Shri Ashokkumar C. Shah, Ahmedabad V. The Income Tax Officer, Ward-11(1), Ahmedabad

ITA 1143/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9766 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIV SEWAK
• Keywords: Reopening of assessment; Competent authority; Reason to believe
• Section: 143(3); 147; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1143/AHD/2015 /BLOCK ASSTT. YEAR: 2009-2010 SHRI ASHOKUMAR C. SHAH O-702, CHANDANBALA OPP: SUVIDHA SHOPPING CENTRE PALDI, AHMEDABAD 380 007. PAN AFXPS 4980 B VS ITO, WARD-11(1) AHMEDABAD. ./ ITA.NO.1152/AHD/2015 /BLOCK ASSTT. YEAR: 2009-2010 SMT.ALKABEN ASHOKUMAR SHAH O-702, CHANDANBALA OPP: SUVIDHA SHOPPING CENTRE PALDI, AHMEDABAD 380 007. PAN : AIJPS 0413 L VS ITO, WARD-11(1) AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI HEMCHHAJED, AR REVENUE BY : SHRI SHIV SEWAK, SR.DR / DATE OF HEARING : 13/01/2016 / DATE OF PRONOUNCEMENT: 15/01/2016 )*/ O R D E R THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF THE ASSESSEES AGAINST SEPARATE ORDERS OF THE LD.CIT(A), AHMEDABAD -5 OF EVEN DATED PASSED ON THE RESPECTIVE APPEALS OF THE APPELLANTS IN THE ASSTT.YEAR 2009-2010. ITA NO.1143 AND 1152/AHD/2015 2 2. THE FIRST GROUND OF APPEAL IS GENERAL IN NATURE IN BOTH THE APPEALS. IT DOES NOT CALL FOR RECORDING OF ANY SPECIFIC FINDING , HENCE, IT IS REJECTED. 3. IN GROUND NO.2, THE ASSESSEES HAVE CHALLENGED RE OPENING OF THE ASSESSMENT BY ISSUANCE OF NOTICE UNDER 148 OF THE A CT. IN GROUND NO.3, THE ASSESSEES HAVE CHALLENGED THE ADDITION OF RS.1,12,0 60/- IN THE HANDS OF EACH ASSESSEE. FIRST WE TAKE GROUND NO.2, WHEREBY, THE ASSESSEES HAVE CHALLENGED REOPENING OF THE ASSESSMENT. 4. THE LD.COUNSEL FOR THE ASSESSEES, AT THE VERY OU TSET, SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEES BY THE DIVISION BENCH ORDER OF THE ITAT PASSED IN THE CASE OF SONAL ARPIT DOSHI VS. IT O IN ITA NO.366/AHD/2015 FOR THE ASSTT.YEAR 2006-07. HE PLA CED ON RECORD COPY OF THE TRIBUNALS ORDER DATED 21.10.2015. THE LD.COUN SEL FOR THE ASSESSEE FURTHER TOOK US THROUGH PAGE NO.5 OF THE PAPER BOOK IN BOTH THE CASE, WHERE, COPIES OF REASONS RECORDED FOR REOPENING OF THE ASSESSMENT AR E BEING PLACED. THE LD.DR RELIED UPON THE ORDER OF THE AO. HE CONTENDE D THAT THE AO HAS REOPENED THE ASSESSMENT AFTER GETTING INFORMATION F ROM INVESTIGATION WING, WHICH HAS DISCLOSED THAT THE ASSESSEES HAVE OBTAINE D ACCOMMODATION ENTRY FROM MUKESH CHOKSHI WHO WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY. THUS, THE AO HAS VALID REASON FOR HARBOURING A BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT IN THE CASE OF BOTH THE ASSESSEES. 5. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. BEFORE REACHING AT ANY CONCLUSIO N, WHETHER, THE LD.AO HAS RIGHTLY REOPENED ASSESSMENT OR NOT ? I DEEM IT PER TINENT TO TAKE NOTE OF THE REASONS RECORDED BY THE AO. THE REASONS IN BOTH TH E CASES ARE VERBATIM. THEREFORE, FOR THE FACILITY OF REFERENCE, I AM REPR ODUCE THE REASONS RECORDED IN THE CASE OF SHRI ASHOKUMAR C SHAH I.E. HUSBAND OF S MT. ALKABEN ASHOKUMAR SHAH. THE REASONS READ AS UNDER: ITA NO.1143 AND 1152/AHD/2015 3 REASONS RECORDED FOR RE-OPENING ASSESSMENT NAME : SHRI ASHOKKUMAR C. SHAH ADDRESS: 0-702, CHANDAN BALA, OPP. SUVIDHA SHOPPING CENTRE, PALDI, AHMEDABAD PAN : AFXPS4980B A.Y. : 2009-10 THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE AY 2009-10 ON 02- 02-2010 WITH DECLARING THE TOTAL INCOME AT RS. 3,01 ,862/-. THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT - HOWEVER, NO SCRUTINY ASSESSMENT U/S. 143(3) OR OTHER APPLICABLE PROVISIONS OF THE A CT HAS BEEN IMPLIED IN THIS CASE. THE SEARCH & SEIZURE ACTION CARRIED O UT BY THE DEPARTMENT ON 25.11.2009 IN THE CASE OF M/S. MAHASA GAR SECURITIES LTD., AND ALSO COVERED ITS GROUP COMPANIES WHICH WE RE CONTROLLED BY SHRI MUKESH M. CHOKSI, AT MUMBAI. SHRI MUKESH M. CH OKSI HIMSELF ADMITTED THAT MY ALL GROUP COMPANIES ARE PROVIDING ENTRY FOR TAKING PROFIT OR LOSS BY SHOWING PURCHASE OR SALE OF THE S HARES AND SECURITIES TO VARIOUS PARTIES ACROSS INDIA ON WHICH I CHARGED CERTAIN COMMISSION FROM THE BENEFICIARY PARTIES. THE SAME INFORMATION RECEIVED BY THIS OFFICE FROM THE DIRECTOR OF INCOME-TAX (I & C.I.)/ NEW DELHI, VIDE LETTER DATED 07.03.2013. ON DEEP SCRUTINIZED OF THE DATA/D ETAILS RECEIVED IN THIS OFFICE IT IS ASCERTAIN THAT THE ASSESSEE SHRI ASHOKKUMAR C. SHAH ALSO INVOLVED IN THE TAKING ENTRY FROM THE GRO UP COMPANIES BELONGS TO SHRI MUKESH CHOKSI DURING THE F.Y. 2008- 09 THE ASSESSEE'S TOTAL TRANSACTION INVOLVED OF RS.1,11,680/- FOR TAK ING FICTITIOUS ENTRIES BY SHOWING PURCHASE AND SALE OF SHARE AND SECURITIE S. THUS IN THE ASSESSEE'S CASE SAID TRANSACTIONS SHOULD BE REQUIRE D FOR DETAILED VERIFICATION FROM VARIOUS ASPECTS. I HAVE THEREFORE FIRM REASON TO BELIEVE THAT THE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE AY 2009-10 DUE T O THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THUS, THE CASE NEED S TO BE RE-OPENED BY ISSUING NOTICE U/S. 148 OF THE I.T. ACT, 1961. SD/- (ANUP SINGH MEENA) INCOME TAX OFFICER WARD-11(1), AHMEDABAD. ITA NO.1143 AND 1152/AHD/2015 4 6. I FIND THAT IDENTICAL REASONS HAVE BEEN RECORDED IN THE CASE OF SONAL ARPIT DOSHI AND DIVISION BENCH HAS CONSIDERED THIS ASPECT. AT THIS STAGE, I DEEM IT APPROPRIATE TO TAKE NOTE OF FINDING RECORDE D BY THE DIVISION BENCH IN THE CASE OF SONAL ARPIT DOSHI FROM PARA-2 AS UNDER: 2. THE FIRST GROUND OF THE ASSESSEES APPEAL READS AS UNDER: THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFI RMING ACTION OF ASSESSING OFFICER IN ISSUING NOTICE U/S 148 AND IN MAKING ASSESSMENT U/S 147 OF THE ACT. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE COPY OF REASONS RECORDED FOR RE-OPEN ING OF ASSESSMENT IS AT PAGE NO.5 OF THE ASSESSEES PAPER-BOOK, WHICH RE ADS AS UNDER: NO. ITO. WD.-10(4)/REASON U/S 148/2013-14 DT. 26 .09.2013 TO SMT. SONAL ARPIT DOSHI, 5/A, VAISHALI APPARTMENT, 43, PRITAM NAGAR, ELLISBRIDGE, AHMEDABAD. MADAM, SUB: REASON OF REOPENING THE ASSESSMENT U/S. 148 O F THE IT ACT FOR THE A.Y. 2006-07 - REGARDING. *************** PLEASE REFER TO THE ABOVE. 2. IT IS TO INTIMATE THAT BEFORE RE-OPENING OF THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2006-07 IN YOUR CASE THE REASONS WERE RECORDED BY THE ASSESSING OFFICER IN WRITING AND THE CASE WAS RE-O PENED AFTER TAKING PRIOR APPROVAL OF THE COMPETENT AUTHORITY. HOWEVE R, CONSIDERING YOUR REQUEST, THE GIST OF; THE REASONS AS RECORDED BY TH E ASSESSING OFFICER ITA NO.1143 AND 1152/AHD/2015 5 REGARDING REOPENING THE CASE U/S. 148 OF THE IT. AC T IS MENTIONED HERE UNDER:- 'THE SEARCH & SEIZURE ACTION, CARRIED OUT BY THE DE PARTMENT ON 25.11.2009 IN THE GROUP CASE OF M/S. MAHASAGAR SEC URITIES LTD., AND ALSO COVERED ITS ALL GROUP COMPANIES WHICH WERE CONTROLLED BY SHRI MUKESH M. CHOKSI, AT MUMBAI. SHRI MUK ESH M. CHOKSI HIMSELF ADMITTED THAT MY ALL GROUP COMPANIE S ARE PROVIDING ENTRY FOR TAKING PROFIT OR LOSS BY SHOWIN G PURCHASE OR SALE OF THE SHARES AND SECURITIES TO VARIOUS PARTIE S ACROSS INDIA ON WHICH I WAS CHARGED CERTAIN COMMISSION FROM THE BEN EFICIARY PARTIES. THE SAME INFORMATION RECEIVED BY ; THIS OF FICE SUPPLIED BY THE DIRECTOR OF INCOME-TAX (I & C.I.), NEW DELHI, V IDE LETTER DATED 07.03.2013 ALONGWITH COPY OF STATEMENT O F SHRI MUKESH M. CHOKSHI RECORDED BY THE DEPARTMEN T ON OATH U/S. 131 OF THE I.T. ACT. ACCORDINGLY, ALL T HE PURCHASE AND SALE TRANSACTIONS REGARDING SHARES AND SECURITIES M ADE BY YOU THROUGH GROUP COMPANIES BELONGING TO SHRI MUKESH M. CHOKSHI WHICH WAS KNOWN AS MAHASAGAR SECURITIES LTD. WHICH IS TOTALLY UNVERIFIABLE TRANSACTION AS THE CONTROLLING PERSON NAMELY SHRI MUKESH M. CHOKSHI HIMSELF ADMITTED IN HIS STATEMEN T RECORDED ON OATH U/S. 131 ON 16.01.2013 BY SHRI P. S. NAIK, CIT, CENTRAL- 46, MUMBAI RECORDED. ON DEEP SCRUTINIZED OF THE DAT A/DETAILS RECEIVED IN THIS OFFICE IT IS ASCERTAIN THAT YOU HA VE ALSO INVOLVED FOR TAKING UNVERIFIABLE/BOGUS BENEFICIAL ENTRIES FR OM THE GROUP COMPANIES BELONGS TO SHRI MUKESN CHOKSI DURING THE F.Y. 2005- 06. ACCORDINGLY, ALL THE TRANSACTIONS MADE BY YOU W ERE UNVERIFIABLE. HENCE, SAME TRANSACTIONS ALSO SHOULD BE REQUIRED FOR DETAILED VERIFICATION FROM VARIOUS ASPECTS FOR GENUINENESS OF THE SAID TRANSACTION AS PER THE INFORMATION SUPPLIE D BY THE DIRECTOR OF INCOME-TAX (I & C.I.), NEW DELHI IN YOU R CASE BY RE- ASSESSMENT'. 3. THE ABOVE REASONS ARE PROVIDED ON EXPRESS REQUES T MADE BY YOU VIDE ABOVE REFERRED APPLICATION. AS SUCH, YOUR APPLICATI ON STAND DISPOSED OFF, WHICH MAY PLEASE BE NOTED. YOURS FAITHFULLY, SD/- (R.N.MEENA) INCOME TAX OFFICE, WARD-10(4) AHMEDABAD ITA NO.1143 AND 1152/AHD/2015 6 4. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSING OFFICER HAS SIMPLY REOPENED THE ASSESSMENT FOR THE PURPOSE OF V ERIFICATION OF THE CERTAIN TRANSACTIONS. IN OUR OPINION, WHEN THE REV ENUE WANTED TO VERIFY THE CORRECTNESS OF CERTAIN TRANSACTIONS, THE PROPER COURSE IS TO ISSUE THE NOTICE U/S 143(2) WITHIN TIME. IF THE REVE NUE FAILED TO ISSUE NOTICE U/S 143(2), IT CANNOT RESORT TO SECTION 148 FOR THE PURPOSE OF VERIFICATION OF CERTAIN TRANSACTIONS. NOTICE U/S 1 48 CAN BE ISSUED ONLY WHEN THE ASSESSING OFFICER RECORDS HIS SATISFACTION WITH REGARD TO ESCAPEMENT OF INCOME. IN THE REASONS RECORDED, THE RE IS NO MENTION OF THE ESCAPEMENT OF INCOME; THEREFORE, IN OUR OPINION , REOPENING OF ASSESSMENT IS NOT VALID AND THE SAME IS QUASHED AND CONSEQUENTIALLY, THE ASSESSMENT ORDER PASSED IN PURSUANCE TO SUCH NO TICE IS ALSO QUASHED. 5. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE SAID ASSESSMENT ORD ER WHICH ARE CHALLENGED ON MERIT IN THE ASSESSEES APPEAL DO NOT SURVIVE FOR ADJUDICATION, BECAUSE THE ASSESSMENT ITSELF HAS BEE N QUASHED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. 7. DIVISION BENCH HAS OBSERVED THAT THE AO AS SIMPL Y REOPENED THE ASSESSMENT FOR THE PURPOSE OF VERIFICATION OF CERTA IN TRANSACTION. ACCORDING TO THE DIVISION BENCH, IF THE AO HAS FAILED TO SCRUTIN IZE RECORD OF THE ASSESSEE IN ORDER TO VERIFY CERTAIN TRANSACTIONS, THEN THE RESO RTING TO SECTION 148 CANNOT BE MADE. ACTION UNDER SECTION 147 CAN ONLY BE INITIAT ED, IF HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN THE REASONS, THE LD.AO HAS OBSERVED THAT HE WANTS TO VERIFY CERTAIN TRANSACTIO NS OF THE ASSESSEE, THAT IS, WHETHER SUCH TRANSACTIONS ARE GENUINE OR NOT. THERE FORE, RESPECTFULLY FOLLOWING THE CONCLUSIONS OF THE DIVISION BENCH ON IDENTICAL REASONING, I AM OF VIEW THAT THE ASSESSMENT ORDERS IN BOTH THE CASE S DESERVES TO BE QUASHED BY HOLDING THAT THE RE-OPENING WAS NOT IN ACCORDANCE W ITH LAW. I ALLOW BOTH THE APPEALS AND QUASH THE ASSESSMENT ORDERS. ITA NO.1143 AND 1152/AHD/2015 7 8. SINCE I HAVE QUASHED THE ASSESSMENT ORDERS, THER EFORE, THERE IS NO NEED TO ADJUDICATE WHETHER THE ADDITION OF RS.1,2,060/- DESERVES TO BE CONFIRMED IN THE CASE OF EACH APPELLANT OR NOT. 9. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLO WED. ORDER PRONOUNCED IN THE COURT ON 15 TH JANUARY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER