MEHRAULI TRADERS P.LTD, MUMBAI V. ITO 8(2)(3), MUMBAI

ITA 1503/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2454 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2015
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Keywords: Reopening of assessment; Bogus purchase; Share purchase agreement; Accommodation entries
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1503 /MUM/ 20 1 5 (ASSESSMENT YEAR 200 6 - 0 7 ) M/S. MEHRAULI TRADERS PVT. LTD. 805, CORPORATE AVENUE SONAWALA ROAD GOREGAON EAST MUMBAI - 400 063. VS. ITO 8( 2)(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACM3556G ASSESSEE BY SHRI PIYUSH CHATURVEDI DEPARTMENT BY SHRI KAILASH GAIKWAD DATE OF HEARING 13.10 . 201 6 DATE OF PRONOUNCEMENT 13.10. 201 6 O R D E R TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.12.2014 PASSED BY LEARNED CIT(A) - 17, MUMBAI AND IT RELATES TO A.Y. 2006 - 07. 2. GROUNDS OF APPEAL URGED BY THE ASSESSEE GIVE RISE TO THE FOLLOWI NG ISSUES : - (A) VALIDITY OF REOPENING OF ASSE SSMENT . (B) ADDITION OF ` 30.48 LAKHS TREATING THE SAID TRANSACTION AS BOGUS. 3. FACTS RELATING TO THE ABOVE SAID ISSUES ARE STATED IN BRIEF. ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT ON 18.12.2008. SUBSEQUENTLY THE ASSESSI NG OFFICER RECEIVED INFORMATION THAT M/S. MAHASAGAR SECURITIES AND M UKESH CHOKSI GROUP HAVE PROVID ED ACCOMMODATION ENTRIES FOR GENERATING CAPITAL GAIN/LOSS. IT WAS FOUND THAT THE ASSESSEE HEREIN WAS ONE OF THE BENEFICIARIES WHO HAS AVAILED ACCOMMODATION E NTRIES FROM THE GROUP OF MR. MUKESH CH OKSI. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS M/S. MEHRAULI TRADERS PVT. LTD. 2 PURCHASED SHARES THROUGH M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. , ONE OF THE GROUP COMPANIES OF THE MUKESH CHOKSI. THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE HAS PURCHASED SHARES OF MAHAVIR SPINNING AND SPICE JET FOR AN AMOUNT OF ` 3 0,06, 197/ - DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT. 4. THE ASSESSEE SUBMITTED THAT IT HAS PURCHASED SHARES OF ONLY SPICE JET FROM M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. AND DID NOT BUY SHARES OF MAHAVIR SPINNING. IT WAS SUBMITTED THAT PURCHASES WERE MADE BY GIVING CHEQUES AND ALL THE SHARES PURCHASED WERE DE MATERIALISED IN THE ACCOUNT MAINT A INED WITH SHCIL. SUBSEQUENTLY, SHARES WERE SOLD IN DEMAT FORM THROUGH INDI INFOLINE. ACCORDINGLY, IT WAS SUBMITTED THAT ALL PURCHASES AND SALES TRANSACTION STANDS PROVED. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE CONT ENTIONS OF THE ASSESSEE AND ACCORDINGLY ASSESSED A SUM OF ` 30,48,885 / - A S BOGUS PURCHASES . THE L EARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE PARTIES AND PERUSED THE R ECORD. I NOTICED THAT THE ASSESSEE HAS PURCHASED SHARES OF SPICE JET ONLY DURING THE PERIOD FROM 2.9.2005 TO 8.9,2005. THE ASSESSEE HAS FURNISHED ACCOUNTS STATEMENT DULY CONFIRMED BY M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. AND THE SAME IS PLA CED AT PAGE NO. 66 OF THE PAPER BOOK. PERUSAL OF THE SAME WOULD SHOWS THAT THE AGGREGATE PURCHASE VALUE OF ` 29.62 LAKHS HAS BEEN SETTLED BY ISSUING CHEQUES BEARING NO. 722111,722115, 7 2 2118 AND 722156 , MEANING THEREBY PURCHASE CONSIDERATION HAS BEEN GIVE N BY WAY OF CHEQUES BY THE ASSESSEE TO M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. THE ASSESSEE HAS ALSO FURNISHED COPIES OF BROKERS NOTE ISSUED BY M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. SUBSEQUENTLY THE ASSESSEE HAS CONVERTED PHY SICAL FORM OF SHARE CERTIFICATE S INTO DEMATERIALISED FORM. THERE SHOULD NOT BE ANY DISPUTE THAT DEMATERIALISATION OF SHARES CANNO T TAKE PLACE UNLESS ASSESSEE HOLDS PHYSICAL CERTIFICATE S . I HAVE ALSO NOTICED THAT T HE M/S. MEHRAULI TRADERS PVT. LTD. 3 ASSESSEE HAS SOLD SHARES OF SPICE JET TH ROUGH ANOTHER BROKER NAMED INDIA INFOLINE. 6. FORGOING DISCUSSION SHOWS THAT THE ASSESSEE WAS HOLDING SHARES OF SPICE JET AND HAS SOLD THE SAME SUBSEQUENTLY. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREAT ING THE PURCHASE OF SHARES OF SPICE JET AS BOGUS IN NATURE. AT THE MOST THE ASSESSEE MIGHT HAVE INFLATE D THE PURCHASE VALUE OF SHARES , BUT THE ASSESSING OFFICER HAS NOT SHOWN THAT THE ASSESSEE HAS PURCHASED SHARES AT INFLATED PRICE. HENCE, I DO NOT FIND AN Y JUSTIFICATION IN TREATING PURCHASE OF SHARES OF SPICE JET AS BOGUS IN NATURE. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF ` 29.62 LAKHS RELATING TO PURCHASE OF SHARE S OF SPICE JET. 7. THE ASSESSING OFFICER HAS ALSO ADDED PURCHASE VALUE OF MAHAVIR SPINNING AMOUNTING TO ` 45,358/ - . IT IS A CONTENTION OF THE ASSESSEE THAT IT DID NOT PURCHASE SHARES OF MAHAVIR SPINNING. I NOTICED THAT THE ASSESSING OFFICER HAS MADE THIS ADDITION ON THE BASIS OF INFORMATION SUPPLIED BY INVESTIGATION WING O F THE DEPARTMENT. THE ASSESSING OFFICER HAS NOT EXAMINED THE BOOKS OF ACCOUNT OF THE ASSESSEE TO FIND OUT AS TO WHETHER THE ASSESSEE HAS PURCHASED THESE SHARES OR NOT. SINCE BOOKS OF ACC OUNT DO NOT DE P I C T PURCHASE OF SHARES OF MAHAVIR SPINNING AND SINCE T HE ASSESSING OFFICER HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS PURCHASED SHARES OF MAHAVIR SPINNING OUTSIDE THE BOOKS OF ACCOUNT , I AM OF THE VIEW THAT NO ADDITION COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT. IN VIEW OF THE ABOVE, I SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF ` 45,358/ - RELATING TO BOGUS PURCHASE OF SHARES OF MAHAVIR SPINNING. 8. SINCE I HAVE DELETED THE ADDITION ON MERITS, I DO NOT FIND IT NECESSARY TO ADJUDICATE LEGAL GROUND RELATING TO VALIDITY OF REOPENING OF ASSESSMENT. M/S. MEHRAULI TRADERS PVT. LTD. 4 9. IN THE RESULT, APPEAL FILED BY THE ASS ESSEE IS TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 13 .10 .2016 SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 13 / 10 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS