BALDEEP SINGH,CHANDIGARH vs. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-5(1), CHANDIGARH, CHANDIGARH

That the Ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and framing the assessment under section 143(3) read with Section 147 r.w.s of the Act without satisfying the statutory pre-conditions required for initiation of proceedings and completion of assessment and as such, the same are without juri iction and hence deserve to be quashed as such.

That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that there was no tangible material on record to form a "reason to believe" that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable.

That the reasons recorded are based only on borrowed information without application of mind much less independent application of mind and hence untenable.

Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs.3,37,380/-made by the assessing officer applying the provisions of Section 69A treating the entire sale price of 10,000 units of VMS Industries Limited to be income of the assessee in utter disregard of the explanations rendered and as such the 199-Chd-2025 Baldeep Singh, Chandigarh addition upheld is illegal, arbitrary and unjustified.

That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the assessee had already declared the short term capital gains of Rs. 1,53,192/-on the sale of shares of VMS Industries Limited while filing the return of income and as such upholding of the addition tantamounts to double addition which is not permissible.

That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.

That the order of Ld. Commissioner of Income Tax(Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable.

Brief facts of the case, as per the order of the Ld. CIT(A), are as under:- 1. That the petitioner had filed original Income Tax Return and then a return in response to notice u/s 148, by declaring the same income under the heads business, short term capital gains, long term capital gains and other sources Copy of Computation of Income already filed, is enclosed herewith.

Thereafter a notice uls 142(1) alongwith questionnaire was issued by Learned A.O. wherein it was pointed out that petitioner has received bogus entry/transaction of Rs. 337,380/- during the financial year 2011-12. 3. However no scrip details or name of broker was given to petitioner. Only the value of Rs. 337,380/- was given. 4. During assessment proceedings, details of capital gains, copies of demat account statements and other information as required were filed. All transactions were conducted on regular stock exchanges and STT is paid on all transactions. Summarized statement of Demat Account held with Master Capital Services Ltd. which is already on record is enclosed herewith. 5. The petitioner could not reconcile the entry of Rs. 337,380/- with his demat account statements, which were already filed with the Learned A.O.

Still without confronting the petitioner with the details of the scrip, the Learned A.O. passed order u/s 143(3) by making addition of Rs. 337,380/-

On receipt of assessment order, the petitioner came to know that the said scrip was of VMS Industries Ltd. The petitioner had already declared the Short-Term Capital Gains at Rs. 1,53,192/- including STCG of Rs. 83,266/- earned on this scrip. Detailed Computation of Short Term Capital Gains is enclosed herewith. 8. The reason for non-reconciliation was that the figure given by Learned A.O. was Rs. 337,380/-, whereas the broker statement revealed the sale proceeds were Rs. 337,144/- 4. During proceedings before us, a brief synopsis was filed by the Ld. Counsel for the Assessee, which reads as under:- “The assessing officer received some STR information From Directorate of Income Tax (Investigation) Mumbai on the basis of search operation on one Shri Naresh Jain and his associates that there were some entry providers who were providing entries of bogus long term capital gains, bogus short term loss and bogus business loss through manipulation of stock prices of the stock exchanges. The assessing officer, on the basis of this information held that the instant assessee was one of the beneficiaries who received Rs.3,37,380/- in financial year 2011-12 dealing in 199-Chd-2025 Baldeep Singh, Chandigarh the shares of VMS Industries Limited. During the course of assessment proceedings, it was submitted by the assessee that he purchased 10,000 units of shares of VMS Industries Limited at the value of Rs.2,53,877 and sold them at a sale price of Rs.3,37,144/- thereby earning a gain of Rs.83,266/- . This fact is mentioned in the assessment order in Para 8. It was also informed that the assessee has declared income/loss from long term and short term capital gains vide reply dated 25.11.2019 placed in the Paper Book at pages 7-8. Copy of the summarized statement of Demat Account and details of short term capital gains is placed in the Paper Book at Pages 108-111. The details in respect of sale of shares of VMS Industries -NSE is as under Detail of Short Term Capital Gains Name Date Price Qty Pur Amount Date Price Sale Amount Profi t VMS Industries- NSE 23/06/2011 14.41 5000 72050 20/10/2011 23.55 117750 457 00 VMS Industries- NSE 14/06/2011 36.36 5000 181800 08/02/2012 43.86 219300 375 00

We have considered the findings given by the Assessing Officer in the assessment order and the Ld. CIT(A) in the appellate order. We have also considered the brief synopsis