SHRIMATI JYOTI D SHAH, MUMBAI V. ITO 21(1)(2), MUMBAI

ITA 1843/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84547 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 14-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 16-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PERMANAND J
• Assessee Lawyers: KARNA THAKER
• Keywords: Reopening of assessment; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Corroborative evidences; Accommodation entries
• Section: 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE : SHRI I.P.BANSAL, JM & SHRI R.C.SHARMA , A M ITA NO. 1843 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 3 - 200 4 ) SMT JYOTI D. SHAH, B - 501, MOHAN VILLA, BAJAJ ROAD, VILE PARLE (WEST), MUMBAI - 400 056 VS. ITO 21(1)(2), MUMBAI PAN/GIR NO. : A BEPS 6290 P ( AP PELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI KARNA THAKER /REVENUE BY : SHRI PERMANAND J. DATE OF HEARING : 1 4 TH OCT . 201 4 DATE OF PRONOUNCEMENT : 18 /12/ 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , DATED 8 - 12 - 2011 FOR ASSESSMENT YEAR 200 3 - 0 4 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S 147 OF THE I.T. ACT . 2. IN THE G ROUNDS OF APPEAL, ASSESSEE IS AGGRIEVED FOR REOPENING OF ASSESSMENT U/S.147 AS WELL AS FOR MERIT OF THE ADDITION MADE ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THERE WAS A SEARCH UNDERTAKEN IN T HE CASE OF M/ S MAHASAGAR SECURITIES P.LTD. AND I TS GROUP COMPANIES INCLUDING M/ S.GOLD STAR FINVEST P.LTD. ON 25.11.2009. A STATEMENT OF SHRI MUKESH CHOKSHI, DIRECTOR OF M/ S. MAHASAGAR SECURITIES P.LTD. WAS RECORDED DURING THE SEARCH WHEREIN ITA NO. 1843 /1 2 2 MUKESH CHOKSHI HAD EXPLAINED IN DETAIL THE MODUS OF 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. FURTHER ENQUIRIES BY THE INVESTIGATION WING ALSO CONFIRMED THAT MANY OF THE SUB - BROKING COMPANIES FLOATED BY SHRI MUKESH CHOKSHI ACTUALLY DID NOT CARRY OUT THE TRANSACTIONS THROUGH THE MAIN' BROKERS FOR WHOM THEY WERE CLAIMING TO BE SUB - BROKERS .AND ALL THE BILLS RAISED BY THEM WERE ILLEGAL, UNAUTHORIZE D AND AGAINST THE PROVISIONS OF THE SCRA ACT, 1956. ON THE BASIS OF THE DETAILS OBTAINED DURING THE SEARCH BY THE INVESTIGATION WING, IT WAS NOTED THAT THE ASSESSEE ALSO HAD MADE SALES AND PURCHASES OF SHARES OF M/ S B UNIYAD CHEMICALS LTD THROUGH M/ S. GOLD STAR FINVEST P.LTD WHICH HAD PROVIDED THE ACCOMMODATION ENTRIES. M/ S BUNIYAD CHEMICALS LTD AS WELL AS M/ S. GOLD STAR FINVEST P.LTD WERE FLOATED BY MUKESH CHOKSHI ONLY. SINCE IT WAS ADMITTED BY M UKESH CHOKSHI THAT HE WAS PROVIDING ACCOMMODATION ENTRIES ONL Y THROUGH ITS VARIOUS COMPANIES, ACCORDINGLY A NOTICE U/S. 148 WAS ISSUED AFTER RECORDING THE REASON S. 4. AS PER THE REASONS RECORDED, WE FOUND THAT THE AO WAS HAVING SUFFICIENT REASONS TO BELIEVE THAT THERE WAS AN ESCAPEMENT OF INCOME, ACCORDINGLY, HE W AS JUSTIFIED IN REOPENING THE ASSESSMENT U/S.147 OF THE ACT. HENCE, THE GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 5. NOW COMING TO THE MERIT OF THE ADDITION, WE FOUND THAT THE ASSESSEE HAD PHYSICALLY PURCHASED 15,000 SHARES OF BUNIYAD CHEMICALS LTD. (HEREAFTER REFERRED AS 'THE COMPANY') THROUGH M/S GOLD STAR FINVEST PVT. LTD. ON 24TH APRIL, 200 1 . (F.Y. 2001 - 02) FOR RS.11,250/ - . SUBSEQUENTLY, THE SAID COMPANY OPTED FOR DEMAT MODE OF TRADING ON THE AHMEDABAD STOCK ITA NO. 1843 /1 2 3 EXCHANGE & AS A CONSEQUENCE OF WHICH, THE ASSESSEE CONVERTED THE ENTIRE PHYSICALLY HELD 15000 SHARES INTO A DEMATERIALIZED FORM FROM 27 TH DECEMBER 2001 THROUGH IL&FS SECURITIES SERVICES LIMITED. SUBSEQUENTLY ASSESSEE S OLD THE ENTIRE 15,000 SHARES OF THE SAID COMPANY DURING 5 TH FEBRUARY 2003 TO 26 TH FEBRUARY 2003 FOR A SAL E CONSIDERATION TOTALING TO RS. 13,13,256/ - . THE ASSESSING OFFICER HAS MADE ADDITIONS OF RS.13,13,256/ - TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING THE ENTIRE SALE CONSIDERATION OF THE SHARES OF BUNIYAD CHEMICALS AS AN INCOM E FROM UNDISCLOSED SOURC E. WE FOUND THAT THE ASSESSEE HAD SUBMITTED A COPY OF THE SHARE CERTIFICATE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE REVERSE OF THE SHARE CERTIFICATE CLEARLY HIGHLIGHTED THE FACT OF 'TRANSFER OF SHARES (IN PHYSICAL FORM) I N THE NAME OF THE ASSESSEE ON 28 TH JUNE 2001 . 6. THE AO HAS NOT C ONSIDERED THE SUPPORTING EVIDENCES DURING THE COURSE OF ASSESSMENT BEFORE CONCLUDING THAT THE ASSESSEE TOO WAS ACT IVELY INVOLVED AS A BENEFICIARY BY PAYING CASH TO THE MUKESH CHOKSI GROUP. TH E LEARNED ASSESSING OFFICER HAD MERELY RELIED ON THE FACT THAT 'THE MAIN PERSON OF THE @ GROUP, SHRI MUKESH CHOKSI, HAD ADMITTED THAT ALL THE TRANSACTIONS CARRIED OUT BY HIS VARIOUS COMPANIES WERE BOGUS AND HE ONLY PROVIDES ACCOMMODATION BILLS. 7 . LEARNED AR ALSO PLACED RELIANCE IN THE CASE OF SHRI ANANT RAI B SHAH VS. ITO 21 (1)(1) , MUMBAI VIDE IT APPEAL NO. 1842 OF 2 0 12, ORDER DATED 14/12/2012 , WHEREIN IT WAS H ELD THAT SHRI MUKESH CHOKSI HAS ISSUED A GENERAL STATEMENT, HOWEVER THE STATEMENT WAS NOT PROVIDE D BY THE ASSESSEE , THEREFORE A GENERAL STATEMENT GIVEN BY MUKESH CHOKSI CANNOT BY APPLIED TO EACH AND EVERY CASE. THE ADDITIONS MADE WERE ITA NO. 1843 /1 2 4 DELETED AS THERE WAS NO DIRECT EVIDENCE AGAINST THE ASSESSEE. NEITHER THE STATEMENT OF MUKESH CHOKSI WAS PROVIDED TO T HE ASSESSEE NOR ANY OPPORTUNITY FOR CROSS EXAMINATION OF MUKESH CHOKSI WAS PROVIDED . FURTHER, RELIANCE WAS PLACED IN THE CASE OF GLOBAL STOCK BROKING {P} LTD. VS. ACIT {2008} 4 DTR 172 {MUM} IT WAS HELD THAT WHERE ORAL EVIDENCE OF ANY PARTY IS SOUGHT TO BE USED AGAINST AN ASSESSEE, IT IS NECESSARY THAT INFORMATION RELATING TO SUCH STATEMENT OR THE COPY OF DEPOSITION SHOULD BE FURNISHED TO THE ASSESSEE WITH OPPORTUNITY TO CROSS EXAMINE THE DEPONENT, IF REQUIRED BY THE ASSESSEE .IF IT IS NOT DONE, IT IS VIO LATION OF PRINCIPLE OF NATURAL JUSTICE. HENCE ORDER IS BAD IN LAW . 8. APPLYING TO THE FACTS OF INSTANT CASE TO THE PROPOSITION LAID DOWN BY THE COORDINATE BENCH, AS DISCUSSED ABOVE, WE DO NOT FIND ANY MERIT IN THE ADDITION SO MADE BY TREATING THE SALE PRO CEEDS OF SHARES AS UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE SAME. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART , IN TERMS INDICATED HEREINABOVE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 / 1 2 / 201 4 . / 1 2 / 2014 SD/ - SD/ - ( ) ( I.P.BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 1 2 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. ITA NO. 1843 /1 2 5 / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 3. / THE CIT(A), MUMBAI. 4. / C IT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//