Pr. CIT vs. Jatin Investment Pvt. Ltd (Delhi High Court)

DATE: January 18, 2017 (Date of pronouncement)
DATE: January 31, 2017 (Date of publication)
AY: 2003-04
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S. 68 Bogus capital gains: A transaction cannot be treated as fraudulent if the assessee has furnished documentary proof and proved the identity of the purchasers and no discrepancy is found. The AO has to exercise his powers u/s 131 & 133(6) to verify the genuineness of the claim and cannot proceed on surmises

(i) The AO based his argument purely on the basis of information from DIT (Investigation), New Delhi. He is entirely relied upon such information for reaching such conclusion. The above information may be a sufficient ground of initiate reassessment proceedings of a case, but no (sic) make an addition the AO has to establish the fact of fraudulent nature of such transaction. Purely on surmises and conjuncture (sic) no transaction can be held as bogus unless the same is proved on the basis of sound reasoning and evidence on the part of the AO before making the addition. When the assessee has furnished all necessary proofs in support of its claim, it is all the more necessary to rebut such evidence with cogent and credible evidence on the part of the AO before making the addition. It is true that the said amount of Rs.93,45,000/- has been received during the year under consideration by the appellant from 21 persons listed in the assessment order. However the perusal of the balance sheet as on 31.03.2003 reveals that no new money has been introduced during the year under consideration. This also implies that there has neither been fresh loan nor fresh share capital introduced in the accounts of the company during the year under consideration. The perusal of the account of the company does not leave any room for doubt that the said amount was nothing but the sale proceeds of the shares which have already been shown by the appellant in the profit & loss account for A.Y.2003-04. When the sale proceeds of the shares have already been shown by the appellant and the same has also been offered as income, it cannot be brought to tax again in the same A.Y. 2003-04 which is under appeal.

(ii) It is also seen that the Assessing Officer could not point out any discrepancy in the evidences relied upon by the assessee. He has neither brought out any direct or inference evidence be contradiction of the assessee. It is further observed that even though A.O. has vast powers u/s 131 and 133 (6) of the Act, he has not used any of his powers to verify the genuineness of the claim of the assessee by verifying the documents furnished by it. If A.O. had doubted the impugned transaction after receiving the evidences which had been produced by the assessee in support of its claim it was very much open to the A.O. to do his independent enquiry and verification. This has not been done by the A.O. Further, what is the desired documentary evidence required to support the claim of the assessee as required by the A.O. is not coming out of the order of the A.O.

(iii) The assessee has adduced the documentary evidences in support of the transaction in question. The identity of the purchasers of the shares was established as it was borne on the record of the Income Tax Department. The purchasers have PAN card as well. Turning to the shares which were sold by the appellant as per its version, there is no evidence or material to even suggest, as pointed out as on behalf of the assessee, that the cheques directly or indirectly emanated from the assessee so that it could be said that the assessee’s own money was brought back in the guise of sale proceeds of the shares. Though, the purchasers of the shares could not be examined by the AO, since they were existing on the file of the Income Tax Department and their Income Tax details were made available to the AO, it was equally the duty of the AO to have taken steps to verify their assessment records and if necessary to also have them examined by the respective AOs having jurisdiction over them which has not been done by him.

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