Commissioner Of Income Tax-I, New Central Revenue Buildingstatue Circle, Jaipur v. Connected With

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 385 / 2011 Commissioner of Income Tax-I, New Central Revenue BuildingStatue Circle, Jaipur ----Appellant Versus Smt. Pooja Agarwal, 1783, Telepada. Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 603 / 2011 Commissioner of Income Tax-I, New Central Revenue Building Statue Circle, Jaipur ----Appellant Versus Shir Jitendra Kumar Agarwal, P/o M/s Garg Jewellers, 222, Johari Bazar, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. N.L Agarwal with Mr. S.L.Poddar _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 11/09/2017 1.Since both these appeals arise out of the same order, they are being decided by this common order. 2.By way of these appeals, the appellant has challengedthe judgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department confirming the order ofCIT(A). 3.This Court while admitting the Income Tax Appeal No.385/2011 on 14.03.2012 has framed following substantialquestion of law: “Whether the Tribunal as well as CIT(A) were justified indeleting the addition of Rs.98,56,872/- made by the AssessingOfficer on account of bogus share transaction, which werenearly accommodation entries, made through one Shri P.K.Agarwal, who was found to be an entry provider, ignoring thatthe assessee in her deposition during survey specificallydenying having made any share transactions in last 5 years?” 4.This Court also while admitting the Income TaxAppeal No.603/2011 on 03.07.2013 has framed followingsubstantial question of law: “Whether on the facts and in the circumstances of thecase, the Tribunal was justified in deleting the addition ofRs.1,06,34,000/- which was made by the Assessing Officer andconfirmed by CIT(A) on account of undisclosed investment ofassessee in land and simply directing to compute 10% profit onthe said investment as income of the assessee, even afterholding that the investment is assessee’s own turnover in landdealing and not the investment made for others?” 5.However, subsequent to application which was moved by the Department, it was further amended by order dated29.08.2017. “1.Whether the Tribunal was justified in confirmingthe deletion of Rs.1,06,34,000/- which made by theAssessing Officer on account of undisclosedinvestment of the assessee, without giving anyfinding in respect of the same? 2.Whether the Tribunal as well as CIT(A) werejustified in not confirming the addition ofRs.1,06,34,000/- ignoring that the said entries weremerely accommodation entries in view of exchangeof cash with broker Shri P.K.Agarwal?” 6.Counsel for the appellant has taken us to the order ofAO stating that the assessee involved in jewelry business hastaken entry for the purpose of converting the black money intowhite and referred this entry from broker, one Shri P.K.Agarwal.Entry provided from Calcutta has been taken. 7.The assessee derives income from salary, capital gainsand other sources. A survey under Section 133A of the Act wasconducted as the business premises of M/s Royal Jewellers,Telipada of which assessee is 50% partner, on 21[st] and 22[nd] ofJanuary, 2008, during which various incriminating documents werefound and impounded wherein several unaccounted transactionwere recorded. Reassessment proceedings were initiated byissuing notice under Section 147 R/W 148 of the Act. Vide ShowCause Notice the assessee was specifically asked as to why theamount of Rs.98,56,872/- should not be treated as anaccommodation entry. 7.The assessee derives income from salary, capital gainsand other sources. A survey under Section 133A of the Act wasconducted as the business premises of M/s Royal Jewellers,Telipada of which assessee is 50% partner, on 21[st] and 22[nd] ofJanuary, 2008, during which various incriminating documents werefound and impounded wherein several unaccounted transactionwere recorded. Reassessment proceedings were initiated byissuing notice under Section 147 R/W 148 of the Act. Vide ShowCause Notice the assessee was specifically asked as to why theamount of Rs.98,56,872/- should not be treated as anaccommodation entry. 8.The assessee submitted reply to the Show Cause Noticecontending therein that the share transactions are genuine andthe ‘Short Term Capital Gain’ of Rs.98,56,872/- has been earnedfrom the purchases and sales of shares of Konark Commercial Ltd.And Limtux Investment Ltd. Investigation revealed that the entireshare transactions were bogus and mere accommodation entriesobtained from an entry provider Shri P.K.Agarwal form Kolkata.The said fact was revealed during search carried out by theInvestigation Wing, Jaipur in the case of B.C.Purohit Group. 9.It is pertinent to note that during the survey operation,it was admitted by the assessee that no investment in shares wasmade by him during the said period. It was further found that thecompany M/s Konark Commercial Ltd. Was never listed in CalcuttaStock Exchange and the assessee was never its shareholder. 10.After considering the entire factual matrix theAssessing Officer held that the assessee had arranged the saidaccommodation entries from entry providers for converting itsundisclosed money into white money and thus the amount ofRs.98,56,872/- was treated as undisclosed income of theassessee. 11.Counsel for appellant has taken us to the order of AO.12.However, counsel for the respondent has taken us to the order of CIT(A) and also to the order of Tribunal andcontended that in view of the finding reached, which was donethrough Stock Exchange and taking into consideration the revenuetransactions, the addition made was deleted by the Tribunalobserving as under:- “Contention of the AR is considered. One of the mainreasons for not accepting the genuineness of thetransactions declared by the appellant that at the time ofsurvey the appellant in his statement denied having madeany transactions in shares. However, subsequently thefacts came on record that the appellant had transactednot only in the shares which are disputed but shares ofvarious other companies like Satyam Computers, HCL,IPCL, BPCL and Tata Tea etc. Regarding the transactionsin question various details like copy of contract noteregarding purchase and sale of shares of Limtex andKonark Commerce & Ind. Ltd., assessee’s account withP.K. Agarwal & co. share broker, company’s masterdetails from registrar of companies, Kolkata were filed.reasons for not accepting the genuineness of thetransactions declared by the appellant that at the time ofsurvey the appellant in his statement denied having madeany transactions in shares. However, subsequently thefacts came on record that the appellant had transactednot only in the shares which are disputed but shares ofvarious other companies like Satyam Computers, HCL,IPCL, BPCL and Tata Tea etc. Regarding the transactionsin question various details like copy of contract noteregarding purchase and sale of shares of Limtex andKonark Commerce & Ind. Ltd., assessee’s account withP.K. Agarwal & co. share broker, company’s masterdetails from registrar of companies, Kolkata were filed. Copy of depository a/c or demat account with AlankritAssignment Ltd., a subsidiary of NSDL was also filedwhich shows that the transactions were made throughdemat a/c. When the relevant documents are availablethe fact of transactions entered into cannot be deniedsimply on the ground that in his statement the appellantdenied having made any transactions in shares. Thepayments and receipts are made through a/c payeecheques and the transactions are routed through KolkataStock Exchange. There is no evidence that the cash hasgone back in appellants’s account. Prima facie thetransaction which are supported by documents appear tobe genuine transactions. The AO has discussed modusoperandi in some sham transactions which were detectedin the search case of B.C. Purohit Group. The AO has alsostated in the assessment order itself while discussing themodus operandi that accommodation entries of long termcapital gain were purchased as long term capital gaineither was exempted from tax or was taxable at a lowerrate. As the appellant’s case is of short term capital gain,it does not exactly fall under that category ofaccommodation transactions. Further as per the report ofDCIT, Central Circle-3 Sh. P.K. Agarwal was found to bean entry provider as stated by Sh. Pawan Purohit of B.C.Purihit and Co. group. The AR made submission beforethe AO that the fact was not correct as in the statementof Sh. Pawan Purohit there is no mention of Sh. P. K.Agarwal. It was also submitted that there was no mentionof Sh. P. K. Agarwal in the order of SettlementCommission in the case of Sh. Sushil Kumar Purohit. Copyof the order of settlement commission was submitted. TheAO has failed to counter the objections raised by theappellant during the assessment proceedings. Simplymentioning that these findings are in the appraisal reportand appraisal report is made by the Investing Wing afterconsidering all thematerial facts available on record doesnot help much. The AO has failed to prove through anyindependent inquiry or relying on some material that thetransactions made by the appellant through share brokerP.K. Agarwal were non-genuine or there was any adversemention about the transaction in question in statement ofSh. Pawan Purohi. Simply because in the shamtransactions bank a/c were opened with HDFC bank andthe appellant has also received short term capital gain inhis account with HDFC bank does not establish that thetransaction made by the appellant were non genuine.Considering all these facts the share transactions madethrough Shri P.K. Agarwal cannot be held as non-genuine.Consequently denying the claim of short term capital gain made by the appellant before the AO is not approved. TheAO is therefore, directed to accept claim of short termcapital gain as shown by the appellant.” 13.The same was confirmed by CIT appeal, in view of this we are of the opinion that the view taken by the Tribunal as wellas CIT is correct. 14.In that view of the matter, the issues are answered in favour of the assessee and against the department. 15.The appeals stand dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/Dheeraj/40-41