ARVIND POPATLAL SHAH, MUMBAI V. ITO 24(3)(1), MUMBAI

ITA 1706/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79208 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Income from undisclosed sources; Search and seizure; Corroborative evidences; Reassessment proceedings
• Section: 143(3); 147; 148; 132

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, SMC MUMBAI .., BEFORE SHRI I.P.BANSAL, JUDICIAL MEMBER. ITA NO.1706/MUM/2014 (A.Y. 2005-06) SHRI ARVIND POPATLAL SHAH, DHIRAJ KUNJ, FLAT NO.702, B-WING, BAJAJ ROAD, EXTENSION NR. FLY OVER, VILE PARLE (WEST), MUMBAI 400 056. PAN:AAPPS 3947R THE ITO 24(3) (1), AAYKAR BHAVAN, BKC, BANDRA, MUMBAI. ( ! / // / APPELLANT) # # # # / VS. ( $% !/ RESPONDENT) ! & ' & ' & ' & ' /APPELLANT BY : NONE $% ! & ' & ' & ' & ' /RESPONDENT BY : SHRI. B.YADAGIRI # & ()* / / / / DATE OF HEARING : 01/07/2014 +,- & ()* / DATE OF PRONOUNCEMENT : 01/07/2014 . . . . / / / / O R D E R PER I.P.BANSAL (JM) : THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-34, MUMBAI DATED 8/1/2014 FOR ASSESSM ENT YEAR 2005-06. GROUNDS OF APPEAL READ AS UNDER: 1. THE INCOME TAX OFFICER, 24(3)(1), MUMBAI (HEREIN AFTER REFERRED TO AS THE AO) ERRED IN PASSING AN ORDER U/S 143(3) AND 147 OF THE I.T. ACT FOR A.Y. 2005-06 TREATING THE APPELLANT AS ASSSESSEE IN DEFAULT. YOUR APPELLANT SUBMITS THAT THE ORDER PASSED BY ITO IS BAD IN LAW, ULTRA VIRES CONTRARY TO THE PROVISIONS OF THE ACT AND SHALL BE QUASHED. 2. THE AO ERRED IN RAISING A TAX DEMAND OF RS.28,50 5/- (INCLUDING INTEREST OF RS.13,161/-) U/S 143(3) AND 147 OF THE I.T. ACT FOR UNEXPLAINED AND FICTITIOUS INVESTMENT AND FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. 3. THE AO ERRED IN TREATING THE APPELLANT AS ASSSESSEE IN DEFAULT FOR UNEXPLAINED AND FICTITIOUS INVESTMENT AND FURNISHING INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME U/S 143(3) AND 147 OF THE I.T. ACT FOR IN VESTMENT MADE IN SCRIPT OF MARUTI INFRA AMOUNTING RS. 52325/- BUT SAME HAS BEEN DISC LOSED IN DEMAT ACCOUNT AND ITA NO.1706/MUM/2014 (A.Y. 2005-06) 2 CLOSING SHARE STOCK STATEMENT ALONG WITH BALANCE SH EET FURNISHED BY ASSSESSEE SO THERE IS NO QUESTION OF UNEXPLAINED AND FICTITIOUS INVESTMENT. THE ASSSESSEE ALSO DISCLOSED THE PROFIT EARNED ON S HARE TRANSACTION MADE BY HIM AMOUNTING RS.86947/- INCLUDING AMOUNTING RS. 52096/ - PROFIT MADE ON SPECULATION GAIN AND SAME HAS BEEN ALREADY OFFERED FOR TAXATION IN THAT YEAR. SO THERE IS NO QUESTION OF FURNISHING INACCURATE PARTICULARS OF IN COME/CONCEALMENT OF INCOME. FURTHER THERE IS NO CASE TO TAX THE SAME INCOME AGAIN BY TH E LEARNED AO. THE APPELLANT SUBMITS THAT, ON THE FACTS AND CIRCUM STANCES OF THE CASE, NO ADDITION WAS PAYABLE BY THE APPELLANT U/S 143(3) AND 147 OF THE ACT AND SAME SHALL BE DROP DOWN. 2. THIS APPEAL WAS EARLIER FIXED FOR HEARING ON 29/ 04/2014 WHEN ASSESSEE DID NOT APPEAR. THEREFORE, THE APPEAL WAS ADJOURNED TO 1/7/2014 WITH A DIRECTION TO ISSUE NOTICE THROUGH RPAD. NOTICE THROUGH RPAD WAS ISSUED FIXING THE DATE OF HEARING ON 1/7/2014. HOWEVER, ON 1/7/2014 NONE APP EARED ON BEHALF OF THE ASSESSEE AND NO APPLICATION FOR ADJOURNMENT HAS ALS O BEEN FILED. IN THESE CIRCUMSTANCES, I PROCEED TO DECIDE THE APPEAL FILED BY THE ASSESSEE ON MERIT AFTER HEARING LD. DR. 3. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 O F THE INCOME TAX ACT, 1961(THE ACT) WAS CONDUCTED IN THE CASE OF MAHASAG AR SECURITIES PVT. LTD. ON 25/4/2009 ON THE BASIS OF INFORMATION RECEIVED IN F IU ALERT FROM NEW DELHI REGARDING SUSPICION OF TRANSACTIONS TAKING PLACE IN BANK ACCOUNTS OF THIS COMPANY AND ITS RELATED COMPANIES. DIRECTORS OF THESE COMP ANIES WERE ONE MR. MUKESH M. CHOKSI & JAYESH K. SAMPAT. DURING THE COURSE OF S EARCH IT WAS FOUND THAT THIS CONCERN AND ITS RELATED GROUP OF 34 COMPANIES (THE PROMINENT ONES BEING M/S. ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD., M/S . MIHIR AGENCIES PVT. LTD., M/S. GOLDSTAR FINVEST P. LTD. ETC. ALL RUN BY MUKESH CHOKSI) WERE ENGAGED IN FRAUDULENT BILLING AND IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT AND LOSS BUT COMMODITY TRADING. THE ASSESSEE WAS FOUND TO BE ONE OF THE BENEFICIARIES OF BOGUS ENTRY IN CAPITAL GAIN AND HAS MADE TRANSACTIO N WITH M/S. MAHASAGAR SECURITIES P. LTD.. BASED ON SUCH INFORMATION RECE IVED FROM DDIT(INV), UNIT -14, MUMBAI, THE ASSESSEES CASE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 23/3/2011 AND AN ADDITION OF RS.52,325/- WAS MADE IN RESPECT OF M/S. ALLIANCE INTERMEDIARIES & NET WORK P. LTD. AS PER F OLLOWING OBSERVATIONS IN THE ASSESSMENT ORDER. ITA NO.1706/MUM/2014 (A.Y. 2005-06) 3 10. THE ASSESSEE ATTENDED ON 18/11/2011 AND AGREED THAT HE HAS ENTERED IN INTRADAY TRANSACTIONS IN THE SCRIPS OF ORCHID CHEMI CALS & CMC LTD. THROUGH ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. AND HAVE EARNED SPECULATION PROFIT OF RS.52,096/-, WHICH IS SHOWN BY HIM IN COMPUTATION OF INCOME AS S HARE PROFIT OF RS.86,947/- & RS.52,096/- IS INCLUSIVE OF THE SAME. THE ASSESSEE ALSO AGREED THAT SHARES OF MARUTI INFRA RS.52,325/- ARE ALSO PURCHASED THROUGH ALLIAN CE INTERMEDIARIES & NETWORK P. LTD., WHICH ARE LYING UNDER CLOSING STOCK IN BALANC E SHEET. 11. AS ALREADY DISCUSSED ABOVE AND AGREED BY THE AS SESSEE RS.52,325/- SHARES OF MARUTI INFRA PURCHASED THROUGH ALLIANCE INTERMEDIAR IES & NETWORK P. LTD., IS ADDED BACK TO TOTAL INCOME OF THE ASSESSEE BEING UNEXPLAI NED & FICTITIOUS INVESTMENTS AND BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOU RCES. PENALTY PROCEEDINGS U/S. 274 R.W. SECTION 271(1)(C) OF THE ACT, IS INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT THEREO F. 12. IN VIEW OF THE ABOVE AND AS AGREED BY ASSESSEE, IT IS CRYSTAL CLEAR THAT, THE ASSESSEE HAS TAKEN ADJUSTMENT ENTRY OF PURCHASE OF MARUTI INFRA SHARES THROUGH ALLIANCE INTERMEDIARIES & NETWORK P. LTD., DURING T HE YEAR AND HAS CLAIMED LONG TERM CAPITAL GAINS IN SUBSEQUENT YEAR TO ENJOY THE EXEMP T INCOME. HENCE, THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07 IS REOPENED WITH PRIOR NECESSARY APPROVAL, AS AGREED BY THE ASSESSEE TO TAX THE SAID FAKE LONG TERM CAPITAL GAIN UNDER THE HEAD INCOME FROM UNDISCLOSED SOURCES, IN THE YEAR IN WHICH IT HAD BE EN GENERATED AND ENJOYED. 13. UPON TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY ASSESSEE, THE TOTAL INCOME OF THE ASSESSEE CALCULATED AS UNDER : TOTAL INCOME RS.2,82,884/- ADD: ADDITION AS PER PARA-11 RS. 52,325/- TOTAL INCOME RS.3,35,209/- ASSESSED U/S. 148 OF THE I.T. ACT, 1961. GIVE CRED IT FOR PREPAID TAXES AFTER DUE VERIFICATION OF RECORDS. ITNS 150 FORMING PART OF T HE ASSESSMENT ORDER IS ISSUED. ISSUE NOTICE U/S.271 R.W.S. 271(1)(C) OF THE ACT FOR FURN ISHING INACCURATE PARTICULAR OF INCOME. CHARGE INTEREST U/S. 234A/ 234B/ 234C AS PR LAW. IS SUE D.N. AND CHALLAN/R.O. ACCORDINGLY. 4, BEFORE LD. CIT(A) THE VALIDITY OF REASSESSMENT P ROCEEDINGS AS WELL AS ADDITION WAS CHALLENGED. LD. CIT(A) HAS UPHELD THE VALIDITY OF REASSESSMENT PROCEEDINGS ON THE BASIS OF DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF RAJAT EXPORT IMPORT INDIA PVT. LTD. VS. ITO 341 ITR 135(DEL). LD. CIT (A) HAS ALSO DISMISSED THE GROUNDS REGARDING ADDITION OF RS.52,325/- WITH THE FOLLOWIN G OBSERVATIONS: 3.3 I HAVE CAREFULLY GONE THROUGH THE ABOVE SUBMIS SIONS OF THE APPELLANT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF THE APPELLA NT HAS AGREED THAT THE SHARES OF MARUTI INFRA RS.52,325/- WERE PURCHASED THROUGH AL LIANCE INTERMEDIARIES & NET WORK P. LTD. WHICH WERE LYING UNDER CLOSING STOCK IN BAL ANCE SHEET. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS NOT PRODUC ED ANY EVIDENCE TO SUBSTANTIATE THE CLAIM. THE TRANSACTION HAS TO BE PROVED WITH SUPPOR TING EVIDENCES. SINCE THE APPELLANT HIMSELF HAS AGREED THAT THE SHARES OF MARUTI INFRA RS.52,325/- WERE PURCHASED ITA NO.1706/MUM/2014 (A.Y. 2005-06) 4 THROUGH ALLIANCE INTERMEDIARIES & NET WORK P. LTD. AND IN THE ABSENCE OF ANY CONCRETE EVIDENCE TO PROVE THE ALLEGED SALE OF SHARES, THE A DDITION MADE BY ASSESSING OFFICER IS HEREBY CONFIRMED. THE GROUND OF APPEAL IS ALSO DISM ISSED. 5. LD. DR SUBMITTED THAT LD. CIT(A) HAS PASSED A R EASONED ORDER UPHOLDING THE ADDITION AS WELL AS VALIDITY OF REASSESSMENT PROCE EDINGS. HE SUBMITTED THAT ASSESSEE COULD NOT SUBSTANTIATE THE INVESTMENT OF RS.52,325/- IN THE SHARES OF MARUTI INFRA AND THUS, THE ADDITION WAS RIGHTLY UPHELD BY LD. CIT(A). 6. I HAVE HEARD LD. DR AND ALSO GONE THROUGH THE OR DERS PASSED AO AND LD. CIT(A). SO FAR AS IT RELATES TO REOPENING OF THE A SSESSMENT, THE SAME WAS MADE ON THE BASIS OF INFORMATION RECEIVED BY THE AO OF THE ASSESSEE FROM THE DDIT(INV) AND IT WAS A SPECIFIC INFORMATION. LD. CIT(A) HAS RIGHTLY RELIED UPON THE DECISION IN THE CASE OF RAJAT EXPORT & IMPORT INDIA PVT. LTD. (SUPR A), WHEREIN REASSESSMENT PROCEEDINGS IN SIMILAR CIRCUMSTANCES WERE UPHELD. 7. SO FAR AS IT RELATES TO ADDITION OF RS.52,325/-, IT HAS BEEN FOUND BY LD. CIT(A) THAT TO THAT EXTENT ASSESSEE COULD NOT PROVE THE IN VESTMENT AND IN THE ABSENCE OF SUPPORTING EVIDENCES THE ADDITION WAS LIABLE TO BE UPHELD. BEFORE ME ALSO NO EVIDENCE HAS BEEN PRODUCED EITHER IN THE SHAPE OF P APER BOOK OR WRITTEN SUBMISSIONS. THEREFORE, THERE IS NO DOCUMENTS ON R ECORD TO CONTROVERT THE FINDINGS RECORDED BY AO AND LD. CIT(A). IN THIS VIEW OF TH E SITUATION I DECLINE TO INTERFERE IN THE FINDINGS RECORDED BY LD. CIT(A). 8. IN VIEW OF ABOVE DISCUSSION, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST JULY, 2014. . & +,- /#0 01/07/2014 , & 6 SD/ - (I.P.BANSAL) / JUDICIAL MEMBER MUMBAI; /# DATED : 1 ST JULY 2014. VM. ITA NO.1706/MUM/2014 (A.Y. 2005-06) 5 . & $(7 87-( . & $(7 87-( . & $(7 87-( . & $(7 87-(/ COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. $% ! / THE RESPONDENT. 3. 9() / THE CIT, MUMBAI. 4. 9 / CIT(A)-13, MUMBAI 5. 7<6 $(# , , / DR, ITAT, MUMBAI 6. 6= > / GUARD FILE. .# .# .# .# / BY ORDER, %7( $( //TRUE COPY// ? ?? ?/ // /@ A @ A @ A @ A (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI