PRADIP HIMATLAL MEHTA, MUMBAI V. ITO 13(1)(4), MUMBAI

ITA 2050/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3532 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 26-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Assessee Lawyers: ATIN MEHTA
• Section: 143(3); 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 2050/MUM/2014 (ASSESSMENT YEAR : 2005-06) PRADIP HIMATLAL MEHTA, C/O. B.C.PAREKH (CA), 413, KAILASH PLAZA, VALLABH BAUG LANE, GHATKOPAR EAST, MUMBAI 400 075 PAN: AADPM 9110G ... APPELLANT VS. THE INCOME TAX OFFICER 13(1) (4), MUMBAI. .... RESPOND ENT APPELLANT BY : SHRI ATIN MEHTA RESPONDENT BY : SHRI VISHWAS JADHAV DATE OF HEARING : 09/12/2015 DATE OF PRONOUNCEMENT : 29/02/2016 ORDER THE CAPTIONED APPEAL IS PREFERRED BY THE ASSES SEE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 01/11/ 2013 OF CIT(A)-24, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2005-06, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 29/12/2011 UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME T AX ACT, 1961( IN SHORT THE ACT). 2 ITA NO. 2050/MUM/2014 (ASSESSMENT YEAR : 2005-06) 2. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO AN ADDITION OF RS.3,14,300/- MADE BY THE INCOME TAX AUTHORITIES ON THE GROUND OF BOGUS SHORT TERM CAPIT AL GAIN. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I S AN INDIVIDUAL, WHO WAS DERIVING INCOME FROM SHARES OF PARTNERSHIP FIRM , CAPITAL GAIN AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED A R ETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ORIGINALLY ON 21/12/200 5 DECLARING AN INCOME OF RS.31,700/-. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT THAT IN THE CASE OF ONE M/S. GOLDSTAR FINVEST PVT. LTD., IT C AME TO LIGHT THAT THE AFORESAID CONCERN AND ITS GROUP ENTITIES WERE ENGAG ED IN THE BUSINESS OF FRAUDULENT BILLING ACTIVITIES AND IN THE BUSINE SS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS , SHORT TERM AND LONG TERM CAPITAL GAIN/LOSS,ETC. THE LIST OBTAINED FROM SUCH GROUP INCLUDED THE NAME OF THE ASSESSEE. ON THE STRENGTH OF STATEMENT ON OATH RECORDED OF ON E SHRI MUKESH CHOKSHI, DIRECTOR OF ONE OF THE GROUP CONCERNS OF M /S. M/S. GOLDSTAR FINVEST PVT. LTD. GROUP, THE ASSESSMENT OF THE ASSE SSEE WAS ALSO RE- OPENED ON THE GROUND THAT CERTAIN INCOME ASSESSABL E TO TAX HAD ESCAPED ASSESSMENT. IN THIS LIGHT, IT WAS NOTICED THAT IN THE ORIGINAL RETURN OF INCOME FILED, ASSESSEE HAD DECLARED SHORT TERM CAPITAL LOSS ON SALE OF SHARES OF M/S. BUNIYAD CHEMICALS LTD., WHIC H WAS ALSO A CONCERN BELONGING TO M/S. M/S. GOLDSTAR FINVEST PVT. LTD. GROUP. IN PARA-5 OF THE IMPUGNED ASSESSMENT ORDER, THE ASSESSING OFFICE R HAS NOTED THAT IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT THE SHORT TERM CAPITAL LOSS INCURRED ON ACCOUNT OF SALE OF SH ARES OF M/S. BUNIYAD 3 ITA NO. 2050/MUM/2014 (ASSESSMENT YEAR : 2005-06) CHEMICALS LTD., WAS OFFERED TO TAX. THIS ASPECT OF THE MATTER IS NOT THE SUBJECT MATTER OF CONTROVERSY BEFORE ME. 3.1 HOWEVER, THE DISPUTE BEFORE ME IS WITH RESPECT TO CHARGE MADE BY THE ASSESSING OFFICER THAT ASSESSEE HAD ALSO EFF ECTED THE SALE OF 7000 SHARES OF ONE M/S. TALENT INFOWAYS PVT. LTD.FOR A C ONSIDERATION OF RS.3,14,300/-, WHICH WAS ALSO A CONCERN BELONGING T O M/S. GOLDSTAR FINVEST PVT. LTD GROUP. THE ASSESSING OFFICER FURT HER STATED THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT INCLUDED THE STATEMENT OF SHRI MUKESH CHOKSI, WHER EIN HE HAD ACCEPTED PURCHASE AND SALE OF THE ABOVE SCRIPS OF T HE ASSESSEE. BEFORE THE ASSESSING OFFICER, THE ASSESSEE DENIED ANY PURC HASE AND SALE OF SHARES OF M/S. TALENT INFOWAYS PVT. LTD. HOWEVER, THE EXPLANATION OF THE ASSESSEE HAS BEEN REJECTED AND AN AMOUNT OF RS. 3,14,300/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 BEFORE THE CIT(APPEALS) THE ASSESSEE REPEATED H IS PERTINENT PLEA TO THE EFFECT THAT HE HAD NOT UNDERTAKEN ANY PURCHA SE AND SALE OF THE SHARES OF M/S. TALENT INFORWAYS PVT. LTD. AND THE S AME WAS ALSO EVIDENCED BY THE MATERIAL ON RECORD. WHILE DOING S O, THE CIT(APPEALS) NOTED THAT THE ADDITION OF RS.3,14,300/- IS JUSTIFI ED NOT ON THE BASIS OF REASONS GIVEN IN THE ASSESSMENT ORDER BUT ON THE BASIS OF HIS OWN EXAMINATION OF ASSESSEES BANK ACCOUNT. IN THIS MA NNER, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE ME, LD. REPRESENTATIVE FOR THE ASSESSEE H AS VEHEMENTLY POINTED OUT THAT NO PURCHASE AND SALE OF THE SHARES OF M/S. TALENT INFOWAYS PVT. LTD. HAS BEEN UNDERTAKEN BY THE ASSES SEE AND THE SAME 4 ITA NO. 2050/MUM/2014 (ASSESSMENT YEAR : 2005-06) HAS BEEN CORROBORATED BY SHRI MUKESH CHOKSI ALSO, W HILE BEING EXAMINED IN THE COURSE OF THE IMPUGNED ASSESSMENT P ROCEEDINGS BY THE ASSESSING OFFICER ON 25/11/2011, A COPY OF SUCH ST ATEMENT RECORDED UNDER SECTION 131 OF THE ACT HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 54 TO 55. 5. ON THIS ASPECT OF THE MATTER, THE LD. DEPARTMENT AL REPRESENTATIVE HAS NOT MADE ANY SPECIFIC ARGUMENT O THER THAN REITERATING THE STAND OF THE ASSESSING OFFICER, WHI CH I HAVE ADVERTED TO IN THE EARLIER PARAS. 6. QUITE CLEARLY, IN AN ANSWER TO QUESTION NO.6, DU RING THE COURSE OF THE EXAMINATION ON 25/11/2011, SHRI MUKESH CHOKSHI CONFIRMED THAT NO PURCHASE OR SALE OF SHARES OF M/S.TALENT INFOWAY S PVT. LTD. WAS UNDERTAKEN BY THE ASSESSEE. HE HAS ALSO CORROBORATE D THAT IN THE ABSENCE OF ANY TRANSACTION OF SALE AND PURCHASE OF SHARES OF M/S.TALENT INFOWAYS PVT. LTD. HAVING TAKEN PLACE, CONSEQUENTL Y NO PAYMENT WAS GIVEN OR RECEIVED FROM THE ASSESSEE ON THIS COUNT. I FIND NO JUSTIFICATION FOR THE ASSESSING OFFICER TO IMPUTE A TRANSACT ION TO THE ASSESSEE, ESPECIALLY WHEN THE FACTS CLEARLY BRING OUT THAT NO SUCH TRANSACTION WAS ENTERED INTO BY THE ASSESSEE. THE CIT(APPEALS ) HAS AFFIRMED THE ADDITION, THOUGH HE NOTICED THAT THE ADDITION IS N OT JUSTIFIED ON THE BASIS OF THE REASONS GIVEN IN THE ASSESSMENT ORDER . IN MY CONSIDERED OPINION, THE AFORESAID INFERENCE OF THE CIT(APPEALS ) OUGHT TO HAVE PREVAILED WITH HIM TO DELETE THE ADDITION, RATHER THAN SUSTAINING IT. THE REASON ADVANCED BY THE CIT(APPEALS) TO SUSTAIN THE ADDITION WHICH IS ENUMERATED IN PARA 4.3.2 OF HIS ORDER IS BASE D ON MERE SURMISES AND CONJECTURES AND DOES NOT PROVE THAT ANY SUCH T RANSACTION WAS 5 ITA NO. 2050/MUM/2014 (ASSESSMENT YEAR : 2005-06) ENTERED BY THE ASSESSEE. THEREFORE, IN VIEW OF THE FACTS AND EVIDENCE ON RECORD, THERE IS NO MATERIAL TO SUGGEST THAT ASS ESSEE HAD ENTERED INTO THE PURPORTED PURCHASE AND SALE OF THE SHARE S OF M/S. TALENT INFOWAYS PVT. LTD. AND THUS, THE IMPUGNED ADDITION IS UNSUSTAINABLE. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS SET A SIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.3, 14,300/-. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 29/02/2016 VM , SR. PS 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