Shri Sharan Ashok Nichani, Bangalore V. Income Tax Officer, ward - 15(4), Bangalore

ITA 1049/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6204 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R G
• Assessee Lawyers: M GANDHI
• Keywords: Unexplained cash credit; Accommodation entries; Set aside
• Section: 143(3); 195; 147; 68; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 1049 /BANG/201 9 ASSESSMENT YEAR S : 200 9 - 1 0 SHRI SHARAN ASHOK NICHANI, 3A, NO.58, MARTHAS PALACE, LAVELLE ROAD, BANGALORE-560 001. PAN : ACSPN 8854 B VS. THE INCOME TAX OFFICER, WARD 15(4), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI M. GANDHI, CA REVENUE BY : SHRI. GANESH R. G., STANDING COUNSEL DATE OF HEARING : 06 . 0 8 .201 9 DATE OF PRONOUNCEMENT : 07 . 0 8 .201 9 O R D E R PER SHRI JASON P BOAZ, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, BANGALORE, DATED 29.03.2019 FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 30.07.2009 DECLARING INCOME OF RS.5,89,060/-; AFTER CLAIMING EXEMPTION OF ITA NO.1049/BANG/2019 PAGE 2 OF 5 RS.10,17,258/- UNDER SECTION 10(38) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON ACCOUNT OF LONG TERM CAPITAL GAINS (LTCG) ARISING ON SALE OF SHARES OF M/S. ZEN SHAVING LTD. SUBSEQUENTLY, BASED ON INFORMATION RECEIVED CONSEQUENT TO SEARCH IN THE MAHASAGAR GROUP AND ITS DIRECTOR, SHRI MUKESH CHOKSI ON 25.11.2009, WHEREIN THE ASSESSEE WAS SAID TO HAVE BEEN A BENEFICIARY OF THEIR FRAUDULENT / BOGUS SHARE DEALINGS, THE ASSESSMENT IN ASSESSEES CASE FOR ASSESSMENT YEAR 2009-10 WAS RE-OPENED BY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER (AO) UNDER SECTION 147 OF THE ACT. THE RE-ASSESSMENTS WERE CONCLUDED VIDE ORDERS PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DATED 27.03.2014; WHEREIN THE ENTIRE CONSIDERATION FOR SALE OF THE AFORESAID SHARES AMOUNTING TO RS.10,41,593/- WAS BROUGHT TO TAX AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSESSEES APPEAL WAS DISMISSED BY CIT(A)-5, BANGALORE VIDE THE IMPUGNED ORDER DATED 29.03.2019. 3. AGGRIEVED BY THE ORDERS OF CIT(A)-5, BANGALORE, DATED 29.03.2019 FOR ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL WHEREIN SHE HAS RAISED THE FOLLOWING GROUNDS: ASSESSMENT YEAR 2007-08 1. ASSESSMENT U/S. 147 OF INCOME-TAX ACT, 1961 (THE ACT) 1.1. THE LEARNED LOWER AUTHORITIES FAILED TO DISPOSE OF THE OBJECTIONS FILED BY THE APPELLANT IN RESPONSE TO THE REASONS RECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT AND THEREFORE, IN SUCH CASE THE PROCEDURE LAID DOWN BY THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS 259 ITR 195 IS VIOLATED AND THE ASSESSMENT SHOULD BE QUASHED. 1.2. THE ASSESSMENT MADE U/S. 147 OF THE ACT IS BAD IN LAW. 2. ADDITION U/S. 68 OF THE ACT 2.1. THE LEARNED LOWER AUTHORITIES ERRED IN MAKING ADDITION OF RS.10,17,258 AS CASH CREDITS U/S. 68 OF THE ACT WHICH WAS DECLARED AS LONG TERM CAPITAL GAINS AND CLAIMED EXEMPTION U/S. 10(38) OF THE ACT. ITA NO.1049/BANG/2019 PAGE 3 OF 5 2.2. THE LEARNED LOWER AUTHORITIES FAILED TO PROVIDE A COPY OF THE INFORMATION THEY RELIED UPON FOR ISSUING NOTICE U/S. 148 OF THE ACT AND SWORN STATEMENT OF MR. MUKESH CHOKSI. 2.3. THE LOWER AUTHORITIES FAILED TO PROVIDE AN OPPORTUNITY TO CROSS EXAMINE MR. MUKESH CHOKSI WHEN THEY ELIDE UPON THE SWORN STATEMENT OF SAID PERSON FOR MAKING THE ASSESSMENT U/S. 147 OF THE ACT. 2.4. THE LOWER AUTHORITIES FAILED TO APPRECIATE THE FACT THAT THE SHARES OF M/S. ZEN SHAVING LTD HAS BEEN TRADED BY THE APPELLANT AND THERE IS NO FINDING THAT THE SAID COMPANY IS PROVIDING ACCOMMODATION ENTRIES. 2.5. THE LOWER AUTHORITIES FAILED TO APPRECIATE THE FACT THAT THE SHARES WERE TRADED THROUGH DEMAT ACCOUNT AND THE AMOUNTS WERE TRANSFERRED THROUGH BANKING CHANNEL AND CONTRACT NOTES FOR THE TRANSACTIONS ARE ALSO AVAILABLE ON RECORD TO PROVE THE GENUINENESS OF THE TRANSACTIONS. 2.6. THE LOWER AUTHORITIES FAILED TO BRING SINGLE EVIDENCE ON RECORD TO PROVE THAT THE TRANSACTIONS CARRIED OUT BY THE APPELLANT ARE SHAM OR BOGUS. 2.7. THE LOWER AUTHORITIES FAILED TO APPRECIATE THE FACT THAT THE ADDITION U/S. 68 OF THE ACT CAN BE MADE ONLY IF THE APPELLANT MAINTAINS THE BOOKS OF ACCOUNT. 3. THE APPELLANT SEEKS THE LEAVE OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL TO MAKE AMENDMENT TO ANY OF THE ABOVE GROUND EITHER BEFORE OR AT THE TIME OF HEARING THE APPEAL. 4. GROUND NO.2.3 4.1 IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT IN GROUND NO.2.3 (SUPRA), THE ASSESSEE HAS DISPUTED THE VALIDITY OF REASSESSMENT ORDER PASSED BY THE AO; WHICH WAS UPHELD BY THE LEARNED CIT(A). IN THIS REGARD, IT WAS POINTED OUT THAT THE MAIN BASIS FOR RE-OPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 IN THE CASE ON HAND WAS ON ACCOUNT OF THE SEARCH IN THE CASE OF MAHASAGAR GROUP ON 25.11.2009, WHEREIN, AS PER THE STATEMENT OF MR. MUKESH CHOKSHI, DIRECTOR OF M/S. MAHASAGAR SECURITIES LTD., IN WHICH IT IS ALLEGED THAT HE HAS STATED THAT HIS BUSINESS ACTIVITIES IS TO PROVIDE ACCOMMODATIVE ENTRIES FOR LONG TERM AND SHORT TERM CAPITAL GAINS, PURCHASE AND SALES OF SHARES ETC., AND HE HAS ALSO PROVIDED LIST OF BENEFICIARIES WHICH INCLUDE THE NAME OF THE ASSESSEE ALSO. IT WAS SUBMITTED THAT NEITHER THE COPY OF THE STATEMENT OF MR. MUKESH CHOKSHI NOR THE LIST OF BENEFICIARIES HAVE BEEN MADE AVAILABLE TO THE ASSESSEE NOR HAS HE BEEN ALLOWED CROSS-EXAMINATION OF THE PERSONS, ON THE BASIS OF WHOSE STATEMENTS THE AO HAS DRAWN ADVERSE INFERENCE IN HIS CASE. ITA NO.1049/BANG/2019 PAGE 4 OF 5 THE LEARNED AR SUBMITTED THAT UNDER SIMILAR FACTS, JUDGMENTS OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO.39370/2014 DATED 2ND OF FEB, 2015 (COPY OF WHICH HAS BEEN PLACED ON RECORD), IS SQUARELY APPLICABLE. HE HAS PARTICULARLY DRAWN MY ATTENTION TO PARA NO.8 OF THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT, AS PER WHICH, IT WAS HELD THAT SINCE THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS, THE MATTER IS REQUIRED TO BE RECONSIDERED BY THE AO BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AFTER FURNISHING DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. THE LEARNED AR SUBMITTED THAT IN THE LIGHT OF THE FACTS OF THE CASE ON HAND AND AS PER THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IN THE CASE ON HAND ALSO, THE ENTIRE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH DECISION WITH SAME DIRECTIONS. 4.2 PER CONTRA, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.3.1 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRST OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA) AND THIS IS AS UNDER: 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCE SA S ADVERTED TO ABOVE AND AS THE PETITIONER HAS BEEN DENIED AN OPPORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE PETITIONER AND BY FURNISHING THE DETAILS / COPY OF THE STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. 4.3.2 FROM THE ABOVE PARA FROM THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA), IT IS SEEN THAT MATTER WAS RESTORED ITA NO.1049/BANG/2019 PAGE 5 OF 5 BACK TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE STATEMENT OF SHRI MUKESH CHOKSI AND OTHER RELATED DETAILS. AS PER THE FACTS NOTED BY THE HIGH COURT IN THE EARLIER PARAS OF JUDGMENT (SUPRA) AND AS PER THE FACTS OF THE CASE ON HAND, THERE APPEARS TO BE NO DIFFERENCE IN FACTS AND THEREFORE BY RESPECTFULLY FOLLOWING THIS JUDGMENT IN THE CASE OF CHANDRA DEVI KOTHARI (SUPRA), I SET ASIDE THE IMPUGNED ORDERS OF CIT(A) AND AO FOR ASSESSMENT YEAR 2009-10 AND RESTORE THE MATTERS TO THE FILE OF THE AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE ISSUED BY THE HONBLE KARNATAKA HIGH COURT IN THE ABOVE CASE AS PER PARA NO.8 OF THE JUDGMENT; REPRODUCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE GROUNDS RAISED ON THE MERITS OF THE ADDITION. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEARS 2009-10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUGUST, 2019. SD/- SD / - SD/ - (N. V. VASUDEVAN) VICE PRESIDENT (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 7 TH AUGUST, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.