ASST CIT 15(1), MUMBAI V. PINAKIN L SHAH, MUMBAI

ITA 3453/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0143 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: S C TIWARI MS RUTUJA N PAWAR
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.3453 & 3454/MUM./2013 ( ASSESSMENT YEAR :2004 - 0 5 , 2005 - 06 ) ASST. CIT 15(1) R.NO. 104 MATRU MANDIR, 1 ST FLOOR, TARDEO, MUMBAI 400 0 07 . APPELLANT V/S PINAKIN L SHAH, 59, K.K STREET GULALWADI, MUMBAI, 40004 PAN AACPS7747Q . RESPONDENT ITA NO.3457 & 3460/MUM./2013 (ASSESSMENT YEAR: 2004 - 05 & 2005 - 06) ITO 15(1)(4) MATRU MANDIR, MUMBAI 400007 . APPELLANT V/S MANJULABEN L. SHAH DHANERA METAL SUPPLY CORPRN. 59, K.K. STREET, GULALWADI, MUMBAI 400004 PAN AAEPS3608J . RESPONDENT ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 2 ITA NO.3461/MUM./2013 (ASSESSMENT YEAR: 2005 - 06) ITO 15(1)(4) MATRU MANDIR, MUMBAI 400007 . APPELLANT V/S RINKU SHAH, 52, K.K. STREET GULALWADI MUMBAI 400004 . RESPONDENT ASSESSEE BY : SHRI. S. C. TIWARI MS. RUTUJA N. PAWAR REVENUE BY : SHRI. T.A KHAN DATE OF HEARING - 08 .06 .2017 DATE OF ORDER 05 .0 7 .2017 O R D E R PER: B.R BASKARAN, ACCOUNTANT MEMBER . ALL THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD. CIT(A) - 26, MUMBAI IN THE RESPECTIVE HANDS OF THE ASSESSEES REFERRED FOR THE YEARS MENTIONED IN THE CAUSE TITLE SUPRA. SINCE THE ISSUE URGED IN THESE APPEALS IS IDENTICAL I N NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 3 2. THE GROUNDS OF APPEAL URGED BY THE REVENUE RELATE TO A SINGLE ISSUE, NAMELY WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION RELATING TO ALLEGED ACCOMMODATION ENTRY TAKEN BY THE ASSESSEES. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE SHALL TAKE UP THE APPEAL FILED IN THE CASE OF PI NAKIN L SHAH FOR ASSESSMENT YEAR 2004 - 05 AS THE LEAD A CASE AND DISCUSS THE FACTS RELATING THERETO. 4. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATION IN THE GROUP CONCERNS OF M/S. MAHASAGAR SECURITIES P. LTD. IN THE STATEMENT RECORDED AT THAT POINT O F TIME, IT WAS ADMITTED BY SHRI. MUKESH M. CHOKSHI, DIRECTOR OF M/S. MAHASAGAR SECURITIES P. LTD., THAT HE AND HIS COMPANIES ARE ENGAGED IN GIVING ACCOMMODATION ENTRIES IN THE FORM OF BOGUS SPECULATION PROFIT, LONG TERM/ SHORT TERM CAPITAL GAIN, SHARE APPL ICATION MONEY, COMMODITIES PROFITS/LOSS ETC. THE A.O NOTICED THAT SHRI. PINAKIN L SHAH, HAD SHOWED SALE VALUE OF SHARES AT RS.52,70,111/ - DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2005 - 06 THROUGH THE TRANSACTIONS CARRIED OUT WITH MUKESH CHOKSI GROUP COMPANY. BASED ON THE ABOVE SAID INFORMATION, THE AO ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 4 REOPENED THE ASSESSMENT FOR THE YEAR ASSESSMENT YEAR 2004 - 05 AND ASSESSED THE SALE VALUE OF 52,70,111/ - AS INCOME OF THE ASSESSEE U/S. 68 OF THE ACT, BY REJECTING THE CLAIM OF THE ASSESSEE THAT THE SAME REPRESENT CAPITAL GAIN/SPECULATION PROFIT. THE A.O WAS ALSO ESTIMATED COMMISSION EXPENDITURE AT 0.15% AND ACCORDINGLY ADDED SOME OF RS.7,905/ - . IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISION RENDERED BY H ONBLE BOMBAY HIGH COURT IN THE CASE OF MUKESH R MAROLIYA. THE LD. CIT(A) HELD THAT THE ADDITION MADE BY THE A.O SIMPLY ON THE BASIS OF THE GENERAL STATEMENT GIVEN BY A THIRD PERSON NAMELY MR. MUKESH CHOKSHI, CANNOT BE SUSTAINED, PARTICULARLY IN ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUPPORT THE VIEW TAKEN BY THE A.O. ACCORDINGLY, HE DELETED THE ADDITION OF SALE VALUE OF SHARES AMOUNTING TO RS.52,70,111/ - . AGGRIEVED BY THE DECISION OF LD. CIT(A) THE REVENUE HAS FIELD THIS APPEAL. 5. AT TIME OF HEARING, T HE LD. A.R SUBMITTED THAT THE SALE VALUE OF SHARES ASSESSED BY THE A.O ACTUALLY RELATE TO SPECULATIVE TRANSACTIONS. HE SUBMITTED THAT, IN THE CASE OF SPECULATIVE TRANSACTIONS, THE ASSESSEE IS NOT REQUIRED TO MAKE ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 5 ANY PAYMENT TOWARDS PURCHASE VALUE OF SHAR ES AND THE SHARE BROKER IS NOT REQUIRED TO MAKE ANY PAYMENT TO THE ASSESSEE TOWARDS THE SALE VALUE. HE SUBMITTED THAT THE SPECULATIVE TRANSACTIONS ARE SETTLED IN RESPECT OF PROFIT/LOSS ARISING FROM PURCHASE AND SALE. ACCORDINGLY THE LD. A.R SUBMITTED THAT THE A.O WAS LEGALLY NOT CORRECT IN ASSESSING THIS SALE VALUE OF SHARES SOLD UNDER SPECULATIVE TRANSACTION. 6. WE HAVE HEARD LD. D.R AND PERUSED THE RECORD. 7. THE FACTS ARE IDENTICAL IN ALL THE CASES UNDER CONSIDERATION. HAVING HEARD RIVAL SUBMISSIONS, WE FIND MERIT IN THE SUBMISSIONS MADE BY LD. A.R. IT IS A KNOWN FACT THAT SPECULATIVE TRANSACTIONS ARE SETTLED ON THE BASIS OF NET RESULT OF THE TRANSACTION, I.E., THE BUYER IS NOT REQUIRED TO PAY MONEY FOR PURCHASES MADE AN D THE SHARE BROKER IS NOT REQUIRED TO PAY THE SALE PRICE OF SALES. THE SPECULATIVE TRANSACTIONS OF PURCHASES SALES ARE SETTLED BY PAYING/RECEIVING THE NET RESULT OF PURCHASE AND SALES. IN THE PRESENT CASES, IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASS ESSING OFFICER HAS ASSESSED THE SALES VALUE OF SHARES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. WHEN THE ASSESSEE HAS NOT RECEIVED THE SALES VALUE OF ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 6 SHARES, THERE IS NO QUESTION OF ASSESSING THE SAME U/S 68 OF THE ACT. HENCE THE A.O WAS NOT LEGALLY CORRECT IN ASSESSING THE SALE VALUE OF SPECULATIVE SALES AS UNEXPLAINED CASH CREDIT. THE ASSESSEE HAS FURNISHED A STATEMENT SHOWING THE DETAILS OF SPECULATION PROFITS IN EACH OF THE FIVE CASES UNDER CONSIDERATION. AS DISCUSSED ABOVE, THE SALES VALUE OF S HARES SOLD UNDER SPECULATIVE TRANSACTIONS CANNOT BE ASSESSED U/S 68 OF THE ACT. EVEN THOUGH THE LD. CIT(A) HAS DELETED THE ENTIRE ADDITION ON SOME OTHER REASONING, WE PREFER TO UPHOLD HIS DECISION IN RESPECT OF SALES VALUE RELATING TO SPECULATIVE TRANSACTI ONS ON THE POINTS DISCUSSED ABOVE. FOR THE REMAINING ADDITION, WE NOTICE THAT THE REVENUE DID NOT FURNISH ANY MATERIAL TO CONTROVERT THE FINDINGS GIVEN BY LD CIT(A). ACCORDINGLY WE UPHOLD HIS ORDER ON THE REMAINING AMOUNT OF ADDITION ALSO. 8. IN THE R ESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 .0 7 .2017 SD/ - SD/ - SANDEEP GOSAIN B.R BASKARAN JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 05 .07.2017 ITA NO.3453 & 3454/MUM./2013 ITA NO.3457 & 3460/MUM./2013 ITA NO.3461/MUM./2013 7 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI