ARVIND ASMAL MEHTA, MUMBAI V. ITO 16(2)(2), MUMBAI

ITA 2799/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3534 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Keywords: Income from undisclosed sources; Search and seizure; Accommodation entries
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 2799/MUM/2015 (ASSESSMENT YEAR : 2009-10) MR. ARVIND ASMAL MEHTA, 450,LOTWALA BUILDING, PATTHE BAPURAO MARG, NEAR SINDHI GALLY, MUMBAI 400 004 PAN: AAIPS 2754 B ... APPELLANT VS. THE INCOME TAX OFFICER 16(2)(2), MUMBAI 400020 .... RESPONDENT APPELLANT BY : SHRI RAHUL SARDA RESPONDENT BY : SHRI VISHWAS JADHAV DATE OF HEARING : 10/12/2015 DATE OF PRONOUNCEMENT : 29/02/2016 ORDER THE CAPTIONED APPEAL IS PREFERRED BY THE ASSESSE E AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 27/02/ 2015 OF CIT(A)-30, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009-10, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 24/01/2014 UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 2 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, WHICH I SHALL DEAL IN SERIATIM. 3. THE FIRST ISSUE RELATES TO AN ADDITION OF RS.8,8 0,332/- MADE BY THE INCOME TAX AUTHORITIES ON THE GROUND THAT IT WAS IN COME FROM UNDISCLOSED SOURCES. IN THIS CONNECTION, BRIEF FAC TS ARE THAT THE APPELLANT IS AN INDIVIDUAL, WHO WAS DERIVING INCOME FROM BUSINESS AND OTHER SOURCES. FOR THE YEAR UNDER CONSIDERATION, H E HAD FILED THE RETURN OF INCOME DECLARING A TOTAL INCOME AT RS.2,75,400/- , WHICH, INTER-ALIA, INCLUDED CAPITAL GAIN ON SALE OF SHARES. THE ASSES SEE HAD SOLD 3450 SHARES OF ESSAR OIL LTD. THROUGH STOCK BROKING FIRM M/S. HEM SECURITIES LTD. FOR A NET CONSIDERATION OF RS.8,80,332/-. 95 0 SHARES WERE PURCHASED BY THE ASSESSEE ON 04/04/2007 AND 2500 SH ARES HAD BEEN PURCHASED ON 13/04/2007 THROUGH ANOTHER BROKER, NAM ELY, M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. FOR A T OTAL NET CONSIDERATION OF RS.1,78,580/-. THUS, ASSESSEE HAD DECLARED A LO NG TERM CAPITAL GAIN OF RS.7,01,773/- ON THE SALE OF SAID SHARES OF M/S. ESSAR OIL LTD. 3.1 THE ASSESSING OFFICER NOTED THAT CERTAIN INFORM ATION WAS RECEIVED FROM THE INVESTIGATION WING AS A CONSEQUENCE OF A SEARCH AND SEIZURE ACTIONCARRIED OUT UNDER SECTION 132 OF THE ACT IN T HE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. ON 25/11/2009. AS P ER SUCH INFORMATION RECEIVED, IT WAS NOTED THAT THERE WAS SOME COMPANIE S WHICH WERE UNDER THE CONTROL OF ONE SHRI MUKESH CHOKSHI WHICH, INTER-ALIA, INCLUDED M/S. ALLIANCE INTERMEDIARIES & NETWORK P VT. LTD., BROKING CONCERN FROM WHOM ASSESSEE HAD CLAIMED THE PURCH ASE OF SHARES OF M/S. ESSAR OIL LIMITED. AS PER SUCH INFORMATION, S UCH COMPANIES WERE INVOLVED IN FRAUDULENT BILLING ACTIVITIES AND WERE ENGAGED IN THE 3 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) BUSINESS OF PROVIDING SPECULATION PROFIT/LOSS, ETC. THE ASSESSING OFFICER ALSO REFERRED TO THE STATEMENT RECORDED OF SHRI MUK ESH CHOKSHI, WHEREIN HE HAD ADMITTED OF HAVING PROVIDED ACCOMMOD ATION ENTRIES TO VARIOUS PERSONS. THE ASSESSING OFFICER HAS OBSERVED THAT ON VERIFICATION OF THE DATA IT WAS FOUND THAT THE ASSESSEE HAD OBTA INED ACCOMMODATION ENTRIES FROM M/S. ALLIANCE INTERMEDIA RIES & NETWORK PVT. LTD. IN RESPECT OF THE TRANSACTION OF SHARES O F M/S. ESSAR OIL LTD. AS A CONSEQUENCE, THE ASSESSING OFFICER REOPENED THE A SSESSMENT AND PASSED AN ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT AND HELD THAT THERE WAS NO REAL PURCHASE AND SALE OF SHARES CARRI ED OUT BY THE ASSESSEE. AS A CONSEQUENCE, THE ENTIRE SALE CONSID ERATION OF RS.8,80,332/- WAS ADDED TO THE RETURNED INCOME AS INCOME FROM UNDISCLOSED SOURCES. PRIMARILY, SUCH POSITION HAS BEEN AFFIRMED BY THE CIT(APPEALS) ALSO AND ACCORDINGLY, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENT LY POINTED OUT THAT THE ENTIRE ADDITION IS BASED ON MERE CONJECTUR ES AND SURMISES. THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO A DETAILED PAPER BOOK FILED, WHEREIN THE RELEVANT DOCUMENTS, NAMELY, CONTRACT NOTE FOR PURCHASES OF SHARES, BANK STATEMENT , D-MAT ACCOUN T STATEMENT, LEDGER ACCOUNT OF M/S. HEM SECURITIES LTD., LEDGER ACCOUNT OF M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., ETC. HAVE BEEN PLACED. ON THE BASIS OF THE AFORESAID DOCUMENTS, IT WAS SOUGHT TO BE POINTED OUT THAT THE PURCHASE OF SHARES WAS IN THE PREVIOUS YEAR RE LEVANT TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR OF 2008-09 AN D IT IS FURTHER POINTED OUT THAT THE ASSESSMENT MADE BY THE ASSESSI NG OFFICER UNDER 4 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) SECTION 143(3) R.W.S. 147 OF THE ACT DATED 04/02/2 014 FOR ASSESSMENT YEAR 2008-09 SHOWS THAT THE PURCHASES OF THE SHARES HAS BEEN ACCEPTED. A COPY OF SUCH ASSESSMENT ORDER HAS BEEN PLACED ON RECORD, WHEREIN NO ADDITION HAS BEEN MADE ON THE GROUND OF ANY UNEXPLAINED PURCHASES OF THE SHARES OF M/S. ESSAR OIL LTD. FROM M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. BE THAT AS IT M AY, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT TH E SALE OF SHARES IS DULY REFLECTED IN THE D-MAT ACCOUNT, A COPY OF WHI CH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE-8. IT IS FURTHER CANVASSED THAT THE SALE CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHA NNEL, WHICH IS ALSO EVIDENCED BY THE COPY OF THE BANK STATEMENT PLACED AT PAGE-7 OF THE PAPER BOOK AS WELL COPY OF THE LEDGER ACCOUNT OF TH E M/S. HEM SECURITIES LTD. PLACED AT PAGE-9 OF THE PAPER BOOK . IT WAS THEREFORE, CONTENDED THAT WHERE SALE OF THE SHARES STAND ESTA BLISHED, THERE IS NO JUSTIFICATION TO INFER THAT THERE WAS NO ACTUAL PUR CHASE OF SHARES BY THE ASSESSEE OF M/S.ESSAR OIL LTD. FURTHERMORE, IT IS POINTED OUT THAT THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE ENQU IRIES FROM NATIONAL STOCK EXCHANGE IS NOT RELEVANT IN AS MUCH AS THE AF ORESAID PURCHASE HAS BEEN MADE IN OFF-MARKET DEALS AND, THEREFORE, IT WO ULD NOT BE IN THE KNOWLEDGE OF THE STOCK EXCHANGE AUTHORITIES. IT WA S POINTED OUT THAT MERELY BECAUSE THE ASSESSEE HAS PURCHASED THE SHARE S IN OFF-MARKET TRANSACTIONS, IT CANNOT BE A GROUND TO DISBELIEVE THEM SO LONG AS THE TRANSACTION IS DULY SUPPORTED BY THE CONTRACT NOTES AND IN THE PRESENT CASE IT IS FURTHER EVIDENCED BY THE FACTUM OF SALE OF SHARES. THE LD. REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE STATEMENT O F SHRI MUKESH 5 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) CHOKSHI IS NOT RELEVANT IN AS MUCH AS NO OPPORTUNIT Y TO CROSS-EXAMINE HIM WAS GIVEN TO THE ASSESSEE AND NOR SUCH STATEMEN T HAS BEEN CONFRONTED TO THE ASSESSEE AT ALL. IN THE COURSE OF THE HEARING THE LD. REPRESENTATIVE FOR THE ASSESSEE RELIED UPON THE FO LLOWING DECISIONS:- 1. MUKESH R. MAROLIA VS. ADDL. CIT, (2006) 6 SOT 0247,(MUM) (TRIB) 2. CIT VS. SHRI MUKESH RATILAL MAROLIA, ITA 456 OF 2007 (BOM) 3. DALPAT SINGH CHOUDHARY V. ACIT, (2012) 25 TAXMAN N.COM 153 (JODHPUR-TRIB) 4. SMT. SMITA P. PATIL & OTHERS, ITA NO.1407,1408 & 1409/PN/2012 ORDER DATED 29/07/2013, WHEREIN UNDER IDENTICAL CI RCUMSTANCES, BASED ON THE INVESTIGATIONS DONE IN THE CASE OF SHRI MUK ESH CHOKSHI, THE ADDITIONS HAVE BEEN DELETED. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE HAS REITERATED THE STAND OF THE LOWER AUTHORITIES BY P OINTING OUT THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER, BASE D ON THE INVESTIGATION IN THE CASE OF SHRI MUKESH CHOKSHI, E STABLISHED THAT THE PURCHASE AND SALE OF SHARES OF M/S. ESSAR OIL LTD. IN AS MUCH AS WAS A BOGUS TRANSACTION. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. IN THE PRESENT CASE, IT IS UNDENIABLE THAT THE TOTAL SALE CONSIDER ATION OF RS.8,80,332/- RECEIVED BY THE ASSESSEE IS ON ACCOUNT OF SALE OF THE SHARES OF M/S. ESSAR OIL LTD., IN AS MUCH AS SUCH SALE IS CLEARL Y EVIDENCED BY THE D-MAT ACCOUNT MAINTAINED BY THE ASSESSEE AND FURTHER SUCH CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHANNELS. THE ONLY P OINT OF DIFFERENCE 6 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) BETWEEN THE ASSESSEE AND THE REVENUE IS WITH REGARD TO THE DETERMINATION OF PURCHASES OF SUCH SHARES, WHICH IS CLAIMED TO HAVE BEEN MADE FROM ONE M/S. ALLIANCE INTERMEDIARIES & N ETWORK PVT. LTD. THE ASSESSEE CLAIMED THAT 950 SHARES AND 2500 SHAR ES OF M/S ESSAR OIL WERE PURCHASED BY HIM ON 04/04/2007 AND 13/04/2007 RESPECTIVELY THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PV T. LTD. FOR A TOTAL CONSIDERATION OF RS.1,78,550/-. IT IS FURTHER CLAI MED THAT SUCH PURCHASE WAS REFLECTED IN THE BALANCE SHEET FOR THE PRECEDI NG YEAR ENDING ON 31/3/2008, COPY OF WHICH HAS BEEN PLACED IN PAPER BOOK AT PAGE-20. IT IS FURTHER CANVASSED THAT SUCH BALANCE SHEET ACC OMPANIED THE RETURN OF INCOME, WHICH HAS BEEN SUBJECT TO AN ASSE SSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DATED 04/02/20 14 FOR ASSESSMENT YEAR 2008-09. THE COPY OF THE ASSESSMENT REFLECTS THAT NO ADVERSE REMARKS HAVE BEEN MADE QUA THE REPORTED PURCHASE OF SUCH SHARES THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PV T. LTD. IN FACT, THE BALANCE SHEET AS ON 31/3/2008 SHOWS A CREDIT BALA NCE IN THE ACCOUNT OF M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LT D. OF RS.1,78,854/-. THEREFORE, IF ON ONE HAND, IN THE SCRUTINY ASSESSM ENT FOR ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER DOES NOT CHALLE NGE THE ACQUISITION OF SHARES, IT IS QUITE INAPPROPRIATE TO HOLD SUCH A CQUISITION AS BOGUS IN THE YEAR WHEN SUBSEQUENTLY SUCH SHARES ARE SOLD. I N THE PRESENT CASE, THE D-MAT ACCOUNT WHICH EVIDENCES THE SALE OF SHARE S DOES JUSTIFY AN INFERENCE THAT THE ASSESSEE WAS INDEED IN POSSESSIO N OF THE SHARES OF M/S. ESSAR OIL LTD. PRIOR TO ITS SALE. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE IN QUESTION I.E. RS.8,80,332/- IS ON ACCOUNT OF ANY TR ANSACTION OTHER THAN 7 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) THE SALE OF SHARES OF M/S. ESSAR OIL LTD. THEREFOR E, UNDER THESE CIRCUMSTANCES THE ONUS WAS ENTIRELY ON THE ASSESSIN G OFFICER TO ESTABLISH THAT THE PURCHASE AND SALE OF THE SHARES OF M/S. ESSAR OIL LTD. WAS BOGUS. IF THE ORDERS OF THE AUTHORITIES BELOW ARE EXAMINED IN THIS CONTEXT, IT IS CLEAR THAT THERE IS NO CLINCHING M ATERIAL TO SAY THAT THE IMPUGNED TRANSACTION WAS BOGUS. THOUGH A REFERENCE HAS BEEN MADE TO THE INVESTIGATION IN THE CASE OF SHRI MUKESH CHOKSH I, BUT NO EFFORT HAS BEEN MADE BY THE ASSESSING OFFICER TO DEMONSTRATE T HAT QUA THE INSTANT TRANSACTION OF THE ASSESSEE, ANY INFIRMITY HAS BEEN CONFESSED BY SHRI MUKESH CHOKSHI. BE THAT AS IT MAY, ASSESSEE HAS BE EN CONSISTENTLY CANVASSING BEFORE THE LOWER AUTHORITIES THAT THE S TATEMENT OF SHRI MUKESH CHOKSHI BE CONFRONTED TO HIM. I DO NOT FIND ANYTHING ON RECORD TO SUGGEST THAT ANY SPECIFIC STATEMENT SHRI MUKESH CHOKSHI HAS BEEN CONFRONTED TO THE ASSESSEE. 6.1 CONSIDERING THE ENTIRETY OF CIRCUMSTANCES AND T HE MATERIAL ON RECORD, IN MY VIEW, THERE IS NO JUSTIFICATION FOR T HE ASSESSING OFFICER TO HOLD THAT THAT THE SALE CONSIDERATION RECEIVED ON THE SALE OF SHARES OF M/S. ESSAR OIL LTD. OF RS.8,80,332/- IS UNEXPLAIN ED OR FROM UNDISCLOSED SOURCES. THEREFORE, I SET ASIDE THE ORDER OF THE C IT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 8,80,332/-. THUS, ON THIS ASPECT ASSESSEE SUCCEEDS. 7. ANOTHER ADDITION MADE BY THE ASSESSING OFFICER I S OF A SUM OF RS.2,10,998/-, WHICH IS STATED TO HAVE BEEN THE PUR CHASE AMOUNT OF ANOTHER SCRIP OF M/S. KIRI DYES AND MAHAR POLY. I N THIS CONTEXT, THE LD. REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY POINTED OUT THAT ASSESSEE DID NOT PURCHASE ANY SUCH SHARES AND THEREFORE, THE RE WAS NO QUESTION 8 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) OF SELLING SUCH SHARES. MY ATTENTION HAS BEEN INVI TED TO THE D-MAT STATEMENT, WHICH DOES NOT REFLECT ANY SUCH TRANSACT ION. 8. I HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BE LOW IN THE CONTEXT OF AFORESAID PLEA OF THE ASSESSEE AND FIND NO MATERIAL TO SUGGEST THAT ANY SUCH TRANSACTION HAS BEEN UNDERTAK EN BY THE ASSESSEE. THEREFORE, IN MY OPINION THERE IS NO JUSTIFICATION TO SUSTAIN THE ADDITION OF RS.2,10,998/-, WHICH IS HEREBY DIRECTED TO BE DE LETED. 9. THE LAST ISSUE IS WITH REGARD TO AN AMOUNT OF R S.21,826/-, WHICH WAS ADDED BY THE ASSESSING OFFICER AS COMMISSION PA YABLE ON THE ACCOMMODATION ENTRIES REFLECTED BY THE PURCHASE AND SALE OF SHARES OF M/S. ESSAR OIL LTD. AND KIRI DYES SINCE ADDITIONS ON ACCOUNT OF PURCHASE AND SALE OF SHARES AMOUNTING TO RS.10,91,320/- ITSE LF HAS BEEN DELETED, THE SAID ADDITION OF RS.21,826/- DOES NOT SURVIVE A ND IS DIRECTED TO BE DELETED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29/02/2016. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 29/02/2016 9 ITA NO. 2799/MUM/2014 (ASSESSMENT YEAR : 2009-10) 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