Chandrakumar Khanmal Jain, Mumbai V. ITO, CHENNAI

ITA 2792/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7746 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-09-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Reopening of assessment
• Section: 147; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 792 /MDS/2016 / ASSESSMENT YEAR :20 0 8 - 0 9 SHRI CHANDRAKUMAR KHANMAL JAIN, ROOM NO. 1101, 11 TH FLOOR, DR. DESHMUKH BUILDING, 7/9, DR. DESHMUKH LANE, VP ROAD, MUMBAI. [PAN: AAFPJ8043F ] VS. THE INCOME TAX OFFICER , NON CORPORATE WARD 11(5 ) C HENNAI 600 006 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI M. KARUNAKARAN , A DVOCATE / RESPONDENT BY : S HRI SUPRIYO PAL , J CIT / DATE OF HEARING : 27 . 12 .201 6 / DATE OF P RONOUNCEMENT : 29 . 12 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 3 , C HENNAI DATED 01 .0 9 .2016 RELEVANT TO THE ASSESSMENT YEAR 20 08 - 0 9 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING THE ORDER OF THE ASSESSING OFFICER IS ILLEGAL, ARBITRARY, AGAINST THE WEIGHT OF EVIDENCE AND ALL PROBABILITIES OF THE CASE. I.T.A. NO . 2792 / M/ 1 6 2 2. THE APPELLANT SUBMITS THAT THE RE - OPENING OF THE ASSESSMENT U/S 148 WAS NOT VALID AS IT WAS BASED ON SUSPICION THAT THE APPELLANT'S TRANSACTION WITH M/S ALLIANCE INTERMEDIARIES AND NET WORK P LTD. IN FINANCIAL YEAR 200 7 - 08 WAS BOGUS. 3. THE APPELLANT SUBMITS THAT THE ENTIRE ASSESSMENT WAS MADE WITHOUT AFFORDING REASONABLE OPPORTUNITY AND FAIR PLAY. THE ASSESSING OFFICER HAS NOT PROVIDED THE EVIDENCES USED AGAINST HIM IN THE ASSESSMENT NOR THE CONCERNED PERSON, SRI MUKESH C H OKSHI WHOSE STATEMENT IS RELIED ON WAS ALLOWED TO BE CROSS EXAMINED BY THE APPELLANT. 4. THE APPELLANT SUBMITS THAT THE ASSESSMENT BASED ON THE ENQUIRIES CONDUCTED BEHIND THE BACK OF THE APPELLANT IS NOT VALID AND LIABLE TO BE CANCELLED. 5. THE APPELLANT'S TRANSACTION OF PURCHASE AND SALE OF SHARES THROUGH M/S ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD. WAS GENUINE HAVING BEEN MADE THROUGH BANKING CHANNELS AND PASSED TRHOUGH BOOKS OF ACCOUNTS AND THEREFORE THE ASSESSING OFFICER WAS NOT CORRECT IN TREATING THE PURCHASES OF .3,98,726/ - AS BOGUS. 6. THE APPELLANT SUBMITS THAT HE HAS NOT CLAIMED THE PURCHASE CONSIDERATION AS AN EXPENDITURE AGAINST ANY SALES AND THEREFORE THE QUESTION OF DISALLOWING THE SAME IS UNWARRANTED. 7. THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATE D THE FACT THAT THE APPELLANT HAD SUBMITTED VALID AND SUFFICIENT DOCUMENTS BY WAY OF CONTRACT NOTES, DEMAT ACCOUNT AND BANK STATEMENTS TO PROVE THAT THE PURCHASE OF SHARES THROUGH M/S. ALLIANCE INTERMEDIARIES AND NET WORK P LTD. WAS GENUINE AND THE CLAIM C ANNOT BE REJECTED ON SURMISES AND CONJECTURES. 8 . THE APPELLANT RELY ON THE DECISION OF THE ITA T MUMBAI BENCH IN THE CASE OF SHAF BROADCAST P LTD. IN ITA NO.1819/MUM/2012 DATED 17/04/2013 AND THE DECISION OF THE ITAT, HYDERABAD BENCH IN THE CASE OF S RI PADUCHURI JEEVAN PRASHANT IN ITA NO. 452/HYD/2015 DATED 19/8/2016 WHEREIN THE REOPENING OF ASSESSMENT BASED ON THE STATEMENT OF MR. MUKESH CHOKSHI WAS HELD TO BE INVALID WHICH WOULD SQUARELY APPLY TO THE APPELLANT'S CASE. 9 . THE APPELLANT FURTHER SUBM ITS THAT IN HIS OWN CASE, THE ITAT, CHENNAI BENCH IN ITA NO. 1226/MDS/2016 DATED 9/9/2016 FOR THE ASSESSMENT YEAR 2006 - 07 HAS SET ASIDE THE MATTER TO THE FILE OF THE COMMISSIONER I.T.A. NO . 2792 / M/ 1 6 3 OF INCOME - TAX (APPEALS) WITH A DIRECTION TO OBTAIN A REMAND REPORT FROM THE A SSESSING OFFICER AFTER MAKING DETAILED ENQUIRY AND DECIDE WHETHER THE REASSESSMENT WAS LEGALLY VIABLE OR NOT AFTER GIVING SUFFICIENT OPPORTUNITIES TO BOTH THE ASSESSEE AND THE ASSESSING OFFICER. 11. THE APPELLANT THEREFORE PRAYS THAT THE HON'BLE INCOME - TAX APPELLATE TRIBUNAL MAY BE PLEASED TO CANCEL THE RE - ASSESSMENT AS INVALID AND VOID: TO DELETE THE ADDITION OF RS. 3,98,728 / - AS INCOME FROM OTHER SOURCES AND RENDER JUSTICE. 2. THE ASSESSEE IS AN INDIVIDUAL AND HAS ADMITTED INCOME FROM SHORT TERM CAP ITAL GAIN AND INCOME FROM OTHER SOURCES. THE ASSESSEE FILED HIS RETURN OF INCOME ON 01.04.2009 ADMITTING TOTAL INCOME OF .5,21,750/ - AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] ON 07.11.2009. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 19.02.2015. THE REASON FOR REOPENING OF THE CASE WAS COMMUNICATED TO THE ASSESSEE VIDE LETTER DATED 16.06.2015 AGAINST THE REQUEST OF THE A SSESSEE. DESPITE SERVICES OF VARIOUS NOTICE TO THE ASSESSEE, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF BANK STATEMENT, DETAILS OF SHARES PURCHASED AND OLD, DEMAND ACCOUNT, COMPUTATION SHEET, ETC. T HE REFORE, CONSIDERING THE MATERIALS AVAILABLE ON RECOR D, ASSESSMENT WAS COMPLETED UNDER SECTION 147 RW.S. 144 OF THE ACT ON 23.09.2015. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). SINCE THE ASSESSEE HAS NOT FURNISHED ANY SUBSTANTIAL EVIDENCE IN SUPPORT OF HIS CLAIM, THE LD. C IT(A) D ISMISSED THE APPEAL FILED BY THE ASSESSEE. I.T.A. NO . 2792 / M/ 1 6 4 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS MAINLY CONTENDED THAT THE EVIDENCE USED AGAINST THE ASSESSEE WAS NOT PROVIDED TO HIM NOR THE CONCERNED P ERSON SRI MUKESH CHOKSHI FOR CROSS EXAMINATION. HE FURTHER SUBMITTED THAT IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07, THE TRIBUNAL HAS REMITTED THE MATTER BACK TO THE LD. CIT(A) AND PRAYED THAT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO T HE MATTER MAY BE REMITTED BACK TO THE LD. CIT(A). 5. ON THE OTHER HAND, THE LD. DR DID NOT SERIOUSLY OBJECT TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDE RS OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07 IN I.T.A. NO. 1226/MDS/2016 DATED 09.09.2016, WHEREIN , ON SIMILAR FACTS AND CIRCUMSTANCES, THE TRIBUNAL H AS OBSERVED AND HELD AS UNDER: 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT WAS THE SUBMISSION OF THE ASSESSEE THAT VIDE CONTRACT NOTE DATED 13.04.2014, THE ASSESSEE PURCHASED EQUITY SHA RES OF M/S. TALENT INFOWAYS LTD. FROM MAHASAGAR SECURITIES PVT. LTD. AND AS PER CONTRACT NOTES DATED 15.07.2005 AND 18.07.2005, THE ASSESSEE IS STATED TO HAVE SOLD THE SAME THROUGH STOCK BROKERS M/S. ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. FOR THE ABOVE TRANSACTION, THE ASSESSEE HAS FURNISHED RELEVANT DE - MAT ACCOUNT, DETAILS OF SHARES PURCHASED, MODE OF PAYMENT, VALUE OF SHARES, BANK I.T.A. NO . 2792 / M/ 1 6 5 ACCOUNT, DAY BOOK, CASH BOOK, ETC. BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER HAS NOT FOUND ANY MIS TAKE FROM THE DETAILS FURNISHED BY THE ASSESSEE. 6.1 FURTHER, BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED THAT 12000 SHARES FOR DEMATERIALIZATION (DEMAT) ON 08.06.2005 WITH SHAREKHAN LIMITED AND THE SAID SHARES WERE DEMATERIALIZED ON 30.06.20 05. EVIDENCING THEREOF, THE ASSESSEE HAS FURNISHED THE STATEMENT OF SHAREKHAN LTD. FOR THE PERIOD FROM 01.04.2005 TO 31.03.2006. IT WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT WHEN THE SHARES WERE DEMATERIALIZED WITH SHAREKHAN LTD., IT CLEARLY PRO VES THAT THE ASSESSEE HAS PURCHASED AND TAKEN DELIVERY OF THE SAID SHARES WITHOUT WHICH DEMATERIALIZATION OF TALENT INFOWAYS LTD. SHARES WOULD NOT HAVE BEEN POSSIBLE AND THE DELIVERY OF THE SAID SHARES WERE ROUTED THROUGH SHAREKHAN LTD., WHICH IS NOT AN AS SOCIATE OF M/S. MAHASAGAR GROUP COMPANIES AND HENCE CANNOT BE SAID TO BE AN ACCOMMODATION ENTRY. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDINGS OVER THE ABOVE SUBMISSIONS OF THE ASSESSEE. FURTHERMORE, THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AS TO WHETHER THE ABOVE FACTS STATED BY THE ASSESSEE ARE TRUE OR NOT. WHEN THESE FACTS WERE PUTFORTH BEFORE THE LD. CIT(A), HE HAS NOT OBTAINED ANY REMAND REPORT FROM THE ASSESSING OFFICER. IT WAS ALSO NOT MADE IT CLEAR WHE THER THE STOCK BROKING COMPANIES ARE REGISTERED WITH SEBI OR NOT. THE ASSESSING OFFICER BY RELYING ON THE STATEMENT RECORDED FROM SHRI MUKESH CHOKSHI BY THE INVESTIGATION WING, MUMBAI REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 6.2 ADMITTEDLY, T HE ONLY INSTRUMENT USED FOR REOPENING OF ASSESSMENT OF THE ASSESSEE IS THE STATEMENT RECORDED FROM SHRI MUKESH CHOKSHI BY THE INVESTIGATION WING, MUMBAI AND IT IS A FACT THAT THE DEPARTMENT DO NOT HAVE ANY OTHER MATERIAL EVIDENCE AGAINST THE ASSESSEE OR IT IS VERY CLEAR THAT THE ASSESSING OFFICER CONCLUDED THE REASSESSMENT HURRIEDLY WITHOUT MAKING ANY ENQUIRY OR VERIFICATION OF THE PARTICULARS FURNISHED BEFORE HIM WHETHER THE SHARES WERE DEMATERIALIZED WITH SHAREKHAN LTD. AND THE ASSESSEE HAS PURCHASED AND TAKEN DELIVERY OF THE SAID SHARES OF TALENT INFOWAYS LTD. THROUGH SHAREKHAN LTD., OR NOT. 6.3 UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMITTED THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO O BTAIN REMAND REPORT FROM THE ASSESSING OFFICER AFTER MAKING DETAILED ENQUIRY AND DECIDE WHETHER THE REASSESSMENT WAS LEGALLY VIABLE OR NOT AFTER GIVING SUFFICIENT OPPORTUNITIES TO BOTH ASSESSEE AND THE ASSESSING OFFICER . THUS, THE GROUND RAISED BY THE I.T.A. NO . 2792 / M/ 1 6 6 ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE INTEREST COMPONENT IS CONSEQUENTIAL TO THE ASSESSMENT AND HENCE NOT ADJUDICATED SEPARATELY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO, THE STATEMENT RECORDED BY THE INVESTIGATION WING, MUMBAI FROM SHRI MUKESH CHOKSHI HAS BEEN USED WITHOUT FURNISHING THE SAME TO THE ASSESSEE. ACCORDINGLY, BY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEAR, WE DIRECT THE LD. CIT(A) TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. FURTHER, WE ALSO DIRECT THE ASSESSEE TO FURNISH ALL DETAILS BEFORE THE LD. CIT(A) FOR CONSIDERATION, WHICH WERE NOT FILED BEFORE THE ASSESSING OFFICER. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 29 TH DECEMBER , 201 6 AT CHENNAI. SD/ - SD/ - (CHANDRA PO OJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 29 . 12 .201 6 VM/ - I.T.A. NO . 2792 / M/ 1 6 7 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.