ALPESH POPATLAL RATHOD, MUMBAI V. ITO 25(1)(3), MUMBAI

ITA 1391/MUM/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5309 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 133(6); 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1391/M/2014 ASSESSMENT YEAR: 2005-06 MR. ALPESH POPATLAL RATHOD, 4/5, JAIN BHAVAN, 80-A.M.B. VELKAR STREET, 2 ND FLOOR, MUMBAI 400 002 PAN: AHUPR6460Q VS. ITO-25(1)(3), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANI JAIN, A.R. REVENUE BY : SHRI ANOOP HIWASE, D.R. DATE OF HEARING : 23.08.2018 DATE OF PRONOUNCEMENT : 22.10.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.05.2013 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS AGAINS T THE CONFIRMATION OF ADDITION OF RS.16,48,417/- UNDER SECTI ON 68 OF THE ACT AS MADE BY THE AO TOWARDS THE BOGUS TRANSAC TION. 3. THE FACTS IN BRIEF ARE THAT THE CASE OF THE ASSE SSEE WAS REOPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION ITA NO.1391/M/2014 MR. ALPESH POPATLAL RATHOD 2 148 DATED 28.03.2012 AFTER THE AO RECEIVED INFORMATIO N FROM THE DGIT (INV.) WING, MUMBAI THAT ASSESSEE WAS BENEFI CIARY OF HAWALA RACKET OPERATED BY MAHASAGAR SECURITIES LTD. ACCORDINGLY, THE ASSESSEE WAS ISSUED A SHOW CAUSE N OTICE AS TO WHY THE TRANSACTIONS OF SALE OF SHARES OF RS.16,48 ,417/- SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE U NDER SECTION 68 OF THE ACT AS THERE IS NO ACTUAL SALE AN D PURCHASE OF SHARES OR SECURITIES BUT THE SAME WERE ONLY MANIPU LATED SALE AND PURCHASE TRANSACTIONS. IN ORDER TO VERIFY THE BROKERS NOTE ISSUED BY M/S. ALLIANCE INTERMEDIARIES & NETWOR K PRIVATE LIMITED, THE AO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT WAS SENT TO NATIONAL STOCK EXCHANGE OF INDIA LTD. WH ICH WAS REPLIED BY NSE VIDE LETTER DATED 22.11.2012 STATING T HAT THE BROKER M/S. ALLIANCE INTERMEDIARIES & NETWORK PRIVAT E LIMITED WAS REGISTERED IN THE CAPITAL MARKET SEGMENT ON 12.1 0.2000 AND THEREAFTER THE REGISTRATION WAS CANCELLED ON 12 .02.2004 AND THUS NO DETAILS ARE AVAILABLE WITH THE EXCHANGE OF ANY SUCH TRANSACTIONS. FINALLY, THE AO ADDED RS.16,48, 417/- AS UNDISCLOSED INCOME BESIDES ADDING 5% TOWARDS COMMIS SION AND FRAMED THE ASSESSMENT VIDE ORDER DATED 28.12.201 2 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 O F THE ACT. 4. THE LD. CIT(A) ALSO DISMISSED THE APPEAL OF THE A SSESSEE BY OBSERVING THAT THE PURPORTED SHARE TRANSACTIONS WERE NOT GENUINE AND WERE RIGHTLY BROUGHT TO TAX BY THE AO U NDER SECTION 68 OF THE ACT. ITA NO.1391/M/2014 MR. ALPESH POPATLAL RATHOD 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE SH ARE BROKER NOTES ISSUED BY M/S. ALLIANCE INTERMEDIARIES & NETW ORK PRIVATE LIMITED. WE OBSERVE THAT THE ASSESSEE HAS PURCHASE D 1200 SHARES OF HINDALCO INDUSTRIES FOR RS.15,60,200/- ON 06.04.2004 AND SOLD ON THE SAME DATE FOR RS.16,47,522/- WITHOUT TAKING ANY PHYSICAL DELIVERY. SIMILARLY SOM E OTHER TRANSACTIONS WERE MADE. THE LD. A.R. SUBMITTED BEFO RE US THAT THE ASSESSEE HAS NOT MADE ANY PAYMENT FOR THE SAID SHARES AS THE SALE AND PURCHASE WAS MADE ON THE SAM E DATE WITHOUT TAKING ANY PHYSICAL DELIVERY WHEREAS THE P ROFIT ON THESE TRANSACTIONS WAS RETURNED AS SPECULATIVE PRO FIT TO THE TUNE OF RS.1,67,929/-. WE ALSO FIND MERIT IN THE LD. A.R.S CONTENTIONS THAT SINCE THE ASSESSEE HAS NOT MADE AN Y PAYMENT FOR THE PURCHASE OF SAID SHARES OF HINDALCO INDUSTRIES AND IT WAS ONLY THE DIFFERENCE WHICH WAS SHOWN AS S PECULATIVE PROFIT AS THE SALE AND PURCHASE WAS DONE ON THE SAM E DAY. IT IS AMPLY CLEAR FROM THE COVER NOTES FILED BY THE AS SESSEE DURING THE ASSESSMENT PROCEEDINGS THAT THE TRANSACT IONS OF PURCHASE AND SALE OF SHARES WERE DONE ON THE SAME DATE AND NO PAYMENT WAS REMITTED FOR PURCHASING THE SHARES. LIKEWISE NO SALE CONSIDERATION WAS RECEIVED FROM THE STOCK B ROKER BUT A NET PROFIT WAS SHOWN AS SPECULATIVE PROFIT. SO IT C AN NOT BE SAID THAT THE ASSESSEE WAS BENEFICIARY OF BOGUS BIL LS WHICH WERE PART OF HAWALA RACKET OPERATED BY MAHASAGAR SE CURITIES LTD. AND ITS GROUP COMPANIES SPECIALLY CONSIDERING T HE FACT THAT NO PAYMENT WAS MADE FOR THE PURCHASE OF SHARES . HOWEVER, WE ARE OF THE VIEW THAT THE COVER NOTES EVI DENCING ITA NO.1391/M/2014 MR. ALPESH POPATLAL RATHOD 4 THE PURCHASES AND SALES OF SHARES NEED TO BE VERIFI ED AND EXAMINED AT THE LEVEL OF AO. WE, THEREFORE, RESTORE THE ISSUE BACK TO THE FILE OF AO FOR LIMITED PURPOSE OF VERIF ICATION OF THE SAID DOCUMENTS AND DECIDE THE ISSUE ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED STATISTICALLY. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.