MANOJ GOPAL GUPTA, MUMBAI V. ITO 25(3)(1), MUMBAI

ITA 2244/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2580 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Share purchase agreement; Accommodation entries; Onus to prove
• Section: 143(3); 234B; 147; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH G, MU MBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AN D SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 2244/MUM/2014 FOR AY - 2005-06 SHRI MANOJ GOPAL GUPTA, ROOM NO.2, SHINDE CHAWL, M.D. ROAD, KANDIVALI (EAST), MUMBAI-400101 PAN: AAMPG4869B VS. ITO- 25(3)(1), PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST),MUMBAI-400020. (APPELLANT) (RESPONDENT) ITA NO. 2245/MUM/2014 FOR AY - 2005-06 SHRI MADAN GOPAL GUPTA, ROOM NO.2, SHINDE CHAWL, M.D. ROAD, KANDIVALI (EAST), MUMBAI-400101 PAN: AABPG9498D VS. ITO- 25(3)(1), PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST),MUMBAI-400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KIRAN S. MEHTA (AR) REVENUE BY : MISS MAHUA SARKAR ( DR) DATE OF HEARING : 26.09.2016 DATE OF PRONOUNCEMENT : 28.09.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPEAL U/S. 253 OF THE INCOME-TAX ACT ARE DIRECTED BY THE TWO ASSESSEE AGAINST THE ORDER(S) OF CIT(A)-35, MUMBAI DATED 10.01.2014 FOR ASSESSMENT YEAR (AY) 2005-06. IN BOTH THE APPEALS C OMMON GROUNDS OF APPEAL ARE RAISED, FACTS OF THE CASES ARE ALSO SIMI LAR, THUS BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE BEING DECIDED BY COMMON ORDER FOR THE SAKE OF BRAVITY. 2 ITA NOS. 2244 & 2245/M/2014 SHRI MANOJ GOPAL GUPTA & ANR ITA NO. 2244/MUM/2014. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 31.08.2015 DECLARING TOTAL INCOME OF RS. 1,63,750/. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED LONG TERM CAP ITAL GAIN (LTCG) OF RS. 2,57,419/- ON THE SALE OF 3,000/- SHARE OF TALENT INFO WAY LTD. THE CASE OF ASSESSEE WAS RE-OPENED U/S 147 OF THE ACT. THE RE-OPENING OF THE ASSESSMENT IN CASE OF ASSESSEE WAS THAT IN HIS CASE SPECIFIC INFORMATION WAS RECEIVED FROM DDIT (INVESTIGATION), UNIT-4, MUM BAI VIDE LETTER DATED 07.03.2011 THAT DURING THE SEARCH ACTION U/S 132 OF THE ACT IN CASE OF MAHASAGAR SECURITIES PVT. LTD. AND OTHER GROUP C ONCERN ON 25.11.2009, WHO WERE ENGAGED IN THE FRAUDULENT BIL LING ACTIVITY AND PROVIDING ACCOMMODATION ENTRIES. IT WAS ALSO REVEAL ED THAT MUKESH CHOKSEY WAS THE MASTER MIND OF THE WHOLE AFFAIRS, W HO HAD ADMITTED TO HAVE INDULGED IN BOGUS ACCOMMODATION ENTRIES. ON TH E PERUSAL OF RECORD OF SEARCH THE NAME OF ASSESSEE WAS ALSO REVEALED TH AT ASSESSEE HAS AVAILED BOGUS BILL FROM ONE OF HIS CONCERN DURING THE RELEV ANT AY IN THE NAME OF TALENT INFOWAY LTD. IN THIS WAY, ON THE BASIS OF SP ECIFIC INFORMATION, THE CASE OF ASSESSEE WAS RE-OPENED BY ISSUING NOTICE U/ S 148 DATED 25.03.2011. DURING THE RE-ASSESSMENT PROCEEDING, TH E ENTIRE SALE CONSIDERATION OF SHARE TRANSACTION AMOUNTING TO RS. 2,61,189/- WAS TREATED AS UNEXPLAINED CASH CREDIT AND ADDED U/S 68 OF THE ACT IN THE INCOME OF ASSESSEE IN ASSESSMENT ORDER DATED 143(3) R.W.S 147 OF THE ACT. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THUS, THE PRESENT APPEAL IS FILED BEFORE US RAISING FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ASSE SSMENT AS UNEXPLAINED CASH CREDIT U/S 68, THE SALES PROCEEDS OF RS. 2,62,189/- (IN RESPECT OF LONG TERM CAPITAL GAIN OF RS. 2,57,4 19/- CLAIMED EXEMPT U/S 10(38)). 2. THE LEARNED CIT (A) ERRED IN NOT ACCEPTING THE C LAIM OF THE APPELLANT THAT THE AFORESAID CAPITAL GAIN WAS IN TH E NATURE OF LONG TERM CAPITAL GAIN ARISING FROM SALE OF A LISTED SEC URITY AND WAS ENTITLED TO EXEMPTION U/S 10(38). 3. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE LEARNED CIT (A) ERRED IN NOT ACCEPTING THE APPELLANT'S CONT ENTION THAT IN ANY 3 ITA NOS. 2244 & 2245/M/2014 SHRI MANOJ GOPAL GUPTA & ANR EVENT, THE IMPUGNED CAPITAL GAIN COULD BE ASSESSED ONLY AS 'CAPITAL GAIN' AND THAT TOO AS 'LONG TERM CAPITAL GAIN' AND THAT THERE WAS NO BASIS AT ALL TO ASSESS THE SAME AS 'UNEXPLAINED CAS H CREDIT'. 4. THE LEARNED CIT(A) GRAVELY ERRED IN CONFIRMING T HE ASSESSMENT OF RS. 4,770/- BEING THE COST PRICE OF THE ABOVE SHARE S INCURRED IN AY: 2004-05, AS INCOME FROM UNEXPLAINED CASH CREDIT FOR THE YEAR IN REFERENCE, MORE SO, AS THIS WAS NOT A RECEIPT BY TH E APPELLANT AND IN ANY CASE IT DID NOT RELATE TO THE YEAR IN REFERENCE . 5. THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT THA T THE IMPUGNED ASSESSMENT ORDER WAS BAD IN LAW IN AS MUCH AS IT WA S MADE PURSUANT TO A NOTICE OF REASSESSMENT U/S 147/148 WHICH ITSEL F WAS BAD-IN-LAW AND FOR WAS OTHERWISE NOT TENABLE. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING LEVY OF I NTEREST OF RS. 68,613/- U/S 234B & C. 3. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF ASSESSEE AND THE LD DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PE RUSED THE ORDERS OF AUTHORITIES BELOW. THE LD. AR OF THE ASSESSEE ARGUE D THAT RE-OPENING OF ASSESSMENT IN THE CASE OF ASSESSEE WAS MADE ON THE BASIS OF STATEMENT OF MUKESH CHOKSI. THE COPY OF STATEMENT OF MUKESH CHOK SI WAS SUPPLIED TO THE ASSESSEE DURING THE RE-OPENING ASSESSMENT PR OCEEDING. THE NAME OF ASSESSEE IS NOWHERE APPEARED IN THE ENTIRE STATE MENT OF MUKESH CHOKSI. THERE WAS NO INCRIMINATING EVIDENCE AGAINST THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS AVAILED ACCOMMODATION EN TRY. ASSESSEE PROVIDED ALL DOCUMENTARY EVIDENCE FOR TRANSACTION O F SHARE AND ASSESSEE PROVED THAT THE TRANSACTION OF LTCG DECLARED BY ASS ESSEE IN THE RETURN OF INCOME WAS GENUINE. THE AO HAS NOT ACCEPTED THE CON TENTION OF THE ASSESSEE. IT WAS FURTHER ARGUED THAT LD. CIT(A) ALS O NOT CONSIDERED THE GENUINENITY OF THE TRANSACTION DESPITE THE FACT THA T ALL PURCHASE BILLS WERE GIVEN ALONG WITH THE DOCUMENTS RELATING TO DEMATERI ALIZATION OF SHARE. ON THE OTHER HAND, THE LD. DR FOR REVENUE ARGUED THAT THE ASSESSEE AVAILED THE ACCOMMODATION ENTRY FROM THE GROUP CONCERNED OF MUKESH CHOKSI WHO WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES A ND WERE ONLY PROVIDING BOGUS ENTRIES. THE ASSESSEE FAILED TO PRO VE OR BRING ANY EVIDENCE ON RECORD TO ESTABLISH THAT TRANSACTIONS W ERE CARRIED THROUGH RECOGNIZED STOCK EXCHANGE. NO SUFFICIENT DOCUMENT W AS FILED BEFORE THE 4 ITA NOS. 2244 & 2245/M/2014 SHRI MANOJ GOPAL GUPTA & ANR AO. THE ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PR OVE THAT TRANSACTION WAS GENUINE BEFORE THE REVENUE AUTHORITY. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE SEEN THAT DU RING THE RE-OPENING ASSESSMENT PROCEEDING, THE AO ASKED THE ASSESSEE TO FURNISH DETAILS OF SHARE TRANSACTION ALONG WITH ALL RELEVANT COPIES OF BROKERS BILL, PROOF OF PAYMENT FOR PURCHASE OF SHARE ALONG WITH FUND FLOW STATEMENT. THE ASSESSEE FURNISHED REPLY OF THE SHOW CAUSE VIDE REP LY DATED 10.11.2011 AND SIMPLY FURNISHED THE COPY OF CONTRACTS NOTES OF SHARE TRANSACTIONS. AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE, T HE AO CONCLUDE THAT ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE THE SHARE TRANSACTION AND FURNISHED A PROOF REGARDING PAYMENT OF PURCHASES AN D ADDED THE ENTIRE SALE CONSIDERATION OF SHARE TRADING AS UNEXPLAINED CASH CREDIT. LD. CIT(A) HAS NOT GIVEN ANY DIFFERENT FINDING AND SUSTAINED T HE ADDITION. 5. THE ASSESSEE HAS PLACED ON RECORD CONTRACTS NOTE OF SHARE TRANSACTION FROM MAHASAGAR SECURITIES PVT. LTD. ALONG WITH COPY OF SAVING BANK PASSBOOK OF CENTRAL BANK OF INDIA AND MALAD SAHKARI BANK LTD., CONFIRMATION OF ACCOUNT BY MAHASAGAR SECURITIES PVT . LTD., COPY OF SHARE CERTIFICATE OF TALENT INFOWAY LTD. ALONG WITH ENTRY OF TRANSFER MENTIONED OVERLEAF TO PROVE THE GENUINENITY OF THE TRANSACTIO N. WE HAVE NOTICED THAT ALL THESE DOCUMENTS WERE NOT DISCUSSED BY AO OR BY LD. CIT(A) IN THEIR ORDER. HENCE, WE DEEM IT APPROPRIATE TO RESTORE THI S GROUNDS OF APPEAL TO THE FILE OF AO TO CONSIDER ALL THE DOCUMENTS FILED BEFORE US AND THE LD CIT(A) AND GIVE FRESH FINDING IN ACCORDANCE WITH LA W. THUS, GROUND NO. 1 TO 4 ARE ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NO.5 IS WITH REGARD TO THAT LD. CIT (A) ERRE D IN SUSTAINING THE ORDER OF REOPENING OF ASSESSMENT U/S 147/148 OF THE ACT WAS NOT BAD-IN- LAW. THE LD. AR OF THE ASSESSEE NOTHING AGAINST TH IS GROUND AND HENCE THIS GROUND IS DEEMED TO BE NOT PRESSED AND THE SAM E IS DISMISSED. 7. GROUND NO.5 IS WITH REGARD TO LEVY OF INTEREST U/S 234B & 234C OF THE ACT. AS PER OUR CONSIDERATION, THIS GROUND IS CONSE QUENTIAL IN NATURE AND 5 ITA NOS. 2244 & 2245/M/2014 SHRI MANOJ GOPAL GUPTA & ANR NEEDS NO ADJUDICATION AS WE HAVE ALREADY RESTORED T HE ABOVE ON QUANTUM ASSESSMENT TO THE FILE OF AO. ITA NO. 2245/MUM/2014 8. THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS IN TH IS APPEAL. THE FACTS OF THE CASE ARE SIMILAR AS THAT OF ITA NO. 2244/MUM/20 14 WHEREIN WE HAVE RESTORED THE GROUND NO. 1 TO 4 TO THE FILE OF AO, T HUS IN THIS APPEAL THESE GROUNDS OF APPEAL ARE ALLOWED ON SIMILAR LINES. GRO UND NO.5 & 6 OF THIS APPEAL IS IDENTICAL TO THE GROUNDS OF APPEAL IN ITA NO. 2244/MUM/2014, WHEREIN WE HAVE DISMISSED THE GROUND NO. 5 & 6. HEN CE, GROUND NO. 5 & 6 IS ALSO DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS FILED BY ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/- SD/- ( R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/09/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/