ITO 14(1)(4), MUMBAI V. HARIGOPAL TAPARIA, HUF, MUMBAI

ITA 3014/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4262 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 24-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Keywords: Principle of natural justice; Opportunity of cross examination; Third party statement

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI H BENCH BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.3014/M/2014, /ASSESSMENT YEAR-2003-04 INCOME TAX OFFICER-14(1)(4) 2 ND FLOOR, ROOM NO.203, EARNEST HOUSE, NARIMAN POINT MUMBAI-400 021. VS SHRI HARIGOPAL TAPARIA, HUF 5 A/B, JAI HIND BUILDING NO.1 1 ST FLOOR, DR. A.M. ROAD BHULESHWAR MUMBAI-400 002. PAN:AABHH 8004 A ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : NONE / REVENUE BY : MS. KUSUM BANSAL (DR) / DATE OF HEARING : 24-11 -2015 / DATE OF PRONOUNCEMENT : 01.01.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER 26.02.2014 OF CIT-28,MUMBAI T HE ASSESSING OFFICER(AO)HAS FILED THE PRESENT APPEAL. ASSESSEE-HUF,FILED ITSS RETURN OF INCOME ON 10.09.2 003,DECLARING INCOME OF RS.1,84,877/-.THE RETURN WAS PROCESSED U/S.143(1)OF THE ACT.THE CASE WAS RE-OPENED ISSUING NOTICE U/S.148 OF THE ACT.THE AO COMPLETED THE ASSESSMENT ON 27.12.2010,U /S.143(3)R.W.S.147 OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.31,23,930/-. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION OF RS.29.30 LAKHS,MADE BY THE AO, U/S.69 A OF THE ACT.DURING THE ASSESSMENT PROCEEDIN GS,THE AO FOUND THAT THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS(LTCG)ON SALE OF SHARE S AMOUNTING TO RS.29,92,277/-,THAT AS PER THE INFORMATION PROVIDED BY THE INVESTIGATION WING OF THE DEPARTMENT THE ASSESSEE-HUF WAS ONE OF THE BENEFICIARIES OF THE OF THE TRANSACTIONS ENT ERED IN TO WITH MUKESH CHOKSI AND HIS GROUP CONCERNS(MCG).HE DIRECTED THE ASSESSEE TO EXPLAIN A S TO WHY THE ENTRIES RELATED WITH MCG SHOULD NOT BE TREATED AS INCOME U/S.69 A OF THE ACT AND CLAIM MADE BY IT UNDER THE HEAD LTCG SHOULD BE DENIED.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,THE AO HELD THAT THE IMPUGNED CAPITAL GAINS REPRESENTED THE AMOUNT OF UN DISCLOSED MONEY THAT HAD BEEN LAUNDERED BY THE ASSESSEE,THAT IT HAD PAID CASH TO MCG AND HAD O BTAINED BOGUS BILLS.FINALLY,HE TREATED THE LTCG AS INCOME TAXABLE U/S.69A OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHOIRTY(FAA).BEFORE HIM,IT WAS ARGUED THAT THE AO HAD NOT FURNISHED THE REASONS RECORDED FOR RE-OPENING THE ASSESSMENT,THAT THE AO NOT VERIFIED THE GENUINENESS OF THE TRANSACTION,THAT IT WAS NOT PROVIDED THE COPY OF THE STATEMENTS OF THE PERS ONS OF THE MCG,THAT NO CROSS EXAMINATION ITA/3014/MUM/2014-AY.2003-04,HT-HUF 2 WAS PROVIDED BY THE AO ABOUT THE ALLEGED BOGUS TRAN SACTION,THAT THE NAME OF THE ASSESSEE WAS NOT FIGURING IN THE STATEMENT OF MUKESH CHOKSI.THE FAA CALLED FOR A REMAND REPORT(RR) FROM THE AO ABOUT NON ISSUANCE OF REASONS RECORDED FOR R EOPENING THE ASSESSMENT AND THE STATEMENTS OF MUKESH CHOKSI.THE AO APPEARED BEFORE THE FAA AND ADMITTED THAT THE REASONS AND THE COPY OF THE STATEMENTS WERE SUPPLIED ON 20.02.2012 AND 2 3.05.2012 RESPECTIVELY.AFTER CONSIDERING THE AVAILABLE MATERIAL THE FAA HELD THAT THERE WAS TANG IBLE MATERIAL FOR ISSUING NOTICE U/S.148 OF THE ACT,THAT REASONS WERE NOT SUPPLIED TO THE ASSESSEE BY THE AO BEFORE HE COMPLETED THE ASSESSMENT,THAT THE SOLE BASIS FOR MAKING ADDITION U/S.69A OF THE ACT WAS THE STATEMENT OF MUKESH CHOKSI,THAT THE AO HAD MADE NO INDEPENDENT I NQUIRY TO VERIFY THE CORRECTNESS OF HIS STATEMENT,THAT THE ASSESSEE HAD VEHEMENTLY DENIED T HE ALLEGATION,THAT IT HAD SUBMITTED NECESSARY BILL AND REQUISITE DETAILS BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS,THAT AO HAD NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THAT THE SH ARE TRANSACTION WERE NOT GENUINE,THAT THE AO HAD NOT PROVIDED THE COPY OF THE STATEMENT OF MUKES H CHOKSI AND HAD PROVIDED CROSS EXAMINATION TO THE ASSESSEE,IT WAS A CASE OF THIRD PARTY STATEMENT.THE FAA REFERRED TO THE ORDERS OF THE TRIBUNAL DELIVERED IN THE CASES OF MAYUR S S HAH(ITA/2390/MUM/2013),HETAL K VASA(ITA/6416/MUM/2012)AND DECIDED THE MATTER IN FA VOUR OF THE ASSESSEE. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO.NONE APPEARED ON BEHALF OF THE ASSESSEE,AS STATED EARLIER. 5. WE HAVE PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE ADDITION TO THE INCOME OF THE ASSESSEE U/S.69A OF THE ACT ON THE BASIS OF THE STATEMENT OF MUKESH CHOKSI (DTD. 11. 12. 2009),THAT THE AO HAD HELD THAT THE TRANSACTION ENT ERED INTO BY THE ASSESSEE-HUF WITH MCG WERE NOT GENUINE,THAT HE HAD NOT SUPPLIED THE REASO NS RECORDED FOR RE-OPENING THE ASSESSMENT, THAT THE COPY OF THE STATEMENT OF MUKESH CHOKSI WAS SUPPLIED TO THE ASSESSEE IN THE MONTH OF MAY,2012,THAT THE ASSESSMENT WAS COMPLETED IN OCTOB ER,2010.IN OUR OPINION,ONLY ON THIS BASIS THE ORDER OF THE ASSESSEE IS LIABLE TO BE HELD INVA LID,AS HE HAD CONTRAVENED THE PRINCIPLES OF NATURAL JUSTICE.THE FAA HAD GIVEN A CATEGORICAL FIN DING OF FACT THAT THE AO HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE LTCG CLAIMED B Y THE ASSESSEE WAS NOT GENUINE.WE FIND THAT THE TRIBUNAL HAS,IN SERIES OF CASES,HELD THAT ONLY ON THE BASIS OF STATEMENT OF MUKESH CHOKSI, SHARE TRANSACTIONS CANNOT BE HELD TO BE BOGUS.CONSI DERING THE FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ORDER OF THE FA A DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. SO,CONFIRMING HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2016. 01 , 2016 SD/- SD/- ( /SANDEEP GOSAIN ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI, DATE: 01.01.2016 . . . JV.SR.PS. ITA/3014/MUM/2014-AY.2003-04,HT-HUF 3 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.