PULKIT M. GOEL, MUMBAI V. ITO 15(2)(2), MUMBAI

ITA 3006/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2134 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Salary income; Share purchase agreement; Reason to believe
• Section: 143(3); 142(1); 148; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C ,MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3006/MUM/2013 FOR (ASSESSMENT YEAR : 2005-06 ) SHRI PULKIT M. GOEL A-WINGH, FLAT NO. 903, LAKSHCHANDI HEIGHT, KRISHNA VATIA ROAD, GOREGAON (E), MUMBAI-400063. PAN: AHPPG6605H VS. ITO-15(2)(2) MATRU MANDIR, MUMBAI-400007. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHUPENDRA SH AH (AR) REVENUE BY : SHRI PRADEEP KUMAR SINGH (DR) DATE OF HEARING : 10.08.2016 DATE OF PRONOUNCEMENT : 09.11.2016 O R D E R PER PAWAN SINGH, JM: 1. THIS APPEAL U/S 253 OF THE INCOME-TAX ACT IS DIRECT ED BY ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [FOR SH ORT THE CIT(A)] -26 MUMBAI DATED 28.03.2013 FOR ASSESSMENT YEAR (AY) 2005-06. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 30.08.2005 FOR RELEVANT AY DECLARING TOTA L INCOME OF RS. 14,45,094/-. IN THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN INCOME FROM SALARY, INCOME FROM HOUSE PROPERTY, LONG TERM CAPITAL GAIN (LTCG) AND I NCOME FROM OTHER SOURCES. THE ASSESSEE CLAIMED EXEMPTION IN LTCG OF RS. 6,38, 805/- ON SALES OF SHARE. THE ASSESSING OFFICER (AO) RECEIVED THE INFORMATION THA T ASSESSEE RECEIVED BOGUS ACCOMMODATION BILLS OF RS. 64,44,760/- ON SALE OF S HARE OF TALENT INFORWAYS LIMITED, FROM ALLIANCE INTERMEDIATERIES & NETWORK P VT. LTD., ONE OF THE GROUP COMPANIES OF M/S. MAHASAGAR SECURITIES PVT. LTD., W HICH IS RUN BY DIRECTORS OF THE 2 ITA NO. 3006/M/2013 SHRI PULKIT M. GOEL COMPANIES, SHRI MUKESH CHOKSI AND SHRI JAYESH K. SA MPAT. THUS, THE NOTICE U/S 148 DATED 29.03.2011 AFTER RECORDING THE REASONS OF RE-OPENING WAS SERVED. THE FOLLOWING REASONS OF RE-OPENING WERE RECORDED AS U NDER: AN INTIMATION HAS BEEN RECEIVED IN THIS CASE, WHER EIN, IT IS STATED THAT A SEARCH AND SEIZURE ACTION U/S. 132 WAS CONDUCTED IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. [NOW ALAG SECURITIES PVT. LTD.] ON 25.11.2009. DURING THE COURSE OF SEARCH ACTION, IT WAS NOTICED THAT THE ASSESSEE IS ALSO ONE OF THE BENEFICIARIES IN THE AC COMMODATION BILLS PROVIDED BY THE SAID COMPANY THROUGH ITS DIRECTORS SHRI MUKE SH M. CHOKSI AND JAYESH K. SAMPAT. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF INFORMATION FURNISHED HAS ESCAPED ASSESSMENT. NOTICE U/S. 143(2) DATED 05.07.2011 AND NOTICE U/S 142(1) WAS ISSUED FOR SEEKING VARIOUS DETAILS. THE ASSESSEE FILED OBJECTION VIDE OBJECTION DATED 02.08.2011 IN RESPECT OF NOTICE U/S. 148. THE OBJECTION OF ASSESS EE WAS DISPOSED OF AND THE ASSESSEE WAS AGAIN ISSUED NOTICE U/S 142(1) FOR SEE KING CERTAIN DETAILS, THE SAME WAS NOT COMPLIED, HOWEVER, ASSESSEE AGAIN FILED OBJECTI ON U/S 292BB OF THE ACT ALLEGING THERE THAT NOTICE U/S 142(1) R.W.S. 147 IS BAD-IN-L AW. THE OBJECTION OF ASSESSEE WAS NOT ACCEPTED BY THE AO HOLDING THAT THE SAME IS NOT MAINTAINABLE, AS THE ASSESSEE HAS ALREADY BEEN SERVED NOTICE U/S 148 AND NOTICES U/S 143(2) AND 142(1) IN PROPER MANNER. THE AO MADE THE REASSESSMENT PROCEEDING HOL DING AS UNDER: 'IN THE RETURN OF INCOME FILED FOR THE AY 2005-06/ YOU HAVE CLAIMED THE EXEMPTION UNDER SECTION 10 IN RESPECT OF LONG TERM CAPITAL GAINS OF RS.63/88/051/-. HOWEVER; NO DOCUMENTARY EVIDENCES I N SUPPORT OF YOUR CLAIM, HAVE BEEN SUBMITTED/PRODUCED BY YOU/ TILL DATE. INF ORMATION HAS BEEN RECEIVED THAT YOU ARE ONE OF THE BENEFICIARIES OF THE ACCOMM ODATION BILLS/CONTRACT NOTES PROVIDED BY M/S. MAHASAGAR SECURITIES PVT. LTD. AND OTHER GROUP CONCERNS THROUGH THE DIRECTORS SHRI MUKESH CHOKSI AND JAYESH K. SAMPAT. YOU ARE THEREFORE REQUESTED TO FURNISH THE FOLIO WINGS IN R ESPECT OF TRANSACTIONS OF SHARES ON WHICH THE LONG TERM CAPITAL GAINS OF RS.63/88/05 1/- HAVE BEEN CLAIMED TO BE EXEMPTED. (I) DEMAT ACCOUNT STATEMENT FROM THE DATE OF PURCHASE O F SHARES TO THE DATE OF SALE OF SHARES/ IN RESPECT OF WHICH THE LTC G WAS CLAIMED TO BE EXEMPTED. (II) RELEVANT CONTRACT NOTES AND BROKER'S BILLS OF PURCH ASE AND SALE OF SHARES. (III) COPY OF LEDGER ACCOUNT OF THE BROKER FOR THE PERIOD FROM THE DATE OF PURCHASE OF SHARES TO THE DATE OF SALE OF THE SHARE S. (IV) BANK ACCOUNT STATEMENTS HIGHLIGHTING THE PAYMENTS M ADE TOWARDS PURCHASE OF THESE SHARES AND THE RECEIPT ON SALE OF THESE SHARES. 3 ITA NO. 3006/M/2013 SHRI PULKIT M. GOEL HOWEVER, THE ASSESSEE DID NOT FURNISH THE ABOVE MEN TIONED INFORMATION AND DOCUMENTS. 3. THUS, THE AO DENIED THE EXEMPTION OF RS. 6,38,805/- CLAIMED U/S 10 OF THE ACT IN ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 DATED 14.12.2011. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE RE-OPE NING U/S 147 AND THE ADDITION FOR DENYING THE EXEMPTION OF LTCG. IN APPEAL, THE LD CI T(A) DIRECTED THE AO THAT PROFIT ON SALE OF SHARE BE TREATED AS STCG. THUS, F URTHER AGGRIEVED BY THE ORDER OF LD CIT(A) THE ASSESSEE FILED PRESENT APPEAL BEFORE U S. 4. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. LD. AR OF THE ASSESSEE ARGUED THAT GROUN D NO. 1 TO 4 IS RAISED AGAINST THE VALIDITY OF RE-OPENING, GROUND NO.5 RELATES TO CONF IRMATION OF ADDITION ON ACCOUNT OF RS. 63,88,051/- AS STCG AND GROUND NO.6 IS CON SEQUENTIAL IN NATURE. THE LD. AR OF THE ASSESSEE HAS NOT ARGUED ANYTHING AGAINST THE GROUND NO. 1 TO 4. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE ISSUE RA ISED IN THE PRESENT APPEAL IS COVERED BY THE DECISION OF MUMBAI TRIBUNAL IN JAFFE RALI K. RATTONSEY VS. DCIT [2012] 23 TAXMANN.COM 21 (MUM). THE LD. DR FOR REVE NUE ARGUED THAT DURING THE SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT AT THE PREMISES OF M/S MAHASAGAR SECURITIES PVT. LTD. (MSPL) ON 25.11.2009 REGARDING SUSPICIOUS TRANSACTION BEING TAKEN PLACE IN THE BANK ACCOUNT OF THIS COMPANY AND ITS RELATED COMPANIES WHICH WERE MANAGED BY SHRI MUKESH CHOKSI AND JAYESH K. SA MPAT. DURING THE SEARCH OPERATION, IT WAS REVEALED THAT MSPL AND ITS RELATE D GROUP OF 34 COMPANIES WERE RUN BY SHRI MUKESH CHOKSI WHO IS ENGAGED IN PROVIDING B OGUS AND SPECULATING PROFIT OR LOSS ON COMMODITY TRADING FOR MANY YEARS AND ON THE BASIS OF SUCH INFORMATION AND MATERIAL, THE ASSESSMENT IN CASE OF ASSESSEE WAS RE OPENED. THE ASSESSEE CLAIMED LTCG ON THE SALES OF SHARES ON THE BASIS OF BOGUS A CCOMMODATION BILL. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALREADY NOTED THE CONC LUSION DRAWN BY AO IN PARA 2 ABOVE. WE FURTHER NOTICED THAT BEFORE LD. CIT(A), A REQUEST FOR FILING FRESH DOCUMENT WAS RAISED. THE REQUEST OF THE ASSESSEE WAS ACCEPTE D AND ACCORDINGLY THE DOCUMENTS WERE REFERRED FOR THE COMMENTS OF AO. ON THE BASIS OF REMAND REPORTS SUBMITTED BY AO ALONG WITH HIS LETTER DATED 18.03.2013, THE OBJE CTION ON THE GROUND REGARDING THE 4 ITA NO. 3006/M/2013 SHRI PULKIT M. GOEL REOPENING WAS REJECTED, HOWEVER, ON THE GROUNDS OF ADDITION OF DENIAL OF LTCG, IT WAS OBSERVED FROM THE REMAND REPORT OF AO THAT DETA ILS OF SHAREHOLDINGS WERE CALLED FROM ROC. AND AS PER THE DETAILS OF SHAREHOL DERS ON 30.09.2003 THE ASSESSEE WAS NOT THE SHAREHOLDER OF TALENT INFORWAYS LTD. TH E NAMES OF ASSESSEE APPEARED ON THE AGM ON 02.09.2004 ONLY. IT WAS FURTHER OBSERVED BY LD. CIT(A) THAT ASSESSEE CLAIMED THAT SHARE WAS ACQUIRED ON 30.05.2003 AND T HE NAME OF ASSESSEE WAS NOT INCLUDED IN THE LIST OF SHAREHOLDER ON 30.09.2003, THUS EXACT DATE OF TRANSFER OF SHARE IS NOT ASCERTAINABLE ON THE DATE OF DOCUMENTS PROVI DED BY ASSESSEE, THUS, IT CANNOT BE PROVED THAT ASSESSEE HOLD THESE SHARES FOR MORE THA N ONE YEAR. IT WAS FURTHER OBSERVED THAT ASSESSEE HAS NOT FURNISHED ANY EVIDEN CE TO SHOW THAT TRANSACTIONS OF PURCHASE WERE ENTERED INTO RECOGNIZED STOCK EXCHANG E AND S.T.T WAS PAID. THOUGH, THE ASSESSEE OBJECTED ABOUT THE REPORT OF AO BUT TH E LD. CIT(A) AGREED WITH THE REPORT OF AO AND CONCLUDED THAT AS PER THE RECORD O F M/S TALENT INFORWAYS LTD. ON 30.09.2003, THE ASSESSEE DID NOT ACQUIRE SHARE BY T HAT DATE, THUS, HIS CLAIM OF CAPITAL GAIN ON PURCHASE OF SHARE ON 31.05.2003 APPEARS TO BE INCORRECT. THOUGH THE LD. CIT(A) CONCLUDED THAT THE SHARES WERE DEMATIZED ON 28.07.2004 AND CONCLUDED THAT THE SHARE MIGHT HAVE BEEN PURCHASED AROUND JULY 200 4 AND DIRECTED THE AO TO TREAT THE PROFIT ON SALE OF SHARE AS STCG. THE LD. AR OF THE ASSESSEE HAS PLACED ON RECORD THE COPY OF SHARE CERTIFICATE ALONG WITH CERTIFICAT E OF M/S TALENT INFORWAYS LTD. ABOUT THE TRANSFER OF SHARE, COPIES OF WHICH ARE AV AILABLE ON PAGE NO. 53 TO 71 OF PB. THE CERTIFICATE OF M/S TALENT INFORWAYS LTD. SHOWS THAT THE SHARES WERE TRANSFERRED ON 31.05.2003. THEREFORE, CONSIDERING THE DOCUMENTA RY EVIDENCE, WE RESTORE THE CASE TO THE FILE OF AO TO VERIFY THE FACT. THE AO S HALL VERIFY THE FACT REGARDING THE DATES OF PURCHASE, DATE OF TRANSFER, PERIOD OF HOLD ING IN ACCORDANCE WITH THE CBDT CIRCULAR NO. 704 DATED 28.04.1995 AND SHALL GRANT R ELIEF IN ACCORDANCE WITH LAW. THUS, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTI CAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH NOVEMBER, 2016. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 09/11/2016 S.K.PS 5 ITA NO. 3006/M/2013 SHRI PULKIT M. GOEL 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/