ZIAUDDIN A. SIDDIQUE, MUMBAI v. ACIT-19(3), MUMBAI

ITA 4700/MUM/2011 | 2005-2006
Pronouncement Date: 25-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 470019914 RSA 2011
Assessee PAN AHLPS0554P
Bench Mumbai
Appeal Number ITA 4700/MUM/2011
Duration Of Justice 2 year(s) 10 month(s) 15 day(s)
Appellant ZIAUDDIN A. SIDDIQUE, MUMBAI
Respondent ACIT-19(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-04-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 25-04-2014
Date Of Final Hearing 02-01-2014
Next Hearing Date 02-01-2014
Assessment Year 2005-2006
Appeal Filed On 10-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUM BAI BEFORE SHRI SANJAY ARORA AM AND SHRI VIJAY PAL RA O JM ./ I.T.A. NO.4699 AND 4700/MUM/2011 ( AY-2004-05 AND 2005-06) ZIAUDDIN A. SIDDIQUE C/O. R. SANGHVI & CO. 104 RIZVI CHAMBERS-2 JAIN MANDIR MARG BANDRA (W) MUMBAI-400 050 / VS. JT. CIT 19(3) 3 RD FLOOR PIRAMAL CHAMBERS PAREL MUMBAI-400 012 ./ ./PAN/GIR NO. AHLPS0554P ( !' #$% / ASSESSEE ) : ( / REVENUE ) I.T.A. NOS. 5293 5294 5295 AND 5296 TO 5299/MUM/2 011 ( AY-2003-04 2004-05 2002-03 & 2005-06 TO 2008-09) ZIAUDDIN A. SIDDIQUE C/O. R. SANGHVI & CO. 104 RIZVI CHAMBERS-2 JAIN MANDIR MARG BANDRA (W) MUMBAI-400 050 / VS. ASST. CIT CENTRAL CIRCLE 24 & 26 AYAKAR BHAVAN CHURCHGATE MUMBAI-400 012 & I.T.A. NO. 4111/MUM/2011 ( ASSESSMENT YEAR: 2004-05) SHAHZEEN SIDDIQUE C/O. R. SANGHVI & CO. 104 RIZVI CHAMBERS-2 JAIN MANDIR MARG BANDRA (W) MUMBAI-400 050 / VS. JT.COMMISSIONER OF INCOME TAX 19(3) 3 RD FLOOR PIRAMAL CHAMBERS PAREL MUMBAI-400 012 ./ ./PAN/GIR NO. AIPPS8400D ( !' #$% / ASSESSEE ) : ( / REVENUE ) !' #$% & ' / ASSESSEE BY : SHRI RAJESH SANGHVI 2 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE & ' / REVENUE BY : SHRI K L P PATNAIK ( ! ) & % * DATE OF HEARING : 24.01.2014 + - & % * / DATE OF PRONOUNCEMENT : 25.04.2014 ' O R D E R PER SANJAY ARORA A. M.: THIS IS A SET OF TEN APPEALS BY THE ASSESSEES ZIA UDDIN A. SIDDIQUE (ZAS FOR SHORT) AND SHAHZEEN SIDDIQUE (SS FOR SHORT). APPE ALS BEARING NO.4699/MUM/2011 AND 4111/MUM/2011 RELATE TO ASSESSMENT YEAR (A.Y.) 2004 -05 CHALLENGING THE ORDER/S BY THE CIT(A)-30 DATED 15.2.2011 UPHOLDING THE ASSESSMENTS U/S. 143(3) OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER) FOR THE TWO SAID ASSES SEES RESPECTIVELY. ITA NO. 4700/MUM/2011 ARISES OUT OF AN ASSESSMENT U/S. 143( 3) OF THE ACT IN THE CASE OF ZAS DECIDED BY THE CIT(A) VIDE HIS ORDER DATED 30/1/200 8. THE BALANCE APPEALS ARE IN RESPECT OF APPEALS BY ZAS CONTESTING HIS ASSESSMENTS SINCE UPHELD FOR ASSESSMENT YEARS 2002- 03 TO 2008-09. THE ISSUES ARISING IN ALL THESE APPE ALS BEING THE SAME THE ASSESSES BEING IN FACT HUSBAND AND WIFE THEY WERE POSTED FOR BEIN G AND ACCORDINGLY HEARD TOGETHER AND ARE BEING DECIDED BY A COMMON CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA LS (FOR AY 2004-05) IS THE VALIDITY OF THE ASSESSEES CLAIM FOR DEDUCTION/EXEMPTION U/S . 54F OF THE ACT AS WELL AS LONG TERM CAPITAL GAIN (LTCG). THE SAME HAS BEEN DENIED BY T REATING THE GAIN RETURNED BY THE ASSESSEE(S) AS LTCG AS UNEXPLAINED CASH CREDIT U/S 68. OF THE ACT. THE SAME STANDS ASSESSED FOR A.Y. 2004-05 IN THE CASE OF BOTH THE A SSESSEES AND FOR A.Y. 2005-06 IN THE CASE OF ZAS. WE SHALL FOR THE SAKE OF REFERENCE AND COMPLETENESS OF THE NARRATIVE REFER TO THE BACK-GROUND FACTS OF THE CASE ADOPTING THE FIGURATIVE FACTS AND ALSO THE FIGURES IN THE CASE OF ONE SHAHZEEN SIDDIQUE (SS). THE ASSESS EES I.E. THE HUSBAND (ZAS) AND WIFE (SS) PURCHASED 1.43 LAKH AND 1.58 LAKH SHARES (OF PAR VALUE OF RS.10 EACH) IN ELTROL 3 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE LTD. FOR RS.149 200/- AND RS.163 100/- RESPECTIVEL Y I.E. AT AVERAGE PRICE OF RS.1.04 AND 1.03 PER SHARE RESPECTIVELY FOR THE TWO ASSESSEES ( WITH A LOW COEFFICIENT OF VARIATION SO THAT PRICE VARIED OVER A SMALL RANGE) DURING JULY 2002 EVEN AS ONE TRANSACTION FOR PURCHASE OF 50000 SHARES BY SS) WAS IN AUGUST 20 02 (07.08.2002). THE PAYMENT FOR THE PURCHASE OF SHARES WHICH WERE CLAIMED TO BE D ELIVERED IN 2-3 WORKING DAYS OF PURCHASE WAS BY WAY OF ADJUSTMENT OF CREDIT ALREAD Y OUTSTANDING IN THE ACCOUNTS OF ASSESSEE(S) IN THE BOOKS OF BROKER M/S. FALGUN FI NVEST (FF) A MUMBAI-BASED SEBI REGISTERED SUB-BROKER OF VENTURA SECURITIES LTD. MUMBAI (VSL). THE SHARES WERE SUBSEQUENTLY (I.E. ON 3.5.2003) SPLIT IN THE RATI O OF 10:1 SO THAT EACH SHARE PURCHASED GOT CONVERTED INTO 10 SHARES OF RE.1 EACH WITH AN AVE RAGE PRICE IN THE RANGE OF 10 PAISA EACH. THE SHARES WERE SUBSEQUENTLY (I.E. FROM AUGU ST 2003 TO MARCH 2004) SOLD THROUGH AHMEDABAD BASED STOCK BROKERS VIZ. GAUTAM N JHAVER I PROPRIETOR M/S. RAJESH N. JHAVERI (RNJ) AND M/S. MANIDHARI SHARE FINANCE LTD. (MSFL) AT AN AGGREGATE CONSIDERATION OF RS.233.02 LAKHS I.E. AGAINST A T OTAL PURCHASE CONSIDERATION OF RS.3.12 LAKHS. INQUIRIES AND INVESTIGATION WAS CAUSED BY TH E ASSESSING OFFICER (A.O.) THROUGH INVESTIGATION WING AT AHMADABAD (ADDL. DIRECTOR OF INCOME TAX (INVESTIGATION) AHMADABAD). THE FOCUS OF THE INQUIRY WAS THE IDENTI TY OF THE PERSON(S) WHO HAD PURCHASED SHARES AT SUCH HIGH RATES AS WELL AS THE MARKET CONDITIONS AT THE AHMEDABAD STOCK EXCHANGE DURING THE RELEVANT PERIOD; THE WHOL E PREMISE BEING TO ARRIVE AT THE TRUTH OF THE MATTER. WHILE THE PREVAILING RATES WERE FOUN D TO MATCH AT WHICH THE SHARES WERE TRANSACTED THE DEALS WERE FOUND TO BE EXECUTED NOT THROUGH THE EXCHANGE BUT AS OFF- MARKET TRANSACTIONS. THE PURCHASERS OF THE SHARES HOWEVER COULD NOT BE CONFIRMED. THE ENTIRE TRANSACTION WAS CONSIDERED BY THE REVENUE AS BOGUS BEING ONLY A DEVICE SET UP TO CLAIM ONLY A TAX RELIEF BOTH BY WAY OF EXEMPTION U /S. 54F AND LOWER TAX RATE OF LTCG BY REFLECTING THE TRANSACTION AS ONE OF PURCHASE AND S ALE OF SHARES. THE SAME WAS ACCORDINGLY CONSIDERED ONLY AS A PLOY OR MODUS OPERANDI ADOPTED BY THE ASSESSEE/S TO CONVERT HIS UNACCOUNTED (BLACK) MONEY INTO ACCOUNTE D (WHITE) MONEY. 3. WE HAVE HEARD THE PARTIES PERUSED MATERIAL ON R ECORD. 4 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE 3.1 THE RESPECTIVE CASES WE PROCEED BY DELINEATING THE RESPECTIVE CASES OF B OTH THE SIDES. THE ASSESSEES CASE THE PURCHASES OF SHARES IN JULY 2002 IS AT THE PRE VAILING/ GOING MARKET RATE (AT RS.1.25 PER SHARE). THE SHARES TO THE EXTENT PURCHASED IN J ULY 2002 (1.08 LAC) WERE SENT FOR TRANSFER TO THE COMPANY ON 25.07.2002 AND RECEIVED BACK DULY TRANSFERRED ON 05.08.2002 (LATEST BY SEPTEMBER 2002). THESE SHARE S WERE SUBSEQUENTLY GOT DEMATERIALIZED ON 03.03.2003 THROUGH NSDL AFFILIATE D DEPOSITORY PARTICIPANT (DP) ON THE COMPANY BEING ALLOWED TO DEMATERIALIZE ITS SHARES. THE SHARES WERE SUBSEQUENTLY SOLD THROUGH TWO AHMEDABAD BROKERS OF WHOM ONE RJN CON FIRMED SHARES SOLD THROUGH HIM WHILE OTHER BROKER I.E. MSFL DID NOT RESPOND TO THE DEPARTMENTAL INQUIRY. THE SAME AS APPARENT WAS BECAUSE OF CHANGE OF ADDRESS INDIREC TLY PROVING THAT HE HAD BEEN WORKING PRIOR THERETO THOUGH WAS UNTRACEABLE IN DECEMBER 2006 I.E. WHEN THE INQUIRY WAS MADE BY REVENUE. THE TRANSACTIONS THOUGH AGAIN O FF-MARKET WERE AT THE PRICE OBTAINING AT THE RELEVANT TIME AT THE AHMEDABAD STO CK EXCHANGE SO THAT THE SAME IS BY ITSELF TO NO EFFECT. SEEKING DETAILS OF THE PERSONS WHO PURCHASED THE SHARES AMOUNTS TO SEEKING INFORMATION ABOUT THE SOURCE OF SOURCE IN-A S-MUCH AS THE STOCK EXCHANGE ITSELF BECOMES THE COUNTER PARTY WHERE THE SHARES ARE BOUG HT/SOLD AT OR THROUGH THE EXCHANGE. IN ANY CASE HOW COULD THE ASSESSEE BE PENALIZED FO R THE DEFAULT OF OR BY THE BROKERS WHO ARE INDEPENDENT PERSONS. THIS IS PARTICULARLY SO AS ALL THE DOCUMENTARY DETAILS SUBMITTED WHICH HAVE NOT BEEN FOUND UNTRUE. THE STOCK EXCHANG E IS REPLETE WITH EXAMPLES WHERE THE SHARES PRICES HAVE RISEN IN SHORT SPANS OF TIME SO THAT REALITY MAY NOT ALWAYS AGREE WITH OR CONFORM TO THE PREPONDERANCE OF PROBABILITI ES. THE REVENUES CASE THE WHOLE PREMISE OF THE REVENUES CASE IS THAT THE ASSESSEE/S HAS BEEN UNABLE TO PROVE THE IDENTITY CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF TRANSACTION LEADING TO THE IMPUGNED CREDIT OF RS.122.58 LACS AND RS. 116.60 LACS IN THE CASE OF ZAS AND SS RESPECTIVELY RECEIVED PURPORTEDLY BY WAY OF GAI N ON SALE OF SHARES IN ELTROL LTD. 5 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE TOWARDS THIS INVESTIGATION AND VERIFICATION OF THE VERACITY AND THE GENUINENESS OF THE CLAIMS MADE AND DOCUMENTS ADDUCED HAS BEEN MADE T O COME TO THE CONCLUSION OF THE GENUINENESS OF THE TRANSACTION BEING IN SERIOUS DOU BT MUCH LESS PROVED . THE BOOK VALUE OF THE COMPANY AT RS.7.01 (AS ON 31.03.2002) AND AT RS.7.54 AND RS.7.37 PER SHARE AS ON 31.03.2003 AND 31.03.2004 RESPECTI VELY AGAIN DOES NOT AT ALL AGREE WITH ITS SALE VALUE AT WHICH THE SAME STOOD S UBSEQUENTLY SOLD DURING THE RELEVANT YEAR (FROM AUGUST 2003 TO MARCH 2004) I.E. AT A N AVERAGE PRICE OF RS.109 PER SHARE (RS.1 17 70 567/1 08 000 SHARES). NOTHING HAS BEEN BROUGHT ON RECORD WHICH WOULD JUSTIFY THE MAGICAL JUMP IN THE PRICE; THE COMPANY CARRYING ACCUMULATED LOSSES AND DECLARING UNPROMISING IF NOT POOR FINANCIAL RESUL TS WITH THE ASSESSEE PURCHASING THE SHARES BARELY A YEAR AGO AT THE RULING PRICE OF ABOUT RE.1 PER SHARE . [THE SHARE PRICES TO ENSURE COMPARABILITY HAVE BEEN PREFERRED TO AT THE PRE-SPLIT BASIS I.E. AS BOUGHT.] FINDINGS 3.2 OUR FIRST OBSERVATION IN THE MATTER IS THAT THE ADDITION QUA LONG TERM CAPITAL GAIN (LTCG) RETURNED BY THE ASSESSEE STANDS AND SUSTAINE D AS UNEXPLAINED CREDIT U/S.68 OF THE ACT. THE ONUS OR THE BURDEN TO PROVE THE CREDIT/S THEREFORE ON THE PARAMETERS OF THE IDENTITY OF THE CREDITOR/S (I.E. FROM WHOM THE CRE DIT FLOWS OR IS ASCRIBED TO REPRESENTING THE SOURCE THEREOF) HIS CAPACITY AND THE GENUINEN ESS (OF THE CREDIT TRANSACTION/S) IS ON THE ASSESSEE. IT IS ONLY WHERE THE ASSESSEE DISCHARGES AT LEAST PRIMA FACIE THE SAID ONUS THAT THE SAME SHIFTS TO THE REVENUE BEGINNING A CYCLE O F SHIFTING ONUS UPON DISCHARGE THROUGH CREDIBLE REBUTTAL OR OTHERWISE MEETING THE EVIDENCE/S OR MATERIAL/S BEING RELIED UPON BY THE OTHER. THE MAINTAINABILITY OR OTHERWISE IN LAW OF THE ADDITION/S UNDER REFERENCE WOULD THUS BE ON THE ANVIL AND THE PARA METERS OF SECTION 68. THE CASE LAW IN THE MATTER IS LEGION AND TOWARD WHICH WE MAY IF O NLY FOR THE SAKE OF COMPLETENESS OF OUR ORDER ADVERT TO THE SOME OF THE CELEBRATED DEC ISIONS BY THE APEX COURT IN THE MATTER: A. GOVINDA RAJULU MUDALIAR V. CIT (1958) 34 ITR 807 (SC) SREELEKHA BANERJEE & OTHRS. V. CIT (1963) 49 ITR 112 (SC) KALEKHAN MOHAMMED HANIF V. CIT (1963) 50 ITR 1(SC) 6 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE CIT V. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) CIT V. BIJU PATNAIK (1986) 160 ITR 674 (SC) S UMATI DAYAL V. CIT (1995) 214 ITR 801 (SC) CIT VS. P. MOHANAKALA &OTHERS 291 ITR 278 (SC) IN THIS REGARD HOWEVER IT COULD BE ARGUED THAT SE CTION 68 MAY NOT BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CREDI T BEING ASCRIBED TO THE PROFIT ARISING ON THE PURCHASE AND SALE OF SHARES. WE CAN HARDLY AGRE E. IN-AS-MUCH AS AND TO THE EXTENT THE SCOPE OF THE PROVISION EXTENDS TO DETERMINING AND CONSEQUENTLY BEING SATISFIED (OF- COURSE ON THE TOUCH-STONE OF REASONABLENESS) ON BOT H THE NATURE AND SOURCE OF THE CREDIT THE TRANSACTION/S YIELDING THE CREDIT/S WOULD NOT S TAND EXCLUDED. THE PURCHASE AND SALE OF SHARES IT IS TO BE APPRECIATED IS ONLY TOWARD ESTABLISHING THE NATURE OF THE CREDIT SO THAT RATHER THAN BEING EXCLUDED PER SE PROVING THE PURCHASES AND SALES IS ONLY TOWARD SATISFACTORILY EXPLAINING THE NATURE OF THE CREDIT. THERE IS ANOTHER ASPECT OF THE MATTER WHICH IN FAC T STANDS PROJECTED BY THE ASSESSEE. THE CREDIT BEING ASCRIBED TO THE PROFIT A RISING ON THE PURCHASE AND SALE OF SHARES THE PURCHASES OCCURRING IN A PRECEDING YEAR ARE FOR THAT REASON CLAIMED AS BEING PRECLUDED FROM EXAMINATION. THE PURCHASES BEING TH US PROVED THE SALE/S OF THE SHARES (OR ANY OTHER GOOD OR COMMODITY FOR THAT MATTER) PU RCHASED CANNOT BE QUESTIONED ESTABLISHING THE CREDIT. THE ARGUMENT IS WHOLLY MIS CONCEIVED. THE SATISFACTION CONTEMPLATED U/S.68 IS PRIMARILY AND ESSENTIALLY A FACTUAL MATTER . A PARTICULAR EXPLANATION MAY BE SATISFACTORY AND ANOTHER NOT. ON E MAY BE BACKED BY MATERIALS AND CORROBORATING CIRCUMSTANCES PROVING THE FACTS AND ANOTHER NOT. AS SUCH UNLESS THE PURCHASES HAVE BEEN SUBJECT TO EXAMINATION AND FACT UAL DETERMINATION BY THE REVENUE SO THAT EXAMINING THEM AGAIN WOULD AMOUNT TO A REVIEW THE A.O. CANNOT BE PRECLUDED FROM BEING SATISFIED ABOUT THE VERACITY OF THE PURCHASES FORMING INDEED A PART OF THE ASSESSEES EXPLANATION TOWARD THE CREDIT/S UNDER REFERENCE. IN FACT EVEN IN SUCH AS CASE THERE COULD BE A GROUND FOR FRESH EXAMINATION AS WHERE THE REV ENUE IS EQUIPPED WITH INFORMATION AND/OR MATERIALS NOT POSSESSED EARLIER. IN FACT TH E ADDITION BEING ONLY FOR THE PROFIT AMOUNT I.E. THE NET CREDIT ARISING TO THE ASSESSE E THE SAME EXCLUDES THE PURCHASE 7 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE AMOUNT. WHY THE EXCLUSION OF THE PURCHASE AMOUNT C OULD ITSELF BE ARGUED AS A REASON FOR THE ACCEPTANCE THEREOF AND THUS OF SALES AS WE LL! THE ARGUMENT IS BOTH FANTASTIC AND SERIOUSLY FLAWED AND PROJECTED ONLY TO HIGHLIGHT W HAT LOGICALLY FLOWS FROM THE EARLIER ARGUMENT EXPLAINED BY US AS MISCONCEIVED. THE EXAM INATION OF PURCHASES THE PURCHASE AMOUNT BEING EXCLUDED IS ONLY TOWARD EX AMINING THE GENUINENESS OF THE TRANSACTION CONSIDERED AS A WHOLE. ON THE CONTRARY IN-AS-MUCH AS THE PURCHASE AMOUNT STANDS EXCLUDED NOT FORMING PART OF THE CREDIT UND ER REFERENCE THE ASSESSEE IS PREVENTED FOR THAT REASON FROM CLAIMING ANY BENEFIT THEREOF. IN-SO-FAR AS THE SAME (PURCHASE) THOUGH STANDS EXAMINED WHETHER FOR THE EARLIER OR THE YEAR OF CREDIT (SALE) THE BENEFIT TO THE ASSESSEE WOULD FOLLOW ON IT BEING PROVED. AGAIN EVEN SO THE SALE TRANSACTION/S BEING INDEPENDENT OF PURCHASE/S A CREDIT COULD BE IMPUGN ED AS NOT GENUINE ON THE STRENGTH OF THE FINDINGS QUA THE SALE/S TRANSACTION ALONE. THIS IS AS BOTH THE TRANSFER (OF SHARES) AND PROFIT ARISES ONLY ON SALE. ACCORDINGLY NOTHIN G TURNS ON THE AFORE-STATED ARGUMENT/S AND THE MATTER WOULD STAND TO BE DECIDED ON FACTUAL FINDINGS WITH THE POWERS OF THE ASSESSING AUTHORITY IN THE MATTER BEING PLENARY. 3.3 THE ASSESSEE REFURBISHING ITS CASE WITH DOCUMEN TARY EVIDENCES THE SAME HAS BEEN SOUGHT TO BE SUBJECT TO VERIFICATION BY THE REVENUE ARRIVING AT THE CONCLUSION THAT THE GENUINENESS OF THE TRANSACTION/S IS NOT PROVED AT A LL. THE QUESTION THAT THUS ARISES FOR OUR CONSIDERATION IS WHETHER THE REVENUE HAS BEEN SUCCE SSFUL IN REPELLING THE GENUINENESS OF THESE DOCUMENTS OR IN THE LEAST CASTING A GENUINE D OUBT ON THE GENUINENESS OF THE TRANSACTIONS UNDER THE GIVEN AND DEMONSTRATED FACTS AND CIRCUMSTANCES OF THE CASE. WE SHALL PROCEED ALONG EACH OF THE AREAS FOR WHICH THE VERIFICATION STANDS CAUSED BY THE REVENUE IN ITS BID TO DISLODGE THE ASSESSEES CASE OF IT BEING A GENUINE AND ABOVE BOARD TRANSACTION/S OF PURCHASE AND SALE OF SHARES IN A P ARTICULAR SCRIP I.E. ELTROL LTD. VIZ. THE COMPANY PROFILE INCLUDING ITS FINANCIALS; THE PURC HASES AND SALES OF SHARES ETC. THE COMPANY ELTROL LTD. TO BEGIN WITH CONFORMS T O A TYPICAL PENNY STOCK COMPANY. ITS MARKET CAPITALIZATION IS AT RS.53.1 4 LACS (AS ON 22.8.2002) OR EVEN AT RS.1024.5 LACS (AS ON 31.2.2003) EXTREMELY LOW. FU RTHER THE ENTIRE SHARE HOLDING IS 8 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE SPREAD OVER 527 SHARE HOLDERS OF WHICH 252 CONTROL 97.49 % OF THE SHAREHOLDING. A FLOATING STOCK I.E. SHARES AVAILABLE WITH THE PUB LIC AT LARGE AVAILABLE FOR TRADING PROVIDING LIQUIDITY TO THE INVESTMENT BEING AT 48. 15% WITH THE BALANCE HELD BY PROMOTERS (42.75 %) IS VERY LOW SO THAT SHARE PRI CE COULD BE EASILY MANIPULATED. IN FACT THE ENQUIRES MADE BY THE REVENUE WITH THE AHMEDABAD STOCK EXCHANGE (ASE) HAVE REVEALED NO POPULAR FOLLOWING OR SENTIMENT OR EVEN TRADE VOLUMES IN SUPPORT OF COMPLETELY UNEXPLAINED PRICE HIKE OR THAT PREVAILIN G AT THE STOCK EXCHANGE. THE MARKET IF THIS COULD BE CALLED ONE BEING DEFINED AS A SPACE (PHYSICAL OR EVEN VIRTUAL) WHERE THE DEMAND AND SUPPLY FORCES INTERACT TO ARRIVE AT A EQ UILIBRIUM CALLED PRICE WAS AS REPORTED BEING OPERATED BY TWO BROKERS ONLY AND T HE SHARE PRICES RIGGED RAISING SERIOUS DOUBT AS TO WHETHER THE SAME ARE REAL. ANNEXURE B TO THE REPORT DATED 12/10/2006 BY THE ASE (PB PGS. 130 141) REVEALS TRADING IN THE SCRI P ON ONLY 24 DAYS WITH 559 TRADES DURING THE WHOLE OF THE RELEVANT YEAR (F.Y. 2003-04 ). JUST TO GIVE AN IDEA OF THE SIZE OF THE MARKET AN ESSENTIAL ATTRIBUTE THEREOF THE TO TAL VOLUME TRADED DURING THE YEAR (15.88 LAC SHARES) MATCHES THE ASSESSEES (SSS) SHAREHOLD ING (I.E. 1.58 LAC SHARES EQUIVALENT TO 15.80 LAC POST-SPLIT SHARES). THERE WAS LITTLE PRIC E MOVEMENT ON EACH DATE VARYING BETWEEN A SMALL RANGE OF 5 PAISE TO 30 PAISE ON ANY DAY WITH THE MAXIMUM VARIATION BEING AT 50 PAISE. SURPRISINGLY THOUGH DESPITE SUC H SPARSE TRADING WITH THERE BEING NO TRADE FOR MONTHS TOGETHER THE SHARE PRICE SHOWS A LINEAR PROGRESSION THE OPENING SHARE PRICE ON ANY DATE ON WHICH THE TRADE TAKES PLACE B EING AT AN INCREASE OF COURSE UNEXPLAINED OVER THE PREVIOUS CLOSE PRICE. AS A RE SULT THE SHARE PRICE INCREASES FROM RS. 2.55 PER SHARE IN MAY 2003 TO RS. 11 IN SEPTEMBER 2003 AN INCREASE OF 432% INSIDE SIX MONTHS AND WITHOUT ANY ECONOMIC OR EVEN TECHNI CAL BASIS NONE BEING DISCLOSED. EXCEPT ON ONE DAY (20/6/2003) THE SHARE PRICE DOES NOT RESPOND TO THE VOLUME OF TRADE (I.E. AT A DECENT FIGURE OF 1 LAC SHARES AND ABOVE ); IT CLOSING AT RS. 5.95 AS AGAINST THE OPENING OF RS. 8.20 ON THAT DATE. WHY? THEN AGAIN IF THE STABILITY OF THE PRICE ON THE EARLIER DATES IS TAKEN AS REFLECTIVE OF A BUYING SE NTIMENT (THOUGH FOR NO APPARENT REASON) THE DECREASE ON 20/6/2003 WOULD SIGNIFY A SELLING P RESSURE. HOWEVER UNEXPLICABLY THE PROGRESSION IN PRICE CONTINUES. COULD THIS BE CALLED A MARKET OR IS IT STRUCTURED ? 9 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE 3.4 IT COULD IN FACT BE ARGUED THAT THE PRICE/S EVEN IF RIGGED COULD BE AND ARE REAL; THE SHARE MARKET WITNESSING ORGANIZED RIGGINGS LEAD ING TO PHENOMENAL GAINS (FOR SOME) AND CORRESPONDINGLY LOSSES FOR OTHERS. THE ARGUMENT IS VALID IN PRINCIPLE SO THAT PRICE BEING MANIPULATED MAY NOT BE CONCLUSIVE OF IT BEING NOT REAL I.E. IN-SO-FAR AS THE TRADERS OR THE PARTICIPANTS IN THE MARKET ARE CONCERNED. FI RSTLY HOWEVER THE ONUS TO EXHIBIT SO RESTS WITH THE ASSESSEE WHO HAS BENEFITED FROM THE SAME AS WELL AS QUA S.68 BEING INVOKED. FURTHER ON SPECIFICS WHO ARE THE PURCHASES OF THE SHARES AT THOSE HIGH RATES ? THE SAME EVEN OTHERWISE OF PRIME RELEVANCE IN-AS-M UCH AS THEY REPRESENT THE SOURCE OF THE CREDIT (AND NOT THE SOURCE OF SOURCE AS CONTEN DED) ASSUME CRITICAL SIGNIFICANCE IN THE CONTEXT OF AN UNIMAGINABLE AND UNREALISTIC PRICE AT WHICH THE SHARES ARE CLAIMED TO BE SOLD. IN THIS REGARD IT MAY BE PERTINENT TO STATE T HAT THE SHARES HAVE BEEN SOLD IN JANUARY 2004 AT AN INCREASE OF ABOUT WHOPPING 45% OVER THE CLOSING PRICE ON THE MARKET (RS 7.20) ON THE LAST DATE OF THE TRANSACTION THEREAT D URING THE RELEVANT YEAR (08/12/2003) WITH IN FACT THE SHARE PRICE REFLECTING A DOWNWARD TREND AND OVER THE PAST FEW MONTHS. WHAT THEN IS THE BASIS OF THESE TRANSACTIONS ? WE FIND NO ANSWERS OR EXPLANATION. FURTHER THE PURCHASERS THOUGH NAMED VIZ. DWAR KESH RESTAURANT PVT. LTD.; MURARILAL B. PRAJAPATI INDOCARE PHARMA (FOR SHARES SOLD THRO UGH RNJ) COULD NOT BE PRODUCED NOR COULD BE LOCATED AT THEIR STATED PLACE SO THAT THE SUMMONS COULD NOT BE SERVED ON THEM STALLING THE INVESTIGATION/VERIFICATION PROCESS. IN FACT REPLIES WERE SUBSEQUENTLY RECEIVED FROM THE FIRST TWO PARTIES (THROUGH RNJ) WHICH IS BY ITSELF SURPRISING CONSIDERING THAT SUMMONS COULD NOT BE SERVED ON THEM OR THEIR WHERE ABOUTS LOCATED DESPITE KEEN EFFORTS. SURELY SOMEBODY WAS OPERATING BEHIND THE SCENES CO MMUNICATING THEM THE DEVELOPMENTS AND THE REVENUE UNDERTAKING VERIFICAT ION OF THE TRANSACTIONS PURPORTEDLY PLACED ON THE MATERIALS BEING FURNISHED OSTENSIBLY ON THEIR BEHALF ? ONLY THEY COULD EXPLAIN THEIR PURCHASES GIVEN THE STATE OF THE MAR KET THE CHOICE OF THE SCRIP THE SOURCE OF INVESTMENT THE BOOKING OR FUNDING OF LOSSES OR PROFIT IF ANY? FURTHER THEIR FINANCIALS WHEREVER FILED DID NOT AT ALL CORRESPOND WITH THE RESOURCES REQUIRED TO PURCHASE THE SHARES; MR. PRAJAPATI RETURNING AN INCOME OF RS.1 0 0 798/- FOR A.Y. 2004-05 NOR THEIR BANK STATEMENTS FILED WHICH WHERE SO WOULD AGAIN NEED TO BE EXAMINED FOR THE SOURCE 10 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE OF DEPOSIT THEREIN FOR FINANCING THE PURCHASES. VER Y INTERESTINGLY IF NOT QUIZZICALLY MR. PRAJAPATI SOLD 3 LACS SHARES IN ELTROL LTD. (POST S PLIT) PURCHASED AT RS.11.01 PER SHARE ON 13.01.2004 TO SHRI GAUTAM N. JHAVERI (OR RNJ) I.E. THE SAM E BROKER THROUGH WHICH THE SHARES WERE PURCHASED AT RE.0.41 PER SHARE INCURRING LOSS OF RS.32.10 LACS (@ RS.1 0.70 PER SHARE). HIS ACCOUNTS DO NOT REFLECT THE SAID LO SS. LIKEWISE BY DWARKESH RESTAURANT PVT. LTD. SELLING 1.57 LACS SHARES TO RNJ AT RS.0. 41 PER SHARE AGAIN INCURRING SIMILAR LOSS THE FUNDING OR THE BASIS THEREOF WHICH OR E VEN ITS ADMISSION HAS NOT DEMONSTRATED. CONTINUING FURTHER WHAT WE WONDER THEN IS THE P RICE ON THAT DATE OR EVEN DURING THE RELEVANT PERIOD; THE ASSESSEE SELLING HER SHARES TH EREAT AND MORE SPECIFICALLY DURING JANUARY 2004 AT RS.10.15 TO RS.10.57 PER SHARE (P OST-SPLIT). IN FACT 50 000 SHARES WERE SOLD ON 13.01.2004 ITSELF THROUGH RNJ THE SAME BROKER AT RS.10.56 PER SHARE! SIMILARLY ONE LAC SHARES WERE SOLD BY THE ASSESSEE THROUGH MS FL AT RS.10.55 PER SHARE ON 13/1/2004 . WHAT FURTHER PROOF ONE MAY ASK DOES ONE REQUIRE T O FIGURE OUT OF THE TRANSACTIONS BEING SHAM AND MANAGED ? RNJ HAD IN FACT HIMSELF PURCHASED 6.51 LAC SHARES (OF PAR VALUE OF RE.1 EACH) FOR RS.71.52 LAC S THE SOURCE OF PAYMENT STANDS NOT EXHIBITED. THE OTHER BROKER WHO HAS ALONG WITH TRA NSACTED SHARES AT AHMEDABAD STOCK EXCHANGE I.E. MSFL IS AGAIN NOWHERE ON THE SCENE . NOT ONLY IS THE SOURCE OF THE CREDIT ABSENT THE CIRCULAR TRADING THUS ESTABLISHED DEM OLISHES ANY CREDENCE BEING PLACED ON THE BOGEY OF THE SALE OF SHARES CONSTRUCTED BY AND THROUGH THE MEDIUM OF THE BROKERS FURNISHING PURCHASE AND SALE BILLS. THE BROKERS ACTING IN CONCERT AND AS CONDUITS HAD MERELY BY SYSTEMATIC PAPER TRANSACTIONS FIRSTLY OB TAINED LISTING AT HIGH MARKET RATES AND THEN EXHIBITED PURCHASE AND SALE TRANSACTIONS THROUGH OSTENSIBLE OFF-MARKET TRANSACTIONS AT THOSE RATES RESULTING IN BOOKING O F GAINS (OR LOSSES) FOR THE RESPECTIVE PARTIES. FURTHER WHILE THE GAINS ARE ACCOUNTED TH E CORRESPONDING LOSSES ARE CONSPICUOUS BY THEIR ABSENCE TAKING REFUGE IN THE EXPLANATION THAT IN MARKET TRANSACTIONS THE BROKER OR THE STOCK EXCHANGE ITSELF BECOMES THE CORRESPOND ING OR THE COUNTER PARTY. TRUE A PURCHASER OR SELLER ON/THROUGH STOCK EXCHANGE WOULD NORMALLY NOT WHO THE CORRESPONDING PARTY AND THEN THAT DOES NOT IN ANY MANNER IMPLY TH AT THERE IS NONE SUCH BEING IN FACT THE TRANSFEROR OR AS THE CASE MAY BE TRANSFEREE IN THE TRANSACTION. THE BROKER WHERE NOT 11 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE HIMSELF ACTING AS A PRINCIPAL WOULD HAVE THOSE DET AILS SO THAT THE SAME COULD BE FURNISHED OR SECURED EITHER DIRECTLY OR THROUGH TH E STOCK EXCHANGE EVEN WHERE THE TRANSACTION ARE THROUGH ANOTHER BROKER ON THE EXCHA NGE. THE NAMES OR THE IDENTITIES FURNISHED BY WAY OF COR RESPONDING PARTIES IN THE INSTANT CASE ARE OF NO CONSEQUENCE IN THE ABSENCE O F ANY CREDIBLE EVIDENCE AS TO THE TRANSACTIONS BEING GENUINE OR REPRESENTING ACTUAL P URCHASE AND SALE TRANSACTIONS. WHAT FOR EXAMPLE ARE RATHER THE RATES PREVAILING AT THE BSE IN JANUARY 2004 ? FOR ALL WE KNOW THE SHARES MAY NO LONGER BE LISTED THEREAT IN VIEW OF STRICT REGULATORY CONTROL OF THE STOCK EXCHANGE AND ABSENCE OF ANY REAL TRADE COUP LED WITH THE LISTING FEES. THE VOLUME AND THE NUMBER OF TRADES AT EVEN THE ASE CLEARLY EX HIBITS (REFER PB PG. 141) ABSENCE OF ANY POPULAR SENTIMENTS OR FREE TRADE WHICH ONLY WO ULD MAKE IT A MARKET BEING IN FACT CONSTITUTED IN FACT BY ONLY TWO OPERATORS THE VE RY BROKERS THROUGH WHOM SHARES HAVE BEEN SOLD AND WHO WE FIND IN THE COMPLETE ABSENCE OF THE PERSONS TRADING SHARES AT THE EXCHANGE WHICH THEY WOULD OTHERWISE EASILY AND REA DILY FURNISH TO HAVE ACTED IN CONCERT. NO CASE OF ACTUAL RIGGING OF THE MARKET A S SEEMS TO BE SUGGESTED IS MADE OUT. FURTHER WHILE A DIFFERENCE OF A FEW PERCENTAGE POI NTS WOULD GENERATE MARKET MOVEMENT BY WAY OF ARBITRARY/JOBBING ACROSS DIFFERENT EXCHAN GES I.E. IN AN ACTUAL SETTING HERE WE FIND THE SAME BROKERS PURCHASING AND SELLING THE SH ARES OF THE SAME SCRIP ON THE SAME DAY AT A VARIANCE OF NEARLY 2600%! WHY WOULD ONE MAY ASK ANY PERSON SELL HIS SHARES WORTH RS.100/- (AS PER THE GOING MARKET RATE) AT LESS THA N RS.4/- (SAY) ? THE SHARES ARE REQUIRED TO BE PURCHASED BACK BY THE BROKERS IN-AS-MUCH AS IT IS THE SAME SHARES THAT ARE REQUIRED TO BE ROTATED FOR BEING AGAIN SIMILARLY REGISTERE D IN THE NAME OF ANY PERSON WISHING TO LAUNDER HIS MONEY THROUGH THE MODUS OPERANDI OF PURCHASE AND SALE OF SHARES. 3.5 THE ASSESSEES PURCHASES ARE AGAIN EQUALLY UN PROVED WITH M/S. FF AS CONFIRMED BY ITS PRINCIPAL VSL STARTED THE TRADING OPERATIO NS ONLY FROM 15.07.2002 WHILE WE FIND IT TO HAVE EXECUTED TRANSACTIONS WITH THE ASSESSEE PRIOR THERETO. HOW COULD THAT BE ? THEN THE SOURCE AND QUANTITY OF SHARES IN ELTROL LTD. WI TH IT COULD NOT BE EXPLAINED THE PRINCIPAL BROKER (VSL) CLARIFYING THAT NO SHARES WE RE SOLD TO FF BEFORE 09.08.2002. THAT 12 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE APART THE BOOKS OF FF REVEAL THAT ONLY 27800 SHARE S WERE PURCHASED BY IT WHILE IT HAD IN FACT SOLD 1.43 LAC AND 1.08 LAC SHARES TO ZAS AND SS RESPECTIVELY DURING JULY 2002 ITSELF. HOW? THE SOURCE OF THESE SHARES REMAINS UNE XPLAINED. IN FACT THE SHARES SOLD THE ASSESSEE ARE NOT EXPLAINED AS TO THEIR ACQUISITION TO THE EXTENT OF EVEN 27 800 SHARES AS THE SAID SHARES WERE ACQUIRED BY IT ON OR AFTER 09/ 8/2002. FURTHER ANOTHER 50 000 SHARES (PRE-SPLIT) SOLD TO SS ON 07.08.2002 WERE NEVER DEL IVERED WHILE SS PAID THERE-FOR. THE SAME VALUED AT THE PRICE OBTAINING AND FOR WHICH T HE SHARES WERE SOLD WOULD FETCH OR ARE WORTH OVER RS.50 LACS. NO ACTION WHICH IS OTHERW ISE UNTHINKABLE HAS APPARENTLY BEEN TAKEN BY THE ASSESSEE AGAINST THE BROKER; THE SAID NON-DELIVERY CAUSING HER LOSS TO NEARLY THE SAID EXTENT. THEN AGAIN THE BROKER BEING ONLY THE PERSON EXECUTING THE TRADE THE REAL QUESTION IS WHO IS THE SELLER OF THOSE SHARES THE INFORMATION ON WHICH (I.E. THE SOURCE OF THE SHARES PURCHASED THROUGH FF) IS CONSPICUOUS BY ITS ABSENCE. WE HAVE ALREADY EMPHASIZED THE RELEVANCE OF THIS INFORMATION AS WEL L. T HE TRANSFER DEEDS (PB PGS. 53-54) ALSO DO NOT BEAR THE NAMES OR THE OTHER PARTICULARS OF THE SELLER/S. THE ASSESSEE SPEAKS OF OFF-MARKET TRANSACTIONS. THE QUESTION TO OUR MIND IS OF THE TRANSACTION/S BEING GENUINE OR NOT AND NOT WHE THER THEY WERE CONDUCTED ON THE FLOOR OF EXCHANGE OR OFF IT. RATHER WE HAVE FOUND ON TH E STRENGTH OF MATERIAL ON RECORD THE PRICES ON THE EXCHANGE ITSELF TO BE MANIPULATED BY TWO BROKERS RNJ AND MSFL ACTING IN CONCERT AND INVOLVED IN SYSTEMATIC CONDUCT OF MONE Y LAUNDERING THROUGH SHARE TRANSACTIONS BUYING SHARES AT LOW RATES PARKING T HEM WITH A PERSON/S AND OFF-LOADING THEM AT AN INTERVAL AT HIGH RATES. THE SAME HAS NO CORRESPONDENCE WITH THE ACTUAL PERFORMANCE OF THE COMPANY OR IN FACT ACTUAL TRAD E IF ANY IN THOSE SHARES. WHAT VALUE THEN THE ASSESSEES STATEMENT OF TRANSACTIONS OF B EING OFF-MARKET TRANSACTIONS? RATHER NOT ONLY IS THE PROTECTION OF THE MARKET REGULATION S AND PRACTICES NOT AVAILABLE TO SUCH TRADES THE SAME WOULD ONLY BE THROUGH PERSONS KNOW N TO THE BROKER OR THE CORRESPONDING BROKER AS THERE IS NO RECOURSE TO TH E STOCK EXCHANGE OR THE MARKET REGULATOR IN CASE OF DEFAULT . IN FACT THE LAW CLEARLY PROVIDES FOR THE SETTLEM ENT OF SUCH TRADES ON SPOT BASIS SO THAT THE DELIVERY AS WELL AS THE PAYMENT IS TO BE COMPLETED WITHIN A SPAN OF ONE TO TWO DAYS OF THE TRADE. WE HAVE ALR EADY NOTED COMPLETE ABSENCE OF THE 13 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE MONEY TRAIL. FURTHER NEARLY 1/3 OF THE SHARES PURC HASED AND PAID FOR BY THE ASSESSEE HAVE APPARENTLY NOT BEEN DELIVERED TO HER SO MUCH FOR THE OFF-MARKET TRANSACTIONS. THE MECHANISM ADOPTED OR THE LOGISTICS FOR COMPLETING T HE TRADE IS EVEN OTHERWISE OF INTEREST IN THE INSTANT CASE INASMUCH AS THE ASSEESSEE (SELL ER) AND THE BROKERS (INTERMEDIARY) AND PURCHASERS ARE LOCATED IN DIFFERENT CITIES. HOW WAS THE DELIVERY OF SHARES REQUIRED TO BE GIVEN IMMEDIATELY AND RECEIPT OF MONEY SIMULTANEO USLY OR ALMOST SO TAKEN OR GIVEN AS THE CASE MAY BE. 3.6 WE MAY AT THIS STAGE CAPSULE OUR FINDINGS. FIRS TLY TRANSACTIONS EVEN WHERE PURPORTED TO BE BY WAY OF PURCHASE AND SALE OF SHAR ES NEED TO BE PROVED ON THE ANVIL OF S. 68 INASMUCH AS UNLESS SO PROVED THE PROFIT REFLECT ED THEREBY IS ONLY A CREDIT APPEARING IN THE BOOKS OF AN ASSESSEE WHICH THEREFORE WOULD REQ UIRE BEING PROVED ON THE PARAMETERS OF S. 68. SHARES IN A NONDESCRIPT COMPANY ARE STATED TO BE PU RCHASED WHICH THE REVENUE DESCRIBES GENERICALLY AS PENNY STOCK COMPANIES WI TH REFERENCE TO THE NOMENCLATURE ADOPTED THEREFOR ABROAD BEING EMPLOYED FOR PRICE R IGGING MANIPULATION ETC. TOWARD VARIOUS ENDS. OUR EXAMINATION REVEALS ON THE BASIS OF UNDISPUTED DATA HAVING IN FACT BEEN FURNISHED BY THE ASSESSEE ITSELF OR THAT AVAIL ABLE IN THE PUBLIC DOMAIN IT TO BE SUCH A COMPANY. STATED TO BE IN THE BUSINESS OF TRADING IN PAPER AND GENERAL ITEMS (WHATEVER THAT WOULD MEAN I.E. IN THE CONTEXT OF TODAYS COMPETI TIVE WORLD WHERE THE TRADING BUSINESS SURVIVES ON THE STRENGTH OF CORE COMPETENCIES) IT HAS POOR FINANCIALS IN TERMS OF OPERATING MARGIN EARNING PER SHARE BOOK VALUE ET C. COUPLE THIS WITH THE MARKET ATTRIBUTES IN TERMS OF LOW MARKET CAPITALIZATION LOW FLOATING STOCK (20.47 LAC RE. 1 SHARES) TRADING PARAMETERS ETC. AND THE PICTURE IS COMPLETE. NO BUSINESS PROSPECTS WHICH WOULD CATAPULT ITS FORTUNES HAVE BEEN EXPLA INED MUCH LESS DEMONSTRATED. THE SHARE PRICES ARE FOUND NOT EXPLAINABLE IN TERMS OF ECONOMIC AND COMPANY SPECIFIC PARAMETERS. ON THE CONTRARY THE SHARE PRICES HAVE BEEN OBSERVED AND FOUND TO BE MANIPULATED AND MANAGED INDEED YIELDING CONTRIVED PRICES; IN FACT NOT CONSTITUTING A MARKET. FURTHER THE SHARE PRICE BEHAVIOR CONFORM S TYPICALLY WITH WHAT ONE WOULD 14 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE EXPECT WHERE THE SHARES OF A PARTICULAR SCRIP ARE U SED TO GENERATE INCOME GOING LOW AND HIGH IN A CYCLICAL MANNER OVER DEFINED TIME CYC LES. THE MARKET IS AS IT WERE COMPRISED OF GHOST PARTICIPANTS WITH NEITHER THE S ELLERS NOR PURCHASERS OF SHARES TO AND FROM THE ASSESSEE BEING IDENTIFIED OR WHERE SO BY WAY PRODUCTION ABLE TO SUBSTANTIATE THEIR CLAIMS IN ANY MANNER EVEN AS SIGNIFICANT PAR T OF THE TRANSACTIONS WERE BY THE BROKERS THEMSELVES. TRANSACTIONS IN OFF MARKET SETT ING APART FROM THE FACT OF THE SAME BEING NOT REPORTED AS PER THE PREVAILING RULES HAV E NECESSARILY TO BE PARTIES WHOSE IDENTITIES AND CAPACITIES ARE KNOWN. TRADES HAVE BE EN FOUND AS UNDERTAKEN INCONSISTENT WITH THE MARKET RATES SERIOUSLY IMPUGNING THEIR GE NUINENESS. WHETHER THE CONDITIONS OF SPOT TRANSACTIONS STAND FULFILLED WHICH ONLY WOULD QUALIFY IT TO BE TERMED AS AN OFF MARKET TRANSACTION REMAINS UNEXPLAINED. TRANSACTIONS DO NOT BECOME REAL MERELY BECAUSE THEY STAND ROUTED THROUGH THE ACCOUNT BOOKS BUT ON BEING ESTABLISHED AS SO I.E. AS PROVED. THE QUESTION IS NOT OF THE ASSESSEES CASE BEING DOCUMENTED OR NOT BUT OF THE TRUTH OF THOSE DOCUMENTS OR OF THEY REPRESENTING GENUINE TRANSACTIONS WHICH WE HAVE FO UND THEM AS NOT. IN THE INSTANT CASE WE HAVE OBSERVED SERIOUS DISCREPANCIES AND INFIRMIT IES IN THE BOOKS OF ACCOUNT WHERE PRODUCED AS WELL. WHY SECTION 68 ITSELF WOULD BEC OME A NON-STARTER IF THE A.O.S SATISFACTION IS TO BE BASED ON THE FACT OF THE TRAN SACTION BEING RECORDED IN THE BOOKS OF ACCOUNT; THAT BEING RATHER THE BASIS FOR THE INVOCA TION OF SECTION SO THAT THE CREDIT BEING NOT DENIED IT UNLESS PROVED TO BE GENUINE MAY BE CONSIDERED AS THE ASSESSEES INCOME. THE SELLERS OF THE SHARES PURCHASED BY THE ASSESSEE ARE NOT KNOWN WHILE THE PURCHASERS I.E. ASSUMING SO FOUND SERIOUSLY WANTING IN THEIR CREDENTIALS IN OUR VIEW THE GENUINENESS OF THE TRANSACTIONS IS FAR FROM PROVED IF NOT ACTUALLY DISPROVED. WHY EVEN THE IDENTITIES OF THE CREDITORS HAVE NOT BEEN ESTAB LISHED. THE QUESTION PROVING THE CAPACITY DOES NOT ARISE UNDER THE CIRCUMSTANCES WI TH NO MONEY FLOWS HAVING BEEN EXHIBITED THOROUGHLY DISCREDITING THE ASSESSEES C ASE. THE REVENUES CASE IS NOT AS BEING STATED BASED WHOLLY ON PREPONDERANCE OF HUMA N PROBABILITIES THOUGH THAT BY ITSELF CANNOT BE SAID TO BE IRRELEVANT AND COULD PROVE DEC ISIVE IN THE FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE BUT ON THE COMPLETE INABILITY TO ESTABLISH ITS CASE AS GENUINE. IN FACT THE 15 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE EXPLANATIONS AND THE MATERIALS FURNISHED RAISE FAR MORE QUESTIONS THAN THEY ANSWER (ALSO REFER PARAS 3.2 TO 3.5). 3.7 THE RELIANCE ON THE DECISIONS AS IN THE CASE OF CIT V. JAMNADEVI AGARWAL [2010] 328 ITR 0656 (BOM.) WOULD IN VIEW OF FACTUAL FINDI NGS RENDERED IN THE CONSPECTUS OF THE CASE BE OF LITTLE CONSEQUENCE. THE PREMISE OF THE SAID DECISION UPHOLDING THE TRIBUNALS ORDER IS THAT THE TRANSACTIONS COULD NO T BE CONSIDERED AS NOT GENUINE MERELY BECAUSE THEY STAND UNDERTAKEN AS OFF MARKET TRANSAC TIONS. WE FIND OUR ORDER AS NOWHERE IN CONFLICT WITH THE SAID PROPOSITION. THE ASSESSEE HAS ALSO SOUGHT TO DISTINGUISH THE DECISION IN THE CASE OF SUMATI DAYAL (SUPRA) ON THE GROUND THAT THAT WAS A CASE OF LOTT ERY WHILE THE PRESENT CASE OF ONE OF STOCK MARKET WHIC H IS HIGHLY ORGANIZED AND WELL REGULATED. IN OUR VIEW THE PREMISE AND THE RATIO OF THE SAID DECISION IS QUA THE INFERENCE AS TO NON-GENUINENESS OF A TRANSACTION/S IN THE GIV EN FACTS AND CIRCUMSTANCES. NOT ONLY IS THE SAID DECISION THEREFORE FULLY APPLICABLE IN ANY DECISION INVOLVING APPLICATION OF S. 68 AND THUS IN THE INSTANT CASE IN OUR VIEW THE POI NT OF THE ASSESSEES DISTINGUISHING IS ALSO MISCONCEIVED. LOTTERY BUSINESS IS EQUALLY WELL REGU LATED WHILE THE ARGUMENT IS IN FACT NOT AVAILABLE IN THE INSTANT CASE WHICH IS BEING D ECIDED ON THE BASIS OF CLEAR AND DEFINITE FACTUAL FINDINGS INASMUCH AS THE BOTH THE PURCHASE AND SALE TRANSACTIONS IN SHARES HAVE BEEN EXECUTED OFF MARKET WITHOUT IN FACT EVEN FULF ILLING THE REPORTING REQUIREMENTS IN RESPECT THEREOF UNDER THE REGULATORY FRAMEWORK. 3.8 THE REVENUES FINDINGS AND DECISION ARE THUS CO MPLETELY ENDORSED AND UPHELD CONFIRMING THE ADDITIONS. THOUGH THE SCRIP FOR AY 2 005-06 IS DIFFERENT RAMAKRISHNA FINCAP LTD . OUR DECISION WOULD HAVE EQUAL APPLICATION FOR TH E SAME AS WELL. IN FACT NO SEPARATE ARGUMENTS WERE ALSO MADE IN RESPECT THEREO F BEFORE US. WE DECIDE ACCORDINGLY DISMISSING THE RELEVANT GROUNDS. 4. GROUNDS NOS.1 AND 2 OF APPEAL BY THE ASSESSEE (Z AS) FOR THE ALL THE ASSESSMENT YEARS CHALLENGE THE IMPUGNED ASSESSMENTS UNDER SECT ION 143(3) R.W.S.153A OF THE ACT ON THE FOLLOWING GROUNDS: 16 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE (A) SEARCH IS INVALID IN-AS-MUCH AS THE SHARE WARRA NT IS IN JOINT NAMES; (B) NO INCRIMINATING MATERIALS HAVE BEEN FOUND DURI NG SEARCH PROCEEDINGS; AND (C) THE WARRANT OF AUTHORIZATION IS IN THE NAME OF THE ASSESSEES PROPRIETARY CONCERN. 5. WE HAVE HEARD THE PARTIES PERUSED THE MATERIAL ON RECORD AND GIVEN OUR ANXIOUS CONSIDERATION TO THE MATTER. WE FIND THE ASSESSEES CASE TO BE WITHOUT MERIT. THE WORDS INCRIMINATING MATERIAL OR AN EXPRESSION TO THAT EFFECT FINDS NO MENTION OR PLACE OR EVEN A REMOTE REFERENCE IN THE RELEVANT PROVISION (SECTI ON 153A) WHICH PROVIDES JURISDICTION TO FRAME ASSESSMENT FOR THE YEAR OF SEARCH AND FOR SIX PRECEDING YEARS ON THE BASIS OF SEARCH ITSELF. FURTHER THE JURISDICTION IS CLEARLY TO ASSESS THE TOTAL INCOME AND WHICH IS TO BE NECESSARILY BASED ON SOME MATERIALS. FURTHER WHAT IS INCRIMINATING COULD ITSELF BE A MATTER OF DISPUTE. WHAT IS INCRIMINATING FOR ONE MA Y NOT BE SO FOR THE OTHER SO THAT THE SAME IMBUED WITH SUBJECTIVITY CANNOT DECIDE THE J URISDICTIONAL ASPECT. YET AGAIN THE SAME THOUGH RELEVANT AND INCRIMINATING MAY GET WH OLLY OR PARTLY EXPLAINED IN ASSESSMENT I.E. ON THE BASIS OF THE ADDITIONAL MA TERIALS GATHERED OR CALLED FOR OR PRODUCED BY THE ASSESSEE ITSELF OR OTHERWISE EXPLAINED BY IT DURING ASSESSMENT PROCEEDINGS. WILL THAT ONE MAY ASK OPERATE TO CANCEL THE JURISDICTI ON SINCE ASSUMED ? THAT IS MATTERS SUBSEQUENT CANNOT DISTURB JURISDICTION. THE ARGUMEN T IS THUS WHOLLY MISPLACED. REFERENCE IN THIS CONTEXT MAY BE MADE ALONG WITH OTHER DECISI ONS IN THE CASE OF CIT VS. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DEL) AND AHURA HOLDINGS V. DY. CIT [2012 TIOL 357 HC AP IT]. FURTHER THERE MAY WELL BE DECISIONS AS BY THE TRIBUNAL IN THE CASE OF ASST. CIT V. PRATIBHA INDUSTRIES LTD . [2013] 141 ITD 151 (MUM) RELIED UPON BY THE ASSESSEE BEFORE US TAKING A DIFFERENT VIEW OF THE MATTER. THE SAME FIRSTLY IS BY THE TRIBUNAL WHILE THE DECISIONS RELIED UPON BY US; TH E MATTER BEING LEGAL ARE BY THE HIGH COURT. SECONDLY IN CASE OF CONFLICT OF OPINION TH E TRIBUNAL IS BOUND TO TAKE A VIEW AS APPEALS ITS CONSCIOUS AND TOWARD WHICH WE MAY RELY ON THE DECISION IN THE CASE OF KANEL OIL & EXPORT INDUSTRIES V. JT. CIT [2009] 121 ITD 596 (AHD)(TM). IN FACT THE FOREGO ING IS STATED ONLY TO MEET THE ARGUMENT RAISED EVEN AS THE ASSESSEE HAS ASSAILED THE 17 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE ASSESSMENT ONLY ON ACCOUNT OF THE SEARCH BEING INVA LID ON THE GROUNDS (A) (B) & (C) AT PARA 4 (SUPRA) (REFER MEMO OF APPEAL). AS REGARDS THE WARRANT OF AUTHORIZATION BEING IN JO INT NAMES I.E. OF THE ASSESSEES PROPRIETARY CONCERN M/S. ZEAR BUSINESS CENTRE AND A COMPANY BY THE NAME ZEAR DEVELOPERS PVT. LTD. THE TWO NAMES APPEARING WITH A COMMA IN BETWEEN. THE SAME AGAIN STANDS JUDICIALLY WELL-SETTLED AND TOWARD W HICH WE MAY REFER TO THE DECISIONS AS IN THE CASE OF RAGHURAJ PRATAP SINGH VS. ASST. CIT [2008] 307 ITR 450 (ALL.); CIT VS. KHYBER FOODS (2012) 346 ITR 36 (KER.); JOSE CYRIAC V. CIT [2011] 336 ITR 241 (KER.); AND MADHUPURI CORPN. V. DY. CIT [2002] 256 ITR 498 (GUJ.). IN FACT THE LAW ALSO S TANDS AMENDED SINCE SO THAT THE ARGUMENT IS WITHOUT ANY BASIS IN LAW. THE NEXT PLEA/DEFECT IS THAT THE WARRANT BEARS THE NAME OF THE ASSESSEES PROPRIETARY CONCERN AND NOT THE ASSESSEES NAME. IN -AS-MUCH AS THE SAID NAME DOES NOT SIGNIFY THE NAME OF ANY PERSON THE WARRANT AND TH EREFORE THE SEARCH ITSELF IS CLAIMED TO BE INVALID. WE ARE UNABLE TO APPRECIATE THE ARGUMEN T. IF THE TRADE NAME OF THE ASSESSEES PROPRIETARY CONCERN DOES NOT SIGNIFY THE ASSESSEE WHO IS THE PERSON ON WHOM THE SEARCH CAN BE AND STANDS CONDUCTED? WHOSE NAME ONE MAY AS K DOES IT THEN SIGNIFY IF NOT THE ASSESSEES; IT BEING UNDISPUTED THAT IT IS THE NAME OF A PROPRIETARY BUSINESS CONCERN? THE CONCERN NAME IN SUCH A CASE IS ONLY A TRADE NAME A ND THE ONLY PERSON IT REPRESENTS OR WHO IS REPRESENTED BY THAT NAME IS THE ASSESSEE. WE CAN UNDERSTAND A CONTROVERSY IF THE SAID NAME INSTEAD OF THE ASSESSEE-INDIVIDUAL OR OF ITS PROPRIETARY CONCERN WHICH ONLY REPRESENTS HIM BY ANOTHER NAME IS THAT OF A PARTNE RSHIP FIRM A SEPARATE PERSON U/S. 2(31) OF THE ACT. FURTHER SECTION 292B OF THE ACT ENSURE S VALIDITY OF A RETURN NOTICE ETC. AND PROCEEDINGS UNDER THE ACT BY PROVIDING SAVING FROM CHALLENGE UNDER SUCH GROUNDS SO THAT THE SAME ARE NOT CONSIDERED INVALID WHERE THEY ARE IN SUBSTANCE AND EFFECT IN CONFORMITY AND IN ACCORDANCE WITH THE INTENT AND PU RPOSES OF THE ACT. ANOTHER ARGUMENT RAISED BEFORE US BY THE LD. AR WAS BY QUESTIONING THE VALIDITY OF THE SEARCH ON THE BASIS THAT THE PANCHAS ARE NOT THE RESIDENTS OF THE LOCALITY. THE SAME AGAIN ONLY NEEDS TO BE STATED TO BE REJECTED. THE R EQUIREMENT IS FIRSTLY PROCEDURAL AND SECONDLY DESIGNED TO ENSURE TRANSPARENCY OF THE SE ARCH OPERATIONS. INHABITANTS OF THE 18 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE SAME LOCALITY WOULD BE KNOWN TO THE ASSESSEE AN EN ABLING FACTOR. HOWEVER PEOPLE OTHER THAN THE RESIDENTS OF THE LOCALITY COULD ALSO BE KN OWN TO THE ASSESSEE WHO ACTING AS WITNESSES PRE-EMPT IT BEING QUESTIONED IN RESPECT OF THE CONDUCT OF THE SEARCH AS WELL AS THE MATERIALS FOUND AND SEIZED THEREAT. THERE IS NO THING TO SHOW OF THESE ASPECTS HAVING BEEN NOT SERVED WELL IN THE PRESENT CASE OR EVEN OF THE ASSESSEE HAVING RAISED ANY OBJECTION IN RESPECT THEREOF DURING SEARCH. IN FACT THE ASSESSEES RESIDENCE WAS NOT SUBJECT TO SEARCH WHICH WAS CONFINED ONLY TO HIS B USINESS PREMISES. THE ARGUMENT IS THUS WITHOUT MERIT. NO ARGUMENT QUA GROUND # 2 MADE WITH REFERENCE TO THE NON-DISPOSA L OF THE ASSESSEES OBJECTIONS U/S. 292BB OF THE ACT WAS MADE BEFORE US. THE ASSESSEE HAS RELIED ON THE DECISION IN THE CASE OF SIKSHA 'O' ANUSANDHAN V/S. CIT [2011] 336 ITR 112 (ORISSA). THE SAME WOULD NOT AP PLY IN THE PRESENT CASE. IN THE FACTS OF THAT CASE THE ASSESSEE-APPELLANTS NAME DI D NOT FIND PLACE ON THE SEARCH WARRANT ITSELF. IN THE ABSENCE OF ASSESSEES NAME NO VALI D SEARCH COULD BE CONDUCTED ON HIM IN- AS-MUCH AS THE SATISFACTION U/S. 132(1) CAN ONLY S AID BE SAID TO OBTAIN IN RESPECT OF THE PERSON WHOSE NAME STANDS MENTIONED THEREON. IN THE INSTANT CASE THE NAME OF THE ASSESSEES PROPRIETARY BUSINESS CONCERN ADMITTEDLY FINDS MENTION ON THE WARRANT OF AUTHORIZATION SO THAT NO CASE FOR APPLICATION OF S AID DECISION IS MADE OUT. IN J.M. TRADING CORPORATION V. ASST. CIT [2008] 20 SOT 489 (MUM) ANOTHER DECISION RELIED U PON BY THE ASSESSEE THE PREMISES SEARCHED WAS RENTED BY IT TO ANOTHER SO THAT THE ASSESSEES NAME THOUGH MENTIONED IN THE PANCHNAMA DID NOT WARRANT A SEARCH THEREAT. THE REASON TO BELIEVE ESSENTIAL FOR A VALID SEARCH WAS THEREFOR E FOUND MISSING AND ACCORDINGLY THE SEARCH HELD INVALID ON THE BASIS OF ITS CONDUCT. AS SUCH EVEN ASSUMING THAT THE TRIBUNAL IS COMPETE NT TO ADJUDICATE ON THE VALIDITY OR OTHERWISE IN LAW OF A SEARCH AN ASPECT ON WHICH THERE IS A CONFLICT OF OPINION AMONG HIGHER COURTS OF LAW WE FIND LITTLE MERIT IN THE A SSESSEES CASE WITH THE GROUNDS ASSUMED FOR CHALLENGING THE SAME BORDERING ON THE FRIVOLOUS . THE ASSESSEE ACCORDINGLY FAILS. 6. THE OTHER ISSUE COMMON FOR ALL THESE ASSESSMENTS AS WELL AS THE ASSESSEES (ZAS) ASSESSMENT U/S. 143(3) FOR AY 2005-06 IS THAT AGITA TED BY GROUND # 3 THEREOF. 19 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE THE ASSESSEE IS RUNNING WHAT IS CALLED A BUSINESS CENTRE. THE ASSESSEE MAKES AVAILABLE CABINS FOR USE OF CLIENTS ALONG WITH PRO VISION OF SERVICES VIZ. TELEPHONE FAX INTERNET SECURITY SERVICES. AS IT IS DIFFICULT TO QUANTIFY COMPOSITE SERVICES RENDERED A CHARGE BASED ON THE AREA (OF THE CABIN) IS RAISED ON A MONTHLY BASIS WHILE CERTAIN UTILITIES LIKE ELECTRICITY TELEPHONE ETC. ARE RECOVERED ON ACTUALS. WHILE THE ASSESSEE HAS DISCLOSED INCOME FROM THE ACTIVITY AS BUSINESS INCOME THE RE VENUE TREATS IT AS ONLY A MANNER OF EXPLOITATION OF THE BUILDING BY WAY OF RENT ALBEIT COMMERCIALLY SO THAT THE SAME IS ASSESSABLE AS INCOME FROM HOUSE PROPERTY EXIGIBLE TO ONLY STANDARD DEDUCTION QUA REPAIRS AT THE RATE OF 30% OF THE GROSS RECEIPT I. E. AS AGAINST THE CLAIM OF BUSINESS EXPENDITURE. ALLOWANCE THOUGH IN WORKING THE GROS S RECEIPT IS MADE FOR REIMBURSEMENTS ON ACCOUNT OF TELEPHONE AND ELECTRIC ITY CHARGES METERED SEPARATELY. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD GIVING OUR CAREFUL CONSIDERATION TO THE MATTER. THE ISSUE IN OUR VIEW LIES IN A VERY NARROW COMPASS I.E. WHETHER ECONOMIC ACTIVITY OF ANY SIGNIFICANCE APA RT FROM MAKING AVAILABLE CABINS SPACE AT A CHARGE IS CARRIED BY ASSESSEE. IF SO THE SAM E WOULD QUALIFY ALONG WITH THE HIRING ACTIVITY TO BE A BUSINESS AS FOR EXAMPLE THE HOTE L OR THE HOSPITALITY BUSINESS TO WHICH THE ASSESSEE IN FACT ALSO ADVERTS TO TRYING TO DRA W SUPPORT THEREFROM. WE SAY SO AS THE STATUTES HAS CARVED OUT THE SEPARATE MANNER FOR ASS ESSMENT OF INCOME ARISING FROM THE LETTING (ACTUAL OR EVEN ON A NOTIONAL BASIS) OF HOU SE PROPERTY BRINGING TO THE CHARGE OF TAX THE ANNUAL VALUE (AV) OF A HOUSE PROPERTY DEFINED AS A RENT AT WHICH IT MAY BE LET FROM YEAR TO YEAR ALSO DESCRIBED AS THE FAIR RENTAL VAL UE. OF COURSE THIS IS SUBJECT TO AN EXCEPTION WHERE THE HOUSE PROPERTY IS BEING USED BY THE ASSESSEE FOR THE PURPOSE OF HIS OWN BUSINESS. IN THIS REGARD WE FIND THE ASSESSEE TO BE PROVIDING ONLY PERIPHERAL SERVICES TO THE PRINCIPAL ACTIVITY OF MAKING AVAILABLE OR LE TTING WHICHEVER WAY ONE MAY CHOOSE TO DESCRIBE IT CABIN SPACE IN HIS HOUSE PROPERTY I.E . TO ENABLE SMOOTH AND HASSLE FREE ENJOYMENT OF THE PROPERTY. ELECTRICITY AND TELEPHON E CHARGES ARE COLLECTED FROM THE CUSTOMERS AND DEPOSITED WITH THE CONCERNED SERVICE PROVIDERS WHO ALONE PROVIDE THOSE SERVICES AND NOT THE ASSESSEE WHO IS ONLY MAKING A VAILABLE OFFICE SPACE WITH ACCESS TO 20 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE THOSE SERVICES. THERE IS NO EVIDENCE OF SECURITY SE RVICES BEING PROVIDED EVEN AS AGAIN ANCILLARY SERVICES LIKE FAX INTERNET ETC. MAY BE PROVIDED FOR A CHARGE. THESE SERVICES CAN AGAIN ONLY BE SAID TO BE MADE AVAILABLE THOUGH SOM E EQUIPMENT MAY BE REQUIRED TO BE INSTALLED BY THE ASSESSEE AND AT HIS COST FOR THE PURPOSE. HOWEVER THERE IS NOTHING TO SHOW THAT THE LETTING OF THESE EQUIPMENTS IS INSEPA RABLE FROM THAT OF THE CABIN SPACE. A PARTICULAR CLIENT MAY DESIRE THESE SERVICES WHILE A NOTHER MAY REQUIRE IT SPARINGLY SO AS TO BE USED AND PAID FOR SEPARATELY AS AND WHEN REQUIRE D WHILE YET ANOTHER MAY FIND IT USEFUL TO INSTALL HIS OWN EQUIPMENT SO THAT IT DOES NOT A MOUNT TO AN INTEGRAL PART OF THE SERVICES OR FACILITIES BEING PROVIDED BUT ONLY AN ALLIED SE RVICE OR FACILITY WHICH WOULD THOUGH NOT ALTER THE CHARACTER OF THE BASIC TRANSACTION AS ONE OF LETTING OF OFFICE SPACE. THE FRINGE SERVICES PROVIDED MERELY FACILITATE THE ASSESSEES PRINCIPAL BUSINESS OF MAKING AVAILABLE OFFICE SPACE TO OTHERS FOR CARRYING ON THEIR BUSINE SSES AT LEAST IN SO FAR AND THE EXTENT AS COULD BE CARRIED OUT FROM WITHIN THE CONFINES OF A CABIN. IT IS STATED THAT EVEN TEA SNACKS ARE PROVIDED FOR A CHARGE. WHETHER HOWEVER THE AS SESSE HAS EMPLOYED STAFF INCURRING EXPENDITURE ON THEIR PREPARATION TOWARD WHICH WE F IND NO CONTENTION MUCH LESS MATERIAL. ALL IT HAS DONE AS IT WOULD APPEAR IS M AKE AVAILABLE PEON FOR SERVING TEA OR EVEN SNACKS AS BOUGHT-OUTS AS WOULD BE THE CASE I N ANY OFFICE SETTING. IN FACT TEA COULD BE PREPARED IN-HOUSE OR EVEN THROUGH A VENDING MAC HINE WITH LITTLE OR NO IMPACT ON THE ESSENTIAL CHARACTER OF THE SERVICES BEING PROVIDE D. WHY A LANDLORD MAY PROVIDE SERVICES OF A LIFT SECURITY SERVICES EVEN A CARET AKER TO TAKE CARE OF THE NEEDS OF THE TENANTS OF DIFFERENT FLATS RESIDING IN HIS BUILDING . THAT HOWEVER WOULD NOT THOUGH MAKE IT ANY LESS AN ARRANGEMENT TO EXPLOIT THE INHERENT RENTAL CAPACITY OR POTENTIAL OF THE PROPERTY. FURTHER WHAT IS THE FURNITURE AND FIXTUR E ALSO LET AND IF IT IS INSEPARABLE FROM THE LETTING THE BUILDING AND FURTHER NOT A PART O F THE CABIN ITSELF REMAINS TO BE CLARIFIED. THE ASSESSEE HAS REFERRED TO A HOTEL IMPLYING PERH APS THAT WHILE THE SAID INDUSTRY FALLS IN THE HOSPITALITY SECTOR IT OPERATES IN THE BUSINESS SECTOR. THE ARGUMENT IS FLAWED AND THE COMPARISON ENDS BEFORE IT BEGINS. WE HAVE A LREADY NOTED ABSENCE OF ANY ECONOMIC ACTIVITY OF MERIT WHICH ALONE WOULD ENABL E THE ASSESSEES BUSINESS BEING CATEGORIZED UNDER A PARTICULAR SECTOR OR EVEN BE TE RMED AS AN INDUSTRY. WHILE A HOTEL 21 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE WOULD FALL IN THE HOSPITALITY SECTOR WHICH BUSINES S SEGMENT SIGNIFIES THE ASSESSEES BUSINESS IT FAILS TO CONVEY. NO SEPARATE CHARGE FO R THE ELECTRICITY CONSUMED OR THE EQUIPMENT USED VIZ. TV AND OTHER EQUIPMENTS INSTA LLED THEREIN BEING PART OF THE HOSPITABILITY SERVICES BEING PROVIDED IS MADE IN T HE CASE OF A HOTEL. AN ANALOGY THERETO IF AT ALL COULD BE OF A TAXI OPERATOR OR A PHOTOCO PIER WHO FOR A CHARGE MAKE AVAILABLE THROUGH USER THEIR EQUIPMENTS FURNISHING THE REQUI RED SERVICE VIZ. THE TRANSPORT SERVICE OR THE COPYING SERVICE AS THE CASE MAY BE. IN FACT EVEN IN THE CASE OF HOTEL WHERE THERE IS A CONTINUING ARRANGEMENT AS IN THE INSTANT CASE THE CHARGE FOR THE SPACE PROVIDED WOULD ONLY BE A MEASURE OF THE AV OF THE PROPERTY. AS SUCH WHERE THE CONTRACT/S FOR STAY IS TO SUBSIST FOR ANY SIGNIFICANT LENGTH OF TIME T HE SAME UNDER CERTAIN CASES WOULD ASSUME THE NATURE OF RENT AND NOT A LICENSE EVEN AS CLAR IFIED BY THE CBDT PER ITS CIRCULAR IN THE CONTEXT OF SECTION 194I OF THE ACT. WE MAY HOWEVER ADD THAT ON THE SAME BASIS AND PR EMISES AS THE TELEPHONE AND ELECTRICITY CHARGES THE ASSESSE AT ITS OPTION I S ENTITLED TO SEGREGATE THE CHARGES IF ANY TOWARD RECEIPT FOR INTERNET FAX ETC. COLLECTED BY IT AND CLAIM EXPENDITURE THERE-AGAINST U/S. 37(1) OR ANY OTHER APPLICABLE PROVISION. WE S AY SO AS AS IT APPEARS THESE MAY ALSO BE PROVIDED ON A CONTINUOUS SYSTEMATIC BASIS SO A S TO CONSTITUTE A SEPARATE SOURCE OF INCOME. SUBJECT TO THIS MODIFICATION WE FIND LITTL E MERIT IN THE ASSESSEES CASE AND ENDORSE THE FINDINGS OF THE REVENUE AUTHORITIES. WE DECIDE ACCORDINGLY PARTLY ALLOWING THE ASSESSEES GROUND. 8. IN THE RESULT THE ASSESSEES APPEALS FOR AY 200 4-05 ARE DISMISSED WHILE FOR OTHER YEARS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 25 201 4 SD/- SD/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( .) MUMBAI; /! DATED : 25.04.2014 22 ITA NOS. 4699 AND OTHER 9 APPEALS ZIAUDDIN A. SIDDIQUE & SHAHZEEN SIDDIQUE .!../ ROSHANI SR. PS & SRL SR. PS '#$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. 0 / THE APPELLANT 2. 120 / THE RESPONDENT 3. ( 3% ( ) / THE CIT(A) 4. ( 3% / CIT - CONCERNED 5. 6 7 1% !8' * 8'- ( .) / DR ITAT MUMBAI 6. 7 9# : ) / GUARD FILE ' ) / BY ORDER *)+ (DY./ASSTT. REGISTRAR) ( .) / ITAT MUMBAI