KANTADEVI GUPTA, MUMBAI V. ITO 14(2)(2), MUMBAI

ITA 2829/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3909 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S JADHAV
• Assessee Lawyers: HARISH AGARWAL
• Keywords: Bogus purchase; Cost of acquisition; Accommodation entries; Onus to prove; Reassessment proceedings
• Section: 143(3); 133(6); 147; 68; 69; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2802/MUM/2015 ASSESSMENT YEAR:2007-08 SANTLAL GUPTA, 404, A WAGHWADI, KALBADEVI MUMBAI ITO-14(2)(2), MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO.AABPG6320Q ITA NO.2829/MUM/2015 ASSESSMENT YEAR:2007-08 KANTADEVI GUPTA, 404, A WAGHWADI, KALBADEVI MUMBAI ITO-14(2)(2), MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO. AHRPG7451P # / REVENUE BY SHRI V.S. JADHAV ! ' / ASSESSEE BY SHRI HARISH AGARWAL ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 2 % #& ' ' ( / DATE OF HEARING : 18/02/2016 ' ' ( / DATE OF ORDER: 29/02/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY DIFFERENT ASSESSEES (CLOS E RELATIVES), ON IDENTICAL ISSUES, IS AGGRIEVED BY TH E IMPUGNED ORDER BOTH DATED 04/02/2015, OF THE LD. FIRST APPEL LATE AUTHORITY, MUMBAI. THE GROUND RAISED IS THAT THE LD . FIRST APPELLATE AUTHORITY ERRED IN OBSERVING THAT TRANSAC TION OF SPECULATION INCOME AND SHORT TERM CAPITAL GAIN ARE NOT GENUINE AND FURTHER THAT SALES PROCEEDS OF SHARE OF CRAZY INFOTECH AMOUNTING TO RS.2,28,188/- AND RS.2,45,416 /-, RESPECTIVELY IS INCOME FROM OTHER SOURCES, WITHOUT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSE L FOR THE ASSESSEE, SHRI HARISH AGARWAL, ADVANCED ARGUMEN TS, WHICH ARE IDENTICAL TO THE GROUND RAISED. ON THE O THER HAND, SHRI V.S. JADHAV, LD. DR, STRONGLY DEFENDED THE IMP UGNED ORDER BY INVITING OUR ATTENTION TO THE FACTUAL FIND ING RECORDED IN THE ASSESSMENT ORDER AS WELL AS IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVA NT FINDING RECORDED IN THE IMPUGNED ORDER FOR READY REFERENCE: - 3.2 FACTS OF THE CASE AND SUBMISSION OF THE LD. A.R. HAVE BEEN CONSIDERED CAREFULLY. THERE IS NO DISPUTE CONSIDERING THE FACTS THAT SUM OF RS.31,110/- ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 3 CONSTITUTES THE SUM OF RS.2,28,188J- ASSESSED AS SPE CULATION INCOME AND FURTHER PAYMENT DT.28.03.2007 BY CHEQUE RS.2,492/-. T HEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.31,110/- MADE SEPARATELY IN THE ASSESSMENT ORDER. 3.2.1 THERE IS ALSO NO DISPUTE OF FACTS THAT ALL THE TRANSACTIONS ARE FROM M/S. ALLIANCE INTERMEDIARIES NET WORK LTD WHICH A MUK ESH CHOKSHI GROUP CONCERN. IN THE CASE OF SHRI MUKESH CHOKSHI GROUP CONCE RNS INCLUDING M/S. ALLIANCE INTERMEDIARIES -NETWORK LTD. ITAT IN THE FO LLOWING APPELLATE ORDERS HAVE ALREADY HELD THAT SHRI MUKESH CHOKSHI AND ALL HIS ASSOCIATES HAVE NOT DONE ANY GENUINE BUSINESS OF STOCK BROKING OR DEALING IN SHARES. ALL THESE GROUP HAS DONE IS PROVIDING ACCOMMODATION ENTRIES. THE CASH FOR SUCH ACCOMMODATION ENTRIES HAVE BEEN PROVIDED BY THE B ENEFICIARIES AND ACCORDINGLY THE CHEQUE AS DESIRED BY THE BENEFICIARIES HAVE BEEN ISSUED. FOR THESE REASONS ITAT HAS HELD IN MUKESH CHOKSHI GROUP CONCE RNS THAT INCOME OF ALL THESE CONCERNS HAS TO BE DETERMINED IND EPENDENT OF THE TRANSACTIONS BUT @ 0.15% OF THE GROSS VALUE OF ALL C HEQUES ISSUED FROM THE BANK ACCOUNTS OF SUCH CONCERNS. THE INCOME WAS HELD AS SESSABLE IS THE NET INCOME -EARNED BY SHRI MUKESH CHOKSHI AND HIS ASSOCIATES IN PROVIDING THE ACCOMMODATION 'ENTRIES. THE CASES IN WHICH ITAT HAS HELD SO ARE AS UNDER:- 3.3 REFERENCE IS ALSO MADE TO THE VARIOUS ORDERS OF THE ITAT IN CASES OF SHRI MUKESH CHOKSHI AND HIS ASSOCIATES AS UNDER:- (A) ORDER DATED 28.03.2008 IN ITA NOS.462S/MUM/2005 AND 5OOO/MUM/200S FOR THE A.Y.2002-03 IN THE CASE OF M/ S. GOLD STAR FINVEST P. LTD. (B) ORDER DATED 29.08.2008 IN THE CASES OF (I) RICHMON D SECURITIES PVT. LTD. (SUBSEQUENTLY KNOWN AS MAHASAGAR SECURITIES P. LTD. AND NOW KNOWN AS ALAG SECURITIES) IN ITA NO.4624/MUM/2005 FOR THE A.Y .2002-03, AND M/S. ALPHA CHEMIE TRADE AGENCIES PVT. LTD. IN ITA NO.4999 /MUM/2005 FOR THE A.Y.2002-03. (C) DECISION IN ITA NO.4912/MUM/2005 DATED 30.05.2 008, IN THE CASE OF M/S. MIHIR AGENCIES PVT. LTD. 3.3.1 BASED UPON THESE ITAT ORDERS, ALL THE CONCERNS INCLUDING M/S. ALLIANCE INTERMEDIARIES AND NETWORK P. LTD., M/S. G OLD STAR FINVEST P. LTD. AND M/S. ALPHA CHEMIE TRADE AGENCIES PVT. LTD. HAVE AL SO FILED THEIR RETURNS DECLARING IT TO BE IN THE BUSINESS OF AN ENT RY PROVIDER AND ESTIMATING ITS INCOME @0.15% OF TOTAL RECEIPTS FROM ENTRY SEEKERS. THE SAME HAS BEEN ACCEPTED IN THE ASSESSMENT ORDER DATED 12.11.2008 FOR THE A.Y.2007-08 U/S.143(3) BY ACIT (OSD-1), CENTRAL RANG E- 7, MUMBAI. ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 4 3.3.2 ON THE BASIS OF THE AFORESAID ORDERS OF ITAT IN CASE OF SHRI MUKESH CHOKSHI AND HIS ASSOCIATES, IT IS A CONCLUDED FACT THAT SHRI MUKESH CHOKSHI IS NOT DOING ANY BUSINESS OF SHARE TRANSACTIONS OR S TOCK BROKERING BUT HE HAS PROVIDED ONLY ACCOMMODATION ENTRIES OF SHARE TRAN SACTIONS AND THUS FACILITATED IN HELPING VARIOUS PERSONS INCLUDING THE APPELLANT FOR SHOWING BOGUS LONG TERM CAPITAL GAIN AND OTHER INCOMES/LOSSE S AS REQUIRED BY VARIOUS PERSONS. FOR ACCOMMODATION ENTRIES PROVIDED BY SHRI MUKESH CHOKSHI AND HIS ASSOCIATES, HIS NET INCOME @0.15% OF TO TAL TRANSACTIONS HAS BEEN SHOWN AS INCOME AND HAS BEEN ACCEPTED BY THE I TAT. 3.3.3 THE ASSESSEE IS ALSO ONE BENEFICIARY OF ACCOMM ODATION ENTRY PROVIDED BY SHRI MUKESH CHOKSHI AND HIS ASSOCIATES. THE ENTITY USE D IN THIS CASE IS M/S. ALLIANCE INTERMEDIARIES NETWORK LTD. THEREFORE, THE SPECULATIVE INCOME AND THE SHORT TERM CAPITAL GAINS BOTH ARE SHOWN BY THE ASSESSEE WITHOUT ANY UNDERLYING GENUINE TRANSACTIONS. THE SUM OF RS.2,492/- SHOWN AS PAID TO MUKESH CHOKSHI IS ALSO A FICTITIOUS PAYMENT SINCE IT IS ONLY AN ACCOMMODATION ENTRY AND ALSO MADE AFTER A GAP OF AB OUT 9 MONTHS SINCE THE PURCHASE OF 2800 SHARES OF CRAZY INFOTECH IS SHOWN A ND AFTER RECEIPT OF THE CHEQUE FOR THE SALE OF SHARES OF CRAZY INFOTECH LTD. 3.4 THEREFORE, CONSIDERING THE FACTS OF THE CASE IN TO TALITY IT IS HEREBY HELD THAT SUM OF RS.L,97,078/- IS RIGHTLY ASSESSED BY THE A O INCOME FROM OTHER SOURCES. AO IS DIRECTED TO MODIFY THE ASSESSMENT BY ASSESSING SALE PROCEEDS OF SHARES OF CRAZY INFOTECH LTD. OF RS.2,28,188/- AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY , TOTAL INCOME IS TO BE DETERMINED AS (I) SPECULATION INCOME SHOWN RS.1,77,634/- (II) INTEREST INCOME AS SHOWN RS. 73,120/- (III) INCOME FROM OTHER SOURCES RS.2,28,188/ - 4. IN THE RESULT, APPEAL IS DECIDED AS ABOVE. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT OR DER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THE FACTS, IN BRIEF, AR E THAT IN THE CASE OF SMT. KANTADEVI GUPTA, INCOME OF RS.4,45,449 /- WAS DECLARED ON 28/07/2007 AND THE SAME WAS PROCESSED U /S ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 5 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT AFTER RECORDING THE REASONS AND ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 28/03/2013. THE AS SESSEE ATTENDED THE PROCEEDINGS. THE REASONS FOR REOPENING THE ASSESSMENT WERE ALSO PROVIDED TO THE ASSESSEE. THE REASONS HAVE BEEN REPRODUCED IN PARA 3 OF THE ASSESSMENT OR DER. IT IS NOTED THAT THE ASSESSEE, AN INDIVIDUAL, DECLARED SH ORT TERM CAPITAL GAINS ON THE SALE OF SHARES AND ALSO INCOME FROM OTHER SOURCES. THE ASSESSEE IS BENEFICIARY OF BOGUS ACCOM MODATION ENTRIES FROM M/S MAHASAGAR GROUP OF CASES I.E. M/S ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. TO VERIFY TH E GENUINENESS OF THE TRANSACTION WITH M/S ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD., INFORMATION WAS SOUGHT FROM BSE AND NSE U/S 133(6) OF THE ACT, WHER EIN, IT WAS CONFIRMED THAT M/S ALLIANCE INTERMEDIATERIES AN D NETWORK PVT. LTD. IS NOT REGISTERED WITH THEM. THE REPLY HA S BEEN REPRODUCED AT PAGE-3 OF THE ASSESSMENT ORDER. IN VI EW OF THIS REPLY, THE ASSESSEE WAS ISSUED/SERVED SHOW CAUSE NO TICE DATED 23/12/2013, AS IS EVIDENT FROM PARA 8 (PAGES 4 TO 7) OF THE ASSESSMENT ORDER. THE ASSESSEE ALSO RESPONDED T O THE SHOW CAUSE NOTICE WHICH HAS ALSO BEEN CONSIDERED. FINALLY, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.31,1 10/- (BEING PURCHASE COST OF 2800 SHARES) AS UNEXPLAINED MONEY AND ADDED TO THE RETURN INCOME OF THE ASSESSEE U/S 69 O F THE ACT, THE SO CALLED PROFIT WAS ALSO TREATED AS UNEXPLAINE D MONEY AND THE DIFFERENTIAL AMOUNT OF RS.2,28,245/- WITH R ESPECT TO BOGUS PURCHASES TRANSACTION WAS TREATED AS INCOME F ROM OTHER SOURCES. ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 6 2.3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS) AFFIRMED THE STAND OF THE LD. ASSESSI NG OFFICER. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBU NAL. 2.4. UNDER THE AFOREMENTIONED FACTS, THERE IS NO D ISPUTE TO THE FACT THAT M/S ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. IS THE GROUP CONCERN OF ONE SHRI MUKESH CHOKS HI. THE CHOKSHI GROUP HAD BEEN PROVIDING BOGUS ACCOMMODATIO N ENTRIES TO THE BENEFICIARY. SOME OF THE DECISIONS H AVE ALREADY BEEN QUOTED BY THE LD. COMMISSIONER OF INCOME TAX ( APPEALS). DURING HEARING, BEFORE US, THE ASSESSEE HAS NOT CON FRONTED THE OBSERVATION MADE IN THE IMPUGNED ORDER. IN FACT, M R. MUKESH CHOKSHI WAS NOT DOING GENUINE SHARE TRANSACTION AND WAS MERELY PROVIDING BOGUS ENTRIES AND SHOWING BOGUS LO NG TERM/SHORT TERM CAPITAL GAINS. IT IS ALSO NOTED THA T IDENTICALLY, IN THE FOLLOWING CASES, ORDER DATED 16/11/2015:- MANISH C. JOGANI, (HUF) VS ITO (ITA N0.7344/MUM/201 4) SANDEEP C.JOGANI (HUF)VS ITO (ITA NO.7345/MUM/2014) GIRISH C. JOGANI (HUF) VS ITO (ITA NO.7346/MUM/2014 ) AND CHAMPAKLAL D. JOGANI (HUF) VS ITO (ITA NO.7347/MUM/ 2014) IDENTICALLY, THE DEPOSITION MADE BY SHRI MUKESH CHO KSHI WAS DISCUSSED IN DETAIL ALONG WITH THE CASES OF RINKU S HAH (ITA NO.4311/MUM/2014), M/S GOLD STAR FINVEST P. LTD. (I TA NO.4625/MUM/2005) AND 5000/MUM/2005) ORDER DATED 28/03/2008, RICHMOND SECURITIES PVT. LTD. (SUBSEQUE NTLY KNOWN AS MAHASAGAR SECURITIES PVT. LTD. AND NOW KNO WN AS ALAG SECURITIES (ITA NO.4624/MUM/2005) ORDER DATED 29/08/2008, M/S APHA CHEMIE TRADE AGENCIES (ITA ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 7 NO.4999/MUM/2005), M/S MIHIR AGENCIES PVT. LTD. (IT A NO.4912/MUM/2005) ORDER DATED 30/05/2008 AND M/S ALLIANCE INTERMEDIATERIES AND NETWORK PVT. LTD. WER E CONSIDERED. THE RELEVANT PORTION OF THE ORDER DATED 16/11/2015 IS REPRODUCED HEREUNDER:- THIS IS A SET OF FOUR APPEALS BY DIFFERENT ASSESSEE S, AGITATING THE DISMISSAL OF THEIR APPEALS CONTESTING THEIR RES PECTIVE ASSESSMENTS U/S. 143(3) R/W S. 147 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) DATED 07.2.2014 FOR THE ASSESSMENT YEA R (A.Y.) 2008-09 BY THE COMMISSIONER OF INCOME TAX (APPEALS)-27, MUMB AI (CIT(A) FOR SHORT) VIDE HIS SEPARATE ORDERS OF EVEN DATE (2 0.10.2014). THE ISSUE/S ARISING BEING COMMON, THE APPEALS WERE POST ED FOR HEARING, AND WERE ACCORDINGLY, HEARD TOGETHER. 2. IT WAS, AT THE VERY OUTSET, SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE ONLY ISSUE ARISING PER THE INSTANT APPEALS CONCERNS THE GENUIN ENESS OF THE LONG- TERM CAPITAL GAIN (LTCG) ON THE SALE OF SHARES. THE APPELLANT/S HAD ON THEIR PART FURNISHED ALL THE RELEVANT DOCUMENTS, I.E., TOWARD ESTABLISHING THE VALIDITY OF THEIR CLAIM, VIZ. THE BILLS AND CONTRACT NOTES FOR THE PURCHASE AND SALE OF THE RELEVANT SHA RES; DE-MAT ACCOUNT, THROUGH WHICH THE DELIVERY OF THE SHARES S TANDS EFFECTED; THE BANK ACCOUNT/S REFLECTING THE RECEIPT, ETC. THE REVE NUE, HOWEVER, BASED ON THE DEPOSITION BY ONE, SHRI MUKESH CHOKSI, WHO AND HIS COMPANIES, IN THE BUSINESS OF MARKET INTERMEDIARIES AND DEALERS IN SECURITIES, WERE SUBJECT TO SEARCH ON 25.11.2009, I NITIATED PROCEEDINGS, IN ALL THE CASES, OF WHICH THE PRESENT FOUR ARE A PART, WHERE THE LTCG HAD ARISEN ON THE BASIS OF THE TRANS ACTIONS THROUGH HIS COMPANIES. TOWARD THIS, HE WOULD TAKE THE BENCH TO THE RELEVANT PART OF THE IMPUGNED ORDER IN THE CASE OF GIRISH C. JOGANI, STATING THE IMPUGNED ORDERS TO BE THE SAME IN ALL CASES, DI FFERENT ONLY IN THE FIGURES. NO OTHER MATERIAL TO IMPUGN THE ASSESSEES RELIANCE ON THE SAID DOCUMENTS HAS BEEN BROUGHT ON RECORD BY THE REV ENUE. WHY, EVEN CROSS EXAMINATION OF THE DEPONENT, SPECIFICALL Y ASKED FOR, WAS NOT PROVIDED, AND TOWARD WHICH HE WOULD ADVERT TO T HE LETTER DATED 02.12.2013 (DULY SUBMITTED ON THAT DATE), SUBMITTED DURING THE ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 8 ASSESSMENT PROCEEDINGS (PB PGS. 10-14). THE LD. CIT(A) , IN APPEAL, HAS MADE ABUNDANT REFERENCE TO CASE LAW. THE SAME I S PRINCIPALLY TOWARD SHOWING THAT THE BURDEN OF PROOF, WHICH IS O N THE ASSESSEE, HAS BEEN DISCHARGED, AND THAT IN THE FACTS AND CIRC UMSTANCES OF THE CASE THE CREDITS ARE UNPROVED. THE SAME DOES NOT IM PUGN THE ASSESSEE/S CASE IN ANY MANNER, EVEN WHOSE NAME DOES NOT APPEAR IN THE STATEMENTS OF SHRI MUKESH CHOKSI BEING RELIED U PON. AT THIS STAGE, ON BEING ASKED BY THE BENCH IF THE ASSESSEE H AD BEEN SUPPLIED THE COPIES OF THE SAID STATEMENTS, HE WOULD REPLY I N THE NEGATIVE. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE O THER HAND, SUBMIT THAT WHEN THE VERY PERSON WHOSE COMPANIES IS SUED THE RELEVANT BILLS AND CONTRACT NOTES, I.E., ON THE BAS IS OF WHICH THE TRUTH OF THE TRANSACTIONS IS BEING CLAIMED, ADMITS TO THE SAME BEING BOGUS, I.E., NOT REPRESENTING ACTUAL TRANSACTIONS, HOW WOU LD IT MATTER IF THE ASSESSEES NAME IS NOT SPECIFICALLY STATED IN THE S AID STATEMENTS? THE ASSESSEES PLEA OF HAVING BEEN NOT SUPPLIED THE COP Y OF THE SAID STATEMENTS COULD NOT BE COUNTENANCED IN-AS-MUCH AS THERE IS NOTHING ON RECORD TO SHOW THAT THE SAME WERE EVER APPLIED F OR. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANYTHING TO REBUT THE REVE NUES RELIANCE ON THE SAID STATEMENTS, WHICH IMPINGE DIRECTLY ON T HE VALIDITY OF THE DOCUMENTS BEING RELIED UPON. 3. THE PARTIES HAVE BEEN HEARD AND THE RECORD PERUS ED. THE FIRST THING OBSERVED IN THE MATTER IS THAT THE ASSESSEE HAS NOT BEEN SUPPLIED A COPY OF THE STATEMENTS BEING RELIED UPON BY THE REVENUE, AND ON THE BASIS OF WHICH IT CLAIMS THE IMP UGNED TRANSACTIONS AS BOGUS. THE ASSESSEE, HOWEVER, CLAIM ING HIS NAME AS NOT APPEARING THEREIN, APPEARS TO BE WELL AWARE OF THE CONTENTS OF THE SAID STATEMENTS, WHICH WAS IN FACT CONCEDED TO BY THE LD. AR DURING HEARING, EXPLAINING THAT THE REASSESSMENTS I N OTHER CASES TOO HAD BEEN INITIATED BY THE REVENUE ON THE BASIS OF TH E SAID STATEMENTS, WHICH ARE THUS IN COMMON KNOWLEDGE. EVEN SO, THE SA ME WOULD NOT SUBSTITUTE A FORMAL CONVEYANCE THEREOF TO THE ASSES SEE, AND BEING BROUGHT ON RECORD, FORM AS IT DOES, AS IT WOULD APP EAR, THE SUBSTRATUM OF THE REVENUES CASE. THE ASSESSEE/S - W HO IS ADMITTEDLY A BENEFICIARY OF THE CREDITS ON TRANSACTIONS CARRIE D THROUGH THE SAID COMPANIES, OBJECTION, HOWEVER, HOLDS LITTLE MERIT. THE STATEMENTS, BEING PURSUANT TO A SEARCH ACTION AT THE BUSINESS P REMISES OF SH. MUKESH CHOKSI AND HIS COMPANIES, WERE NOT QUA ANY S PECIFIC ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 9 ASSESSEE BUT SPECIFIC TO HIS BUSINESS/ES, COVERING ALL THE PERSONS TRANSACTING BUSINESS THEREWITH. IT IS NOT THE REV ENUES CASE THAT ONLY SOME SPECIFIED TRANSACTIONS, AS OF THE ASSESSE E, UNDERTAKEN THROUGH THE SAID COMPANY/S, ARE NOT GENUINE, BUT TH AT THE ENTIRE BUSINESS AS CARRIED OUT THROUGH SUCH HAWALA COMPANI ES, IS SHAM AND BOGUS, ONLY A MAKE BELIEVE, BEING CARRIED WITH A VI EW TO PROVIDE ACCOMMODATION ENTRIES FOR A CHARGE, EVEN AS ADMITTE D PER THE SAID DEPOSITIONS, AND WHICH IS UNDERSTOOD TO BE THE SUBS TANCE THEREOF. THE CONTENTION OF THE NAME BEING NOT SPECIFICALLY S TATED IN THE SAID STATEMENTS, IS THUS OF LITTLE CONSEQUENCE. IN FACT, THE REASSESSMENT PROCEEDINGS ARE NOT UNDER CHALLENGE, SO THAT THE RE LEVANCE OF THE MATERIALS WITH THE REVENUE, OR THE VALIDITY OF THE R EASONS RECORDED, IS NOT IN DISPUTE. AGAIN, AS OBSERVED BY THE BENCH, HOW COULD, EVEN DE H ORS THE SAID STATEMENTS, CREDENCE BE GIVEN TO THE BILLS/CON TRACT NOTES, AS FURNISHED, WHEN THE REGISTRATION OF M/S. ALLIANCE IN TERMEDIARIES & NETWORK PVT. LTD., A SUB BROKER AFFILIATED TO M/S. ISE SECURITIES & SERVICES PVT. LTD., AND THROUGH WHOM THE PURCHASE OF THE RELEVANT SHARES IS STATED TO HAVE BEEN MADE, STOOD CANCELLED AS FAR BACK AS ON 19.02.2004 . FURTHER, THE TRANSACTIONS WERE ADMITTEDLY NOT CAR RIED OUT THROUGH THE STOCK EXCHANGE, AS AGAIN CLARIFIED BY THE NATIONAL STOCK EXCHANGE (REFER PARA 2.4.3 OF THE IMPUGNED ORD ER). WHAT VALUE, THEN, THE SAID BILLS/CONTRACT NOTES, ISSUED BY SUCH COMPANIES, WHICH COULD NOT HAVE ACTED AS BROKERS OR SUB-BROKER S? THE CONTRACT NOTES ARE, IN TERMS OF THE LAW/PROCEDURE, EVEN OTHE RWISE REQUIRED TO BE TIME STAMPED, ALSO BEARING THE UNIQUE IDENTIFICA TION NUMBER (UIN) (AND WHICH BEARS REFERENCE TO HIS PAN) OF THE CLIENT, WHILE IN THE PRESENT CASE THERE IS CONSIDERABLE DOUBT IF THE TRANSACTIONS ARE MARKET TRANSACTIONS, I.E., THROUGH THE MARKET/EXCHA NGE. THE ASSESSEES PLEA FOR CROSS EXAMINATION IS, AGAIN, MI SCONCEIVED. IN-AS- MUCH AS THE ASSESSEE RELIES ON THE EVIDENCES FURNIS HED BY SH. MUKESH CHOKSI OR HIS COMPANIES, I.E., IN THE FORM O F BILLS, CONTRACT NOTES, ETC., HE (MR. MUKESH CHOKSI) IS HIS WITNESS. THE SAID RELIANCE HOWEVER GETS PUT PAID IN VIEW OF HIS SUBSEQUENT STA TEMENTS, WHICH MAY EVEN BE SUBSTANTIATED AND CORROBORATED BY THE EVIDENCES/MATERIALS FOUND IN SEARCH. THE CREDIBILIT Y OF THE BILLS AND CONTRACT NOTES IS EVEN OTHERWISE IN SERIOUS DOUBT, WITH THE TRANSACTIONS BEING NOT MARKET TRANSACTIONS, SO THAT THE BROKER COULD NOT HAVE ACTED AS SUCH, I.E., AS A MARKET INT ERMEDIARY. IT IS, ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 10 THUS, THE ASSESSEE, ON WHOM THE ONUS SHIFTS, AND WH O WAS REQUIRED TO PRODUCE AND EXAMINE HIM (MUKESH M. CHOKSI), IF HE W ANTED TO REBUT THE REVENUES RELIANCE ON HIS SUBSEQUENT STATEMENTS. IN FACT, SH. MUKESH CHOKSI AS WELL AS HIS COMPANIES STAND BLACK LISTED BY SEBI ON THE GROUND OF BEING ENGAGED IN CLANDESTINE ACTIVITIES, EVEN AS NOTED BY THE TRIBUNAL IN THE CA SE OF RATANCHAND J. OSWAL & RISHI R. OSWAL (IN ITA NOS. 4998 & 4999/MUM/2 009 DATED 28.03.2013) VIDE PARA 4.2 OF ITS ORDER. CLEARLY, TH EREFORE, THEIR CAPACITY TO FUNCTION AS DEALERS IN SECURITIES IS DO UBTFUL. WHY, AS OBSERVED DURING HEARING ITSELF, THE ASSESSMENTS IN THE CASE OF THESE COMPANIES HAVE ITSELF BEEN CONFIRMED BY THE TRIBUNA L ON THE BASIS THAT THESE ENTRIES DO NOT REPRESENT OR ARISE OUT OF GENUINE TRANSACTIONS, BUT ARE ONLY ACCOMMODATION ENTRIES, A SSESSING THEIR INCOME BY ESTIMATING THE SAME BY APPLYING A PERCENT AGE ON THE GROSS RECEIPT AS PER THEIR BANK ACCOUNTS. REFERENCE TOWAR D THIS, BEING INFORMATION IN THE PUBLIC DOMAIN, IS MADE TO THE FO LLOWING CASES, HAVING BEEN RELIED UPON BY THE REVENUE IN ANOTHER SU CH CASE (RINKU SHAH - IN ITA NO. 4311/MUM/2014 FOR A.Y. 2005-06): 1) M/S. GOLD STAR FINVEST P. LTD. (IN ITA NOS. 4625/MUM/2 005 & 5000/MUM/2005 DATED 28.03.2008 FOR A.Y. 2002-03); 2) RICHMOND SECURITIES P. LTD. (SUBSEQUENTLY KNOWN AS MA HASAGAR SECURITIES P. LTD. AND NOW KNOWN AS ALAG SECURITIES) (IN ITA NO. 4624/MUM/2005 DATED 29.08.2008 FOR THE A.Y. 2002-03) AND M/S. APHA CHEMIE TRADE AGENCIES PVT. LTD. (IN ITA NO. 4999/ MUM/2005 DATED 29.08.2008 FOR A.Y. 2002-03); 3) M/S. MIHIR AGENCIES PVT. LTD. (IN ITA NO. 4912/MUM/20 05 DATED 30.05.2008); AND 4) M/S. ALLIANCE INTERMEDIARIES AND NETWORK P. LTD., (AS SESSMENT ORDER U/S.143(3) DATED 12.11.2008 FOR A.Y.2007-08/BY ACIT(O SD-1), CENTRAL RANGE-7, MUMBAI)). THAT IS, THE TRIBUNAL, THE FINAL FACT FINDING AUTHO RITY, HAS ITSELF FOUND, AS A FACT, THAT THESE COMPANIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO VARIOUS ENTRY SEEKERS, SO THAT ONLY THE COMMISSION AT THE STIPULATED RATE COULD BE ASSESSED AS INCOME IN THEIR HANDS. BY NECESSARY, NAY, DIRECT IMP LICATION, THE ENTRIES/CREDITS ARE NOT GENUINE. ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 11 COMING TO THE FACTS OF THE CASE, IT IS OBSERVED THA T THOUGH THE REVENUE HAS MADE A CLEAR AND THOROUGH ANALYSIS OF TH E OBTAINING LEGAL FRAMEWORK, RELYING ON ABUNDANT CASE LAW, WHIC H HAS NOT BEEN REBUTTED, THE FACTS HAVE NOT BEEN SIMILARLY COLLATE D & ANALYZED, WITH A VIEW TO DETERMINE THE ISSUE AT LARGE, WHICH IS PR INCIPALLY FACTUAL, I.E., IF THE TRANSACTIONS ARE SATISFACTORILY PROVED , TOWARD SATISFACTORILY EXPLAINING THE IMPUGNED CREDIT/S AS TO THEIR NATURE AND SOURCE, BY THE ASSESSE. AND WHICH WOULD ALSO REQUIRE PROVIDING HIM OPPORTUNITY TO EXPLAIN THE DIFFERENT ASPECTS OF THE TRANSACTIONS. SEVERAL QUESTIONS ARISE, IN THE MATTER, AND WHICH W OULD REQUIRE BEING SUITABLY ADDRESSED. WHETHER THE SHARES UNDER REFERENCE WERE PURCHASED FROM THE MARKET, OR ARE OFF MARKET TRANSA CTIONS. WHAT IS THE BASIS OF THE PURCHASE PRICE IN THE CASE OF THE LATTER? WHO IS THE SELLER/S, FROM WHOM THEREFORE THE DELIVERY WOULD FL OW, AND TO WHOM THE PAYMENT/S WOULD BE MADE? IS THERE ANY CONTEMPOR ANEOUS EVIDENCE TO EXHIBIT THE PURCHASE (AS WELL AS THE RA TE), WHICH IS CRUCIAL ALSO FROM THE POINT OF VIEW THAT IT IS ONLY WHERE THE HOLDING PERIOD IS FOR A MINIMUM OF 12 MONTHS THAT THE GAIN ARISING ON THE TRANSFER OF THE SHARES QUALIFIES TO BE A LTCG. LIKE -WISE, FOR THE SALE. IS THE SALE SUPPORTED BY MARKET QUOTE/S? WHAT IS TH E BASIS OF THE SALE RATE/S, WHICH IS SEVERAL TIMES THE RATE OBTAINING A YEAR OR SO BACK, INASMUCH AS IT WAS PURCHASED THEREAT AT THAT RATE? IS THERE ANY JUSTIFICATION ON RECORD FOR THE SALE (MARKET) RATE IN TERMS OF THE CREDENTIALS OR FUNDAMENTALS OF THE COMPANY? WHO ARE THE BUYERS OF THE SHARES, TO WHOM THE DELIVERY THEREOF WOULD BE M ADE AND FROM WHOM THE CONSIDERATION FLOWS, AND WHO THEREFORE REP RESENT THE SOURCE OF THE CREDIT. WHERE CLAIMED AS OFF-MARKET T RANSACTIONS, THE SAME COULD ONLY BE ON PRINCIPAL TO PRINCIPAL BASI S, AND AS SPOT TRANSACTIONS, I.E., WHERE BOTH THE ACTUAL DELIVERY (OF SHARES) AS WELL AS THE PAYMENT THERE-AGAINST IS CONCLUDED IMMEDIATE LY, I.E., ON THE VERY SAME DAY OF THE CONTRACT OR, MAXIMUM, THE NEXT DAY (S. 2(I) OF SECURITIES CONTRACT REGULATION ACT, 1956). IN WHAT C APACITY, THEN, HAS THE BROKER ACTED, WHO THEREFORE COULD NOT HAVE ACTED AS ONE? THIS IS APART FROM THE FACT THAT IT IS OTHERWISE NO T ELIGIBLE TO ACT AS ONE IN VIEW OF THE CANCELLATION OF THE REGISTRATION . ONE COULD IN FACT CONTINUE FURTHER. IT IS THE SATISFACTORY ANSWER TO ALL THESE AND RELATED QUESTIONS THAT WOULD DETERMINE IF THE TRANSACTIONS, AS CLAIMED, ARE PROVED, OR NOT. AND, THUS, THE APPLICABILITY OR OTHE RWISE OF SECTION 68 OF THE ACT IN THE PRESENT CASE. ALSO RELEVANT, WOULD BE THE MATERIALS ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 12 FOUND DURING SEARCH IN-AS-MUCH AS THEY MAY INDICATE IF THE STATEMENTS ARE CORROBORATIVE AND, FURTHER, IF THE M ODUS OPERANDI ADOPTED, AS EXPLAINED THEREIN, CORROBORATES THE FAC TS AND INCIDENTS OF THE CASE. THE LAW IN THE MATTER IS WELL SETTLED, AN D TOWARD WHICH SOME BINDING DECISIONS MAY BE CITED: CIT VS. SRI MEENAKSHI MILLS LTD. [1967] 63 ITR 609 ( SC) JUGGILAL KAMLAPAT VS. CIT [1969] 73 ITR 702 (SC) CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) MCDOWELL & CO. LTD. VS. COMMERCIAL TAX OFFICER [198 5] 154 ITR 148 (SC) WORKMEN, ASSOCIATED RUBBER INDUSTRY LTD. VS. ARI LTD. [ 1986] 157 ITR 77 (SC) CIT V. AKSHAY TEXTILE TRADING & AGENCIES (P.) LTD. [20 08] 304 ITR 401 (CONFIRMING THAT THERE WAS NO DEPARTURE FROM TH E PRINCIPLES/RATIO OF THE DECISION IN MCDOWELL & CO. LTD.(SUPRA) IN UOI V. AZADI BACHAO ANDOLAN [2003] 263 ITR 706 (SC)) TWINSTAR HOLDINGS LTD.V. DY. CIT [2003] 260 ITR 6 (B OM) IT NEEDS TO BE APPRECIATED THAT THOUGH THE REVENUE HAS SOUGHT TO IMPUGN THE TRANSACTION/S AS BOGUS/NOT GENUINE, T HE ISSUE IS QUA THE APPLICABILITY OF SECTION 68, WHEREBY THE STATUT E ITSELF CASTS A BURDEN OF PROOF ON THE ASSESSEE TO SATISFACTORILY E XPLAIN THE NATURE AND SOURCE OF A CREDIT. THE ISSUE, WHICH IS PURELY IN THE REALM OF A FACTUAL MATTER, IS THUS WHETHER THE ASSESSEE HAS BE EN ABLE TO SATISFACTORILY PROVE THE IMPUGNED CREDIT, I.E., AS WOULD SATISFY A MAN OF NORMAL PRUDENCE, ACTING REASONABLY, AS WHERE WIT H REGARD TO HIS OWN AFFAIRS. IN OTHER WORDS, IS THE ASSESSING AUTHO RITY, IN BEING NOT SATISFIED WITH THE ASSESSEES EXPLANATION, BACKED O F-COURSE BY THE MATERIALS RELIED UPON, ACTING REASONABLY. BEING, OF- COURSE, WHERE AND TO THE EXTENT REQUIRED/RELEVANT, DULY INFORMED OF THE APPLICABLE LAW/PROCEDURE. THE LAW IN THE MATTER IS AGAIN WELL SETTLED, AND TOWARD WHICH SOME BINDING DECISIONS MAY BE CITED: A. GOVINDA RAJULU MUDALIAR V. CIT (1958) 34 ITR 807 (SC) SREELEKHA BANERJEE & OTHRS. V. CIT (1963) 49 ITR 11 2 (SC) KALEKHAN MOHAMMED HANIF V. CIT (1963) 50 ITR 1(SC) CIT V. DURGA PRASAD MORE (SUPRA) CIT V. BIJU PATNAIK (1986) 160 ITR 674 (SC) SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 13 CIT VS. P. MOHANAKALA &OTHERS (2007) 291 ITR 278 (S C) THEN, AGAIN, WHETHER THE SECURITIES TRANSACTION TAX (STT) HAS BEEN PAID ON THE PURCHASE AND SALE OF SHARES. T HIS IS AS IT IS ONLY WHERE THE STT IS CHARGEABLE, THAT AN EXEMPTION U/S. 10(38) ENURES. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSES SEE TO ESTABLISH ITS CASE, BESIDES CLAIMING RELIANCE ON THE DOCUMEN TS, AND WHICH GETS IMPUGNED IN VIEW OF THE STATEMENTS, THE EXISTENCE O F WHICH IS NOT DOUBTED; RATHER, ACCEPTED, REQUESTING FOR CROSS EXA MINATION. THE REVENUE, ON ITS PART, HAS THOUGH MADE OUT A CASE , HAS NOT BROUGHT ON RECORD ALL THE RELEVANT FACTS. ALSO, IT CANNOT BE DENIED THAT THE ASSESSEE IS ENTITLED TO BE FURNISHED A COP Y OF ALL THE MATERIALS BEING RELIED UPON BY THE REVENUE TOWARD IMPUGNING TH E ASSESSEES RELIANCE ON THE SAID DOCUMENTS, AND AN OPPORTUNITY TO SET UP ITS DEFENSE. THE ISSUE TO MY MIND IS FACTUALLY INDETERM INATE. RELIANCE ON THE DECISIONS BY THE TRIBUNAL IN CASES OF OTHER PER SONS AVAILING SUCH CREDITS; THE ISSUE BEING PRINCIPALLY FACTUAL, WOULD BE OF LITTLE ASSISTANCE. THIS IS STATED AS THE LD. AR CLAIMS OF AB OUT 15-20 CASES BY THE MUMBAI BENCHES OF THE TRIBUNAL IN THE RECENT MONTHS, WHERE, UNDER SUCH CIRCUMSTANCES, THE APPEALS BY THE ASSESS EE ARE CLAIMED TO HAVE BEEN ALLOWED. WHY, THE LD. CIT(A) HAS HIMSELF R ELIED ON SEVERAL DECISIONS BY THE TRIBUNAL, EVEN DISCUSSING THE FACT S THEREOF, WHERE UNDER SUCH SIMILAR CIRCUMSTANCES THE ADDITIONS HAVE BEEN CONFIRMED, SO THAT THE ISSUE IN ALL THE CASES, TO BE DECIDED O N THE FACTS AND CIRCUMSTANCES OF EACH CASE, IS WITH REGARD TO THE D ISCHARGE OR OTHERWISE OF THE BURDEN OF PROOF ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF THE IMPUGNED CREDI TS. TOWARD THIS, REFERENCE HAS ALREADY BEEN MADE TO THE ORDER BY THE TRIBUNAL IN RATANCHAND J. OSWAL & RISHI R. OSWAL (SUPRA). SIMILARL Y, THE TRIBUNAL IN THE CASE OF ZIAUDDIN A. SIDDIQUE & OTHER S VS. JT. CIT (IN ITA NOS. 4699 AND 4700/MUM/2011 AND OTHERS, DATED 2 5.04.2014) ON A FACTUAL ANALYSIS FOUND THE TRANSACTIONS THROUG H THE AHMEDABAD STOCK EXCHANGE TO BE SHAM, WITH IN FACT THE MARKET R ATES ITSELF BEING RIGGED. 4. THE MATTER ACCORDINGLY WOULD STAND TO BE RESTORE D TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH, EV EN AS INDICATED DURING HEARING. THE ASSESSEES SHALL BE ALLOWED PROP ER OPPORTUNITY TO STATE THEIR CASE, AS WELL AS TO MEET THAT OF THE REV ENUE, WHICH SHALL ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 14 MAKE AVAILABLE THERETO ALL THE MATERIALS BEING RELI ED UPON BY IT. REFERENCE IN THIS CONTEXT MAY BE MADE TO, AMONG OTHE RS, THE DECISION BY THE HONBLE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VS. CIT [1981] 131 ITR 451 (SC). I DECIDE ACCORDINGLY. 5. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR S TATISTICAL PURPOSES. IN THE LIGHT OF THE AFORESAID DISCUSSION AND THE JU DICIAL PRONOUNCEMENT DISCUSSED HEREINABOVE, THERE IS CATEG ORICAL FINDING IN PARA 3.3.3 OF THE IMPUGNED ORDER THAT BO TH THE ASSESSEES BEFORE US ARE BENEFICIARY OF ACCOMMODATIO N ENTRY PROVIDED BY SHRI MUKESH CHOKSHI AND HIS ASSOCIATES. BEFORE US, THE ASSESSEE HAS NOT CONTRADICTED THE FACTUAL F INDING RECORDED IN THE IMPUGNED ORDER, THUS, CONSIDERING T HE TOTALITY OF FACTS, WE FIND NO INFIRMITY IN THE IMPUGNED ORDE R, CONFIRMING THE ASSESSED INCOME AS INCOME FROM OTHER SOURCES. THE STAND TAKEN BY THE LD. FIRST APPELLATE AUTHORIT Y IS AFFIRMED, THEREFORE, BOTH THE APPEALS ARE HAVING NO MERIT, THEREFORE, DISMISSED. FINALLY, BOTH THE APPEALS ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 18/02/2016. SD/- SD/- ( SANJAY ARORA ) (JOGINDER SINGH) !' / ACCOUNTANT MEMBER #' /JUDICIAL MEMBER % & MUMBAI; ) DATED : 29/02/2016 F{X~{T? P.S/. . . ITA NOS.2802 & 2829/MUM/2015 SANTLAL GUPTA & KANTADEVI GUPTA 15 $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 % 1' ( + ) / THE CIT, MUMBAI. 4. 0 0 % 1' / CIT(A)- , MUMBAI 5. 3#4 .' , 0 +( 5 , % & / DR, ITAT, MUMBAI 6. 7& / GUARD FILE. / BY ORDER, /3+' .' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI