BIMAL V. VORA, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 3189/MUM/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3528 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 26-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Search and seizure; Principle of natural justice; Opportunity of cross examination
• Section: 6

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI BEFORE SHRI A.D.JAIN, JUDICIAL MEMBER . . , ./ I.T.A. NO. 3189 /MUM/2015 ( / ASSESSMENT YEAR :2008 - 09) BIMAL V VORA, 1/42, TARDEV A/C MARKET, TARDEO ROAD, MUMBAI - 400034 / VS. INCOME TAX OFFICER 16(1)(4), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAPV8124A / APPELLANT S BY SHRI JITENDRA SINGH / RSPONDENT BY SHRI A RAMCHANDRAN / DATE OF HEARING : 04/07/2016 / DATE OF PRONOUNCEMENT : 04/07/2016 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 4.2.2015 PASSED BY THE LD.CIT(A) - 30, MUMBAI FOR THE ASSESSMENT YEAR 2008 - 09. 2. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1 . UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD.CIT(A) HAS ERRED BY UPHOLDING THE INITIATION OF RE - ASSESSMENT PROCEEDINGS CARRIED ON BY THE LEARNED AO; 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED BY UPHOLDING THE CONTINUATION OF RE - ASSESSMENT PROCEEDINGS CARRIED ON BY THE AO; 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED BY UPHOLDING THE ADDITION OF RS. 1,44,968 C ARRIED OUT BY THE AO TREATING THE SAME AS BOGUS PURCHASES OF SHARES; 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED BY UPHOLDING THE ADDITION OF RS. 2,900 CARRIED OUT BY THE LEARNED A O TREATING THE SAME AS UNEXPLAINED EXPENDITURE. 5. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED BY UPHOLDING THE ADDITION OF RS. 8 ,22, 114 / - CARRIED OUT BY THE LEARNED AO TREATING THE SAME AS BOGUS SALE OF SHARES 3. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS RELEVANT TO THE ABOVE SAID ISSUES AR E THAT THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATION IN THE HANDS OF A PERSON NAMED AS SHRI MUKESH CHOKSHI , 3189/MUM/2015 2 WHO ADMITTED THAT HE AND HIS GROUP OF COMPANIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS FOR PURCHASE AND SALE OF SHA RES IN ORDER TO ENABLE THE PERSONS TO GENERATE THE SPECULATION PROFIT /LOSS , SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAINS ETC. IT WAS NOTICED THAT T HE ASSESSEE HEREIN HAD ALSO PURCHASED SHARES FROM THE GROUP COMPANIES BELONGING TO SHRI MUKESH CHOK S HI. HENCE, UPON RECEIPT OF INFORMATION IN THIS REGARD, THE AO RE - OPENED THE ASSESSMENT OF ALL THESE ASSESSEES FOR THE YEARS UNDER CONSIDE RA TION. THE AO TREATED THE PURCHASE VALUE OF THE SHARES AS BOGUS PURCHASES AND ASSESSED THE SAME AS INCOME OF THE ASS ESSEE. T HE AO ALSO ESTIMATED THE EXPENDITURE THAT COULD HAVE BEEN INCURRED B Y THE ASSE S SEES FOR GETTING ACCOMMODATION BILLS AT 2 % OF THE PURCHASE VALUE AND ASSESSED THE SAME AS UNEXPLAINED EXPENDITURE. THE LD. CIT(A) DISMISSED THE APPEAL S FILED BY THE AS SESSEES AND HENCE THEY HA V E FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. THE FIRST ISSUE RELATES TO THE VALIDITY OF REOPENING OF THE ASSESSMENT. AT THE TIME OF HEARING, THE LD. AR DID NOT ARGUE ON THIS GROUND. HENCE THE SAME IS DISMISSED. 5 . THE NEXT ISSUE RELATE S TO THE ASSESSMENT OF PURCHASE VALUE OF SHARES AS INCOME OF THE ASSESSEE AND ALSO THE ADDITION RELATING TO ESTIMATED EXPENDITURE . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT ASSESSES HEREIN HAD SOU GHT FOR CROSS - EXAMINATION OF S HRI MUKESH CHOK SHI, SINCE THE AO FRAMED THE ASSESSMENT ON THE STRENGTH OF THE STATEMENT GIVEN BY SHRI MUKESH CHOKSHI . H E SUBMITTED THAT THESE ASSESSEES WERE NOT AFFORDED THE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOK SHI. ACCORDINGLY, T HE LD. AR SUBM ITTED THAT THE AO SHOULD NOT HAVE MADE THE ADDITIONS BY VIOLATIN G THE PRINCIPLE S OF NATURAL JUSTICE . A CCORDINGLY HE PRAYED THAT THE ASSESSEE S SHOULD BE PROVIDED WITH A DEQUATE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKSHI . THE LD A.R 3189/MUM/2015 3 SUBMITTED THAT THE SAME WOULD HELP THE ASSESSEES TO SUPPORT SHARE TRANSACTION S. 6 . THE LD. DR DID NOT OBJECT TO THE PLEA PUT FORTH BY THE LD. AR. 7 . HAVING REGARD TO THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN NOT AFFORDING THE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEES HEREIN AND THE SAID ACTION OF THE AO VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. FURTHER, AS SUBMITTED BY THE LD A.R, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITIONS ONLY ON THE BASIS OF STATEMENT GIVEN BY SHRI MU KESH CHOKSI. ACCORDINGLY, I AM OF THE VIEW THAT THE ASSESSEES HEREIN SHOULD BE PROVIDED WITH A DEQUATE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKASHI . ACCORDINGLY , I SET ASIDE THE ORDER OF LD. CIT(A) IN RESPECT OF BOTH THE ADDITIONS REFERRED ABOVE AN D RESTORE THEM TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THESE ISSUES AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEES TO CROSS - EXAMINE SHRI MUKESH CHOKS I AND ALSO AFTER CONSIDERING ANY OTHER INFORMATION AND EXPLANATION S THAT MAY BE FUR NISHED BY THESE ASSESSEES. 8 . IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED ACCORDINGLY ON 4 TH JULY, 2016. 4 TH JULY, 2016 SD ( . . , / A.D. JAIN ) / JUDICIAL M EMBER MUMBAI: 4 TH JULY, 2016 . . . ./ SRL , SR. PS 3189/MUM/2015 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI