ACIT 25(2), MUMBAI vs. PRATIKSHA B SHAH, MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) This bunch of four appeals out of which the assessee

is aggrieved for Assessment Year 2005-06 and 2006-07,

whereas, in the appeals of the Revenue deleting the penalty

u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the

Act) has been challenged. First, we shall take up the appeal

of the assessee for Assessment Year 2005-06 (ITA

No.1422/Mum/2010), wherein, the assessee has filed

application under Rule 11 of the Appellate Tribunal Rules

ITA Nos. 1422 & 1423/Mum/2010, 3 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 1963 by placing reliance upon the decision from Hon'ble

Apex Court in the case of NTPC Ltd. vs CIT 229 ITR 383

(SC), which was followed by Special Bench of the Tribunal

in the case of All cargo Global Logistics Ltd. vs DCIT (ITA

Nos.5018 to 5022 and 5059/Mum/2010, challenging the

confirmation of addition of ` 69,07,803/- made by

assessment u/s 153A of the Act on the ground that no

incriminating material was found or seized during the

course of search reflecting undisclosed income. It was also

pleaded that no notice u/s 143(2) of the Act was ever

served upon/given to the assessee within the stipulated

period. The Bench asked the Ld. DR whether any notice

u/s 143(2) of the Act was given to the assessee. The Ld.

DR after going through the record fairly admitted that no

notice u/s 143(2) was given to the assessee, as is apparent

from the assessment order. Considering the decision of the

Special Bench (supra) and the decision in the case of NTPC

Ltd.(supra) from Hon'ble Apex Court, we admit the legal

ground raised by the assessee. Assessee has also filed

written submissions, copy given to the Ld. DR and such

submissions are kept on record.

ITA Nos. 1422 & 1423/Mum/2010, 4 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 2. The assessee, before us, has strongly contended

that no notice u/s 143(2) of the Act was ever served upon

the assessee. This factual matrix was fairly accepted by the

Ld. DR, therefore, in the light of this admission, we shall

examine the legality of assessment and consequent

addition u/s 153A of the Act. The facts, in brief, are that a

search and seizure operation u/s 132(1) of the Act was

carried out at the residential premises of the assessee

which lead to seizure of jewellery ` 9,27,000/-,

18/01/2007, from the locker and bundles of loose papers

marked as ‘Annexure-A1, A2 and A3’ containing the details

regarding personal activities were seized. The noting on the

loose papers had no bearing on business transaction of the

assessee in purchase and sale of the shares. Even in the

assessment order, the Ld. Assessing Officer does not make

any reference to any incriminating material or evidence

found during the course of search in relation to addition so

made. The Ld. Assessing Officer during proceedings u/s

132 made enquiries about purchase and sale of shares of

Robinson Impex India Ltd. (now known as Robinson World

Wide Trade Ltd.). These shares transactions were made

ITA Nos. 1422 & 1423/Mum/2010, 5 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah through two brokers namely M/s DPS Shares and

Securities Pvt. LTd. and M/s Pruthvi Brokers & Shares

Holding Pvt. Ltd. The purchase transaction were done

through M/s DPS shares and Security Pvt. Ltd. and the

services of M/s Pruthvi Brokers & shares Holding Pvt. Ltd.

utilized for the sale of shares. The Ld. Assessing Officer

recorded the statement of one of the director of DPS shares

and Securities Pvt. Ltd. to the effect that these transactions

were not part of the official account and only

accommodation entries were provided. On the basis of this

statement, the Ld. Assessing Officer was of the view that

the assessee obtained artificial capital gains by

manipulating share transactions. However, the

documents/ papers found and seized during the course of

search did not corroborate the conclusion arrived at by the

Officers that the transaction is shares of M/s Robinson

Impex India Ltd. were not genuine. However, the Ld.

Assessing Officer made the addition and the First Appellate

Authority confirmed the same.

2.1. So far as, the issue of legality and consequent

addition u/s 153A of the Act is concerned, we note that the

ITA Nos. 1422 & 1423/Mum/2010, 6 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah assessee filed its return of income u/s 139(1) of the Act on

12/08/2005. The Department, in terms of section 143(2) of

the Act has an option to peak up the proceeding by

issuance of notice. However, no such notice was issued by

the Ld. Assessing Officer. At the time of search on

18/01/2007, the proceedings for the impugned assessment

year had become final as the period prescribed for issuance

of notice u/s 143(2) had already expired. The relevant

extract of the provision of section 153A of the Act is

reproduced hereunder for ready reference and analysis:-

"153A. Assessment in case of search or requisition. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years ; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if

ITA Nos. 1422 & 1423/Mum/2010, 7 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah any, relating to any assessment year falling within the period of six assessment years referred to in this sub- section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, Provided that such revival shall cease to have effect, if such order of annulment is set aside." 2.2. If the aforesaid provision of the Act is

analyzed, it makes clear that it applies to a person in

whose case a search is initiated u/s.132 of the Act, 1961

or whose books of accounts, other documents or any

assets are requisitioned u/s. 132A of the Act after

31/05/2003. Section 153A of the Act provides that where

a search is initiated u/s 132 of the Act the Assessing

Officer shall "assess or reassess the total income of six

assessment years immediately preceding the assessment

year" relevant to the previous year in which the search is

conducted or requisitioned is made. The 1st proviso states

that the Assessing Officer shall "assess or reassess the total

income in respect of each assessment year falling within

such six assessment years" while the 2nd proviso states that

the assessment or reassessment relating to the said six

assessment years "pending" on the date of initiation of the

ITA Nos. 1422 & 1423/Mum/2010, 8 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah search u/s. 132 of the Act shall "abate". Therefore, in case

where assessment has been abated the Assessing Officer

can make addition even if no incriminating material has

been found during the course of search. It thus follows

that assessment or reassessments which are not pending

(concluded) on the date of initiation of search shall not

abate. Therefore when there is no abatement the AO can

frame the assessment u/s. 153A of the Act only on the

basis of incriminating material found during the course of

search. In this respect it would be useful to take note of

the following facts in the case of the assessee for the year

under consideration. The relevant dates are summarized

hereunder:-

Sr. Particulars A.Y. 2005-06 No. 1. Date of search 18/01/2007 2. Original return of income was filed on 12/08/2005 3. Order passed u/s 143(3) of the Income Tax No order Act, 1961 4. Order passed u/s 143(2) of the Income Tax 31/08/2006 Act, 1961 for framing assessment u./s 143(3) of the Income Tax Act, 1961 (twelve months from the end of the month in which the return is furnished 5. Status of Assessment date of search Concluded/Not Pending

2.3. From the above chart given it is clear that the

assessee filed the original return on 12/08/2005,

ITA Nos. 1422 & 1423/Mum/2010, 9 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah therefore, on the date of search i.e. on 18/01/2007 time

limit for issue of notice u/s. 143(2) of the Act had

expired. Therefore, there was no assessment pending in

the case of assessee for the year under consideration on

date of search and in such a case there was no question of

abatement. Thus, Assessing Officer can make the addition

only on the basis of incriminating material found during

the course of search. In case of assessee there was no such

incriminating material or evidence found during the course

of search in order to support of the addition and the alleged

addition was merely based upon the statement of one of the

directors of M/s. DPS Shares and Securities Pvt. Ltd. from

whom purchase transactions were made. However, there

was no incriminating material or evidence was found

during search. The decision of the Tribunal in the case of

Gurinder Singh Baba vs DCIT 28 taxman.com 328 (Mum.),

on identical facts, in favour of the assessee. The relevant

portion from the order (pages 269 to 277 of paper book-II)

is reproduced hereunder:-

"The assessee for assessment year 2005-06 had filed return of income on 18.08.2005 declaring total income of Rs. 9,61,000/-. Subsequently there was search conducted in case of the assessee and its family

ITA Nos. 1422 & 1423/Mum/2010, 10 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah member u/s. 132 of the Act on 05.01.2007. Consequent to the search assessment proceedings were initiated Ws. 153A of the Act. The AO during the assessment proceedings for A.Y. 2005-06 found that the assessee had credited a sum of Rs. 93,72,310/- to his capital account with narration receipt towards gifts AO observed that assessee could not prove that the assessee had received these amounts as genuine gifts. He therefore added the same u/s. 68 of the Act... In appeal CIT(A) confirmed the additions made by AO under section 68 of the Act in relation to the loan taken by the assessee. 4. We first take up the issue relating to legal validity of addition made under section 153A of the Act because this is a basic issue having a bearing on outcome of the appeal. The assessee had raised the legal dispute before CIT(A). It was submitted that under the provisions of section 153A, in case, there was a search conducted in case of the assessee the AO shall assess or reassess the total income of six assessment years immediately preceding assessment year relevant to the previous year in which the search was conducted. The section also provides that assessment or reassessment relating to the said six assessment years pending on the date of initiation of search would abate. In the present case, it was pointed out, that assessment had been processed under section 143(1) and no notice under section 143(2) had been issued. Therefore, assessment had become final and was not pending and therefore, there was no question of abatement. In such a case, no addition could be made unless there was some material found during the course of search. Since no material was found during the course of search, no addition could be made legally under section 153A of the Act in cases where assessment was not pending...... Decision of the ITAT 6.1 "The Special bench in the case of All Cargo Global Logistics Ltd. (supra), has held that the provisions of section 153A come in to operation i f a search or requisition is initiated after 31.05.2003 and on satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income for six years immediately preceding the year search. The Special Bench further held that in case assessment has abated, the AO retains the original jurisdiction as well as jurisdiction under section 153A for which assessment shall be made for each assessment year separately. Thus in case where assessment has abated the AO can make addition in the assessment, even if no incriminating material has been found But in other case the Special Bench held that the assessment

ITA Nos. 1422 & 1423/Mum/2010, 11 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah under section 153A can be made on the basis of incriminating material which in the context of relevant provisions means books of account and other document found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search. In the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pen dine in the case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search."

2.4. If the aforesaid order of the Tribunal is kept in

juxtaposition with the facts of the present appeal, we not

that a search action u/s. 132 of the Act is not meant to

disturb the completed assessment in respect of which

nothing incriminating is discovered. It is also noted that

while coming to the particular decision, the Bench duly

placed the reliance on the judgment passed by Mumbai

Special Bench of the Tribunal in the case of All Cargo

Global Logistics Ltd vs Deputy Commissioner of Income-

tax, Central Circle-44, Mumbai reported at 137 ITD 287

(Page no 193-236 of the Paper BookII). The relevant extract

of the decision is as under:

"Thus, question raised before the Special Bench No. 1 is answered as under: a. In assessment that are abated, the Assessing Officer retains the original jurisdiction as well as

ITA Nos. 1422 & 1423/Mum/2010, 12 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah jurisdiction conferred on him under section 153A for which assessments shall be made for each of the six assessment years separately. b. In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search ".

2.5. It is further noted that the Hon'ble Jurisdictional

High Court of Bombay approved the decision of the Special

Bench of the Tribunal vide order dated 21/04/2015 (Page

Nos. 237-268 of the Paper Book II). The relevant portion of

this order is reproduced hereunder:-

"29. We are not in agreement with Mr. Pinto that these observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only in relation to the legality and validity of the order of the Commissioner under section 263 of the IT Act. Had that been the case, the Division Bench was not required to trace out the history of section 153A of the IT Act and the power that is conferred there under. When Revenue argued before the Division Bench that the power under section 153A can be invoked and exercised even in cases where the second proviso to sub-section (1) is not applicable that the Division Bench was required to express a specific opinion. The provision deals with those cases where assessment or reassessment, if any, relating to the assessment years falling within the period of six assessment years referred to in sub-section (1) of section 153A were pending. If they were pending on the date of the initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessment or reassessment and which are in force on the date of initiation of the search or

ITA Nos. 1422 & 1423/Mum/2010, 13 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah making of the requisition. As that specific argument was canvassed and dealt with by the Division Bench and that is how it was called upon to interpret section 153A of the IT Act, then, each of the above conclusions rendered by the Division Bench would bind us.

be placed upon the following judicial pronouncements:-

(I) In the case of Nikki Agarwal v ACIT in ITA No

879/M/2011, the Hon'ble ITAT, Mumbai Bench (Page No.

'7

ITA Nos. 1422 & 1423/Mum/2010, 14 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 278-295 of the Paper Book-II) held as under:-

"The following grounds of appeal were raised by the assessee in C.O. No 204/M/2013: "1. The Ld CIT (A) erred in law and facts in holding that the AO was empowered to make additions in the order passed u/s 153A of the Act in respect of completed assessment even in the absence of incriminating material found as a result of search. 2. The ACIT erred in law and as well as in the facts in making addition of Rs. 34,87,500/- on account of sale proceeds of shares of Database Finance Ltd and Rs. 1,74,375/- on account of unexplained expenses relating to long term capital gain on sale of shares and Database Finance Ltd in the order passed u/s 153A even in the absence of incriminating material found as a result of search." (II) Identically, the Tribunal relying upon the

decision/s, in the case of Shri Govind Agarwal v ACTT in

ITA No 3389/M/2011 dated 10.01.2014 (1TAT, Mumbai)

has held as under:

"6. During the proceedings before us, Shri Devendra Mehta, Id Counsel for the assessee raised the above mentioned grounds and questioning the additions and the validity of the assessment u/s 153A of the Act. In this regard, Ld Counsel for the assessee submitted various arguments before us, which are common to the ones already mentioned in detail and adjudicated by us in connection with the appeals filed in the case of Shri Govind Agarwal vs. ACTT vide ITA Nos.3389/M/2011 (AY: 2002-2003) and ITA No. 3390/M/2011 (AY: 2004-2005) vide order dated 10.01.2014. For the sake of completeness of this order, relevant portions of the said order of the Tribunal (supra) are reproduced here under: .......... 17. Rajasthan High Court judgment in the case of Jai Steel

ITA Nos. 1422 & 1423/Mum/2010, 15 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah (India) (supra), vide para 18, it is categorically mentioned that "the requirement of assessment or reassessment under the said section (153A) has to be read in the context of sections 132 or 132A of the Act, inasmuch as, in case nothing incriminating is found on account of search or requisition, then the question of reassessment of the concluded assessments does not arise, which would more reiteration.............". Thus, the judgment of Hon’ble High court in the case of Jai Steel Ltd, supra and above decisions of the Tribunal are categorical in concluding that, in case of the concluded assessments like the present one, the additions are made only based on the incriminating material discovered during the search action. The facts of the Jai Steel Ltd (supra) are identical to the present one ie AO made additions by reassessing u/s 153A on the completed assessment u/s 143(1) of the Act. Thus, considering the judgment in the case of the Jai Steel Ltd (supra), the arguments on the legal issue raised before us stands covered. Therefore, considering the Raiasthan High Court judgment in the case of Jai Steels Ltd, Supra, we have no difficulty in (i) upholding the issue of notice u/s 153A of the Act and (2) in disapproving the making of the impugned additions u/s 68 and 14A of the Act, which are not backed by the incriminating materials. In the absence of incriminating material, the role of the AO is only to reiterate the returned income filed in response to the notice u/s 153A of the Act. Accordingly, in substance, the common legal issue raised in the grounds for both the appeals of the assessee (ITA NO 3389&3390/M/2011) is allowed.

ITA Nos. 1422 & 1423/Mum/2010, 16 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah

(III) In another case of B. R. Machine Tools Pvt. Ltd v

ACIT in ITA No 4174 to 41771Mum/2013 the Hon'ble ITAT

Mumbai Bench (Page Nos 296-305 of the Paper Book-II) held

as under:

"19. In the case before us, search took place on the new management and admittedly no document as such was found which indicated that there was certain income belonging to the assessee, which had not been disclosed to the department in the impugned assessment years. Since the search was on the new management, the assessee company became the person other then the person searched. In these circumstances, issue of notice u/s 153C and assessment to be framed under this provision is imperative, as the provision is non obstante. In these circumstances, the following have to be taken into consideration are

a) whether there is any incriminating material, indicating income not declared before the revenue authorities and

b) whether the assessment in any assessment years or any assessment year in which notice u/s 153C is pending. If the answer to both these questions are in the negative then the assessment to be framed shall be as per the ratio laid down in the case of Special Bench decision in the All Cargo and Delhi High Court in the case of Anil Kumar Bhatia.

ITA Nos. 1422 & 1423/Mum/2010, 17 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah because, the decision is on the issue of framing of the assessment under section 143(3)1153A, which has been accepted by the AR. The decision in Pratibha Industries, was on the issue whether the assessment framed u/s 143(3)1153C is legally correct, in case, there is no incriminating material against the assessee.

(IV) In another significant decision, the Mumbai

Bench of the Tribunal in ACIT vs Pratibha Industries Ltd.

(141 ITD 151) made an elaborate discussion by explaining

the scope of the provision (Page no 312-354 of the Paper

Book) and held as under:-

"50. We find there is complete disharmony in the circumstance, because, the Act allows six assessments years to be open vide section 153A for being assessed or reassessed to ascertain total income, therefore, the AO is bound to pass an order sunder section 153A read with 143(3), which, according the Anil Kumar Bhatia (supra), "Such determination in the orders passed under section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income ". Therefore, the AO, accordingly has to stop short in these proceedings and restrict himself to the income already determined/assessed in the already concluded

ITA Nos. 1422 & 1423/Mum/2010, 18 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah proceedings for the year(s), whether under section 143(1) or 143(3). Thus it is a case of valid notice under section 153A, with no undisclosed income to be clubbed with income originally assessed and finalized. However, it has to be added here that proceedings under section 153A are linked to the search having been initiated on the person, not with the documents found and seized, The documents so found and seized, may become useful to the AG for making an assessment of total income under section 153A read with 143(3) ". (V) Similar view was taken by the Tribunal in the

case of Neeta Doshi & Manisha Doshi in ITA No 439

and 441/[If12010 (Page No. 355-371 of the Paper

book-H) dated 30/11/2015. Identically, the Tribunal in the

case of Zeenat P. Sanghavi vs DCIT in ITA No.

8026/Mum/2010 (Page No. 372-393 of the Paper Book-II)

vide its order dated 19/12/2014 and also in the case of

Jignesh P. Shah vs DCIT in ITA No 1553 & 3173/M/2010,

vide order dated 13/02/2015. (Page No 394-405 of the

Paper Book-I1) took similar view. The Hon'ble Calcutta

High Court in LMJ International Ltd. Vs. DCIT (2008)

119 TTJ (Kol) 214 (Page No 406-418 of the Paper Book-

I1): Held that where nothing incriminating is found in the

course of search relating to any assessment years, the

assessments for such years cannot be disturbed; items of

regular assessment cannot be added back in the

ITA Nos. 1422 & 1423/Mum/2010, 19 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah proceedings under s. 153C when no incriminating

documents were found in respect of the disallowed

amounts in search proceedings. It is also noted that the

Tribunal in the case of husband (Shri Brijesh D. Shah) of

the present assessee on identical issue, vide order dated

03/02/2016 ITA Nos. 1417 to 1420/Mum/2010 (Page No.

419-427 of the Paperbook-II), decided in favour of the

assessee. The relevant portion from the order is reproduced

hereunder:-

“These are the appeals filed by the assessee against the order of Ld. CIT(A) for the assessment years 2002-03 to 2005-06, in the matter of order passed under section 153A read with section 143(3) of the Income Tax Act. 2. In addition to the grounds taken in the appeal, the assessee has taken the additional ground in the A.Y.2003-04 which reads as under: “That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.11,63,400/- in the assessment u/s 153A of the I.T. Act as no relevant or incriminating material or evidence was found or seized during the course of search reflecting undisclosed income.” 3. Similar additional grounds have been taken in all the years under consideration. On merits, the assessee has challenged the addition made on account of sale proceeds of shares under section 68 of the Income Tax Act instead of assessing the net capital gains earned thereon. 4. The additional ground so raised by the assessee is purely legal. Keeping in view the decision of Hon’ble Supreme Court in the cases of National Thermal Power Corporation, 229 ITR 383 and Jute Corporation of India Ltd., 187 ITR 688, we accept the additional ground which is purely legal in nature for adjudication. 5. Rival contentions have been heard and records perused. Facts in brief are that the assessee is an individual

ITA Nos. 1422 & 1423/Mum/2010, 20 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah earning income from salary, business, capital gains and other sources. He is an investor in shares and securities and also invests through initial public offer (IPO) or through secondary market. All gains arising from the same are offered by him as long term or short term capital gains depending on the period of holding and taxes are paid as per provisions of law. Search and seizure operations u/s 132(1) of the Income-tax Act, 1961 were carried out in premises of the assessee on the allegation that the assessee obtained artiflcial capital gain by manipulating share transactions. However, during this Search, no incriminating document, paper, evidence etc. were found or seized so as to prove or establish the said allegation. On receipts of notices u/s. 153A, the assessee filed his Returns and the Ld. A.O. completed his assessments u/s. I 53A r.w.s 143(3) on 24.12.08 by a consolidated Asstt. Order for Asstt. Years 2001-02 to 2007- 08, wherein addition was made on account of sale proceeds of shares u/s.68 of I.T. Act. 6. It was argued by Ld. A.R. that the entire assessment for all the years under appeal passed under section 153A in the assessee’s case is ultravires the provisions of the said section. The Ld. A.R. submitted that a bare perusal of section 153A makes it clear that it applies to a person in whose case a search is initiated u/s 132 of the Act, or whose books of account, other documents or any assets are requisitioned u/s 132A after 31.05.2003. Section 153A provides that where a search is initiated u/s 132 the Assessing Officer shall “assess or reassess the total income of six assessment years immediately preceding the assessment year” relevant to the previous year in which the search is conducted or requisition is made. The 1st Proviso states that the Assessing Officer shall “assess or reassess the total income in respect of each assessment year falling within such six assessment years” while the 2nd Proviso states that the assessment or reassessment relating to the said six assessment years “pending” on the date of initiation of the search under section 132 shall “abate”. It thus follows that assessments or reassessments which are not pending on the date of initiation of search shall not abate. The Ld. A.R. further drawn our attention to the following chart indicating status of assessment on the date of search

ITA Nos. 1422 & 1423/Mum/2010, 21 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Sr Particulars A.Y.2002- A.Y.2003- A.Y.2004- A.Y.2005- No 03 04 05 06 1. Date of Search 18/01/2007 18/01/2007 18/01/2007 18/01/2007 2 Original Return of 31.07.2002 30.09.2003 22.09.2004 31.08.2005 Income was filed on 3 Income declared in 31.03.2004 31.03.2005 N.A. 03.08.2006 the original return was accepted u/s 143(1) on 4 Order passed u/s No Order No Order 26.12.2006 No Order 143(3) 5 Due date for issue of 31.07.2003 30.09.2004 N.A. 31.08.2006 notice u/s143(2) for framing assessment u/s 143(3) 6 Status of Assessment Concluded/Not Concluded/Not Concluded/Not Concluded/Not on the date of search Pending Pending Pending Pending

b. In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - books of account, other documents, found in the course of search but not produced in the course of original assessment, and undisclosed income or property discovered in the course of search.”

ITA Nos. 1422 & 1423/Mum/2010, 22 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah observations are made in passing or that they are not binding on us because the essential controversy before the Bench was somewhat different. He urges that was only in relation to the legality and validity of the order of the Commissioner under section 263 of the IT Act. Had that been the case, the Division Bench was not required to trace out the history of section 153A of the IT Act and the power that is conferred thereunder. When the Revenue argued before the Division Bench that the power under section 153A can he invoked and exercised even in cases where the second proviso to sub-section (1) is not applicable that the Division Bench was required to express a specific opinion. The provision deals with those cases where assessment or reassessment, if any relating to the assessment years falling within the period of six assessment years referred to in sub- section (1) of section 153A were pending. If they were pending on the date of the initiation of the search under section 132 or making of' requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would a bate and n ot where th ere are orders made of assessment or reassessment and which are in force on the date of initiation of the search or making of the requisition. As that specific argument was canvassed and dealt with by the Division Bench and that is how it was called upon to interpret section 1 53 A of t he IT Act, then, each of the abo ve conclusions rendered by the Division Bench would bind us.

There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words "search" and "requisition" appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the

ITA Nos. 1422 & 1423/Mum/2010, 23 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah conclusion reached by the Division Bench in Murli Agro (supra) with which we respectfully agree. These are the conclusions which can be reached and upon reading of the legal provisions in question.

ITA Nos. 1422 & 1423/Mum/2010, 24 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah LMJ International Ltd. 119 TTJ 214 wherein it was held that where nothing incriminating is found in the course of search relating to any assessment years, the assessments for such years cannot be disturbed. Items of regular assessment cannot be added back in the proceedings under s.153C when no incriminating documents were found in respect of the disallowed amounts in search proceedings.

ITA Nos. 1422 & 1423/Mum/2010, 25 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 13. Reliance was also placed on the decision of the ITAT Delhi Bench in case of Rubber Enterprises Pvt. Ltd. 88 ITD 95 wherein it was held that onus of proof that commission paid was genuine, the assessee should miserably failed to demonstrate that services were rendered to it and failed to discharge onus, therefore not entitled to deduction to commission paid. Reliance was also placed on the decision of Rajesh Jhaveri Stock Brokers Pvt. Ltd. in support of the proposition that intimation under section 143(1)(a) cannot be treated an order by issuing and there being no issue under section 143(1)(a), the question of change of opinion does not arise. The Ld. D.R. also relied on the decision of the Hon’ble Supreme Court in the case of Calcutta Knitwears 43 taxman.com 446, Sujit Singh Chavra order dated 25.10.96.

ITA Nos. 1422 & 1423/Mum/2010, 26 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah and 2005-06 and u/s 143(3) of the Act for A.Y. 2004-05 prior to the date of search. As per the chart of status of assessment on the date of search, as referred above in para 6 of the order no assessment as such could be said to be "pending" on the date of initiation of search and as such, could not he said to have “abated" in the light of the contextual and harmonized reading of the second proviso to section 153A(l) of the Act. However, for A.Y. 2005-06 on the date of search the time limit for issue of notice u/s 143(2) had expired and as such no proceeding could be initiated for the said year which implies that the said assessment was not pending on the date of search. Now, applying the principle of law laid down by the ITAT Special Bench in the case of All Cargo Global Logistic Ltd. (supra), 137 ITD 287, which was confirmed by the Hon’ble Bombay High Court vide its order dated 21-4-2015, to the facts of the instant case, we can reach to the conclusion that no assessment was pending and since no incriminating material was found during the course of search, the additions so made were not justified. Our view is also supported by the decision of coordinate bench (Bombay) in case of Shri Gurinder Singh Bawa (supra), Pruthvi Industries (supra), V.R.Machine Tools Pvt. Ltd. (supra) and in the case of Zeenat P. Sanghavi (supra), as discussed above.

husband of the assessee, which is also part of the same

search and seizure operation u/s 132(1) of the Act and

that too on identical facts/issue clearly held that no

ITA Nos. 1422 & 1423/Mum/2010, 27 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah incriminating material was found during the course of

search, consequently, the addition made u/s 153A of the

Act, when the assessment was not pending, is not justified.

The Ld. DR did not dispute this factual matrix. Applying

the ratio/principle laid down in the case of All Cargo

Logistic Ltd. (supra), which was confirmed by Hon'ble

jurisdiction High Court, vide order dated 21/04/2015, we

can reach to the conclusion that no assessment was

pending and since no incriminating material was found

during search, the addition so made was unjustified. Our

view also find support in the case of Gurinder Singh Baba

(supra), Pruthvi Industries 141 ITD 151, V.R. Machine

Tools Pvt. Ltd. (ITA No.4174 to 4177/Mum/2013), Zeenat P

Sanghvi (ITA No.8026/Mum/2010) order dated

19/12/2014 and Jignesh P. Shah (ITA No.1553 and

3173/Mum/2010) order dated 13/02/2015 along with the

decision of the Coordinate Bench in the case of LMU

International Ltd. (119 TTJ 214). The sum and substance

and the ratio laid down in the aforesaid cases is that,

where no incriminating material is found during the course

of search relating to any Assessment Years, then the

ITA Nos. 1422 & 1423/Mum/2010, 28 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah assessment for such year cannot be disturbed.

Uncontrovertedly, no incriminating material was found,

therefore, respectfully following the aforesaid decisions,

this legal issue is decided in favour of the assessee.

since, the issue is common for Assessment Year 2005-06

and 2006-07, it can be disposed off by this common order.

The facts, in brief, are that originally for both the years

under consideration, the details are summarized as

under:-

Sr. A.Y. Date of Total Date of Date of Total No. filing income as notice filing Income original per issued u/s return u/s as per return original 153A 153A return return u/s 153A 1. 2005- 12.08.2005 NIL 07.02.2008 07.03.2008 NIL 06 2. 2006- 04.10.2006 16,56,982 07.02.2008 07.03.2008 16.56,982 07

3.1. The Ld. Assessing Officer framed assessment

u/s 153A r.w.s 143(3) of the Act, by passing consolidated

order for Assessment Year 2001-02 to 2007-08, on

24/12/2008, determining the total income of the assessee

at different figures making the following additions:-

ITA Nos. 1422 & 1423/Mum/2010, 29 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Grounds A.Y. 2005-06 A.Y. 2006-07 `65,78,860/- Addition on account of alleged bogus long term 15,23,130/- capital gains on sale of shares of Robinson Impex Ltd. Addition on account of alleged expenditure ` 3,28,943/- 76,156/- incurred from undisclosed source towards purchasing commission towards purchasing the shares Total additions ` 69,07,803/- `15,99,286/-

3.2. Against the aforesaid decisions, the assessee

filed appeal before the First Appellate Authority, wherein,

the additions were confirmed as unexplained cash credit

u/s 68 of the Act and the addition of `65,78,860/-

(Assessment Year 2005-06) and ` 15,23,130/- (Assessment

Year 2006-07) on account of alleged bogus long term

capital gains on the sale of shares of Robinson Impex Pvt.

Ltd., it is noted that the assessee challenged the additions

before the Ld. First Appellate Authority under different

section, whereas, the Ld. Assessing Officer made addition

of the aforementioned amounts and the First Appellate

Authority confirmed the same as unexplained cash credit

u/s 68 of the Act. No cross objection or cross appeal has

been filed by the Revenue against confirmation of additions

under different section by the First Appellate Authority.

The whole issue revolves around whether, the impugned

ITA Nos. 1422 & 1423/Mum/2010, 30 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah amounts of `65,78,860/- (Assessment Year 2005-06) and

` 15,23,130 (Assessment Year 2006-07), being sale

proceeds of shares of M/s Robinson Impex Ltd. can be

treated as unexplained cash credit u/s 68 of the Act. The

assessee purchased 50000 shares of M/s Robinson World

Wide Trade Ltd. (formerly known as M/s Robinson Impex

(India) Ltd.) for `76,052/- through M/s DPS shares and

Securities Pvt. Ltd. (BSE Clearing No. 151, SEBI

Registration No. INB010986539), the copies of bill for the

purchases as well as the ledger copy of broker are available

at pages 121 to 123 of the paper book. The purchase of

these shares was duly reflected by the assessee in the

balance sheet for Assessment Year 2004-05, filed along

with return of income of the said year. The copy of the

return of income and list of investment for Assessment

Year 2004-05 was filed with the income tax return

reflecting 50000 shares of M/s Robinson Impex Ltd. are

available at pages 124 to 129 of the paper book. The Bench

asked the ld. counsel for the assessee with respect to

source of the purchase cost of shares, it was explained that

cost was settled against the sale proceeds of shares of M/s

ITA Nos. 1422 & 1423/Mum/2010, 31 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Pan Packing of ` 93,919/- sold by the assessee during

Financial Year 2003-04 (relevant to Assessment Year 2004-

05) through the same broker, which was purchased in

Financial Year 2002-03 and which was duly reflected in

the balance sheet of Financial Year 2002-03 (relevant to

Assessment Year 2003-04) under the head ‘Investment in

shares’. To substantiate its claim, the ld. counsel for the

assessee invited our attention to pages 129.1 to 129.6 of

the paper book containing the copy of the sale bill along

with contract note, list of investment for Assessment Year

2003-04, evidencing the shares of Pan Packing and

statement of Short Term Capital Gain/Loss for Financial

Year 2003-04. The shares of M/s Robinson Impex (India)

Ltd. were purchased in physical form and duly transferred

in the name of the assessee. The face value of these shares

was ` 10 each and shares certificate were received in lot of

100 shares. The details of physical share certificate of

50000 shares (giving the certificate numbers, distinctive

numbers, folio numbers and number of shares along with

sample copy of one certificate of 100 shares is available at

pages 130 to 131.10 is available at paper book). The ld.

ITA Nos. 1422 & 1423/Mum/2010, 32 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah counsel explained that, thereafter, the assessee applied for

consolidation of all the small certificate of 100 shares each

into one jumbo certificate of 50000 shares, which was

received from the company, which is bearing distinctive

numbers 1293001 to 1343000, certificate no.75084, folio

number T 82 and the correspondence letter from the

company are available at pages 132 to 133 of the paper

book. It was also asked by the Bench from the ld. counsel

for the assessee whether all these documents were made

available to the ld. Assessing Officer/Ld. Commissioner of

Income Tax (Appeal). It was specifically explained that

these documents were very much made available before

both the authorities. It was also explained that the

assessee had D-mat account with Oriental Bank of

Commerce (formerly Global Trust Bank) with client ID

No.80055254 in which these shares were dematerialized

on 21/09/2004 for which our attention was invited to copy

of the De-mat statement showing dematerialization of

50000 shares of M/s Robinson Impex India Ltd. and sale

through M/s Pruthvi Brokers and Shares Holdings Pvt.

Ltd. during Financial Year 2005-06 (pages 135 to 138 of

ITA Nos. 1422 & 1423/Mum/2010, 33 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the paper book). It is noted that out of these 50000 shares

(purchase in Financial Year 2003-04) 43000 shares were

sold on different dates during relevant Financial Year

2004-05 and balance 7000 shares were sold on different

dates during Financial Year 2005-06 relevant to

Assessment Year 2006-07. All these shares (50000) were

sold through M/s Pruthvi Brokers and Shares Holdings

Pvt. Ltd. resulting in Long Term Capital Gain of `

65,135,500/- and ` 15,12,490/-. The details of which are

summarized hereunder:-

Date Broker’s Name Purchase Purchase Sale Sale (Qty.) (Amt.) (Qty) (Amt.) 04.04.2003 DPS Shares & 43,000 65,360 Securities Pvt. Ltd. Sale of Shares in A.Y. 2006-07 04.04.2003 Pruthvi 1,000 1,94,088 Brokers & Shareholders Pvt. Ltd. Pruthvi Brokers & 4,200 7,22,231 Shareholders Pvt. Ltd. 3,79,575 Pruthvi Brokers & 2 000 Shareholders Pvt. Ltd. Pruthvi Brokers & 3,000 5,68,080 Shareholders Pvt. Ltd. 7,500 14,39,935 Pruthvi Brokers & Shareholders Pvt, Ltd. Pruthvi Brokers & 5,700 9,98,369 Shareholders Pvt. Ltd. 1,400 2,34,822 Pruthvi Brokers & Shareholders Pvt. Ltd. Pruthvi Brokers & 1,000 1,03,600 Shareholders Pvt. Ltd. Pruthvi Brokers & 7,500 8,16,925 Shareholders Pvt. Ltd. Pruthvi Brokers & 9,500 11,21,235 Shareholders Pvt.

ITA Nos. 1422 & 1423/Mum/2010, 34 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Ltd. Total 43,000 65,360 43,000 65,78,860 Long Term Capital Gain 65,13,500

Date Broker’s Name Purchase Purchase Sale Sale (Qty.) (Amt.) (Qty) (Amt.) 04.04.2003 DPS Shares & 7,000 10,640 Securities Pvt. Ltd. Sale of Shares in A.Y. 2006-07 26.05.2005 Pruthvi Brokers & 1,000 2,16,580 Shareholders Pvt. Ltd. 2,000 4,37,180 27.05.2005 Pruthvi Brokers & Shareholders Pvt. Ltd. 01.06.2005 Pruthvi Brokers & 3,000 6,53,340 Shareholders Pvt. Ltd. Pruthvi Brokers & 06.06.2005 Shareholders Pvt. Ltd. 1,000 2,16,030 7,000 10,640 7000 15,23,130 Total Long Term Capital Gain 15,12,490

3.3. M/s Pruthvi Brokers and Shares Holdings Pvt.

Ltd. is listed on Bombay Stock Exchange (BSE) under scrip

code no 532154. The broker is assessed to income tax

having PAN-AABCP3901B, SEBI registration

No.INB011059830, clearing no.529, Service Tax

No.AABCP3901BST001. Copies of sale bills issued by the

broker are available at pages 138.1 to 138.15 (Assessment

Year 2005-06) and 138.18 to 138.21 (Assessment Year

2006-07). The ledger copy in the paper books of Pruthvi

Brokers and Shares Holdings Pvt. Ltd and confirmation of

sale from the broker are available at pages 138.16 to

138.17 (Assessment Year 2005-06) and 138.22 to 138.25

ITA Nos. 1422 & 1423/Mum/2010, 35 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah (Assessment Year 2006-07) of the paper book. The pool

account of M/s Pruthvi Brokers and Shares Holdings Pvt.

Ltd. having client ID No.80055254 with Oriental Bank of

Commerce, showing delivery of shares of M/s Robinson

Impex Ltd. to the pool account and subsequently delivery

of shares from this pool account to Bombay Stock

Exchange on sale of shares is available at pages 141 to 152

(Assessment Year 2005-06) and 167 to 171 (Assessment

Year 2006-07) is available in the paper book. The relevant

copies of trade files received by M/s Pruthvi Brokers and

Shares Holdings Pvt. Ltd., from BSE, for the settlement

period confirming the sale transactions of M/s Robinson

Impex Ltd. under client Code No.D003 are available at

pages 153 to 166 (Assessment Year 2005-06) and 172 to

175 (Assessment Year 2006-07). All these evidences

clearly fortifies the claim of the assessee regarding

genuineness of sale transaction. As explained by the ld.

counsel for the assessee, these documents were duly made

available to Ld. Assessing Officer as well as to the First

Appellate Authority. It is noteworthy that the sale

proceeds were duly received by the assessee by way of

ITA Nos. 1422 & 1423/Mum/2010, 36 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah account payee cheque, which were credited in HDFC Bank,

Account No. 0601330003532 of the Fort Branch of HDFC.

Copies of bank statement are available at pages 176 to 177

of the paper book. The assessee claimed Long Term Capital

Gains of ` 65,13,500/- (Assessment Year 2005-06) and

`15,12,490/- (Assessment Year 2006-07) and claimed

exemption of the same u/s 10(38) of the Act. The Ld.

Assessing Officer disbelieved the clinching evidences and

made addition by placing reliance upon the statement

recorded on 18/01/2007, before the investigation wing, of

Shri Pratik C. Shah, director of M/s DPS Shares &

Securities Pvt. Ltd. and by the Assessing Officer on

18/11/2008 by tendering that the purchase bills and the

contract notes in respect of 50000 shares were off market

and were not registered with BSE, therefore, these are

bogus accommodation bills. This statement of Mr. Shah

has been reproduced in the assessment order and heavily

relied upon by the Ld. Assessing Officer while making the

addition. Relying upon the statement the Ld. Assessing

Officer made the following conclusion:-

I. The assessee was not able to produce the parties from

ITA Nos. 1422 & 1423/Mum/2010, 37 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah whom the purchase and sales of share transactions were made and prove the genuineness of transactions, particularly purchase party M/s DPS Share & Securities Pvt. Ltd. (Para 4.1 of the Assessment Order). II. The assessee has not been able to prove from whom it has purchased the shares of M/s Robinson Worldwide. (Para 10.2.1 of the Assessment Order). III. The assessee has not been able to prove from whom it has received physical delivery of shares of M/s Robinson Worldwide in light of the statement of M/s DPS Share & Securities Pvt Ltd (Para 10.2.2 of the Assessment Order). IV. It has not been able to prove with documentary evidence the actual date on which it has received physical delivery of shares since the de-mat delivery of shares has been received near about the date of sale of shares (Para 10.2.3 of the Assessment Order) V. The plea of the assessee that around 4-5 years back it was not mandatory to conduct transactions on the BSE is an afterthought. Moreover the assessee has not filed any documentary evidences to prove whether it had received any such permission from BSE for off market transactions (Para 10.2.4 of the Assessment Order) VI. Enquiries were conducted by issuing notice u/s 133(6) of the Act with the purchase broker. (parts 9 of the Assessment Order). No inquiry was however made in the case of sales broker M/s. Pruthvi Brokers & Shareholdings Pvt. Ltd. VII. With regards to the alleged commission at 5 percent, the Assessing Officer relied on the decision of Sumati Dayal reported at 214 ITR 801 to state that it is apparent that when the assessee has obtained artificial

ITA Nos. 1422 & 1423/Mum/2010, 38 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah capital gain he would have to pay some sort of compensation to the operators since the operators have carried out this illegal activity at a large scale. Further, reliance was placed on the order of the CIT(A) in the case of Shri Ashok Mehta wherein the CIT(A) had confirmed payment of commission at the rate of 5 percent. (Para 10.2.5 of the Assessment Order). 3.4. On appeal, before the Ld. Commissioner of

Income Tax (Appeal), the facts were considered and

broadly, following conclusion was arrived at by the First

Appellate Authority.

I. The Ld. CIT(A) has discussed the modus operandi adopted by operators in general for fabricating share transactions resulting in artificial/bogus capital gains. II. The director of Mis. DPS Shares & Securities Pvt. Ltd., Shri Pratik Shah in his statement u/s. 131 of the Act has stated that the transactions of shares of M/s. Robinson were not genuine. III. The purchase of shares was not made through banking channels and was shown through speculation income. IV. Neither brokerage nor service charges were charged on speculation transactions nor on purchase of shares of Mis. Robinson. V. In the contract notes, the assessee/client PAN is not mentioned. VI. The statement of Shri Sujal C. Shah recorded u/s. 131, director of M/s. DPS Shares & Securities Pvt. Ltd., reconfirms that the assessee had not purchased shares of MIs. Robinson. VII. Further, the assessee was allowed to cross-examine M/s. DPS Shares & Securities Pvt. Ltd. and the broker MIs. DPS Shares & Securities Pvt. Ltd. conceded that all

ITA Nos. 1422 & 1423/Mum/2010, 39 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the bills and contract notes including the shares of M/s. Robinson issued by them were for accommodation purposes. VIII. Enquiries were made from BSE which shows and 'Trade Files' of the broker M/s. DPS Shares & Securities Pvt. Ltd. was shown to the assessee wherein the transactions of speculation gains, which were the source of purchase of shares of M/s Robinson Worldwide Trade, were not reflected. 3.5. If the observation made in the assessment order,

leading to addition made to the total income, conclusion

drawn in the impugned order, material available on record,

assertions made by the ld. respective counsel, if kept in

juxtaposition and analyzed, now question arises whether

the sale proceeds of shares of Robinson Worlwide Ltd. can

be treated as unexplained cash credit u/s 68 of the Act for

the years under consideration, it seems that the whole

addition was made by the Assessing Officer and confirmed

by the Ld. Commissioner of Income Tax (Appeal) is based

upon the statement of the Directors of M/s DPS Shares &

Securities Pvt. Ltd., the Ld. Assessing Officer has also

considered the statement of Shri Sujat C. Shah u/s 131 of

the Act dated 18/01/2007 (page-19 of the assessment

order), which is reproduced hereunder for analysis:-

"Q. 1. Please identify yourself Please also confirm that an

ITA Nos. 1422 & 1423/Mum/2010, 40 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah oath has been administered on you and the consequences of giving a false statement is explained to you. Ans. I am Sujal Chandrakant Shah, S/o. Mr. Chandrakant K. Shah. I confirm that an oath has been administered on me and the consequences of giving a false statement has been explained to me. Q. 2 What are your sources of income? ANs: Stock Brokerage. Q.3 Please explain it in detail. Ans. My card is suspended by BSE, I have taken NSE terminal-ship from one of the NSE broker, who charges me 1.5% brokerage, in return, I charge my various clients 3.0%. Q. 4 Please give the name of the broker for whom you are doing trading business. Ans. Excel Mercantile Private Ltd. He is a NSE broker. Q. 5 Since when you have started this brokerage business? Ans. I started this in June, 2006. Before that I used to trade on my terminal for various clients. Q. 6 Other than the so called brokerage business done by you, have you ever undertook any other type of business in shares in any other manner. if so, please described in details. Ans. Apart from this for the year 2003-04 and 2004-05, we had issued off-market purchase bills in the year 05-06. Q. 7 To whom for and in what scrips you had been indulging in off-market operations? Ans. Mr. Naresh Jain & Naresh Saboo having office at Blue Moon Chambers, N M Road, Fort, Mumbai — 400001. On knowing that we were in financial crunch and to facilitate our market obligation i.e. Pay-in of BSE, approached us and asked that they would be helpful to us financially, provided we give accommodation of bills to their clients. Q. 8 Who gives the name of clients and how they came into contact with you? Ans. We have no direct contact with the beneficiaries. Mr. Naresh Jain & Naresh Saboo used to give the name of

ITA Nos. 1422 & 1423/Mum/2010, 41 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah beneficiaries with addresses to us and as desired by them, we used to give off market bills/accommodation bills. Q. 9 Please state whether these bills were genuine? Ans. These transactions were not on the BSE terminal, and hence were not genuine. Q. 10 Please explain the modus operandi adopted by you, for the above off-market/non genuine transaction and in what way the beneficiaries are benefited? Ans. As stated above, this transaction were only accommodation bills, given by us in the name of ultimate beneficiaries, as required by Shri Naresh Saboo and Shri Naresh Jain. We have never handed over these bills to the beneficiaries directly. In fact, we won't be able to recognize the beneficiaries to whom we have issued the bills. We are not in a position even to give the distinctive numbers of the shares, as in reality, no transaction was done on the BSE floor. Q. 11 Whether the shares were listed on the BSE? Ans. These shares were not traded on the floor on BSE, as these shares were not listed on BSE. In the year 2003-04 and 2004-05 (F. Y), this companies were not listed in BSE. But the said companies were listed in BSE in 2005-06. I want to further clariji that when we issued the purchase bill at that time, the company was not listed in BSE." Q. 12 Please state, the name of the companies, for which you have issued bogus bills, as per the requirement of Shri Niaresh Saboo and Shri Naresh Jain or any other person. Ans. We have issued the bogus bills on the instructions of Mr. Naresh Jain and Naresh Saboo in only one company, which is M/s. Robinson Worldwide Ltd. Apart from this, I have issued some bills in M/s. Fasttract Entertainment Ltd. as per the directions from Mr. Sirish C. Shah, having address at Meghdoot Apt., Fourth Floor, Marine Drive, Mumbai. Q. 13 What is the quantum of shares of M/s. Robinson Worldwide Ltd and Ws. Fasttract Entertainment around 8-10 lac shares. Ans. As this matter is old, I don't exactly remember the

ITA Nos. 1422 & 1423/Mum/2010, 42 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah quantum, but as per my memory, in M/s. Robinson Worldwide Ltd around 40 lac shares, and in Fasttrack Entertainment around 8 — 10 lac shares. Q. 14 Have you maintained any register for the above operation? Ans. We have maintained the details in computer. I am submitting herewith a hard and soft copy of the documents/data for your perusal. Q. 15 Had you been accepting or paying cash regarding the above transactions from anybody? Ans. I have not accepted or paid any cash regarding the whole operation from anybody, except for the commission @ one paise per share, in cash from Shri Naresh Saboo and the same amount of one paise per share was received by us from Mr. Sirish C. Shah s/o. Mr. Chandulal Shah. Q. 16 From the data furnished by you, it is seen that you have given quantity of shares and rate only. However, no information is available about the sales. Please explain the same. Ans. As stated earlier, my work was limited to the extent of issuing of purchase bill as per the requirement of Shri Naresh Saboo to the ultimate beneficiaries, who are known only to Shri Naresh Sabo°. Jam not aware, at what rate and when the ultimate beneficiaries have sold these shares. Hence these data are not available with me. Q. 23 I once again draw your attention to the statement, given above by you that you have issued bogus purchase bills and in very few cases, sales hills are also especially as per the requirements of Shri Naresh Saboo and Naresh Jain, you have further stated that you have not been issued the bills directly to the beneficiaries and even you have not accepted or paid/given any cash Do you confirm the same? Ans. Yes I do confirm what I have stated above." 3.6. It is also noted that the Ld. Assessing Officer

also place reliance upon the statement dated 18/11/2008,

recorded u/s 131 of the Act, of Shri Pratik C. Shah and

ITA Nos. 1422 & 1423/Mum/2010, 43 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah thus the whole addition is based upon both these

statements, but at the same time, no evidence was brought

on record by the Ld. Assessing Officer, corroborating the

statements, ignoring the documents/evidences filed by the

assessee, which are summarized hereunder:-

ITA Nos. 1422 & 1423/Mum/2010, 44 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 3.7. Totality of facts clearly indicates that the sale of

shares by the assessee and getting the sale proceeds by

cheque is not in dispute. The assessee got the shares de-

mated in the BSE, which is also not in dispute. The

source of investment in the shares, as mentioned earlier,

in earlier paras of this order is also explained by the

assessee. Under these circumstances, it is an accepted

principle of law that documentary evidence has to give

precedence over the oral statement unless and until it is

corroborated with documentary evidence. The whole case

of the Revenue is based upon the statements, which is not

corroborated with facts. Thus, we are of the view that

addition cannot be sustained merely on the basis of

statement ignoring the documentary evidences brought on

record by the assessee. Our view finds support from the

decision from Hon'ble jurisdictional High Court in the case

of CIT vs Shri Om Prakash Jain ITXA no 1242 of 2008

(Born) where in the Hon'ble Bombay High Court has held

as under (Page Nos 428-431 of the Paper Book -II). The

relevant portion from the aforesaid order is reproduced

hereunder:-

ITA Nos. 1422 & 1423/Mum/2010, 45 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 6. On behalf of the assessee, the learned counsel submits that when there was documentary evidence available, it was open to the learned Tribunal to come to the conclusion that the statement of the assessee which was retracted were given under duress or coercion. It is further submitted that in the case of Sanjay Jam, the Tribunal proceeded on the footing that the documents were produced and in these circumstances, deleted the additions. No fault can be found with this approach of the Tribunal. 7. In so far as other assesses are concerned, it is pointed out that the documentary evidence was available before the A. 0. but the A. 0. and CIT(A) have not considered the same and the matter has been remanded back for reconsideration. 8. After hearing the learned counsel, we are of the opinion that the order of the Tribunal cannot be sustained, in the first instance apart from the retracted statement of 21.1.2004, subsequent statement made on 25.3.2004 has not been considered Secondly, there was documentary evidence on record The A. 0. while considering whether the retraction was under duress or coercion had also to consider the genuineness of the documents which were produced as this is documentary evidence. The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind The A.O. will have to comply with the settled principle of law. Documentary evidence ifgenuine must prevail over the oral statement. We however, do not propose to go into these issue as they have not been considered or answered. We propose to remand the matters for fresh consideration of the A. 0. on all these aspects.

3.8. Likewise, the Hon'ble Calcutta High Court in

the case of Chandrakant N. Seth (2004) 89 TTJ (Cal)

417(Page Nos. 432-441 of the Paper Book - II) held that

"In the absence of any link or nexus established by the A 0, either directly or circumstantial evidences so as to conclusively show that D was carrying on business for an on behalf of the assessee, AO was not

ITA Nos. 1422 & 1423/Mum/2010, 46 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah justfled in treating D as benamidar of assessee only on the basis of contrary oral statement of D and making addition in the hands of assessee." 3.9. Likewise, the third member Bench of the

Delhi Tribunal in India Seed House Vs. ACIT (2000) 69

TTJ (Del) (TM) 241(Page Nos 442-472 of the Paper Book

- II): held as under:

"Search & seizure — Block assessment — Computation of undisclosed income — AO made addition of peak investment on unaccounted sales on the basis of statement of P, managing partner of assessee firm — However, assessee is able to prove from a seized paper itself that it was making purchases on credit and was making payments from realization of sales — Such paper cannot be ignored — There is no material with the AO to arrive at the figure of peak investment — Said paper falsifies the statement given at the time of search — No addition can be made merely on the basis of statement which is fully proved to be incorrect Thus there was no justification for making any addition on estimate basis."

3.10. If the aforesaid judicial pronouncements are

kept in juxtaposition with the facts of the present appeal

and analyzed, It is to be noted that both the directors of

the broker, M/s. DPS Shares & Securities have stated that

the alleged accommodation entries have been issued by

them on the instructions of third persons, Shri Naresh

Saboo and Slui Shirish C. Shah. These statements are

general in nature and no reference has been made to the

assessee at all. Further, in his statement, Shri Pratik C.

ITA Nos. 1422 & 1423/Mum/2010, 47 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Shah has stated that he had not charged any service tax

on the said transactions and has not paid service tax to

the government. This shows that the broker, M/s. DPS

Shares 8z Securities is an interested party and therefore

no reliance can be placed on their statement. At this

juncture, it would also be relevant to refer to the

judgment of the Hon'ble Mumbai Tribunal in the case of

Sri Bhagvandas Gordhandas Vs. DCIT in ITA No.

5021/Muni196 (Page Nos 473-498 of the Paper Book —II)

rendered under somewhat similar circumstances. In the

said case, the assessee Sri Bhagwandas Gordhandas

(BG), proprietor of M/s. Bhagwandas Gordhandas

(MBG) was engaged in the business of share broking,

share jobbing and trading in shares. A search was

conducted in the case of a broker M/s. T.H. Vakil (MTHV)

in August 1992. During that search, Sri Rajcn C. Vakil

(RCV), prop of MTHV admitted about transferring of

hawala losses to a number of share brokers, including the

assessee-assessee. Relying on the admission/ statement

of RCV, the A.0 treated nine transactions of the assessee

with MTHV to be non-genuine and meant simply for

ITA Nos. 1422 & 1423/Mum/2010, 48 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah transferring fictitious speculation losses aggregating to

Rs. 59,41,5001- to the assessee. Given the aforesaid

facts, the Hon'ble Tribunal at para 27 of the order ruled as

under:

“ ....the deponent or declarant is himself tainted in as much as he himself is involved in the transactions and his above statement partakes the nature of a self- explanatory statement In the circumstances an important characteristic, so essential for reliability of statement of the deponent, of being uninterested or non- interested, which, lends credence, based on impartiality, to the deposition gets lost. As a result merely a bare statement of such a tainted, deponent, may not justifiably be treated as sufficient enough to fasten the liability on another person, say assessee, when that another person (assessee) is denying the facts contained in that statement and is alleging the same to be incorrect.

3.11. In the light of the foregoing decision/findings of

various judicial authorities, there is no dispute that the

assessee had purchased the shares of M/s. Robinson

Worldwide Trade Limited for which the assessee has

submitted the purchase bills & ledger account of the

purchase broker. The assessee had settled the purchase

cost against the sale proceeds of shares of MIs. Pan

Packaging of Rs. 93,919/- sold during the F.Y 2003-04

ITA Nos. 1422 & 1423/Mum/2010, 49 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah relevant to A.Y. 2004-05. The said transactions and even

the purchases have been accepted by the Department

while passing the order u/s. 153A r.w.s. 143(3) of the Act

for A. Y. 2004-05. Originally, the shares were issued in

physical format which got transferred in assessee's name

on 14.06.2003. The said fact can be ascertained from the

letter received by the assessee from MIs. Robinson

Worldwide Trade Limited. The shares of the assessee were

consolidated and the assessee was issued Jumbo share

certificate. Thereafter, the said shares were dematerialized

to de-mat account of the assessee held with Oriental Bank

of Commerce (formerly known as Global Trust Bank). Such

de-mated shares were sold through M/s. Pruthvi Brokers

& Shareholdings Pvt. Ltd. as can be seen from the sale bills

submitted by the assessee. Further, the payments for the

sale of said shares have been received by the assessee

through account payee cheques. The Assessing Officer

has further relied on the so-called cross-examination

conducted in the case of the assessee. First and foremost,

it is submitted by the assessee that directors of the broker,

M/s. DPS Shares & Securities Pvt. Ltd. have nowhere

ITA Nos. 1422 & 1423/Mum/2010, 50 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah specifically stated in their respective statements that they

have issued accommodation entries to the assessee.

There is no live link between the statement and the

assessee. They have simply stated that they issued

accommodation entries on instructions of certain third

parties. Further, no statements of such third parties have

been confronted to the assessee. In such a case, no

question of cross-examination of the broker arises

when there is no specific statement with regards to the

assessee.

3.12. It is further noted that the alleged cross-

examination as held was not conducted in context of the

assessee. During the course of cross-examination

proceedings, the purchase documents which have been

stated to be accommodation bills pertain to Shri Brijesh

D. Shah and which do not belong to the assessee. The

relevant extract of said statement is extracted hereunder: "Q. 5 I am showing you the contract note and bill for purchase of shares of Robinson Impex issued by your company to Shri Brijesh Shah and Sint. Pratiksha Shah, Late Shri Shreevallabh Damani and Smt. Saroj Devi Damani, For e.g. bills as under:

Bill date Name of the Party Quantity Amount Bought/Sold

ITA Nos. 1422 & 1423/Mum/2010, 51 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 04/04/03 Brijesh D. Shah 79500 120840 Bought

This contract note/bill is in the name of Shri Brijesh Shah, issued by your company M/s. DPS Shares & Securities P. Ltd. Please confirm whether you have issued this and who has signed the said contract note/bill. Whether he is authorized to sign. Ans. This bill and contract note are given by our company to Brijesh Shah and others which are off market and not registered with the BSE. The contract is not signed by any of the Directors. Q. 7 I am showing you the ledger copy of Sh Brijesh Shah issued by DPS Shares and Securities Pvt. Ltd. for F. Y. 2003-04 Ans. Yes. This is our ledger copy. Q. 17 You have said in your statement dated 21/11/08 that you charge service tax but not paid to government. Is it true? Ans. Yes. I have collected service tax from the client on his contract note and not paid to the government as these transactions were not done on the floor and were off market and not genuine so we did not pay the service tax to the government. In the bill of Shri Brijesh Shah we have not collected the service tax." 3.13. Undisputedly, the so-called cross-

examination was not conducted with regards to the

assessee, but was conducted in the case of Shri Brijesh

D. Shah. The Hon'ble Mumbai Tribunal in the case of

Shri Brijesh D. Shah has decided the case in favour of

ITA Nos. 1422 & 1423/Mum/2010, 52 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the said assessee in ITA Nos. 1417 to 1420/Mum/2010

(Page No. 419-427 of the Paperbook-II) dated

03/02/2016. It is worth mentioning that the Assessing

Officer as well as the Ld. CIT(A) has not doubted the

sales made by the assessee through d-mat account. It is

a fundamental principle that there cannot be a sale

without a purchase. Therefore, the fact of purchase

made by the assessee cannot be doubted as the same

has ultimately been resulted in conversion of shares in

electronic form and credit of the same in the D- mat

account. Once the shares are credited to the D-mat

Account sales are effected through the stock exchange.

The Assessing Officer has not brought out anything to

remotely suggest that the sales made by the assessee are

not genuine. In such a situation, reliance can be placed

on the judgement of Hon 'Me Jharkhand High Court in

the case of CIT vs. Arun Kumar Agarwal (HUF) & Others

in Tax Appeal No. 4 of 2011 dated 13.07.2012 (Page No.

499-508 of the Paperbook-II) wherein the Hon'ble High

Court held as under:

ITA Nos. 1422 & 1423/Mum/2010, 53 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah "10. We have considered the submissions of the learned counsel for the parties and we are of the considered opinion that the learned Assessing Officer was much influenced by the enquiry report which may has been brought on record by the efforts of the Assessing Officer and that enquiry report was prepared by the SF81 and from the observations made by the Tax Appeal No.4 of 2011 with analogous case Assessing Officer himself, it is clear that after getting that enquiry report, the SEBI prima facie found involvement of some of the share brokers in unfair trade practices. Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, ifpurchased the share from that broker innocently and bonajIdely and if he show his bonaflde in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of SE. B. I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame transaction. Fact of tinted broker nay be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted. In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case."

3.14. The Mumbai Bench of the Tribunal in the case

of Shri Arvind Kariya & Others vs. ACIT Central Circle - 12,

Mumbai in the ITA No. 787-791/Mum/2010 dated

30/12/2011, (Page No 509-526 of the Paperbook-II) held as

under-

ITA Nos. 1422 & 1423/Mum/2010, 54 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah "8. .........Now the question is how assessee is going to find out whether this transaction was bogus when physical delivery has been handed over to the assessee. The authorities below have also doubted the source for purchases. As pointed out by the Ld. Counsel assessee has earned speculation profit amounting to Rs. 28,9411- which has been included in the return of income under the head 'income from other sources' for A. Y 2004-05, a copy of the computation is on pages 22 & 23 of the paper book and this has been accepted by the department. The assessee has also filed the balance sheet in which investment in shares has been shown at Rs, 1,45,06,054/- and in the annexure showing the details of investment in MIs Robinson Worldwide Trade Ltd shares have been included at 15500 shares amounting to Rs.26810.54. This purchase has to be treated as accepted because this balance sheet was filed in A. Y 2004-05 and no adverse inference has been taken in that year. These documents are available at pages 24 to 26 of the paper book The assessee had also filed the contract note for sale and purchase of shares generating speculating profit filed at pages 36 & 37 of the paper book. The contract note for purchase of 15500 shares of M/s Robinson Worldwide Trade Ltd from M/s. DPS Shares & Securities Pvt. Ltd has been filed at page-38 of the paper book and the particulars read as under: “ The above particulars would not indicate that it was a bogus transaction. In any case, assessee has no need to know whether the transaction was bogus or not because even invoice has been issued by M/s. DPS Shares & Securities Pvt. Ltd for purchase of these shares, copy of which is placed at page 39 of the paper book and delivery was also given which is at page 40 of the paper book Later on assessee filed an application for transfer of these shares and we have already discussed the particulars of transfer form. Ultimately, a jumbo share certificate showing 15500 shares was issued by the company, copy of which is at page 45 of the paper book. Later on assessee lodged a demat request with Action Financial Services (India) Ltd. for demat of 15500 shares of M/s Robinson Worldwide Trade Ltd and copy of that request is available at page 46. The demat account statement of the assessee with Action Financial Services (India) Ltd. shows that 15500 shares have been dematerialised. We fail to understand how the shares were actually transferred in physical form and later on dematerialised and how this whole process can be called bogus. This cannot be called bogus unless the connivance of M/s

ITA Nos. 1422 & 1423/Mum/2010, 55 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Robinson Worldwide Trade Ltd and Action Financial Services (India) Ltd. is also alleged and proved. But no enquiry seems to have been conducted with these entities. Ultimately, the shares have been sold through Anugrah Stock and Broking Pvt. Ltd. on various dates as under: Date Quantity 09-12-2004 3000 13-12- 2004 3000 04-01- 2005 6000 o6-01-2005 3500 The contract notes for the above sales are placed in the paper book at pages 48 to 55. The above sales have been reflected in the later demat account with Action Financial Services (India) Ltd, copy of which is at pages 57 and 58 of the paper book. From the above it is clear that assessee has proved the purchases as well as the sales transactions. The shares have been sold through BSE and it is not alleged that these transactions are also off market. All these facts clearly prove that the transactions are genuine and the same cannot be doubted unless and untill the other participants like depository known as Action Financial Services (India) Ltd. is also proved to be bogus or in connivance with the Penny Stock scam and even the sale conducted through Anugrah Stock and Broking Pvt. Ltd. is proved to be bogus. In our opinion, when overwhelming documentary evidence is available to prove the purchase and sale transactions part of which has already been accepted by the revenue in A. Y 2004-05, then a mere statement by the broker who has sold the shares to the assessee that this was an accommodation entry cannot lead to a conclusion that the whole transaction was bogus. In these circumstances, we are of the view that the sale and purchase of the shares stand proved and should be assessed under the head capital gains."

3.15. In another case, the Mumbai Bench of the

Tribunal, Late Smt. Kanchanben J. Shah vs. ITO, the ITA

No. 6544/Mum/2011 dated 18/02/2016, (Page No 527-

540 of the Paperbook-II) has held as under:

"4. Aggrieved by the orders dated 16. 08.201] of the CIT(A), the assessee filed appeal with the Tribunal. The Ld. Counsel for the assessee reiterated the submissions as made before the authorities below which are not repeated for sake of brevity. The Ld. Counsel for the assessee stated before us that the 10000 shares of Robinson Impex (India) Limited was purchased on 04-04-2003 vide physical delivery from DPS Shares and Securities Private Limited who are SEBI approved registered broker with BSE which are duly evidenced by contract notes issued by the said broker

ITA Nos. 1422 & 1423/Mum/2010, 56 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah which is placed at page 29-30 paper bookfiled before the Tribunal. The id. Counsel stated before us said shares were transferred in favour of the assessee on 30-04-2003 vide share certificate issued by the company which is placed at page 30 of the paper book filed with the Tribunal. The Id. Counsel stated before us that payment of the said 10000 shares of Robinson Impex (India) Limited aggregating to Rs. 13210.43 was settled through speculative profit of Rs. 13168.67 earned by the assessee in the shares of Mastek Limited on 04-04-2003 which is also supported by contract notes issued by DPS Shares and Securities Private Limited which are placed at paper book page 2 7-28. The Ld. Counsel stated before us that the speculative profit of Rs 13168.67 earned by the assessee was duly declared and disclosed to the Revenue and offered for taxation by the assessee in the return of income filed with the Revenue which is placed at paper book page 42-46 for the assessment year 2004-05. The id. Counsel stated before us that purchase of 10000shares of Robinson impex (India) Limited were duly declared and disclosed to the Revenue in the return of income filed with the Revenue for financial year 2 003- 04 (assessment year 2004-05) which is placed at page 42-46 of paper book. The said 10000 shares of Robinson Impex (India) Limited were de- matted in the month of June 2004 in favour of the assessee which is placed at page 32 of paper book The Id. Counsel stated that the transactions of sale and purchase of shares are genuine although there are discrepancies in trade log with BSE at the time of purchase as detailed by A 0 in the assessment order which is a mistake of broker. The id. Counsel stated that the sale of 10000 Robinson Impex India Limited was also undertaken through registered share broker and contract notes are placed at page 21-26 of paper book and payments were received by cheque, the relevant bank statements are placed at page ii of paper book where sale proceed cheques were credited . The id. Counsel of the assessee drew our attention to remand report submitted by the A0 to the CIT(A) whereby Mr. Rajkumar Masalia did not appear before the A 0 for cross examination three times on 18.2.2009, 29.04.2009 and 09.11.2009 while the assessee representative was duly present before the AO on those dates. The A0 in remand report has confirmed that BSE has confirmed the sale transaction of 10000 Robinson Impex (India)

ITA Nos. 1422 & 1423/Mum/2010, 57 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Limited which was sold by the assessee on 10-06-2004. The ld. Counsel relied upon the decision of Mumbai Tribunal in the case of Mr. Jagdish H.Shah in ITA No. 6557/Mum/2011 vide orders dated 05/09/2012 for the assessment year 2005-06, whereby on the identical facts, income earned on sale of shares of Robinson Impex (India) Limited has been accepted to be income assessable under the head 'long term capital gain'. The Ld. Counsel has also filed a tabulation showing similarity of facts between the case of the assessee and that of Jagdish H Shah(supra). The tabulation furnished by the assessee depicts the similarity in scrip involved, assessment year involved, the broker involved, enquiries by the AO from BSE , etc. . Apart there-from, it has also been pointed out that the same AO as well as the same CIT(A) have rendered the decisions on the same dates in the case of Jagdish H Shah(supra) as well as the assessee. Under these circumstances, it has been pointed out that the impugned orders of the lower authorities are unsustainable and that income from sale of the shares of Robinson Impex (India) Limited be accepted as long term capital gain as returned by the assessee. The reliance is also placed on the similar case on identical facts in the case of Nikunj J Shah v. ITO in ITA no. 6545/Mum/2011 whereby Mumbai Tribunal vide orders dated 31/07/2015 has accepted the income from sale of shares of Robinson Impex (India) Limited as income assessable under the head long term capital gain as returned. 7. Following the aforesaid precedent we hereby allow the appeal of the assessee, and direct the AO to accept the long term capital gain as returned by the assessee." 3.16. In another case, the Hyderabad Bench of the

Tribunal in ITO vs. Aarti Alittal reported, (2013) 37 CCH

0227 (Hyd. Trib.) (Page No 541-571 of the Paperbook-II),

held as under:

"In consonance with the fundamental principle that there cannot be a sale without a purchase, if the purchase of shares by the assessees is disbelieved, there cannot be consequent sale of the said shares by the assessee. Therefore, the fact of the

ITA Nos. 1422 & 1423/Mum/2010, 58 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah purchases cannot be doubted, since the same ultimately resulted in conversion of shares into electronic form and credit of the same in the D—MAT account. Once it is credited to the D—MAT account the sales are effected through the floor of the stock exchange. The AO has not brought out anything to even remotely suggest that the sale transactions were arranged by the assessee. There is no mention in the entire order about the identity of the party who has purchased the same through electronic stock exchange, the nexus between the assessees and the said party could not be established. The most crucial aspect which could be considered as incriminating in such transactions may relate to a case where compensatory payments are made by the seller to the buyer. No evidence has been brought on record that the assessee's of this group have made any such compensatory payment to the buyer of the stocks. In the absence of any such observation, as submitted by the assessee 's, the CIT(A) was correct in holding the view that the sale transactions cannot be doubted on suspicion. Moreover, these are the cases in which the transactions have taken place through the floor of the stock exchange and Securities Transactions Tax have been paid. In view of these evidences which have not been rebutted by the A. 0., it is difficult to hold that the sale transactions are non- genuine and the proceeds thereof are liable to be taxed under the head other sources. On the basis of the report received from SEBI, upon enquiries got conducted that some of the brokers named above have been suspended for some act of omission and commission, the AO held that the transactions entered through these brokers are not genuine. But merely based on such a report, such transactions cannot be treated as sham merely/or some discrepancies or adverse report by the SEBI It is found that the A0 has not brought out any material to establish the final outcome of the enquiry initiated by SEBI and specific shares purchased by the assessee in course of making investment. Therefore, it is not possible to take any adverse view on the basis of mere suspicion that SEBI had initiated some action and found the brokers violating the rules of SEBI The CIT(A) is further correct in holding that notwithstanding the observations of the AO that the purchases

ITA Nos. 1422 & 1423/Mum/2010, 59 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah and sales of shares were made with reference to penny stocks which were purchased at a nominal price and sold at a very high price, since all the sale transactions were made through stock exchanges there is hardly any scopes for price manipulation, it is all the more so, since the assessee has paid STT. Even with regard to the observation of the assessing officer that the assessee before purchasing the shares the assessees did not take into account the financial standing of the companies, the CIT(A) was correct is observing that the share market is generally sentiment driven and the assessees cannot remain static. Even the absence of experience of the assessees in transaction of the shares except dealing in these penny stocks, does not clinch the issue against the assessee. This may at the most lead to a suspicion but the same cannot be treated as conclusive to draw any adverse inference against the assessees to the effect that the transactions are not genuine. Similarly, even the opening of D—MA T accounts at Calcutta, a remote place may give rise to a suspicion, but the same cannot lead to any adverse inference against the assessee. In course of hearing, the assessee 's had produced its books, there is no finding in the assessment order that payments were not made to the brokers similarly there is no observation in the order that the sales were arranged between the assessee 's and the buyer. In the absence of any cogent finding by the AO the observation merely raises some suspicion but this suspicion cannot take the place of proof Even with regard to the enquiry got conducted by the assessing officer through the DOT Calcutta, which revealed that most of the brokers and the companies were not traceable, the CJT(A) is correct in concluding that mere failure to trace the brokers and companies cannot be held as fatal to the transaction of both purchase and sale, when the details of which have been duly explained by the assessees. The assessee, in our considered opinion, has duly discharged the onus that lies on it, in establishing the genuineness of the transactions, and that being so, it is for the revenue to disprove the claim of the assessee, by bringing on record the evidence to the contrary, as held by the Hon'ble Madras High Court in the case of CIT vs Gobi Textiles Ltd (294 ITR 663)."

ITA Nos. 1422 & 1423/Mum/2010, 60 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 3.17. Further, in the assessment order, the Assessing

Officer has stated that TRADE Files of M/s. DPS Shares &

Securities Pvt Ltd show that there was discrepancies in the

number of shares traded for earning the speculation gain

which where the source of purchase of shares of M/s.

Robinson Worldwide Pvt. Ltd With regards to the same it is

submitted that the assessee cannot be faulted for the

failure of the broker M/s. DPS Shares & Securities for not

notifying the stock exchange regarding its transactions and

does not render the purchases made by the assessee non-

genuine. It is to be noted that the Assessing Officer had

confronted the assessee with such discrepancies and

despite of the same the assessee had maintained that

the transactions entered by him were genuine. Thus,

the mere statement is not enough to fasten liability upon

the assessee when the assessee is denying allegation

contained in the statement and there is no corroboration of

the statement, whereas, the stand of the assessee is

corroborated with documentary evidence, which has not

been disapproved by the Revenue, because, in the present

case, every transaction of purchase and sale of shares of

ITA Nos. 1422 & 1423/Mum/2010, 61 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah M/s. Robinson Impex Ltd has been duly accounted,

documented and supported by documentary evidences.

Further, the search action in the case of the ass essee has

also not resulted in discovery of any evidence whatsoever to

prove that the impugned transactions were not

genuine. Thus, apart from an uncorroborated statement

of third party, the Department has no evidence to dislodge

the claim of the assessee.

3.18. It is also noted that the impugned additions

were confirmed by the Ld. Commissioner of Income Tax

(Appeal) on the following grounds.

(i) The assessee was allegedly part of some penny stock scam involving booking of bogus capital gains detected by the Investigation Wing. (ii) The director of M/s. DPS Shares & Securities Pvt. Ltd in his statement recorded u/s 131 of the Income-tax Act, 1961 and in course of cross examination had stated that bill relating to impugned shares of MIs. Robinson Impex Ltd were not genuine. (iii) U/s. 68 of the Income-tax Act, 1961, it was for the assessee to explain the nature and source of the sums credited in his books of account and in the instant case, the appellant had allegedly failed to explain the purchases of penny stock and the sales thereof. (iv) Thus, the alleged capital gains of Rs. 65,78,60/- for A,Y. 2005-06 and Rs. 15,23,130 for A.Y. 2006-07 was chargeable to tax u/s 68 of the Income-tax Act, 1961, 3.19. As far as the allegation of penny stock scam,

ITA Nos. 1422 & 1423/Mum/2010, 62 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah busted by the Investigation Wing is concerned, it is

observed that no addition can be made in the hands of

the assessee merely on the basis of a general report of

the Investigation Wing unless the assessee is proved to

be a part of it by bringing tangible evidence on record. In

the assessee's case, admittedly no evidence was found

during the course of search to prove that the assessee

was part of any such alleged scam or that he had booked

artificial capital gains. The entire addition in the case of

the assessee, case rests merely on the statement of

third party. As already discussed above, an

uncorroborated & unsubstantiated statement of third

party does not have any evidentiary value. Reliance can

be placed upon the decision of the Mumbai Bench of the

Tribunal in the case of ITO Vs. W.D. Estate Pvt. Ltd.

[19931 45 ITD 473 (Mum) (Page Nos 572-586 of the

Paper Book), wherein additions were made on account of

on money received by the assessee in respect of sale of

property. The CIT(A) confirmed the addition partly after

being influenced by a report published by Ministry of

Finance wherein prevalence of notorious practice of

ITA Nos. 1422 & 1423/Mum/2010, 63 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah payment of black money in real estate transaction in

metropolitan city of Bombay was discussed The Tribunal

deleted the additions. In this case, there was an adverse

statement by one of the disgruntled employees of the

assessee. Further, the comparable cases in the vicinity

suggested payment of on money. Despite all these facts, the

Tribunal held that additions could not be made on the

basis of report prepared by the experts in the Ministry of

Finance. A survey report which highlighted prevailing

practice could not be adequate substitute for tangible

evidence. The observation made by the Ld. Commissioner

of Income Tax (Appeal), while affirming the additions is

reproduced hereunder:-

"It is held that section 68 is squarely applicable in this case and since the appellant neither satisfactorily explained the purchases of penny stock nor the sales thereof the nature and source of the income credited to the books of account remain not properly explained. Therefore the alleged capital gain of Rs. 65,78,860/- is chargeable to tax u/s 68 of the Act. Whereas the Ld. Assessing Officer has charged such sum of Rs. 65,78,860/- as unexplained money in possession of the appellant, the same is confirmed as unexplained cash credit u/s 68 of the Act."

3.20. The above observation with respect to capital

gain is factually incorrect, because, it is the sum total of

ITA Nos. 1422 & 1423/Mum/2010, 64 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah sale proceeds received on sale of 50,000 shares of

Robinson Impex (India) Ltd. The long term capital gains

claimed by the assessee is Rs. 65,13,500/- for A.Y.

2005-06 and Rs. 15,12,490 for A.Y. 2006-07. Thus, the

Ld. CIT(A) has treated the sale proceeds received on sale of

shares of Robinson as unexplained cash credit u/s 68 of

the Income-tax Act, 1961 for A.Y. 2005-06 and A.Y. 2006-

07 respectively. In this regard, it is submitted that the said

section is not applicable to the case of the appellant.

Section 68 of the Income-tax Act, 1961 reads as under:

"68. Cash credits.—Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 3.21. The scope of section 68 was explained by

the Hon'ble Allahabad High Court in the case of Anil

Rice Mills Vs. CIT (2006) 282 ITR 236 (All) (Page Nos

587-602 of the Paper Book - II)in the following words:

"Under section 68, if any sum is found credited in the books of account of the assessee and the assessee offers no explanation about the nature and source thereof or the

ITA Nos. 1422 & 1423/Mum/2010, 65 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah explanation offered by him is not in the opinion of the AO, satisfactory, the sum so credited may be charged to income tax as income of the assessee of that previous year. Therefore what has to be enquired into by the assessing authority is about the nature and source of the deposit. If the explanation with regard to nature and source is found unsatisfactory, only then the amount so credited may be treated as income. Assessee has to prove three conditions (1) Identity of the creditors (2) Capacity of such creditor to advance money and (3) Genuineness of the transaction. If all the aforesaid three conditions are proved, the burden shifts to the Revenue to prove that the amount belongs to the assessee. The assessee cannot be asked to prove the source of source or the origin of origin."

3.22. If this issue is viewed with the angle of section 68

of the Act is concerned, it is noted that the impugned sale

proceeds were received through MIs. Pruthvi Brokers &

Share Holdings Pvt. Ltd. The said company is listed in BSE

under scrip code no. 532154 and is assessed to Income

Tax under PAN AABCP3901B. The SEBI Regn No. is [NB

011059830, clearing no. 529. Thus, the identity of the

broker is fully established.

3.23. So far as, the capacity/creditworthiness of the

creditor is concerned, since, M/s. Pruthvi Brokers &

Shareholdings Pvt. Ltd is a SEBI registered broker

ITA Nos. 1422 & 1423/Mum/2010, 66 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah and a regular income tax assessee with a regular

source of income and a distinct PAN No.

AABCP390113, its creditworthiness as a share

broker is well established. Further, the payments for

sale proceeds being made by M/s. Pruthvi Brokers

& Shareholdings Pvt. Ltd through regular banking

channels, the pool account of M/s. Pruthvi Brokers

& Shareholdings Pvt. Ltd in Oriental Bank of

Commerce (pages 141 to 152 for A.Y. 2005-06 and

pages 167 to 171 for A. F. 2006-07 of the Paper

Book) showing the impugned sale on behalf of the

appellant and copy of Trade files received by M/s.

Pruthvi Brokers & Shareholdings Pvt. Ltd from the

BSE (Copy enclosed at pages 153 to 166 for A. F.

2005-06 and pages 172 to 175 for A. Y. 2006-07 of

the Paper Book) showing sale of Robinson shares all

go to prove the capacity of M/s. Pruthvi Brokers &

Shareholdings Pvt. Ltd to conduct the sale

ITA Nos. 1422 & 1423/Mum/2010, 67 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah transactions on behalf of the appellant.. Further,

the ledger copy of the appellant in the books of M/s.

Pruthvi Brokers (pages 138.16 to 138.17 for A. Y.

2005-06 and pages 138.22 to 138.25 for A. Y.

2006- 07 of the Paper Book) also proves its

capacity to conduct the impugned share

transactions on behalf of the assessee. Thus, the

capacity to conduct the impugned share

transactions on behalf of the assessee stands

established.

3.24. So far as the genuineness of the sale

transaction of Robinson shares is concerned, it has

been proved conclusively from the Trade files

received from the Bombay Stock Exchange for

the impugned settlement period wherein the BSE

has confirmed the sale transaction of M/s.

Robinson Impex Ltd under client code D003

(pages 75-94 of the Paper Book). Further, the De-

ITA Nos. 1422 & 1423/Mum/2010, 68 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah mat A/c with Oriental Bank of Commerce (Formerly

known as Global Trust Bank) (IN 301071) with

Client ID No. 80055254 showing the

dematerialization and subsequent sale of 50000

shares of Robinson by the appellant through

Pruthvi Brokers & Shareholdings P. Ltd. during

A.Y. (pages 134 of the Paper Book) also goes a long

way to prove the genuineness of the impugned

transactions. Thus, the impugned sale transactions

were duly conducted through a recognized stock

exchange and also confirmed by the BSE. The sale

proceeds were received through M/s. Pruthvi

Brokers by way of account payee cheque which

were credited in HDFC Bank, Fort Branch A/c No.

0601330003532 (bank statement available at

pages 176 to 177 of the Paper Book). Thus, the

sale proceeds were also received through regular

banking channels. As such, the genuineness of the

ITA Nos. 1422 & 1423/Mum/2010, 69 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah impugned transactions is proved beyond doubt.

The totality of facts clearly establishes that the (i)

Identity of M/s. Pruthvi Brokers & Shareholdings Pvt.

Ltd (ii) the creditworthiness or capacity of the said

broker to conduct the impugned transactions on behalf

of the appellant and (iii) the genuineness of the impugned

transactions, by placing on record conclusive

documentary evidences has been discharged and thus

the onus cast upon the assessee of proving the nature

and source of the concerned credits in his books of

account. In such an eventuality, the burden shifted on the

Revenue to disprove the claim of the assessee by bringing

on record some tangible evidence. In the absence of any

such material to dislodge the claim of the assessee or

disbelieve the evidences filed by him, no addition on

account of any unexplained cash credits u/s 68 of the Act

could be made by the Revenue. Thus, the Ld.

Commissioner of Income Tax (Appeal) unjustifiably

confirmed the addition, which is merely based upon

suspicion. We are of the view that suspicion cannot take

the shape of evidence, however strong it may be.

ITA Nos. 1422 & 1423/Mum/2010, 70 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 3.25. So far as the genuineness of purchase of 50,000

shares of M/s. Robinson Impex Ltd in A.Y. 2004-05 is

concerned, we have already dealt with this issue in

earlier paras of this order. The time limit for passing

intimation u/s 143(1) of the Act was 31/03/2006 and for

issuing notice u/s 143(2) of the Act was 31/08/2005 for

making regular assessment. Thus the Assessing Officer

had neither issued any notice u/s 143(2) of Act nor made

any intimation uls 143(1) of the Act. Therefore, it is

established that the concerned Assessing Officer accepted

the purchase of 50,000 shares of M/s. Robinson Impex Ltd

during the said year against disclosed sources. However,

this shows that Assessing Officer duly accepted the

genuineness of purchase of 50,000 shares of M/s.

Robinson Worldwide Trade Ltd by the appellant during F.Y.

2003-04 (relevant to A.Y. 2004-05) against explained

sources. Further, even after the search operation u/s

132 of the Act assessment u/s 153A of the Act for A.Y.

2004-05 was completed by the AO on 24/12/2008 at the

returned figure thus accepting the purchase of 50,000

shares of Robinson against sale proceeds of PAN

ITA Nos. 1422 & 1423/Mum/2010, 71 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Packaging. Copy of the said order u/s 153A of the Act for

A.Y. 2004-05 is available at (pages 71 to 97 of the Paper

Book). Accordingly, in assessment framed u/s 153A of the

Act for the subsequent year i.e. A.Y. 2006-07, in the

absence of any material change in facts, the Assessing

Officer was not justified in taking a contrary view that the

earning of speculation profit of ` 15,12,490 for A.Y. 2006-

07 and purchase of shares of Robinson for `76,052/-

during F.Y. 2003-04 relevant to A.Y. 2004-05 were bogus

only on the basis of an unsubstantiated statement of

third party sans any material found in course of search.

Various Courts and Tribunals have time and again held in

a plethora of cases that power of review is not available to

the Assessing Officer under the Act and in the absence of

any material change in facts, a different view than taken

in earlier years cannot be taken.

3.26. So far as, the statement and subsequent cross-

examination of Sri Pratik C. Shah by the assessee and

the purchase transactions being off market, the assessee

made the following submissions before the Assessing

ITA Nos. 1422 & 1423/Mum/2010, 72 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Officer vide letter dated 08/12/2008 reproduced on page

14 of Assessment Order Para No.10:

"Your honour has mentioned that the director of Ms. DPS Share & Securities Pvt. Ltd. in their statement on 18.01.2007 stated on Oath that "they have issued only bogus accommodation bills for facilitating capital gain to the ultimate beneficiaries and for which they have not handed over the bills to the beneficiaries. Further no transactions were done on BSE Ltd" It is noted that while entering into transaction for

purchase and sale of shares, generally client is not required

to enquire about, whether the transactions entered by him/

her with the broker were in turn entered by him through

Recognised Stock Exchange. Once the transaction is

entered into for purchase of shares with SEBI- registered

broker and the broker issued the invoice for the same,

then there is no need to verify the transactions entered

by him were informed to the exchange or not. The

transaction of shares sometimes used to take place off

market, which remained to be intimated to the Stock

Exchange i.e. the purchase and sale of shares outside the

floor of stock exchange is not an unlawful activity. Off

market transactions are not illegal. It is always possible for

the parties to enter into transactions even without the help

ITA Nos. 1422 & 1423/Mum/2010, 73 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah of brokers. Further it might be possible in the case of

the assessee, the brokers may not have carried out my

transaction through the stock exchange and it were off

market transactions and intimation for which was not

given to the stock exchange by the broker. But this is

not sufficient to conclude that the transaction of

purchase of shares was done by the assessee with the

said brokers were not genuine transaction as no

incriminating document or evidence indicating any

doubtfulness in the bona-fides of the share transaction

were found in the course of search."

3.27. It is noteworthy that on the date of purchase

of shares of M/s. Robinson Impex India Ltd. the said

shares were not listed in the BSE. This also explains the

obvious reason behind the impugned purchase

transactions being off-market. However, subsequently,

on being listed, the sales of the said shares were

carried out through the BSE and the BSE confirmed the

sale transactions of the said shares of M/s. Robinson

Impex Ltd under its client code No. D003. Even

otherwise, it is pertinent to note here that the purported

ITA Nos. 1422 & 1423/Mum/2010, 74 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah statement of Shri Pratik C. Shah, director of M/s. DPS

Shares & Securities Pvt. Ltd., being the sole so-called

evidence so emphatically relied upon by the AO and the

Ld. CIT(A) pertains only to the purchase of shares of

M/s. Robinson Impex Ltd. against sale proceeds of

shares of Pan Packaging through the said broker during

F.Y. 2003-04 and as such pertains only to A.Y. 2004-05.

The assessment pursuant to search u/s 153A of the Act

for the said A.Y. 2004-05 were completed by the AO

without making any addition on the said count. The said

statement of Shri Pratik C. Shah however, has no

relevance to the sale of the impugned shares during F.Y.

2004-05 relevant to A.Y. 2005-06 and F.Y. 2005-06

relevant to AN. 2006-07 through M/s. Pruthvi Brokers

& Shareholdings Pvt. Ltd which has been duly confirmed

by the BSE and by M/s. Pruthvi Brokers &

Shareholdings Pvt. Ltd. Thus, as far as the impugned

sale proceeds of Rs. 65,78,860/- for F.Y. 2004-05

relevant to A.Y. 2005-06 and Rs. 15,23,130/- for F.Y.

2005-06 relevant to A.Y. 2006-07 are concerned, both

the Assessing Officer and the Ld. CIT(A) have failed to

ITA Nos. 1422 & 1423/Mum/2010, 75 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah bring on record any material whatsoever to prove that

the same did not pertain to sale of shares of M/s.

Robinson Impex Ltd through M/s. Pruthvi Brokers &

Shareholdings Pvt. Ltd but represented assessee's

own undisclosed money. Thus, the assessee having

clearly explained the nature and source of the credits in

his bank account to the extent of Rs. 65,78,860/- for F.Y.

2004-05 relevant to AN. 2005-06 and Rs. 15,23,130/- for

F.Y. 2005-06 relevant to A.Y. 2006-07, no addition in

respect of the said amount u/s 68 of the Act can be

made for A.Y. 2005-06 and A.Y 2006-07. It is also noted

that apart from doubting the validity of purchase

transactions of Robinsons for F.Y. 2003-04 relevant to

A.Y. 2004-05, even the AO has failed to dislodge the sale

of the said shares during F.Y. 2004-05 and F.Y. 2005-06

relevant to A.Y. 2005-06 and A.Y. 2006-07 by any clear

cut finding in the assessment order. Further, the Ld.

CIT(A) has himself observed in para 2.2.1, page 13 of his

order under the heading "BRIEF FACTS OF THE

CASE AND ASSESSING OFFICER'S

CONCLUSIONS" as under:

ITA Nos. 1422 & 1423/Mum/2010, 76 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah "2.1.8. ......Robinson shares were sold partly during A. V. 2005-06 and partly during A. Y. 2006-07 through brokers M/s. Pruthvi Brokers & Shareholders (P) Ltd. The sale proceeds were received by the appellant through broker by account payee cheque which was credited in the appellant's bank. The appellant had explained before the Ld. Assessing Officer that on sales of Robinson shares the delivery was given to the pool account of the said MIs. Pruthvi Brokers & Shareholdings Pvt. Ltd. and from this pool account the impugned shares of Robinson were delivered to the Bombay Stock Exchange, The BSE had confirmed the sale transactions of the said Robinson scrip"

3.28. Thus, the Assessing Officer as well as the

Ld. CIT(A) have indirectly accepted that the amount of

`65,78,860/- credited in the bank account of the

appellant represented the sale proceeds of shares of

Robinson through identified source. Accordingly, there

was no doubt regarding the nature and source of the

said amount, consequently, no addition was called for

u/s 68 of the Act, for A.Y. 2005-06 and A.Y. 2006-07. As

such, even if for argument's sake, it is assumed

without accepting that the purchase of 50,000 shares

of Robinson on 04/04/2003 for Rs. 76,052/- against

sale proceeds of PAN Packaging shares remained

unexplained, the said aspect pertained to A.Y. 2004-

05 and had nothing to do with the assessment for A.Y.

ITA Nos. 1422 & 1423/Mum/2010, 77 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 2005-06 and A.Y. 2006-07. The undisputed sale of

50,000 shares of Robinson for Rs. 65,78,860/- and Rs.

15,23,130 during A.Y. 2005-06 and A.Y. 2006-07 fully

explained the relevant credits in the bank account of the

appellant. Thus, no addition was called for u/s 68 of the

Act for A.Y. 2005-06 and A.Y. 2006-07. The ratio laid

down from Hon'ble Delhi High Court in the case of

Kishan Lal Jewels (P) Ltd. Vs. ACIT (2006) 26 SOT 30

(Del) (Page Nos. 603-611 of the Paper Book - II)

supports the case of the assessee, wherein it was held as

under:

"Income - Cash credit - Scope and validity of addition u/s 68 - In every case of application of section 68, nature and source of sum found credited have first to be examined - Even though there was enough evidence on record to treat purchase of diamonds as bogus, amounts credited to the account of export sales could not be straightway added u/s 68 where sale consideration was claimed to have been received through banking channels with names and addresses of purchasers who remitted the amount without examining the credit entries and background of purchasers - Though the burden of proof is on assessee, question of discharge thereof is required to be decided on examination and appraisal of material on record."

3.29. Reference can be made to the

following case laws wherein under somewhat similar

circumstances as in the case of the present assessee,

ITA Nos. 1422 & 1423/Mum/2010, 78 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah it was consistently held that where the assessee proved

the (i) identity of creditor (ii) creditworthiness of creditor

(iii) genuineness of transactions, no addition could be

made u/s 68 of the Income-tax Act, 1961:

(i) The Mumbai Bench of the Tribunal in the case of

Farrah Marker vs. Income Tax Officer, (2016) 46 CCH

0535 (Mum. Trib.), has held as under:

"3.4.2 It is also seen that, as contended by the assessee, there is no evidence on record to show that any action or enquiry was carried out either by the SEBI or BSE in respect of the alleged manipulation or propping up of the price rate movement of the 'said shares' of Shukun Constructions Ltd., as has been assessed by the AO. We find from the details filed by the assessee on record in pursuance of the query by the AO in the course of assessment proceedings, that the shares of Shukun Constructions Ltd. is listed on BSE and that the sale transaction of the 'said shares' by the assessee is at the rate quoted on the date of sale has been confirmed both by BSE and the concerned stock broker M/s. Khambatta Securities Ltd. It is strange that the AO has made the addition under section 68 of the Act treating the entire sale proceeds of the 'said shares' received by the assessee through regular banking channels from stock broker registered with SEB1, M/s. Khambatta Securities Ltd, which facts have been confirmed by the said stock broker. In our considered view, in these factual circumstances, the assessee has discharged the onus required under section 68 of the Act as she has established the identity of the payer, source of funds received on sale of the same shares and the genuineness of the transaction.

3.4.3 The addition under section 68 of the Act in the case on

ITA Nos. 1422 & 1423/Mum/2010, 79 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah hand, it appears, has been made only because the AO presumed the purchases of the 'said shares' of M/s. Shukun Constructions Ltd. were not made on the date as disclosed by the assessee, but was backdated and an arranged transaction, and not because there was any irregularity in the sale of the said shares. We find from the material on record that the purchases of the said shares were duly disclosed under the head investment in the audited Balance Sheet as on 31.03.2004 relevant to A. Y 2004-05. In this context we concur with the averments of the learned A. R. for the assessee that if there was any adverse material in respect of the purchases of the 'said shares', the AO ought to have or would have proceeded to initiate proceedings for re- opening the assessment for A. Y 2004-05 while concluding the assessment for A. 1. 2005-06, the year under consideration, on 31.12.2007 or thereafter till 31.03.2011, which he has not done."

In another case of Tulip Hotels (P) Ltd. Vs. DCIT (ii) (2010) 37 SOT 77 (Mumbai) (TM) it was held as under :-

"Revenue has doubted the genuineness merely on the basis of presumption and suspicion ignoring the documentary evidences produced by the assessee, which establish the genuineness of transaction — Assessee has duly established the identity of the creditor, creditworthiness of the creditor and also genuineness of the transaction — Addition made and confirmed by lower authorities under s. 68 are liable to be deleted "

The Jodhpur Bench of the Tribunal in ACIT Vs.

Chandresh Kumar Maheshwari (2009) 120 TTJ (Jd)

132(Page Nos 640-643 of the Paper Book — II) held as

under:

ITA Nos. 1422 & 1423/Mum/2010, 80 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah

"Income - Cash credit - Genuineness of share transaction - Amount claimed by assessee as long-term capital gains on sale of shares disbelieved by AO as not genuine and addition made under s. 68— Not justified in the facts and circumstances of the case - Assessee produced on record share certificate with distinctive numbers issued by CSL, a public limited company - These shares were sold by assessee through broker R - No enquiry was made by AO from CSL whose shares were listed on the stock exchange - No enquiry also made by assessee from the stock exchange as to trading of these shares - On the contrary, assessee had produced the letter of the broker giving the details of shares purchased and sold on behalf of the assessee mentioning therein the commission charged by him as well as proceeds available with him for purchase of shares as well as realization of the sale proceeds and crediting the same to the bank account of the assessee - CIT(A) was justified in deleting the addition."

3.30. The ratio laid down in the case of ITO Vs.

Naveen Gupta (2006) 5 SOT 94 (Del) (Page Nos 730-

738 of the Paper Book - II) supports the case of the

assessee, wherein, it was held as under:

"Income from undisclosed sources - Cash credits - Addition - Validity - Long term capital gain from sale of shares of company 'A' - Company listed on Delhi Stock Exchange - No material brought on record by the AO to show that assessee had surreptitiously introduced his unaccounted money in guise of sale proceeds - Sale proceeds could not be added under s. 68."

The coordinate Bench of the Tribunal in the case of ACIT

Vs. Claridges Investment & Finance (P) Ltd. (2007) 18 SOT

ITA Nos. 1422 & 1423/Mum/2010, 81 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 390 (Mumbai) (Pages 644-706 of the Paper Book-11) held as

under:

"Business Income - Business Loss - Assessee a share broker had share transactions with three Kolkata based brokers - Assessee 's transactions are supported by movement of shares as reflected in demat account, movement of money as reflected in bank account, entries in the books of account of assessee, prevalent market quotations of CSE, contract notes and delivery bills issued by Kolkata brokers and their statements in response to enquiries made by the AO and assessee had shown net profit of Rs. 16.18 crores - The conclusions of the AO that "these transactions were shown only in order to generate loss or profit and were not genuine share transactions" could not be reached for reason only of and irregularities in the deficiencies documentation at the end of Kolkata brokers - AO has acted upon grossly inadequate material and his conclusions are in the realm of suspicion, conjecture and surmises - Business loss claimed by assessee was allowable as shown in its books of account."

3.31. The Hon'ble Delhi High Court in CIT Vs. Divine

Leasing & Finance Ltd. (2008) 299 ITR 268 (Del) (Page Nos

707-726 of the Paper Book - 11) held that "A distillation of

the precedents yields the following propositions of law in

context of s. 68. The assessee has to prima facie

prove (1) the identity of the creditor/subscriber (2) the

genuineness of the transaction namely, whether it has

been transmitted through banking or other indisputable

channels; (3) the creditworthiness or financial strength of

ITA Nos. 1422 & 1423/Mum/2010, 82 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the creditor/ subscriber. If relevant details of the address

or PAN identity of the creditor/ subscriber are

furnished to the Department along with copies of the

shareholders register, share application forms, share

transfer register etc. it would constitute acceptable proof or

acceptable explanation by the assessee. The Department

would not be justified in drawing an adverse inference

only because the creditor/ subscriber fails or neglects to

respond to its notices." Held further that "Assessee —

company having received subscription to the public/ rights

issues though banking channels and furnished complete

details of the shareholders, no addition could be made

under s. 68 in the absence of any positive material or

evidence to indicate that the shareholders were

benamidars or fictitious persons or that any part of the

share capital represented company's own income from

undisclosed sources."

The Bench of Calcutta Tribunal in the case of V.T.R Marketing Vs. ACIT (2005) 1 SOT 205 (Kol) (Pages Nos. 727-729 of Paper Book- II) held as under: "Income from disclosed sources — cash credits — genuineness of transactions and identity and creditworthiness of creditors — creditors confirmed their statement of account

ITA Nos. 1422 & 1423/Mum/2010, 83 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah as appearing in the accounts of the assessee — The loan transactions through bank and the creditors income-tax assessees and their income-tax assessment therein tally with those of the account books of the assessee — AO was informed about the new address of the creditors vide communication of the assessee in writing — In these circumstances, the ass essee has discharge its onus to prove the identity and the creditworthiness of the creditors and also that the loan transactions are genuine. In the absence of any material to disbelieve the evidence filed by the assessee, no case of addition for unexplained credits is made out by the Revenue and hence the addition is deleted."

In the light of the foregoing discussion and the judicial

pronouncements, mentioned hereinabove, we find that

the purchase and sale of shares outside the floor of stock

exchange is not an unlawful activity meaning thereby off

market transactions are not illegal unless and until

contrary material is brought on record. The assessee in

the present appeal, got the shares de-mated on the

Bombay Stock Exchange and the sale proceeds were

received through banking channel, therefore, so far as,

purchase of share is concerned (off market transaction),

the details cannot be provided by the Stock Exchange

and such stock Exchange can merely provide the details

of sale. Therefore, there was no relevance in seeking the

details of purchase transactions which were entered into

ITA Nos. 1422 & 1423/Mum/2010, 84 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah between the parties outside the floor of the stock

exchange. Therefore, the reliance placed by the Ld.

Assessing Officer on the communication received from

Stock exchange that the particulars of shares

transactions (purchase transaction) entered into by the

assessee were not available in their records, is out of

place. There is no evidentiary value for such reliance,

more specifically, when the assessee has categorically

contended that the transactions were not entered into at

the floor of the stock exchange. The coordinate Bench of

the Tribunal in the case of Mukesh R. Marolia vs Addl.

CIT (2006) 6 SOT 247 (Mum.) order dated 15/12/2005

held as under:-

This appeal is filed by the assessee. The relevant assessment year is 2001-02. It is directed against the order passed by the CIT(A)- XV at Mumbai on 24-12-2004 and arises out of the assessment completed under section 143(3) of the Income-tax Act, 1961. 2. The assessee is carrying on the business of manufacturing handkerchief as the proprietor of M/s. Rumal Manufacturing Company. The assessee had filed its return of income for the impugned assessment year for a total income of Rs. 4,28,219 added by an agricultural income of Rs. 6,000. The income returned by the assessee included business income, income from other sources and also long-term capital gains on sale of shares and sale of office premises. 3. The assessee had purchased a residential flat at Colaba, Mumbai during the relevant previous year. The flat was jointly purchased with his wife. Assessee's share in the flat is 70 per cent and the share of wife is 30 per cent. The long-term capital gains declared by the assessee on sale of shares and office premises were

ITA Nos. 1422 & 1423/Mum/2010, 85 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah accordingly claimed as deduction under section 54E as against the purchase of the said flat. According to the assessee, the investment in the flat was made out of the sale proceeds of shares and office premises thereby utilizing the sale consideration for the purchase of eligible asset for claiming deduction under section 54E.

ITA Nos. 1422 & 1423/Mum/2010, 86 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah obvious consequence, the disallowance of claim of deduction under section 54E was also upheld. Regarding the remaining two additions also, the CIT(A) agreed with the assessing authority that the assessee has not proved the bona fides of those amounts. Those two additions also have been confirmed. The first appeal was accordingly dismissed by the CIT(A). The assessee is aggrieved and therefore, the second appeal before us.

"1. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in having confirmed the high-pitched assessment on an alleged unexplained investment/income of Rs. 1,54,53,250 as against returned by the assessee at Rs. 4,78,290 without considering the fact that the purchases and sales of shares and subsequent investment in house property were made through accounted and disclosed money/source only.

6(a) That the Ld. CIT(A) misdirected himself in having upheld the addition of Rs. 6,61,063 under section 69 of the Act being the bank balance of the minor son on the alleged ground of non- disclosure of cash deposits as income, in spite of the fact that the

ITA Nos. 1422 & 1423/Mum/2010, 87 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah said income was already included in the assessee's hand under section 64(1A) and the said sum represented the refund of outstanding loan credit from Rainbow Industries through account payee cheques.

6(b) That the revenue authorities have made the said addition under section 69 of the Act on the alleged ground of lack of evidence of such refund and this Act was arbitrary and uncalled for inasmuch as the transaction was through banking channel and the identity and genuineness of the transaction could have been easily found out.

(I)That Radha Ashok, the Broker has informed that he never sold any shares to the assessee.

ITA Nos. 1422 & 1423/Mum/2010, 88 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah (II)That Sandeep D. Shah, proprietor of Rushab Investments stated in his statement recorded under section 131 that he never sold any shares to the assessee.

(III)That the bills issued by Ami Securities were colour photostat copies of unused bills.

(IV)That National Stock Exchange of India has informed that the shares of M/s. Mobile Tele Communications Limited said to be sold by Ami Securities were never available for trading in the capital market segment of the Exchange.

(V)That Ami Securities was expelled from the membership of the stock exchange with effect from February 20, 1999.

(VI)That the purchase and sale of shares are not reflected in the records of Bombay Stock Exchange.

(VII)That assessee had no funds with him for the purchase of the shares.

(VIII)That the interconnected Stock Exchange of India has informed that no transactions were carried out by Richmond Securities Pvt. Ltd. in respect of the assessee.

(IX)That another Broker Scorpio Management ceased to be a member of the National Stock Exchange with effect from February 20, 1999.

(X)That Shri Mukesh Chokshi, Director of Richmond Securities Pvt. Ltd., has made a statement that he had not issued any bill to the assessee;

(XI)That the ADIT (Inv.) at Hyderabad has informed that according to M/s. Centil Agro Tech., the assessee had never held any of its shares.

(XII)That the assessee did not produce Mr. Sathish stated to be a broker. Even though the assessee has informed that all the payments except that of Rs. 11,55,750 were received from M/s. Richmond Securities Pvt. Ltd. The assessee had also received monies from Rushab Investments and Tripathi Sales Corporation, but the latter two receipts were not disclosed by him. The genuineness of the transactions were not established for the failure of the assessee to identify the real persons behind the brokers through whom purchase and sale were said to be made.

(XIII)That the assessee could not prove the creditworthiness of the parties involved in the transactions and also their identity and therefore, has failed in proving the genuineness of the transactions as such. This failure is in spite of number of opportunities given by the assessing authority by issuing notice under section 142(1).

7.1 On adjudicating the issue of addition of Rs. 1,41,08,484, the learned Commissioner of Income-tax arrived at the following conclusion :

ITA Nos. 1422 & 1423/Mum/2010, 89 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah "But the most important point is the veracity of the transactions conducted by the appellant. The off-market transactions are not recognized transactions, particularly when all the shares transacted are quoted shares. When the share transaction is not through Stock Exchange, greater responsibility is there with the appellant and more particularly when it is not conducted through a registered broker. If such off-market transactions are recognized, then what is the necessity of conducting transactions through Stock Exchange ? What is the need of the regulatory authority like SEBI. On appreciation of the evidence collected by the Assessing Officer, both the purchase and sales claimed to have been made by the appellant are found to be non-genuine. Hence, the addition made by the Assessing Officer on this account under section 69 of the Act is quite justified. It is, therefore, confirmed."

7.2 Regarding the next addition of Rs. 6,61,063, it was made under section 69 as unaccounted investment against the credits reflected in the bank account of the assessee's minor son, Master Pratik. In the course of assessment proceedings, the Assessing Officer has noticed that the assessee had shown a sum of Rs. 35,490 under the head 'Income from other sources'. This interest income came out of the bank account of assessee's minor son. The Assessing Officer found that there were two deposits in the name of assessee's minor son totalling to Rs. 6,61,063, the source of which have not been properly explained. Therefore, it was added. In first appeal, the CIT(A) also agreed that no evidence was produced by the assessee to prove the source of the sum of Rs. 6,61,063 represented by fixed deposits in the name of assessee's minor son. The contention of the assessee was that the said amount was outstanding as a loan credit with M/s. Rainbow Industries at Tardeo, Mumbai. It was further explained by the assessee that the said amount was repaid by M/s. Rainbow Industries which was in turn reflected by the fixed deposits.

7.3 The third addition is the amount of Rs. 2 lakhs made under section 68. This amount has been reflected in the accounts of the assessee's minor daughter Miss Zankhana. According to the assessee, the amount was gifted by assessee's co-brother. His explanation was not accepted by the assessing authority as well as the CIT(A). Therefore, the said addition was also confirmed.

8.1 Shri S.K. Tulsian, the learned Counsel appearing for the assessee made extensive arguments against the addition. His contentions are summarized below.

8.2 The foremost argument of the learned counsel is that the case of the assessee regarding purchase and sale of shares was fully supported by the details collected in the course of survey conducted by the department in the business premises of the assessee. There was a survey carried out by the department in the business premises of the assessee. Copies of contract notes for sale of shares, copies of bills thereof, photocopies of share

ITA Nos. 1422 & 1423/Mum/2010, 90 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah certificates etc., were found in the course of survey. It is the case of the learned counsel that these details collected by the department by itself is the best testimony for the case of the assessee that he had purchased and sold shares resulting in capital gains which was utilized by him for the purchase of flat at Colaba.

8.3 The learned counsel submitted that as far as the share transactions are concerned, not only the department collected positive evidences in the course of survey, in support of the accounts of the assessee regarding purchase and sale of shares, but also to be noted that no incriminating document or evidence indicating any doubtfulness in the bona fides of the share transactions were found in the course of survey. It is the case of the learned counsel that survey was done by the department without any prior notice and almost surprisingly and therefore, what was found in the course of survey should be accepted on its face value.

8.4 That the assessee had submitted number of evidences before the assessing authority to prove the genuineness of the share transactions. The assessing authority had relied on the negative replies received from Bombay Stock Exchange, the National Stock Exchange and the Interconnected Stock Exchange of India to reject the explanations of the assessee without recognizaing the basic fact that those share transactions were off-market transactions and obviously there would be no records regarding those transactions with those stock exchanges. The assessing authority was making enquiries with those Stock Exchanges knowing that the enquiry results would be futile. Such negative answers cannot be used against the assessee as positive evidence. The Assessing Officer himself knew that those enquiries would serve no purpose.

8.5 That the fact that summons could not be served on few brokers which has been used against the assessee, eventhough the identity of the brokers were not disputed by the assessing authority. The bills issued by those brokers in respect of share transactions were found in the course of survey itself. The learned counsel further submitted that the purchases of all the shares were duly recorded, disclosed in the return of income filed by the assessee for the assessment years 1999-2000 and 2000-01. That the purchases were made out of the identified and disclosed funds; that the sale of the shares were duly disclosed in the returns filed by the assessee for the assessment year 2001-02; that the persons through whom most of the purchase and sales were transacted had confirmed the transactions with the assessee; that the proceedings from the sale of shares were received by the assessee by account payee cheques and pay orders. The assessee had produced letters from various companies confirming the holding of shares by the assessee during the relevant period. That the purchase and sales of shares were off-market transactions and as such the communications from various Stock Exchanges were wholly irrelevant.

ITA Nos. 1422 & 1423/Mum/2010, 91 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 8.6 The learned counsel of the assessee further explained on the facts of the case. He has filed detailed paper book containing such details. The break up of purchase and sale of shares are furnished. The learned counsel submitted that most of the purchase and sale of shares were carried out through Shri Satish Mandovara, Mediator, who is a specialist in off-market trading of shares. Shri Satish Mandovara was the Assistant of Shri Mangesh Chokshi, Director of M/s. Richmond Securities Pvt. Ltd. Both Shri Satish Mandovara and Shri Mangesh Chokshi in the respective statements recorded under section 31 of the Income-tax Act have confirmed that the transactions are entered into by them with the assessee were genuine. Regarding the source of investments, the assessee has explained before the Assessing Officer that he had agricultural income which reflected in the returns filed for the assessment years 1990-91 to 2001-02. The learned counsel invited our attention to the cash on hand available with the assessee for various year endings detailed in the paper book.

8.7 The learned counsel submitted that the Assessing Officer has erred in appreciating the statements given by Shri Satish Mandovara. Shri Satish Mandovara is the proprietor of M/s. Rushab Investments which is different from the other Rushab Investments referred to by the Assessing Officer. As the proprietor of M/s. Rushab Investments he has been filing returns of income. It was also stated by him that he got shares of the concerned companies transferred in the name of the assessee. The learned counsel further submitted that the above evidence proved beyond any reasonable doubt that the assessee had actually purchased and sold shares.

8.8 In fact, denial of Shri Sandeep D. Shah any transaction with the assessee, the learned counsel submitted that he had categorically stated that as Proprietor of M/s. Rushab Investments, the business was discon- tinued with effect from 1997, whereas, in fact the impugned shares were purchased by the assessee from M/s. Rushab Investments during the accounting years 1998-99 and 1999-2000. He explained that during this period Shri Satish Mandovara carried on the business in the name and style of M/s. Rushab Investments and he has categorically confirmed the sale of the impugned shares to the assessee. Therefore, the Assessing Officer has erred in relying on the denial of Shri Sandeep D. Shah.

8.9 The learned counsel further submitted that eventhough summons issued to various companies could not be served, the communications received from relevant Stock Exchanges proved that those shares were quoted shares which showed that the transactions entered into by the assessee were genuine.

8.10 Regarding the sale of the shares, the learned counsel submitted that in the light of statements made available before the assessing authority it was made clear that the shares were sold through Shri Satish Mandovara who was an Assistant of Shri Mangesh Chokshi, the Director of M/s. Richmond Securities Pvt. Ltd. The sales are supported by the details issued by M/s. Richmond Securities Pvt. Ltd. Payments were issued by cheques. The bank accounts were identified. Shri Mandovara paid the money

ITA Nos. 1422 & 1423/Mum/2010, 92 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah to the assessee out of the collections made from various jobbers. Even the cheques were issued on behalf of M/s. Richmond Securities Pvt. Ltd. as instructed by Shri Mangesh Chokshi. It was the case that M/s. Scorpio Management Consultancy Pvt. Ltd. also that the identity of the said company as a broker was never doubted. Even though the sales transactions were off-market transactions, they were documented and supported by various evidences.

8.11 Therefore, the learned counsel submitted that there is no basis for sustaining an addition of Rs. 1,41,08,484.

9.1 The learned Commissioner submitted that the above transactions were very incredible and that incredibility is further compounded by the fact that the entire transactions were made outside Stock Exchange. They were all off-market transactions. When all the above facts are read together, it is, to be clearly seen that the assessee has made up a story regarding the purchase and sale of shares so as to make out a case of non-existing capital gains.

9.2 He stated that the off-market transactions as stated by the assessee was not proper. Radha Ashok, the Broker has confirmed in his statement before the assessing authority that he never sold any shares to the assessee. Shri Sandeep D. Shah, Proprietor of M/s. Rushab Investments made a similar statement before the assessing authority. Bills of Ami Securities were forged and unused bank bills were utilized by the assessee to give a true picture of transactions. The broker has been expelled from the Stock Exchange much before transactions took place. In the above circumstances, it is, to be seen that the assessee has failed to establish the identity as well as the creditworthiness of the brokers involved in the case.

9.3 The learned Commissioner further contended that it is clear from the statement of Mr. Mangesh Chokshi, Proprietor of M/s. Richmond Securities Pvt. Ltd. that assessee's money was routed through Shri Satish Mandovara who is a broker.

9.4 The learned Commissioner submitted that if the entire factual matrix of the case is examined in a logical manner, it is, very clear that the assessee was building up a story of purchase and sale of shares by making false entries in the books of account and

ITA Nos. 1422 & 1423/Mum/2010, 93 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah arranging forged documents to support such entries. This is very clear from the statements extracted by the Assessing Officer from the concerned parties. Statements given by those parties do really quash the concocted story made out by the assessee.

9.5 The learned Commissioner further contended that the Assessing Officer as well as the CIT(A) have examined the issue in a very exhaustive manner explaining each and every instance of evidence and have passed very speaking orders and have conclusively arrived at a finding that the amount of Rs. 1,41,08,484 stated to be received by the assessee on sale of shares was only bogus and not real. He, therefore, submitted that the addition may be confirmed in the hands of the assessee.

10.1 The assessee has purchased the shares of four companies viz., Allan Industrial Gases Ltd., Mobile Telecom, Rashee Agrotech and Centil Agrotech, during the previous years relevant to the assessment years 1999-2000 and 2000-01. The books of account maintained by the assessee for both the years clearly reflected the purchase of those shares. The shares are reflected in the balance sheets filed by the assessee along with the returns of income for the assessment years 1999-2000 and 2000-01. Therefore, it is seen that as a prima facie evidence, the purchases of shares have been contemporaneously entered into the books of account of the assessee.

10.2 The assessee has been declaring agricultural income in his returns of income for the assessment years from 1990-91 to 2001- 02. The total agricultural income returned by the assessee up to the assessment year 1999-2000 was at Rs. 7,57,883. The amount invested in the purchase of shares as on 31-3-1999 was Rs. 4,48,160. The cash available with the assessee by way of agricultural income was much higher than the investment made by the assessee in the purchase of shares as on 31-3-1999. After making the investments in the shares, the assessee had a surplus cash balance of Rs. 3,09,000 as on 1-4-1999. Thereafter, the assessee has further returned an agricultural income of Rs. 66,000 for the assessment year 2000-01. The amount invested in the purchase of shares in the year ending on 31-3-2000 was Rs. 2,57,020. Again the assessee had a cash balance thereof of Rs. 1,18,771. Therefore, it is, very clear that the investment made by the assessee in shares during the previous periods relevant to the assessment years 1999-2000 and 2000-01 was supported by cash generated out of agricultural income. The above agricultural income have been considered in the respective assessments.

ITA Nos. 1422 & 1423/Mum/2010, 94 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah Therefore, the contention of the assessing authority that the assessee had no sufficient resourcefulness to make investments in the shares is unfounded.

10.3 Purchase and sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off-market transactions are not illegal. It is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the CIT(A) that off-market transactions are not permissible. The assessee has stated that the transactions were made with the help of professional mediators who are experts in off-market transactions.

10.4 When the transactions were off-market transactions, there is no relevance in seeking details of share transactions from Stock Exchanges. Such attempts would be futile. Stock Exchanges cannot give details of transactions entered into between the parties outside their floor. Therefore, the reliance placed by the assessing authority on the communications received from the Stock Exchanges that the particulars of share transactions entered into by the assessee were not available in their records, is out of place. There is no evidential value for such reliance placed by the assessing authority. The assessee had made it very clear that the transactions were not concluded on the floor of the Stock Exchange. The matter being so, there is no probative value for the negative replies solicited by the assessing authority from the respective Stock Exchanges. We are of the considered view that the materials collected by the assessing authority from the Stock Exchanges are not valid to dispel or disbelieve the contentions of the assessee.

10.5 The next set of evidences relied on by the assessing authority are the statements obtained from various parties. When certain persons like Radha Ashok and Sandeep D. Shah made negative statements against the assessee, persons like Satish Mandovara and Mangesh Chokshi had given positive statements in support of the contention of the assessee. But, the assessing authority sought to pick and choose the statements given by various parties. While accepting and rejecting such statements given by the parties, the Assessing Officer has made a mistake of accepting irrelevant statements and rejecting relevant statements. During the relevant period in which the assessee transacted in shares, persons like Radha Ashok and Sandeep D. Shah were not carrying on their business of brokers as in the manner they carried on the business in the past. Even their Stock Exchange Memberships were cancelled. It was Shri Satish Mandovara who was carrying on the business mainly for and on behalf of Shri Mangesh Chokshi, Director of M/s. Richmond Securities Pvt. Ltd. Those two persons have categorically admitted before the assessing authority that they had dealings with the assessee in respect of the share transactions. They have confirmed the transactions stated by the assessee that he had with them. These positive statements made before the assessing authority supported the case of the assessee. There is no force in the action of the assessing authority in relying on the negative statements of the other parties whose role during

ITA Nos. 1422 & 1423/Mum/2010, 95 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the relevant period was either irrelevant or insignificant. Therefore, in the facts and circumstances of the case, it is, our considered view that certain statements relied on by the assessing authority do not dilute the probative value of the statements given by other persons in favour of the assessee confirming the share transactions entered into by the assessee.

10.6 The above circumstances have made out a clear case in support of the book entries reflecting the purchase and sale of shares and ultimately supporting the money received on sale of shares and finally investing the same in the purchase of flat. The chain of transactions entered into by the assessee have been properly accounted, documented and supported by evidences.

10.7 Therefore, we find that the explanations of the assessee seems to have been rejected by the assessing authority more on the ground of presumption than on factual ground. The presumption is so compelling that comparatively a small amount of investment made by the assessee during the previous year period relevant to the assessment years 1999- 2000 and 2000-01 have grown into a very sizable amount ultimately yielding a fabulous sum of Rs. 1,41,08,484 which was used by the assessee for the purchase of the flat at Colaba. The sequence of the events and ultimate realization of money is quite amazing. That itself is a provocation for the Assessing Officer to jump into a conclusion that the transactions were bogus. But, whatever it may be, an assessment has to be completed on the basis of records and materials available before the assessing authority. Personal knowledge and excitement on events, should not lead the Assessing Officer to a state of affairs where salient evidences are over-looked. In the present case, howsoever unbelievable it might be, every transaction of the assessee has been accounted, documented and supported. Even the evidences collected from the concerned parties have been ultimately turned in favour of the assessee. Therefore, it is, very difficult to brush aside the contentions of the assessee that he had purchased shares and he had sold shares and ultimately he had purchased a flat utilizing the sale proceeds of those shares.

10.8 For a moment, even if all the above evidences are ignored, one cannot overlook the pressure of the evidence coming out of the survey carried out by the department in the business premises of the assessee. There was a survey carried out by the department in the business premises of the assessee. In the course of survey, contract notes for sale of shares, copies of bills thereof, photocopies of share certificates etc., were found. The purchase and sale of shares were also found recorded in the books of account. The department has no case that the survey was a staged enactment. A survey is always unexpected. So, it is not possible to presume that the assessee had collected certain fabricated documents and kept at his business premises so as to hoodwink the survey party to lead them to believe that the assessee had entered into share transactions. Atleast such an inference is not possible in law. The department has no defence against the forcible argument of the learned counsel that the survey conducted by the department has out and out upheld the contention of the

ITA Nos. 1422 & 1423/Mum/2010, 96 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah assessee that he had purchased and sold shares. We find that this solitary evidence collected in the course of survey is sufficient to endorse the bona fides of the share transactions made by the assessee.

10.9 Therefore, in short on the basis of the internal evidences available with the assessee and the fact that the sale proceeds were collected through bank accounts and coupled with the external evidence of survey and statement of parties, we have to hold that the sale proceeds of Rs. 1,41,08,484 has been explained. Therefore, the said addition is deleted.

The aforesaid decision of the Tribunal was affirmed

by Hon'ble jurisdictional High Court (CIT vs Mukesh R.

Marolia) (ITA No.456 of 2007) order dated 07/09/2011 by

ITA Nos. 1422 & 1423/Mum/2010, 97 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah observing that the sale of said shares was through two

brokers namely Richmond Securities Pvt. Ltd. and M/s

Scorpio Management Consultant Pvt. Ltd. cannot be

disputed because the fact that the assessee received the

amount is not in dispute. It was neither the case of the

Revenue that the shares in question were still lying with

the assessee nor it was the case of the Revenue that the

amount received by the assessee on sale of shares was

more than what was declared by the assessee. It is also

noted that the ratio laid down by the Tribunal in the case

of Green Infra Ltd. vs. ITO (2013) 38 taxmann.com 253

(Mum) wherein the assessee collected share premium on

allotment of shares of face value of `10/- each at a

premium of `490/- per share. The assessee credited the

said amount in the Balance Sheet under the head ‘Share

Premium Account’ by claiming that it was a capital

receipt not exigible to tax. The learned Assessing Officer

taxed the share premium under section 56(1) r.w.s. 68 of

the Act as income from other sources. The question

before the Bench was since the entire transaction relating

to allotment of shares was done through banking channel

ITA Nos. 1422 & 1423/Mum/2010, 98 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah and the assessee invested sale premium in its three

subsidiary companies section 68 is not applicable and

the case was decided in favour of the assessee. The

Revenue challenged the decision before the Hon'ble

Jurisdictional High Court wherein the Hon'ble High Court

vide order dated 25.01.2017 (2017) 78 taxmann.com 340

(Bom) held that where the identity of the subscribes is

confirmed, genuineness of entire transaction was

recorded in the books of account/reflected in the

financial statement and since the subscription was done

through banking channels, the order of the Tribunal was

upheld by the Hon'ble High Court. The relevant portion

from the order of the Hon'ble High Court is reproduced

hereunder for ready reference: -

“1. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 23rd August, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respectof Assessment Year 2011-12.

“(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that an amount of Rs.490/ per share

ITA Nos. 1422 & 1423/Mum/2010, 99 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah received by the respondent assessee constituted share premium of the assessee company?

(ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in disagreeing with invocation of Section 68 of the Act to tax share premium?

(iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that because its subsidiary company has started manufacturing and therefore interest income from fixed deposit is to be charged as business income?

Regarding question no.(ii):

(b) The impugned order examined the applicability of Section 68 of the Act on the parameters of the identity of the subscriber to the share capital, genuineness of the transaction and the capacity of the subscriber to the share capital. It found that the identity of the subscribers was confirmed by virtue of the Assessing Officer issuing a notices under Section 133(6) of the Act to them. Further, it holds that the Revenue itself makes no grievance of the identity of the subscribers. So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the Books of Accounts and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which

ITA Nos. 1422 & 1423/Mum/2010, 100 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98% of the shares is held by IDFC Private Equity FundII which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings.

(c) Mr.Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of Rs.490/ per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of Section 68 of the Act and found on facts that it is not so hit. Therefore, Section 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the Tribunal is perverse in any manner.

(d) Thus, question no.(ii) as formulated does not give rise to any substantial question of law and thus not entertained.” In aforesaid order the Hon'ble jurisdictional High Court

has clearly held that since the identity of the subscriber

is established. The entire transaction was recorded in the

books of account, the financial statements of the

assessee were found to be correct, the transaction was

done through banking channel therefore the Tribunal

was held to be justified that the case of the Revenue is

not hit by section 68 of the Act and the factual finding

recorded by the Tribunal was justified. In the present

ITA Nos. 1422 & 1423/Mum/2010, 101 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah case of the assessee also no incriminating material was

found out by the Revenue, the shares were De-mated, the

sale was effected at the floor of the Bombay Stock

Exchange, the money was received through banking

channel, identity of the parties is not in dispute, therefore

the addition cannot be affirmed on the basis of the

statement of a third party. Thus, the ratio laid down in

the aforesaid case and the conclusion arrived at clearly

supports the case of the assessee. In another case in CIT

vs. Gagandeep Infrastructure Pvt. Ltd. [2017] 394 ITR

680 (Bom), order dated 20.03.2017, wherein on the issue

whether the Tribunal was justified in deleting the

addition of `7,53,50,000/- made u/s. 68 of the Act, being

share capital/share premium received during the year

and the ld. Assessing Officer added the same as

unexplained cash credit. The Hon'ble Jurisdictional High

Court considering the decision from the Hon'ble Apex

court in CIT vs. Lovely Exports P. Ltd. [2009] 319 ITR

(Statue 5) (SC), held that it does not entitle the Revenue

to add the same to the income of the assessee as

unexplained cash credit, further supports the case of the

ITA Nos. 1422 & 1423/Mum/2010, 102 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah assessee by holding that the three essential tests laid

down by the Courts, namely, the genuineness of the

transactions, identity and capacity of the investors of the

share application money along with premium had already

been examined by the Tribunal and on facts the Tribunal

was satisfied. This judicial pronouncement further

supports the case of the assessee. Thus, considering the

various judicial pronouncements and the factual matrix,

discussed hereinabove, following the ratio laid down

therein the appeal of the assessee, on merit also,

deserves to be allowed.

So far as, the addition of `3,28,943/- on account 4.

of payment of commission by the assessee for obtaining

accommodation entry in respect of sale of shares through

share broker (Assessment Year 2005-06) and identically

`76,156/- for Assessment Year 2006-07, on account of

alleged commission paid toward purchase of Long Term

Capital Gains, is concerned, on the broad reasoning

contained in the earlier paras of this order, while disposing

off the alleged addition made u/s 68 of the Act, we find that

ITA Nos. 1422 & 1423/Mum/2010, 103 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah the Ld. Assessing Officer added these impugned amounts,

being 5% of `65,78,860/- (Assessment Year 2005-06) and `

15,23,130/- (Assessment Year 2006-07) as unexplained

money in possession of the assessee as commission

(remuneration). As per the Ld. Assessing Officer the

assessee must have paid these impugned amounts for

engineering Long Term Capital gains on sale of shares of

M/s Robinson Impex Pvt. Ltd., which was affirmed by the

First Appellate Authority by making the following

observation:-

"I have carefully and dispassionately considered the facts and circumstances of the case. I have already confirmed such findings given by the Ld. Assessing Officer while deciding ground No. 1 vide para 2.3.13 above. As a corollary, the addition of Rs.76,1561- made is accordingly confirmed. Ground No. 2 is therefore dismissed."

4.1. We find that the addition has been made solely on the

basis of presumption without bringing any material on

record to prove that the assessee paid such commission to

the broker. Even otherwise, nothing incriminating was

found during search to prove that the assessee made such

undisclosed payments to the broker as has been alleged by

the Revenue. The observation of the Ld. Assessing Officer

ITA Nos. 1422 & 1423/Mum/2010, 104 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah at para 7 (page25) of the consolidated assessment order

u/s 153A of the Act is without any basis. In earlier paras of

this order, we have decided the issue in favour of the

assessee by holding that the addition on account of alleged

capital gain on sale of shares was explained one as the sale

proceeds were received through banking channel. The

observation/allegation that such commission was payble by

the assessee at the rate of 5% to 7% of the capital gain

amount is without any basis/evidence. The ratio laid down

in the decision in Umacharan Shaw and Bros vs. CIT 37

ITR 271 (Page Nos. 225 to 231 of the Paper Book -

II)that "suspicion, howsoever strong cannot take the

place of legal proof". Further, it is an accepted principle of

law that an assessment based on no material at all or

based on inadequate material, is bad in law, supports

the case of the assessee. Reference can also be made to

the following decisions:-

a. Dbakeswari Cotton Mills Ltd. Vs. CIT (1954) 26 ITR 775 (SC) b. Raj Mohan Saha Vs. CIT (1964) 52 ITR 231 (Assam) c. CIT Vs. Gokaldas Hukumehand (1943) 11 ITR 462 (Born)

ITA Nos. 1422 & 1423/Mum/2010, 105 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah d. Ram Datta Sita Ram of Basti (1947) 15 ITR 61 (All) e. Narayan Chandra Baidya Vs. CIT (1951) 20 ITR 287

In earlier paras of this order, we have already

elaborated that the sale of shares of M/s. Robinson

Impex Ltd during Assessment Year 2005-06 and A.Y.

2006-07 has been proved by the appellant by filing

conclusive documentary evidences on record and has

also been duly confirmed by the broker M/s. Pruthvi

Brokers & Shareholdings P. Ltd. The said sale of shares for

Rs. 65,78,860/- of A.Y. 2005-06 and Rs. 15,23,130 for A.Y.

2006-07 through M/s. Pruthvi Brokers & Shareholdings

Pvt. Ltd have not been successfully disputed either by the

Assessing Officer or the Ld. CIT(A). Thus, the question of

payment of 5% of the sale proceeds during A.Y. 2005-06

and A.Y. 2006-07 by way of alleged undisclosed

remuneration does not arise. The Assessing Officer has

only disputed the purchase of shares for Rs. 76,052/-

against sale of shares proceeds of PAN Packaging during

A.Y. 2004-05 on the basis of statement of director of M/s.

DPS Shares & Securities Pvt. Ltd. which, as explained

earlier, has no relevance for disproving the sale

ITA Nos. 1422 & 1423/Mum/2010, 106 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah transactions conducted through M/s. Pruthvi Brokers &

Shareholdings P. Ltd during A.Y. 2005-06 and A.Y.2006-

being the sole so-called evidence relied upon by the

Assessing Officer, also does not, in any manner hint at

any such payment of unaccounted remuneration of 5%

on sale proceeds by the assessee. The ratio laid down in

S.F. Wadia-vs-ITO (19-ITD-306) that the burden of proving

that the assessee has incurred any unexplained

expenditure which is assessable u/s.69C of the I.T. Act is

on the Department. Similar views have been taken in the

cases of Yogeshwar Prasad (16-TTJ-175) Naren Singh

Bhatti (40-TTJ-381) and Pradip C. Patel (58-TTJ-409). In

the instant case, this burden has not been discharged.

The Ld. Assessing Officer has added the aforesaid

amounts on the basis of information in possession of the

Department. This is nothing but hearsay. Since, the

burden of proof in this case has not been discharged by

the Revenue, therefore, the addition so made, is directed

to be deleted. Thus, this ground of the assessee is also

allowed.

ITA Nos. 1422 & 1423/Mum/2010, 107 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah 5. Now, we shall take up the appeals of the Revenue

(ITA No.4655/Mum/2012 and 3479/Mum/2014) of

`22,95,995/- for Assessment Years 2005-06 and

`5,47,821/- for the Assessment Year 2006-07

respectively, wherein, the First Appellate Authority deleted

the penalty imposed u/s 271(1)(c) of the Act.

relief to the assessee, the First Appellate Authority ignored

the facts, whereas, the ld. counsel for the assessee,

defended the order of the Ld. Commissioner of Income Tax

(Appeal) in deleting the penalty.

6.1. We have considered the rival submissions and

perused the material available on record. It is noted that

the First Appellate Authority deleted the penalty because

the addition was made merely on the basis of statement of

one of the Directors and the broker did not confirmed the

purchase. There is uncontroverted finding that the assessee

was having consolidated share certificate received from the

company and the copies of letter received were filed before

the Assessing Officer. This finding of the Ld. Commissioner

ITA Nos. 1422 & 1423/Mum/2010, 108 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah of Income Tax (Appeal) rather supports the case of the

assessee not only on quantum addition but on penalty also.

The cases relied upon by the First Appellate Authority,

more specifically on page-18 supports the case of the

assessee which are not being repeated. The finding of the

Ld. Commissioner of Income Tax (Appeal) was not

controverted by the Revenue. Therefore, we don’t find any

infirmity in the order of the First Appellate Authority. Even

otherwise, while dealing with the quantum addition, in

earlier paras of this order, since, we have allowed the

appeal of the assessee in preceding paras of this order by

holding that the addition was not justified, therefore, this

appeal of the Revenue has remained for academic interest

only. Even otherwise, when the quantum on the basis of

which penalty was imposed u/s 271(1)(c) of the Act remains

no more remained in existence, therefore, we are of the view

that penalty imposed u/s 271(1)(c) will not survive. Our

view find support from the decision in K.C. Builders vs

ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in

CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when

the quantum addition is deleted, there remains no basis at

ITA Nos. 1422 & 1423/Mum/2010, 109 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah all for levying the penalty for concealment or furnishing

inaccurate particulars. The penalty cannot stand on its legs

when addition on the basis of which the penalty was

imposed remains no more in existence, thus, the appeals of

the Revenue are dismissed.

Finally, the appeals of the assessee are allowed and

that of the Revenue are dismissed.

This Order was pronounced in the open court in the

presence of ld. representatives from both sides at the

conclusion of the hearing on 13/09/2017.

Sd/- Sd/- (N.K. Pradhan) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER

मुंबई Mumbai; �दनांक Dated : 03/10/2017

eÉá{tÇ| fÜA cAfA 9 f{x~{tÜ? P.S

ITA Nos. 1422 & 1423/Mum/2010, 110 ITA No.4655/Mum/2012 & ITA No.3479/Mum/2014 Smt. Pratiksha Shah

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Assessee 1. 2. ��यथ� / The Respondent. 3. आयकर आयु�त,(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai