Jagmohan Jalan (HUF), Kolkata v. ACIT, Circle - 32, Kolkata

ITA 664/KOL/2009 | 2003-2004
Pronouncement Date: 11-03-2011

Appeal Details

RSA Number 66423514 RSA 2009
Assessee PAN AABHJ4934P
Bench Kolkata
Appeal Number ITA 664/KOL/2009
Duration Of Justice 1 year(s) 10 month(s) 14 day(s)
Appellant Jagmohan Jalan (HUF), Kolkata
Respondent ACIT, Circle - 32, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Bench Allotted C
Tribunal Order Date 11-03-2011
Assessment Year 2003-2004
Appeal Filed On 27-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BEN CH C KOLKATA () BEFORE . .. . . .. . SHRI B.R.MITTAL JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . #$ SHRI C.D.RAO ACCOUNTANT MEMBER % % % % / ITA NO . 664/KOL/2009 &' ()/ ASSESSMENT YEAR : 2003-04 (+ / APPELLANT ) SHRI JAGMOHAN JALAN (HUF)KOLKATA (PAN : AABHJ 4934 P) - & - - VERSUS - . (./+ / RESPONDENT ) A.C.I.T. CIRCLE-32 KOLKATA + 0 1 #/ FOR THE APPELLANT: SHRI SUBHAS AGARWAL ./+ 0 1 #/ FOR THE RESPONDENT: SHRI PIYUSH KOLHE SR.DR #2 / ORDER ( (( ( . .. .!' !'!' !'. .. . ) )) ) #$ PER SHRI C.D.RAO AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 29.01.2009 OF THE CIT(A)-XIX KOLKATA PERTAINING TO ASSESSMENT YEAR 2 003-04. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS CONFIRM ATION OF ADDITION OF RS.27 19 500/- MADE BY THE A.O. U/S 68 OF THE I.T.A CT. 3 THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AO WH ILE DOING THE SCRUTINY ASSESSMENT THE AO HAS OBSERVED AS UNDER :- LONG TERM CAPITAL GAIN : DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD CL AIMED LONG TERM CAPITAL GAIN OF RS.25 56 670/- IN SHARE TRANSACTION . ACCORDING TO THE CALCULATION OF THE CAPITAL GAIN FILED BY THE ASSESS EE ALONG WITH THE RETURN OF INCOME THIS GAIN WAS ON ACCOUNT OF PURCHASE AND SA LE OF SHARES OF M/S TWENTY FIRST CENTURY (INDIA) LTD. ACCORDING TO ASSESEES C LAIM IT HAS PURCHASED 2 10 000 SHARES OF M/S. TWENTY FIRST CENTURY (INDIA) LTD. ON 03.12-2001 RS. 4.90/- 10000 SHARES ON 03-12- 2001 @ RS.4.85/- 500 0 SHARES ON 5.12.2001 @RS.4.65/- AND 9000 SHARES ON 3.12.2001 @RS.4.60/-. IT HAS SOLD 10 000 SHARES ON 3.12.2003 @ RS.82.83/- 5 000 SHARES ON 0 5-02-2003 @ RS.75/- 10 000 SHARES ON 19-02-2003 @ RS.79.95/- AND 9 000 SHARES ON 19-02-2003 RS.79.90/-. VIDE THIS OFFICE LETTER DATED 29-12-2005 ASSESSEE W AS ASKED TO FURNISH THE EVIDENCE OF PURCHASE AND SALE OF SHARES PAYMEN T MADE AND RECEIVED FOR PURCHASE AND SALE OF SHARES AND COPY OF DEMAT ACCOU NT. ASSESSEE FILED COPY OF CONTRACT NOTES OF SHARES PURCHASED AND SOLD WHIC H RESULTED IN LONG TERM CAPITAL GAIN. FROM THE CONTRACT NOTE IT IS OBSERVED THAT ASSESSEE HAS PURCHASED 25 000 SHARES OF M/S. TWENTY FIRST CENTURY LTD. ON 03-12-2001 OF WHICH 10 000/- SHARES @RS.4.90/- 10 000/- SHARES @ R.4.8 5 5 000 SHARES @RS.4.65/- THROUGH SHARE BROKER M/S SPARTEK FINANCI ERS & INVESTMENT LTD. VIDE TRADE NO.288 289 AND 290. ASSESSEE HAS FURTHER PURCHASED 9 000 SHARES OF M/S. TWENTY FIRST CENTURY(INDIA) LTD. ON 03-12-2 001 @ RS.4.60/- THROUGH SHARE BROKER M/S.SWADHA SECURITIES PRIVATE LIMITED VIDE TRADE NO.427. ASSESSEE HAS SOLD 10 000 SHARES ON 03-02-2003 @ RS. 82.83/- VIDE TRADE NO.4920 5000 SHARES ON 05.02.2003 @RS.75/- VIDE TR ADE NO.4966 THROUGH M/S SPARTEK FINANCIERS & INVESTMENT LTD. ASSESSEE H AS SOLD 10 000 SHARES ON 19.02.2003 @ RS.79.95/- AND 9000 SHARES ON 19.02.20 03 @RS.79.90/- THROUGH M/S. SPARTEK FINANCIERS & INVESTMENT LTD. VIDE TRAD E NO.5096 AND 5097. ON 30.01.2006 LETTERS WERE ISSUED TO CALCUTTA STOC K EXCHANGE FOR VERIFICATION OF PURCHASE AND SALE OF SHARES. CALCUT TA STOCK EXCHANGE VIDE THEIR LETTER NO.CSE/MSD/ITAX/0602/1440 DATED 10.02.2006 H AS CONFIRMED THAT M/S. SWADHA SECURITIES PVT.LTD. HAD NOT DONE ANY TR ANSACTION IN THE SCRIP M/S. TWENTY FIRST CENTURY (INDIA)LTD ON 03-12-2001 VIDE TRADE NO.427 FOR 9000 SHARES IN THE ON-LINE TRADING SYSTEM OF THE EXCHANG E. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSE E VIDE THIS OFFICE LETTER DATED 03-03-2006 AND ASSESSEE WAS ASKED TO EXPLAIN WHY THE ABOVE TRANSACTIONS WILL NOT BE TREATED AS FICTITIOUS. BUT A.R. FILED REPLY ON 9.3.2006 WHICH IS REPRODUCED BELOW : THE TRANSACTION ARE GENUINE AND DONE IN USUAL . CO URSE OF BUSINESS THROUGH THE SHARE BROKER M/S. SWADHA SECURITIES PV T. LTD. NOW IT HAS TO BE VERIFIED HOW THE TRANSACTION UNDE R TRADE NO.427 APPEARED IN THE CONTRACT NOTE OF THE SHARE BROKER D ENIED BY THE CALCUTTA STOCK EXCHANGE ASSOCIATION LTD FOR WHICH WE HAVE WRITTEN TO M/S.SWADHA SECURITIES PVT. LTD. COPY OF WHICH IS ENCLOSED HEREWITH. THAT BESIDES OUR ABOVE LETTER WE ALSO REQUEST YOU TO KINDLY WRITE TO M/S. SWADHA SECURITIES PVT. LTD. FOR CLARIFICATION REGAR DING TRADE NO.427 AS STATED B THE CALCUTTA STOCK EXCHANGE ASSOCIATION LTD. IN T HEIR DATED 10.02.2006. THAT THOUGH THE TRANSACTION IS GENUINE IT CANNOT BE TREATED AS FICTITIOUS WITHOUT ANY COGENT REASON AND WITHOUT VERIFYING THE GENUINE NESS OF THE SAME. SUCH ARGUMENT OF THE ASSESSEE IS UNBELIEVABLE. THE ASSESSEE WITH FULL KNOWLEDGE AND WRONG INTENTION HAS SHOWN BOGUS SHARE TRANSACTION IN 3 CONNIVANCE WITH THE SHARE BROKER. IN THE CONTRACT N OTES SUBMITTED BY THE ASSESSEE TRADE NO. IS MENTIONED. THE TRADE NOS. A RE GENERATED ONLY FROM THE COMPUTER OF THE STOCK EXCHANGE WHEN A MEMBER MAKE T RANSACTION THROUGH ON- LINE TRADING OF THE STOCK EXCHANGE AND STOCK EXCHAN GE HAS DENIED THAT ASSESSEES ALLEGED TRANSACTIONS WAS DONE AGAINST TH E TRADE NO. MENTIONED IN THE CONTRACT NOTE. IN FACT THERE IS OTHER TRANSACTI ON AGAINST THE TRADE NO. ASSESSEE HAS GENERATED ONLY DOCUMENTS TO CLAIM CAPI TAL GAIN. CALCUTTA STOCK EXCHANGE VIDE THEIR LETTER NO.CSE/MSD/ITAX/0602/1400 DATED 06-02-2006 INFORMED THAT :- IT APPEARS FROM THE RECORDS OF THE EXCHANGE THAT M/S. SPARTEK FINANCIERS & INVESTMENT PVT. LTD. HAD DONE TWO TRANSACTION IN THE SCRIP M/S . TWENTY FIRST CENTURY (INDIA) LTD. IN THE ON-LINE TRADING SYSTEM OF THE E XCHANGE ON 03.12. WITH TRADE NOS.288 289 FOR 10000 SHARES EACH AND ONE TRANSACT ION WITH TRADE NO.290 FOR 5000 SHARES. ALL THREE TRANSACTIONS WERE EXECUTED B Y M/S.SPARTEK FINANCIERS & INVESTMENT PVT. LTD. FOR THE CLIENT CODE JO10 . A SUMMON U/S 131 WAS ISSUED TO M/S. SPARTEK FINANCIER & INVESTMENT PVT. LTD TO KNOW THE NAME AND ADDRESS OF THE PERSON FROM WHOM THE SHARES WERE PURCHASED B Y THE BROKER AND DELIVERED TO THE ASSESSEE AND ALSO OTHER EVIDENCES. AR OF M/S. SPARTEK FINANCIERS & INVESTMENT PVT. LTD. APPEARED ON 30-03 -2006 AND FILED A LETTER DATED 27-03-2006. IN THAT LETTER BROKER HAS MENTION ED THAT SHARES WERE DELIVERED TO THE ASSESSEE ON 14-05-2002 THOUGH IT W AS PURCHASED ON 03-12- 2001. AR COULD NOT EXPLAIN THE REASON FOR DELAY IN DELIVERY OF SHARES AND ALSO FAILED TO PRODUCE ANY OTHER EVIDENCE IN SUPPORT OF DELIVERY OF SHARES. CALCUTTA STOCK EXCHANGE VIDE THEIR LETTERS NO.CSE/MSD/ITAX/0602/1438 DATED 10-02-2006 HAS INFO RMED THAT M/S.SPARTEK FINANCIER & INVESTMENT PVT LTD HAS EXEC UTED TRANSACTIONS FOR SALE OF 34 000 SHARES OF A. TWENTY FIRST CENTURY (INDIA) LTD. HOWEVER THE COUNTER PARTY FOR THESE TRANSACTION WAS ALSO M/S. SPARTEK F INANCIER & INVESTMENT PVT LTD AND WERE DONE FOR CLIENT CODE A014. SUMMON U/S. 131 WAS ISSUED TO SHARE BROKER M/S. SPARTEK FINANCIER & INVESTMENT PVT LTD. MR. VISHNU LOHIA A/R OF M/S. SPARTEK FINANCIER & INVESTMENT PVT LTD. APPEAR ED ON 27-03-2006. A/R WAS ASKED TO GIVE THE NAME AND ADDRESS OF THE PERSO NS TO WHOM SHARES WERE DELIVERED AFTER IT WAS RECEIVED FROM JAGMOHAN JALAN (HUF). A/R FILED A LETTER DATED 27-03-2006 IN WHICH IT HAS BEEN STATED THAT S INCE THE SHARES WERE SOLD THROUGH CALCUTTA STOCK EXCHANGE IT IS NOT POSSIBLE TO STATE THE NAMES AND ADDRESSES OF THE PURCHASERS. BUT THIS IS NOT CORREC T. ACCORDING TO THE INFORMATION GIVEN BY THE STOCK EXCHANGE BROKER FOR BOTH PURCHASER AND SELLER WAS M/S. SPARTEK FINANCIER & INVESTMENT PVT LTD IT MUST HAVE INFORMATION REGARDING THE PURCHASER OF THE SHARES SOLD BY THE A SSESSEE. MOREOVER THE BROKER COULD NOT PRODUCE ANY EVIDENCE TO SHOW THE TRANSFER OF SHARES TO CALCUTTA STOCK EXCHANGE. IN FACT THESE TRANSACTIONS WERE ONLY AN ARRANGEMENT BETWEEN SHARE BROKER AND ASSESSEE TO CREATE DOCUMENTS TO GENERATE BOGUS CAPITAL GAIN. THIS IS MORE AUTHENTICATED FROM THE FACT THAT WHEN THE ASSE SSEE PURCHASED THE SHARES IT WAS SOLD BY A CLIENT OF M/S. SPARTEK FINANCIER & IN VESTMENT PVT LTD HAVING CLIENT CODE NO.A014 AND AGAIN WHEN THE ASSESSEE SOL D THE SHARES IT WAS PURCHASED BY THE SAME CLIENT OF THE BROKER. 4 THIS PROVES THAT ASSESSEE HAS NOT DONE ACTUAL SHARE TRANSACTION BUT ONLY HAS CREATED FALSE DOCUMENTS TO CLAIM CAPITAL GAIN. IN FACT SUCH FRAUDULENT CLAIM OF NON-EXISTENT CAPITAL GAIN GENERATED ON PEN NY STOCKS LISTED IN CALCUTTA STOCK EXCHANGE HAS BEEN REPORTED IN LEADING NEWSPAP ERS ALSO. THE ECONOMIC TIMES ONE OF THE WIDELY CIRCULATED NEWSPAPER HAS R EPORTED IN LAST WEEK OF MARCH 2006 REGARDING SUCH FRAUDULENT TRANSACTION WH ICH RESULTED IN FALSE CAPITAL GAIN. M/S. TWENTY FIRST CENTURY (INDIA) LTD. IS ALSO ONE OF THE SUCH PENNY STOCKS AND ASSESSEE HAS CLAIMED TO HAVE EARNED CAPI TAL GAIN ON PURCHASE AND SALE OF ITS SHARES. I HAVE GONE THROUGH THE BALANCE SHEET AND PROFIT AND LOSS A/C. OF M/S. TWENTY FIRST CENTURY (INDIA) LTD. FOR THE FINANCIAL YEAR 2001-02 AND 2002-03 AND OBSERVED THAT THERE WAS NO IMPROVEM ENT IN THE WORKING OF THE COMPANY DURING THE ABOVE FINANCIAL YEARS FOR WHICH SUCH INCREASE IN SHARE PRICE CAN BE JUSTIFIED. IN FACT EPS OF THE COMPANY FOR THE YEAR 2001-02 AND 2002-03 WERE 0.004 AND 0.018. ACTUALLY THE BROKER AND THE NETWORK THROUGH CIRCULAR TRADING RAMP UP PRICES OF THE SHARES TO MA XIMIZE THE CAPITAL GAIN WHICH IS EXEMPTED FROM INCOME THIS IS AUTHENTICATED BY TH E TRADING CHART OF THE SHARE SCRIP THROUGHOUT THE FINANCIAL YEAR 2002-03 WAS OBT AINED FROM THE CALCUTTA STOCK EXCHANGE. IT IS ALSO PERTINENT TO MENTION HERE THAT ASSESSEE HAS NOT ENTERED INTO ANY OTHER SHARE TRANSACTION BESIDES THE ABOVE TRANSACTI ONS. AND FROM THE BALANCE SHEET AS ON 31.03.2003 IT IS OBSERVED THAT ASSESSEE HAS NO INVESTMENT IN SHARES EXCEPT SHARES OF GROUP COMPANIES. THIS ALSO PROVES THAT THE ASSESSEE IS NOT A REGULAR INVESTOR IN SHARE MARKET AND THERE WAS NO R EASON FOR MAKING INVESTMENT IN A LESSER KNOWN COMPANY LIKE M/S. TWENTY FIRST CE NTURY (INDIA) LTD. FROM THE ABOVE DISCUSSION REGARDING THE FACTS OF TH E CASE AND ALSO GENERAL PRACTICE PREVAILING IN THE MARKET THE PURC HASE AND SALE OF SHARES AS CLAIMED BY THE ASSESSEE IS TREATED AS BOGUS. THE AM OUNT OF RS.27 19 500/- SHOWN AS SALE PRICE OF THE SHARES OF M/S. TWENTY FI RST CENTURY (INDIA) LTD. DURING THE FINANCIAL YEAR 2002-03 IS TREATED AS CAS H CREDIT U/S 68 OF THE I.T.ACT 1961. 3.1. ON APPEAL THE LD. CIT(A) HAS CONFIRMED THE SAM E BY OBSERVING AT PARA 5 TO 5.2. AT PAGES 5 6 AND 7. FINALLY HE CONCLUDED THAT : 5. HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE RECORDS. THE APPELLANT HAS CLAIMED PURCHASE OF 34 000 SHARES OF TWENTY FIRST CENTURY(INDIA) LTD. ON 3.12.2001. 25 000 SHARES IN QUESTION WERE PURCHASED THROUGH THE BROKER M/S. SPARTEK FINANCIERS & INVEST MENTS LTD. @RS.4.90/- 4.85/- AND 4.65/- PER SHARE VIDE TRADE NOS.288 28 9 AND 290. BALANCE 9000 SHARES WERE CLAIMED TO BE PURCHASED THROUGH ANOTHER BROKER M/S. SWADHA SECURITIES LTD. @4.60/- PER SHARE IN TRADE NO.427. FROM BOTH THE BROKERS THE ALLEGED PURCHASE WAS MADE ON 3.12.2001 ITSELF. HOWEVER ON PERUSAL OF DEMAT ACCOUNT OF APPELLANT IT WAS OBSERVED THAT 25000 SHARES WHICH WERE CLAIMED TO BE PURCHASED THR OUGH THE BROKER M/S.SPARTEK FINANCIERS ON 3.12.2001 WERE CREDITED I N THE DEMAT ACCOUNT ON 5 14.5.2002 I.E. AFTER A GAP OF MORE THAN 5 MONTHS. THE SAID SHARES WERE TRANSFERRED FROM THE ACCOUNT OF LOHIA SECURITIES LT D. SIMILARLY ALLEGED 9000 SHARES WHICH WERE PURCHASED THROUGH M/S. SWADHA SEC URITIES PVT. LTD. ON 3.12.2001 WERE ALSO CREDITED IN THE DEMAT ACCOUNT O F THE APPELLANT ON 15.5.2002 I.E. AFTER MORE THAN 5 MONTHS OF DATE OF TRANSACTION. THIS IS AGAINST THE NORMAL PRACTICE IN THE STOCK MARKET. THESE 9000 SHARES WERE TRANSFERRED IN THE ACCOUNT OF THE APPELLANT FORM THE ACCOUNT OF TR ANS SCAN SECURITIES PVT. LTD. ON BEING ENQUIRED FROM CALCUTTA STOCK EXCHANGE IT WAS GATHERED THAT SWADHA SECURITIES PVT. LTD HAD NOT DONE ANY TRANSACTION IN THE SCRIP 21 ST CENTURY INDIA LTD. ON 3.12.2001 VIDE TRADE NO.427 FOR 9000 SHARES IN THE ON-LINE TRADING SYSTEM OF THE EXCHANGE. ON THE CONTRARY THE CONTRA CT NOTE ISSUED BY THE BROKER HAS THE TRADE NO. AND THE TRADE TIME. UNTIL AND UNL ESS THE TRANSACTION WAS DONE IN ON-LINE SYSTEM OF THE EXCHANGE THE TRADE N O. AND TRADE TIME WOULD NOT APPEAR. THIS SHOWS THAT ALL WAS NOT WELL WITH R ESPECT TO THE GENUINENESS OF THE TRANSACTION. IN THE CASE OF ANOTHER BROKER I.E. M/S. SPARTEK FINANCIERS & INVESTMENT PVT. LTD. ALSO IT WAS INFORMED BY THE E XCHANGE THAT IT HAD ENTERED INTO CROSS DEALS OF 25000 SHARES ON 3.12.2001. 5.1. WITH REGARD TO THE ALLEGED SALE OF 34000 SHARE S OF TWENTY FIRST CENTURY INDIA LTD. IT WAS CLAIMED BY THE APPELLANT THAT TH ESE SHARES WERE SOLD THROUGH M/S. SPARTEK FINANCIERS & INVESTMENT PVT. LTD HOWEV ER AS PER THE INFORMATION RECEIVED FROM THE CALCUTTA STOCK EXCHANGE IN THESE TRANSACTIONS ALSO THE BROKER HAS DONE THE CROSS DEALS. THE APPELLANT HAS NOT SUBMITTED ANY EXPLANATION TO THE AO WHEN THE FINDINGS OF THE ENQU IRY FROM THE STOCK EXCHANGE WERE COMMUNICATED TO HIM. MERELY FOR THE REASON THAT THE TRANSACTIONS WERE MADE THROUGH THE BROKER AND BY CH EQUE AND THE CONTRACT NOTES SUBMITTED TO THE A.O. A NON-GENUINE TRANSACT ION WOULD NOT BECOME A GENUINE TRANSACTION. THE APPELLANT CANNOT ABSOLVE H IMSELF FROM THE RESPONSIBILITY OF PROVING OF GENUINENESS OF THE TRA NSACTIONS IF CREDITS ARE APPEARING IN HIS BOOKS OF ACCOUNTS. THE RECORDS SHO WS THAT THE APPELLANT HAS NOT DONE ANYTHING TO DISCHARGE THE ONUS CAST UPON H IM. HE HAS MISERABLY FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE C ASE LAWS RELIED UPON BY THE APPELLANT ARE NOT RELEVANT FOR THE ISSUE UNDER CONS IDERATION. 5.2. UNDER THE CIRCUMSTANCES I AM OF THE OPINION THAT THE AO WAS JUSTIFIED IN TREATING THE AMOUNT OF RS.27 19 500/- AS CASH CR EDIT U/S 68 OF THE I.T.ACT. THE RELIANCE IS PLACED ON THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT REPORTED IN 214 ITR 801 WHEREI N IT WAS HELD THAT BURDEN OF PROOF IS ON THE ASSESSEE TO PROVE THAT THE AMOUN T CREDITED IN THE ACCOUNTS DID NOT REPRESENT THE INCOME. IN VIEW OF SECTION 68 OF THE ACT WHERE AN SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSES SEE OF THE PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE N ATURE AND SOURCE THEREOF IS IN THE OPINION OF THE AO NOT SATISFACTORY. IN SUCH CASE THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE VIZ. THE RECEIPT OF MONEY AND IF HE FAILS TO REBUT THE SAME THE SAID EVIDENCE BEING UNREBUTTED CAN BE USED AGAINST HIM BY HOLDING THAT IT IS A RECEIPT OF AN INCOME NATURE. 6 THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING TH E SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HIM. WHERE THE NATURE AND SOURCE OF A RECEIPT WHETHER IT BE A MONEY OR O THER PROPERTY CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE IT IS OPE N TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE ROH AN DI HATTI VS CIT [1977] 107 ITR 938 (SC)/KALE KHAN MOHAMMAD HANIF VS CIT [1 963] 50 ITR 1 (SC) IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FAC IE THE TRANSACTION WHICH RESULTS IN A CASH CREDIT IN HIS BOOKS OF ACCO UNTS. SUCH PROOF INCLUDE PROOF OF THE IDENTITY OF HIS CREDITOR THE CAPACITY OF SUCH CREDITOR AND LASTLY THE GENUINENESS OF THE TRANSACTION. ONLY AFTER THE ASSE SSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID THE ONUS SHIFT S ON THE DEPARTMENT SHANKAR INDUSTRIES VS CIT 114 ITR 689 (CAL). 5.3. IN VIEW OF THE ABOVE FACTS AND DISCUSSION IT I S HELD THAT APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE AND SALE OF ALLEGED SHARES OF TWENTY FIRST CENTURY INDIA LTD. T HE A.O. WAS JUSTIFIED IN MAKING ADDITION OF RS.27 19 500/- U/S 68 OF THE I.T .ACT. THE ADDITION SO MADE IS CONFIRMED. THE GROUND NOS. 1 AND 2 ARE DISMISSED . 3.2. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. 4. AT THE TIME OF HEARING BEFORE US THE LD. COUNSE L APPEARING ON BEHALF OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFOR E THE REVENUE AUTHORITIES WHICH ARE AS UNDER :- I) THE ADDITION OF RS..27 19 500/- HAS BEEN MADE B Y THE A.O. WITHOUT ANY BASIS. II) THE SHARES OF M/S. TWENTY FIRST CENTURY LTD. PU RCHASED IN THE YEAR 2001 BY THE APPELLANT WERE THE QUOTED SHARES IN CALCUTTA ST OCK EXCHANGE. III) THE APPELLANT HAD THE SHARES IN THE POSSESSION OF SHARE BROKER AFTER PURCHASE. THESE SHARES WERE DEMATED ON 14.5.2002 AN D 15.5.2002. IV) THE APPELLANT HAD THE SHARES IN HIS NAME OVER 1 2 MONTHS. V) THE APPELLANT HAS FULL FAITH IN THE SHARE BROKER AND AS SUCH THE SALES WERE EFFECTED THROUGH THEM. VI) SHARES WERE PURCHASED IN OFF MARKET THROUGH BRO KER. VII) THE APPELLANT IS NOT SUPPOSED TO KNOW THE WORK ING OF THE SHARE BROKER. THE APPELLANT IS CONCERNED ONLY WITH PURCHASE AND SALE OF SHARES AND ABOUT THE STATUS OF THE SHARE BROKER. THE BROKER IS IN EXISTE NCE AND ASSESSED TO TAX. 7 VIII) THE TRANSACTIONS ARE DONE THROUGH CHEQUE SHA RES WERE ROUTED THROUGH DEMAT ACCOUNT. IX) THE WORKING OF CALCUTTA STOCK EXCHANGE AND SHAR E BROKERS ARE RESTRICTED TO THEM AND THE APPELLANT IS NOT SUPPOSED TO KNOW ABO UT THEIR INTERNAL WORKING AND AFFAIRS. X) IF THE A.O. HAS ANY GRIEVANCE IN THE MATTER IT WILL BE AGAINST THE SHARE BROKERS AND FOR THIS APPELLANT IS NOT SUPPOSED TO B E SUFFERED AND PENALIZED. XI) RELIANCE IS PLACED ON THE DECISION IN THE CASE OF MAN MOHAN SINGH VS. CIT 304 ITR 52 (MP AND CIT VS ANUPAM KAPOOR 212 CTR 49 (P&H). 4.1. IN SUPPORT OF THE SUBMISSIONS HE FILED THE DOC UMENTS FILED BEFORE THE REVENUE AUTHORITIES AND CONTENDED THAT THE ACTION OF THE RE VENUE IS NOT JUSTIFIABLE. AS THE TRANSACTIONS ARE ROUTED THROUGH DEMAT ACCOUNT AND B ANK ACCOUNT. THEREFORE HE REQUESTED TO SET ASIDE THE ORDERS OF THE REVENUE AU THORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 5. ON THE OTHER HAND THE LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND FURTHER CONTE NDED THAT THE ASSESSEE HAS ALSO NOT FILED ANY EVIDENCE IN SUPPORT OF THE PURCHASES ALSO . THEREFORE HE REQUESTED TO UPHOLD THE ORDERS OF THE REVENUE AUTHORITIES. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT AS PER THE ASSESSEES CONTENTION THE SHARES ARE PURCHASED ON 03.12.2001 AND 05.12.2001 BUT HOWEVER HE HAS NOT FILED ANY BALANCE SHEET AS ON 31.3.2002 SHOWING THAT THE SAID SHARES OF M/S. TWENTY CENTURY ARE RECORDED IN THE BOOKS OF THE ASSESSEE FOR THE YEAR ENDING 31 .03.2002. IN ADDITION TO THE ABOVE THOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DOCUMENTS PLACED BEFORE US HE COULD NOT REBUT THE OBSERVATIONS MADE BY THE AO/ CIT(A). BUT HOWEVER THE UNDISPUTED FACTS ARE THAT THE PURCHASE AND SALE OF SHARES WERE ENTERED INTO THE DEMAT ACCOUNT OF THE ASSESSEE AND THE SALE PROCEEDS ARE R ECORDED IN THE BANK ACCOUNT OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES WE ARE UNABLE T O ACCEPT THE VIEW OF THE REVENUE THAT THE PURCHASE AND SALE OF SHARES CLAIMED BY THE ASSESSEE IS TO BE TREATED AS BOGUS. 8 THEREFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO RE- DECIDE THE ISSUE AFRESH AFTER MAKING FURTHER ENQUIR IES AS PER LAW AND GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. IT IS FURTHER CLARIFIED THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT WHY THE T RANSACTIONS ARE RECORDED IN THE DEMAT ACCOUNT OTHER THAN THE DATE OF PURCHASE/SALE AS MEN TIONED BY THE ASSESSEE AND THE PREVAILING RATES AS ON THE DATE OF PURCHASE/SALE IN ORDER TO PROVE GENUINENESS OF THE TRANSACTION. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 11.03.2011. SD/- SD/- . .. . . .. . B.R.MITTAL JUDICIAL MEMBER . .. .!' !'!' !'. .. . #$ #$ #$ #$ C.D.RAO ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 11.03.2011. #2 0 .3 4#3(5- COPY OF THE ORDER FORWARDED TO: 1. SHRI JAGMOHAN JALAN(HUF) 26 SHAKESPEARE SARANI KO LKATA-700017.. 2 THE A.C.I.T. CIRCLE-32 KOLKATA 3. THE CIT 4. THE CIT(A)-CENTRAL-XIX KOLKATA 5. DR KOLKATA BENCHES KOLKATA /3 ./ TRUE COPY #2&:/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES R.G.(.P.S.)