Smt. Sushilaben D. Shah, Ahmedabad V. The Income Tax Officer, Ward-7(3), Ahmedabad

ITA 1151/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9558 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 17-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K B SONI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Accommodation entries
• Section: 133A; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ./ ITA.NO.1151/AHD/2015 / ASSTT. YEAR: 2006-2007 SMT.SUSHILABEN D. SHAH 302, SIMANDHAR FLATS USMANPURA AHMEDABAD. PAN : ACTPS 7388 C VS ITO, WARD-7(3) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI K.B. SONI, AR REVENUE BY : PRAJNA PARAMITA, SR.DR / DATE OF HEARING : 17/02/2016 / DATE OF PRONOUNCEMENT: 17/02/2016 $%/ O R D E R THIS APPEAL OF THE ASSESSEE AROSE FROM ORDER OF THE LD.CIT(A)-10, AHMEDABAD DATED 23.3.2015 FOR THE ASSTT.YEAR 2006-2 007. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE APPEAL. HE OUGHT TO HAVE ALLOWED THE A PPEAL FULLY IN ACCORDANCE WITH THE GROUNDS OF APPEAL RAISED BY THE APPELLANT BEFORE HIM. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ADDITION OF RS. 2,13,350/- MADE BY THE ASSESSING OF FICER U/S. 68 OF THE IT ACT 1961. ITA NO.1151/AHD/2015 2 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON F ACTS BY ADDING THE EXEMPTED LONG TERM CAPITAL GAIN ON SECURITIES U/S 1 0(38) WHEN THE PURCHASE OF SHARES ARE OF LISTED COMPANY AND ARE SO LD THROUGH REGISTERED BROKER COMPLYING THE PROVISIONS OF SECTI ON 10(38) OF THE INCOME TAX ACT, 1961 AND TREATING THE RECEIPT OF SA LES CONSIDERATION OF RS. 2,13,350/- AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS BY TREATING THE TRANSACTIONS OF PURCHASE AND SALES OF SHARES AS SHA M AND BOGUS AND TREATING THE SALES CONSIDERATIONS AS UNEXPLAINED CR EDIT U/S 68. 3. BRIEF FACTS OF THE CASE REPRODUCED BY THE LD.CIT (A) IN HIS ORDER READ AS UNDER: 4.1 THE ONLY GROUND OF APPEAL IS REGARDING ADDIT ION OF RS.2,13,350/- AS UNDISCLOSED INCOME U/S 68 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED T HAT IN A SEARCH CARRIED OUT U/S 132 OF THE ACT IN THE GROUP CASES O F MAHASAGAR SECURITIES PVT. LTD. IT WAS FOUND THAT THIS COMPANY AND ITS RELATED COMPANIES WERE ENGAGED IN THE BUSINESS OF ISSUING B OGUS BILLS FOR SHARE TRANSACTIONS FOR SHOWING CAPITAL GAIN/LOSS AN D SPECULATION PROFIT/LOSS. DURING THE COURSE OF SEARCH, LIST OF B ENEFICIARIES OF SUCH ENTRIES WAS FOUND. THE NAME OF THE APPELLANT FIGURE D IN THE LIST. FROM THE DETAILS RECEIVED BY THE AO, IT WAS SEEN THAT TH E APPELLANT HAD OBTAINED FAKE SHARE TRANSACTION BILLS FROM THE SAID GROUP. THE AO OBSERVED THAT THE APPELLANT HAD SHOWN LONG TERM CAP ITAL GAINS (LTCG) OF RS.2,13,350/- FROM SHARE TRANSACTIONS. TH IS WAS CLAIMED AS EXEMPT U/S 10(38) OF THE ACT. THESE SHARE TRANSACTI ONS WERE DONE THOUGH MAHASAGAR SECURITIES PVT. LTD. AND ALLIANCE INTERMEDIARIES & NETWORKS PVT. LTD., TWO OF THE VARIOUS BOGUS COMPAN IES FLOATED BY MUKESH CHOKSI WHICH WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THUS THE AO HAD REASON TO BE LIEVE THAT INCOME HAD ESCAPED ASSESSMENT. ACCORDINGLY, AFTER RECORDIN G REASONS TO DO SO, THE AO REOPENED THE ASSESSMENT AND ISSUED NOTICE U/ S 148 OF THE ACT. FURTHER, THE AO OBSERVED THAT THE APPELLANT HAD SHO WN LTCG OF RS.2,13,350/- ON SHARE TRANSACTIONS OF TALENT INFOW AYS LTD. THE AO OBSERVED THAT THE APPELLANT HAD TAKEN BOGUS BILL FO R ALLEGED PURCHASE OF 900 AND 1400 SHARES OF TALENT INFOWAYS FROM MAHA SAGARS SECURITIES PVT. LTD., MUMBAI AND HAD ALSO TAKEN BOGUS BILL FOR ALLEGED SALE OF 900 AND 1400 SHARES OF TALENT INFOWAYS THROUGH ALLIANCE INTERMEDIARIES ITA NO.1151/AHD/2015 3 NETWORKS PVT. LTD., A RELATED COMPANY OF MAHASAGAR SECURITIES. THE AO OBSERVED THAT THE ABOVE TRANSACTIONS WERE MADE T HROUGH MAHASAGAR SECURITIES PVT. LTD. AND ALLIANCE INTERME DIARIES NETWORK PVT. LTD., TWO OF THE VARIOUS COMPANIES FLOATED BY MUKESH CHOKSI COMPANIES WHICH WERE ENGAGED IN PROVIDING ACCOMMODA TION ENTRIES. FURTHER, THE AO OBSERVED THAT MUKESH CHOKSI HAD DEP OSED THAT THE COMPANIES FLOATED BY HIM ARE ENGAGED IN ISSUING ACC OMMODATION ENTRIES FOR SHARE TRANSACTIONS AND THESE COMPANIES USED TO GIVE ACCOMMODATION ENTRY FOR MEAGER COMMISSION OF 0.15%. THE AO CONFRONTED ALL THIS INFORMATION TO THE APPELLANT AS KING TO SHOW CAUSE WHY RS.2,13,350/- SHOWN AS LTCG ON SALE AND PURCHAS E OF SHARES SHOULD NOT BE TREATED AS UNDISCLOSED INCOME U/S 68 OF THE ACT. NOT FINDING THE EXPLANATION OF THE APPELLANT SATISFACTO RY, THE AO CONCLUDED THAT THE APPELLANT HAD NOT CARRIED OUT ANY GENUINE SHARE TRANSACTIONS AND THAT THE ALLEGED TRANSACTIONS FROM WHICH THE AP PELLANT HAD EARNED LTCG WERE ONLY ACCOMMODATION ENTRIES. THE AO CONCLU DED THAT THE SALE CONSIDERATION SHOWN TO HAVE BEEN RECEIVED BY T HE APPELLANT WAS NOTHING BUT APPELLANT'S OWN INCOME FROM UNDISCLOSED SOURCES. THUS THE AO TREATED THE AMOUNT OF RS.2,13,350/- AS INCOME FR OM UNDISCLOSED SOURCES AND ADDED THE SAME TO THE INCOME OF THE APP ELLANT U/S 68 OF THE ACT. 4. THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO QUO TING THE DECISION IN THE CASE OF MUKESH CHOKSHI VS. ACIT, IN ITA NO.2299 /M/2010 AND ITA NO.2300 AND 2301/M/2010 WHERE IT HAS BEEN ESTABLISH ED THAT MAHASAGAR SECURITIES AND ALLIANCE INTERMEDIARIES WERE INVOLVE D IN PROVIDING ACCOMMODATION ENTRIES. THE LD.COUNSEL FOR THE ASSE SSEE ARGUED THAT THE SAID CASE IS ON THE PENALTY PROCEEDINGS AND DOES NOT APP LY TO THE PRESENT PROCEEDINGS, AND HE RELIED UPON THE DECISIONS OF VA RIOUS COURTS OF LAW IN SUPPORT OF HIS CONTENTIONS. HE FURTHER SUBMITTED T HAT THE ASSESSEE HAS NOT TAKEN ANY ENTRY, AND IN FACT, THEY ARE ACTUAL TRANS ACTIONS. 5. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE F ACTS ON RECORD. THE UNDISPUTED FACT IN THE PRESENT CASE IS THAT THE ASS ESSEE HAS DECLARED LONG TERM ITA NO.1151/AHD/2015 4 CAPITAL GAIN OF RS.2,13,350/- ON SHARES OF TALENT I NFOWAYS LTD., AND IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS TAKEN BOGU S BILL FOR ALLEGED PURCHASE OF 900 AND 1400 SHARES OF TALENT INFOWAYS FROM MAHASAGARS SECURITIES PVT. LTD., AND HAS ALSO TAKEN BOGUS BILL FOR ALLEGED SAID SALE OF 900 AND 1400 SHARES FROM TALENT INFOWAYS THROUGH ALLIAN CE INTERMEDIARIES NETWORKS P.LTD., A RELATED COMPANY OF MAHASAGAR SEC URITIES. THESE TWO COMPANIES WERE FLOATED BY MUKESH CHOKSHI, WHICH WER E ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. IT HAS BEEN DEPO SED BEFORE THE AO BY MUKESH CHOKSHI THAT THE COMPANIES FLOATED FOR ISSUI NG ACCOMMODATION ENTRIES FOR SHARE TRANSACTIONS AT A MEAGER COMMISSI ON OF 0.15%. THE ITAT, MUMBAI BENCH IN CASE OF MUKESH CHOKSHI (SUPRA) HAS GIVEN A FINDING WHICH ARE REPRODUCED IN THE CIT(A)S ORDER, AND READS AS UNDER: '2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THERE WAS A SEARCH CONDUCTED IN CASE OF ONE SHRI HITESH M.BAGTHARIYA O N 28.6.2006 DURING THE COURSE OF WHICH IN HIS STATEMENT RECORDE D UNDER SECTION 132(4) HE HAD STATED THAT HE WAS AN ENTRY OPERATOR AND HE USED TO ARRANGE CHEQUES OF M/S.MAHASAGAR SECURITIES PVT. LT D. AND M/S.GOLDSTAR FINVEST PVT. LTD, IT WAS ALSO STATED B Y HIM THAT MR. MUKESH CHOWKSHI, THE ASSESSEE IN THIS APPEAL, HAD F LOATED VARIOUS COMPANIES INCLUDING HIS PERSONAL CAPACITY FOR PROVI DING ACCOMMODATION ENTRIES TO THE ENTRY SEEKERS. A SURVE Y UNDER SECTION 133A WAS ALSO CARRIED OUT ON THE SAME DAY AT THE BU SINESS PREMISES OF MR. MUKESH CHOWKSHI AND HIS CONCERN M/S. MAHASAGAR SECURITIES PVT. LTD. SHRI CHOWKSHI AT THE TIME OF SURVEY ADMITTED T HAT THE FOLLOWING COMPANIES HAD BEEN OPERATING AT THE ADDRESS AND THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES: I) M/S.GOLDSTAR FINVEST (P) LTD. II) M/S.RICHMOND SECURITIES (P) LTD. III) M/S. ALLIANCE INTERMEDIATERIES (P) LTD. IV) M/S.MAHASAGAR SECURITIES (P) LTD. (FORM ERLY KNOWN AS RICHMOND SECURITIES (P) LTD. V) M/S.ALPHA CHEMIE TRADE AGENCY (P) LTD. VI) M/S.MIHIR AGENCIES (P) LTD. VII) M/S.TALENT INFOWAY (P) LTD. VIII) M/S. BUNIYAD CHEMICALS LTD. ITA NO.1151/AHD/2015 5 IX) MUKESH CHOWKSHI, INDIVIDUAL 3. THE AO NOTED THAT THE MODUS OPERAND! ADOPTED BY THE ASSESSEE WAS THAT HE FIRST RECEIVED CASH FROM ENTRY SEEKERS WHIC H WERE DEPOSITED IN THE BANK ACCOUNT OF ONE OF THE GROUP COMPANIES AND AFTER DEPOSITING THE CASH IN THE BANK ACCOUNTS, A CHEQUE WAS ISSUED AND THE EQUAL AMOUNT IN FAVOUR OF ENTRY SEEKERS. THE ASSESSEE THU S RETURNED THE CASH OF THE ENTRY SEEKERS IN THE GUISE OF CHEQUE AFTER R ETAINING COMMISSION.' 7. THEREFORE, IN THE CIRCUMSTANCES AND THE FACTS OF THE CASE, IT IS EVIDENT THAT MAHASAGARS SECURITIES PVT. LTD. AND ALLIANCE I NTERMEDIARIES NETWORK PVT. LTD. WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRI ES, AND THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AS ASSESSEES OWN MONE Y FROM UNDISCLOSED SOURCES. THE ASSESSEE HAS NOT BROUGHT ANYTHING ON RECORD TO CONTROVERT THE FINDING OF THE AO OR THE LD.CIT(A). THE JUDGMENT R ELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE, THEREFORE, DOES NOT HE LP THE ASSESSEE, WHICH I HAVE GONE THROUGH CAREFULLY. ACCORDINGLY, I FIND NO IN FIRMITY ON THE ORDER OF THE AO, AND THE CIT(A) HAS RIGHTLY CONFIRMED THE SAME. THUS, ALL THE GROUNDS OF THE ASSESSEE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 17 TH FEBRUARY, 2016 AT AHMEDABAD. SD/- ( B.P. JAIN ) ACCOUNTANT MEMBER AHMEDABAD; DATED 17/02/2016