CHANDRAKANT BABULAL SHAH (IND), MUMBAI v. A.O. WD 16(2)(4), MUMBAI

ITA 6108/MUM/2009 | 2002-2003
Pronouncement Date: 15-12-2010 | Result: Allowed

Appeal Details

RSA Number 610819914 RSA 2009
Assessee PAN EMBER2001W
Bench Mumbai
Appeal Number ITA 6108/MUM/2009
Duration Of Justice 1 year(s) 26 day(s)
Appellant CHANDRAKANT BABULAL SHAH (IND), MUMBAI
Respondent A.O. WD 16(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 15-12-2010
Date Of Final Hearing 06-12-2010
Next Hearing Date 06-12-2010
Assessment Year 2002-2003
Appeal Filed On 19-11-2009
Judgment Text
ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C : MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B.RAMAKOTAIAH ACCOUNTANT MEMBER ITA. NO.6108/MUM/2009 ASSESSMENT YEAR 2002-2003 CHANDRAKANT BABULAL SHAH MUMBAI-400007 PAN AAHPS-8314-A VS. THE ASSESSING OFFICER WARD 16 (2) 4 MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : S/SHRI K.SHIVRAM & AJAY R. SINGH FOR RESPONDENT : SHRI SURENDRA KUMAR (DR) ORDER PER B. RAMAKOTAIAH A.M. 1. ASSESSEES APPEAL IS AGAINST THE ORDER OF THE CIT(A )-XVI MUMBAI DATED 13-8-2009. THE ASSESSEE FILED AN APPEA L WITH A DELAY OF 6 DAYS AND PLACED AN AFFIDAVIT EXPLAINING THE DELAY DUE TO LEAVE OF ARTICLED CLERK AS WELL AS MARRIAGE IN THE AUTHORISE D REPRESENTATIVES FAMILY. CONSIDERING THE SMALLNESS OF THE DELAY INVO LVED AND THE REASONS EXPLAINED WE ARE SATISFIED THAT IT IS A FI T CASE FOR CONDONATION OF DELAY AND ACCORDINGLY THE DELAY IS CONDONED. AP PEAL ADMITTED. 2. THE ASSESSEE RAISED DETAILED GROUNDS OF APPEAL AND SUBSEQUENTLY FILED REVISED GROUNDS OF APPEAL (ABRID GED) WHICH ARE AS UNDER : 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFICER TREATING THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN OF RS.15 50 048/- ON SALE OF SHARES AND NOT ALLOWING THE EXEMPTION U/S. 54EC OF THE ACT. ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.8138/- ON ACCOUNT OF ALLEGED COMMISSION PAID. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE ADDITIONAL GROUND RAISED BY THE ASSESSEE VIDE LETTER DATED 19-6-2009 I.E. NO OPPORTUNITY PROVIDE D TO THE ASSESSEE TO CROSS EXAMINE THE STOCK BROKER MR. MUKESH CHOKSHI THEREBY PRINCIPLES OF NATURAL JUSTICE HAS BEEN VIOLATED. 3. WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASSES SEE AND THE LEARNED DR IN DETAIL. BRIEFLY STATED THE ASSESS ING OFFICER HAS TREATED AN INCOME OF RS.15 50 048/- OFFERED BY THE ASSESSEE AS LONG TERM CAPITAL GAIN FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN THEREBY DISALLOWING EXEMPTION UNDER SECTION 54EC OF THE ACT. THE ASSESSEE IS AN INDIVIDUAL. DURING THE YEAR UNDER CO NSIDERATION THE ASSESSEE SOLD 10500 SHARES OF RASHEL AGRO TECH LTD. AT RS.1627580/- ON 26-11-2001/14-12-2001 AND AFTER TAKING INDEXATIO N BENIFIT ON THE COST OF ACQUISITION DECLARED LONG TERM CAPITAL GAIN OF ` 15 37 753/-. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 54EC B Y WAY OF INVESTMENT IN BONDS OF RURAL ELECTRIFICATION CORPOR ATION TOTALLING ` 15 30 000/- ON THE NET CAPITAL GAIN RETURNED AT ` 14 90 057. THE ASSESSING OFFICER ASKED FOR DETAILS OF PURCHASE OF THE SAID SHARES AND HAVING NOTICED THAT THE ASSESSEE HAS NOT PAID AMOUN TS ON THE SO CALLED DATE OF PURCHASE OF 05-04-2000 FROM A BROKIN G FIRM M/S. GOLD STAR FINVEST P. LTD. ITS DIRECTOR MR. MUKESH CHOKSH I IS STATED TO HAVE BEEN INDULGED IN ISSUING VARIOUS BOGUS BILLS OF SH ARE TRANSACTIONS FOR A COMMISSION AND ON THE BASIS OF HIS GENERAL STATEM ENT AND ALSO A SPECIFIC STATEMENT UNDER SECTION 131 RECORDED BY TH E ASSESSING OFFICER THE ASSESSING OFFICER DID NOT BELIEVE THE DATE OF PURCHASE. HOWEVER HE GAVE THE COST OF PURCHASE AS A BENEFIT AND CALCULATED THE CAPITAL GAIN AS SHORT TERM CAPITAL GAIN (AS AGAINST LONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE) AND IN THE PROCESS AL SO ADDED ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH COMMISSION STATED TO HAVE BEEN PAID OUT SIDE THE BO OKS AT RS.8138/-. THE BENEFIT UNDER SECTION 54EC WAS DENIED AS THE CA PITAL GAIN WAS TREATED AS SHORT TERM ONLY. THE ASSESSING OFFICER H AS DISCUSSED VARIOUS ISSUES IN DETAIL AND ALSO EXTRACTED STATEME NTS RECORDED FROM MR. MUKESH CHOKSHI. HOWEVER WHEN ASKED FOR CROSS E XAMINE OF SAID MUKESH CHOKSHI THE SAID PERSON DID NOT TURN-UP ON 7/12/2006 AND ASSESSEE COULD NOT CROSS-EXAMINE SHRI MUKESH CHOKSH I. BASED ON THE STATEMENTS GIVEN IN THE COURSE OF 131 AND ALSO GENE RAL STATEMENT IN THE COURSE OF SEARCH RECORDED EARLIER BY THE DDIT A BOUT THE MODUS OPERANDI OF SHRI MUKESH CHOKSHI THE ASSESSING OFFI CER CAME TO A CONCLUSION THAT CLAIM OF LONG TERM CAPITAL GAIN WAS UNDERTAKEN FICTITIOUSLY. IT IS ALSO CONSIDERED THAT AN AMOUNT OF 0.5% COMMISSION WAS PAID OUTSIDE BOOKS OF ACCOUNTS ON THE TOTAL SAL E PRICE OF RS. 16.27 LAKHS AND AN AMOUNT OF RS.8138/- WAS ALSO ADDED TO THE ASSESSEES INCOME AS UNEXPLAINED EXPENDITURE. 4. IT WAS CONTESTED BEFORE THE CIT(A) THAT ASSESSI NG OFFICER HAS NOT GIVEN ANY OPPORTUNITY TO CROSS-EXAMINE MR. MUKESH CHOKSHI AND ALSO FURTHER CONTENDED THAT ASSESSEE HAS FURNIS HED THE FOLLOWING DOCUMENTS IN SUPPORT OF ASSESSEES CONTENTION THAT THE SHARES AND PURCHASE IN 2000-2001 ITSELF. A) STATEMENT OF TOTAL INCOME OF THE ASSESSEE. B) PURCHASE BILLS OF THE GOLD STAR FINVEST P. LTD. C) LETTER DT.30-6-2000 FROM RASHEL AGROTECH LTD. CONFI RMING THE TRANSFER OF SHARE CERTIFICATES ALONG WITH THE C OPY OF SHARE CERTIFICATE. D) SALE BILLS OF THE GOLD STAR FINVEST P. LTD. (SPECUL ATION) E) LEDGER COPY OF GOLD STAR FINVEST P. LTD. FOR AY 200 0-01 F) SALE BILLS OF GOLDSTAR FINVEST PVT. LTD. 4.1. IT IS ALSO CONTENDED THAT THE SAID MUKESH CHO KSHI IN HIS STATEMENT UNDER SECTION 131 RECORDED ON 28-10-2006 HAS GIVEN A CATEGORICAL FINDING/STATEMENT THAT THE ASSESSEES T RANSACTIONS ARE ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH GENUINE AND SINCE THE BROKER HAS ACCEPTED THE TRANS ACTION AS GENUINE THE PAYMENT MADE BY WAY OF CHEQUES AND ENTRIES RELA TING TO PURCHASE AND SALE OF SHARES WERE DULY BACKED BY CONTRACT NOT ES AND ALSO CARRIED IN REGULAR BOOKS OF ACCOUNTS THE DATE OF PU RCHASE IN APRIL 2000 SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFF ICER. THE CIT(A) AFTER CONSIDERING THE DETAILED SUBMISSIONS HAS REJ ECTED THE CONTENTION VIDE PARA 4 OF THE ORDER WHICH IS AS UND ER : ON GOING THROUGH THE REPLY FILED BY THE AR OF THE APPELLANT I FIND THAT THE REPLY DOES NOT HAVE MUCH FORCE. IT IS THE CONTENTION OF THE COUNSEL OF THE APPELLANT THAT HE HAD PURCHAS ED OF RASHEL AGRO TECH LTD. ON 5-4-2000 WHILE CONTRACT DATE OF PURCHASE WAS DT. 11-4-2000. THESE SHARES WERE SOLD ON NOV./DEC. 2001 AFTER A PERIOD OF MORE THAN 1 YEAR FROM THE DATE OF PURCHAS E. HENCE HE HAD SHOWN INCOME FROM LTCG. IT IS CLAIMED BY HIM TH AT PAYMENT OF THE SHARES WAS MADE BY ADJUSTMENT OF SPECULATION PROFIT EARNED BY HIM ON SALE AND PURCHASE OF VARIOUS SHARE S AND SINCE HE HELD THE SHARES FOR MORE THAN 1 YEAR THEREFORE LTCG SHOULD BE ALLOWED. HOWEVER IT IS SEEN THAT THE DIRECTOR O F STOCK BROKING FIRM MR. MUKESH CHOKSHI HAD STATED BEFORE THE A.O. THAT THE SPECULATION PROFITS WERE FICTITIOUS AND NO PAYMENT WAS MADE TO BY THE ASSESSEE FOR THE PURCHASE OF THOSE SHARES B UT HE HAS CONFIRMED SELLING OF THE SHARES WHICH WAS A GENUIN E TRANSACTION. SINCE THERE IS NO DETAIL AVAILABLE REG ARDING PROOF OF PURCHASE OF SHARES OF PAYMENT OF PURCHASE OF SHARES THE A.O. HAS TREATED THE SHARES AS STCG. IN MY OPINION THE A CTION OF THE A.O. IN TREATING THE WHOLE TRANSACTION AS STCG APPE ARS TO BE CORRECT AS THERE IS NO PROOF OF PURCHASE OF THE SHA RES OR THE PURCHASE PRICE OF THE SHARES. SINCE THE STOCK BROKE R HAS DENIED THAT THE STORY OF SPECULATION OF PROFIT FROM WHICH THE APPELLANT HAS MADE PAYMENTS THERE IS NO PROOF THAT WHAT WAS THE PRICE THAT THE APPELLANT HAD PAID FOR THE SHARES WHICH HA VE BEEN SOLD. IT COULD HAVE BEEN THAT THEY COULD HAVE PAID FULL P AYMENT OF RS. ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH 16 LAKHS BY WAY OF CASH AND LATER THEY SOLD IT TO T HE STOCK BROKER AND RECEIVED THE PAYMENT BY WAY OF CHEQUE. IT COULD HAVE BEEN AN ATTEMPT TO CONVERT THE CASH MONEY INTO WHITE WIT HOUT PAYING ANY TAXES. THE WHOLE TRANSACTION WAS A BOGUS TRANSA CTION ENTERED BY THE APPELLANT AND IT WAS JUST DONE FOR T HE PURPOSE OF CREATING CAPITAL AND SINCE THE APPELLANT HAS NOT RE BUTTED THE CONTENTIONS OF THE STOCK BROKER WHO HAS STATED THA T NO PAYMENTS WERE RECEIVED ON THE PURCHASE OF SHARES H ENCE THE WHOLE TRANSACTION WAS A FICTITIOUS TRANSACTION ENTE RED FOR THE CREATION OF CAPITAL AND NO DEDUCTION FOR LTCG CAN B E MADE AVAILABLE TO THE ASSESSEE. THIS WILL BE MORE OF AN UNEXPLAINED RECEIPT OF MONEY IN THE HAND OF THE APPELLANT. HENC E THE A.O. HAS RIGHTLY ADDED THE AMOUNT BACK AND THE ACTION OF THE A.O. IN MAKING THIS ADDITION IS CONFIRMED AND TREATING IT A S STCG. THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 5. REFERRING TO THE ORDER OF THE ASSESSING OFFICER /CIT(A) AND ALSO THE PAPER BOOK FILED IN THIS REGARD THE LEARN ED COUNSEL FOR THE ASSESSEE EXPLAINED THAT ASSESSEE HAS PURCHASED THE SHARES THROUGH THE STOCK BROKER WHO HAS ISSUED PURCHASE INVOICES A ND SUBSEQUENTLY THE SHARES WERE ALSO TRANSFERRED IN THE NAME OF THE ASSESSEE ON 30-6- 2000 ITSELF AND FURTHER THE ASSESSEE HAS SHOWN THES E TRANSACTION OF PURCHASE OF SHARES IN THE BALANCE SHEET FILED FOR T HE ASSESSMENT YEAR 2001-2002 IN AUGUST 2001 AND THESE SHARES WERE SOL D IN DECEMBER 2001 ON WHICH THE ASSESSEE HAS EARNED LONG TERM CAP ITAL GAIN. HE THEN REFERRED TO THE STATEMENT RECORDED BY THE ASSE SSING OFFICER FROM MR. MUKESH CHOKSHI. PARTICULARLY QUESTION NO. 4 WHI CH IS ALSO EXTRACTED IN THE ASSESSMENT ORDER TO SUBMIT THAT TH E SAID BROKER HAS ACCEPTED THAT THE TRANSACTIONS ARE GENUINE AND THE PAYMENTS ARE MADE BY WAY OF ADJUSTMENT TRANSACTIONS. THE LEARNED COUNSEL FURTHER EXPLAINED THAT THE ASSESSEE HAD A SPECULATION PROFI T OF RS.87 611/- ON PURCHASE OF SALE OF 620 SHARES OF APTECH LTD. ON 13 -4-2000 / 17/4/2000 AND THIS AMOUNT WAS UTILISED FOR PURCHASI NG 10500 ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH SHARES OF RASHEL AGRO TECH LTD. IT WAS FURTHER SUBM ITTED THAT ON 14/2/2001 THE ASSESSEE PURCHASED SHARES OF BPL LIMI TED AND NIIT LIMITED WHEREIN THE ASSESSEE HAD A SPECULATION LOSS OF RS.89 602/- AND THESE TRANSACTIONS HAPPENED IN THE STOCK EXCHAN GE AND BOTH THE TRANSACTIONS ARE REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE. SINCE THE NET EFFECT OF SPECULATION LOSS IS VERY SMALL AM OUNT THE ASSESSEE DID NOT CLAIM ANY SPECULATION LOSS TO BE CARRIED FO RWARD BUT UTILISED THE SPECULATION PROFIT OF RS.87 611/- EARNED IN APR IL 2000 FOR PURCHASE OF RASHEL AGRO SHARES AND AFTER INCURRING SPECULATION LOSS IN FEBRUARY 2001THE ACCOUNTS WERE SETTLED SUBSEQUENTL Y BY ISSUING A PAYMENT CHEQUE ON 4-12-2001 AFTER THE SALE PRICE WA S RECEIVED. IT IS ALSO ON RECORD THAT AFTER PURCHASING THE SHARES THE Y WERE SENT TO THE COMPANY FOR TRANSFER OF SHARES IN ASSESSEES NAME A ND THE SAID COMPANY TRANSFERRED THE SHARES ON 30-6-2000. IT IS THE LEARNED COUNSEL SUBMISSION THAT THE EVIDENCE ON RECORD INDI CATE THAT ASSESSEE HAS PURCHASED THE SHARES IN APRIL 2000 AN D SOLD IN DECEMBER 2001 WHICH RESULTED IN LONG TERM CAPITAL GAIN AND THERE IS NO EVIDENCE TO THE CONTRARY FOR DENYING THE SAID BE NEFIT TO THE ASSESSEE. HE EVEN CONTESTED FINDINGS OF THE CIT(A) TO SUBMIT THAT THERE IS NO BOGUS TRANSACTION AND ASSESSING OFFICER HAS G IVEN CREDIT FOR PURCHASE OF SHARES AT THE COST PRICE ITSELF AND ONL Y THING THE AO DID WAS TO TREAT THE LONG TERM CAPITAL GAIN AS SHORT T ERM GAIN BY DOUBTING THE PURCHASES IN APRIL 2000. 6. THE LEARNED AR RELIED ON VARIOUS CASE LAWS. (I) MUKESH R. MAROLIA VS. ADDL. CIT (2006) 6 SOT 247 (M UM.) (II) DCIT VS. M/S. SHARDA CREDITS P. LTD. ITA.3415/M/07 DT.9 TH FEBRUARY 2009 (III) SHRI POPATLAL BHACHUBHAI NANDU VS. ACIT CIR. 21 (1) VIDE ITA. NOS. 1718/M/2006 ETC. DATED 17 TH OCT. 2008. 6.1. LEARNED DR HOWEVER REFERRED TO MR. MUKESH CHO KSHIS GENERAL STATEMENT THAT HE WAS INDULGING IN ACCOMMO DATING BOGUS CAPITAL GAINS AND REFERRED TO THE STATEMENT RECORDE D BY THE ASSESSING ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH OFFICER TO SUBMIT THAT HE HAS ADMITTED HAVING ACCOM MODATED THE ASSESSEE ALSO. HE FURTHER REFERRED TO THE NEXT QUES TION TO MUKESH CHOKSHI TO STATE THAT ANOTHER BROKER MR. T.C. KOTHA RI A JOBBER WAS ALSO INVOLVED IN ARRANGING TRANSACTIONS AND HELPING ASSESSEE. IN VIEW OF THIS HE SUBMITTED AS THE DATE OF PURCHASE IS NOT PROVED THE ASSESSING OFFICER WAS RIGHT IN TREATING THE TRANSAC TION AS BOGUS TRANSACTION. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND EXAMINED THE RECORD. THE CASE RELIED UPON BY TH E LEARNED COUNSEL ARE NOT DIRECTLY APPLICABLE TO THE FACTS OF THE CAS E AS IN THOSE CASES THE SALE PROCEEDS ARE TREATED AS UNDISCLOSED INCOME DEN YING THE ENTIRE TRANSACTION AS SUCH WHEREAS IN THE PRESENT CASE THE ASSESSING OFFICER DID NOT TREAT THE SALE OF SHARES AS BOGUS. HE HAS ONLY EXAMINED THE PURCHASE OF SHARES AND DOUBTED THE DATE OF PURC HASE. BUT IN THE COMPUTATION HE HAS GIVEN BENEFIT TO THE SAME COST O F PURCHASE OF SHARES AND TAXED THE LONG TERM CAPITAL GAIN OFFERED AS SHORT TERM CAPITAL GAIN ONLY. AS FAR AS THE DATE OF PURCHASE I S CONCERNED THE EVIDENCE ON RECORD INDICATE THAT THE ASSESSEE HAD I NDEED EARNED SPECULATION PROFIT BY SALE OF APTECH SHARES WHICH T HE ASSESSING OFFICER HAS NOT DOUBTED. FURTHER THE ASSESSEE ALSO SUFFERED SPECULATION LOSS AS STATED ABOVE IN FEBRUARY 2001 AND DEBIT AND CREDIT ENTRIES PERTAINING TO SAME BROKER WERE SHOWN IN THE BALANCE SHEET IN THE RETURN FILED FOR THE AY 2001-2002 IN A UGUST 2001. THERE IS ALSO A MENTION OF PURCHASING OF SHARES OF THE CO MPANY IN THE RETURN. IT IS ALSO ON RECORD THAT THE SAID COMPANY VIDE LETTER DATED 30- 6-2000 HAD TRANSFERRED THE SHARES IN THE NAME OF TH E ASSESSEE WITH THE FOLIO NO. 15021 AND CERTIFICATE NOS. 105744 TO 105848. THE ASSESSING OFFICER NEITHER QUESTIONED THE SAID COMPA NY NOR DISPROVED THE TRANSFER OF SHARE CERTIFICATES BY 30/6/2000. TH E ONLY BASIS FOR ARRIVING AT THE CONCLUSION THAT THE TRANSACTION IS NOT GENUINE IS ON THE BASIS OF THE STATEMENT GIVEN BY MR. MUKESH CHOKSHI ON 20-6- 2004/20-6-2002 BEFORE THE DDIT (INV.) WITH REFERENC E TO CERTAIN ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH TRANSACTIONS UNDERTAKEN BY MR. MUKESH CHOKSHI AND H IS GROUP OF COMPANIES MAINLY GOLD FINVEST PVT. LTD. RICHMOND S ECURITIES AND ALEMBIC SECURITIES WHICH ARE DEALING IN INTERCONNE CTED STOCK EXCHANGE/NSC. MOST OF THE ENQUIRIES PERTAINS TO THE TRANSACTIONS IN INTERCONNECTED STOCK EXCHANGE AND SALE OF SHARES IN THE COMPANY VIZ. RASHEL AGRO TECH LTD. THE ENQUIRY IN THE SAID GROUP OF COMPANIES WAS WITH REFERENCE TO THE ISSUANCE OF BOGUS PURCHASE AN D SALE BILLS AND ACCOMMODATING VARIOUS PARTIES IN EARNING THE CAPITA L GAINS. HOWEVER AS SUBMITTED BY THE LEARNED COUNSEL THE ASSESSEES NAME IS NOT FIGURING IN THE TRANSACTIONS WHICH WERE ORIGINALLY ENQUIRED BY THE DDIT (INV.) ON 26-4-2002. EVEN THOUGH THE MODUS OPE RANDI WAS EXPLAINED AND STATED THAT THEY WERE GETTING 0.5% CO MMISSION IN ARRANGING THE TRANSACTIONS NOTHING WAS CONCLUDED A GAINST THE ASSESSEE IN THE SAID STATEMENT. THE ASSESSING OFFIC ER IN THE COURSE OF ASSESSMENT AGAIN RECORDED THE STATEMENT UNDER SECTI ON 131 ON 9-11- 2006 IN WHICH QUESTION NO. 4 AND 5 WHICH ARE EXTRAC TED IN THE ASSESSMENT ORDER ITSELF. THE MAIN RELIANCE IS ON QU ESTION NO. 5 WHICH IS AS UNDER : Q.5 : PLEASE GIVE THE DETAILS OF BILLS OF PROFIT I SSUED BY YOUR COMPANY AS STATED ABOVE. ANS: THESE BILLS NUMBERS BILLS NO. CC/2000/16/12501 DT.18-4-2000 WHICH SHOWS THAT B.87610.85 PAYABLE TO SHRI CHANDRAKANT D. SHAH. THERE IS ANOTHER BILL NO. CC/2001/07/164 (N) DT.20/2/2001 IN WHICH RS.89602 WAS RECEIVABLE BY SHRI CHANDRAKANT B. SHAH. THESE B ILLS ARE ISSUED SHOWING FICTITIOUS PROFIT AND THEREFORE THE PURCHASE ARE NOT SUBSTANTIATED BY GENUINE PAYMENTS. 8. THIS STATEMENT WAS RELIED UPON BY THE ASSESSING OFFICER TO STATE THAT THE PURCHASE BILLS ARE ISSUED SHOWING FICTICIOUS PROFIT. HOWEVER THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE MR. MUKESH CHOKSHI AND WHEN AN OPPORTUNITY WAS GIVE N AND ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH ASSESSEE WAS PRESENT MR. MUKESH CHOKSHI WAS NOT AVA ILABLE. THE ONLY BASIS FOR THIS ABOVE STATEMENT IS THAT THE PAYMENTS ARE NOT MADE IMMEDIATELY BUT EVEN STATEMENT ITSELF INDICATE THAT THEY WERE CAPITAL GAINS EARNED BY THE ASSESSEE AS SPECULATION PROFITS AND IN QUESTION NO. 4 IN THE STATEMENT MR.MUKESH CHOKSHI ADMITS THE PURCHASE OF 10500 SHARES OF RASHEL AGRO TECH LTD. MADE OUT OF A DJUSTED SHARE PROFITS AND THEREFORE CONFIRMED THAT THIS IS AN AD JUSTMENT TRANSACTION. IN VIEW OF THIS STATEMENT IN QUESTION NOS. 4 AND 5 WE ARE UNABLE TO UNDERSTAND HOW THE TRANSACTIONS BECOMES A BOGUS ONE. THERE IS NO EVIDENCE EXCEPT THIS ORAL STATEMENT WHI CH IS ALSO NOT SUBMITTED FOR CROSS-EXAMINATION TO PROVE/DISPROVE T HE TRANSACTION. WHEREAS THE ASSESSEE FURNISHED TRANSACTION DETAILS THE BANK ACCOUNTS PURCHASE AND SALE OF OTHER LISTED COMPANI ES SPECULATION PROFIT AND LOSS AND ALSO EVIDENCE IN THE FORM OF BA LANCE SHEET FILED MUCH BEFORE THE SAID SHARES WERE SOLD. THE SALE OF SHARES WAS UNDERTAKEN IN DECEMBER 2001 WHEREAS THE RETURN FOR AY 2001-2002 WAS FILED BY AUGUST 2001 ITSELF INDICATING THE PURC HASE OF SHARES AND OUTSTANDING AMOUNTS TO M/S. GOLDEN FINVEST LTD IN T HE STATEMENTS. IN VIEW OF THE DOCUMENTARY EVIDENCE IN FAVOUR OF THE A SSESSEE WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSING OF FICER BASED ON THE STATEMENT WHICH IS ALSO UN-SUPPORTED BY ANY OTHER E VIDENCE TO DENY THE BENEFIT OF PURCHASE OF SHARES BY THE ASSESSEE O N 8-4-2000. NOT ONLY THAT THE ASSESSING OFFICER HAS ALSO GAVE CREDI T FOR THE SAME AMOUNT OF PURCHASE OF SHARES AT COST AND DID NOT TR EAT THE SALE PROCEEDS AS BOGUS/UNACCOUNTED INCOME. THE ONLY ACTI ON TAKEN BY THE ASSESSING OFFICER IS TO DENY THE ASSESSEE THE BENEF IT OF LONG TERM CAPITAL GAIN AND SUBSEQUENT DEDUCTION UNDER SECTION 54EC OF THE ACT AS THE ASSESSEE INVESTED THE CAPITAL GAINS IN REC B ONDS. WE DO NOT SEE ANY REASON TO AGREE WITH THE FINDINGS OF THE AS SESSING OFFICER AND ALSO THE FINDINGS OF THE CIT(A). IN FACT THE CIT(A ) HAS WENT AHEAD IN TREATING THE ENTIRE TRANSACTION AS BOGUS AND CONFIR MED THE ACTION OF THE ASSESSING OFFICER WHILE HOLDING THIS WILL BE MORE FOR AN UNEXPLAINED RECEIPT OF MONEY OF THE APPELLANT. HENC E ASSESSING OFFICER ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH HAD RIGHTLY ADDED THE AMOUNT BY AND THE ACTION OF T HE ASSESSING OFFICER IN MAKING THIS ADDITION IS CONFIRMED TREATING IT AS STCG . IN ARRIVING AT THIS CONCLUSION THE CIT(A) PRESUMED THAT ASSESSEE COULD HAVE PAID FULL PAYMENT OF RS. 16 LAKHS BY WAY OF CASH WHICH W AS NOT THE CASE OF THE ASSESSING OFFICER EITHER. THERE IS NO EVIDENCE EVEN TO PRESUME THESE OBSERVATIONS OF THE CIT(A) AS STATED ABOVE. 9. THE ONLY ACTION OF THE ASSESSING OFFICER IS DOUBTING THE PURCHASE IN APRIL 2000 BUT THE ASSESSING OFFICER H AS NOT DOUBTED THE TRANSACTION AS SUCH AS HE HAS ACCEPTED THE SAME AS WELL AS PURCHASE COST. SINCE THE CIT(A) FINDINGS ARE NOT BASED ON AN Y VERIFIABLE EVIDENCE AND DIFFERS FROM THE FINDINGS OF THE ASSESSING OFFI CER WE ARE UNABLE TO APPROVE THE ACTION OF THE CIT(A) AS WELL. WE ARE OF THE OPINION THAT ASSESSEE HAS DISCHARGED THE ONUS IN PROVING THE DAT E OF PURCHASE IN APRIL 2000 AND THERE IS NO REASON TO DENY THE BENEF IT OF CAPITAL GAINS TO THE ASSESSEE AS LONG TERM CAPITAL GAINS. ACCORDI NGLY THE ASSESSEES GROUNDS ARE ALLOWED. ASSESSING OFFICER IS DIRECTED TO TREAT THE CAPITAL GAIN AS LONG TERM CAPITAL GAIN AND NOT AS SHORT TER M CAPITAL GAIN. CONSEQUENTLY ASSESSING OFFICER IS ALSO DIRECTED TO ALLOW THE BENEFIT UNDER SECTION 54EC OF THE ACT. GROUNDS TO THAT EXTE NT ARE CONSIDERED AS ALLOWED. 10. GROUND NO.2 IN THIS APPEAL IS WITH REFERENCE T O ADDITION OF RS.8138/- AS COMMISSION TO MR. MUKESH CHOKSHI. THIS ADDITION IS ALSO ON PRESUMPTION RELYING ON THE STATEMENT OF MR. CHOKSI AND THERE IS NO EVIDENCE ON RECORD OF EITHER ASSESSEE PAYING THE AMOUNT OR THE SAID M/S. GOLD STAR FINVEST PVT. LTD. RECEIVING THE AMOUNT. SINCE THE ADDITION WAS MADE WITHOUT ANY BASIS WE HOLD THAT T HERE IS NO NEED FOR MAKING AN ADDITION OF RS.8138/- ON ACCOUNT OF C OMMISSION PAID. GROUND NO.2 IS ALSO ALLOWED. ITA.NO.6108/M/09 CHANDRAKANT BABULAL SHAH 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOW ED. PRONOUNCED IN THE OPEN COURT ON THIS THE 15 TH DAY OF DECEMBER 2010. SD/- (R.S. PADVEKAR) JUDICIAL MEMBER SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER DATED : 15 TH DECEMBER 2010 VBP/- COPY TO : 1. ITO 20 (2) (1) PIRAMAL CHAMBERS LALBAUG PAREL M UMBAI-012. 2. MR. PETER FERNANDES FLAT NO. A/13 4 TH FLOOR ADLYAMAN SOC. NEAR J.B. NAGAR JAIN MANDIR ANDHERI (E) MUMBAI 40 0 093 PAN AACPF-5048-H. 3. CIT(A)-XX MUMBAI 4. CIT-XX MUMBAI 5. DR C BENCH 6. GUARD FILE TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI