M/S DEEPS SPECIAL STEELS LIMITED,LUDHIANA vs. DCIT, CIRCLE-1, ALWAR
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A-Bench” JAIPUR
Jh xxu xks;y] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k
BEFORE: SHRI GAGAN GOYAL, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1016/JPR/2024
fu/kZkj.ko"kZ@Assessment Year : 2015-16
M/s Deeps Special Steels Limited
320-321, Industrial Area-A,
Ludhiana (East), Ludhiana-141003. cuke
Vs.
Deputy
Commissioner of Income Tax,
Circle-1,
Alwar.
LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACD6027H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Pankaj Bhalla, C.A.
jktLo dh vksjls@Revenue by: Shri Rajendra Ojha, CIT lquokbZ dh rkjh[k@Date of Hearing
:25/08/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 28/08/2025
vkns'k@ORDER
PER: NARINDER KUMAR, JUDICIAL MEMBER .
Assessee-appellant has challenged, by way of this appeal, order dated 21.06.2024, passed by Learned CIT(A), National Faceless Appeal
Centre, Delhi, whereby the appeal filed by the said assessee, challenging assessment order dated 29.12.2017, passed after selection of the case for scrutiny, relating to the assessment year 2015-16, stands dismissed.
Vide assessment order dated 29.12.2017, the Assessing Officer assessed its total income at Rs. 3,70,73,690/-, making addition of Rs.
2
M/S Deeps Special Steels Ltd., Ludhiana.
11,00,000/- i.e. by disallowance of the said amount claimed by the assessee and another addition of Rs. 3,29,978 on breach of contract, by way of disallowance of various expenses, namely, salary, wages, allowance and other benefits, AGM expenses, traveling expenses, and disallowance of loss of Rs. 7,42,75,089/- claimed by the assessee on the sale of share of KAPAAC Pharma.
2. As per impugned order, while dealing with ground No. 3 in the appeal, which related to addition of Rs. 3,29,978/- described above,
Learned CIT(A) observed that in the course of arguments, no submissions were put forth by the appellant on the said ground. Accordingly, said ground of appeal was rejected.
3. The other ground raised on behalf of the appellant, before Learned
CIT(A), NFAC, pertained to disallowance of short term capital loss of Rs.
7,42,75,089/-, which related to sale of shares of KAPAAC Pharma.
4. It may mentioned here that before us, Ld. AR for the appellant has challenged the impugned order passed by Learned CIT(A) only as regards disallowance of Rs. 7,42,75,089/-, pertaining to sale of shares of KAPAAC
Pharma Limited.
5. Arguments heard. File perused.
3
M/S Deeps Special Steels Ltd., Ludhiana.
It may be mentioned here that the assessee-appellant is engaged in business of manufacturing of steel. As regards year under consideration, the assessee declared its total income as Nil, while submitting the return of income. The department selected the case for limited scrutiny. Thereupon, notice u/s 143(1) of the Act was issued on 18.03.2016. On initiation of proceedings, notice u/s 142(1) of the Act, accompanied by a questionnaire, was served upon the assessee. Income declared by the Assessee 7. Case of the department is that while declaring its income as ‘Nil’, in the return of income, the assessee was found to have claimed set off of the previous year loss and computed MAT u/s 115JB, to the tune of Rs. 8,20,087/-, but in its revised return of income, furnished on 17.03.2017, i.e. during pendency of the assessment proceedings, the assessee declared its income at Rs. 3,59,73,685/- and also claimed short term capital loss of Rs. 7,42,75,089/- on sale of shares of KAPAAC Pharma Limited, and in this way, net loss to be carry forward was computed at Rs. 3,83,01,404/-. Sale of certain Land-No addition 8. During assessment proceedings, it transpired that on 19.03.2015m the assessee had sold some land measuring 8,03,600 Sq. Meters, in the 4 M/S Deeps Special Steels Ltd., Ludhiana.
area of MIA, Alwar, but, in this regard no addition was made, considering the reply furnished by the assessee and finding that the provisions of section 50C were not attracted in the case of lease hold property, and the assessee was found to have taken said land on lease of 99 years, and as such, it was not a capital asset.
Sale of shares of KAPPAC PHARMA
9. Coming to the only issue of sale of KAPPAC Pharma, argued before us, during the year under consideration i.e. from 16.09.2014 to 02.01.2015, the assessee purchased said shares, for Rs. 7,84,03,954/- and sold the same only for Rs. 41,28,865/-.
10. Case of the department is that the assessee had planned to minimize his tax liabilities by purchase and sale of shares of dummy company and also that the assessee had received the above said amount as sale consideration, on 17.03.2015, whereas shares were stated to have been sold two days thereafter i.e. on 19.03.2015, show cause notice came to be issued to the assessee on 21.12.2017. The assessee furnished reply thereto. Having considered the entire material available, the Assessing Officer passed assessment order.
5
M/S Deeps Special Steels Ltd., Ludhiana.
Said assessment order came to be upheld by Learned CIT(A) while dismissing the appeal filed by the assessee, for the reasons recorded therein.
Contentions
11. Ld. AR for the appellant has submitted that this is a case where the assessment order came to be passed, thereby disallowing genuine claim of the assessee, as regards short term capital loss, which had origin from sale of shares, while the Assessing Officer ignored the material submitted by the assessee.
12. It has also been submitted that the assessee-appellant was not provided reasonable opportunity of being heard as complete information, including on the aspect as to who had acted as the operator for the assessee, was provided.
13. While assailing impugned order passed by Learned CIT(A), Ld. AR has contended that for the above said reasons, even the impugned order deserves to be set aside, matter may be remanded for afresh decision, after providing reasonable opportunity of being heard to the assessee- appellant.
6
M/S Deeps Special Steels Ltd., Ludhiana.
It may be mentioned here that on behalf of the assessee one paper book consisting of copies of documents, including written submission etc., running from page 1 to 159, has been submitted. 15. Another paper book submitted on behalf of the appellant is by way compilation of plethora of decisions. As tabulated by Learned AR for the appellant, the list of decisions is as under: Sl Particulars Proposition Pages Relevant Pages 1. The Hon'ble Gujarat High Court in case of Principal Commissioner of Income-Tax V. Affluence Commodities (P.) Ltd. [2024] 161 taxmann.com 476 (Gujarat)
Losses from share transactions cannot be disallowed or assessments reopened merely on suspicion of penny stock dealings; if trades are through recognized exchanges, backed by proper documents, banking channels, and no evidence of collusion, such losses are allowable.
1-4
1,3,4
2. The Hon'ble Gujarat High Court in case of Principal
Commissioner of Income-Tax V. Champalal Gopiram
Agarwal [2023] 155 taxmann.com 66
5-9
5,7
3. The Hon'ble Gujarat High Court in case of Principal
Commissioner of Income-Tax V. Sangitaben Jagdish kumar Shah [2023] 156 taxmann.com 147 (Gujarat)
10-11
10,11
4. The Hon'ble Gujarat High Court in case of Principal
Commissioner of Income-Tax V. Genuine Finance P.
Ltd.* [2023] 152 taxmann.com 330 (Gujarat)
12-14
12,14
5. The Hon'ble Bombay High Court in case of Assistant
Commissioner of Income-tax, Central Circle-8(1),
Mumbai
V.
Jainam
Investments
[2021]
131
taxmann.com 327
15-24
15,23,24
6. Hon’ble High Court of Punjab & Haryana in the case of Commissioner of Income Tax vs. Anupam Kapoor reported in ITA No. 356 & 378 of 2004 and 308 of 2005
no adverse inference can be made with respect to sale of equity shares on account of high variation in sale price of the script
25-28
25-26
7. Assistant Commissioner of Income Tax V3. Pardeep
Kumar Aggarwal reported in [2016] 70 taxmann.com
154 (Chandigarh - Trib.)
29-41
32,38
8. The Pr. Commissioner of Income Tax (Central),
Ludhiana vs.Sh. Hitesh Gandhi reported in ITA No. 18
of 2017 (O&M)
42-46
45,48
9. The Pr. Commissioner of Income Tax (Central),
47-49
7
M/S Deeps Special Steels Ltd., Ludhiana.
Ludhiana vs. Prem Pal Gandhi reported in ITA No. 95-
2017 (O&M) wherein it has held that;
10. Kishan Chand Chellaram Vs. CIT, (1980) 125 ITR 713
(SC)
Material collected behind the back of the assessee cannot be used against him unless the assessee has been allowed a chance to rebut the same.
50-88
50,55
11. CIT v. Sham Lal [1981] 127 ITR 816 (Punj. &Har.);
89-90
90
12. Meenu Goel vs. ITO in ITA No. 6235/Del/2017
91-98
97
13
Smt. Shikha Dhawan, Vs. ITO ITA No.3035/Del/2018
99-114
113-114
14
CIT vs. Lavanya Land Pvt. Ltd. [2017] 83taxmann.com
161 (Bom)
In absence of any material to show that huge cash was transferred from one side to another, addition cannot be sustained
115-125
115,124
15
Pratik Suryakant Shah vs. ITO [2017] 77 taxmann.com
260 (Ahmedabad Tribunal)
126-131
130-131
16
AnilNand
Kishore
Goyalvs.ACIT-ITA
Nos.
1256/PN/2012 (Pune Tribunal)
132-176
17
CIT vs. Jamna Devi Agrawal [2012] 20 taxmann.com
529 (Bom HC)
177-180
179
18
Commissioner of Income-tax v. Smt. Sumitra Devi
[2014] 49 taxmann.com 37
Transaction could not be rejected altogether in absence of cogent evidence to the contrary
181-185
184
19
Shri Dolarrai Hemani vs. ITO, ITA No. 19/Kol/2014,
Date of Judgement : 02.12.2016, ITAT-Kolkata
186-196
192
20
ITO-24(3)(1) vs. M/s. Arvind Kumar Jain HUF reported in ITA No. 4862/MUM/2014 Assessment Year: 2005-
06
The claim of appellant cannot rejected where the transaction is supported by documentary evidences.
197-201
200
21
Commissioner of Income-tax-13 ShyamR. Pawar reported in [2015]
54
taxmann.com
108
(Bombay)/[2015]
202-205
202,205
22
Jaipur, ITA No. 292/JP/2017
206-214
213-214
23
LalithaJewellery
Mart
(P.)
Ltd.
v.
Deputy
Commissioner of Income-tax reported in [2018] 99
taxmann.com 408 (Madras)
215-224
215
24
Commissioner of Income Tax -III, Ludhiana vs. Vivek
Mehta reported in [2012] 17 taxmann.com 197 (Punj.
&Har.)
225-226
225-226
25
Commissioner of Income Tax vs. Himani M. Vakil reported in [2014] 41 taxmann.com 425 (Gujarat)
227-228
228
26
Commissioner of Income Tax vs. Udit Narain Agrawal reported in [2013] 31 tasmann.com 76 (Allahabad)
229-233
232-233
27
CIT v. Paras Cotton Co [(2007) 288 ITR 211 (Raj.)]
The claim cannot be rejected on basis of suspicion only
234-239
28
Faqir Chand Chaman Lal v. ACIT [(2004) 1 SOT 914
(Asr.)]
240-242
242
29
Assam Tea Co. v. ITO [(2005) 92 ITD 85 (Asr.) (SB)]
243-250
242
30
CIT vs. Carbo Industrial Holdings Ltd. [2000] 244 ITR
422 (Calcutta High Court)
Addition cannot be made on default of broker
251-253
253
31
Asstt. CIT vs. BhavikBharatbhai Padia [2017] 78
254-259
259
8
M/S Deeps Special Steels Ltd., Ludhiana.
2551/KOL/2018
Transaction is shares of M/s
Kappac
Pharma
Ltd. was held to be genuine when supported by documentary evidence
260-277
264-
265,276
33
Indore, ITA No. 464/Ind/2019
278-288
288
34
No.4459/DEL/2017
289-292
292
It may be mentioned here that in the course of arguments, before us, Ld. AR has relied only on the following decisions:- Shri Mahaveer Kanwarlal Ranka vs. ACIT, ITA No. 224 & 965/M/2024, dated 29.11.2024 (Mumbai Trib.) PCIT vs. Shri Arnav Goyal, D.B. Income Tax Appeal No. 14/2024, dated 19.02.2024 (Rajasthan H.C.) arising out of decision in Shri Arnav Goyal vs. ITO, ITA No. 275/JP/2020, dated 03.04.2023 (Jaipur Trib.) PCIT vs. Affluence Commodities (P) Ltd. (2025) 177 taxmann.com 352 (SC) 17. It may also be mentioned here that in the course of arguments, on 18.08.2025 on behalf of the appellant still another paper book, having following index also came to be presented:- SL Particulars Pages 1. Copy of RTI Application filed on 17.02.2025. 160-161 2. Order u/s 7(1) of the RTI Act, 2005 passed by the ACIT, Circle-1, Alwar. 162-164 3. Copy of SIT report provided along with RTI order. 165-214
9
M/S Deeps Special Steels Ltd., Ludhiana.
Historical share price chart obtained from GROWW of M/s Kappac Pharma Limited. 215-2016
However, it is significant to note that the assessee-appellant has not filed any application seeking permission to place on record this additional evidence.
For want of any such application or any justification for their non production earlier before the Assessing Officer or the first appellate authority, we are not inclined to take the material sought to be placed by way of this paper book on record.
Is it correct that no reasonable opportunity of being heard was provided to the appellant by the Revenue authorities?
18. As regards the contention raised by Ld. AR that no reasonable opportunity was provided to the assessee-appellant, of being heard, it may be mentioned here that as per record, assessment proceedings commenced with issuance of notice u/s 143(2) of the Act, on 18.03.2016, whereupon the assessee was represented by its authorized representative.
Notice u/s 142(1) of the Act, accompanied by questionnaire, was issued to the assessee, on 14.02.2017. Due to change in combination, fresh notice under said provision of law accompanied by a questionnaire was issued to the assessee.
10
M/S Deeps Special Steels Ltd., Ludhiana.
That is how, the assessee furnished reply thereto, on 17.03.2017. In this way, the assessee had the opportunity to file revised return of income, and he came forward with the claim of short term capital loss.
19. During pendency of the assessment proceedings, a show cause notice dated 21.12.2017 was issued to the assessee, and thereupon, the assessee submitted its reply on 26.12.2017. Said reply runs into about 10 pages i.e. as available from page No. 5
to 17 of the assessment order.
All this goes to show that the Assessing Officer provided reasonable opportunity to the appellant of being heard, on the issues involved, and the assessee availed of the said opportunities from time to time.
20. As regards non communication of information, as regards operator stated to be involved for sale of the said shares, is concerned, in the course of arguments, we have enquired from Ld. AR for the appellant if at any point of time, during assessment proceedings, the assessee ever sought for any such information from the Assessing Officer or the department.
Ld. AR for the appellant has candidly admitted that no such information was sought from the department/Assessing Officer.
11
M/S Deeps Special Steels Ltd., Ludhiana.
It may be mentioned here that from the very beginning case of the Assessee is that the transactions of purchase and sale of shares were made through a renowned broker.
When the assessee or its AR did not deem it an appropriate to seek any information from the department/Assessing Officer and presented a very lengthy reply to the show cause notice, it cannot be said that the department/Assessing Officer had no communication of any such information from the assessee or that on said account, the assessee had no reasonable opportunity of being heard.
21. Show cause Notice issued by the Assessing Officer read as under:
“You have sold KAPAAC Pharma share to M/s Robinson Worldwide Trade
Limited at very low price and claimed loss. The KAPAAC Pharma is delisted from BSE/NSE, you have sold KAPPAC Pharma share physically at very low price and claimed loss it is also noted that the price of share of M/s KAPPAC Pharma
Ltd, was ský rocketed without having any awesone profit, EBIDTA margin, EPS, bonus, dividend etc., later on rapidly his value is done. Therefore it seems that the company involved in penny stock.
It is also noted that payment received from Sun and Shine worldwide limited on 17.03.2015 whereas shares were transferred on 19.03.2015. Payment received before transfer of share show malafide transactions. Show cause why the loss arises from sale of share is not disallowed and added to the income of the assessee.”
12
M/S Deeps Special Steels Ltd., Ludhiana.
Assessee submitted its reply to the said show cause notice, on 26.12.2017. For ready reference, said reply as available in para 8 of the assessment order, is reproduced hereunder:- “A/r of the assessee filed his reply on 26.12.2017, which is re-produced as under :- "Loss of Rs.74275089/- on sale of share of M/s KAPPAC Pharma Ltd, We hereby submit as under :- That the assessee had purchased equity shares of Kappac Pharma limited in its DEMAT form account maintained with LSE SECURITIES LTD, 1" Floor, LSE Building, Feroze Gandhi Market, Ludhiana (Copy of DEMAT account DP ID 12025400, Client ID: 00405676 through broker M/s Kewat Banker LSE Securities Ltd, Ludhiana giving transactions details attached (Annexure-1) The summary of purchases of shares alongwith complete purchase invoices confirming the transactions are attached for your kind perusal. (Purchase summary -Annexure 2) The above confirms that the proper procedure has been adapted for investment in shares. The shares have been traded online in our DEMAT account. Further, submitted that as these shares have been purchased on line through stack exchange and at the price as per the index at the date and time of purchase. The investment was made with a purpose for making profit keeping in a view the past trends of the share price of this company. The share of this company touched high of Rs 734.75 in March 2014 and the same was purchased by us in September 2014 to approx average rate of Rs 355/. The historic data chart of this share as sourced from moneycontrol.com confirming the above rates is attached for your kind perusal. (Annexure -3) So, the decision taken at that time to invest in these shares was very practical and logical. Our submission is further reinforced by the movement of this share in initial period which is explained as under and in the details of purchase summary submitted as per Annexure-2 submitted above. Share purchased period No of shares Amount (Rs.) Average rate (Rs.) 12/09/2014 to 13/10/2014 59066 2,10,02,048.18 355/-
The price of this share touched a high of Rs 425/- on 14/10/2014. This further proves that our investment decision was correct and we were making profit.
13
M/S Deeps Special Steels Ltd., Ludhiana.
Subsequently, because of unpredictable nature of the stock market the price of the shares did not sustain and came down and we invested more money to bring down our average cost of purchase. Unluckily and due to unforeseen circumstances the shores of this company were delisted in January 2015, which was beyond our control, and nobody could predict the same in advance. This resulted in huge fall in the share price of the company. Sensing no immediate future of the listing of the company we made efforts to dispose of the shares at the best price available. Since, the shares were not being traded online to that time these had to be sold off line, outside the stock exchange route. But we emphatically submit that these shores has been transferred electronically through our DEMAT Account and it is wrong to suggest that the shores have been sold physically as pointed out in your goodself abovesaid notice. The shares were sold to Robinson Worldwide Trade Ltd (now Sun and Shine Worldwide Trode
Ltd.) and were transferred to their DEMAT account under DP No.JN302269
Client ID no. 10357128 held with India infoline Limited Thane (Copy of the DEMAT Account of Purchaser is attached). (Annexure-4).
Copy of credit note confirming purchase of shares by Robinson Worldwide Trade
Limited is enclosed. (Annexure-5).
Robinson Worldwide Trade Ltd (now Sun and Shine Worldwide Trade Ltd.) has issued a certificate certifying the purchase of shares and transfer of funds which is attached. (Annexure -6)
The payment for purchase of shares and receipt of amount for sale of shares has been mode through banking channel only. We are submitting herewith the copies of bank statement of Axis Bank and PNB highlighting the receipt and payment in regard to purchase and sale of shares. (Annexure -7 and Annexure-8)
So the above trail confirms that transaction is completely genuine and as per normal practice of trade.
Further your observation that it seems company involves in penny stock is not applicable in our case and is also not correct at all. Your observation is based on fact that the price of this share of this share skyrocketed and then fell down and thus making it a Penny Stock.
We hereby submit that the share of Kappac Pharma is not Penny Stock since as per stock exchange in India the penny stocks are those that trode at a very low price less than their face value, have very low market capitalization, are mostly illiquid, and are usually listed on a smaller exchange. Penny stocks in the indian stock market con have prices below Rs 10/- whilst Kappac Pharma share was listed on Bombay Stock Exchange and that too at a good price.
And regarding the fall in share price of Kappac Pharma, we are to submit that share trading is subject to volatility and quotient of risk is always there. Kappac
Pharma is not the only company whose shares have lost value due to fall in 14
M/S Deeps Special Steels Ltd., Ludhiana.
price. There have been a number of many other established companies listed on National Stack Exchange and Bombay Stock Exchange whose shares had fost much of their value during the year. We are submitting herewith dota of some companies whose shares fell considerably during the year 2014-15. Company
High(Rs.)
Low(Rs.)
Reduction
Reliance Comm.
90
90
64%
Joiparkash Power
26.63
90
63%
Unitech
60
27
66%
Jaiparkash Asso.
85
05
74%
Lanco Infatech
94
45
70%
GVK Power
85
75
63%
Bhushan Steel
05
50
87%
This data is for some companies and there are many more companies whose shares have lost their value considerably. The details are attached. (Annexure-
9).
Since incidentally we had invested in shares of Kappac Phorma and had to incur loss due to circumstances beyond our control because the share lost much of it value, this reason cannot be formed basis for disallowing our loss.
We summarise our submissions as under:
1. The shares of Kappac Pharma, a listed company on Bombay Stock Exchange had beenpurchased in DEMAT form through stock exchange paying STT.
2. The consideration price of these shares had been paid through banking channel only.
3. The shares had been in electronic form kept in DEMAT account.
4. The shares had been sold in DEMAT farm and not physically.
5. The payment against sale of these shares had been received through banking channel.
6. The complete transaction is as per normal practice of trade.
Even for the hypothetical purpose if this share is considered to be penny stock still the trading in this share cannot be considered illegal or bogus.
There are a large no of case lows on the above issue in favour of assessee, some of which are being submitted below for your immediate reference.
Commissioner Of Income Tax-l vs Smt Pooja Agarwal on 11 September, 2017
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.8. Income Tax Appeal No. 385/2011
Commissioner of Income Tax-1, New Central Revenue Building Statue Circle,
Jaipur Vs Smt. Pooja Agarwal, 1783, Telepada, Jaipur order 11/09/2017. 1. Since both these appeals arise out of the same order, they are being decided by this common order.
15
M/S Deeps Special Steels Ltd., Ludhiana.
By way of these appeals, the appellant has challenged the judgment and order of Tribunal whereby the Tribunal has dismissed the appeal of the department the confirming the order of CIT(A). 3. This Court while admitting the Income Tax Appeal (2 of 6) | ITA-385/2011) No.385/2011 on 14.03.2012 has framed following substantial question of law: "Whether the Tribunal as well as CIT(A) were justified in deleting the addition of Rs. 98.56.872/- made by the Assessing Officer an account of bogus share transaction, which were nearly accommodation entries, made through one Shri P.K. Agarwal, who was found to be an entry provider, ignoring that the assessee in her deposition during survey specifically denying having made any share transactions in last 5 years?" 4. This Court also while admitting the income Tax Appeal No.603/2011 on 03.07.2013 has framed following substantial question of law: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the oddition of Rs. 1,06,34,000/- which was made by the Assessing Officer and confirmed by CIT(A) on account of undisclosed investment of assessee in land and simply directing to compute 10% profit on the said investment as income of the assessee, even after holding that the investment is assessee's own turnover in land dealing and not the investment made for others?" 5. However, subsequent to application which was moved by the Department, it was further amended by order dated 29.08.2017. "1.Whether the Tribunal was justified in confirming the deletion of Rs. 1,06,34,000/-which made by the Assessing Officer on account of undisclosed investment of the assessee, without giving any finding in respect of the same? 2. Whether the Tribunal as well as CIT(A) were justified in not confirming the addition of Rs. 1,06,34,000/- ignoring that the said entries were merely accommodation entries in view of exchange of cosh with broker Shri P.K.Agarwal?" (3 of 6) ITA-385/2011] 6. Counsel for the appellant has taken us to the order of AD stating that the assessee involved in jewelry business has taken entry for the purpose of converting the black money into white and referred this entry from broker, one Shri P.K.Agarwal. Entry provided from Calcutta has been taken 7. The assessee derives income from salary, copital gains and other sources. A survey under Section 133A of the Act was conducted as the business premises of M/s Royal Jewellers, Telipada of which assessee is 50% partner, on 21 st and 22nd of January, 2008, during which various incriminating documents were found and impounded wherein several unaccounted transaction were recorded.
16
M/S Deeps Special Steels Ltd., Ludhiana.
Reassessment proceedings were initiated by issuing notice under Section 147
R/W 148 of the Act. Vide Show Cause Notice the assessee was specifically asked as to why the amount of Rs. 98,56,872/- should not be treated as an accommodation entry.
8. The assessee submitted reply to the Show Couse Notice contending therein that the share transactions are genuine and the 'Short Term Capital Gain' of Rs
98,56,872/- has been earned from the purchases and sales of shores of Konark
Commercial Ltd.
And Limtux Investment Ltd. Investigation revealed that the entire share transactions were bogus and mere accommodation entries obtained from an entry provider Shri P.K. Agarwal form Kolkata.
The said fact was revealed during search carried out by the Investigation Wing,
Jaipur in the case of B. C. Purohit Group.
(4 of 6) ITA-385/2011]
9. It is pertinent to note that during the survey operation, it was admitted by the assessee that no investment in shares was made by him during the said period.
It was further found that the company M/s Konark Commercial Ltd. Was never listed in Calcutta Stock Exchange and the assessee was never its shareholder.
10. After considering the entire factual matrix the Assessing Officer held that the assessee had arranged the said accommodation entries from entry providers for converting its undisclosed money into white money and thus the amount of Rs.98,56,872/- was treated as undisclosed income of the assessee.
11. Counsel for appellant has taken us to the order of AO.
12. However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of Tribunal and contended that in view of the finding reached, which was done through Stock Exchange and taking into consideration the revenue transactions, the addition made was deleted by the Tribunal observing as under:-
"Contention of the AR is considered. One of the main reasons for not accepting the genuineness of the transactions declared by the appellant that at the time of survey the appellant in his statement denied having made any transactions in shures. However, subsequently the facts came on recard that the appellont had transacted not only in the shares which are disputed but shares of various other companies like Satyam Computers, HCL, IPCL, BPCL and Tata Tea etc.
Regarding the transactions in question various details like copy of contract note regarding purchase and sole of shares of Limtex and Konark Commerce & Ind.
Ltd., assessee's account with P.K. Agarwal & co. share broker, company's master details from