogus trade, the\nonus is on the assessee to establish the genuineness of transactions and also to prove\nthat the price of script/stocks in which he was traded to claimed LTCO/STCL was\nnot manipulated. The reliance is placed on judgment of Hon'ble Culcutta High\nCourt's decision in the case of Pr. CIT Vs Swati Bajaj (I. A. No. GA/2/2022) in ITAT\nNo 6 of 2022, Dated. 14.06.2022.\n7. The tax effect involved in this case is Rs.20,30,905, which is below the prescribed\nlimit mentioned in the CBDT's Circular F.No.279/Misc. 142/2007-ITJ(Pt) amended\nvide No. 09/2024 dated. 17.09.2024. However, the appeal is being filed before the\nHon'ble ITAT, as this case also falls under one of the exceptions specifled in\nparagraph 3.1(h) of the of the CBDT's Circular No.05/2024 Dated. 15.03.2024,\nwherein it is stated that in cases involving\" Organized Tax Evasion", in such cases\nthe decision to file appeal/ SLP shall be taken on merit without regard to the tax effect\nand the monetary limit.\n8. The appellant craves, leave to amend or alter any grounds or add a new ground\nwhich may be necessary.\nA copy of the CITIA)'s order was received on 25.03.2025 in this office of PCIT-19,\nMumbai. The last date of filling an appeal is 31.05.2025. The appeal should be filed\nIMMEDIATELY.\"\n3.\nBriefly stated the facts of the case are that the assessee filed its\nreturn of income on 12/09/2013 declaring income of Rs.3,30, 780/-. On\nthe basis of the information in possession with the Department and after\nrecording the satisfaction and after obtaining necessary approval from\nthe concerned authority, the AO has issued notice u/s 148 of the Act on\n28/07/2022. Pursuant to which, the assessee filed his return of income.\n3. As per the information, the assessee availed accommodation\nentries to the tune of Rs.65,72,502/- from Shri Naresh Makechand Jain\nwho was involved in operations of the syndicate establishing clearly the\nmodus operandi of providing bogus long term capital gain/loss and\nrigging the prices of various scrips on stock exchange for providing\nbogus long term capital gain/loss.\n4.\nThe assessee was asked to furnish details and documentary\nevidence to prove the genuineness of transactions with respect to Shri\nNaresh Makechand Jain. The details were furnished and partial\ndocuments were also submitted. A final showcause notice was issued\nby the AO again asking the assessee to furnish supporting documents\nin response to which the assessee supported his case by referring to the\ndecision of the Hon'ble Gujarat High Court and Hon'ble Allahabad\nHigh Court, who have quashed the re-assessment proceedings.\n4.

1. The contentions of the assessee were dismissed by the AO who\nwas of the opinion that the assessee has failed to prove genuineness of\nthe transactions and made addition of Rs.65,72,502/- u/s 68 r.w.s.\n115BBE of the Act.\n5. The assessee challenged the additions before the ld. CIT(A) and\nmade various submissions with supporting evidence. After considering\nthe facts, submissions and all the material available on record, the ld.\nCIT(A) called for a remand report from the AO, who submitted his\nreport on 26/09/2024 which is extracted by the ld. CIT(A) at para 6.2.2.\non page 10 of his order. On the addition on account of accommodation\nentries alleged to have been availed by the assessee from Shri Naresh\nMakechand Jain, it was strongly contended that the assessee is engaged\nin share trading activity on a day-to-day basis right from AY 2002-03\nand the turnover from share trading activity has crossed the threshold\nprescribed for tax audit u/s 44AB of the Act and accordingly, the books\nof accounts of the assessee were audited. The return of income has been\nfiled electronically within the due date. It was also pointed out to the ld.\nCIT(A) that on the basis of information received from DDIT (Inv.) Unit\n– 7(1) and 7(3), the Jurisdictional AO (JAO) initiated the re-assessment\nproceedings on 25/05/2022 against which the assessee raised specific\nobjections claiming that no benefit of long term capital gain or short\nterm capital losses has been claimed by the assessee in his return of\nincome on any scrips traded by it or alleged by the JAO.\n5.