AJAY J DOSHI (HUF),MUMBAI vs. ITO 12(2)(4), MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 09/10/2014 of the First Appellate Authority, Mumbai. The assessee, through ground no.1, has challenged reopening of assessment u/s 148 upholding the issuance of notice u/s 148 of the Income Tax Act, 1961 (hereinafter the Act) and thus passing the reassessment order and as well as on merit.

2.1. On the other hand, the Ld. DR, Shri Rajat Mittal, contended that statement of broker was recorded and relied

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upon the finding of the Ld. Commissioner of Income Tax (Appeal).

2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee HUF earned short term capital gain, long term capital and also income from other sources, filed its return on 12/08/2005, declaring total income of Rs.2,05,598/-, which was processed on 31/03/2007, u/s 143(1) of the Act. The Ld. Assessing Officer issued notice u/s 148 of the Act on 29/02/2012 (page-1 of the paper book) and the assessment was reopened after lapse of more than four years from the end of the relevant Assessment Year. The assessee sought the reasons for reopening, which were provided by the Assessing Officer (page-3 of the paper book). In response to notice u/s 148 of the Act, the assessee through its communication claimed that the return filed on 12/08/2005 may be treated as return filed against the said notice. The reasons provided to the assessee are reproduced hereunder:-

"An Intimation has been receivedfrom ACIT Cent. Cir. 12, Mumbai as per letter No. A CT/CC12/2008-09 dt. 13.03. 2009 stating that a search action in Doshi Group of cases were carried out on 18.01. 07, wherein the assesses in this group have obtained artificial bogus 'capital gains' through share market hawala operations. They have obtained bogus backdated purchase bills of shares and such shares were received in physical format. Thereafter, the said physical shares have been de materialized and sold in stock exchanges either in open market or through engineered transactions, thus fabricating artificial/bogus capital gains and

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thereby gaining the entailing benefits of taxation at lower rates or tax exemption.

It is further intimated that Shri Ajay Doshi, HUF, has also claimed bogus/artificial Long Term Capital Gain amounting to Rs. 41,80,055/- in the year under consideration.

In view of the aforesaid, I have reason to believe that income chargeable to tax to the extent of Rs. 41,80,055/- has escaped assessment. Therefore this is a fit case to issue notice u/s. 148 of the Income Tax Act, 1961.

As such, permission may please be accorded as per the provisions of section 151 (1) of the Income Tax Act, 1961. "

If the aforesaid reasons of reopening are analyzed, we find that the Ld. Assessing Officer has relied upon a letter received from another Assessing Officer i.e. ACIT, which speaks about search carried out in the case of group concern, which was alleged to be involved in artificial capital gains. Further it was also claimed that the assessee has also claimed artificial long term capital gain amounting to Rs.41,80,055/-. However, as claimed by the assessee, during assessment proceedings, the assessee furnished various evidences in support of the claim of the long term capital gain, which was disregarded by the Assessing Officer by holding that the same claim is artificial long term capital gain on sale of shares. The assessee has challenged both legality of reopening of assessment and as well as the addition on merit. The Ld. Commissioner of Income Tax (Appeal) confirmed both on merit as well as the legality of assessment framed u/s 147 r.w.s 143(3) of the Act and the consequent additions.

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2.2. Before us, the assessee has contended that there is no independent application of mind by the Assessing Officer and also there is absence of tangible material, which is the requirement for reopening the assessment. We find that the Mumbai Bench of the Tribunal in the case of Income Tax Officer vs M/s Desire Jewells Pvt. Ltd. (supra) vide order dated 29/02/2016 observed/held as under:-

“6. I have carefully considered the rival submissions. One of the necessary ingredients required to initiate reassessment proceedings under section 147 of the Act is formation of belief by the Assessing Officer that certain income chargeable to tax had escaped assessment. It is also a trite law that the formation of such belief should be discernible from the material and information on record when the Assessing Officer records his reasons. In other words, it is an accepted position of law that there should be a live link between the reasons and the evidence/material available with the Assessing Officer. In the present case, the CIT(Appeals) has extracted the reasons recorded by the Assessing Officer in para 3.2 of his order. A reading of suchreasons reveal that the Assessing Officer refers to information received from the Investigation Wing that assessee made bogus purchases from one M/s. U.M Exports to the extent of Rs.4,90,275/-. Merely noticing such information, the Assessing Officer proceeds to record a belief that income chargeable to the aforesaid extent had escaped assessment. In the context of such recording of reasons the CIT(Appeals) referred to the judgment of the Hon’ble Delhi High Court in the case of Meera Kapoor (supra), wherein a somewhat similar reasons recorded were held to be non- complaint with the requirement of section 147/148 of the Act.

6.1 At the time of hearing, the Ld. Representative for the assessee referred to the Paper Book, wherein a copy of the statement rendered by Shri Mahesh P. Mehta, proprietor of

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M/s. U.M Exports is placed. On that basis, it is sought to be explained that the assessee has not been specifically named therein.

6.2 Be that as it may, I am presently only examining the conclusion of the CIT(Appeals) that the reasons recorded by the Assessing Officer do not reflect independent application of mind as to whether the information before him suggested any escapement of income. To that extent, in my view, the reasons recorded do not satisfy the requirement of section 147 of the Act in as much as they do not refer to any documents or statement, etc., which would prima-facie establish a link between the bogus nature of the impugned purchases and consequential escapement of income. Therefore, having regard to the facts and material found by the CIT(Appeals), the initiation of proceedings under section have been rightly held to be ab-inito invalid. The order of the CIT(Appeals) on this aspect is hereby affirmed.”

2.3. In the aforesaid order, the jurisdictional Tribunal has observed that for initiating reassessment proceedings u/s 147 of the Act, one of the necessary ingredients is information of belief by the Assessing Officer that certain income chargeable to tax had escaped assessment and further such belief should be discernible from the material and information on record when the Assessing Officer record his reasons, meaning thereby, there should be live link between the reasons and the evidence/material available with the Assessing Officer. In the present appeal, the Ld. Assessing Officer refers to an information received from another Assessing Officer. The Ld. Assessing Officer merely based upon such information proceeded to record the belief that income chargeable to a particular extent has escaped

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assessment. Identical are the facts in the case of M/s Desire Jewells Pvt. Ltd. (supra), wherein, it was held that the proceedings so initiated were ab-initio invalid.

2.4. Likewise, in the case of Pr. CIT vs G and G. Pharma India Ltd. (2016) 384 ITR 147 (Del.), Hon'ble Delhi High Court held as under:-

“1. This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 („Act‟) is directed against the order dated 9th January 2015 passed by the Income Tax Appellate Tribunal („ITAT‟) in ITA No. 3149/Del/2013 for the Assessment Year („AY‟) 2003-04. 2. The issue sought to be projected by the Revenue is whether the ITAT was correct in holding that the Assessing Officer („AO‟) has not applied his mind and not come to an independent conclusion that he has reason to believe that the income of the Assessee has escaped assessment which was the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act. 3. The Assessee filed its return on 14th November 2004 at Rs.1,190/- which was processed under Section 143(3) of the Act on 1 st March 2004. Thereafter, on the basis of information received from the Directorate of Investigation, the AO issued notice under Section 148 of the Act to the Assessee on 19th March 2010 i.e., more than six years after the assessment. The AO made various additions and completed the assessment at Rs.55,50,180/. The Appeal of the Assessee was dismissed by the Commissioner of Income Tax (Appeals) [CIT (A)] by order dated 30th August 2011. 4. The Assessee‟s further appeal was allowed by the ITAT by the impugned order dated 9th January 2015. The ITAT set out in the impugned order the reasons recorded by the AO for the reopening of the assessment by the AO by the letter dated 15th September 2010, and came to the conclusion that, apart from making a mere reference to information received from the investigation wing, the AO mechanically issued notice under Section 148 of the Act, without coming to an independent conclusion that he has reason to believe that the income has escaped assessment during the AY in question.

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dated 24th August 2015 in ITA No. 226 of 2015 (CIT v. Ashian Needles Pvt. Ltd.) 9. The Court at the outset proposes to recapitulate the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act by referring to two decisions of the Supreme Court. In Chhugamal Rajpal v. SP Chaliha (1971) 79 ITR 603, the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were "name-lenders and the transactions are bogus." The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme Court disagreed and observed that the AO "had not even come to a prima facie conclusion that the transactions to which he referred were not genuine transactions. He appeared to have had only a vague felling that they may be '"bogus transactions'." It was further explained by the Supreme Court that: "Before issuing a notice under S. 148, the ITO must have either reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under S. 139 for any assessment year to the ITO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of cl. (a) or cl. (b) of S. 147 are satisfied, the ITO has no jurisdiction to issue a notice under S. 148." The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under Section 147 and therefore could not have issued notice under Section 148. 10. In ACIT v. Dhariya Construction Co.(2010)328 ITR 515 the Supreme Court in a short order held as under: "Having examined the record, we find that in this case, the Department sought reopening of the assessment based on the opinion given by the DVO. Opinion of the DVO per se is not an information for the purposes of reopening assessment under s. 147 of the IT Act, 1961. The AO has to apply his mind to the information, if any, collected and must form a belief thereon. In

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the circumstances, there is no merit in the civil appeal. The Department was not entitled to reopen the assessment." 11. The above basic requirement of Sections 147/148 has been reiterated in numerous decisions of the Supreme Court and this Court. Recently, this Court rendered a decision dated 22nd September 2015 in ITA No. 356 of 2013 (Commissioner of Income Tax II v. Multiplex Trading and Industrial Co. Ltd.) where the assessment was sought to be reopened beyond the period of four years. This Court considered the decision of the Supreme Court in Phool Chand Bajrang Lal v. Income-tax Officer (supra) as well as the decision of this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. v. CIT 308 ITR 38 (Del). The Court noted that a materialchange had been brought about to Section 147 of the Act with effect from 1st April 1989 and observed: "29. It is at once seen that the Amendment in Section 147 of the Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled under Section 147(a)and that is, that the AO has reason to believe that income of an Assessee has escaped assessment. However, the proviso to Section 147 of the Act provides a complete bar for reopening an assessment, which has been made under Section 143(3) of the Act, after the expiry of four years. However, this proscription is not applicable where the income of an Assessee has escaped assessment on account of failure on the part of the Assessee to make a return or to disclose fully and truly all material facts necessary for his assessment. Thus, in order to reopen an assessment which is beyond the period of four years from the end of the relevant assessment year, the condition that there has been a failure on the part of the Assessee to truly and fully disclose all material facts must be concluded with certain level of certainty. It is in the aforesaid context that this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. (supra) explained that the ratio of the decision in Phool Chand Bajrang Lal (supra) may not be entirely applicable since the same was in respect of Section 147(a) as it existed prior to the amendment." 12. In the present case, after setting out four entries, stated to have been received by the Assessee on a single date i.e. 10th February 2003, from four entities which were termed as

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accommodation entries, which information was given to him by the Directorate of Investigation, the AO stated: "I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries." The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analysing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous. No substantial question of law arises. 15. The appeal is dismissed.”

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2.5. We note that while coming to a particular conclusion, Hon'ble High Court duly considered various decisions including from Hon'ble Apex Court/High Court and finally held that the basic requirement of law for reopening of assessment is application of mind by the Assessing Officer to the material produced prior to reopening the assessment to conclude that he had reason to belief that income, chargeable to tax, has escaped assessment. In the present case also, the Ld. Assessing Officer merely reopened the assessment on the basis of information received from another ACIT and did not independently applied his mind, thus, the aforesaid decision squarely applies to the present appeal also. The ratio laid down in the case of Banke Bihari Properties Pvt. Ltd. vs Income Tax Officer (supra) further support the case of the assessee. In the present appeal, the ld. Assessing Officer merely mention one letter No. ACIT/CC.12/2008-2009 dated 13/03/2009 mentioning one search action in Doshi Group of cases was carried out on 18/01/2007. Neither any independent enquiry was made by him nor any material was before him evidencing/suggesting that income had really escaped taxation in the present appeal also. The ratio laid down in Devesh Kumar (ITA No.2068/Del./2010) (pages 93 to 106 of the paper book), DCIT vs Bhart Chandra Sheth (ITA No.622/Mum/2014) (Page 107 to 11 of the paper book), Pankaj Gas Cylinders vs ACIT (ITA No.5273/Del./2013) dated 03/05/2016, R.M.G. Plyvinxl (I) Ltd. (2016) 48 ITR (Trib.) 674 (Del.), Hon'ble jurisdictional High Court in Prashant Joshi vs Income Tax Officer (324 ITR 154)(Bom.), Godrej Industries

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Ltd. vs DCIT & Ors. (2015) 377 ITR 1(Bom.) supports the case of the assessee. In the present appeal, the assessee, during assessment proceedings, furnished the necessary documents, as claimed in the paper book (filed before this Tribunal), which is summarized hereunder for ready reference and analysis:-

Particulars Evidence Paper Book Pg. No. (i) Evidence of Copy of Purchase of 25000 shares of Robinson 04 purchase of Impex (India) Ltd. from DPS Shares & Securities Pvt. Ltd. Robinson Impex (ii) Copy of Ledger Account of DPS Shares & Securities 05 (India) Ltd. Pvt. Ltd. evidencing purchase of 25,000 of shares to the appellant. (iii) Copy of the return of income for A.Y. 2004-05, 06-12 Balance Sheet of assessee as at 31.3.2004 and Statement showing investment in shares filed along with return of income for A.Y. 2004-05 showing purchase of 25,000 shares for Robinson Impex (India) Ltd. (iv) Copy of assessment order for A.Y. 2004-05 dated 13-14 30.11.2006 in assessee’s own case. Evidence of (v) Copy of the sale bill showing sale of shares of 28 source of Mastek Limited and RIL Ind. Purchase/mode of (vi) The Balance Sheet and statement showing payment investment in shares filed along with return of income for 11 A.Y. 2004-05 showing purchase of 25,000 shares of Robinson Impex (India) Ltd. (vii) Copy of assessment order for A. Y. 2004-05 dated 13-14 30.11.2006 in assessee's own case. Evidence for (viii) Details of physical share certificates of 19-23 Physical Shares M/s.Robinson Worldwide Trade Ltd. (ix) received Copy of the letter dated 30.04.2003 received from 24 Robinson Worldwide Ltd. regarding transfer of shares and issue of jumbo certificate. (x) Copy of jumbo certificate of Robinson Impex (India) 25 Ltd. issued on 30.04.2003 Evidence for (xi) Acknowledged Copy of request issued by HDFC Bank 26 dematerialization accepting the assessee's shares 111 physical form for of Shares dematerialization. (xii) Copy of transaction cum holding statement reflecting 27 confirmation of said demat. Evidence for Sale (xiii) Copy of sale bill of Pruthvi Brokers & Shareholdings 15-18 of Shares Pvt. Ltd. (xiv) Ledger copy evidencing sales in the books of Pruthvi 29-30 Brokers for A.Y. 2005-06. (xv)Copy of transaction cum holding statement reflecting 27 confirmation of sale of shares from demat. (xvi) Copy of Pool Account of Pruthvi Brokers & 31-42 Shareholdings Pvt. Ltd. in Oriental Bank of Commerce for A.Y.2005-06. 43-46 (xvii) Sample copy of BR files received by Pruthvi Brokers

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from Bombay Stock Exchange reflecting sale with trade id, trade time & client code for A. Y. 2005-06. 47 (xviii) Statement of computation of Long term capital gains from sale of shares of Robinson Impex (India) Ltd. 48-54 (xix) Copy of the return of income for A.Y. 2005-06, Balance Sheet of assessee as at 31.3.2005 and Statement showing investment in shares filed along with return of income for A.Y. 2004-05 showing purchase of 25,000 shares of Robinson Impex (India) Ltd. Evidence for (xx) Copy of bank statement of HDFC Bank 55 receipt of sale consideration for shares

2.6. From the above, one question arises whether the assessee fully and truly disclosed the material facts for making the assessment. From the aforesaid summarized chart, it is evidently clear the assessee produced the evidence of purchase of shares of Robinson Impex (India) Ltd. for purchase of 25,000 shares, from DPS shares and securities Pvt. Ltd., (page-4 of the paper book), copy of ledger account of DPS shares and securities pvt. Ltd. evidencing purchase of 25,000 shares to the assessee (page-5 of the paper book), copy of return of income for Assessment Year 2004-05, copy of balance sheet of the assessee as on 31/03/2004 and the statement showing investment in shares along with return of income for Assessment Year 2004-05 showing purchase of aforementioned shares (page-6 to 12 of the paper book) and the copy of assessment order for Assessment Year 2004-05 dated 30/11/2006 in the case of the assessee (paperbook page 13 to 14). So far as, evidence of source of purchase/mode of payment is concerned, the assessee filed copy of sale bill, showing sale of shares of Mastek Ltd. and RIL India (page 28 of the paper book), the balance sheet and

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statement showing investment in shares, copy of assessment order for Assessment Year 2004-05 were duly furnished. The evidence for physical shares, received by the assessee such certificate is available at page 19 to 23 and 24 of the paper book. The copy of the certificate of Robinson Impex (India) Ltd., issued on 30/04/2003 (page 25 of the paper book) was made available before the Assessing Officer. The evidence of dematerialization of shares, acknowledged copy of request, issued by HDFC bank, accepting the assessee’s shares in physical form for dematerialization (page 26 of the paper book) and copy of transaction cum holding statement, reflecting confirmation of said D-mat is available at page 26 of the paper book. So far as, evidence of sale of shares is concerned, the assessee produced the necessary documents which are available to page 15 to 54 of the paper book. So far as, evidence of receipt of sale consideration for shares is concerned, the copy of bank statement of HDFC bank is available on page 55 of the paper book. Considering the totality of facts and the judicial pronouncements, discussed hereinabove, it can be said that reopening of assessment was not justified as the material facts for making the assessment were duly disclosed/furnished by the assessee. In such a situation, the Hon'ble jurisdictional High Court in the case of Khubchandani Healthparks P. Ltd. vs Income Tax Officer (2016) 384 ITR 322 (Bom.) after following the decision in ACIT vs Rajesh Jhaveri Stock Broker Pvt. Ltd. (2007) 291 ITR 500 (SC) and on explaining and distinguishing DCIT vs Zuari

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Estate Development & Investment Co. Ltd. (2015) 373 ITR 661 (SC) held as under:-

“5. It is settled position in law that the decision of the Court has to be read in the context of the facts involved therein and not on the basis of what logically flows therefrom as held by the Supreme Court in Ambica Quarry Works Vs. State of Gujarat, 1987(1) SCC 213. The Apex Court in Zuari Estate Development and Investment Co. Ltd. (Supra)not having dealt with the issue of reason to believe that income chargeable to tax has escaped assessment on the part of the Assessing Officer in cases where regular assessment was completed by Intimation under Section 143(1) of the Act, it would not be wise for us to infer that the Supreme Court in Zuari Estate Development and Investment Co. Ltd. (Supra) has held that the condition precedent for the issue of reopening notice namely, reason to believe that income chargeable to tax has escaped assessment, has no application where the assessment has been completed by Intimation under Section 143(1) of the Act. The law on this point has been expressly laid down by the Apex Court in the case of Rajesh Jhaveri Stock Brokers P. Ltd. (Supra) and the same would continue to apply and be binding upon us. Thus, even in cases where no assessment order is passed and assessment is completed by Intimation under Section 143(1) of the Act, the sine qua non to issue a reopening notice is reason to believe that income chargeable to tax has escaped assessment. In the above view, it is open for the petitioner to challenge a notice issued under Section 148 of the Act as being without jurisdiction for absence of reason to believe even in case where the Assessment has been completed earlier by Intimation under Section 143(1) of the Act.

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intrinsic value, which has escaped assessment. It gives no reasons to indicate the basis of coming to the conclusion that share premium is excessive and, therefore, income. Moreover, the Notice also does not dispute that this is a share premium but seek justification for charging the share premium over and above intrinsic value of the share premium. Primafacie, we are of the view that the basis of the impugned Notice stands concluded by the decision of this Court in Vodafone India Services Ltd. Vs. CIT 368 ITR 01, wherein it has been held that the share premium being on the capital amount cannot be subjected to tax as income.

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evidence available with the Assessing Officer. The Ld. Assessing Officer was merely having information received from the Investigation wing and merely noticing such information, without verifying the same, proceeded to record the belief that income chargeable to tax had escaped assessment. No independent application of mind has been done by the Assessing Officer suggesting escapement of income. Therefore, having regard to the factual matrix and the judicial decisions like Pr. CIT vs G and G Pharma India Ltd. (2016) 384 ITR 147 (Del.) and Hon'ble jurisdictional High Court in Khoobchandani Healthpack Pvt. Ltd. (2016) 384 ITR 322 (Bom.), we are of the view that the initiation of proceedings u/s 147 of the Act by the Ld. Assessing Officer are held to be ab-initio invalid.

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claimed that during Financial Year 2003-04 (Assessment Year 2004-05), the assessee purchased the following shares.

Sr. Name of Nos. of Scrip Purchased through Sold through No. Scrip 1 Robinson 25,000 (sold in DPS shares & Pruthvi Brokers & Worldwide A.Y.-2005-06) Securities Pvt. Ltd. Share Holdings Pvt. Trade Ltd. (SEBI Regn. No. Ltd. (SEBI Regn No. INB-010986539 INB 011059830, Clg. Clg. No.151) No. 529)

3.1. We have perused the assessment order and found that broadly, even after submission of aforesaid documents, the Ld. Assessing Officer made addition by making following broad objections:-

i. Search was conducted on the Doshi Group of cases on 18.01.2007, wherein it was found that the assessee had obtained artificial long term capital gains. ii. The assessee's in the group have backdated the purchase of shares as the same have been paid either through cash or through speculative capital gains and no actual purchase of the said shares was ever made. iii. It is seen that on the date of purchase of these shares, the market price of the said shares is very nominal. iv. On the date of purchase of the said shares, no transaction for these shares was conducted on the Bombay Stock Exchange (BSE). v. Similarly, the speculation profits never actually arose out of transactions on BSE. The assessee on the date on which it had supposedly vi. earned long term capital gains was in possession of unexplained money to the extent of Rs. 41,79,305/-. vii. Additions with regards to the sale of scrip of M/s. Robinson Worldwide Trade Ltd. was made in all the Doshi group cases by ACIT Central Circle - 12 and as the

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assessee's case was left out of centralization, information was sent to this office for making the additions on account of bogus/artificial capital gains.

3.2. In the backdrop of the above observations, we have also analyzed the impugned order, wherein, the First Appellate Authority, confirmed the addition by observing as under i. The share broker through whom the shares in question have been claimed to have been Purchased has categorically stated that the purchases in question are bogus and in the nature of accommodation entries. ii. It appears that there are hundreds of persons unrelated to each other who have adopted the same modus operandi in respect of transactions in the shares of M/s. Robinson Impex and the involvement of same share broker i.e. M/s. DPS Share Brokers. This cannot he a mere coincidence. iii. The fact as mentioned in sub-para 'b' above cannot be ignored merely because the assessee has some documents in its possession. iv. The speculative transactions, especially of blue chip companies like RIL, in question were not effected on the stock exchange platform. v. The alleged broker had not informed the speculative transactions to the stock exchange in all cases. vi. It is not understandable as to why the assessee would invest in penny stock with no track record. vii. The shares were sent for de-materialisation long after purchasing the same. viii. The assessee has filed the Demat Request Form submitted to Oriental Bank of Commerce for dematerialization of shares, which is incomplete and not signed/stamped by the authorized participant. ix. Therefore, from the facts on record it emerges that even though the shares were dematerialized, it was part of the arrangement between the assessee and the

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company. x. Even if it is accepted that the said shares were in fact purchased by the assessee, the same is to he held to have been purchased for profit motive as trading asset and not as a capital asset or investment. xi. Further, no deduction of purchase cost can he allowed to the assessee since it has been held that the said purchase has not been substantiated by it. xii. No reliance can be placed on the assessment order for A. Y. 2004-05 for genuineness of purchases since the said issue was not examined by the Assessing Officer. 3.3. Now, we shall analyze, the search proceedings, as observed in the assessment order as well as in the impugned order. The submissions on behalf of the assessee, before us, are summarized as under:-

The Assessing Officer as well as the Ld. CIT(A) has placed reliance on the search proceedings conducted on the Doshi Group on 18.01.2007 to conclude that the appellant had claimed bogus long term capital gains.

It is submitted herewith that search action was carried out u/s. 132(4) of the Act on the Doshi Group on 18.01.2007. However, no incriminating material was seized/found during the course of the said search action that in any manner points out that either in the assessee's group concern or in the appellant was engaged in the obtaining accommodation entries with regards to long term capital gains on sale of shares. The following assessee's of Doshi Group were before the Hon'ble Income Tax Appellate Tribunal, Mumbai Bench:- Sr. No. Name of the Asst. Years. ITA No. Date of Order assessee 1. Smt. Neeta 2005-06 439/Mum/2010 and 30.11.2015 Doshi & Smt. 441/Mum/2010 Manisha Doshi 2. Shri Brijesh D. 2002-03, 2003-04, 1417 to 1420/Mum /2010 03.02.2016 Shah 2004-05 & 2005- 06

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In the case of said assessees, the Assessing Officer had issued notices u/s. 153A of the Act and passed assessment orders u/s. 153A r.w.s. 143(3) of the Act. The said assessee's had challenged the said order on both the issues of legality of the assessment and merits of the addition made by the Assessing Officer. The Hon'ble Tribunal in the case of the above-referred assessees granted relief on the issue of legality of assessment framed u/s. 153A r.w.s. 143(3) of the Act itself'. The said relief was granted looking into the fact that there was no incriminating material which was either found or seized during the course of search to justify addition u/s 153A r.w.s. 143(3) of the Act. Reliance for this contention is placed on the order of Hon'ble Mumbai Tribunal in the case of Skil Brijesh D. Shah vs. ACIT Central Circle 11, Mumbai in the ITA No. 1417 to 1420/M/2010 dated 03.02.2016 (Page No 125-133 of the Paperbook). The relevant portion of the said order is reproduced hereunder: "15. We have considered the rival contentions and also deliberated on the judicial pronouncements referred by lower authorities in their respective order as well as cited by Ld A. R. and D. 1?. during the course before us, in the context of factual matrix of the instant cases before us. From the record, we found that a search was carried out under section 132(1) on the assessee's premises on 18.01.2007 on the allegation that assessee obtained artificial capital gains. However, nowhere in the assessment order the AO has stated any incriminating document, paper or evidence found during search in allegation of bogus capital gain. 16. In view of above discussion, since no incriminating material was found during the course of search, the addition made under section 153A, when the assessment was not pending, was not justified." Similar order was passed by Hon'ble Mumbai Tribunal in the case of Smt. Neeta Doshi & Snit Manisha Doshi, in the ITA No. 439/Mum/2010 and 441/Mum/2010 dated 30.11.2015 (Page No 134-150 of the Paperbook).

From, a perusal of the above order it gets amply clear that the search and seizure operation on the Doshi Group had

23 ITA No.121/Mum/2015 Ajay J. Doshi

not yielded with any Findings with regards to the genuineness of claim of Long Term Capital Gains in either the case of the said assessee's or in the case of the appellant.

No confrontation of the purchase broker/ No opportunity to cross-examine:

The Ld. CIT(A) in the appellate order has given credence to statement of M/s. DPS Shares & Securities Pvt. Ltd. and has stated that share broker has categorically stated that the purchases in question are bogus and in the nature of accommodation entries. He has emphasized that involvement of same share broker i.e. M/s. DPS Share Brokers with regards to the shares or M/s. Robinson Worldwide Trade Ltd in case of hundreds of persons cannot be a mere coincidence. It is pertinent to note here that no such averment was made by the Assessing Officer as can be seen from a perusal of the assessment order. It is humbly submitted that the Assessing Officer has never confronted the appellant with any statement recorded of the share broker i.e. M/s. DPS Shares & Securities Pvt. Ltd during the course of assessment proceedings. No opportunity has been provided to the appellant to cross- examine the said broker. Therefore, any reliance placed on the statement of M/s. DPS Share & Securities Pvt. Ltd. would be in gross violation of the principles of natural justice propagated by courts time and again. The assessment order therefore cannot be sustained on this grounds itself.

Reliance for this contention is placed on the following judgment) The judgment of Hon’ ble Bombay High Court in the case of H. R. Mehta vs. ACIT, ITA No.58 of 2001 dated 30.06.2016, wherein the Hon?* High Court (Page No 151- 163 of the Paperbook) has held as under: "17. In our view in the light of the .fact that the monies were advanced apparently by the account payee cheque

24 ITA No.121/Mum/2015 Ajay J. Doshi

and was repaid vide account payee cheque the least that the revenue should have done was 10 grant an opportunity to the assessee to meet the case against him by providing the material sought 10 he used against assessee in arriving before passing the order of reassessment. This not having been done, the denial of such opportunity goes to root of the matter and strikes at the very foundation of the reassessment and therefore renders the orders passed by the CIT (A) and the Tribunal vulnerable. In our view the assessee was bound to be provided with the material used against him apart from being permitting him to cross examine the deponents. Despite the request dated 15th February, 1996 seeking an opportunity to cross examine the deponent and .furnish the assessee with copies of statement and disclose material, these were denied to him. In the view of the matter, we are inclined to allow the appeal on this very issue."

The judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II, Civil Appeal No. 4228 of 2006 wherein the Hon'ble Supreme Court (Page No 164-170 of the Paper book) has held as under: -

"According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were 'nude the basis of the impugned order is a serious/law which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As .far as the Tribunal is concerned, we ,find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not fin. the Tribunal to have guess work as to fur what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.

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Reliance is placed on the order of Hon'ble Mumbai Tribunal in the case of Adamji &Co., Mumbai vs. ITO, in ITA No. 25/Mum/2016 dated 27.05.2016, wherein the Hon'ble Jurisdictional Tribunal (Page No 171-179 of the Paper book) has held as under:- "As it appears, neither the Assessing Officer had confronted the adverse material to the assessee nor has allowed the Adamji & Company assessee to cross-examine the concerned persons. Therefore, the adverse material used by the Assessing Officer in detriment to assessee's interest remained uncontested which is in clear violation of principles of natural justice. Moreover, ills a fact on record that the assessee in the course of assessment proceedings has produced documentary evidence to prove the genuineness of the purchases. It is also not disputed that the Assessing Officer has accepted the sales turnover disclosed by the assessee. Therefore, unless, the assessee had made purchases he could not have effected corresponding sales. Therefore, before treating the purchases made by the assessee as bogus, the Assessing Officer should have conducted necessary enquiry keeping in view of the aforesaid fact. Without conducting any enquiry, the Assessing Officer solely relying upon the investigation made by the Sales Tax Department cannot make the addition. 117(1t too, on the basis of untested material. The decisions relied upon by the learned Authorized Representative referred to above fully support this view. Therefore, in the aforesaid facts and circumstances, we are a/the view, the addition made on account on account of estimation of profit by treating the purchases as bogus has no legs to stand. Accordingly, we delete the same.

3.4. If the aforesaid submissions of the assessee and observation made in various orders are analyzed, admittedly, so far as the evidence of purchase of Robinson Impex(I) Ltd. is concerned, the assessee duly furnished the copy of purchase bill for purchase of 25000 shares from DPS shares and Securities Pvt. Ltd. (Page-4 of the paper book), copy of ledger account of DPS Shares and Securities Ltd., evidencing purchase of 25000 shares to the assessee (page -5 of the paper book), copy of return of income of Assessment Year 2004-05, balance sheet of assessee as on 31/03/2004 and

26 ITA No.121/Mum/2015 Ajay J. Doshi

statement shown investment in shares (filed along with return of income) for Assessment Year 2004-05 (pages 6 to 12 of the paper book), copy of assessment order for Assessment Year 2004-05 dated 31/11/2006 in the case of the assessee itself (pages 13 and 14 of the paper book).

3.5. So far as evidence of source of purchase/mode of payment is concerned, the assessee duly furnished the copy of sale bill, showing sale of shares of Mastek Ltd. and RIL India (Page 28 of the paper book), the balance sheet and statement showing investment in shares, filed along with the return of income for Assessment Year 2004-05 (page 11 of the paper book) and copy of assessment order dated 30/11/2006 for Assessment Year 2004-05 was made available by the assessee.

3.6. So far as evidence of physical shares, received by the assessee, the assessee duly furnished the details of physical shares certificate of M/s Robinson Worldwide Trade Ltd. (pages 19 to 23 of the paper book), copy of letter dated 30/04/2003 received from M/s Robinson Worldwide Ltd. regarding transfer of shares and issue of Jumbo Certificate (page -24 of the paper book) and certificate of Robinson Impex issued on 30/04/2003 (Page 25 of the paper book) was duly furnished. So far as, evidence for dematerialization of shares is concerned, the assessee duly furnished the acknowledge, copy of request issued by HDFC Bank accepting the assessee’s shares in physical form for

27 ITA No.121/Mum/2015 Ajay J. Doshi

dematerialization (page 26 of the paper book) and copy of transaction cum holding statement reflecting confirmation of said De-mat (page 27 of the paper book) were furnished by the assessee.

3.7. So far as, evidence of sale of shares concern, the assessee duly furnished the copy f sale bill of Pruthvi Brokers & Shareholding Pvt. Ltd. (Pages 15 to 18 of the paper book), ledger copy evidencing sales in the books of Pruthvi Brokers for A.Y. 2005-06 (pages 29 to 30 of the paper book), Copy of transaction cum holding statement reflecting confirmation of sale of shares from de-mat (Page 27 of the paper book), Copy of Pool Account of Pruthvi Brokers & Shareholdings Pvt. Ltd. in Oriental Bank of Commerce for A.Y.2005-06 (Pages 31 to 42 of the paper book), Sample copy of BR files received by Pruthvi Brokers from Bombay Stock Exchange reflecting sale with trade id, trade time & client code for A. Y. 2005-06 (Pages 43 to 46 of the paper book). Statement of computation of Long term capital gains from sale of shares of Robinson Impex (India) Ltd. (Pages 47 of the paper book), Copy of the return of income for A.Y. 2005-06, Balance Sheet of assessee as at 31.3.2005 and Statement showing investment in shares filed along with return of income for A.Y. 2004-05 showing purchase of 25,000 shares of Robinson Impex (India) Ltd. (Pages 48 to 54 of the paper book), was made available by the assessee. So far as, evidence for receipt of sale consideration of shares concern, the assessee filed copy of bank statement of HDFC Bank

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(Page 55 of the paper book), therefore, it is observed that necessary evidence was furnished by the assessee. Thus, even on merit, the assessee has duly substantiated his claim. The Mumbai Bench of the Tribunal vide order dated 30/12/2011 (ITA No.787 to 791/Mum/2010) for Assessment Year 2005-06 in the case of Shri Arvind M. Kariya and Ors. vs ACIT on the issue of Long Term Capital Gains and consequent addition u/s 68 of the Act, wherein, the shares were purchased from M/s DPS Shares and Securities Pvt. Ltd. and M/s Robinson Worldwide Trade Ltd., the factual matrix was considered and finally the sale and purchase of shares were held to be proved and thus order to be assessed under the head ‘Capital Gains’, fortifies the case of the assessee. The relevant portion of the order is reproduced hereunder:-

“In this group of cases identical issues are raised. Both the parties agreed that since facts and issues involved are identical, therefore, the case of Shri Arvind M. Karia in I.T.A.No.787-Mum2010 may be taken up for detailed hearing. In this case the grounds raised by the assessee are as under:

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conducted on the specific information that the assessee in this group had obtained artificial capital gains by manipulating share transactions. It was alleged that assessee had obtained bogus back dated purchase bills and shares and received the delivery in physical format and later on these shares were sold at the stock exchange through engineered transactions availing bogus capital gains. In this case the bogus capital gains were said to be generated on the purchase and sale of 15,500 shares of M/s Robinson Worldwide Trade Ltd. (also known by the name M/s. Robinson Impex India Ltd.). It was noted that the shares were said to have been purchased from M/s. DPS Shares & Securities Pvt. Ltd. A statement u/s.131 of Shri Sujal C. Shah director of M/s. DPS Shares & Securities (P) Ltd. was recorded during the survey conducted u/s.133A on 18-1-2007. In this statement he has specifically stated that actually no purchase transaction in the scrip of M/s Robinson Worldwide Trade Ltd. were carried out, but only accommodation bills were issued. During the course of assessment proceedings another director Shri Pratik C. Shah of M/s. DPS Shares & Securities Pvt. Ltd. was called to the office and he again admitted that these transactions were only accommodation transactions during the cross examination. It was also stated by him that for purchase of these shares made by M/s. DPS Shares & Securities Pvt. Ltd. from a third party speculation bills were issued where profits were shown in speculation but actually there was no such transactions where speculation profit was generated. It was further admitted that speculation transactions were not shown in their books of account. Thereafter, assessee was given specific opportunity for cross examination of Shri Pratik C. Shah. The assessee availed this opportunity and his representative Shri Ketan Mehta examined Shri Pratik C. Shah. Even during the course of cross examination Shri Pratik C. Shah stated that purchase transactions of M/s Robinson Worldwide Trade Ltd. were bogus. It was stated that though physical delivery was given but such physical shares were given by Shri Naresh Sahu and Shri Shirish C. Shah. It was ultimately submitted before the AO that shares were actually purchased for which bills were there and the source of the purchase was the speculation profit earned by the assessee. If the broker has not shown those transactions in his books, then it was not assessee’s fault. The AO after examining the submissions observed that purchase of shares of M/s Robinson Worldwide Trade Ltd. were either sourced by supposed speculative gains or by paying cash, which means the assessee in this group bas back dated this supposed purchases and such speculative transactions were also proved to be bogus. On the basis of these observations and the statement of Shri Sujal C. Shah and Shri Pratik C. Shah regarding bogus transactions, it was concluded by the AO that capital gains generated was bogus.

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source of purchase of the shares was speculation profit. The shares were sold through Anugrah Stock and Broking Pvt. Ltd. in A.Y 2005-06 and copies of the sales bills were furnished before the AO. The consideration was received by account payee cheques. It was also pointed out that originally the shares were issued in physical format which were dematerialised on 30-11-2004. Thus, it is clear that all evidence for purchase and sale of shares was there which has been ignored by the AO and the transactions were held to be bogus only on the basis of the statements of the two directors, namely, Shri Sujal C. Shah and Shri Pratik C. Shah of M/s. DPS Shares & Securities Pvt. Ltd. It was also submitted that once transactions of purchase and sales were entered into by the assessee there was no need to verify the transactions by him as to whether same were through stock exchange or recorded in the books of the broker. It seems during the search assessee has accepted in the statement u/s.132(4) that this transaction was bogus. During the appellate proceedings it was submitted that assessee had made the surrender u/s.132[4] to buy peace of mind and to avoid litigation. Since department had gone ahead with the litigation, therefore, this declaration was withdrawn. Reliance on some case law was also placed. The ld. CIT(A) after considering the submissions observed that there was a racket going on in the market in Penny Stock which was used for booking capital gains. In this racket stock involved were that of M/s Robinson Worldwide Trade Ltd, Data Base Finance Ltd., Baffin Engg. Project Ltd. and Hindustan Stockland Ltd. These rackets were busted by the Investigation Wing and searches were conducted at various places in the country. The modus operandi for adopting engineered bogus capital gains using such Penny Stock was that some key players were involved which can be called operator and beneficiaries. The operator is a person who manipulates all the transactions necessary to fabricate the capital gains on account of shares including the arrangement of bills for such transactions. The beneficiary is a person who purchases artificial/bogus capital gains from the operator by paying the gross amount of sale price of such shares in cash. The Operator gives physical shares to the beneficiary, whose market value is roughly equivalent to the money, the beneficiary intends to launder. Such shares would be accompanied by a backdated contract note showing the sale of shares to the beneficiary at less than a rupee or just a few rupees per share, as they were quoted earlier (about an year. or so). The consideration from beneficiary is mostly shown in cash so that the backdating of the bogus purchase transaction is camouflaged. Sometimes, bogus speculation profit generated by hawala bills is also used for this purpose. In some rare cases, cheque payments are shown wherein the payments are seen to e at a later date for obvious reasons. Since the shares cannot be sold in physical Format, the beneficiary sends the shares to depositary to be dematerialized and converted into electronic form. The beneficiary sells such dematerialized shares on secondary market at the prevalent price and receives cheque payment thereby converting black money into white. depending upon how far the

31 ITA No.121/Mum/2015 Ajay J. Doshi

contract note for purchase of such shares was backdated, the beneficiary launders the money by either paying zero or 10% capita gain tax (depending on the rates of taxation of capital gains for the relevant A.Y.) In some cses it is gathered through market intelligence that the operators by using benami entities/name lenders recycle the same set of shares several times over by re-materialization. i.e., conversion of shares from electronic form to physical, form and thereby extending the facility of laundering black money to another beneficiary. It has been found during the course of investigation that this cycle of rematerialization/dematerilzation has, been used several times over in the case of such Penny stocks. During such process, huge amount of black money were converted by fabricating artificial capital gains.

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has been carried out through the stock exchange or it is a off market transaction. In any case, even under the regulation ‘off market’ transactions are permitted by the brokers. He then referred to the cross examination of Shri Pratik C. Shah in which in reply to question no.22 it was agreed by him that such bogus bills were issued at the instance of Shri Naresh Sahu and physically shares were given to Ms. Jigna A. Kariya [i.e. one of the assessee before us]. However, the revenue has not brought any evidence on record to show that Shri Naresh Sahu was acting on behalf of the assessee and this person was not known to the assessee at all and there is no evidence to prove that this person was known to the assessee. In any case, in the same reply it has been clearly admitted by Shri Partik Shah that physically shares were given to the assessee. Similarly, in reply to question no.34 it has been again reiterated that delivery of physical shares was given to the assessee. The assessee was not required to find out anything more than this because against the payment in terms of speculation profit assessee was given physical delivery of the shares, therefore, this statement cannot be relied upon at all. He contended that assessee has proved the purchase in the earlier years which has been accepted by the department and nothing more was required to be proved. The income generated from such sales was offered under the head ‘long term capital gain’ which proved that assessee had generated genuine capital gain. He also relied on the following decisions:

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certificates which were later on issued by M/s Robinson Worldwide Trade Ltd by splitting one certificate in to 155 certificates which proves ownership of the shares. He also pointed out that it is not correct statement by the DCIT that M/s Robinson Worldwide Trade Ltd is not in existence and in this regard he filed copies of list containing the names of the companies by the Ministry of Corporate Affairs, which clearly shows that M/s Robinson Worldwide Trade Ltd is existing at Sr.No.2 and the name of the company has been changed to Sun & Sine Worldwide Ltd. and under column GLM it is shown to be the active company. He also filed a copy taken from BSE India site which shows that the name of the company was changed by extra ordinary general meeting from M/s Robinson Worldwide Trade Ltd to Sun & Sine Worldwide Ltd. He also filed another copy from BSE which shows that shares were quoted on 6 th September, 2011 and price at that moment was Rs.36.75 per share. All these documents clearly show that the company is very much in existence under the new name Sun & Sine Worldwide Ltd.

“The appellant carried on business as a dealer in art pieces, antiques and curios at Bangalore. During the assessment year 1971-72, she claimed that received a total amount of Rs.3,11,831 by way of race winnings in jackpots and treble events in races at Turf Clubs in Bangalore, Madras and Hyderabad. The said amount was shown by the appellant in the capital account in the books. For the assessment year 1972-73, she claimed receipts of Rs.93500/- as race winnings in two jackpots at Bangalore and Madras and the said amount was credited in the capital account in the books. The Income-tax Officer The included the amount as income from other sources and assessed them. The appellant referred matter to the Settlement Commission. The Settlement Commission by a majority held that the explanation of the assessee was not genuine for the following reasons: (i) The appellant's knowledge of racing is very meagre. (ii) A jackpot is a stake of five events in a single day and one can believe a regular and experienced punter clearing a jackpot occasionally but the claim of the appellant to have won a number of jackpots in three or four seasons not merely at one place but at three different centres, namely, Madras, Bangalore and Hyderabad appears, prima facie, to be wild and contrary to the statistical theories and experience of the frequencies and probabilities. (iii) The appellant's books do not show any drawings on race days or on the immediately preceding days for the purchase of jackpot combination

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tickets, which entailed sizable amounts varying generally between Rs. 2,000 and Rs. 3,000. The drawings recorded in the books cannot be co- related to the various racing events at which the appellant made the alleged winnings. (iv) While the appellant's capital account was credited with the gross amounts of race winnings, there were no debits either for expenses and purchase of tickets or for losses. (v) In view of the exceptional luck claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income-tax from April 1, 1972, but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different, however, if the claim of winnings in races was false and what were passed off as such winnings really represented the appellant's taxable income from some undisclosed sources.

On the above facts it was held as under:

“Held, dismissing the appeal, the Settlement Commission after considering the surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winnings from races is not genuine.”

From the above decision it is clear that human probabilities or circumstantial evidences can be taken into account for deciding an issue. However, in that case the circumstances were so strong against that the documentary evidence was ignored by the Hon'ble apex court. But in the case of the assessee before us it shows that circumstantial evidence is not so over whelming and rather the documentary evidence clearly proves the transactions.

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issued in the name of the assessee by splitting the jumbo certificate, have been filed, which show that shares were in the name of the assessee. A document from the Ministry of Corporate Affairs, Government of India from the cite http://www,.mca,gov.in serial Nos.1 & 2 of the same read as under:

Old Name New Name

(1) Robinson Impex (India) Ltd. Sun And Shine Worldwide Ltd.

(2) M/s Robinson Worldwide Trade Ltd Sun And Shine Worldwide Ltd.

This clearly shows that Robinson Impex (India) Ltd. as well as M/s Robinson Worldwide Trade Ltd were merged and the new name of the company is Sun And Shine Worldwide Ltd. The above extract has been taken on 12-12-2011 which shows that the company is very much in existence even as on today. This is further supported by another extract from M/s. DPS Shares & Securities Pvt. Ltd taken from www.bseindia.com. This extract shows the following information:

“Outcome of EGM 02-05-2011 18:36 M/s Robinson Worldwide Trade Ltd has informed that the shareholders at the Extra Ordinary General Meeting (EGM) of the company held on May 02,2011, inter alia, have taken the following decisions:

1) To chance to the name of the company from “M/s RPBINSON WORLDWIDE TRADE LTD.” TO “SUN AND SHINE WORLDWIDE LTD.” This confirms that the name of the company was changed in the Extra Ordinary General Meeting held on 2-5-2011. Perhaps because of the change of name, the AO has not been able to confirm the existence of the company. The third document is also taken from the BSE site shows that shares were traded on 6-9-2011 at Rs.36.75. This clearly shows that shares of the company are still being traded but under the new name. In the light of these documents, we find no merit in the objection raised in the letter of the DCIT -12, addressed to the CIT DR, which was placed before us.

Shares & Securities Pvt. Ltd. Shri Pratik Shah director of M/s. DPS Shares & Securities Pvt. Ltd was cross examined by the representative of the assessee Shri Ketan Mehta on 20-11-2008 and AO has reproduced the whole cross examination. The question and answer to Qs. Nos.22 & 34 read as under:

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Q.22. You have slated in your statement u/s. 13] on ]8.iJ.2008 that all the bogus bills were issued by you at the instruction of Mr.Naresh Saboo and Mr. Shirish C.Shah. Do you agree with the same?

Ans. Yes I agree. The bogus bills were issued by .ny company at the instructions of Mr.Naresh Saboo. As these hills were bogus and off market transaction. the physical shares which were given by us to the said Ms..Jigna A.Kariya were received by us from Naresh Sahoo and were forwarded by us to Ms.Jigna .A. Kariya, because these transactions were not on the floor, the said physical shares had not conic’ from BSE. Hence this was an accommodation transaction, we received the shares from Naresh Sahoo and forwarded to Ms..Jigna A.Kariya.

Q.34. Do you want to say anything else?

Ans. Yes. All these accommodation hills/bogus bills were given by our company for the accommodation of the said assessees for the LTCG purpose and the delivery of physical shares which were given by us to the said assessees were received by us from Mr.Naresh Saboo and handed over to the said assessees.

The above clearly shows that the so called bogus shares were issued on the instructions of Shri Naresh Saboo. Before us it was denied that assessee has anything to do with Shri Naresh Saboo. Neither the AO nor the ld. CIT(A) has brought any material on record to show that Shri Naresh Saboo has some connection with the assessee. Even ld. CIT DR has not placed any evidence to show that Shri Naresh Saboo was acting on behalf of the assessee. Secondly, Shri Pratik Shah in answer to both question Nos.22 & 34 has clearly admitted that physical delivery of the shares was given to the assessee. 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.28,941/- 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 M/s Robinson Worldwide Trade Ltd shares have been included at 15500 shares amounting to Rs.28810.54. 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

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book and the particulars read as under:

XXXXXXXXXXXXXXXXXXXXXXXXXXXX

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 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:

xxxxxxxxxxxxxxxxxxx

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.”

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3.8. Identically, in the case of Late Smt. Kanchanben J. Shah vs Income Tax Officer (ITA No.6544/Mum/2011) order dated 18/02/2016, the sale consideration on sale of shares of M/s Robinson Worldwide Trade Ltd. as income from other sources instead of income from long term capital gains by holding the purchase transaction of said shares as not genuine was considered by the Tribunal and finally the appeal of the assessee was allowed directing the Assessing Officer to accept the long term capital gain as returned by the assessee. The relevant portion of the aforesaid order dated 18/02/2016 is reproduced hereunder for ready reference and analysis:- “This is an appeal by the assessee directed against the Order by the learned Commissioner of Income Tax (Appeals)- 22, Mumbai (‘CIT(A)’ for short) dated 16/08/2011 , the assessee’s appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter for short) for the assessment year 2005-06. 2. The assessee has raised following revised grounds of appeal in the memo of appeal filed with the Tribunal:- “1) The learned CIT(A) erred in treating sale consideration of Rs.9,19,015/- on sale of shares of M/s. Robinson Worldwide Trade Ltd. as income from other sources instead of Income from long term capital gains by holding the purchase transaction of said shares as not genuine without appreciating that said shares were sold through registered broker and sale of said shares is confirmed by BSE, said shares were endorsed in favour of assessee in physical format by the company & the said shares were dematted and such sale transaction is not treated as not genuine by A.O. & CIT(A). 2) The learned CIT(A) erred in treating purchase transaction of shares of M/s. Robinson Worldwide Trade Ltd. as not genuine without appreciating that A.O was unable to afford cross examination of Mr. Rajkumar Masalia to assessee, Mr Rajkumar Masalia had retracted his statement and assessee had produced affidavit of Mr Pratik C Shah Director of Broking Company who had executed purchase transaction for assessee. 3) The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal”. 2. The brief facts of the case are that the assessee is an individual and derives income from salary, business, capital gains and income from other sources. The learned assessing officer (hereinafter called “the AO”) enquired the details of

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profit earned on sale of shares. The assessee furnished the details of such profit and filed copies of purchase and sale bills, brokers’ notes and source of funds from which it purchased the shares on which capital gains were earned. From the details , it was seen by the AO that the assessee has earned long term capital gain on sale of 10,000 shares of Robinson Worldwide Trade Ltd. [formerly known as Robinson Impex. As per the submissions made, the assessee had purchased these shares @ Rs. 1.30 per share for the total consideration of Rs. 13,210.43 including brokerage and taxes, which was purchased against the profit on the intra-day sale / purchase transaction in 950 shares of Mastek on which the assessee has shown to have made profit of Rs. 13,168.67. The transactions were claimed to have been made through a broker, namely, M/s. DPS Shares & Securities Pvt. Ltd.. In order to ascertain genuineness of the transaction, the AO sent the letter to Bombay Stock Exchange on 13/08/2007 to confirm the following transactions:- "During the course of assessment proceedings in the case of Smt. Kanchanben J. Shah for A.Y. 2005-06 i.e. F.Y. 2004-05, it is seen that the assessee i.e. Smt. Kanchanben J. Shah has claimed to have made purchase and sale of shares through M/s. DPS Shares & Securities Pvt. Ltd., who is a member of the Bombay Stock Exchange having its office at 414-B, Rotunda, Bombay Samachar Marg, Fort, Mumbai 400 001 (SEBI Regn. INB 010986539 Clg. No. 151) as under: xxxxxxxxxxxxxxxxxxxxxxxxxx

You are' requested to confirm if the above transactions have taken place through the Bombay Stock Exchange or if the same were off market transactions. Copies of the Contract Note in Form A and the corresponding bills issued by M/s. DPS Shares & Securities Pvt. Ltd. to the assessee are enclosed for your perusal and reference.” The Surveillance and Supervisory Department of Bombay Stock Exchange vide letter dated 20/08/2007, inter alia, stated as under:-

“On verification of the trades mentioned in the contract notes in the scrip Mastek Ltd. with the trades executed by the member at the Exchange, many discrepancies were observed in the client codes and the quantity of shares traded etc. Hence, please find enclosed herewith trade log in respect of the trades executed by the said member in the scrip Mastek Ltd. on the dates mentioned in the contract notes. Also, no trades were found to be executed by the member DSP Shares & Securities (151) in the scrip Robinson Worldwide Ltd., formerly known as Robinson Impex (532154) on the dates mentioned in the contract notes." The Bombay Stock Exchange enclosed the copies of the trades carried out by the DPS Shares & Securities Ltd as under, whereby there was discrepancies in the transactions of shares of Mastek Ltd. as per the brokers notes and the trade log of the broker as per Bombay Stock Exchange of 04/04/2003 as detailed below:- xxxxxxxxxxxxxxxxxxx Thus, it was observed by the AO that the contract note issued by the broker and submitted by the assessee is at variance with the trade log of the Bombay Stock

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Exchange. The said contracts notes and the bills did not contain PAN of the assessee. The AO issued the summons u/s. 131 of the Act to the Principal Officer of M/s. DPS Shares & Securities Pvt. Ltd. which issued the contract notes. Whereby, Shri Rajkumar Masalia, the authorized officer of DPS Shares and Securities Private Limited appeared before the AO on 05-12-2007 and vide statement dated 05-12-2007 recorded u/s 131 of the Act that M/s DPS Shares and Securities Private Limited issued the accommodation bills and no transaction was done on the floor of the BSE on behalf of Smt. Kanchanben J. Shah. He further confirmed that share of Robinson Impex (India) Ltd. are listed on the Bombay Stock Exchange but were suspended or thinly traded on 04/04/2003 , the captioned period. He submitted that no transactions were carried on with the assessee and submitted that these bills are only accommodation entries and are not actual transactions , thus he submitted that the purchases and sales are bogus. The assessee submitted that the assessee purchased shares of Robinson Impex (India) Ltd. on 04.04.2003 from M/s. DSP Shares and Securities Ltd. which was then having its office at 414 B Rotunda, Mumbai Samachar Marg, Fort Mumbai-400 001. They are registered stock brokers who are registered with Bombay Stock Exchange having their SEBI registration number. All the shares are purchased by the assessee in physical form. The reason for purchase in physical form was that the broker of the assessee had advised him to do so. The assessee was given to understand that if the share were physically purchased then it would cost him a little less than the market price. The information or tip of the above mentioned scrip i.e. Robinson Impex Ltd. was given to the assessee by his common friends who specializes in trading of shares. Since in the past many of the assessee’s friends had benefited from the advice of their common friend the assessee took an opportunity to follow the advice of his friend so as to make profit in the transactions of shares. During the relevant assessment year 2005-06, the assessee sold the above shares. Before selling the shares, the assessee got them demated. After demating the shares they were sold through recognized stock brokers who are registered members of the Bombay Stock Exchange. The transactions of purchase and sale of shares cannot be treated as bogus since all the shares were purchased and sold through brokers who were registered with Bombay Stock Exchange. Also the company under consideration was listed in the stock exchange with both BSE and NSE. The share transactions are genuine transactions; the shares that are purchased were traded in the stock market. Rates of these shares were, reflected in the bhav copies and also in all leading newspapers and they are existing companies filing their balance sheets regularly with the ROC, and are listed in the stock market and are being traded. The sale transaction is through broker and payments for sale have been effected through the cheque transactions and cheque were issued by the brokers themselves. The assessee submitted that if any discrepancy is reported by BSE, it is due to mistake of the broker for which the assessee cannot be penalized. The assessee relied upon the decisions of the Mumbai Tribunal in the case of the Mukesh Marolia v. Additional Commissioner of Income Tax . A letter from the Director of DPS Shares And Securities Pvt. Ltd dated 19/12/2007 was

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submitted before the AO which clearly stated that the earlier statement made by their representative on 05-12-2007 was incorrect and transactions in the shares are genuine transaction. It was enclosed before the AO and the assessee asked for the cross examination of the representative of M/s. DPS Shares And Securities Pvt. Ltd to verify the correctness and validity of statement and hence requested to the Assessing Officer to treat that the purchase of share of M/s. Robinson Impex Ltd. as a genuine transactions in shares there by treating the income as long term capital gain . The assessee enclosed the letter dated 19-12- 2007 from Director of the company DPS Shares And Securities Pvt. Ltd to the AO which read as under:- “Dear Sir” Sub:- Confirmation of 1000 shares of Robinson Impex Ltd. Sold to Mr. Jagdish H. Shah (F.Y.- 2003-04)_ I undersigned, have to state that Mr. Jagdish H. Shah was a family friend of our director who in trading in shares earned a speculation profit of Rs. 15156.56 during the F.Y.- 2003 As we were in relation we had recommend him to purchase 1000 shares of Robinson Impex Ltd. at the price around Rs.1.50 per shares, since the shares were not traded in the stock exchange and were sold in physical mode by us OFF MARKET and bills were issues. We further confirm that 10000 shares of Robinson Impex Ltd. were handed over in the physical mode against our OFF MARKET transactions only which was not reported to BSE. We further state that any statement/letter made earlier to the contrary to this is by mistake and not relevant to all. Thanking you, Yours faithfully For DPS Shares And Securities Pvt. Ltd. Sd/- Director” The assessee asked for cross examination of representative of M/s DPS Shares and Securities to verify the correctness and validity of their statement. The AO observed that Mr. Rajkumar Masalia was authorized by Directors of DPS Shares and Securities Private Limited vide letter dated 05/12/2007 to discuss and give statement before the Revenue which will be binding on DPS Shares and Securities Private Limited .In response , Mr Rajkumar Masalia appeared before the AO and stated on oath that contracts bills in respect of speculation profit and purchase of shares of Robinson Impex Limited are only accommodating entries and no actual transaction has taken place and now the Director of the DPS Shares and Securities Private Limited has stated that transaction for purchase of shares of Robinson Impex Limited was made off market in physical form which was not reported to BSE. The AO held that no proof of genuineness of the transaction was submitted by the assessee. The Director of DPS Shares and Securities Private Limited has deviated from its statement and has now

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stated that these purchase of shares of Robinson Impex was in off market form and shares were given in physical form and request for cross examination is being made at fag end when the matter is getting time barred and these transactions are sham and bogus. Even in respect of sale and purchase of shares of Mastek Limited, the trade log is not tallying with BSE records. Even procedure for carrying off market transactions as prescribed by the BSE and SEBI has not been complied with. Thus, the AO treated the sale consideration of 10000 shares of Robinson Impex Limited of Rs.9,19,015.00 as ‘income from undisclosed sources’ as the transaction for purchase of 10000 shares of Robinson Impex Limited were not proved to be genuine and the entire sale consideration is taxed under the head income from other sources, vide assessment order dated 28/12/2007 passed u/s 143(3) of the Act by the AO. 3. Aggrieved by the assessment order dated 28/12/2007 passed u/s 143(3) of the Act by the AO, the assessee filed first appeal with the CIT(A). The assessee reiterated its submissions as made before the AO which are not repeated for sake of brevity. The CIT(A) called for remand report from AO which was submitted by AO. The CIT(A) after considering assessment order, remand report, submission of the assessee and discussions with the assessee held that there are many discrepancies in the records with respect to client code and quantity of shares traded with the records of BSE. The assessee even during appellant proceedings have submitted that the same is due to mistake of the broker.The CIT(A) observed that there is no PAN in contract notes nor in bills issued by brokers which is mandatory. The statement of Mr Rajkumar Masalia, the authorized officer of DPS Shares and Securities Private Limited has been recorded who accepted that bills/contract notes were issued as accommodation entries and no transactions have taken place. The CIT(A) noted that the assessee has submitted before him that the statement of Mr Rajkumar Masalia stood retracted and same could not be taken as correct as he failed to appear before the AO during remand proceedings for cross examination on three different dates. The CIT(A) held that the person duly authorized has given the statement on oath that the transactions were bogus and any subsequent statement appear to be an after-thought and statement of Mr. Raj Kumar Masalia recorded u/s 131 of the Act has evidentiary value. The CIT(A) also held that even there is no compliance of BSE/SEBI reporting mechanism with respect to off market purchase of 10000 shares of Robinson Impex Limited and the assessee has merely termed it as mistake of broker which is an after- thought. Thus, the CIT(A) vide orders dated 16.08.2011 upheld the action of the AO by treating the income of Rs.9,19,015/- as income from undisclosed income and to be taxed under the head ‘Income from other sources’. 4. Aggrieved by the orders dated 16.08.2011 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

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Securities Private Limited who are SEBI approved registered broker with BSE which are duly evidenced by contract notes issued by the said broker which is placed at page 29-30 paper book filed before the Tribunal . The ld. 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 ld. 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 27- 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 ld. Counsel stated before us that purchase of 10000 shares 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 2003-04(assessment year 2004-05) which is placed at page 42-46 of paper book. The said 10000 shares of Robinson Impex (India) Limited were dematted in the month of June 2004 in favour of the assessee which is placed at page 32 of paper book. The ld. 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 AO in the assessment order which is a mistake of broker. The ld. 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 11 of paper book where sale proceed cheques were credited . The ld. Counsel of the assessee drew our attention to remand report submitted by the AO to the CIT(A) whereby Mr Rajkumar Masalia did not appear before the AO 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 AO in remand report has confirmed that BSE has confirmed the sale transaction of 10000 Robinson Impex (India) 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

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, 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. 5. The Ld. DR submitted that these transactions of sale and purchase of shares in April 2003 were sham transactions . The brokers have not reported off market transactions to BSE/SEBI as per requirements of law. There is difference in client code in trade log of BSE which evidences that the transactions are sham. 6. We have considered the rival contentions and perused the material on record. it is evident that similar controversy has been considered by our Co- ordinate Bench in the case of Jagdish H. Shah (Mumbai Tribunal ITA nos.6557/Mum/2011 for the assessment year 2005-06 vide orders dated 05- 09-2012) and Nikunj J Shah (Mumbai Tribunal - ITA No. 6545/Mum/2011 vide orders dated 31-07-2015).The Ld. Representative of the assessee has also placed on record copies of the assessment order as well as the order of CIT(A) in the case of Jagdish H.Shah (supra) which reveal that the discussion contained therein is almost similar to the discussion in the impugned orders before us. The enquiries made by the AO in case of Jadish H. Shah (supra) are on similar lines to those made in the case before us. In the case of the assessee as well as in the case of Jagdish H. Shah(supra) the shares were purchased from the same broker namely DPS Shares and Securities It is also emerging that the AO carried out a verification exercise which involved recording of statement of one Shri Raj Kumar Masalia, Principal Officer of DPS Shares & Securities Ltd.; similar action was taken in the case of Jagdish H. Shah (supra) also. Be that as it may, it is quite clear that the stand of the Revenue as well as the assessee in the present case is on similar footing to their respective stands in the case of Jagdish H. Shah (supra). Having regard to the aforesaid similarities, which are not controverted by the Revenue, we deem it fit and proper to rely upon the reasoning taken by the Co-ordinate Bench in the case of Jagdish H. Shah(supra) and hold that the income tax authorities have erred in treating the sale consideration on the sale of shares of Robinson Worldwide Trade Ltd. as an income from undisclosed sources. Identical decision was also rendered in the case of Mr Nikunj J. Shah(supra) by Mumbai Tribunal in ITA No. 6545/Mum/2011 for assessment year 2005-06 vide orders dated 31-07-2015 , relevant extracts are reproduced below: “6. Having perused the orders of the authorities below as well as the

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submissions put forth before us, it is evident that similar controversy has been considered by our Co-ordinate Bench in the case of Jagdish H. Shah (supra).The Ld. Representative of the assessee has also placed on record copies of the assessment order as well as order of CIT(A) in the case of Jagdish H. Shah(supra) which reveal that the discussion contained therein is almost similar to the discussion in the impugned orders before us. The enquiries made by the AO in case of Jadish H. Shah (supra) are on similar lines to those made in the case before us. In the case of the assessee as well as in the case of Jagdish H. Shah(supra) the shares were purchased from the same broker namely DPS Shares and Securities Pvt. Ltd. It is also emerging that the AO carried out a verification exercise which involved recording of statement of one Shri Raj Kumar Masalia, Principal Officer of DPS Shares & Securities Ltd.; similar action was taken in the case of Jagdish H. Shah (supra) also. Be that as it may, it is quite clear that the stand of the Revenue as well as the assessee in the present case is on similar footing to their respective stands in the case of Jagdish H. Shah (supra). Having regard to the aforesaid similarities, which are not controverted by the Revenue, we deem it fit and proper to rely upon the reasoning taken by the Co-ordinate Bench in the case of Jagdish H. Shah(supra) and hold that the income tax authorities have erred in treating the sale consideration on the sale of shares of Robinson Worldwide Trade Ltd. as an income from undisclosed sources. Nevertheless in order to impart completeness to this order, we deem it fit and proper to reproduce hereafter the relevant portion of the order of the Tribunal in the case of Jagdish H. Shah(supra), which is as under: “11. We have heard the rival contentions and perused the orders of the Authorities and also the Paper Book submitted by the assessee. It is not in dispute that the shares were purchased in physical form in off market transaction. It is also not in dispute that the shares were subsequently dematted and the sales have taken place out of the DMAT A/c. The only dispute relates to the genuineness of the purchases' as doubted by the Lower Authorities. We find that the purchases. are supported by purchase bills issued by M/ s. DPS Shares and Securities Pvt. Ltd., exhibited at Pages 28 to 32 of the Paper Book. We also find that the shares so purchased were transferred to DMAT A/c with HDFC Bank. Copy of which is exhibited at Page No. 34 of the Paper Book. We have also considered the letter of the Director of M/s. DPS Shares & Securities Pvt. Ltd., addressed to the AO by which the. Director has confianed 'the offmarket transaction in physical mode of shares of the 11,500 shares of M/s.Robinson Impex (India) Ltd (Robinson Worldwide Trade Ltd.,). We have also considered the retraction letter of Shri Rajkumar Masalia addressed to the AO by which he accepted that he. was not aware of the transaction and he has stated wrong facts during the course of his statement recorded by the A.O. 12. We find that during the course of the appellate proceedings, the CIT(A) has called for a Remand Report from the AO relating to the purchase of 11500 shares of M/s. Robinson Worldwide Trade Ltd., (formerly known as robinson Impex (India) Ltd.]. We have perused the Remand Report of ITO 10(3)(2) Mumbai dt. 11.4.2011. In his Remand Report, the AO states that an opportunity of cross examination of Shri Rajkumar Masalia was given to the assessee on 18-02-2009, 29-04-2009 and 09-11-2009. However, despite of giving aforesaid opportunities, Shri Rajkumar Masalia did not attend though assessee’s representative attended on all of above dates and whose

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attendance was duly recorded on the attendance Sheet. In his Remand Report, the AO further states that the said shares of M/s. Robinson Worldwise Trade Ltd. (formerly known as Robinson Impex (India) Ltd.] were purchased on 05- 04-2003 for a consideration of Rs.15191.99 from M/s. DPS Shares and Securities Pvt. Ltd. As per record of the said company, the shares were endorsed in favour of the assessee on 30-04- 2003 in physical format only. The AO further states that as per investigation made, these shares were sent for dematerialization to HDFC Bank on 03-05-2004 and were converted into De-mat form on 22-05-2004. In his Remand Report, the AO has further confirmed the sale transaction made through broker, M/s. Ajmeera Associates Pvt. Ltd. 13. After considering all the above stated facts in totality, we do not find any reason or logic in treating the purchase of 11,500 shares as bogus. The Lower Authorities could have directly verified the transaction from the company itself, whose shares were questioned to be bogus but both the Lower Authorities did not do this exercise. The Remand Report of the AO itself show that the transactions have been treated as genuine subsequently by the AO himself while sending the Remand Report to the CIT(A). We find that the sale transaction of 11,500 shares of M/s.Robinson Impex (India) Ltd. (Robinson Worldwide Trade Ltd.) has been doubted or question by the Lower authorities. A simple logical question arises if the shares were never purchased, how can they be sold subsequently? 14. After considering all the facts and submissions, we find that both theLower Authorities have grossly erred in treating the sale consideration as ‘Incomefrom undisclosed sources.’ 15. We, therefore, reverse ht finding of Lower Authorities and direct the AO to accept the Long Term Capital Gains as returned by the assessee.” 6.1 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. 7. In the result, the appeal filed by the assessee is allowed.” 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. 8. In the result, the assessee’s appeal is allowed.”

If the aforesaid elaborate orders of the Tribunal in the case of different assessee are analyzed, we find that the Tribunal has duly discussed the sale through a broker namely M/s DPS Shares & Securities Pvt. Ltd. on sale of shares of M/s Robinson Worldwide Trade Ltd. and finally the finding of the lower authorities were reversed and the Ld. Assessing Officer was directed to accept the long term capital

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gains, as returned by the assessee. Our view is further fortified by the decision of the Tribunal in the case of Smt. Neeta R. Doshi and Smt. Manisha A. Doshi (ITA No.439 and 441/Mum/2010) order dated 30/11/2015, wherein, the decision from Hon'ble jurisdictional High Court, reported in (2015) 374 ITR 645 (Bom.) was considered and thereafter the appeals of the assessee were allowed. No contrary facts were brought to our notice by either side, therefore, in the present case of the assessee, being on identical facts/parties involved, no U-turn is permissible unless and until contrary facts are brought to our notice, therefore, following the aforesaid orders of the Tribunal, Hon'ble High Courts including from jurisdictional High Court, we allow the appeal of the assessee on merit as well. Finally, the appeal of the assessee is allowed. Order pronounced in the open court on 31/05/2017

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

मुंबई Mumbai; �दनांक Dated : 31/05/2017

f{x~{tÜ? P.S/.�न.स., आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

48 ITA No.121/Mum/2015 Ajay J. Doshi

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

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