DIVYA M. SHAH, MUMBAI V. ITO 25(3)(2), MUMBAI

ITA 2389/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100904 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 26-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Unexplained cash credit; Principle of natural justice; Accommodation entries
• Section: 68; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 2389 / MUM/20 1 3 ( / ASSESSMENT YEA R : 20 03 - 04 ) DIVYA M SHAH, 3 5/36, MANGALAM, MATHURADAS ROAD, KANDIVALI, (W), MUMBAI - 400067 / VS. INCOME TAX OFFICER 25(3)(2), C - 1 1 , PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : ANIPS0393P / APPELLANT S BY SHRI AJAY SINGH / R EVENUE BY SHRI A RAMACHANDRAN / DATE OF HEARING : 0 7 .9 . 201 5 / DATE OF PRONOUNCEME NT: 0 7 . 9. 201 5 / O R D E R P ER B R BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 15.1.2013 PASSED BY LD . CIT (A) - 11 , MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 20 03 - 04 . 2. THE ASSESSEE IS AGGRIEVED BY T HE DECISION OF LD. CIT(A) IN CONFIRMING THE ASSESSMENT OF LONG TERM CAPITAL GAIN (LTCG) AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FI LED RETURN OF INCOME ON 23.9.2003 ITA NO. 2389 / MUM/20 1 3 2 AND THE SAME WAS ACCEPTED U/S 143(1) OF THE ACT , THE ASSESSEE HAD DECLARED LTCG OF RS.5,10,625 / - ARISING ON SALE OF SHARES OF BUNIYAD CHEMICALS LTD. CONSEQUENT TO THE SEARCH OPERATION CONDUCTED IN THE HANDS OF SHRI MUKES H CHOKSI AND ITS GROUP OF COMPANIES, IT CAME TO THE LIGHT THAT SHRI MUKESH CHOKSI GROUP OF COMPANIES WERE PROVIDING ACCOMMODATION ENTRIES IN ORDER TO GENERA TE BOGUS LTCG. THE ASSESSEE WAS ONE OF THE BENEFICIARY WHO HAS PURCHASED AND SOLD THE SHARES THR OUGH SHRI MUKESH CHOKSI AND HIS COMPANIES. HENCE, THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE TO THE PRINCIPAL OFFICER OF GOLDSTAR FINVEST PVT LTD. THRO UGH WHOM THE ASSESSEE PURCHASED AND SOLD THE SHARES OF BUNIYAD CHEMICALS. IN RESPONSE TO THE SUMMONS ISSUED BY THE AO , SHRI MUKESH CHOKSI CONTENDED AND HIS STATEMENT WAS RECORDED ON OATH ON 24.12.2012 . T HE CONTRACT NOTE S BELONGING TO THE ASSESSEE SHO WS THAT THE SHRI MUKESH CHOKSI HAS CONFESSED THAT THE ABOVE SAID CONTRACT NOTE S WERE ISSUED ONLY TO FACILITATE THE GENERATION OF LTCG BY THE ASSESSEE HEREIN. ACCORDINGLY, THE AO ASSESSED THE LTCG OF RS.5,10,625/ - AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE LD. CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE AO RECORDED THE STATEMENT OF SHRI MUKESH CHOKSI ON 24.12.2010 AND ON THE VERY SAME DATE HE ALSO COMPLETED THE ASSESSMENT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKSI AND ACCORDINGLY SUBMITTED THA T THE AO HAS VIOLATED THE PRINCIPAL OF NATURAL JUSTICE. TH E LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAD PURCHASED THE SHARES IN THE IMMEDIATELY PRECEDING YEAR AND SOLD THE SHARES DURING THE YEAR UN DER CONSIDERATION . HOWEVER, ITA NO. 2389 / MUM/20 1 3 3 THE AO HAS ASSESSED THE LTCG AS CASH CREDIT DURING THE YEAR UNDER CONSIDERATI ON EVEN THROUGH THE PURCHASE OF SHARES WERE DULY DECLARED IN THE RETURN OF INCOME FILED FOR THE IMMEDIATELY PRECEDING YEAR AND THE SAME WAS ACCEPTED BY THE AO. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN ASSESSING THE ENTIRE AMOU NT OF LTCG DURING THE YEAR UNDER CONSIDERATION. 5 . WE HEARD THE LD.DR AND PERUSED THE RECORD. ADMITTEDLY , THE AO HAS PLACED RELIANCE ON THE SWORN STATEMENT RECORDED OF MUKESH CHOKSI ON 24.12.2012. ADMITTEDLY, THE AO HAS PLACED RELIANCE ON THE STATE MENT SO GIVEN BY SHRI MUKESH CHOKSI FOR ASSESSING THE LTCG AS UNEXPLAINED CASH U/S 68 OF THE ACT. THE AO HAS PASSED THE ASSESSMENT ORDER ON THE VERY SAME DAY WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE SHRI MUKESH CHOKSI. HENCE, AS SUBMITTED BY THE LD. AR THERE IS A CLEAR VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. ACCORDINGLY, WE FIND MERITS IN THE CONTENTION OF THE LD.AR THAT THE ASSESSEE SHOULD BE GIVEN OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKSI. ACCORDINGLY, WE SET ASI DE THE ORDER OF LD.CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO OFFER FAIR AND REASONABLE OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE SHRI MUKESH CHOKSI. 6 . BEFORE US THE LD. AR RAISED VARIOUS ALTERNATI VE CONTENTIONS. SINC E, WE HAVE SET ASIDE THE ORDER OF LD.CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO, THE ASSESSEE IS FREE TO CONTEST THE ABOVE CONTENTIONS FROM ALL ANGLES AS HE DEEM FIT AND PROPER. THE ASSESSEE HAS ALSO RAISED GROUNDS RELATING TO REOPENING OF THE AS SESSMENT. SINCE, THE LD. AR DID NOT ADVANCE ANY ARGUMENT ON THE SAID GROUND , THEREFORE, DISMISSED. ITA NO. 2389 / MUM/20 1 3 4 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED ACCORDINGLY ON 7TH SEPT, 2015. 7 TH SEPT , 2015 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 7TH SEPT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELL ANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE CO PY (ASSTT. REGISTRAR) , /ITAT, MUMBAI