DCIT, Kanpur v. Dr. Gaurhari Yadupati Singhania, HUF, Kanpur

ITA 606/LKW/2010 | 2004-2005
Pronouncement Date: 12-01-2011 | Result: Dismissed

Appeal Details

RSA Number 60623714 RSA 2010
Assessee PAN AABHG1259C
Bench Lucknow
Appeal Number ITA 606/LKW/2010
Duration Of Justice 3 month(s) 22 day(s)
Appellant DCIT, Kanpur
Respondent Dr. Gaurhari Yadupati Singhania, HUF, Kanpur
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 12-01-2011
Date Of Final Hearing 16-12-2010
Next Hearing Date 16-12-2010
Assessment Year 2004-2005
Appeal Filed On 20-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NO.606(LKW.)/2010 A.Y. : 2004-05 THE DY.CIT-I VS. DR. GAUR HARI YADUPATI SINGHANIA HUF KANPUR. KAMLA TOWER KANPUR. PAN AABHG1259C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANADI VERMA SR.D.R. RESPONDENT BY : NONE O R D E R PER N.K.SAINI ACCOUNTANT MEMBER THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE LD.CIT(A)-I KANPUR DATED 5.7.2010 RELATING TO ASSE SSMENT YEAR 2004-05. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED IN THI S APPEAL : 1. THAT THE LD. COMMISSIONER OF INCOMETAX (APPEALS )-I KANPUR HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSE SSING OFFICER TO TREAT THE AMOUNT OF RS.19 24 750/- AS 'LONG TERM CAPITAL GAINS' INSTEAD OF INCOME FROM 'UNDISCLOSED SOURCES' WITHOU T APPRECIATING THE FACTS OF THE CASE AND MATERIAL BRO UGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSES SMENT PROCEEDINGS. 2. THAT THE LD. COMMISSIONER OF INCOMETAX (APPEALS) -I KANPUR HAS ALSO FAILED TO APPRECIATE THAT SMT. SUSHILA GUP TA IN HER STATEMENT DATED 28.12.2004 HAD STATED THAT THE MEMB ERSHIP OF M/S CMS SECURITIES LTD. WAS SUSPENDED BY NATIONAL S TOCK EXCHANGE DUE TO SALE OF BOGUS SHARES FOR WHICH THEY STARTED ISSUING DRAFTS TO VARIOUS PARTIES BY TAKING CASH FR OM THEM IN 2 LIEU OF COMMISSION TAKEN @ 0.25%. SMT. SUSHILA GUPT A HAPPENED TO BE ONE OF THE DIRECTORS OF CMS SECURITI ES. 3. THAT THE LD. COMMISSIONER OF INCOMETAX (APPEALS) -I KANPUR HAS ALSO FAILED TO APPRECIATE THAT THE INQUIRIES MA DE BY THE ASSESSING OFFICER REVEALED THAT THE SHARES OF M/S S UPREME AGRO PRODUCTS LTD. WHICH WERE ALLEGEDLY SOLD BY THE ASSESSEE CONTINUE TO BE REGISTERED IN THE NAME OF THE ASSESS EE HUF AS PER INTIMATION GIVEN BY THE COMPANY. 4. THAT THE LD. COMMISSIONER OF INCOMETAX (APPEALS) -I KANPUR HAS ALSO FAILED TO APPRECIATE THE FACT THAT M/S CMS SECURITIES HAD ISSUED DEMAND DRAFTS/CHEQUES TO THE ASSESSEE AF TER GETTING PAYMENTS FROM THOSE BANK ACCOUNTS ON TRANSFER IN WH ICH THE CASH OF THE EQUAL AMOUNTS WERE DEPOSITED WHICH CLEA RLY SHOWS A LINK BETWEEN THE CASH DEPOSITED AND DEMAND DRAFTS /CHEQUES ISSUED. 5. THAT THE ORDER OF THE LD. CIT (A)-I KANPUR DATE D 05.07.2010 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASS ESSING OFFICER DATED 22.12.2006 BE RESTORED. 6. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD ANY FRESH GROU NDS AS AND WHEN IT IS REQUIRED TO DO SO. FROM THE ABOVE GROUNDS IT WOULD BE CLEAR THAT THE ONLY GRIEVANCE OF THE DEPARTMENT RELATES TO THE DIRECTION OF THE LD. CIT(A) TO THE AO TO TREAT THE AMOUNT OF RS.19 24 750 AS LONG TERM CAPITAL GAI NS INSTEAD OF INCOME FROM UNDISCLOSED SOURCES. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE AS SESSEE FILED THE RETURN OF INCOME ON 29.7.2004 DECLARING AN INCOME OF RS.19 5 6 480 WHICH WAS PROCESSED UNDER SECTION 143(1) ON 10.5.2005 ON THE RETURNED INCOME. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE AO NOT ED IN THE ASSESSMENT 3 ORDER THAT THE LONG TERM CAPITAL GAIN AS PER RETURN FILED BY THE ASSESSEE CONSTITUTES SALE AND PURCHASE OF SHARES AS PER THE DETAILS GIVEN BELOW : COMPUTATION OF LONG TERM CAPITAL GAINS PARTICULARS YEAR OF ACQUISITION COST PRICE SALE PROCEEDS LONG TERM CAPITAL GAINS 2000 SH.OF SUPREME AGRO PROD.11.3.02 200000 1914750 17 14 750 RS.17 14 750 LONG TERM CAPITAL GAINS : RS.17 14 750 2.1 IN ORDER TO ASCERTAIN GENUINENESS OF INCOME UN DER THE LONG TERM CAPITAL GAINS THE AO ASKED THE ASSESSEE VIDE NOTI CE DATED 4.8.2006 TO FURNISH INFORMATION AND DOCUMENTS AS UNDER : ' REGARDING INCOME UNDER THE HEAD 'LONG TERM CAPITA L GAINS' YOU ARE REQUESTED TO FURNISH COPY OF SHARE SCRIPTS NA ME AND ADDRESS OF PERSONS FROM WHOM THE TRANSACTION OF PURCHASE AND S ALE WAS MADE AND ALSO THE NAME AND ADDRESS OF BROKERS. PLEASE FU RNISH REGD. ADDRESS OF THE COMPANY AND STATE WHETHER THE SHARES WERE GOT REGISTERED IN YOUR NAME. PLEASE ALSO FURNISH COPY O F BANK A/C THROUGH WHICH THE PAYMENT FOR PURCHASE AND SALE OF SHARES W AS DONE. GIVE COMPLETE DETAILS OF CHEQUE NO. DATE NAME & ADDRES S OF ISSUING BANK AND NAME OF PERSON IN FAVOUR OF WHOM CHEQUE FOR PUR CHASE OF SHARE WAS ISSUED AND ALSO GIVE NAME AND ADDRESS OF DEAD P ERSON. SIMILARLY PLEASE GIVE CHEQUE NO. DATE AMOUNT NAME AND ADDR ESS OF ISSUING BANK OF WHICH CHEQUE WAS GIVEN TO YOU FOR SALE OF S HARES. PLEASE ALSO GIVE NAME AND ADDRESS OF PERSON WHO HAS GIVEN THE C HEQUE. ' 2.2 IN RESPONSE TO THE SAID QUERY THE ASSESSEE SUB MITTED AS UNDER : ' PLEASE REFER TO YOUR QUERY REGARDING LONG TERM CA PITAL GAINS. IT IS SUBMITTED THAT WE HAD APPLIED UNDER FRESH ISSUE OF SHARES OF M/S SUPREME AGRO PRODUCTS LTD. VIDE OUR D.D. NO.161972 DATED 23.01.2002 DRAWN ON STANDARD CHARTERED BANK. THE MA LL. KANPUR FOR A SUM OF RS.2 00 000/- TOWARDS APPLICATION FOR 20 0 00 EQUITY SHARES OF RS.10/-EACH. THE PHOTO COPY OF THE BANK STATEMENT S HOWING THE DEBIT WITH THIS RECEIPT ALONGWITH THE COPY OF THE ALLOTME NT LETTER DATED 4 4.3.2002 IS ENCLOSED HEREWITH FOR YOUR PERUSAL. THESE SHARES WERE PURCHASED IN THE A.Y. 2002-03. FU RTHER IN THE YEAR UNDER CONSIDERATION THESE 20.000 SHARES WERE SOLD BY US THROUGH M/S CMS SECURITIES LTD. AND THE PAYMENT HAS BEEN RECEIV ED BY VARIOUS CHEQUES. THE DETAILS OF WHICH ARE AS UNDER:- CHEQUE NO./DATE NAME OF BANK AMOUNT NAME & ADDRESS OF THE PERSONS WHO HAVE GIVEN CHEQUES 654583/10.4.03 P.N.B. BANK DELHI 4 50 000 CMS SECURITIES LTD. 654597/17.4.2003 P.N.B. BANK DELHI 4 00 000 CMS SECURITIES LTD. 654598/21.2.2003 P.N.B. BANK DELHI 3 00 000 CMS SECURITIES LTD. 654600/29.4.2003 P.N.B. BANK DELHI 4 50 000 CMS SECURITIES LTD. 890377/30.4.2003 P.N.B. BANK DELHI 3 14 750 CMS SECURITIES LTD. YADUPATI SINGHANIA (HUF) NAME OF THE COMPANY NO.OF EQUITY SHARES APPLIED FOR AMOUNT PAID (RS.) DD NO.& DATE NAME OF THE BANK M/S.SUPREME AGRO PRODUCTS LTD. 10 000 1 00 000 161971/23.1.2002 STANDARD CHARTERED BANK M/S. PAWANSUT HOLDING LTD. 5000 50 000 162656/19.9.02 -DO- THE PHOTO COPY OF THE BANK STATEMENT SHOWING THE DE BIT OF THE ABOVE AMOUNT ALONGWITH THE COPY OF THE ALLOTMENT LETTER DATED 4.3.2002 & 30.3.2002 ARE ENCLOSED HEREWITH FOR YOUR PERUSAL. FURTHER IN THE YEAR UNDER CONSIDERATION THESE SHA RES WERE SOLD BY US THROUGH M/S. CMS SECURITIES LTD. AND THE PAYMENT HA S BEEN RECEIVED THROUGH VARIOUS CHEQUES. THE DETAILS OF WHICH ARE AS UNDER: CHEQUE NO./DATE NAME OF BANK AMOUNT NAME AND ADDRESS OF THE PERSONS WHO HAVE GIVEN CHEQUES 654582/9.4.03 P.N.B.BANK DELHI 4 50 000 CMS SECURI TIES LTD. 654596/19.4.03 P.N.B.BANK DELHI 3 50 000 CMS SECUR ITIES LTD. 654599/28.4.03 P.N.B.BANK DELHI 1 50 000 CMS SECUR ITIES LTD. 654582/9.4.03 P.N.B.BANK DELHI 4 50 000 CMS SECURI TIES LTD. 890376/30.4.03 P.N.B.BANK DELHI 7375 CMS SECURITIE S LTD. DD932149/2.2.04 P.N.B.BANK DELHI 2 49 400 CMS SECU RITIES LTD. 5 DD932188/4.2.2004 P.N.B.BANK DELHI 2 49 4 00 CMS S ECURITIES LTD. DD932201/6.2.2004 P.N.B.BANK DELHI 23 590 CMS SECU RITIES LTD. 2.3 SINCE THE ASSESSEE CLAIMED THAT SALE OF SHARES WAS THROUGH THE BROKER M/S. CMS SECURITIES LTD. THE AO ASKED THE SAID BRO KER TO FURNISH THE INFORMATION AS UNDER : F.NO.ACIT-1/KNP/133(6)/122 & 124/2006-07/DATED 17 .8.2006 TO M/S CMS SECURITIES LTD. MEMBER NATIONAL STOCK EXCHANGE D-20 ROSE APARTMENTS SECTOR-14 EXTN ROHINI DELHI -110 085. SUB: INFORMATION U/S 133(6) OF THE I.T.ACT 1961 I N CASES OF I) DR. GAUR HARI YADUPATI SINGHANIA (HUF) II) YADUPATI SINGHANIA (HUF) KAMLA TOWER KANPUR - A.Y. 2004-05 - REGARDING- PLEASE REFER TO THE CONTRACT NOTE NO. NSE/3067/45 DATED 07/04/2003 ISSUED TO DR. GAUR HARI YADUPATI SINGHA NIA (HUF) & THE CONTRACT NOTE NO. NSE/3067/44 DATED 07/04/2003 IS SUED TO YADUPATI SINGHANIA (HUF) FOR SALE OF SHARES OF SUPREME AGRO PRODUCTS LTD. ON THEIR BEHALF. 2. IN THIS REGARD YOU ARE REQUIRED TO FURNISH INF ORMATION AND DOCUMENTS AS UNDER : I. YOUR PANO. WARD AND CIRCLE OF FILING OF RETURN OF INCOME. II. WHETHER YOU HAVE ACTUALLY SOLD SHARES ON BEHAL F OF YOUR PERSONS AS PER THE CONTRACT NOTE. IF YES PLEASE FU RNISH (A) NAME AND ADDRESS OF PERSONS TO WHOM SAID SHARE S WERE SOLD . (B) DETAILS OF PAYMENT RECEIVED FROM THESE PERSONS AND THE DETAILS OF YOUR BANK ACCOUNT WHERE SUCH PAYMENTS WE RE DEPOSITED. PLEASE FURNISH NAME AND ADDRESS OF THE B ANK AND COPY OF THE BANK ACCOUNT WHERE THE PAYMENTS WER E 6 DEPOSITED. PLEASE ALSO FURNISH NAME AND ADDRESS OF THE BANK AND COPY OF BANK ACCOUNT FROM WHERE PAYMENTS WERE MADE TO ABOVE CAPTIONED PERSONS. THE COPY OF B OTH BANK ACCOUNT SHOULD BE AT LEASE 15 DAYS PRIOR TO EN TERING OF THE TRANSACTION. (C) PLEASE GIVE ADDRESS OF THE HEAD OFFICE/REGISTE RED OFFICE OF SUPREME AGRO PRODUCTS LTD. 3. THIS INFORMATION MAY PLEASE BE FURNISHED BY 04/ 09/2006. THIS INFORMATION IS BEING CALLED FOR U/S 133(6) OF THE I .T. ACT 1961 AND FAILURE TO FURNISH THE SAME MAY ATTRACT PENAL PROVI SION AS PER LAW. YOU ARE THEREFORE REQUESTED TO FURNISH THE ABOVE INFO RMATION DULY CERTIFIED BY YOU ON OR BEFORE 4.9.2006. 2.4 THE SAID BROKER I.E. CMS SECURITIES LTD. VIDE ITS LETTER DATED 1.9.2006 STATED THAT THEY SOLD SHARES OF BOTH THE ASSESSEE-HUF AS PER CONTRACT NOTES TO M/S. AKG ASSOCIATES NEW DELHI. T HE BROKER ALSO PROVIDED COPY OF LEDGER ACCOUNT OF THE ASSESSEE HUF SHOWING PAYMENT MADE TO THE ASSESSEE AS UNDER : STATEMENT OF ACCOUNT OF DR.GAURHARI YADUPATI SINGH ANIA HUF FOR THE PERIOD 1.4.2003 TO 30.4.2003. DATE PARTICULARS DR. CR. 7.4.2003 SALE 20 000 SUPREME AGRO 19 14 750 10.4.2003 PAYMENT CH. NO.654583 4 50 000 17.4.2003 PAYMENT CH. NO.654597 4 00 000 21.4.2003 PAYMENT CH. NO.654598 3 00 000 26.4.2003 PAYMENT CH. NO.654600 4 50 000 30.4.2003 PAYMENT CH. NO.890377 3 14 750 TOTAL 19 1 4 750 19 14.750 7 STATEMENT OF ACCOUNT OF YADUPATI SINGHANIA HUF FOR THE PERIOD 1.4.2003 TO 30.4.2003. DATE PARTICULARS DR. CR. 7.4.2003 SALE 10 000 SUPREME AGRO 9 57 375 9.4.2003 PAYMENT CH. NO.654583 4 50 000 16.4.2003 PAYMENT CH. NO.654597 3 50 000 28.4.2003 PAYMENT CH. NO.654598 1 50 000 30.4.2003 PAYMENT CH. NO.654600 7 375 TOTAL 9 57 375 9 57.375 IT WAS ALSO MENTIONED THAT THE PAYMENTS WERE MADE BY M/S.CMS SECURITIES LTD. THROUGH ITS ACCOUNT NO.41660021001 96 IN PUNJAB NATIONAL BANK PRASHANT VIHAR NEW DELHI. 2.5 THE AO THEREAFTER OBTAINED THE COPY OF BANK ACCOUNT OF THE ASSESSEE ALONGWITH THE COPY OF OTHER ACCOUNTS FRO M WHOM THE MONEY WAS DEPOSITED IN THE BANK ACCOUNT OF M/S.CMS SECURITIE S LTD. THE RELEVANT DETAILS GATHERED WERE AS UNDER : SL. NO . NAME OF ACCOUNT HOLDER ACCOUNT NO. NAME OF THE DIRECTORS/PROPRIETOR NAME OF INTRODUCER REMARK 1. CMS SECURITIES LTD. D- 20 ROSE APARTMENT SECTOR-14 EXTN.ROHINI DELHI110085 416600210001960 MUKESH KUMAR GUPTA SUSHILA GUPTA NARESH GOEL/AR CO.- EXTRUDED FILMS A- 2/452 SECT.- 8 ROHINI NEW DELHI PAYMENTS WERE MADE TO ASSESSEES HUF AND OTHER PERSONS FROM THIS ACCOUNT 2 AKG ASSOCIATES 3806 PAHARI DHIRAJ DELHI-6 4166002100005009 ASHOK KUMAR GUPTA MUKESH KUMAR GUPTA DIREC TOR-CMS SECURITIES LTD. ASHOK KUMAR GUPTA IS FAMILY MEMBER OF MUKESH KUMAR GUPTA 8 3 NEHA INVESTMENT 3806 PAHARI DHIRAJ DELHI-6 4166002100004994 ANITA GUPTA MUKESH KUMAR GUPTA DIRECTOR- CMS SECURITIES LTD. ANITA GUPTA IS FAMILY MEMBER OF MUKESH KUMAR GUPTA 4 SAHIL ASSOCIATES D-20 ROSE APARTMENT SECTOR 14 EXTN. ROHINI DELHI. 4166002100002057 SUSHILA GUPTA MUKESH KUMAR GUPTA DIRECTOR- CMS SECURITIES LTD. SUSHILA GUPTA IS FAMILY MEMBER OF MUKESH KUMAR GUPTA 2.6 THE AO POINTED OUT THAT THE PERSONS MENTIONED IN THE AFORESAID TABLE AT SL.NOS.2 3AND 4 WERE EITHER DIRECTORS OF CMS SE CURITIES LTD. OR FAMILY MEMBERS OF DIRECTORS OF CMS SECURITIES LTD. WHO MA DE PAYMENT TO CMS SECURITIES LTD. BY TRANSFERRING THE ENTIRE AMOUNT O F MONEY DEPOSITED IN CASH. HE ALSO POINTED OUT THAT THE AFORESAID BANK ACCOUNT S REVEALED THAT THE CASH WAS DEPOSITED IN THE ACCOUNTS MENTIONED AT SL.NOS. 2 3 AND 4 AND THE SAME WAS TRANSFERRED TO ACCOUNT NO.1 FROM WHERE PAYMENTS WERE MADE TO THE ASSESSEE AS WELL AS TO SEVERAL OTHER PERSONS TO WHO M ACCOMMODATION ENTRY IN THE GARB OF LONG TERM CAPITAL GAINS WERE GIVEN. THE AO DISCUSSED THE EXTENT OF CASH DEPOSIT MODE OF TRANSFER AND SUBSEQ UENT PAYMENT ON ACCOUNT OF ALLEGED BOGUS ENTRY AS UNDER : I) AKG ASSOCIATES-4166002100005009(SL.NO.2) TOTAL CASH OF RS.5 81 995 WAS DEPOSITED IN THE ABO VE ACCOUNT DURING THE F.Y.2003-04 AND ENTIRE AMOUNT WAS TRANSF ERRED TO M/S. CMS SECURITIES LTD. THE AMOUNTS WERE DEPOSITED REGU LARLY IN CASH AND THE TOTAL CASH DEPOSITED WAS TRANSFERRED TO TH E ACCOUNT OF CMS SECURITIES. THE PATTERN OF CASH DEPOSITED AND TRANS FERRED MAYBE ILLUSTRATED BY GIVING A FEW ILLUSTRATION AS UNDER : DATE PARTICULARS CH.NO. WITHDRAWAL DEPOSIT 3.4.2003 BY CASH 4 00 000 -DO- TO CMS 500427 4 00 000 9 4.4.2003 BY CASH 3 10 000 -DO- TO CMS 500428 3 10 000 7.4.2003 BY CASH -DO- TO CMS 00429 4 65 000 . . . . . NOTE: SAME PATTERN CONTINUED . . . . . 29.3.2004 BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- TO CMS 836506 5 00 000 -DO- TO CMS 836507 5 00 000 -DO- TO CMS 836508 5 00 000 TOTAL 5 81 49 700 5 81 54 995 II) NEHA INVESTMENT 3806 PAHARI DHIRAJ DELHI-6- 4166002100004994(SL.NO.3) TOTAL CASH OF RS.4 39 20 770 WAS DEPOSITED IN THE A BOVE A/C DURING THE F.Y. 2003- 04 AND ENTIRE AMOUNT WAS TRANSFERRED IN THE ACCOUNT OF M/S.CMS SECURITIES LTD. THE AMOUNTS WERE DEPOSITED REGULARLY IN CASH AND T HE TOTAL CASH DEPOSITED WAS TRANSFERRED TO THE ACCOUNT OF CMS SECURITIES. THE PATTERN OF CASH DEPOSITED AND TRANSFERRED MAY BE ILLUSTRATED BY GIVING A FEW ILLU STRATION AS UNDER: DATE PARTICULARS CH.NO. WITHDRAWAL DEPOSIT 2.4.2003 BY CASH 3 15 000 -DO- TO CMS 500390 3 15 000 4.4.2003 BY CASH 4 00 000 -DO- TO CMS 500391 4 00 000 5.4.2003 BY CASH 5 00 000 -DO- TO CMS 500392 5 00 000 .. . . . NOTE:SAME PATTERN CONTINUED . . . 29.3.2004 BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- TO CMS 836601 5 00 000 -DO- TO CMS 836602 5 00 000 -DO- TO CMS 836603 5 00 000 -DO- TO CMS 836604 5 00 000 TOTAL 4 96 05 760 4 96 10 870 10 III) SAHIL ASSOCIATES D-20 ROSE APARTMENT SECTOR-1 4 EXTEN.ROHINI DELHI-416600002057 (SL.NO.4) TOTAL CASH OF RS.8 01 42 767 WAS DEPOSITED IN THE ABOVE A/C DURING THE F.Y. 2003-04 AND ENTIRE AMOUNT WAS TRANSFERRED I N THE ACCOUNT OF M/S.CMS SECURITIES LTD. THE AMOUNTS WERE DEPOSITED REGULAR LY WAS TRANSFERRED TO THE ACCOUNT OF CMS SECURITIES. THE PATTERN OF CASH DE POSITED AND TRANSFERRED MAY BE ILLUSTRATED BY GIVING A FEW ILLUSTRATION AS UND ER : DATE PARTICULARS CH.NO. WITHDRAWAL DEPOSIT 16.4.2003 BY CASH 2 75 000 -DO- TO CMS 656789 2 75 000 23.4.2003 BY CASH 4 65 000 -DO- TO CMS 656790 4 65 000 26.4.2003 BY CASH 4 50 000 -DO- TO CMS 656790 4 50 000 . . . . NOTE : SAME PATTERN CONTINUED . . . . . 29.3.2004 BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- BY CASH 5 00 000 -DO- TO CMS 829505 5 00 000 -DO- TO CMS 829506 5 00 000 -DO- TO CMS 829507 5 00 000 TOTAL 8 01 37 735 8 01.42.767 2.7 ON THE BASIS OF THE ABOVE THE AO OBSERVED AS U NDER: THUS IN FINANCIAL YEAR 2003-04 CASH DEPOSITS OF R S.18 79 08 632 (8 01 42 767 +54 96 10 870 + 5 81 54 995) WAS DEPO SITED IN THESE THREE ACCOUNTS AND ENTIRE MONEY WAS TRANSFERRED IN THE ACCOUNT OF M/S. CMS SECURITIES LTD. WHICH WAS USED FOR MAKING PAYMENT OF BOGUS ENTRIES TO THE ASSESSES HUF AND OTHER PERSONS . ACTUALLY NO REAL PURCHASE AND SALE OF SHARES WERE MADE. THE MONEY WA S TAKEN FROM THE PERSONS AND CHEQUE WAS ISSUED IN LIEU THEREOF. THE BROTHER HAVE TAKEN THEIR COMMISSION SEPARATELY. 2.8 THE AO POINTED OUT THAT ALTHOUGH M/S.CMS SECUR ITIES INTIMATED THAT 11 THE PAYMENTS WERE MADE TO THE ASSESSEE ON ACCOUNT OF SALE OF SHARES BUT WHEN COMMISSION WAS ISSUED TO THE ACIT CIR.16(1) NEW DELHI TO VERIFY THE GENUINENESS OF SUCH TRANSACTION M/S.CMS SECUR ITIES AVOIDED TO PRODUCE ITS BOOKS OF ACCOUNTS AND OTHER DETAILS. HE ALSO POINTED OUT THAT AT THE ADDRESS GIVEN FOR CONDUCTING THE BUSINESS OF M /S.CMS SECURITIES LTD. IT WAS FOUND THAT THE FLAT WAS USED FOR RESIDENCE AND NO BUSINESS WHATSOEVER WAS BEING DONE FROM THERE. HE ALSO POINTED OUT THA T EARLIER IN FINANCIAL YEAR 2004-05 THE DDIT(INVESTIGATION) AGRA HAS OCCASI ON TO EXAMINE AND RECORD THE STATEMENT OF SHRI MUKESH KUMAR GUPTA D IRECTOR OF THE COMPANY AND HIS WIFE SMT.SUSHILA GUPTA IN CONNECTION WITH THE SIMILAR MATTER OF BOGUS ACCOMMODATION ENTRIES GIVEN BY THE SAID COMP ANY AND IN THEIR STATEMENTS IT WAS CONFESSED THAT THEY WERE PROVIDI NG ENTRIES TO VARIOUS INDIVIDUALS AND USED TO CHARGE COMMISSION APPROXIMA TELY AT THE RATE OF 0.25% AND THAT THE MEMBERSHIP OF M/S. CMS SECURITIE S LTD. WAS SUSPENDED BY NATIONAL STOCK EXCHANGE DUE TO SALE OF BOGUS SH ARES AND THEREAFTER THEY STARTED DRAFTS TO VARIOUS PARTIES BY TAKING CASH F ROM THEM IN LIEU OF COMMISSION TAKEN AT THE RATE OF 0.25%. THE AO CAME TO THE CONCLUSION THAT THE MODUS OPERANDI ADOPTED BY THE BROKER BECAME CLE AR AND THE SAID BROKER USED TO TAKE MONEY AND COMMISSION @ 0.25% AND IN L IEU THEREOF ISSUED CHEQUES AND SALE VOUCHERS OF SHARES TO GIVE THE TR ANSACTION THE COLOUR OF SALE AND PURCHASE OF SHARES. THE AO TO PROVE THE GE NUINENESS OF TRANSACTION ASKED THE ASSESSEE TO EXPLAIN AND SUBMIT THE FOLLOW ING: (I) ASK YOUR BROKER TO APPEAR IN PERSON ALONGWITH THE BOOKS OF A/C. VOUCHERS FOR PURCHASE AND SALE FOR F.Y. 2003-04. II) NATURE OF TRANSACTIONS AND COPY OF A/C OF M/S AKG ASSOCIATES FOR F.Y. 2003-04. III) NAME AND COMPLETE ADDRESS OF PROPRIETOR/PARTN ER OF AKG 12 ASSOCIATES. PAN;WARD/CIRCLE AND COPY OF ACKNOWLEDGE MENT SLIP OF ROI OF M/S CMS SECURITIES & M/S AKG ASSOCIA TES. IV) SOURCE AND NATURE OF CASH DEPOSITED BY M/S AKG ASSOCIATES. V) COPY OF TRANSFER VOUCHERS FOR SALE OF YOUR SHAR ES. IN CASE YOUR BROKER FEELS UNABLE TO APPEAR AT KANPU R. THE UNDERSIGNED IS READY TO ISSUE COMMISSION REQUIRING HIM TO COMPL Y BEFORE THE INCOME TAX AUTHORITIES AT DELHI. APART FROM ABOVE IT IS SEEN THAT SHRI MUKESH GUPTA PROP. M/S CMS SECURITIES LTD. ON PREVIOUS OCCASION HAS GIVEN HI S STATEMENT BEFORE THE INCOME TAX AUTHORITIES THAT HE USED TO GIVE CHE QUE/DD AFTER TAKING CASH & COMMISSION @ 0.25% AND SHOW AT PAYMEN T ON A/C OF SHARES TRANSACTION BUT NO ACTUAL SHARES WERE TRANS ACTED PLEASE MAKE COMPLIANCE OTHERWISE THE SALE PROCEED OF SHARES MAY BE ASSESSED AS YOUR INCOME FROM OTHER SOURCES. BY HOLD ING THAT THERE WAS NO GENUINE SALE OF SHARES MADE BY YOU.' 2.9 IN RESPONSE TO THAT THE ASSESSEE SUBMITTED AS UNDER : I) REGARDING AVAILABILITY OF TRANSFER DEED IN RESPE CT OF SHARES OF THE COMPANY M/S SUPREME AGRO PRODUCTS LTD. IT IS RE ITERATED THAT THE TRANSFER DEED AFTER ITS HAVING BEEN DULY E XECUTED WAS DELIVERED TO THE SHARE BROKER. IT IS NONE OF THE CO NCERN OF ANSWERING ASSESSEE THAT THE SAID TRANSFER DEED WAS NOT LODGED WITH THE SAID COMPANY FOR TRANSFER OF THOSE SHARES IN THE NAME OF THE ULTIMATE TRANSFEREE. II) REGARDING THE BANK ACCOUNTS RESPECTIVELY OF TH E SHARE BROKER VIZ CMS SECURITIES LTD. AND THAT OF AKG ASSOCIATES IT IS SUBMITTED THAT THEY HAVE NO BEARING UPON THE TRANSA CTION OF SALE OF THE SHARES OF THE AFORESAID COMPANY AND NO ADVER SE INFERENCE CAN BE DRAWN AGAINST THE ANSWERING ASSESSEE. IN SO FAR AS THE TRANSACTION OF SALE OF SHARES IS CONCERNED IT IS A LSO REITERATED THAT ALL DOCUMENTARY EVIDENCE IN RESPECT OF TRANSAC TION HAS ALREADY BEEN SUBMITTED TO YOUR HONOUR DURING THE CO URSE OF HEARING. MOREOVER. FROM THE ORDER SHEET ENTRY UNDER REPLY IT IS 13 CLEAR THAT BROKER NAMELY M/S CMS SECURITIES LTD. HA VE ADMITTED HAVING PURCHASED THE SHARES FROM ANSWERING ASSESSEE PAYMENT IN RESPECT OF WHICH STANDS ACCEPTED TO HAVE BEEN MADE THROUGH NORMAL BANKING CHANNELS. III) THE INFERENCE THAT THE BROKER IS THE WITNESS OF ANSWERING ASSESSEE SIMPLY BECAUSE SALE HAS BEEN DONE THROUGH THE SAID BROKER IS NOT TENABLE UNDER LAW IN THE FACTS AND CI RCUMSTANCES OF THE CASE. IV) A) REGARDING THE REQUIREMENT TO ASK THE BROKER TO APPEAR IN PERSON ALONGWITH THE BOOKS OF ACCOUNTS VOUCHERS FO R PURCHASE AND SALE FOR THE F.Y. 2003-04 IT IS TO REQUEST YOU SIR. TO APPRECIATE THAT ANSWERING ASSESSEE CAN ONLY PERSUAD E THE BROKER TO APPEAR BEFORE YOU AND EFFORTS ARE BEING MADE IN THAT DIRECTION. B) ANSWERING ASSESSEE DOES NOT KNOW AKG ASSOCIATES HENCE THE QUESTION OF ANY COMPLIANCE IN THIS REGARD DOES NOT ARISE. C) IN VIEW OF THE FACT THAT ANSWERING ASSESSEE DOES NOT KNOW AKG ASSOCIATES THE QUESTION OF EXPLAINING THE SOURC E AND NATURE OF CASH DEPOSITED BY AKG ASSOCIATES IN THE B ANK ACCOUNT DOES NOT ARISE. IT AMOUNTS TO PUTTING THE O NUS ON WRONG SHOULDERS. 5. IT IS NOT UNDERSTANDABLE AS TO UNDER WHAT CIRCU MSTANCES SHRI MUKESH GUPTA PROP. OS M/S CMS SECURITIES LTD. HAS G IVEN THE SAID STATEMENT. IN ANY CASE THE FACTS REMAINS THAT NO IN FERENCE CAN BE DRAWN AGAINST THE ANSWERING ASSESSEE UNDER LAW IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. IN VIEW OF THE DOCUMENTARY EVIDENCE PUT ON RECORD S ALE PROCEEDS OF THE SHARES SOLD BY ANSWERING ASSESSEE CAN NOT BE TR EATED AS INCOME FROM OTHER SOURCES UNDER LAW IN THE FACTS AND CIRCU MSTANCES OF THE CASE.' 14 2.10 THE AO CONSIDERED THE LONG TERM CAPITAL GAIN S HOWN BY THE ASSESSEE AS INCOME FROM OTHER SOURCES BY OBSERVING AS UND ER: 11. I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANC ES OF THE CASES AND THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS MATERIAL GATHERED FROM VARIOUS SOURCES. AT THE OUTSET I WOULD LIKE T O RECORD THAT A BIG RACKET OF GIVING AND TAKING BOGUS ENTRY IN THE GARB OF LONG TERM CAPITAL GAINS WAS RUNNING WITH CONNIEVANCE OF M/S C MS SECURITIES LTD. IN WHICH A FEW COMPANIES LIKE SUPREME AGRO PRO DUCTS LTD. HAVING NOT MUCH WORTH BUT SOMEHOW HAVING LISTED IN LOCAL STOCK EXCHANGE WERE ALSO INVOLVED. ON THE BASIS OF MATERI AL GATHERED BY THIS OFFICE THE TRANSACTIONS OF PURCHASE AND SALE OF SH ARES ARE NOT FOUND GENUINE IN VIEW OF REASONS GIVEN AS UNDER:- I) THE SHARES OF SUPREME AGRO PRODUCTS LTD. WERE PU RCHASED @ 10/- PER SHARE BY THE TWO HUFS OF THE SAME FAMILY I N MARCH 2002 AND WERE SOLD IN APRIL 2003 @ RS.96/- PE R SHARE. THUS WITHIN A PERIOD OF 13 MONTHS THERE WAS INCREA SE IN VALUE OF SHARES BY ALMOST 9.6 TIMES. SIMILARLY THE SHARE S OF PAWANSUT HOLDING LTD. WERE PURCHASED @ RS.10/-PER SHARE IN SPETEMBER 2002 AND WERE SOLD IN JANAUARY 2004 THROU GH CMS SECURITIES LTD. AT THE RATE OF RS.105/- PER SHARE. THUS WITHIN A PERIOD OF 16 MONTHS THERE WAS INCREASE IN VALUE OF SHARES BY ALMOST 10.5 TIMES WHICH WAS HIGHLY IMPROBABLE AND C ERTAINLY UNBELIEVABLE AND WAS MANIPULATED BY THE BROKERS BY MAKING PURCHASE AND SALE OF ACCOMMODATIVE IN NATURE IN ORD ER TO GIVE BOGUS ENTRY IN THE GARB OF LONG TERM CAPITAL GAIN. II) IT IS PERTINENT TO MENTION THAT EVEN IN GROUP- A COMPANIES THERE WAS NO SUCH INCREASE IN THE RELEVANT POINT OF TIME AND THE GENERAL INDEX IN STOCK MARKET HAS ALSO NOT SHOWN SU CH A STEEP INCREASE IN THIS PERIOD. MOREOVER THE COMPANY SUPR EME AGRO PRODUCTS LTD. HAS LITTLE WORTH OF ITS OWN. AS MENTI ONED EARLIER THE COMPANY HAS SUBMITTED RETURN OF LOSS FOR A.Y. 2 004-05 AND IT HAS NEVER DECLARED DIVIDEND. SIMILARLY THE OTHE R COMPANY PAWANSUT HOLDING LTD. HAS ALSO NOT DECLARED ANY DIV IDEND. III) THE ASSESSEES FAILED TO FURNISH COPY OF TRANS FER DEED ISSUED AT THE TIME OF SALE AND THE SHARES OF SUPREME AGRO PRO DUCTS LTD. STILL CONTINUED TO BE REGISTERED IN THE NAME OF THE ASSSESEES 15 HUF AS PER THE INTIMATION GIVEN BY THE COMPANY. IT SHOWS THAT THERE WAS NO REAL PURCHASE AND SALE OF SHARES AND T HERE WAS NO GENUINE PURCHASER OF SAID SHARES ON SUCH A HIGH VAL UE. IV) AS DISCUSSED IN FOREGOING PARAS M/S CMS SECURI TIES LTD. HAS TAKEN CASH AND DEPOSITED THE SAME IN THE ACCOUNT OF VARIOUS MEMBERS OF HIS FAMILY AND AFTER TRANSFERRING THE CA SH IN HIS ACCOUNTS THE CHEQUES WERE ISSUED TO THE ASSESSEE H UF AS WELL AS TO OTHER PERSONS AND THE COMMISSION @ 0.25% WAS ALSO TAKEN AS WERE ADMITTED BY HIM BEFORE THE INVESTIGAT ION WING OF THE DEPARTMENT. THE EXTENT OF CASH DEPOSIT MODE AND MANNER OF ITS TRANSFER AND ALL THE FACTS AND CIRCUMSTANCES OF THE CASE LEFT NO DOUBT THAT THE ASSESSEE HUF ARE ALSO INVOLVED I N TAKING ACCOMMODATION ENTRIES BY GIVING COLOUR OF SALE OF S HARES. IN VIEW OF FOREGOING FACTS IT IS HELD THAT THERE W AS NO GENUINE SALE AND PURCHASE OF SHARES AND THE SALE PROCEEDS OF RS. 19 14 750/- CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE REPRE SENTS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES WHICH IS BEIN G TAXED UNDER THE LAD INCOME FROM OTHER SOURCES UNDER SECTION 69 OF T HE ACT. 3. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R TO THE LD.CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD FURNISHED COPIES OF PURCHASE BILLS SALE BILLS COPY OF QUOTATION OF STOCK EXCHANGE ETC. IT WAS FU RTHER SUBMITTED THAT THE AO WHILE MAKING THE ADDITION DISREGARDED ALTOGETHER THAT EVIDENCES FILED BY THE ASSESSEE AND THE REPLY BY THE BROKER M/S. CMS SECURITIES LTD. UNDER SECTION 133(6) OF THE I.T.ACT DATED 1.9.2006 AND HA S GUIDED HIMSELF WITH IRRELEVANT CONSIDERATION LIKE SHARE IN QUESTION ALLOTTED AT FACE VALUE OF RS.10/- REGISTERED AN INCREASE RESPECTIVELY OF 9.6 TIMES TO 10.5 TIMES WITHIN A SHORT SPAN OF TIME DISREGARDING QUOTATION OF THE ST OCK EXCHANGE. IT WAS ALSO SUBMITTED THAT ALTHOUGH THE AO HAD NOT DISPUTED A T ALL EITHER THE PURCHASE PRICE OR THE SALE PRICE OF THE SHARE WHILE ACCEPTIN G BOTH THE SALE AND PURCHASE HE HAD JUMPED TO THE CONCLUSION THAT TH E SALE WAS A SHAM TRANSACTION BY EXERCISING HIS QUASI JUDICIAL FUNC TION AND GONE INTO 16 ERRONEOUS AND IRRELEVANT CONCLUSION WHICH DESERVE D TO BE TREATED AS NULL AND VOID AND QUASHED. RELIANCE WAS PLACED ON THE FO LLOWING CASE LAWS: (A) UMA CHARAN SHAW & BROS. VS. CIT 37 ITR 271 (S.C.) (B) EVEREADY INDUSTRIES INDIA LTD. VS. JCIT 234 I TR 540 (GAUHATI) (C) JCIT VS GEORGE WILLIAMSON LTD. 258 ITR 126 ( GAUHATI) (D) ITO VS RAJEEV AGRAWAL 139 TAXMAN PLUS ITO (D ELHI) (E) ASHOK KUMAR AGRAWAL VS. ACIT IN ITA NO. 129/A GR/2004 IT WAS STATED THAT THE RELIANCE ON GUIDING THE AO ON ACCOMMODATION ENTRIES IN SOME STATEMENT GIVEN IN SOME PROCEEDINGS AT AGRA ARE NOT RELEVANT IN THE CASE OF THE ASSESSEE BECAUSE THE STATEMENTS OF M R. MUKESH KUMAR GUPTA AND SMT. SUSHILA GUPTA GIVEN IN SOME WHERE ELSE IN SOME OTHER PROCEEDINGS HAVE NO RELEVANCE TO THE ASSESSMENT PROCEEDINGS IN QUESTION. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : (I) PRAKASH CHAND NAHATA VS. CIT 301 ITR 134 (MP .) (II) ADDL. CIT VS. LATA MANGESHKAR 97 ITR 696 (B OMBAY). AS REGARDS TO THE ADDITION MADE UNDER SECTION 69 OF THE I.T. ACT THE ASSESSEE SUBMITTED THAT THE SAID PROVISIONS WERE DEALING WITH THE INVESTMENTS WHICH WERE NOT RECORDED IN THE BOOKS O F ACCOUNT AND FAILURE ON THE PART OF THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: 1. CIT VS. JAUHARIMAL GOEL 2005 147 TAXMANN 448 ALLA HABAD 2. ASHOK KUMAR AGRAWAL VS. ACIT ITA NO.129/AGR/2004 3. ITO VS. RAJEEV AGRAWAL ITAT DELHI BENCH IN APPE AL NO.ITA 960/2004 4. CIT VS. SARLA JAIN IN CIT(APPEAL)-I/270/KNP/06-0 7 DATED 10.12.2007 FOR THE ASSESSMENT YEAR 2003-04 3.1 THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE OBSERVED THAT THE VARIOUS DOCUMENTS PARTICULARLY P URCHASE SALE BILLS QUOTATION OF STOCK EXCHANGE AND THE PAYMENT RECEIVE D BY WAY OF CHEQUE 17 ESTABLISHED THAT THE ASSESSEE HAD DISCHARGED THE ONUS OF PROVING THE SAME IN THE NATURE OF LONG TERM CAPITAL GAIN. HE FURTHER OBSERVED THAT THE ENQUIRY BY WAY OF NOTICE UNDER SECTION 133(6) TO THE BROKER ALSO CONFIRMED THE TRANSACTION VIDE LETTER DATED 1.9.2006 DIRECTLY SEN T AND ADDRESSED TO THE ACIT RANGE-I KANPUR. ACCORDING TO THE LD.CIT(A) THE AO FRAMED THE ASSESSMENT ORDER ON THE BASIS OF MERE SUSPICION WH ICH IS NOT SUSTAINABLE ON THE FACTS AS WELL AS IN LAW. HE THEREFORE DIREC TED THE AO TAX THE INCOME UNDER THE HEAD CAPITAL GAINS AND ALLOW THE DEDUCT ION OF SUCH INCOME AS PER LAW. 4. NOW THE DEPARTMENT IS IN APPEAL. 5. DURING THE COURSE OF HEARING NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE. WE THEREFORE PROCEEDED TO DECIDE THE CA SE EX PARTE QUA THE ASSESSEE ON MERIT AFTER HEARING THE LD.D.R. 6. THE LD.D.R. REITERATED THE OBSERVATIONS MADE B Y THE AO IN THE ASSESSMENT ORDER DATED 22.12.2006 AND STRONGLY SUPP ORTED THE ORDER OF THE AO. HE FURTHER SUBMITTED THAT THE BROKER WAS FOU ND TO BE INVOLVED IN THE BUSINESS OF PROVIDING ENTRIES BY CHARGING THE COMMI SSION AT THE RATE OF 0.25%. THEREFORE THE TRANSACTION WAS NOT GENUINE AND THE AO RIGHTLY CONSIDERED THE SALE PROCEEDS OF THE SHARES AS INCO ME FROM OTHER SOURCES. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD.D. R. AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT APPEARS THAT THE AO DOUBTED THE TRANSACTION ON TH E BASIS THAT THERE WAS AN INCREASE OF APPROXIMATELY 9.6 TIMES TO 10.5 TIMES IN THE PRICE OF THE SHARES 18 WITHIN A SHORT SPAN OF 13 MONTHS TO 16 MONTHS. ANOT HER REASON FOR DOUBTING THE TRANSACTION WAS THAT THE STATEMENT OF THE BROK ER WAS RECORDED BY THE DDIT (INV.) AGRA AND IT WAS FOUND THAT SHRI MAHESH GUPTA DIRECTOR OF M/S. CMS SECURITIES LTD. WAS PROVIDING ENTRIES TO VARI OUS INDIVIDUALS AND USED TO CHARGE COMMISSION APPROXIMATELY AT THE RATE OF 0 .25% AND THAT THE BROKER HAS TAKEN THE CASH AND DEPOSITED THE SAME IN THE A CCOUNT OF VARIOUS MEMBERS OF THE FAMILY. HOWEVER IN THE PRESENT CAS E THE AO IGNORED THE VITAL DOCUMENTS FURNISHED BY THE ASSESSEE IN THE SH APE OF PURCHASE BILLS SALE BILLS COPY OF QUOTATIONS OF STOCK EXCHANGE ETC. THE ASSESSEE PURCHASED THE SHARES THROUGH BANKING CHANNEL BY ACCOUNT PAYEE CHE QUES AND ALSO RECEIVED THE SALE PROCEEDS THROUGH THE BANKING CHANNEL SO IT WAS IMMATERIAL THAT THE SHARE-BROKER HAD RECEIVED CASH FROM OTHER PERSONS A ND DEPOSITED THE SAME IN THE BANK ACCOUNT OF HIS FAMILY MEMBERS BECAUSE THE BANKING TRANSACTIONS OF THE SHARE BROKER WERE BEYOND THE CONTROL OF THE ASS ESSEE AND MOREOVER THE OPERATION OF BANK ACCOUNT OF THE SHARE BROKER AND I TS DIRECTORS WAS NOT RELEVANT TO CONSIDER THE TRANSACTION OF THE ASSESSE E AS NON-GENUINE. IN THE INSTANT CASE THE AO RELIED ON THE STATEMENTS OF TH E TWO DIRECTORS OF THE SHARE BROKER COMPANY HOWEVER THE SAID STATEMENTS WERE RECORDED IN DIFFERENT PROCEEDINGS AT DIFFERENT STATION AND WERE NOT CONNECTED TO THE TRANSACTION OF THE ASSESSEE. MOREOVER THE AO ASKE D THE SHARE BROKER FOR EXPLANATION UNDER SECTION 133(6) OF THE I.T.ACT AND IN RESPONSE TO THAT THE SHARE BROKER NEVER STATED THAT THE TRANSACTION IN Q UESTION WAS NOT GENUINE OR HE WAS CHARGING ANY COMMISSION FROM THE ASSESSEE F OR PROVIDING THE ENTRIES. ON THE CONTRARY THE SHARE BROKER VIDE LE TTER DATED 1.9.2006 ADMITTED THAT THEY HAVE SOLD SHARES TO THE ASSESSEE AS PER T HE CONTRACT NOTES AND ALSO PROVIDED THE COPY OF LEDGER ACCOUNT OF THE ASSESSEE SHOWING THAT THE PAYMENTS WERE MADE TO THE ASSESSEE THROUGH CHEQUES. THE SHARE BROKER ALSO 19 DISCLOSED ITS BANK ACCOUNT MAINTAINED WITH THE PUN JAB NATIONAL BANK PRASHANT VIHAR NEW DELHI AND FURNISHED COPY OF TH EIR BANK ACCOUNT. SO ALL THE INFORMATIONS WERE PROVIDED TO THE AO BY THE SHA RE BROKER. IN THE INSTANT CASE THE AO NEITHER DOUBTED THE PURCHASE PRICE/ SALE PRICE NOR DISAGREED WITH THE RATES QUOTED IN THE STOCK EXCHANGE HOWE VER HAD JUMPED TO THE CONCLUSION THAT THE SALE TRANSACTION WAS A SHAM TRA NSACTION WHICH WAS NOT JUSTIFIED. ON A SIMILAR ISSUE THE I.T.A.T. DELHI BENCH IN THE CASE OF ITO VS. RAJEEV AGRAWAL IN I.T.A.NO.960/2004 HAS HELD AS UN DER : THE ASSESSEE HAD SOLD INVESTMENT MADE IN SHARES. N ECESSARY DETAILS AS CALLED FOR HAD BEEN FILED. ON GOING THROUGH THE ASSESSMENT ORDER IT WAS OBSERVED THAT NOTHING WRONG OR INCORRECT IN THE DOCUMENTS AND INFORMATION SUBMITTED BY THE ASSESSEE WAS FOUND. TH E ASSESSEE HAD MADE SALE OF SHARES AND HAD RECEIVED PAYMENT IN THE NORMAL COURSE BY ACCOUNT PAYEE CHEQUE. THE ASSESSING OFFICER WAS PLA CING RELIANCE ON THE STATEMENT OF TWO PERSONS WHO THEMSELVES HAD ADM ITTED THAT THEY WERE ENGAGED ILL DUBIOUS BUSINESS. CREDENCE HAD BEE N GIVEN TO THE STATEMENTS OF THE PERSONS HAVING DUBIOUS DEALING BY THEIR OWN ADMISSION OVER AND ABOVE THE STATEMENT OF THE ASSES SEE WHO HAD FURNISHED ALL DOCUMENTS TO SUPPORT HIS CLAIM. THE A SSESSING OFFICER IT APPEARED HAD PRESUMED THAT THE ASSESSEE HAD PAID C ASH AND PURCHASED THE CHEQUE BUT NO MATERIAL HAD BEEN BROUGHT ON REC ORD TO SUBSTANTIATE THAT ALLEGATION. IT WAS A FACT THAT THE ASSESSEE WA S SIMPLY A SHAREHOLDER IN THE COMPANY. HE HAD MADE INVESTMENT IN THE COMPA NY IN WHICH HE WAS NEITHER A DIRECTOR NOR WAS HE IN CONTROL OF THE COMPANY. HE HAD MADE INVESTMENT IN SHARES OF WHICH NECESSARY EVIDEN CE HAD BEEN FILED. PURCHASE OF SHARES IN THE ASSESSMENT YEAR 19 93-94 HAD BEEN REFLECTED BY THE ASSESSEE AND ALSO ACCEPTED BY THE REVENUE. THE SALE OF SHARES WAS THROUGH A BROKER. THE RATE AT WHICH THE SHARES WERE PURCHASED AND SOLD WAS ALSO NOT IN DISPUTE. THE PAY MENT HAD BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. ALL THOSE FA CTS WERE BORNE ON RECORD AND ACCORDINGLY THE ASSESSEE HAD DISCHARGE D HIS ONUS. ON THE OTHER HAND THE ASSESSING OFFICER HAD NOT BROUGHT O UT ANY MATERIAL IN SUPPORT OF HIS ALLEGATION THAT THE TRANSACTION WAS NOT GENUINE. MERE RELIANCE ON THE STATEMENT OF THIRD PARTIES WHO WERE NEVER EXAMINED BY THE ASSESSING OFFICER HIMSELF COULD NOT BE HELD TO BE SUFFICIENT TO COME TO THE FINDING THAT THE TRANSACTION WAS NOT GE NUINE AND MORE SO 20 WHEN THERE WERE OTHER MATERIALS AND EVIDENCES TO SU PPORT THE GENUINENESS OF THE TRANSACTION. IT IS SETTLED LAW T HAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF LEGAL PROOF. IN THE INSTANT CASE THE ASSESSING OFFICER HAD NOT BROUGHT OUT ANY EVIDENCE WHICH COULD EVEN REMOTELY SUGGEST THAT THE MATERIAL PLACED BEFORE HIM WAS UNRELIABLE SUFFERED FROM DEFECTS OR WAS INCONSISTENT. ACCORDINGLY THERE WAS NO SCOPE TO INTERFERE WITH T HE DECISION OF THE COMMISSIONER (APPEALS) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. IN THE RESULT THE INSTANT APPEAL WAS DISMISSED. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE F ACTS INVOLVED IN THE AFORESAID REFERRED TO CASE SO RESPECTFULLY FOLLO WING THE AFORESAID REFERRED TO CASE OF THE CO-ORDINATE BENCH WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). 8. IN THE RESULT THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.1.11 . SD. SD. (H.L.KARWA) (N.K.SAINI) VICE PRESIDENT ACCOUNTANT MEMBER JANUARY 12TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA. 21