ULKA VIJAY SALVI, MUMBAI V. ITO 20(3)(1), MUMBAI

ITA 2069/MUM/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2163 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNI KUMAR AGA RWAL
• Keywords: Income from undisclosed sources; Accommodation entries
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) ULKA VIJAY SALVI, 16/5, MAHANT KRUPA, MANIESH NAGAR, 4 BUNGLOW, ANDHERI (W), MUMBAI 400 058 PAN: AAQPS 1152B ... APPELLANT VS. THE ITO 20(3)(1), MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI NISHIT GANDHI RESPONDENT BY : SHRI SUNI KUMAR AGA RWAL DATE OF HEARING : 21/10/2015 DATE OF PRONOUNCEMENT : 30/11/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE ASSES SEE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 08/01/ 2015 OF CIT(A)-37, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2005-06, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 30/12/2011 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 2. IN THIS APPEAL THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE CIT(A) IN UPHOLDING THE STAND OF THE ASSESS ING OFFICER THAT THE 2 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) ENTIRE CONSIDERATION ON SALE OF SHARES OF RS.3,94,1 35/- WAS ASSESSABLE AS INCOME FROM UNDISCLOSED SOURCES. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS AN INDIVIDUAL, WHO FILED HER RETURN OF INCOME WHICH, INTER-ALIA, I NCLUDED LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN ON SALE AN D PURCHASE OF SHARES AND SECURITIES. IN AN ASSESSMENT FINALIZED UNDER S ECTION 143(3) R.W.S. 147 DATED 30/12/2014, THE ASSESSING OFFICER ACCEPTE D THE LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE, EXCEPT THE LONG TERM CAPITAL GAIN DECLARE D ON THE SALE OF SHARES OF M/S. BUNIYAD CHEMICALS, AMOUNTING TO RS.3 ,49,720/-. 3.1 THE APPELLANT HAD CLAIMED PURCHASE OF 4400 EQUI TY SHARES OF M/S. BUNIYAD CHEMICALS ON 15/04/2003 FOR A PRICE O F RS.44,029/- AND THE SAME WAS CLAIMED TO HAVE BEEN SOLD ON 24/01/200 5 FOR A CONSIDERATION OF RS.3,93,749/-, THEREBY RESULTING I N A LONG TERM CAPITAL GAIN OF RS.3,49,720/-. THE ASSESSING OFFICER NOTED IN THE ASSESSMENT ORDER THAT SUCH SHARE TRANSACTION WAS UNDERTAKEN TH ROUGH AN INTERMEDIARY M/S. ALLIANCE INTERMEDIARIES & NETWOR K PVT. LTD., WHICH WAS A CONCERN CONTROLLED BY ONE MR. MUKESH CHOKSI. IT IS NOTED BY THE ASSESSING OFFICER THAT EXTENSIVE ENQUIRIES WERE CA RRIED OUT BY THE INVESTIGATION WING OF THE DEPARTMENT IN THE CASE OF MR.MUKESH CHOKSI, WHEREIN THE SAID PERSON HAD ADMITTED THE MODUS OPER ANDI OF ISSUING BOGUS BILLS FOR PROFIT ADJUSTMENT ENTRIES TO VARIOU S PARTIES AGAINST RECEIPT OF CASH OF EQUIVALENT AMOUNT. AS PER THE A SSESSING OFFICER THE LIST OF BENEFICIARIES OF SUCH MODUS OPERANDI BEING CARRIED OUT BY MR. MUKESH CHOKSI INCLUDED THE NAME OF THE ASSESSEE ALS O. FOR THE SAID REASON ASSESSING OFFICER CONCLUDED THAT THE SALE AN D PURCHASE OF SHARES 3 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) OF M/S. BUNIYAD CHEMICALS LTD., UNDERTAKEN BY THE A SSESSEE THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WA S A BOGUS TRANSACTION AND THAT THE SAID TRANSACTION WAS AN O FF-MARKET TRANSACTION. THE ASSESSING OFFICER ALSO INFERRED THAT ASSESSEE WOULD HAVE PAID EQUIVALENT AMOUNT OF CASH PLUS COMMISSION TO ROUTE HER UNACCOUNTED MONEY AS LONG TERM CAPITAL GAINS. ACCO RDINGLY, THE ENTIRE AMOUNT OF SALE CONSIDERATION OF THE SHARES PLUS CE RTAIN AMOUNT OF COMMISSION TOTALLING TO RS.3,94,135/- WAS ADDED AS INCOME FROM UNDISCLOSED SOURCES. THE SAID ADDITION HAS ALSO BE EN SUSTAINED BY THE CIT(A) AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. IN THE ABOVE BACKGROUND, THE FIRST AND FOREMOST PLEA RAISED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE IS THAT IN SIMILAR CIRCUMSTANCES, THE MUMBAI BENCH OF THE TRIBUNAL HAS DELETED THE ADDITIONS MADE BY THE DEPARTMENT BY SOLELY RELYING ON THE STATEMENT OF MR. MUKESH CHOKSI. IN THIS CONTEXT, THE FOLLOWING DECISIONS H AVE BEEN RELIED UPON:- (I) ACIT VS. RAVINDRA KUMAR TOSHNIWAL,ITA NO.1356/ MUM/2010, ORDER DATED 13/03/2013. (II) SMT. HAMIDA J.RATTORSEY VS. DCIT, ITA NO.5069/ MUM/2009, ORDER DATED 01/08/2012 (III) SMT. ANANYA SINGH VS. ACIT, ITA NO.6493/M/201 4, ORDER DATED 11/03/2015. (IV) SMT. REKHA DINESH SHAH VS. ITO, ITA NO.7392/M UM/2014 DATED 08/10/2015 4 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) 4.1 APART, THEREFROM, THE LD. REPRESENTATIVE CANVA SSED THAT ASSESSEE HAD PURCHASED THE SHARES IN THE PRECEDING ASSESSMENT YEAR ON 15/04/2003 IN PHYSICAL FORM, WHEREAS THE SAME WERE DEMATERIALIZED AND SUBSEQUENTLY SOLD IN JANUARY 2005 CORRESPONDING TO THE YEAR UNDER CONSIDERATION. IT WAS POINTED OUT THAT SECURITIES TRANSACTION TAX WAS DULY PAID AND REFLECTED IN THE SALE BILLS ISSUED BY M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. AND THAT THE TR ANSACTION WAS DULY SUPPORTED BY THE BILLS, STAMPED RECEIPT IN RESPECT OF PURCHASE OF SHARES AS ALSO THE DETAILS OF D-MAT ACCOUNT HELD WITH HDFC BANK. REFERRING TO THE INVESTIGATION CARRIED OUT WITH MR. MUKESH CHOKS I, THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN T HE CASE OF SMT. HAMIDA J.RATTORSEY (SUPRA), THE TRIBUNAL HAS CATEGO RICALLY NOTED THAT THE STATEMENT TENDERED BY MR. MUKESH CHOKSI WAS NOT A RELIABLE EVIDENCE TO TREAT THE SHARE TRANSACTIONS AS BOGUS. THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE SUB MISSIONS BEFORE THE CIT(A), WHEREIN RELIANCE WAS PLACED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MAYUR M. SHAH VS. IT O IN ITA NO.2390/MUM/2013, WHEREBY IN SIMILAR CIRCUMSTANCES THE STATEMENT OF MR. MUKESH CHOKSI WAS FOUND NOT RELIABLE FOR THE PURPOSES OF TREATING THE TRANSACTION OF PURCHASE AND SALE OF SH ARES AS BOGUS. LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT THE CIT(A) ERRED IN IGNORING THE SUBMISSIONS PUT-FORTH BY THE ASSESSEE AND INSTEAD RELYING ON CERTAIN DECISIONS OF THE TRIBUNAL, WHIC H HAVE BEEN RENDERED IN DIFFERENT CIRCUMSTANCES. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE REITERATED THE REASONING TAKEN BY THE ASSESSING OFFICER IN SU PPORT OF THE CASE OF 5 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) THE REVENUE, WHICH ARE NOT BEING REPEATED SINCE I H AVE ALREADY NOTED THE SAME IN PARA-3.1 ABOVE. 6. HAVING CONSIDERED THE RIVAL STANDS, I FIND THAT THE ENTIRE CASE OF THE REVENUE RESTS ON A STATEMENT PURPORTED TO HAVE BEEN TENDERED BY ONE MR. MUKESH CHOKSI TO THE INVESTIGATION WING OF THE DEPARTMENT. ON THE STRENGTH OF SUCH STATEMENT THE ASSESSING OFF ICER CANVASSED THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE ARE THROUGH A CONCERN CONTROLLED BY MR. MUKESH CHOKSI, WHO HAS ADMITTED THAT HE WAS CARRYING OUT BOGUS CAPITAL GAIN/SPECULATIVE PROFIT/ BOGUS CAPITAL LOSS ACCOMMODATION ENTRIES. IN THIS CONTEXT, THE ASSESS ING OFFICER ALSO REFERRED TO THE FACT THAT THE MATERIAL OBTAINED FRO M MR.MUKESH CHOKSI CONTAINS REFERENCE OF M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., THROUGH WHOM THE ASSESSEE HAD TRANSACTED IN THE SHA RES OF M/S. BUNIYAD CHEMICALS LTD. THEREFORE, THE ASSESSING OF FICER CAME TO CONCLUDE THAT THE ENTIRE TRANSACTION I.E. PURCHASE AND SALE OF SHARES OF M/S. BUNIYAD CHEMICALS WAS PART OF AN ACCOMMODATIO N BUSINESS CARRIED OUT BY MR. MUKESH CHOKSI AND THAT THE ASSES SEE ROUTED HER UNACCOUNTED MONEY THROUGH THE GUISE OF CAPITAL GAI NS. 6.1 THE AFORESAID CONCLUSION OF THE ASSESSING OFFIC ER IS ENTIRELY BASED ON THE RESULT OF THE INVESTIGATIONS CARRIED OUT IN THE CASE OF MR. MUKESH CHOKSI. SIMILAR SITUATION CAME UP BEFORE THE TRIBU NAL IN THE CASE OF SHRI RAVINDRA KUMAR TOSHNIWAL VIDE ITA NO.5302/MUM/2008 FOR ASSESSMENT YEAR 2005-06, WHEREIN ALSO THE SALE AND PURCHASE OF SHARES UNDERTAKEN IN M/S. BUNIYAD CHEMICALS WAS HELD TO BE A BOGUS TR ANSACTION. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL DA TED 24/02/2010(SUPRA) REVEALS THAT THE ARGUMENTS SET UP BY THE ASSESSING 6 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) OFFICER WERE SIMILAR TO THOSE WHICH ARE BEFORE ME. THE TRIBUNAL CONSIDERED THE MATERIAL SOUGHT TO BE RELIED UPON BY THE ASSESSING OFFICER IN THE PRESENT CASE. FIRSTLY, THE TRIBUNAL OBSERVED THAT MERELY BECAUSE A TRANSACTION WAS NOT UNDERTAKEN ON THE F LOOR OF STOCK EXCHANGE IS NO GROUND TO DOUBT ITS VERACITY. IN T HE PRESENT CASE TOO EMPHASIS HAS BEEN ON THE FACT THAT THE IMPUGNED TRA NSACTION WAS AN OFF- MARKET TRANSACTION. HAVING REGARD TO THE PREC EDENT IN THE CASE OF THE ORDER OF THE TRIBUNAL DATED 24/10/2010 IN THE C ASE OF RAVINDRA KUMAR TOSHNIWAL (SUPRA), I FIND NO REASON TO UPHOL D THE STAND OF THE REVENUE. 6.2 SECONDLY, IN THE CASE OF SHRI RAVINDRA KUMAR TO SHNIWAL(SUPRA), FOR ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 13/03/ 2013, THE TRIBUNAL CONSIDERED THE SALE AND PURCHASE OF SHARES OF M/S. BUNIYAD CHEMICALS WHICH IS ALSO THE CASE BEFORE ME, WHEREIN ALSO THE TRIBUNAL DIFFERED WITH THE ASSESSING OFFICER AND INSTEAD UPHELD THE S TAND OF THE ASSESSEE REGARDING THE NATURE OF GAIN ON SALE AND PURCHASE OF SHARES. 6.3 SIMILARLY, IN THE CASE OF SMT. HAMIDA J.RATTOR SEY(SUPRA) ALSO, THE TRIBUNAL FOUND NO REASON TO DOUBT THE SALE AND PURC HASE OF SHARES UNDERTAKEN BY THE ASSESSEE MERELY ON ACCOUNT OF ST ATEMENT MR. MUKESH CHOKSI, WHICH IS ALSO BEING RELIED UPON BY T HE REVENUE BEFORE ME. IN VIEW OF THE AFORESAID PRECEDENT, WHICH HAS DIRECTLY CONSIDERED THE EVIDENCE BEING RELIED UPON BY THE REVENUE BEFO RE ME I FIND NO REASON TO UPHOLD THE RELIABILITY OF SUCH MATERIAL. THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. ANANYA SINGH (SUPRA) IS ALSO TO THE SAME EFFECT AND DEALS WITH THE STATEMENT OF MR. MUKESH C HOKSI. 7 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) 6.4 CONSIDERING THE DECISIONS STATED ABOVE, WHICH H AS BEEN RENDERED IN IDENTICAL CIRCUMSTANCES, I FIND NO REASON TO UPH OLD THE CONCLUSION OF THE LOWER AUTHORITIES. 6.5 BEFORE PARTING, I MAY ALSO REFER TO CERTAIN OTH ER DECISIONS STATED BY THE ASSESSEE BEFORE ME, WHEREIN ALSO ADDITIONS W ERE MADE ON THE BASIS OF THE STATEMENT OF MR.MUKESH CHOKSI, THOUGH THE INVESTMENT COMPANIES WERE DIFFERENT. ONE SUCH CASE WAS THE DE CISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MUKESH R. MAROLIA VS. ADDL.CIT, 6 SOT 247 (MUM). THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT SUCH JUDGMENT HAS SINCE BEEN APPROVED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SH RI MUKESH RATILAL MAROLIA, INCOME TAX APPEAL NO.456 OF 2007 DATED 07/ 09/2011. 6.6 CONSIDERING THE AFORESAID DISCUSSION, IN MY VIE W, THE CIT(A) FELL IN ERROR IN UPHOLDING THE CONCLUSION OF THE ASSESSI NG OFFICER THAT THE SALE AND PURCHASE OF SHARES OF M/S. BUNIYAD CHEMICA LS LTD., WAS A BOGUS TRANSACTION. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADD ITION OF RS.3,94,135/-. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2015. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 30/11/2015 8 ITA NO. 2069/MUM/2015 (ASSESSMENT YEAR : 2005-06) 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 VM , SR. PS