BRIJENDRA GARG,BHIWADI vs. ITO WARD BHIWADI, BHIWADI

ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 11-01-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2011-12 raising therein following grounds of appeal. ‘’1. In the facts and circumstances of the case and in law the ld.CIT(A) has erred in confirming the action of the AO in reopening the case of the assessee u/s 147 of the Act. The action of the ld.CIT(A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted quashing the entire reassessment proceedings being illegal and void ab initio.

2. In the facts and circumstances of the case and in law the ld.CIT(A) has erred in confirming the action of the AO in treating the sale of listed equity shares SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI as bogus transaction, thereby disallowing the exemptions of LTCG of Rs.2,75,650/- and making addition to the income of the assessee. The action of the ld.CIT(A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by considering the gain on sale of listed equity shares as long term capital gains and allowing consequential relief by deleting the entire addition of Rs.2,75,650/- 3. In the facts and circumstances of the case and in law the ld.CIT(A) has erred in confirming the action of the AO in making addition of Rs.5,513/- as undisclosed expenditure on account of alleged commission paid on obtaining long term capital gain. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition of Rs.5,513/-.

4. In the facts and circumstances of the case and in law the ld.CIT(A) has erred in confirming the action of the AO in making additions of Rs.1,80,000/- on account of cash deposited by the assessee. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition of Rs. 1,80,000/-.

2.1 The assessment proceedings under section 147 of the Income Tax Act were initiated and assessment was completed under section 147 read with section 143(3) of the Income Tax Act, thereby making additions in the case of the assessee 2.2 Aggrieved by the order of assessment, assessee preferred before ld.CIT(A) but the same was dismissed and the additions made by the AO were upheld. 2.3 Further aggrieved by the order of ld CIT(A), the assessee has preferred the present appeal before me on the grounds mentioned here in above 3.1 Ground No. 1 raised by the assessee is not pressed during the course of arguments. Therefore, this ground raised by the assessee stands dismissed as not pressed.

SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI 4.1 Ground No. 2 and 3 raised by the assessee are interrelated and interconnected and relates to upholding of additions by ld. CIT(A) of Rs.2,75,650/- and Rs.5,513/- on account of disclosed expenditure. Since both the grounds are interrelated and interconnected, therefore I have thought it fit to dispose of both the grounds through the present consolidated order. 4.2 In order to substantiate this ground, AR retreated the same arguments as were raised by him before the lower authorities and also relied upon his written submissions. The contents of the written submissions filed by the assessee with regard to Ground No. 2 & 3 are reproduced below. ‘’GROUND NO. 2 & 3-ADDITION OF RS. 2,81,163 Assessee is a regular trader engaged in the purchase and sale of shares.on a recognized stock exchange. Assessée is also a registered sub-broker, having been granted a Certificate of Registration by the Securities and Exchange Board of India (SEBI) in 2006. During the year under consideration, assessee purchased and sold shares of DMC Vaults Ltd., incurring a loss of Rs. 42,097 During the course of the assessment proceedings, the Id. AO, based on information received from the Investigation Wing, concluded that the assessee had earned a gain of Rs 2,75,650 on the sale of shares of DMC Education Ltd. (AO Order Page No.2), which was considered to be bogus. However, during the assessment proceedings, all relevant evidence related to the transactions undertaken in the said script was duly submitted to the Id. AO Despite this, the Id. AO disregarded the submissions, citing that the assessee had provided details pertaining to M/s DMC Vaults Ltd., while the information received from the Investigation Wing referred to M/s DMC Education Ltd. It is pertinent to note that the company in which the assessee traded during the relevant year had undergone a name change from M/s DMC Vaults Ltd to M/s SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI DMC Education Ltd. A snapshot of the relevant corporate events, as obtained from the Moneycontrol.com website, is provided hereunder The Company has issued Bonus Shares in the Ratio of 11 Company has changed its name from DMC Vaults Ltd to DMC International Ltd 2008 DMC International Ltd. Director appointed Mr. Ravi Santani as independent Director Company name has been changed from DMC Vaults Ltd DMC International Ltd. 2010 DMC International Ltd. has informed that management of the Company has appointed Mr Gaurav Mittal as CEO for the education division of the Company Company has changed its name from DMC International Ltd. to DMC Education Ltd 2011 DMC Vaults - Acquisition of 51% Stake of LIFELONG Finishing Academy & Delhi based Training Institute DMC Education Ltd has Takeover of PLANSTEPS 14 Years Education Consulting and Carter Counseling Firm for INR 45 million Both the Id. AO and the Id. CIT(A) disregarded the documentary evidence submitted and relied solely on the information provided by the investigation Wing The fact that the assessee incurred a loss of Rs. 42,097 on the purchase and sale of shares of DMC Education Ltd is undisputed. In light of the above, it is submitted that no gain, as alleged by the Ld.AO and CIT(A), arose from the trading in the shares of DMC Education Ltd. On the contrary, the assessee has only incurred a loss in respect of the said transactions. Therefore, the entire addition of Rs.2,81,163 made to the assessee's income is unwarranted and deserves to be deleted.’’ SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI 4.3 On the other hand, ld. DR relied upon the orders passed by the revenue authorities 4.4 I have heard the counsel for both the parties, perused the material placed to record, judgements cited before me, and also the orders passed by revenue authorities. I noticed from the record that assessee is a regular trader engaged in the purchase and sale of shares on a recognised stock exchange and is also a registered sub broker having been granted certificate of registration by the securities and exchange board of India in 2006, During the year and consideration, the assessee had purchased and sold shares of DMC vaults Ltd, thereby incurring a loss of Rs.42,097/-. I further noticed that during the course of assessment proceedings, the AO proceeded on the premise based on the information received from the investigation being that the assessee had earned gain of Rs.2,75,650/- on the sale of shares of DMC education Ltd. However, on the contrary, as per the factual position, assessee has never earned gain rather asses, he has incurred loss of Rs. 42,097/-. I have further noticed that though during the assessment proceedings, all the relevant evidences relating to the transactions undertaken in the said script were duly submitted to the AO, despite this fact, the AO disregarded the submissions citing that assessee had provided details pertaining to M/s DMC vault Ltd while the information received from the investigation wing referred to M/s. DMC education Ltd. Considering these facts, I am of the view that AO was under SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI some confusion or misconception about the facts of the case as the company in which the assessee traded during the relevant year had under gone a name change from DMC Vaults Ltd to M/s. DMC Education Ltd, snapshot of the relevant corporate events as obtained by the assessee is reproduced herein below. The Company has issued Bonus Shares in the Ratio of 11 Company has changed its name from DMC Vaults Ltd to DMC International Ltd 2008 DMC International Ltd. Director appointed Mr. Ravi Santani as independent Director Company name has been changed from DMC Vaults Ltd DMC International Ltd. 2010 DMC International Ltd. has informed that management of the Company has appointed Mr Gaurav Mittal as CEO for the education division of the Company Company has changed its name from DMC International Ltd. to DMC Education Ltd 2011 DMC Vaults - Acquisition of 51% Stake of LIFELONG Finishing Academy & Delhi based Training Institute DMC Education Ltd has Takeover of PLANSTEPS 14 Years Education Consulting and Carter Counseling Firm for INR 45 million Both the revenue authorities disregarded the documentary evidences submitted by the assessee but solely relied on the information provided by the investigation wing the fact that the assessee incurred loss of Rs. 42,097/- on the purchases and sale of shares of DMC education Ltd is an undisputed fact on record moreover, the assessee has not got the said loss adjusted anywhere. Therefore, now under the circumstances the question arises as to how and in what manner the assessee is a SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI beneficiary of any alleged accommodation entries in the form of exempted capital gain/ loss. It is also pertinent to mention that nothing has been placed on record by the revenue authorities to demonstrate that there was live link between the assessee and M/S DMC Education Ltd and it is not the case of the revenue or the allegations that assessee's name was pointed out by any of the directors of M/S DMC Education in the statements recorded-during investigation, therefore by no stretch of imagination, it can be assumed that assessee is a beneficiary in any manner whatsoever, in my considered view, no addition can be made on the basis of suspicion or assumptions or presumptions. Therefore, the entire addition of Rs.2,81,163/- made to the assesses Income is unwarranted and deserve to be deleted and thus I direct the AO to delete the said additions, therefore, this ground raised by the assessee stands allowed. 5.1 The Ground No. 4 raised by the assessee relates to challenging the order of Ld CIT appeal in confirming the action of AO in making additions of Rs. 1,80,000/- on account of cash deposited by the assessee. 5.2 The ld AR reiterated the same arguments as were raised by him before the lower authorities and also relied upon written submissions filed by him and the same are reproduce below ‘’GROUND NO.4- ADDITION OF RS. 1,80,000 During the year under consideration, assessee deposited Rs. 1,80,000 in cash into his bank account. The source of this cash, as explained to the lower authorities, SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI was the amount received by assessee from his wife. The assessee's wife had accumulated this amount from her personal savings over time. It is important to highlight that the deposited amount of Rs. 1,80,000 is a modest sum, which is reasonably expected to be present in any Indian household. In this context, reference is made to CBDT Instruction No. 03/2017 dt. 21.02.2017, issued post-demonetization, wherein it was explicitly accepted that Indian households may possess cash holdings up to Rs. 2,50,000 Relevant screenshot of the guidelines issued by the CBDT are setout hereunder Annexure ‘’Source Specific General Verification Guidelines

1. Cash out of earlier Income or savings 1.1 in case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs 2.5 lakh In case of taxpayers above 70 years of age, the limit is Rs. 50 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filling of ROI and income shown therein, cash withdrawals made from accounts etc’’ This clearly demonstrates that the cash deposited by assessee originated from genuine sources and falls within the acceptable threshold for cash holdings in an Indian household. Accordingly, the addition made by the Id. AO, and subsequently confirmed by the Id. CIT(A), is unwarranted and deserves to be deleted. 5.3 On the other hand, learn DR relied upon the orders passed by the revenue authorities 5.4 I have heard the counsel for both the parties and have also perused The material placed on record, and also the orders passed by the revenue authorities. From the records, I noticed that during the year under consideration as he had SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI deposited a sum of Rs. 1,80,000 in cash into his bank account and in order to explain the source of this cash, it was specifically and categorically submitted by AR that the amount received by the assessee is from his wife as the wife of the assessee had accumulated this amount from her personal savings over the years. This explanation put forth by Ld AR. appears to be quite reasonable, keeping in view the modest sum of Rs.1,80,000, which is reasonably expected to be present in any Indian household. In this context, I make reference to. CBT instructions No.3/ 2017 dated

21. February 2017 issued post demonetisation wherein it has been explicitly accepted by the CBT that Indian households may possess cash holdings up to 2,50,000 and in this regard the relevant screenshot of the guidelines issued by the CBDT are reproduced here and below. ‘’Source Specific General Verification Guidelines

1. Cash out of earlier Income or savings 1.1 in case of an individual (other than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs 2.5 lakh In case of taxpayers above 70 years of age, the limit is Rs. 50 lakh per person. The source of such amount can be either household savings/ savings from past income or amounts claimed to have been received from any of the sources mentioned in Paras 2 to 6 below. Amounts above this cut-off may require verification to ascertain whether the same is explained or not. The basis for verification can be income earned during past years and its source, filling of ROI and income shown therein, cash withdrawals made from accounts etc’’ After having considered the facts of the case, coupled with instructions of CBDT, I am of the view that from the facts it is clearly demonstrated that the cash deposited by the assessee originated from genuine sources and falls within the acceptable SHRI BRIJENDRA GARG VS ITO, WARD-BHIWADI, BHIWADI threshold for cash holdings in an Indian household accordingly, the additions made by the AO and confirmed by the ld. CIT(A) are unwarranted and deserves to be deleted and is thus ordered accordingly, consequently, this ground raised by the assessee stands allowed 6.0 In the result, the appeal filed by the assessee stands partly allowed with no order is to cost Order pronounced in the open court on 30 /09/2024.