ITO 28(3)3, NAVI MUMBAI V. SUJATA D. PANDEY, NAVI MUMBAI

ITA 1463/MUM/2015

• Counselvise Citation: 146319914 RSA 2015
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HIRAL D SEJPAL
• Keywords: Accommodation entries; Reassessment proceedings
• Section: 143(3); 148; 132; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' SMC ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 1463/MUM/2015 (ASSESSMENT YEAR: 2005 - 06 ) INCOME TAX OFFICER - 28(3) - 3 VS. SMT. SUJATA D. PANDEY VASHI RLY. STCN. COMPLEX TOWER NO. 6, 3RD FLOOR VASHI, NAVI MUMBAI FLAT NO. 1001, PLOT NO.04 BALAJI HEIGHTS, SECTOR 11 SANPADA, NAVI MUMBAI 400705 PAN - ADHPP2016P APPELLANT RESPONDENT APPELLANT BY: SHRI JEEVAN LAL LAVIDIYA RESPONDENT BY: MS. HIRAL D. SEJPAL DATE OF HEARING: 29.09. 2015 DATE OF PRONOUNCEMENT: 29 .0 9 .2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 26, MUMBAI AND IT PERTAINS TO A.Y. 2005 - 06. 2. FOLLOWING GROUNDS WERE URGED BEFORE THE TRIBUNAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.12,12,840/ - OF BOGUS SHARE TRANSACTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN AP PRECIATING THE FACT THAT M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. IS ENGAGED IN FRAUDULENT BILLING ACTIVITIES. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT THE ASSESSING OFFICER BE RESTORED. 3. FA CTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. FOR THE YEAR UNDER CONSIDERATION ASSESSEE DECLARED TOTAL INCOME OF ` 1,72,262/ - . ASSESSEE IS ENGAGED IN ART WORK AND STITCHING WORKS . S HE ITA NO. 1463/MUM/2015 INCOME TAX OFFICER - 28(3) - 3 2 WAS ALSO EARNING RENTAL INCOME BY LEASING OUT A TRUCK. NO ACTION WAS TAKEN AGAINST THE RETURN FILED BY THE ASSESSEE . THEREAFTER THE AO SOUGHT TO ISSUE A NOTICE UNDER SECTION 148 ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DY.DIT (INVESTIGATION) WHEREIN IT WAS NOTICED THAT THE ASSESSEE HAS TAKEN BOGUS ENTRI ES WITH REGARD TO SPECULATION PROFIT AND CAPITAL GAIN/LOSS ACCOMMODATION ENTRIES/BILLS IN THE FINANCIAL YEAR 2004 - 05 TO THE EXTENT OF ` 12,12,840/ - FROM M/S. ALLIANCE INTERMEDIARIES PVT. LTD. IT APPEARS THAT ACTION UNDER SECTION 132 W AS CARRIED OUT IN MAHA S AGAR GROUP OF COMPANIES AND THE DIRECTOR OF THE SAID C OMPANY DISCLOSED THAT M/S. MAHAS AGAR SECURITIES PVT. LTD AND ITS GROUP CONCERNS WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES IN THE BUSINESS OF PROVIDING BOGUS SPECULATION TRANSACTIONS. M/S. ALLIANCE I NTERMEDIARIES PVT. LTD. IS ONE OF SUCH GROUP COMPANIES AND THE ASSESSEE HAD OBTAINED ENTRIES TO THE TUNE OF ` 12,12,840/ - . 4. IN RESPONSE TO THE NOTICE THE ASSESSEE SUBMITTED THAT SHE HAS PURCHASED THE FOLLOWING SHARES AND NO OTHER SHARES WERE PURCHASED DURING THE ABOVE YEAR: - I. ABB LTD. 500 II. ITC LTD. 250 III. L & L 250 IV. SANCHETA METALS 30,000 5. THE AO OBSERVED THAT M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED COMPANIES, INCLUDING M/S. ALLIANCE INTERMEDIARIES PVT. LTD., ARE ENGAGED IN FRAUDULENT BILLING A CTIVITIES IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS AND THE ASSESSEE HAVING SHOWN TRANSACTIONS TO THE TUNE OF ` 12,12,840/ - WITH M/S. ALLIANCE INTERMEDIARIES PVT. LTD., THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNDISCLOSED I NCOME. 6. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE REASSESSMENT PROCEEDINGS WERE NOT VALID SINCE THERE WAS NO QUESTION OF BRINGING ANY BOGUS ENTRY. RELIANCE WAS ALSO PLACED UPON THE DECISION OF THE HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS. SMT. ITA NO. 1463/MUM/2015 INCOME TAX OFFICER - 28(3) - 3 3 PARAMJIT KAUR (311 ITR 38) WHEREIN IT WAS HELD THAT IF THE AO HAD NOT EXAMINED AND CORROBORATED INFORMATION, BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME, INITIATION OF REASSESSMENT PROCEEDINGS CAN BE SAID TO BE BASED ON SUSPICION AND THER EFORE NOTICE UNDER SECTION 148 WAS HELD TO BE INVALID IN LAW. IN THE CASE OF THE ASSESSEE THE AO HAS NOT ONLY FAILED TO RECORD HIS SATISFACTION BUT ALSO HAS BEEN UNABLE TO GATHER ANY OTHER INFORMATION AS REGARDS THE BOGUS SHARE TRANSACTIONS. IT WAS ALSO SU BMITTED THAT THE AO HAS NOT GIVEN ANY OPPORTUNITY OF HEARING BEFORE PLACING RELIANCE UPON THE INFORMATION SO GATHERED AND THUS THE REOPENING IS INVALID IN LAW. EVEN ON MERITS IT WAS CONTENDED THAT THE TRANSACTIONS IN SHARES WERE DONE BY THE ASSESSEE DURING THE FINANCIAL YEAR 2005 - 06 RELEVANT TO A.Y. 2006 - 07 AND THE LONG TERM CAPITAL GAINS DERIVED OUT OF THE SAID TRANSACTIONS HAVE BEEN DULY DECLARED IN A.Y. 2006 - 07 AND THE AO ACCEPTED THE SAME VIDE HIS ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AGAINST WHICH THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL. UNDER THESE CIRCUMSTANCES, THE AO HAVING NOT BROUGHT ANY MATERIAL TO CONCLUSIVELY ESTABLISH THAT THE RECEIPT OF THE ALLEGED ENTRIES ARE BOGUS, THE ADDITION MADE THEREON DESERVES TO BE DELETED. 7. SINCE THE A SSESSEE CATEGORICALLY STATED THAT SHE HAD NOT ENTERED INTO ANY TRANSACTION OF PURCHASE AND SALE OF SHARES WITH M/S. ALLIANCE INTERMEDIARIES PVT. LTD. AS HELD BY THE AO, A REPORT WAS CALLED FOR FROM THE AO. THE AO, VIDE LETTER DATED 25.08.2014, SUBMITTED HI S REPORT WHEREIN IT WAS STATED THAT DURING THE SEARCH ACTION CARRIED OUT IN MAHASAGAR GROUP OF COMPANIES THE DIRECTOR OF THE COMPANY DISCLOSED THAT THEY WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES IN THE BUSINESS OF PROVIDING BOGUS SPECULATION TRANSACTIO N AND ONE SUCH COMPANY IS M/S. ALLIANCE INTERMEDIARIES PVT. LTD. AND THE ASSESSEE HAD OBTAINED ENTRIES FROM THAT COMPANY IN THE FINANCIAL YEARS 2003 - 04 AND 2004 - 05 RESPECTIVELY. HE THEREFORE SUPPORTED THE ASSESSMENT ORDER. WHEN THE SAME WAS PUT TO THE ASSE SSEE IT WAS ITA NO. 1463/MUM/2015 INCOME TAX OFFICER - 28(3) - 3 4 CONTENDED THAT THE AO HAS NOT EXAMINED AND CORROBORATED THE INFORMATION RECEIVED FROM THE INVESTIGATION WING BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND THEREFORE THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT WAS INVALID. FURTHER, THE AO COMPUTED ASSESSEES UNDISCLOSED INCOME AT ` 12,12,840/ - WHEREAS THERE WAS NO SUCH ALLEGED TRANSACTION; THE AO HAS JUST MENTIONED THAT A SPECIFIED AMOUNT HAS BEEN UNACCOUNTED. HOWEVER, A LIST OF TRANSACTIONS INCURRED DURING THE YEAR HAS NOT BEEN SUBMITTED BY THE AO ALONG WITH THE REMAND REPORT. IT WA S ALSO CONTENDED THAT IN THE REPORT OF THE DIRECTOR, H E HAS NOWHERE , IN HIS STATEMENT , MENTIONED THAT BOGUS ENTRIES WERE GIVEN TO THE ASSESSEE. 8. HAVING REGARD TO THE CIRCUMSTANCES OF THE ASSESSEE , THE LEARNED CIT(A) SET ASIDE THE ADDITION ON THE GROUND THAT S IMILAR MATTER WAS CONSIDERED BY HIM IN ASSESSEES OWN CASE FOR A.Y. 2004 - 05. IN PARTICULAR HE OBSERVED THAT THE ASSESSEE CARRIED OUT SALES OF THE SAME SHARES, WHICH WERE ACCEPTED BY THE AO , AND IF THE VERACITY OF THE DOCUMENT ON SALE SIDE IS ASSUMED TO BE CORRECT WITH REGARD TO SALES THE SAME DOCUMENT SHOWING THE PURCHASES CANNOT BE ASSUMED TO BE INCORRECT. 9. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED D.R. SUBMITTED THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES AND THEREFORE THE ADDI TION MADE BY THE AO, REFERABLE TO BOGUS SHARE TRANSACTIONS, IS JUSTIFIED. 10. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LONG TERM CAPITAL GAINS DERIVED FROM THE SAID TRANSACTIONS HAS BEEN DECLARED FOR A.Y. 2006 - 07 AND THE AO HA S ACCEPTED THE SAME , VIDE ORDER DATED 19.03.2013, IN THE PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. WHEN THE SALES ARE ACCEPTED AVAILABILITY OF SHARES AND PURCHASE THEREOF CANNOT BE DISPUTED. HE T HUS STRONGLY SUPPORTED THE ORDER PASSED BY THE CIT(A). 11. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE ASSESSMENTS FOR ASSESSMENT YEARS 2004 - 05 TO 2006 - ITA NO. 1463/MUM/2015 INCOME TAX OFFICER - 28(3) - 3 5 07 WERE REOPENED BASED UPON THE INFORMATION RECEIVED FROM THE DY. DIT (INVESTIGATION) AND THUS THE AO CANNOT BE SAID TO B E UNAWARE OF THE FACTUAL MATRIX OF THE CASE WHILE ACCEPTING THE SALE O F SAME SHARES IN SUBSEQUENT YEARS. IT IS ALSO THE CASE OF THE ASSESSEE THAT THE ASSESSEE PURCHASED AND SOLD SHARES OF BAJAJ AUTO LTD., CADILA ILEALT LTD. , GRASIM IND. LTD. AND SHE HAD N OT DEALT WITH THE SHARES OF M/S. ALLIANCE INTERMEDIARIES PVT. LTD. NO MATERIAL, WHATSOEVER, WAS PLACED BY THE REVENUE TO CONTRADICT THE FINDINGS OF THE CIT(A) AND ALSO TO HIGHLIGHT THAT ACCEPTANCE OF CAPITAL GAINS STANDS ON A DIFFERENT FOOTING IN SUBSEQUEN T YEAR. 12. HAVING REGARD TO THE OVERALL CIRCUMSTANCES OF THE CASE , I AM OF THE FIRM VIEW THAT THE ORDER PASSED BY THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE SINCE IT IS BASED UPON THE ORDER PASSED BY THE AO IN ASSESSEES OWN CASE FOR SUBSEQUENT ASSESSMENT YEAR . 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER , 2015. SD/ - (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 29 TH SEPTEMBER , 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 26 , MUMBAI 4. THE CIT 28 , MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI