PAYAL B. VORA, MUMBAI V. ITO 16(1)(4), MUMBAI

ITA 3220/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100856 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 27-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; 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 S/SHRI B.R.BASKARAN ,AM AND LALIT KUMAR, JM ./ I.T.A. NO . 3143 AND 3144 / MUM/20 1 5 ( / ASSESSMENT YEA R S : 2006 - 07 AND 2007 - 08 ) VIREN P VORA (HUF), 1/42, TARDE V A/C MARKET, TARDEO ROAD, MUMBAI - 400034 / VS. INCOME TAX OFFICER 16(1)(4), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAHV2456G ./ I.T.A. NO .3217 AND 3218/ MUM/20 15 ( / ASSESSMENT YEA RS : 2007 - 08 AND 2008 - 09 ) ASHA D VORA, 1/42, TARDEV A/C MARKET, TARDEO ROAD, MUMBAI - 400034 / VS. INCOME TAX OFFICER 16(1)(4), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABPV8609B ./ I.T.A. NO .3219 AND 3220/ MUM/20 15 ( / ASSESSMENT YEA RS : 2006 - 07 AND 2007 - 08 ) PAYAL B VORA, 1/42, TARDEV A/C MARKET, TARDEO ROAD, MUMBAI - 400034 / VS. INCOME TAX OFFICER 16(1)(4), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABPJ5872C ITA NO. ,3143,3144,3217 ,3218,3219 AND 32 20 / MUM/20 1 5 2 / APPELLANT S BY SHRI JITENDRA SINGH / RSPONDENT BY SHRI MOURYA PR ATAP / DATE OF HEARING : 1 3 .8 . 201 5 / DATE OF PRONOUNCEMENT : 26 . 8. 201 5 / O R D E R P ER B ENCH : ALL THE APPEALS FILED BY THE RESPECTIVE ASSESSEES ARE DIRECTED AGAINST T HE SEPARATE ORDERS PASSED BY THE LD.CIT(A) - 30, MUMBAI IN THEIR RESPECTIVE HANDS FOR THE ASSESSMENT YEARS MENTIONED IN THE CAUSE TITLE . SINCE THE ISSUES URGED IN ALL THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. ALL THE ASSESSEES ARE CONTESTING THE FOLLOWING ISSUES: A) VALIDITY OF REOPENING OF ASSESSMENT; B) ASSESSMENT OF PURCHASE VALUE OF SHARES BY TREATING THEM AS BOGUS PURCHASES; AND C) ASSESSMEN T OF ESTIMATED EXPENDITURE RELATING TO PURCHASES. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS RELEVANT TO THE ABOVE SAID ISSUES ARE THAT THE DEPARTMENT CARRIED OUT SEARCH AND SEIZURE OPERATION IN THE HANDS OF A PERSON NAMED AS SHRI MU KESH CHOKSHI , WHO ADMITTED THAT HE AND HIS GROUP OF COMPANIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS FOR PURCHASE AND SALE OF SHARES 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 ASSESSEES HEREIN HAD ALSO PURCHASED SHARES FROM THE GROUP COMPANIES BELONGING TO SHRI MUKESH CHOK SHI. HENCE, UPON RECEIPT OF INFORMATION IN THIS REGARD, THE AO RE - OPENED THE ASSESSMENT OF ALL THESE AS SESSEES FOR THE YEARS UNDER CONSIDE RA TION. THE ITA NO. ,3143,3144,3217 ,3218,3219 AND 32 20 / MUM/20 1 5 3 AO TREATED THE PURCHASE VALUE OF THE SHARES AS BOGUS PURCHASES AND ASSESSED THE SAME AS INCOME OF THE ASSESSEE. 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 ASSESSEES AND HENCE THEY HA V E FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. THE FIRST ISSUE RELATES TO TH E 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 ADDIT ION RELATING TO ESTIMATED EXPENDITURE . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT ASSESSES HEREIN HAD SOU GHT FOR CROSS - EXAMINATION OF SHRI MUKESH CHOK SHI, SINCE THE AO FRAMED THE ASSESSMENT ON THE STRENGTH OF THE STATEMENT GIVEN BY SHRI M UKESH CHOKSHI . H E SUBMITTED THAT THESE ASSESSEES WERE NOT AFFORDED THE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOK SHI. ACCORDINGLY, T HE LD. AR SUBMITTED THAT THE AO SHOULD NOT HAVE MADE THE ADDITIONS BY VIOLATIN G THE PRINCIPLE S OF NATURAL JUSTICE . A CC ORDINGLY HE PRAYED THAT THE ASSESSEE S SHOULD BE PROVIDED WITH A DEQUATE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKSHI . THE LD A.R 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, WE ARE 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 NA TURAL JUSTICE. FURTHER, AS SUBMITTED BY THE LD A.R, THE ITA NO. ,3143,3144,3217 ,3218,3219 AND 32 20 / MUM/20 1 5 4 ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITIONS ONLY ON THE BASIS OF STATEMENT GIVEN BY SHRI MUKESH CHOKSI. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEES HEREIN SHOULD BE PROVIDED WITH A DEQUA TE OPPORTUNITY TO CROSS - EXAMINE SHRI MUKESH CHOKASHI . ACCORDINGLY , WE 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 FURNISHED BY THESE ASSESSEES. 8 . IN THE RESULT, ALL THE APPEAL S F ILED BY THE ASSESSEE S ARE TREATED A S ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 26 TH AUGUST 2 015. 26 TH AUGUST, 2015 SD SD ( LALIT KUMAR) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 2 6 TH AUG , 2015 . . . ./ SRL , SR. PS / 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