ANANTRAI B SHAH, MUMBAI V. ITO 21(1)(1), MUMBAI

ITA 1842/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9115 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-12-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S R SHAH
• Keywords: Bogus purchase; Unexplained cash credit; Gift; Search and seizure; Share purchase agreement; Opportunity of being heard; Additional evidence; Accommodation entries
• Section: 143(3); 148; 132

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 1842 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 200 3 - 20 0 4 ) SHRI ANANTRAI B. SHAH , B - 501, MOHAN VILLA, BAJAJ RD., VILLE PARLE (WEST) , MUMBAI - 56 VS. ITO 2 1( 1 )( 1 ) , MUMBAI PAN/GIR NO. : A AJPS 9683 E ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. S.R .SHAH /REVENUE BY : MR. RAKESH RANJAN DATE OF HEARING : 11 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 14 TH DEC. ,2012 O R D E R THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 8 - 12 - 2011 OF LEANED CIT(A) - 32 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 3 - 0 4 . 2 . THE GROUND NO. 1 IS AGAINST CONFIRMING THE REOPENING OF THE ASSESSMENT. GROUND NO. 2 IS AGAINST CONFIRMING THE ADDITION OF RS. 1,74,318/ - AND GROUND NO. 3 IS AGAINST CONFIRMING THE ADDITION MADE ON ACCOUNT OF GIFT OF RS. 1,25,000/ - AS UNEXPLAINED CREDIT. 3 . ON INFORMATION FROM DDIT (INV) UNIT - 1(V), MUMBAI , A SEARCH AND SEIZURE WAS UNDER TAKEN UNDER SECTION 132 IN THE CASE OF M/S MAHASAGAR SEC URITIES PVT. LIMITED AND ITS GROUP COMPANIES INCLUDING GOLD STAR FINVEST PVT. LIMITED. THE STATEMENT OF SHRI MUKESH CHOKSHI , ITA NO. 1842 /20 1 2 2 DIRECTOR OF M/S MAHASAGAR SECURITIES PVT. LIMITED WAS RECORDED DURING THE SEARCH, WHEREIN MR. MUKESH CHOKSHI HAD EXPLAINED IN DETA IL THAT THE MODUS OPERATION OF THE ACCOMMODATION ENTRIES RACKET BEING RUN BY HIM BY FLOATING SOME 34 COMPANIES AND ADMITTED TO BE IN BUSINESS OF PROVIDING THE BOGUS ACCOMMODATION ENTRIES. ON THE BASIS OF THE DETAILS OBTAINED DURING THE SEARCH B Y THE INVEST IGATION WING, IT WAS NOTED THAT THE ASSESSEE ALSO HAD MADE SALES AND PURCHASES OF SHARES OF M/S BUNIYAD CHEMICALS LIMITED THROUGH M/S GOLD STAR FINVEST PRIVATE LIMITED, WHICH HAD PROVIDED THE ACCOMMODATION ENTRIES. THESE COMPANIES WERE FLOUTED BY MR. MUKES H CHOKSHI ONLY. SINCE THE ASSESSEE HAS PURCHASED 6000 SHARES OF BUNIYAD CHEMICALS LIMITED ON 10 - 5 - 2001 AND ON 14 - 5 - 2001 THROUGH M/S GOLDSTAR FINVEST PVT. LTD., THEREFORE, NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE TO VERIFY THE GENUINENESS OF THE TRANSACTION. THEREAFTER ASSESSMENT UNDER SECTION 143(3) /148 WAS COMPLETED BY WHICH AN ADDITION OF RS. 1,76,037/ - WAS MADE ON ACCOUNT OF ALLEGED SALE OF SHARES OF M/S BUNIYAD CHEMICALS LIMITED AS THEY WERE TREATED AS ACCOMMODATION ENTRY. THE ADDITION OF RS. 1 ,25,000/ - WAS ALSO MADE WHILE COMPUTING THE ASSESSMENT. THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT WERE ALSO CHALLENGED BEFORE THE CIT(A) . DETAIL SUBMISSIONS FILED BEFORE THE CIT(A) . RELIANCE WAS PLACED ON VARIOUS CASE LAWS. THE CIT(A) HA S DISCUSSED THE ISSUE AT GREAT LENGTH AND AFTER CONSIDERING THE CASE LAWS AND THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF JHAVERI STOCK BROKERS (P) LTD, 291 ITR 500 (SC) , IT IS HELD ITA NO. 1842 /20 1 2 3 THAT REOPENING OF THE ASSESSMENT WAS VALID. THE DECISION OF T HE TRIBUNAL IN RESPECT TO ADDITION ON MERIT WERE ALSO CONSIDERED AND THEY WERE FOUND DISTINGUISHABLE. ACCORDINGLY , THE ADDITION MADE ON MERIT ON ACCOUNT OF BOGUS ENTRY UNDER THE GARB OF PURCHASE AND SALE OF SHARES WERE ALSO CONFIRMED. 4 . THE AO HAS ALSO M ADE ANOTHER ADDITION OF RS. 1,25,000/ - ON ACCOUNT OF GIFT RECEIPT AS THE ASSESSEE COULD NOT LEAD THE EVIDENCE FOR PROVING THE GIFT AS GENUINE. THEREFORE, THE ADDITION WAS MADE BY THE AO. LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE AO. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . THE CONTENTION RAISED BEFORE THE AUTHORITIES BELOW, ARE REITERATED HERE BEFORE THE TRIBUNAL . IT WAS SUBMITTED THAT THE SHARE OF BUNIYAD CHEMICALS LIMITED WERE PURCHASED THROUGH M/S GOLD STAR AND THE PAYMENT HAS BE EN MADE THROUGH PROPER BANKING CHANNEL. CERTIFICATE OF THE SHARE BROKER WAS RECEIVED. COPY OF THE SAME IS PLACED AT PAGE 10 TO 11 OF THE PAPER BOOK . THE TRANSACTIONS IN RESPECT TO PURCHASE OF SHARE WERE CREDITED TO THE DEMAT ACC OUNT OF THE ASSESSEE. THE S HARE CERTIFICATES WERE ALSO RECEIVED. COPY OF THE SAME IS PLACED IN THE PAPER BOOK AS EXHIBIT - 5. THE CONFIRMATION FROM BUNIYAD CHEMICALS LIMITED WAS ALSO PLACED IN THE PAPER BOOK AS EXHIBIT - 6. COPY OF THE TRADING VOLUME OF SHARES FROM AHMEDABAD SHARE TRAD ING WAS ALSO FILED. LATER ON THESE SHARES WERE SOLD IN THE OPEN MARKET AND THEY WERE TRANSFERRED FROM DEMAT ACCOUNT. IT WAS EXPLAINED THAT IN CASE OF MR. ITA NO. 1842 /20 1 2 4 KATARIA KETAN ISHWARLAL VS.ITO, ON SIMILAR FACTS, AN ADDITION CONFIRMED BY THE CIT(A) HAS BEEN DELETE D BY THE TRIBUNAL WHILE DECI DING ITA NO.4304/M/2007, VIDE ORDER DATED 30 - 4 - 2010 . COPY OF WHICH IS PLACED IN THE PAPER BOOK AS EXHIBIT - 8. THEREFORE, IT WAS THEREFORE, SUBMITTED THAT THERE IS NO EVIDENCE AGAINST THE ASSESSEE IN DELETING THAT THESE TRANSACTIO NS WERE NOT GENUINE. SHRI MUKESH CHOKSHI HAS ISSUED A GENERAL STATEMENT, HOWEVER, THE STATEMENT WAS NOT PROVIDED TO THE ASSESSEE, THEREFORE, A GENERAL STATEMENT GIVEN BY THE MUKESH CHOKSHI CANNOT BE APPLIED IN EACH AND EVERY CASE. ACCORDINGLY, IT WAS STATE D THAT REOPENING AS WELL AS ADDITION MADE ON MERIT WAS NOT JUSTIFIED. 6 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF THE LEARNED CIT(A) . 7 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSE SSEE HAS DISCHARGED HIS ONUS BY FILING COMPLETE DETAILS IE. PURCHASE OF SHARES, SHARE CERTIFICATE, DEMAT ACCOUNT, CONFIRMATION FROM BUNIYAD CHEMICALS LIMITED OF WHOSE SHARES WERE PURCHASED. C ONSIDERATION WAS PAID THROUGH ACCOUNT PAYEE CHEQUE, THEREFORE, T HERE IS NO MATERIAL AGAINST THE ASSESSEE FROM WHICH IT CAN BE SAID THAT THE TRANSACTION ENTERED BY THE ASSESSEE WAS NOT GENUINE. IT IS FURTHER NOTICED THAT IN CASE OF KATARIA KETAN ISHWARLAL (SUPRA) , THE ADDITIONS WERE MADE ON THE BASIS OF STATEMENT OF SHR I MUKESH CHOKSHI. THE TRIBUNAL BY NOTING THAT MR. CHOKSHI HAS ITA NO. 1842 /20 1 2 5 ISSUED A GENERAL STATEMENT AND IT CANNOT BE APPLIED IN EACH AND EVE RY CASE, THERE WAS NO DIRECT EVIDENCE AGAINST THAT ASSESSEE. ACCORDINGLY, THE AMOUNT OF ADDITION MADE IN THAT CASE WAS DELETED BY THE TRIBUNAL. HERE FACTS ARE SIMILAR. NEITHER THE STATEMENT OF MUKESH CHOKSH I WAS PROVIDED TO THE ASSESSEE NOR THERE WAS ANY CROSS EXAMINATION OF MUKESH CHOKSHI , WHEREAS CONTRARY TO THAT THE ASSESSEE HAS FILED ALL THE DETAILS REQUIRED FOR PROVIDING FOR PURCHASE OF SHARES WERE GENUINE. IT IS NOT A CASE OF THE DEPARTMENT, WHATEVER THE CONSIDERATION WAS PAID BY THE ASSESSEE THROUGH CHEQUE FOR PURCHASING OF SHARES HAVE COME BACK TO THE ASSESSEE UNDER THE GARB OF BOGUS PURCHASES AS THERE IS NO EVIDENCE AGAINS T THE ASSESSEE. KEEPING IN MIND ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THE ADDITION MADE AND SUSTAINED ON ACCOUNT OF PURCHASE OF SHARES ONLY ON THE BASIS OF STATEMENT OF MUKESH CHOKSHI, WAS NOT JUSTIFIED. THEREFORE, THE SAME IS DELETED. 8 . SINCE I HAVE DELETED THE ADDITION ON MERIT, THEREFORE, I AM NOT INCLINED TO DISPOSE OF THE LEGAL GROUND AGAINST REOPENING OF THE ASSESSMENT AT THIS STAGE. 9 . THE REMAINING ISSUE IS AGAINST CONFIRMING THE ADDITION OF RS. 1,25,000/ - . 10 . LEARNED COUNS EL OF THE ASSESSEE HAS FILED AN APPLICATION OF ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL ) RULES , 1963 . THE COUNSEL OF THE ASSESSEE STATED THAT THESE EVIDENCES COULD NOT BE FILED EARLIER AND IT GOES TO THE ITA NO. 1842 /20 1 2 6 R OOT OF THE CASE, THEREFORE, THE SAME SHOULD BE ADMITTED AND THE MATTER CAN BE SENT BACK TO THE FILE OF THE AO TO PASS FRESH ORDER AFTER CONSIDERING THESE EVIDENCES. 11 . ON THE OTHER HAND, LEARNED DR STATED THAT THIS ISSUE CAN BE DECIDED ON MERIT. 12 . A FTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, I ADMIT THE ADDITIONAL EVIDENCE AS THEY GO TO THE ROOT OF THE CASE. THE ADDITIONA L EVIDENCES ARE IN SHAPE OF GIFT G IVEN TO THE ASSESSEE BY ONE MS FAREEDA MANASSWALA. COPY OF HER PASSPORT AND CONFIRMATION LETTER ARE FILED AS ADDITIONAL EVIDENCES. THEY WERE NOT FILED BEFORE THE AO OR BEFORE THE CIT(A) . THEREFORE, TO MEET THE END OF JUSTICE, I SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THESE EVIDENCES AND THEN PASS A FRESH ORDER AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I ORDER ACCORDINGLY. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND PART FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF DEC . 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 14 / 1 2 / 2012 . /PKM , PS ITA NO. 1842 /20 1 2 7 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2 . / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI