Shri Bhavesh Parasmal Jain, Baroda V. The Income Tax Officer, Ward-5(3), Baroda

ITA 1122/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8564 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA SHUKLA
• Assessee Lawyers: P D SHAH
• Keywords: Unexplained investment; Accommodation entries; Reason to believe
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORESHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1122/AHD/2016 / ASSESSMENT YEAR: 2008-09 BHAVESH PARASMAL JAIN, 27, VIJAY SOCIETY, NEW KHANDERAO ROAD, BARODA-390001 PAN : ADUPJ 6627 M VS. THE INCOME TAX OFFICER, WARD-5(3), BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : PD SHAH, AR REVENUE BY : ADITYA SHUKLA, SR DR / DATE OF HEARING : 14/02/2018 / DATE OF PRONOUNCEMENT: 04/04/2018 / O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAI NST THE ORDER OF THE LEARNED CIT(A)-1, VADODARA DATED 25.02.2016 PAS SED FOR ASSESSMENT YEAR 2008-09. 2. IN THE FIRST FOLD OF GRIEVANCE, THE ASSESSEE HAS PLEADED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME ON 31.07.2008 DECLARING TOTAL INCOME AT RS.4 ,19,550/-. THE LEARNED ASSESSING OFFICER GOT AN INFORMATION THAT THE ASSES SEE HAS ENTERED INTO PURCHASE TRANSACTION WITH M/S. ALLIANCE INTERMEDIAT ERIES & NETWORK PVT LTD WHEREIN THE ASSESSEE HAS ALLEGEDLY MADE PURCHAS E AND SALE OF SHARES OF SMC-ITA NO. 1122/AHD/2016 BHAVESH PARASMAL JAIN VS. ITO FOR AY: 2008-09 2 VARIOUS COMPANIES. THE ASSESSING OFFICER FURTHER O BSERVED THAT M/S. ALLIANCE INTERMEDIATERIES & NETWORK PVT LTD WAS AN UNDERTAKING OF MUKESH CHOKSI GROUP WHO WAS ENGAGED IN PROVIDING AC COMMODATION ENTRIES. ACCORDINGLY, HE RECORDED REASONS AND REOP ENED THE ASSESSMENT. AFTER HEARING THE ASSESSEE, THE LEARNED ASSESSING O FFICER HAS PASSED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE A CT ON 03.02.2014. HE MADE AN ADDITION OF RS.8,07,018/- ON ACCOUNT OF UND ISCLOSED SHORT TERM CAPITAL GAINS. THE RELEVANT DISCUSSIONS MADE BY TH E ASSESSING OFFICER READ AS UNDER:- FURTHER, IN THE STATEMENT RECORDED OF SHRI MUKESH CHOKSHI, THE DIRECTOR OF THE COMPANY, M/S. GOLDSTAR FINVEST PVT. LTD. AND M/ S. ALLIANCE INTERMEDIARIES & NETWORK PRIVATE LIMITED, HE HAS CL EARLY ADMITTED THAT M/S. GOLDSTAR FINVEST PVT. LTD AND M/S. ALLIANCE INTERME DIARIES & NETWORK PRIVATE LIMITED WERE ENGAGED IN THE BUSINESS OF PRO VIDING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS CAPITAL GAINS. THIS FACT IS ALSO STRENGTHENED BY THE FACT THAT M/S. GOLDSTAR FINVEST PVT. LTD. ITSEL F IN THE APPEAL PROCEEDINGS FOR THE A.Y.2002-03 ADMITTED BEFORE THE I.T.A.T., M UMBAI THAT IT IS AN ENTRY PROVIDER. THE I.T.A.T. VIDE ITS ORDER DATED 28.03.2 008 IN ITA NO.4625/MUM/2005 & 5000/MUM/2005 FOR THE A.Y.2002-0 3 IN THE CASE OF M/S. GOLDSTAR FINVEST PVT. LTD. HAS ACCEPTED THIS C LAIM AND DECLARED THE COMPANY AS AN ENTRY PROVIDER AND ORDERED THAT ITS I NCOME SHOULD BE COMPUTED @ 0.15% OF TOTAL ENTRIES PROVIDED BY THIS COMPANY. M/S.GOLDSTAR FINVESTMENT PVT. LTD AND M/S. ALLIANCE INTERMEDIARI ES & NETWORK PRIVATE LIMITED HAVE BEEN FILLING ITS RETURN OF INCOME SINC E A.Y.2002-03 TILL DATE BY DECLARING ITS BUSINESS AS AN ENTRY PROVIDER AND HAS BEEN COMPUTING ITS INCOME @ 0.15% OF TOTAL AMOUNT OF ENTRIES PROVIDED; 7. IN VIEW OF ABOVE DISCUSSION, STCG CLAIMED ON SAL E OF SHARES OF VARIOUS COMPANIES THROUGH ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., AMOUNTING TO RS.8,07,018/- IS TREATED AS UNDISCLOSED INCOME F ROM OTHER SOURCES. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT, IS SEPAR ATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS ASSE SSEE HAS CLAIMED BOGUS STCG. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. SMC-ITA NO. 1122/AHD/2016 BHAVESH PARASMAL JAIN VS. ITO FOR AY: 2008-09 3 5. LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSMENT WAS REOPENED BY RECORDING REASONS ON THE PREMISES THAT THE ASSESSEE HAS NOT DISCLOSED FINANCIAL TRANSACTIONS AND MADE UNEXPLAIN ED PURCHASE OF SHARES HAVING WORTH OF RS.5,06,957/-, AND, NO ADDITION OF THIS AMOUNT WAS MADE; THEREFORE, THE ASSESSING OFFICER CANNOT MAKE THE AD DITION OF ALLEGED UNEXPLAINED SHORT TERM CAPITAL GAINS. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MOHD JUNED DADANI, REPORTED IN[(2013) 355 I TR 172 (GUJ). HE ALSO RELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. JET AIRWAYS (I) LTD, REPORTED IN 331 ITR 236 (B OM). ON THE STRENGTH OF THESE DECISIONS, HE CONTENDED THAT THE RE-ASSESSMEN T ORDER DESERVES TO BE QUASHED. 6. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE CONTENDED THAT, THOUGH IN THE REASONS RECORDED THE ASSESSING OFFICER HAS ALLEGED THAT SOURCE OF PURCHASE OF SHARES REMAINED TO BE EXPLAINED BY THE ASSESSEE, BUT IT IS AN INTERCONNECTED TRANSACTION FOR WHICH ADDITION HAS B EEN MADE. 7. I HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO TAKE NOTE OF THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH READ AS UNDER:- IN THIS CASE, INFORMATION HAS BEEN RECEIVED FROM TH E CCIT(CENTRAL)-I, MUMBAI VIDE LETTER NO.CCIT(CENTRAL)-I/MAHASAGAR/201 2-13 DTD. 6.2.2013 THAT SHRI BHAVESH PARASMAL JAIN, 27-VIJAY SOCIETY, NEW KHANDERAO ROAD, VADODARA HAS ENTERED INTO TRANSACTION WITH M/S. ALL IANCE INTERMEDIATERIES & NET WORK PVT LTD OF PURCHASE OF SHARES WORTH RS.5,0 6,957/- DURING THE YEAR F.Y. 2007-08 RELEVANT TO AY 2008-09. THE AFORESAID TRANSACTIONS WERE UNDERTAKEN BY THE ASSESSEE THROUGH SHRI MUKESH CHOK SI OF M/S. MAHASAGAR GROUP. A SEARCH ACTION WAS CONDUCTED IN THE CASE O F MAHASAR GROUP ON 25.11.2009. SHRI MUKESH CHOKSI IN HIS STATEMENT ST ATED THAT HE WAS ONLY SMC-ITA NO. 1122/AHD/2016 BHAVESH PARASMAL JAIN VS. ITO FOR AY: 2008-09 4 INVOLVED IN GIVING ACCOMMODATION ENTRIES. THE EVID ENCE WITH RESPECT TO BOGUS NATURE OF TRANSACTION AND IDENTIFICATION OF A SSESSEES NAME AS ONE OF THE BENEFICIARIES BY SHRI MUKESH CHOKSI REVEALS THA T ASSESSEE HAS NOT DISCLOSED CORRECT FINANCIAL TRANSACTION FOR THE YEA R UNDER CONSIDERATION. THEREFORE, IT IS ESTABLISHED THAT THE ASSESSEE HAS NOT OFFERED THE INCOME OF RS.5,06,957/- FOR TAXATION FOR THE A.Y. 2008-09. 8. A PERUSAL OF THE ABOVE REASONS WOULD INDICATE TH AT THE ASSESSING OFFICER HAS WORKED OUT ESCAPED INCOME OF RS.5,06,95 7/-. THIS INCOME REPRESENTS ALLEGED UNEXPLAINED INVESTMENT IN PURCHA SE OF SHARES. A PERUSAL OF THE ASSESSMENT ORDER WOULD SHOW THAT NO ADDITION OF THIS AMOUNT WAS MADE. THE ASSESSING OFFICER HAS ULTIMATELY MADE THE ADDITION OF SHORT TERM CAPITAL GAINS CLAIMED ON SALES OF SHARES OF VA RIOUS COMPANIES. IT IS ALTOGETHER A DIFFERENT TRANSACTION THAN THE ONE FOR WHICH THE ASSESSMENT WAS REOPENED. IT IS PERTINENT TO OBSERVE THAT HONBLE JURISDICTIONAL HIGH COURT AS WELL AS HONBLE BOMBAY HIGH COURT HAS CONSIDERED SECTION 147 AND OBSERVED THAT THIS SECTION AUTHORIZES THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT WHERE HE HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED FOR ANY ASSESSMENT YEAR, THEN HE MA Y ASSESS/REASSESS SUCH INCOME AFTER RECORDING REASONS FOR REOPENING THE AS SESSMENT. THE ASSESSING OFFICER MAY ALSO ASSESS/REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THI S SECTION. ACCORDING TO THE HONBLE COURTS, EXPRESSION ANY OTHER EMPLOYED IN SECTION 147 IS TO BE CONSTRUED THAT ANY OTHER SUCH INCOME WOULD ONLY BE TAXED IF AN ADDITION IS BEING MADE QUA AN ITEM FOR WHICH ASSESSMENT HAS BEE N REOPENED. IF ADDITION IS BEING NOT MADE ON AN ISSUE FOR WHICH TH E ASSESSMENT HAS BEEN REOPENED, THEN ANY OTHER ISSUE EMERGING OUT IN REAS SESSMENT PROCEEDINGS WOULD NOT BE TAKEN INTO CONSIDERATION, BECAUSE FOR THAT ISSUE THE ASSESSING OFFICER HAS TO RECORD SEPARATE REASONS FOR REOPENIN G. IN THE PRESENT CASE, SMC-ITA NO. 1122/AHD/2016 BHAVESH PARASMAL JAIN VS. ITO FOR AY: 2008-09 5 THESE JUDGMENTS ARE FULLY APPLICABLE, BECAUSE THE A SSESSING OFFICER HAS NOT MADE ADDITION ON THE ISSUE FOR WHICH THE ASSESSMENT WAS REOPENED. THE ASSESSING OFFICER CANNOT MAKE ADDITION ON OTHER ISS UES. THEREFORE, I ALLOW THIS GROUND OF APPEAL AND QUASH THE RE-ASSESSMENT O RDER. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 4 TH APRIL, 2018 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/04/2018 BIJU T., SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! # / CONCERNED CIT 4. # ( ) / THE CIT(A) 5. & ! , ! , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) %, / ITAT, AHMEDABAD