MANJULABEN L. SHAH, MUMBAI V. ITO 15(1)(4), MUMBAI

ITA 3112/MUM/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8200 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-10-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N DSOUZA
• Assessee Lawyers: S C TIWARI; NATASHA MANGAT
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Principle of natural justice; Earning of tax free income; Accommodation entries; Retraction
• Section: 143(3); 133A; 133(6); 68; 148

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI . . , ,, , , !' !' !' !', ,, , # # # # BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMIT SHUKLA, JM ITA NO.3112/MUM/2014: ASST.YEAR 2005-2006 SMT.MANJULABEN L SHAH 212 SHREEJI CHAMBERS OPERA HOUSE, MUMBAI 400 004 PAN : AAEPS3608J. $ $ $ $ / VS. THE INCOME TAX OFFICER WARD 15(1)(4) MUMBAI. ( &' / // / APPELLANT) ( ()&' / RESPONDENT) &' * + * + * + * + /APPELLANT BY : SHRI S.C.TIWARI & MS.NATASHA MANGA T ()&' * + * + * + * + /RESPONDENT BY : SHRI R.N.DSOUZA $ * , / / / / DATE OF HEARING : 16.10.2014 -./ * , / DATE OF PRONOUNCEMENT : 31.10.2014 ! ! ! ! / / / / O R D E R PER AMIT SHUKLA (JM) : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER DATED 28.03.2014 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-26, MUMBAI, IN RELATION TO THE QUANTUM PROCEEDINGS U/S 143(3) READ WITH SECTION 148 READ WITH SECTION 254. 2. BY WAY OF REVISED APPLICATION, THE ASSESSEE HAS RAISED FOLLOWING REVISED AS WELL AS ADDITIONAL GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED IN UPHOLDING THE ASSESSMENT OF RS.1,41,80,926/-, SHOWN BY THE APPELLANT AS LONG-TERM CAPITAL GAINS, AS HER INCOME UNDER SECTION 68 OF THE ACT. ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED IN BRUSHING ASIDE THE EVIDENCE AND MATERIAL RELIED UPO N BY THE APPELLANT IN SUPPORT OF LONG-TERM CAPITAL GAINS SHO WN BY HER. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED, IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTIC E, IN RELYING UPON THE ALLEGED STATEMENT OF SHRI. MUKESH CHOKSI D ATED 11.12.2009 RECORDED BY DDIT (INV), UNIT 1(4), MUMBA I BEHIND THE BACK OF THE APPELLANT WITHOUT ALLOWING THE APPE LLANT OPPORTUNITY TO CROSS EXAMINE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED IN BRUSHING ASIDE THE DECISION OF ITAT AS WELL AS HON BLE BOMBAY HIGH COURT IN THE CASE OF THE APPELLANTS HUSBAND M R.PINAKIN SHAH AND SMT.RAJANIDEVI ON ALMOST IDENTICAL FACTS. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED IN UPHOLDING THE ASSESSMENT OF GIFTS OF RS.20,00,000/- RECEIVED BY THE APPELLANT AS THE APPELLANTS INCOME FROM UND ISCLOSED SOURCES. 6. THAT THE ORDER OF THE LEARNED CIT(APPEALS) BEIN G CONTRARY TO THE FACTS OF THE CASE, EVIDENCE AND MAT ERIAL ON RECORD AND LAW APPLICABLE THERETO SHOULD BE SET ASI DE, AMENDED OR MODIFIED IN ACCORDANCE WITH THE GROUNDS OF APPEAL DEDUCED ABOVE. 7. EACH OF THE GROUNDS OF APPEAL ENUMERATED ABOVE ARE INDEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER . 3. BESIDES THIS, THE ASSESSEE HAS SUBSTITUTED THE A FORESAID GROUND NO.3, IN THE FOLLOWING MANNER:- ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 3 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW LEARNED CIT(APPEALS) HAS E RRED, IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTIC E, IN RELYING UPON THE ALLEGED STATEMENT OF SHRI. MUKESH CHOKSI D ATED 11.12.2009 RECORDED BY DDIT (INV), UNIT 1(4), MUMBA I BEHIND THE BACK OF THE APPELLANT WITHOUT ALLOWING THE APPE LLANT OPPORTUNITY TO CROSS EXAMINE, WHICH STATEMENT WAS SUBSEQUENTLY RETRACTED BY SHRI MUKESH CHOKSI. 4. THUS, THE ASSESSEE IS MAINLY AGGRIEVED BY THE AD DITION OF RS.1,41,80,926 RECEIVED BY THE ASSESSEE AS LONG TER M CAPITAL GAIN ON SALE OF SHARES WHICH WAS TAXED U/S 68 OF THE INCOME-TAX ACT , 1961, AND SECONDLY, ADDITION OF RS.20,00,000 RECEIVED AS GIFT BY THE AS SESSEE, ADDED AS INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE ACT. 5. THE IMPUGNED ORDER HAS BEEN PASSED IN PURSUANCE OF ORDER DATED 05.04.2013, PASSED BY THE TRIBUNAL IN ITA NOS.2708/ MUM/2011 AND 2709/MUM/2011, WHEREBY THE TRIBUNAL HAS SET ASIDE T HE MATTER TO THE FILE OF THE CIT(A) FOR ADJUDICATING THE AFORESAID ISSUES AF RESH. 6. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL AND A PARTNER IN M/S.DHANERA METAL CORPO RATION. A SURVEY U/S 133A WAS CONDUCTED ON THE BUSINESS PREMISES OF M/S. DHANERA METAL CORPORATION, WHEREIN IT WAS FOUND THAT THE ASSESSEE ALONG WITH HER FAMILY MEMBERS, SHRI PINAKIN L.SHAH, SMT.RINKU GIRISH SHAH AND SMT.NISHA PINAKIN SHAH WERE BENEFICIARIES OF ACCOMMODATION EN TRIES OF LONG TERM CAPITAL GAIN GIVEN BY SHRI MUKESH CHOKSI, DIRECTOR OF M/S.MAHASAGAR SECURITIES PVT. LTD. THE ASSESSEE HAD SHOWN LONG TE RM CAPITAL GAIN ON SALE OF SHARES FOR A SUMS AGGREGATING RS.1,41,80,926 FOR THE ASSESSMENT YEAR 2005-2006. BESIDES THAT, THE ASSESSEE HAS ALSO RECE IVED GIFT OF RS.20,00,000 FROM SHRI MUKESH CHOKSI AND SHRI MANIK LAL CHIMANLAL CHOKSI. ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 4 THE PRESENT ASSESSMENT PROCEEDING WAS INITIATED UND ER SECTION 148, ON THE GROUND THAT EVIDENCES RELATING TO LONG TERM CAPITAL GAIN WAS COLLECTED IN THE CASE OF SHRI PINAKIN L SHAH, WHEREIN THE ASSESSING OFFICER HAD HELD THAT THE LONG TERM CAPITAL GAIN ON SALE OF SHARES ARE NOTHIN G BUT ACCOMMODATION ENTRIES GIVEN BY SHRI MUKESH CHOKSI AND ALSO, SIMIL AR GIFTS RECEIVED FROM THE FAMILY OF MUKESH CHOSKI WERE ALSO ACCOMMODATION ENT RIES. BASED ON THESE INFORMATION IN THE CASE OF SHRI PINAKIN L.SHAH, THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 BY ISSUANCE OF NOTICE DATED 03.04. 2008. 7. IN RESPONSE TO THE VARIOUS NOTICES, THE ASSESSEE SUBMITTED THAT SHE HAD PURCHASED 1,45,000 SHARES OF M/S.TALENT INFOWAY LIMITED FROM M/S.MAHASAGAR SECURITIES PVT. LTD. THESE PURCHASES WERE MADE IN THE MONTH OF APRIL 2003 AT AN AVERAGE RATE OF RS.1.40 P ER SHARE. THE ASSESSEE HAD SHOWN THE PURCHASE VALUE OF THESE SHARES AT RS. 2,00,470. THE SOURCES OF SAID PURCHASES WERE CLAIMED THROUGH SPECULATION PROFIT EARNED BY THE ASSESSEE IN THE FINANCIAL YEAR 2003-2004. IN SUPPOR T OF THE PURCHASES, THE ASSESSEE HAD FILED COPIES OF PURCHASE BILLS, CONTRA CT NOTES AND STATEMENT OF ACCOUNT WITH THE BROKER. FURTHER, THE SAID SHARES W ERE TRANSFERRED IN THE NAME OF THE ASSESSEE BY THE COMPANY, M/S.TALENT INF OWAY LIMITED. COPY OF TRANSFER LETTERS ISSUED BY THE COMPANY WERE ALSO FI LED. THESE SHARES WERE LATER ON DEMATED IN THE DMAT ACCOUNT MAINTAINED WIT H AXIS BANK LIMITED. THE SAID SHARES WERE LATER ON SOLD THROUGH M/S.MAHA SAGAR SECURITIES PVT. LTD. BETWEEN 1 ST OCTOBER, 2004 AND 6 TH DECEMBER, 2004. THE DELIVERY OF THE SAID SHARES WAS MADE THROUGH ORIENTAL BANK OF COMME RCE. THE SHARES WERE SOLD AND THE SUMS WERE CREDITED TO THE BANK AC COUNT OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT EXACTLY ON SAME FA CTS, THE ASSESSING OFFICER IN THE CASE OF SHRI PINAKIN L.SHAH, HAS ADD ED THE SAID LONG TERM ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 5 CAPITAL GAIN U/S 68 AFTER DETAILED REASONING. THE O BSERVATIONS AND FINDINGS GIVEN IN THE ASSESSMENT ORDER OF SHRI PINAKIN L.SHA H HAS BEEN INCORPORATED BY THE LEARNED ASSESSING OFFICER ADVERTISM AND ON S IMILAR REASONING, HE HAS MADE THE ADDITION OF THE AMOUNT SHOWN UNDER THE HEA D LONG TERM CAPITAL GAIN, AS INCOME OF THE ASSESSEE U/S 68. SIMILARLY, ON ACCOUNT OF THE GIFTS OF RS.10 LAKH EACH, RECEIVED FROM SHRI MUKESH CHOKSI A ND SHRI MANIKLAL CHOKSI, THE ASSESSING OFFICER HELD THAT SIMILAR GIF T FROM SIMILAR SET OF DONORS HAD BEEN CONFIRMED IN THE CASE OF SHRI PINAKIN L.SH AH. THE OBSERVATION MADE BY THE A.O. IN THE ORDER OF SHRI PINAKIN L.SHA H HAS AGAIN BEEN INCORPORATED FOR CONFIRMING THE ADDITION IN THE CAS E OF THE ASSESSEE. THE SUM AND SUBSTANCE OF THE A.OS FINDING IN PINAKIN L .SHAH WAS THAT, A STATEMENT OF SHRI MUKESH CHOKSI, DIRECTOR OF M/S.MA HASAGAR SECURITIES PVT. LTD. WAS RECORDED ON 07.08.2006 AND 04.01.2007, WHE REIN HE HAS ADMITTED THAT HE WAS INVOLVED IN PROVIDING ADJUSTMENT ENTRIE S. THE RELEVANT PORTION OF THE STATEMENT HAS ALSO BEEN INCORPORATED IN THE ASS ESSMENT ORDER OF PINAKIN L. SHAH. BASED ON THIS STATEMENT, AN ADVERSE VIEW W AS TAKEN IN THE CASE OF SHRI PINAKIN L.SHAH. ONE IMPORTANT FACT IN THE ASSE SSMENT PROCEEDING OF SHRI PINAKIN L.SHAH WAS THAT, THE ASSESSING OFFICER HAD ISSUED A NOTICE U/S 133(6) TO M/S.MAHASAGAR SECURITIES PVT. LTD. AND IN RESPONSE TO WHICH THE SAID BROKER- COMPANY HAD CONFIRMED THE TRANSACTION OF SALE OF SHARES OF M/S.TALENT INFOWAY LIMITED OWNED BY SHRI PINAKIN L. SHAH. THE RELEVANT NOTICE AND THE REPLY HAVE BEEN INCORPORATED AT PAGE 8 AND 9 OF THE ASSESSMENT ORDER. SHRI MUKESH CHOKSI WAS ALSO SUBJE CTED TO CROSS- EXAMINATION ON 26.12.2007 BY THE ASSESSEE IN PRESEN CE OF THE AO. DURING THE COURSE OF CROSS-EXAMINATION, SHRI MUKESH CHOKSI RETRACTED HIS STATEMENT MADE BEFORE THE ADIT (INVESTIGATION) EARLIER AND CL AIMED THAT THE ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 6 TRANSACTIONS WITH SHRI PINAKIN L.SHAH AND HIS FAMIL Y ARE GENUINE AND THE STATEMENT GIVEN EARLIER BEFORE ADIT WAS WITHOUT VER IFICATION OF CORRECT FACTS AND RECORDS. THE A.O., IN THAT CASE, REJECTED THE A SSESSEES CONTENTION AND HELD THAT THE RETRACTION OF SHRI MUKESH CHOKSI AT T HE TIME OF CROSS- EXAMINATION IS AN AFTERTHOUGHT AND WITHOUT ANY BASI S OR PROOF BECAUSE SHRI MUKESH CHOKSI COULD NOT GIVE THE DETAILS OF THE BUY ERS OF THE SHARES, THAT IS, TO WHOM THE SHARES WERE SOLD BY THE ASSESSEE THROUG H HIS BROKING COMPANY. SOLELY BASED ON THESE GROUNDS, THE ADDITIO N WAS MADE IN THE CASE OF SHRI PINAKIN L.SHAH. EXACTLY ON SIMILAR REASONI NG AND WITHOUT ANY OTHER INDEPENDENT FINDING THE ADDITIONS HAS BEEN MADE IN THE CASE OF THE ASSESSEE ALSO. 8. AGGRIEVED BY THE SAID ASSESSMENT ORDER, THE ASSE SSEE PREFERRED ON APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) VIDE O RDER DATED 27.01.2011 DELETED THE ADDITION OF RS.1,41,80,926 AND ALSO ADD ITION OF RS.20,00,000. THE MAIN GROUND FOR DELETION OF THE ADDITION BY THE LEARNED CIT(A) WAS THAT, IN THE CASE OF OTHER FAMILY MEMBERS, ESPECIALLY IN THE CASE OF PINAKIN L. SHAH, WHO WERE ALSO ALLEGED TO BE BENEFICIARIES OF ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN PROVIDED BY SHRI MUKESH CHOK SI THROUGH M/S.MAHASAGAR SECURITIES PVT. LTD., THE TRIBUNAL HA S DELETED THE SAID ADDITION AND THE ORDER OF THE TRIBUNAL HAS ALSO BEE N AFFIRMED BY THE HONBLE BOMBAY HIGH COURT. NOT ONLY THIS, IN OTHER CASES AL SO, WHEREIN ADDITION WAS MADE ON THE BASIS OF STATEMENT GIVEN BY SHRI MUKESH CHOKSI BEFORE THE ADIT (INV.), VARIOUS COURTS HAD DELETED SIMILAR ADD ITION. THE LEARNED CIT(A) HAS HEAVILY RELIED UPON THE IDENTICAL CASE OF SHRI MUKESH R.MAROLIA, WHEREIN SIMILAR ALLEGED ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN WAS TAKEN FROM SHRI MUKESH CHOKSI AND IN THOSE CASES ADDITION S HAVE BEEN DELETED BY ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 7 THE TRIBUNAL AND LATER ON UPHELD BY THE HIGH COURT. HE ALSO REFERRED TO SERIES OF DECISIONS AND OTHER APPELLATE ORDERS OF THE CIT( A) IN THE CASE OF GADA FAMILY, WHO WERE SUBJECT MATTER OF SIMILAR ADDITION , ON THE BASIS OF STATEMENT GIVEN BY SHRI MUKESH CHOKSI. AS REGARDS THE ADDITIO N ON ACCOUNT OF GIFTS ALSO, THE LEARNED CIT(A) FOLLOWED THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI PINAKIN L.SHAH. 9. AGAINST THIS ORDER, THE DEPARTMENT PREFERRED APP EAL BEFORE THE TRIBUNAL BEING ITA NO.2708/MUM/2011. THE TRIBUNAL H ELD THAT THE CIT(A) HAS NOT ANALYZED THE FACTS OF THE CASE INDEPENDENTL Y BUT INSTEAD, HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE O F SHRI PINAKIN L.SHAH, WHICH AGAIN WAS BASED ON THE DECISION OF SHRI MUKES H R.MAROLIA. THE RELEVANT OBSERVATION OF THE TRIBUNAL FOR SETTING AS IDE THE MATTER HAS BEEN REPRODUCED BY THE CIT(A) IN THE IMPUGNED ORDER AT P AGE 2. THE SUM AND SUBSTANCE OF THE TRIBUNAL ORDER WAS, THAT THE LD.CI T(A) SHOULD DECIDE THE CASE ON THE FACTS OF THE ASSESSEES CASE RATHER THA N SIMPLY FOLLOWING THE OTHER DECISIONS. 10. IN THE SET ASIDE PROCEEDINGS, THE LEARNED CIT( A), FIRST OF ALL, INCORPORATED THE RELEVANT FINDING OF THE LEARNED CI T(A) PASSED IN THE FIRST ROUND AND HELD THAT THE SAME HAS BEEN SET ASIDE BY THE TRIBUNAL TO BE DECIDED AFRESH. THEREAFTER, HE INCORPORATED THE STA TEMENT OF SHRI MUKESH CHOKSI, WHICH WERE EXAMINED BY THE INVESTIGATION WI NG, WHEREIN HE HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATI ON ENTRIES TO VARIOUS COMPANIES FLOATED BY HIM. THE RELEVANT QUESTION AND ANSWER HAS BEEN INCORPORATED BY THE LEARNED CIT(A) FROM PAGES 7 TO 9 OF THE APPELLATE ORDER. FROM THE SAID STATEMENT, HE OBSERVED THAT SHRI MUKE SH CHOKSI HAS ADMITTED THAT HE IS PROVIDING ACCOMMODATION ENTRIES AND ALL SUCH TRANSACTIONS ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 8 RECORDED IN THE BOOKS OF ACCOUNT, ARE NOT GENUINE. IN THIS CASE ALSO, THE SHARES HAVE BEEN PURCHASED AT A LOWER RATE AND HAVE BEEN SOLD SUBSEQUENTLY THROUGH SHRI MUKESH CHOKSI AT A HIGHER RATE. THE SHARES HAVE BEEN DEMATED AFTER A LONG GAP AND IMMEDIATELY AFTER DEMATING, THE SHARES HAVE BEEN SOLD. HE ALSO DISTINGUISHED THE CASE OF S HRI MUKESH R.MAROLIA AND OTHER ORDERS OF THE TRIBUNAL. BEFORE THE CIT(A) , THE ASSESSEE RAISED AN OBJECTION THAT SUCH A STATEMENT OF SHRI MUKESH CHOK SI CANNOT BE ACCEPTED AS THE ASSESSEE WAS NOT GIVEN OPPORTUNITY OF CROSS- EXAMINATION. THIS CONTENTION OF THE ASSESSEE HAS BEEN REJECTED BY THE CIT(A) ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TH AT SHE HAS MADE ANY CLAIM BEFORE THE A.O. FOR CROSS-EXAMINATION OF THE WITNESS. HE FURTHER HELD THAT SHRI MUKESH CHOKSI HAS BEEN PROVIDING ACCOMMOD ATION ENTRIES TO LARGE NUMBER OF PEOPLE INCLUDING THE ASSESSEE. THEREFORE, THE ARGUMENT OF CROSS- EXAMINATION IS MERE TECHNICAL AND NO PREJUDICE IS C AUSED TO THE ASSESSEE IN THE ABSENCE OF CROSS-EXAMINATION. THEREAFTER HE HAS REFERRED TO SERIES OF SUPREME COURT DECISIONS AND OTHER HIGH COURT DECISI ONS, WHICH HAVE BEEN DEALT BY HIM FROM PAGES 12 TO 22 OF THE APPELLATE O RDER AND CAME TO THE CONCLUSION THAT THE ARGUMENT OF CROSS-EXAMINATION B Y THE ASSESSEE IS WITH THE SOLE OBJECTIVE OF OBSTRUCTING THE PROCESS OF L AW AND IT IS MERELY DILATORY. THE EVIDENCE AVAILABLE ON RECORD IS ADEQUATE AND SU FFICIENT TO DECIDE THE ISSUE. THUS, HE HELD THAT ALL THE SHARE TRANSACTION S SHOWING CAPITAL GAIN IN THE RETURN OF INCOME ARE BOGUS, AND THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD BY HIM. SIMILARLY, WIT H REGARD TO THE ADDITION ON ACCOUNT OF GIFTS RECEIVED FROM TWO PERSONS FOR RS.1 0 LAKH EACH, HE AGAIN ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 9 GAVE THE SIMILAR REASON THAT, SHRI MUKESH CHOKSI WA S ENGAGED IN THE BUSINESS OF ACCOMMODATION ENTRIES, AND THEREFORE, S UCH GIFTS TOO ARE BOGUS. 11. BEFORE US, THE LEARNED COUNSEL SHRI S.C.TIWARI SUBMITTED THAT THE ENTIRE PREMISE OF THE REOPENING THE CASE IN THE CAS E OF THE ASSESSEE WAS ON THE BASIS OF INFORMATION RECEIVED IN THE CASE OF SH RI PINAKIN L.SHAH. EVEN THE LEARNED ASSESSING OFFICER HAD NOT GIVEN ANY IND EPENDENT FINDING, BUT HAS SIMPLY INCORPORATED THE ASSESSMENT ORDER OF SHRI PI NAKIN L.SHAH AND HAS MADE THE SIMILAR ADDITION IN THE CASE OF THE ASSESS EE. IN THE CASE OF SHRI PINAKIN L.SHAH, THE MATTER STANDS CONCLUDED NOT ONL Y FROM THE STAGE OF THE TRIBUNAL, BUT ALSO FROM THE HIGH COURT. HE FURTHER SUBMITTED THAT THE SOLE BASIS OF THE CIT(A) IN THE SECOND ROUND OF THE PROC EEDINGS IS THE STATEMENT ON OATH RECORDED BY THE INVESTIGATION WING OF SHRI MUKESH CHOKSI, WHICH IS EVIDENT FROM VARIOUS OBSERVATIONS MADE BY HIM IN TH E IMPUGNED ORDER. SUCH A STATEMENT CANNOT BE ADVERSELY VIEWED IN THE CASE OF THE ASSESSEE, AS NO CROSS-EXAMINATION HAS BEEN ALLOWED BY THE DEPARTMEN T TO THE ASSESSEE. WITHOUT ANY CROSS-EXAMINATION, THE STATEMENT CANNOT BE RELIED UPON WHEN ALL THE EVIDENCES RELATING TO PURCHASE AND SALE OF SHAR ES ALONG WITH THE CONTRACT NOTE OF THE BROKERS, BILLS RAISED BY THE BROKERS, H AVE BEEN FILED. IN SUPPORT OF HIS CONTENTION, HE STRONGLY RELIED UPON THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM V. CIT R EPORTED IN (1981) 125 ITR 713 (SC). HE FURTHER SUBMITTED THAT, THERE HAVE BEEN SERIES OF TRIBUNAL DECISIONS IN VARIOUS CASES WHEREIN ON SIMILAR STATE MENT OF SHRI MUKESH CHOKSI, THE CASES WERE REOPENED AND ADDITIONS WERE MADE. IN ALL THESE CASES THE TRIBUNAL HAS DECIDED THE ISSUE OF LONG TE RM CAPITAL GAIN IN FAVOUR OF THE ASSESSEE AS THE SAID STATEMENT OF SHRI MUKES H CHOKSI COULD NOT BE CORROBORATED BY ANY OTHER MATERIAL OR EVIDENCE. HE, THUS, SUBMITTED THAT THE ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 10 DECISION OF THE TRIBUNAL IN THE CASE OF SHRI PINAKI N L.SHAH AND OTHER SUCH DECISIONS SHOULD BE FOLLOWED. IN THE CASE OF SHRI M UKESH R.MAROLIA, AGAIN THE SIMILAR BROKER WAS INVOLVED, WHEREIN THE TRIBUN AL HAS GIVEN A DETAILED REASONING, WHICH HAS BEEN AFFIRMED BY THE HIGH COUR T ALSO. THUS, ON SIMILAR SET OF FACTS, WHICH IS PERMEATING THROUGH IN THIS CASE ALSO, THESE DECISIONS SHOULD BE FOLLOWED. 12. AS REGARDS THE ADDITION ON ACCOUNT OF GIFTS, SH RI S.C. TIWARI SUBMITTED THAT THE GENUINENESS AND CREDITWORTHINESS OF THE DO NORS HAVE BEEN ANALYZED IN DETAIL BY THE TRIBUNAL IN THE CASE OF SHRI PINAK IN L.SHAH. BASED ON THE EVIDENCES FURNISHED, THE TRIBUNAL HAS DELETED THE S AID ADDITION MADE ON ACCOUNT OF GIFT. IN THIS CASE ALSO THE ASSESSEE HA S FURNISHED THE CONFIRMATION LETTERS FROM THE DONORS, AFFIDAVITS, THEIR INCOME-T AX PARTICULARS AND ALSO THE FACT THAT GIFTS TRANSACTION HAVE BEEN REFLECTED IN THE BALANCE SHEET AND INCOME-TAX RETURNS OF THE DONORS. THE DONORS WERE F AMILY FRIENDS, WHO WERE IN REGULAR TOUCH AND HAD REGULAR BUSINESS WITH THE ASSESSEE. HENCE THEY WERE NOT STRANGERS. IF THE DONORS WERE FAMILY FRIEN DS OF SHRI PINAKIN L.SHAH, THEN THE ASSESSEE BEING MOTHER OF SHRI PINAKIN L.SH AH, THEN NATURALLY, THE DONORS ARE ALSO FAMILY FRIENDS OF THE ASSESSEE AND NOT STRANGERS. THE TRIBUNAL HAS TAKEN NOTE OF THESE FACTS AND HAS DELE TED THE SAID ADDITION WHICH SHOULD ALSO BE FOLLOWED HERE AS NO DIFFERENT FINDING HAS BEEN GIVEN EITHER BY THE A.O. OR BY THE CIT(A), ARE NOT EVEN I N THE SET ASIDE PROCEEDINGS. 13. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED T HAT IT IS A CASE OF PENRY STOCK AND THE TRANSACTIONS HAVE BEEN UNDER TAKEN OF F MARKET. THE SHARES HAVE BEEN PURCHASED AT A LOW PRICE AND WITHIN A GAP OF ONE YEAR THE PRICE OF ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 11 THE SHARES HAVE JUMPED MANY FOLD, WHICH IS AGAINST ANY HUMAN PROBABILITY. THIS FACT IS CORROBORATED BY THE SUBMISSION OF SHRI MUKESH CHOKSI AS RECORDED BY THE INVESTIGATION WING, WHICH WILL GO T O SHOW THAT THE ENTIRE TRANSACTION IS MERE PAPER TRANSACTION AND THAT CANN OT BE HELD TO BE GENUINE. THUS, THE DECISION OF SHRI PINAKIN L.SHAH SHOULD NO T BE FOLLOWED. REGARDING GIFT ALSO, HE STRONGLY RELIED UPON THE ORDER OF THE A.O. AS WELL AS CIT(A) AND SUBMITTED THAT IT SUFFICE THAT GIFT HAS BEEN RECEIV ED FROM THE SAME SET OF PERSONS WHO HAVE ACCEPTED TO THE PROVIDING ACCOMMOD ATION ONLY. THE GIFTS ARE NOTHING BUT A BOGUS ENTRY GIVEN BY SHRI MUKESH CHOKSI, WHICH IS EVIDENT FROM THE STATEMENT RECORDED BY THE INVESTIGATION WI NG, WHEREIN HE HAS CATEGORICALLY ADMITTED THAT HE WAS ENGAGED IN THE B USINESS OF GIVING ACCOMMODATION ENTRIES. MOREOVER, THE GIFTS OF SUCH A HUGE AMOUNT WITHOUT ANY FAMILY RELATION AND ANY OCCASION IS UNNATURAL. THUS, THE SAME SHOULD BE CONFIRMED. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDER AND ALSO THE MATERIAL PLACED ON RECORD. AS STATED A BOVE, THIS IS THE SECOND ROUND OF PROCEEDINGS, IN PURSUANCE OF ORDER OF THE TRIBUNAL DATED 05.04.2013, WHEREIN THE MATTER HAS BEEN SET ASIDE T O THE CIT(A) TO DECIDE THE ISSUES AFRESH AS THE TRIBUNAL FOUND THAT THE R ELIANCE PLACED BY THE LEARNED CIT(A) ON THE DECISION OF SHRI PINAKIN L.SH AH, WHICH AGAIN WAS BASED ON THE CASE OF SHRI MUKESH R.MAROLIA, CANNOT BE FOLLOWED BLINDLY WITHOUT ANALYZING THE FACTS OF THE PRESENT CASE. NO W ON SUCH A MANDATE THE CASE OF THE DEPARTMENT AND THE FACTS HAS TO BE SEEN FROM THE ASSESSMENT ORDER, FROM WHERE THE IMPUGNED ADDITIONS ARISE. FRO M THE PERUSAL OF THE ASSESSMENT ORDER, AS NOTED ABOVE, IT IS AMPLY EVIDE NT THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY INDEPENDENT FINDING, EXCE PT FOR INCORPORATING THE ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 12 OBSERVATIONS AND FINDING GIVEN IN THE CASE OF SHRI PINAKIN L.SHAH, A FAMILY MEMBER OF THE ASSESSEE WHEREIN SIMILAR ADDITIONS HA VE BEEN MADE. THE VERY PREMISE OF REOPENING THE CASE OF THE ASSESSEE AND ALSO THE ADDITIONS MADE THEREIN IS THAT, THE ASSESSEES FAMILY WERE TH E BENEFICIARIES OF THE ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN GIV EN BY SHRI MUKESH CHOKSI, DIRECTOR OF M/S.MAHASAGAR SECURITIES PVT. L TD. SINCE THE NATURE OF CAPITAL GAIN IN THE CASE OF ALL THE FAMILY MEMBERS WERE ARISING OUT OF SAME SET OF SHARES OF M/S.TALENT INFOWAY LIMITED, WHICH WERE SOLD THROUGH SHRI MUKESH CHOKSI THEREFORE, THE FACTS OF THE PINAKIN L . SHAH AND THE FINDINGS GIVEN THEREIN ASSUME A GREAT SIGNIFICANCE WHILE ANA LYZING THE FACTS OF THE ASSESSEES CASE, AS DETAILED INQUIRY AND INVESTIGAT ION WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF SHRI PINAKIN L. SHAH, WHICH HAS BEEN VERBATIM NOTED BY THE A.O. IN THE PRESENT ASSESSMEN T ORDER. 15. THE UNDISPUTED FACTS RELATING TO PURCHASE OF SH ARES ARE THAT THE ASSESSEE HAD PURCHASED 1,45,000 SHARES OF M/S.TALEN T INFOWAY LIMITED IN THE MONTH OF APRIL 2003, FALLING IN THE FINANCIAL Y EAR 2003-2004 RELATING TO ASSESSMENT YEAR 2004-2005. THE PURCHASES WERE SUPPO RTED BY PURCHASE BILLS AND CONTRACT NOTES OF THE BROKER. THE SAID SH ARES WERE ALSO TRANSFERRED IN THE NAME OF THE ASSESSEE BY M/S.TALENT INFOWAY L IMITED IN THE MONTH OF MAY 2003. THE COPY OF TRANSFER LETTERS HAS ALSO BEE N ISSUED BY THE COMPANY. THESE SHARES WERE ULTIMATELY DEMATED AND SOLD AT A HIGHER RATE. SINCE THE A.O. HAS HELD THAT THE FACTS ARE SIMILAR TO SHRI PI NAKIN L.SHAH, THEREFORE, WE ARE ANALYZING THE OBSERVATIONS AND FINDING GIVEN BY THE A.O. IN THE ORDER OF SHRI PINAKIN L.SHAH. IN THAT CASE, THE ASSESSING OF FICER HAD NOTED THE SIMILAR STATEMENT MADE BY SHRI MUKESH CHOKSI BEFORE THE INV ESTIGATION WING, THAT HE WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMO DATION ENTRIES THROUGH ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 13 HIS VARIOUS COMPANIES. SURVEY REPORT OF INQUIRIES M ADE BY THE ADIT WITH THE AHMEDABAD STOCK EXCHANGE ALSO REVEALED THAT M/S.TAL ENT INFOWAY LIMITED WAS LISTED WITH THE STOCK EXCHANGE AND THE SHARES O F THE SAID COMPANY WAS TRADED DURING THE PERIOD 25.11.1999 TO MARCH 2004. AT THE TIME OF SALE OF SHARES, NO SUCH TRANSACTION HAD TAKEN PLACE, IN THE STOCK EXCHANGE. FURTHER THE SHARES WERE TRADED IN THE STOCK EXCHANGE AT RS. 49 PER SHARE, WHEREAS THE ASSESSEE HAD SOLD THE SAME AT THE RATE OF RS.68 TO 88 PER SHARE. ON BEHALF OF THE ASSESSEE, AFTER GIVING THE ENTIRE DET AILS AND REPLY, IT WAS ALSO POINTED OUT THAT SHRI MUKESH CHOKSI WAS PRODUCED BE FORE THE A.O. ON 26.12.2007 AND DURING THE COURSE OF HIS CROSS-EXAMI NATION, HE HAS DULY CONFIRMED THE GENUINENESS OF THE TRANSACTION AND AL SO THE PRICE AT WHICH THESE SHARES HAVE BEEN PURCHASED BY HIM. HENCE THE RATES AT WHICH THE SHARES HAVE BEEN SOLD ARE QUITE GENUINE. THIS FACT GIVEN IN THE LETTER FILED BEFORE HIM HAS BEEN NOTED BY THE A.O. AT PAGE 7 OF THE PRESENT ASSESSMENT ORDER, WHICH FOR THE SAKE OF READY REFERENCE IS REP RODUCED HEREUNDER:- ON ENQUIRY WITH MAHASAGAR SECURITIES PVT. LTD. I H AVE COME TO KNOW THAT THERE WERE MANY BUYERS FOR THE SHARES OF THIS COMPANY EVEN AFTER OUR SELL AND THAT ALSO AT MUCH H IGHER PRICE THAN OURS. I HEREBY ENCLOSE THE CERTIFICATE FROM MA HASAGAR SECURITIES PVT. LTD. IN THIS REGARDS. AS PER YOUR I NSTRUCTION SHRI.MUKESH CHOKSI, DIRECTOR OF MAHASAGAR SECURITIE S PVT. LTD., ON 26/12/2007. DURING HIS CROSS EXAMINATION H E HAS CONFIRMED THE GENUINENESS OF THE TRANSACTION & CONS EQUENTLY THE PRICE AT WHICH THESE SHARES HAVE BEEN PURCHASED BY HIM. HENCE THE RATE AT WHICH WE HAVE SOLD THE SHARES ARE GENUINE, WE ALSO ENCLOSE AN AFFIDAVIT OF MR.MUKESH CHOKSI, D IRECTOR, MAHASAGAR SECURITIES PVT. LTD., CONFIRMING THE GENU INENESS OF THE TRANSACTION. ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 14 AFFIDAVIT OF SHRI MUKESH CHOKSI, CONFIRMING THE GE NUINENESS OF THE TRANSACTION HAVE ALSO BEEN REPRODUCED IN THE SAID P AGE. 16. THE ASSESSING OFFICER HAD ALSO ISSUED NOTICE U /S 133(6) TO M/S.MAHASAGAR SECURITIES PVT. LTD. THE CONTENTS OF WHICH HAS BEEN REPRODUCED AT PAGE 8 OF THE ASSESSMENT ORDER. IN RE SPONSE, M/S.MAHASAGAR SECURITIES PVT. LTD. HAS REPLIED BACK TO THE A.O., WHICH TOO HAS BEEN REPRODUCED AT PAGE 9 OF THE ASSESSMENT ORDER, WHERE IN, MUKESH CHOKSI HAS GIVEN THE ENTIRE DETAILS OF TRANSACTIONS AND ALSO C ONFIRMED THE GENUINENESS OF THE SHARE TRANSACTION. THE AO HAS ALSO TAKEN NO TE OF THE FACT THAT DURING THE COURSE OF CROSS EXAMINATION OF SHRI MUKESH CHOK SI ON 26.12.2007, HE HAS RETRACTED FROM HIS EARLIER STATEMENT AND HAS CL AIMED THAT THE TRANSACTION WITH SHRI PINAKIN L.SHAH AND FAMILY ARE GENUINE AND THE EARLIER STATEMENT WAS WITHOUT VERIFICATION OF CORRECT FACTS AND RECOR DS. THE RELEVANT OBSERVATION OF THE A.O. IN THIS REGARD IS REPRODUCE D HEREUNDER:- AFTER GIVING THROUGH THE REPLY OF THE M/S.MAHASAGA R SECURITIES LTD. SHRI PINAKIN SHAH WAS GIVEN AN OPPO RTUNITY TO CROSS EXAMINE SHRI MUKESH CHOKSI ON 26/12/2007. DURING THE CROSS EXAMINATION SHRI MUKESH CHOKSI RETRACTED HIS STATEMENT MADE BEFORE THE ADIT (INV) V(3) AND CLAIMED THAT THE TRANSACTIONS WITH SHRI PINAKIN SHAH AND FAMILY ARE GENUINE AND STATEMENT GIVEN BEFORE A DIT (INV.) V(3) WAS WITHOUT VERIFICATION OF CORRECT FAC TS AND RECORDS. THUS, THE ASSESSING OFFICER WAS OF THE VIEW THAT R ETRACTION OF SHRI MUKESH CHOKSI AT THE TIME OF CROSS-EXAMINATION IS A N AFTERTHOUGHT AND WITHOUT ANY BASIS OF PROOF, THEREFORE, HE HELD THAT THE EARLIER STATEMENT OF SHRI MUKESH CHOKSI CAN ONLY BE CONSIDERED. HE FURTH ER HELD THAT SHRI MUKESH CHOKSI COULD NOT LEAD TO WHO WAS THE REAL BU YER OF THE SHARES LATER ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 15 ON. THE BUYERS WHICH WERE SHOWN BY THE ASSESSEE COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE AS NO CONFIRMATIONS F ROM THE BUYERS WERE FILED. BASED ON THESE REASONING ALONE THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN WAS MADE. 17. THE ASSESSEES CASE IN THE FIRST APPELLATE PROC EEDINGS, APART FROM RELYING UPON THE DECISION OF SHRI PINAKIN L.SHAH, W AS AS UNDER:- XI. YOUR HONOUR, WE ARE ENCLOSING HEREWITH THE STA TEMENT OF CAPITAL GAINS AND THE DETAILS OF THE STATEMENT OF I NCOME AND THE ACKNOWLEDGEMENT FILED BY THE ASSESSEE. YOUR HON OR SHALL APPRECIATE THAT THE ASSESSEE HAS MENTIONED THAT IT HAS EXEMPT INCOME BY WAY OF LONG TERM CAPITAL GAINS ARISING AF TER 01/10/2004 AND THE COPY OF THE STATEMENT IS ENCLOSE D ALONG WITH THIS RETURN OF INCOME. FROM THIS FACT, YOUR HO NOR SHALL APPRECIATE THAT THE ASSESSEE HAS DULY DISCLOSED THE FACT AS REGARDS LONG TERM CAPITAL GAINS ALONG WITH THE RETU RN OF INCOME. AS SUCH THE STATEMENT OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DISCLOSED THE FACT AS REGARDS LONG TERM CAPITAL GAINS IS NOT TRUE AND CORRECT. XII. FURTHER, YOUR HONOUR, WE ARE ENCLOSING HEREWI TH THE COPIES OF ALL THE LONG TERM BILLS. YOUR HONOR SHALL APPRECIATE THAT SECURITIES TRANSACTION TAX (STT) HAS BEEN LEVI ED BY THE BROKER. THE SAID STT HAS BEEN DULY BEEN PAID BY THE ASSESSEE TO THE BROKER. AS PER THE PROVISIONS OF TH E ACT, IF STT HAS BEEN PAID BY THE ASSESSEE, ANY LONG TERM CAPITA L GAINS ARISING ON TRANSFER OF SECURITIES IS EXEMPT FROM TA X. THE STT IS A ALTERNATE TAX TO CAPITAL GAINS TAX. WHERE STT HAS BEEN DULY BEEN CHARGED BY THE BROKER TO THE ASSESSEE AND THE SAID ASSESSEE HAS MADE THE PAYMENT OF THE SAID STT, THE CONDITIONS PRESCRIBED IN THE ACT ARE DULY FULFILLED AND THE SAID LONG TERM CAPITAL GAINS IS EXEMPT FROM TAX AS PER T HE PROVISIONS OF THE SAID ACT. XIII. THE APPELLANT HAS IN THE COURSE OF THE ASSES SMENT PROCEEDINGS HAS SUBMITTED THE CO0MPLETE SET OF DOCU MENTS ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 16 RELATING TO THE SAID TRANSACTION WHICH INCLUDES STA TEMENT OF CAPITAL GAINS, COPIES OF CONTRACT CUM BILLS FOR PUR CHASE AND SALE OF SHARES, PROOF OF DEMATTING OF THE SAID SHAR ES, STATEMENT OF ACCOUNTS IN THE BOOKS OF THE BROKERS, COPIES OF LETTER ISSUED BY THE BROKERS IN SUPPORT OF SUCH TRA NSACTIONS, CONFIRMATION OF BROKERS, COPIES OF BANK STATEMENT O F THE BROKERS CONFIRMING THE PAYMENTS, AND ALL OTHER DOCU MENTS. THE COMPLETE SET OF SUCH DOCUMENTS AS SUBMITTED TO THE ASSESSING OFFICER IS ALSO ENCLOSED HEREWITH FOR YOU R HONORS READY REFERENCE. XIV. YOUR HONOUR SHALL APPRECIATE THAT THE ASSESSE E HAS SUBMITTED ALL THE REQUIRED DETAILS IN SUPPORT OF SU CH TRANSACTIONS TO THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAD S UFFICIENT TIME TO VERIFY AND PURSUE THE SAID DOCUMENTS, MAKE ENQUIRIES AS HE MAY DEEM FIT TO AND PREPARE THE ORDERS. XV. YOUR HONOR SHALL APPRECIATE THAT THE ASSESSIN G OFFICER HAS NOT MADE ANY ENQUIRIES AND HAS NOT EVEN VERIFIE D THE DOCUMENTS SUBMITTED BY THE ASSESSING OFFICER. XVI. YOUR HONOR IS REQUESTED TO KINDLY CONSIDER TH E SAID DECISION OF THE LD.CIT(A), DT.ITAT AND THE LD.MUMBA I HIGH COURT AND IS REQUESTED TO DELETE THE SAID ADDITION. SUCH A SUBMISSION OF THE ASSESSEE FOUND FAVOURABL E APPRECIATION BY THE LD.CIT(A) TO THE ASSESSEE AND THE ADDITION WAS DELETED. 18. NOW IN THE SET ASIDE PROCEEDINGS, THE LEARNED C IT(A) IN THE SECOND ROUND WITHOUT ANALYZING THE FACTS WHICH WERE THERE IN THE RECORD AND ALSO WHICH WAS THE MANDATE OF THE TRIBUNAL ORDER, HAS SI MPLY REPRODUCED THE STATEMENT ON OATH OF SHRI MUKESH CHOKSI GIVEN BEFOR E THE INVESTIGATION WING EARLIER AND HELD THAT, SINCE HE HAS ADMITTED O F PROVIDING ACCOMMODATION ENTRIES, THEREFORE, ANY TRANSACTION C ARRIED OUT WITH HIM IS NOTHING BUT BOGUS TRANSACTION. THEREAFTER HE HAS RE JECTED THE ASSESSEES PLEA FOR CROSS-EXAMINATION IN THE PRESENT CASE ON T HE GROUND THAT THE ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 17 OBJECTION HAS BEEN RAISED FOR THE SOLE PURPOSES OF OBSTRUCTING THE PROCESS OF LAW. WE ARE UNABLE TO UNDERSTAND AS TO HOW THE CROS S-EXAMINATION OF A WITNESS, WHO HAS GIVEN A STATEMENT BEHIND THE BACK OF THE ASSESSEE CAN BE SOLELY RELIED UPON, ONCE THE ASSESSEE HAS ADDUCED A LL THE RELEVANT MATERIAL AND EVIDENCES IN HER FAVOUR. IF THE SOLE BASIS OF A DVERSE VIEW IS THE STATEMENT OF A THIRD PARTY WHICH IS BEING USED AGA INST THE ASSESSEE, THEN THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT THE S AME WITNESS SHOULD BE PUT TO CROSS-EXAMINATION. THIS IS MORE SO, WHEN ALL THE TRANSACTION WITH THE BROKER IS DULY SUPPORTED BY DOCUMENTS IN WHICH HE H IMSELF HAS CONFIRMED THE TRANSACTION. IT BECOMES ALL THE MORE RELEVANT BECAU SE THE SAID WITNESS HIMSELF HAS RETRACTED HIS STATEMENT IN THE CASE OF SHRI PINAKIN L.SHAH AND HAS CATEGORICALLY ADMITTED THAT THE TRANSACTIONS WI TH SHRI PINAKIN L.SHAH AND THE FAMILY MEMBERS, (WHICH ALSO INCLUDED THE ASSESS EE) IS GENUINE. ON THE FACE OF SUCH A RETRACTION, THE ENTIRE PREMISE OF TH E CONCLUSION DRAWN BY THE LEARNED CIT(A) GETS EFFACED. IT IS QUITE TRITE LAW THAT EVIDENCES BROUGHT ON RECORD BY WAY OF CONFESSION OR STATEMENT WHICH STAN DS RETRACTED, MUST BE SUBSTANTIALLY CORROBORATED BY OTHER INDEPENDENT AND COGENT EVIDENCES WHICH WOULD LENT TO CREDIBILITY BEFORE THE COURT TO RELY ON SUCH CONTENTIONS. HERE IN THIS CASE THE STATEMENT OF SHRI MUKESH CHOKSI STAND S RETRACTED AS HE HAS ADMITTED THAT SALE OF SHARES IN CASE OF PINAKIN L. SHAH AND HIS FAMILY MEMBERS ARE GENUINE AND EARLIER STATEMENT WAS WITHO UT VERIFICATION OF RECORDS. ALL THE EVIDENCES WHICH WERE FILED BY THE ASSESSEE IN RELATION TO SHARE TRANSACTIONS HAS NEITHER BEEN INQUIRED UPON N OR HAS BEEN REBUTTED BY SOME COGENT MATERIAL ON RECORD. THE LEARNED CIT(A) HAS MERELY RELIED UPON THE STATEMENT OF SHRI MUKESH CHOKSI, GIVEN EARLIER. EVEN IF WE RELY ON SUCH A STATEMENT, WHICH HAS BEEN REPRODUCED BY THE LEARN ED CIT(A) FROM ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 18 PAGES 7 TO 9 OF THE APPELLATE ORDER, THEN IT CAN BE SEEN THAT, NOWHERE THE NAME OF THE ASSESSEE HAS SURFACED NOR ANY REFERENCE IS MADE TO ASSESSEE OR HER FAMILY, HENCE SUCH A STATEMENT THAT HE WAS E NGAGED IN PROVIDING ACCOMMODATION ENTRIES TO ALL, CANNOT BE TAKEN AT A FACE VALUE, UNLESS THE SAME IS CORROBORATED BY A COGENT MATERIAL QUA THE A SSESSEE. 19. ANOTHER IMPORTANT FACT WHICH IS NOTICEABLE IS T HAT THE PURCHASES OF SHARES HAVE BEEN MADE IN THE EARLIER ASSESSMENT YEA R AND SUCH PURCHASES HAVE NOT BEEN DOUBTED BY THE DEPARTMENT. ONLY THE N ET SALE PROCEEDS, WHICH HAS BEEN SHOWN AS LONG TERM CAPITAL GAIN, HAS BEEN ADDED, THAT IS, SALES MINUS PURCHASES. IF THE FACTUM OF PURCHASES RECORDED IN THE BALANCE SHEET OF THE EARLIER YEARS IS NOT DISPROVED, THEN T HE SALE OF THE SAME SHARES IN THIS YEAR CANNOT BE PRIMA FACIE HELD TO BE BOGUS . THE ADDITION ITSELF HAS NOT BEEN MADE ON ACCOUNT OF ENTIRE SALE PROCEEDS, B UT ONLY ON ACCOUNT OF NET LONG TERM CAPITAL GAIN, WHICH ITSELF GOES TO SH OW THAT THE DEPARTMENT HAS NOT CARRIED OUT PROPER INQUIRY OR HAS BROUGHT ANY M ATERIAL ON RECORD IN THE CASE OF THE ASSESSEE TO PROVE THAT THE ENTIRE SALE TRANSACTION OF THE ASSESSEE IS NOT GENUINE. THE PRESUMPTION, BASED ON SURMISES, THAT HOW THE VALUE OF SHARES IN ONE YEAR HAS ARISEN MANY FOLD GI VING RISE TO EXEMPT LONG TERM CAPITAL GAIN, HAS TO BE BASED ON CONCRETE MATE RIAL AND INDEPENDENT ENQUIRY. HERE, IN THIS CASE, SHRI MUKESH CHOKSI, BE FORE THE A.O., HAS GIVEN A LETTER DURING THE COURSE OF THE ASSESSMENT PROCEEDI NGS OF SHRI PINAKIN L.SHAH THAT THE TRANSACTION WITH THE FAMILY OF SHRI PINAKIN L.SHAH ARE GENUINE WHICH NECESSARILY IMPLIES ASSESSEE ALSO. IF WE ANALYZE THE SIMILARITY OF THE CASE OF SHRI PINAKIN L.SHAH AND SMT.MANJULAB EN L.SHAH (THE ASSESSEE), THEN WE FIND THAT THE FACTS RELATING TO PURCHASE AND SALE TRANSACTION OF SHARES AND RESULTANT LONG TERM CAPI TAL GAINS ARE EXACTLY ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 19 IDENTICAL, AND THEREFORE, THERE CANNOT BE A DIFFERE NT FINDING IN THE CASE OF THE ASSESSEE TO WHAT HAS BEEN GIVEN IN PINAKIN L. SHAH, WHICH STAND CONFIRMED FROM THE STAGE OF HONBLE HIGH COURT. THUS EVEN ON MERITS, AS DISCUSSED ABOVE, WE DO NOT FIND ANY REASON TO CONFIRM THE ADD ITION ON ACCOUNT OF LONG TERM CAPITAL GAIN, WHICH HAS BEEN ADDED AS INCOME O F THE ASSESSEE U/S 68, AND THEREFORE, THE SAME STANDS DELETED. IN THE RESU LT THE ADDITION OF RS.1,41,80,926/- IS DELETED. 20. NOW COMING TO THE ADDITION ON ACCOUNT OF GIFT, WE FIND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION PRIMARILY O N THE GROUND THAT THE PROOF OF SOURCE AND CAPACITY OF THE DONORS HAVE NOT BEEN GIVEN, EXCEPT GIFT DEEDS. THE ASSESSEES CASE HAD BEEN THAT IT HAS NOT ONLY GIVEN THE CONFIRMATION LETTERS FROM THE DONORS, BUT ALSO THEI R AFFIDAVITS CONFIRMING THE TRANSACTION OF GIVING OF THE GIFTS. NOT ONLY THAT, THE DONORS HAVE ALSO GIVEN THEIR INCOME-TAX PARTICULARS, COPY OF THE BALANCE S HEET, WHEREIN THE GIFTS HAVE BEEN SHOWN AND FILED ALONGWITH THE INCOME TAX RETURNS. THUS, THE PRIMA FACIE ONUS OF THE ASSESSEE WAS DISCHARGED. IT HAS ALSO BEEN SUBMITTED THAT THE DONORS WERE THE FAMILY FRIENDS, WHO WERE I N TOUCH WITH THE FAMILY AND HAD REGULAR BUSINESS DEALS. THE A.O. HAS INSTEAD HE LD THAT EXACTLY SIMILAR FACTS WERE THERE IN THE CASE OF SHRI PINAKIN L.SHAH ALSO, AND THEREFORE, BASED ON THE FINDING GIVEN THEREIN, HE HAS CONFIRME D THE ADDITION. IN THE FIRST ROUND UP TILL THE STAGE OF CIT(A), THE ADDITION OF GIFTS HAVE BEEN DELETED. NOW THE CIT(A), IN PURSUANCE OF THE ITAT ORDER, DECIDED THE ISSUE BY MERELY STATING THAT SHRI MUKESH CHOKSI AND HIS ASSOCIATES WERE PROVIDING ACCOMMODATION ENTRIES, AND THEREFORE, THIS TRANSACT ION IS ALSO NOT GENUINE AND THE ASSESSEE WAS UNABLE TO ESTABLISH THE RELATI ONSHIP WITH THE DONORS TO SHOW THAT THERE WAS LOVE AND AFFECTION. HENCE THE D ONORS WERE MERELY ENTRY ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 20 PROVIDERS. FROM THE RECORDS, IT IS SEEN THAT THE AS SESSEE AND HER FAMILY HAD RECEIVED GIFTS FROM SHRI MUKESH CHOKSI AND HIS FAMI LY, THE DETAILS OF WHICH HAS BEEN INCORPORATED AT PAGE 23 OF THE IMPUGNED AP PELLATE ORDER. THE ASSESSEE HAD RECEIVED GIFTS OF RS.10 LAKH FROM SHRI MUKESH CHOKSI AND RS.10 LAKH FROM SHRI MANIKLAL CHIMANLAL CHOKSI. IN THE CASE OF SHRI PINAKIN L.SHAH, ONE OF THE DONORS WERE COMMON, WHEREIN THE TRIBUNAL HAS DELETED THE SAID ADDITION. THIS ORDER OF THE TRIBUNAL HAS N OW BEEN AFFIRMED BY THE HONBLE HIGH COURT ALSO. IN THE CASE OF SHRI PINAKI N L.SHAH, THE TRIBUNAL DELETED THE GIFT RECEIVED FROM SHRI MUKESH CHOKSI A ND HIS FAMILY, AFTER OBSERVING AND HOLDING AS UNDER:- 6.4 BE IT AS IT MAY, THE ASSESSEE, IN THIS CASE HA S FURNISHED CONFIRMATIONS LETTERS FROM THE DONORS, AND HAS ALSO FILED AFFIDAVITS FROM THE DONORS, WHEREIN THEY HAVE ADMIT TED TO HAVE GIVEN THE SAID GIFTS. THE DONORS ARE ALL INCOME-TAX ASSESSEE AND THESE GIFT TRANSACTIONS ARE REFLECTED NOT ONLY IN THEIR BALANCE SHEETS BUT ALSO IN THEIR INCOME-TAX RETURNS . THE SUBMISSION OF THE ASSESSEE THAT ALL THE DONORS WERE FAMILY FRIENDS AND WERE IN TOUCH WITH THE FAMILY AND THAT THEY HAD REGULAR BUSINESS DEALS FOR MANY YEARS PRIOR TO THE DATE OF GIFTS AND ALSO IN THE SUBSEQUENT YEARS TO THE DATE OF GIF TS IS NOT DISPUTED BY THE REVENUE BY WAY OF ANY EVIDENCE OR A NALYSIS OF AVAILABLE INFORMATION. THE ASSESSEE SUBMITTED THAT THE PERSONS ARE NOT STRANGERS TO EACH OTHER AND DO HAVE LONG AS SOCIATION. WHEN THE ASSESSEE PRODUCED CONFIRMATION LETTERS, AF FIDAVITS, INCOME-TAX DETAILS IN SUPPORT OF HIS CONTENTION THA T HE HAD RECEIVED GIFTS, REJECTING THESE EVIDENCES MERELY ON THE BASIS OF PREPONDERANCE OF PROBABILITIES, IN OUR CONSIDERED O PINION, IS BAD IN LAW. THE ASSESSING OFFICER, WHEN HE DOUBTS T HE GENUINENESS OF THE GIFTS, HE SHOULD HAVE CONDUCTED ENQUIRIES BY WAY OF SUMMONING THE DONORS AND EXAMINING THEM O N OATH OR VERIFYING THE ANTECEDENTS OF THOSE PEOPLE AND BY GATHER ATLEAST SOME EVIDENCE AGAINST THE TRANSACTIONS. THE ASSESSING ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 21 OFFICER REJECTED THE ENTIRE EVIDENCE FILED IN JUST TWO LINES, WHICH ARE EXTRACTED FOR READY REFERENCE: `EXCEPT FOR FILING FRESH EVIDENCE FROM THE DONORS, THE ASSESSEE HAS NOT PROVED CREDITWORTHINESS OF THE DON ORS NOR FILED COPY OF THE INCOME-TAX RETURN. THE RETRAC TION OF THE ASSESSEE IS WITHOUT ANY SUBSTANCE OF PROOF. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE GIFT RECE IVED BY THE ASSESSEE IS TREATED AS UNEXPLAINED CREDIT U/ S 68 OF THE ACT. WHEN THE PERMANENT ACCOUNT NUMBER AND INCOME-TAX DE TAILS ARE FURNISHED TO THE ASSESSING OFFICER BY WAY OF CO NFIRMATION LETTERS AS WELL AS AFFIDAVITS, THE AO OBSERVING THA T NO DETAILS HAVE BEEN FURNISHED, IN OUR CONSIDERED OPINION IS N OT CORRECT. NO ATTEMPT HAS BEEN MADE TO EXAMINE THE BALANCE SHE ET TO FIND OUT THE CREDITWORTHINESS. WE ALSO FIND THAT TH E ASSESSING OFFICER HAD RECORDED THE STATEMENT OF ONLY ONE OF T HE DONORS I.E. SHRI MUKESH R.CHOKSHI AND IN REPLY TO QUESTION (AT PAGE 178 OF THE PAPER BOOK) SHRI CHOKSHI STATED ON OATH THAT HE HAS GIVEN RS.5 LAKHS OUT OF LOVE AND AFFECTION TO HIS B USINESS CUSTOMER AND FRIEND AND THAT HE WOULD SUBMIT HIS BA LANCE SHEET TO PROVE THIS. THERE IS NO EVIDENCE WHATSOEVE R FOUND BY THE REVENUE, WHICH CONTRADICTS THE EVIDENCE FILED B Y THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDE RED OPINION, THE ADDITION BY INVOKING THE THEORY OF PRE PONDERANCE OF PROBABILITIES IS BAD IN LAW. 6.5 COMING TO THE CASE LAWS RELIED UPON BY THE REVE NUE, IN THE CASE OF CIT VS. P MOHANA KALA 291 ITR 278 (SC), THE ASSESSEE IN THAT CASE WERE RECEIVING GIFTS FROM A S TRANGER, WHO WAS A COMMON DONOR. MOST OF THE CHEQUES IN THAT CAS E WERE DRAWN ON A SINGLE BANK AND IT WAS HELD UNACCEPTABLE . THE HONBLE SUPREME COURT HELD THAT, IN CASES WHERE EXP LANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN THE BOOKS IS NOT SATISFACTOR Y THEN THERE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE. IN TH IS CASE, THERE IS NO RECORDING THAT THE GIFTS IN QUESTION AR E FOUND RECORDED IN THE BOOKS OF THE ASSESSEE AS A CREDIT. BASICALLY THE GIFTS WERE RECEIVED BY MASTER ABHAY P SHAH BY WAY O F CROSSED ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 22 CHEQUES FROM CLOSE BUSINESS ASSOCIATES OF SHRI PINA KIN SHAH, WHO WERE ALSO FAMILY FRIENDS AND THESE WERE CREDITE D TO HIS BANK ACCOUNT. IN THE ABSENCE OF BOOKS OF ACCOUNT FO R THE MINOR AND AN ENTRY IN THOSE BOOKS OF ACCOUNT NO ADDITION CAN BE MADE AS HELD BY THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF CIT V. BHAICHAND V GANDHI 141 ITR 67 (BOM.). 6.6. THE GIFT NOT BEING FROM THE STRANGERS AND AS T HERE IS EVIDENCE FILED WHICH IS NOT CONTROVERTED THE RATIO OF THE DECISIONS RELIED UPON BY THE CIT(A) CANNOT BE APPLI ED TO THE FACTS OF THIS CASE. IN FACT TO MEET SUCH A SITUATIO N ONLY SECTION 56(2)(V) WAS INTRODUCED IN THE ACT BY THE FINANCE A CT, 2005 WITH EFFECT FROM 01.04.2005 FOR GIFTS RECEIVED AFTE R 01.09.2004. IN THIS CASE ALL THE GIFTS WERE RECEIVED BEFORE 23. 08.2004. HENCE THIS SECTION WAS NOT APPLIED. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT T HE ADDITION U/S 68 HAS TO BE NECESSARILY DELETED. THE APPEAL; O F THE ASSESSEE IS ALLOWED. 21. THUS, WE HOLD THAT SO FAR AS THE ISSUE OF GIFT IS CONCERNED, THE SAME IS ARISING OUT OF SIMILAR SET OF FACTS, WHICH WERE THE RE IN THE CASE OF SHRI PINAKIN L.SHAH, AND HENCE THE FINDINGS GIVEN THEREIN, WILL APPLY MUTATIS MUTANDIS IN THE PRESENT CASE ALSO. IN THAT CASE THE ISSUE OF GI FTS AS INCORPORATED ABOVE WAS DECIDED ON THE ANALYSIS OF FACTS, AND MERITS TH EREFORE, THE SAME REASONING WILL APPLY HERE ALSO AS THERE ARE SIMILAR SET OF DONORS. FURTHER WITHOUT THERE BEING ANY PROPER REASONING BY THE LEA RNED CIT(A) AND ANALYSIS OF THE DOCUMENTS AND AFFIDAVITS FURNISHED, WE DO NO T FEEL PERSUADED TO TAKE CONTRARY VIEW AND HOLD THAT THE ADDITION OF GIFTS F OR SUMS AGGREGATING RS.20 LAKH CANNOT BE SUSTAINED. HERE IN THIS CASE, ONE VE RY IMPORTANT FACT IS THAT, AFTER THE ASSESSEE HAS FILED ALL THE RELEVANT DOCUM ENTS AND EVIDENCES IN SUPPORT OF GIFTS, THE DEPARTMENT HAS NEITHER CARRIE D OUT ANY ENQUIRY NOR HAS REBUTTED THE EVIDENCE WITH ANY MATERIAL, EXCEPT FOR RELYING ON UNSUBSTANTIATED STATEMENT OF MUKESH CHOKSI, WHICH T OO WAS NOT SPECIFIC ON ITA NO.3112/MUM/2014. SMT.MANJULABEN L.SHAH. 23 GIFTS. THUS WITHOUT ANY REBUTTAL BY DEPARTMENT, THE PRIMARY ONUS WHICH LIED UPON THE ASSESSEE STOOD DISCHARGED AND THE AMOUNT O F GIFT CANNOT BE ADDED U/S 68. HENCE SAME IS DELETED. 22. 0 1 $ 20 * 3 4 * 56 IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF OCTOBER, 2014. ! * -./ 7$1 . * 8 SD/- SD/- ( B.R.BASKARAN ) ( AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 7$ DATED : 31 ST OCTOBER, 2014. DEVDAS* ! * ( 9 :9/ ! * ( 9 :9/ ! * ( 9 :9/ ! * ( 9 :9/ / COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. ; ( ) / THE CIT, MUMBAI. 4. ; / CIT(A)-26, MUMBAI 5. 9>8 ( $ , , / DR, ITAT, MUMBAI 6. 8?2 @ / GUARD FILE. !$ !$ !$ !$ / BY ORDER, )9 ( //TRUE COPY// A AA A/ // /5 5 5 5 (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI