ITO 4(2)(2), MUMBAI V. JAIHIND SYNTHITCS LTD, MUMBAI

ITA 1789/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3684 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 02-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Unexplained investment; Accommodation entries
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1789/MUM/2011 ( %' ( / ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER 4(2)(2) R. NO.658, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI ' / VS. JAIHIND SYNTHETICS LTD. 110, AJANTA SQUARE, L.T.ROAD, BORIWALI(W), MUMBAI - 400092 ./ ./ PAN/GIR NO. : AAACJ2475R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 25.05.2016 !' /DATE OF PRONOUNCEMENT:12.08.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 02.12.2010 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 11, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI MUKESH CHOKSHI DEPARTMENT BY: SHRI PAWAN KUMAR BEERLA ITA NO.1789/M/2011 A.Y. 2006-07 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION OF RS.25,40,779/- EVEN THOUGH THE ALLEGATI ONS AGAINST MR. MUEKESH CHOKSEY ABOUT HIS ALLEGED FRAUD WERE NOT FINALLY PROVED SINCE THE CASES WERE STILL PENDI NG. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING T HE ADDITION OF RS.25,40,779/- WITHOUT APPRECIATING THA T THE ADDITION WAS MADE ON THE BASIS OF DOCUMENTARY EVIDE NCE SHOWING THAT M/S.ULTRATECH CEMENT HAD MADE THE PAYM ENTS BY ACCOUNT PAYEE CHEQUES IN THE NAME OF THE ASSESSE E COMPANY AFTER DULY DEDUCING TAX AT SOURCE AND THE S AME STOOD DEPOSITED IN THE BANK ACCOUNT IN THE NAME OF THE ASSESSEE COMPANY AND THAT THE ALLEGED CHARGES OF FO RGERY WERE NOT PROVED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE A DDITION OF RS.10,00,000/- MADE U/S.69B OF THE ACT BY HOLDING T HAT SHRI MUKESH M. CHOKSEY HAD FRAUDULENTLY USED THE NAME OF THE ASSESSEE COMPANY FOR PROVIDING THE BOGUS CAPITAL TO M/S.SOUMYA TRADING & FINANCE PVT. LTD. IGNORING THA T THE AO HAD SUFFICIENT EVIDENCE AND MATERIAL ON RECORD T O INFER THAT THE TRANSACTION WAS AN UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE COMPANY IN M/S.SOUMYA TRADING & FINANCE PVT. LTD. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE A DDITION OF RS.20,137/- MADE ON ACCOUNT OF INTEREST INCOME FROM M/S. GOODVALUE STOCK TRADING PVT. LTD. BY HOLDING THAT T HE ASSESSEE COMPANY WAS NOT INVOLVED IN ANY OF THE TRANSACTION AND THE NAME WAS MERELY USED BY SHRI MU KESH CHOKSHI IGNORING THAT THE AO HAD SUFFICIENT MATERIA L ON RECORD TO DRAW REASONABLE INFERENCE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME ON 17.10.2006 UNDER PROVISIONAL ACKNOWLEDGMENT NO.90005400 DECLARING TOTAL LOSS TO THE TUNE OF RS. (-)16,63,620/-. ITA NO.1789/M/2011 A.Y. 2006-07 3 THE SAME WAS PROCESSED U/S143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ON 15.10.2007 ACCEPTING THE RETURN FILED. THIS RETURN WAS SUBSEQUENTLY SELECTED FOR SCRUTINY AND NOTICE U /S.143(2) OF THE DATED 19.10.2007 WAS ISSUED AND SERVED UPON THE ASS ESSEE ON 27.10.2007. THEREAFTER, THE NOTICE U/S.143(2) AND 142(1) OF THE ACT WERE ALSO ISSUED AND SERVED UPON THE ASSESSEE. THE REAFTER, ASSESSING OFFICER ASSESSED THE INCOME TO THE TUNE OF RS.38,12 ,920/- MAKING CERTAIN ADDITIONS MENTIONED THEREIN. HOWEVER, THE ASSESSEE WAS NOT SATISFIED, THEREFORE FILED THE APPEAL BEFORE THE CI T(A) WHO DELETED THE ADDITION ON ACCOUNT OF TRANSACTIONS WITH M/S. ULTRA TECH CEMENT AND M/S. SOUMYA TRADING & FINANCE PVT. LTD. AND ON ACCO UNT OF INTEREST INCOME RECEIVED M/S. GOODVALUE STOCK TRADING PVT. L TD. AGGRIEVED BY DELETING THESE ADDITIONS THE REVENUE HAS FILED T HE APPEAL BEFORE US. ISSUE NO.1 &2:- 4. ISSUE NO.1 AND 2 ARE INTERCONNECTED THEREFORE AR E BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES, THE ASSESSEE HAS CHALLENGED THE DELETING OF THE ADDITION TO THE TUNE OF RS.25,40,779/- WHICH WAS THE TRANSACTIONS OF THE ASSESSEE COMPANY WITH ULTRATECH CEMENT. BEFORE GOING FURTHER IT IS NECESSARY TO AD VERT THE FINDING OF THE CIT(A) ON RECORD:- 3.6. I HAVE CAREFULLY GONE THROUGH THE ORDER OF TH E ASSESSING OFFICER, HIS REMAND REPORTS AND REPORT OF THE ADDL. DIT ITA NO.1789/M/2011 A.Y. 2006-07 4 (INV.) UNIT-I, MUMBAI AND THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY. I FIND THAT ONE SHRI MUKESH M. CHOKSHI AND SHRI JAYTE SH SAMPAT HAD OPENED BANK ACCOUNTS IN HDFC BANK KHAR (WEST) BRANCH ILLEGALLY IN THE NAME OF THE APPELLAN T COMPANY I.E. M/S. JAIHIND SYNTHETICS LTD. THE APPE LLANT COMPANY HAD NO BUSINESS CONNECTION WITH M/S.ULTRATE CH CEMENT LTD. TO BE ABLE TO EARN COMMISSION INCOME OF RS.25,40,779/-. APPARENTLY THIS WAS AN ACCOMMODATI ON ENTRY AND GIVEN BY SHRI MUKESH M. CHOKSHI WHO IS INDULGING IN GIVING BOGUS ACCOMMODATION ENTRIES TO VARIOUS PARTIES. IN THIS STATEMENT BEFORE THE ADDL . DIT(INV.), UNIT-I, MUMBAI, SHRI MUKESH CHOKSHI HAS ADMITTED HIS WRONG DOINGS IN NO UNCERTAIN TERMS. THEREFORE, ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE, ACTION LIES AGAINST M/S.ULTRATECH CEMENT LTD. FOR OBTAINING BOGUS ACCOMMODATION ENTRY AND AGAINST SHR I MUKESH M. CHOKSHI FOR PROVIDING SUCH ENTRY AND NOT AGAINST THE APPELLANT COMPANY WHICH HAS TAKEN CORRE CTION ACTION IN THE MATTER BY FILING POLICE COMPLAINT AGA INST SHRI MUKESH M. CHOKSHI. SINCE, THE NAME OF THE APPELLANT COMPANY HAS BEENWRONGLY DRAGGED BY SHRI MUKESH M. CHOKSHI TO GIVE ENTRY TO M/S.ULTRATECH CEMENT LTD., THE ONLY REMEDY AVAILABLE WITH THE ITA NO.1789/M/2011 A.Y. 2006-07 5 APPELLANT COMPANY WAS TO FILE A POLICE COMPLAINT AG AINST SHRI MUKESH M. CHOKSHI WHICH HAS BEEN DONE BY THE APPELLANT COMPANY TO SAVE ITS REPUTATION. FURTHER, NONE OF THE DIRECTORS OF THE APPELLANT COMPANY WERE INVO LVED IN THE SAID TRANSACTIONS OF GIVING BOGUS ENTRY TO M/S.AUTRATECH CEMENT LTD. UNDER THESE CIRCUMSTANCE S, THE ADDITION MADE BY THE ASSESSING OFFICER IN THE H ANDS OF THE APPELLANT COMPANY IS DIRECTED TO BE DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 5. NO DISTINGUISHABLE FACTS HAVE BEEN PLACE ON RECO RD. SHRI MUKESH M. CHOKSHI AND SHRI JAYESH SAMPAT HAD OPENED BANK ACCOUNTS IN HDFC BANK KHAR (WEST) BRANCH ILLEGALLY IN THE NAME OF THE APPELLANT COMPANY. THE APPELLANT COMPANY HAD N O BUSINESS CONNECTION WITH M/S.ULTRATECH CEMENT LTD.. NO COMM ISSION OF RS.25,40,779/- WAS EARNED. THERE IS NO OTHER EVIDE NCE ON RECORD THAT THE SAID TRANSACTIONS ARE RELATED TO THE ASSESSEE C OMPANY. SINCE THE TRANSACTIONS WERE FAKE AND WAS NOT RELATING TO THE ASSESSEE COMPANY, THE ASSESSEE COMPANY WAS HAVING ONLY ONE OPTION I.E . TO FILE THE COMPLAINT BEFORE THE POLICE WHICH HE HAD DONE.THERF ORE IN VIEW OF THE SAID CIRCUMASTANCES THE CIT(A) HAS RIGHTLY DEAL T THE ISSUE WHICH IS NOT REQUIRED TO BE INTERFEARED WITH THIS APPELLATTE STAGE. ITA NO.1789/M/2011 A.Y. 2006-07 6 ISSUE NO.3:- 6. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DELETING OF THE ADDITION TO THE TUNE OF RS.10,00,000/- WHICH WAS TH E TRANSACTIONS OF THE ASSESSEE COMPANY WITH M/S. SOUMYA TRADING & FIN ANCE PVT. LTD.. BEFORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD:- 4.2. I HAVE GONE THROUGH THE ASSESSMENT ORDER, REM AND REPORTS AND REPORT OF THE ADDL. DIT (INV.) UNIT-I, MUMBAI A ND THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY. I FIND THAT THE TRANSACTIONS WI TH M/S. SOUMYA TRADING & FINANCE PRIVATE LIMITED IN THE NAM E OF THE APPELLANT COMPANY WAS UNAUTHORIZEDLY CARRIE D OUT BY SHRI MUKESH M. CHOKSHI. THIS WAS ADMITTED BY SH RI MUKESH M. CHOKSI BEFORE THE INVESTIGATION WING, ON 6 TH APRIL, 2010 IN HIS STATEMENT IN REPLY TO QUESTION N O.4 THAT SHRI MUKESH M. CHOKSHI HAD PROVIDED BOGUS SHARE CAPITAL OF RS.10,00,000/- TO M/S. SOUMYA TRADING & FINANCE PVT. LTD. THE ISSUE IS SIMILAR TO THE GROU ND NO.2 AS MENTIONED IN PARA 3 OF THIS APPELLATE ORDER. IN VIEW OF THE ADMISSION OF GUILT BY SHRI MUKESH M. CHOKSHI TH AT HE HAD USED THE NAME OF THE APPELLANT COMPANY FOR PROVIDING BOGUS CAPITAL TO M/S.SOUMYA TRADING & FINANCE PVT. LTD., NO ADDITION CAN BE MADE IN THE H ANDS ITA NO.1789/M/2011 A.Y. 2006-07 7 OF THE APPELLANT COMPANY. CONSEQUENTLY, THE ASSESSI NG OFFICER IS DIRECTED TO DELETED THE ADDITION MADE IN THIS REGARD. 7. NO DISTINGUISHABLE FACTS HAVE BEEN PLACE ON RECO RD. SHRI MUKESH M. CHOKSHI AND SHRI JAYESH SAMPAT HAD OPENED BANK ACCOUNTS IN HDFC BANK KHAR (WEST) BRANCH ILLEGALLY IN THE NAME OF THE APPELLANT COMPANY. THE APPELLANT COMPANY HAD N O BUSINESS CONNECTION WITH M/S.M/S. SOUMYA TRADING & FINANCE P VT. LTD... NO COMMISSION OF RS.10,00,000/- WAS EARNED. THERE IS NO OTHER EVIDENCE ON RECORD THAT THE SAID TRANSACTIONS ARE RELATED TO THE ASSESSEE COMPANY. SINCE THE TRANSACTIONS WERE FAKE AND WERE NOT RELATING TO THE ASSESSEE COMPANY THERFORE THE SAME COULD NOT BE TREATED ON ACCOUNT OF ASSESSEE COMPANY. THE ASSESSEE COMPANY W AS HAVING ONLY ONE OPTION I.E. TO FILE THE COMPLAINT BEFORE THE PO LICE WHICH HE HAD DONE. THERFORE IN VIEW OF THE SAID CIRCUMASTANCES THE CIT(A) HAS RIGHTLY DEALT THE ISSUE WHICH IS NOT REQUIRED TO BE INTERFEARED WITH THIS APPELLATTE STAGE ISSUE NO.4:- 8. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DELETING THE ADDITION TO THE TUNE OF RS.20,137/- WHICH WAS THE T RANSACTIONS OF THE ASSESSEE COMPANY WITH M/S. GOODVALUE STOCK TRADING PVT. LTD... ITA NO.1789/M/2011 A.Y. 2006-07 8 BEFORE GOING FURTHER IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD:- 5.2. I HAVE GONE THROUGH THE SUBMISSION OF THE AUT HORIZED REPRESENTATIVE ON THE ABOVE ISSUE. I FIND THAT THE ISSUE IS IDENTICAL TO THE ISSUE RAISED IN THE GROUNDS OF APP EAL NO.2 AND 3 ABOVE. THE EVIDENCES PLACED ON RECORD PROVED BEYOND OUT THAT THE APPELLANT COMPANY WAS NOT INVOL VED IN ANY OF THESE TRANSACTIONS AND ITS NAME WAS MEREL Y USED BY SHRI MUKESH M. CHOKSHI FOR HIS PERSONAL BENEFITS . FOR THE SIMILAR REASONS AS GIVEN IN THE FOREGOING P ARA NO.3 AND 4, I AM OF THE VIEW THAT NO ADDITION IS CA LLED FOR IN THE HANDS OF THE APPELLANT COMPANY IN RESPECT OF THE AFORESAID INTEREST INCOME. IN RESULT, THIS GROUND OF APPEAL IS ALLOWED. 9. NO DISTINGUISHABLE FACTS HAVE BEEN PLACE ON RECO RD. SHRI MUKESH M. CHOKSHI AND SHRI JAYESH SAMPAT HAD OPENED BANK ACCOUNTS IN HDFC BANK KHAR (WEST) BRANCH ILLEGALLY IN THE NAME OF THE APPELLANT COMPANY. THE APPELLANT COMPANY HAD N O BUSINESS CONNECTION WITH M/S.GOODVALUE STOCK TRADING PVT. LT D. NO INTEREST INCOME OF RS.20,137/- WAS EARNED. THERE IS NO OTHE R EVIDENCE ON RECORD THAT THE SAID TRANSACTIONS ARE RELATED TO TH E ASSESSEE COMPANY. SINCE THE TRANSACTIONS WERE FAKE AND WERE NOT RELAT ING TO THE ASSESSEE COMPANY, THE ASSESSEE COMPANY WAS HAVING ONLY ONE O PTION I.E. TO FILE ITA NO.1789/M/2011 A.Y. 2006-07 9 THE COMPLAINT BEFORE THE POLICE WHICH HE HAD DONE. THEREFORE THE SAME COULD NOT BE TREATED ON ACCOUNT OF ASSESSEE CO MPANY. THE ASSESSEE COMPANY WAS HAVING ONLY ONE OPTION I.E. TO FILE THE COMPLAINT BEFORE THE POLICE WHICH HE HAD DONE. THE REFORE IN VIEW OF THE SAID CIRCUMSTANCES THE CIT(A) HAS RIGHTLY DEALT THE ISSUE WHICH IS NOT REQUIRED TO BE INTERFERE WITH THIS APPELLATE ST AGE 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 12 TH AUGUST, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI