SUPRIYA PHADTARE, BHIWANDI V. ITO WD 1(4), KALYAN

ITA 3525/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0773 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 02-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2016
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Bogus purchase; Unexplained investment; Unexplained expenditure; Search and seizure; Principle of natural justice; Opportunity of cross examination
• Section: 143(3); 69

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, A CCOUNTANT M EMBER AND SHRI SANDEEP GOSAIN, J UDICIAL M EMBER ./I.T.A. NO. 3525/M/2016 (ASSESSMENT YEAR: 2006 - 2007 ) ./I.T.A. NO.3526/M/2016 (ASSESSMENT YEAR: 2007 - 2008 ) SUPRIYA PHADTARE, 219, PHADTARE SADAN, LAHOTI COMPOUND, KALYAN ROAD, BHIWANDI, 421302. / VS. ITO, WARD - 1(4), KALYAN. ./ PAN : AAAXPP8747J ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DEVENDRA JAIN / REVENUE BY : SHRI M.C. OMI NINGSHEN, DR / DATE OF HEARING : 02 .05.2017 / DATE OF PRONOUNCEMENT : 08 .05.2017 / O R D E R PER R.C. SHARMA, AM: THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE COMMON ORDER OF THE CIT (A) - 2, THANE FOR THE AYS 2006 - 07 AND 2007 - 08, IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S 147 OF THE ACT, WHEREIN THE ASSESSEE IS AGGRIEVED FOR ADDITION MADE U/S 69 OF THE INCOM E TAX ACT, 1961 AS UNEXPLAINED INVESTMENT IN RESPECT OF SHARES SOLD BY THE ASSESSEE. 2. BEFORE US, AT THE OUTSET, IT WAS ARGUED BY THE LD AR THAT THE AO MADE ADDITION WITHOUT APPRECIATING THE FACTUAL POSITION IE THE BALANCE IN CAPITAL ACCOUNT OF THE ASSESSEE AS ON 1.4. 2005 WAS RS. 15,64,184/ - AND INCOME EARNED DURING THE YEAR WAS RS. 6,76,318/ - WHICH ADEQUATELY EXPLAINS THE INVESTMENT OF RS. 3,38,930/ - IN SHARES DURING THE YEAR 2005 - 06. IT WAS FURTHER CONTENDED THAT AO HAS MERELY RELIED ON THE STATEM ENT OF SHRI MUKESH CHOKSHI AND HELD THAT THE PURCHASES ARE TAXED WITHOUT ALLOWING THE OPPORTUNITY TO EXAMINE HIM. LD AR PLACED ON RECORD ORDER OF 2 THE TRIBUNAL IN THE CASE OF HUSBAND OF THE ASSESSEE (SHRI SUNIL R PHADTARE) VIDE ITA NO. 3697 AND 3698/M/2015 (AYS 2006 - 07 AND 2007 - 08), DATED 08.07.2016 WHEREIN THE ADDITION WITH RESPECT TO THE SIMILAR ISSUE UNDER CONSIDERATION WAS RESTORED BACK TO THE FILE OF THE AO. 3. WE HAVE HEAD THE RIVAL CONTENTIONS CAREFULLY, PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE CITED DECISION OF THE TRIBUNAL (SUPRA) DATED 8.7.2016, PASSED IN THE CASE OF HUSBAND OF THE ASSESSEE, WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO AFTER OBSERVING AS UNDER: - 3. I HAVE HEARD THE PARTIES AND HAVE PERUSED THE RECORD. THE ADDITIONAL GROUND RAISED IN ITA NO.3697/MUM/2015 IS A LEGAL GROUND. THE SAME IS ADMITTED. THE FACTS RELEVANT TO THE ABOVE SAID ISSUES ARE THAT THE DEPARTMENT CARRIED OUT A SEARCH AND SEIZURE OPERATION ON THE PREM ISES OF A PERSON NAMED AS SHRI MUKESH 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 THE ASSESSEE HEREIN HAD ALSO PURCHASED SHARES FROM THE GROUP COMPANIES BELONGING TO SHRI MUKESH CHOKSHI. HENCE, UPON RECEIPT OF INFORMATION IN THIS REGARD, THE AO REOPEN ED THE ASSESSMENT OF THIS ASSESSEE FOR THE YEARS UNDER CONSIDERATION. THE AO TREATED THE PURCHASE VALUE OF THE SHARES AS BOGUS PURCHASES AND ASSESSED THE SAME AS INCOME OF THE ASSESSEE. THE AO ALSO ESTIMATED THE EXPENDITURE THAT COULD HAVE BEEN INCURRED BY THE ASSESSEE FOR GETTING ACCOMMODATION BILLS OF THE PURCHASE VALUE AND ASSESSED THE SAME AS UNEXPLAINED EXPENDITURE. THE LD CIT (A) DISMISSED THE APPEALS FILED BY THE ASSESSEE AND HENCE THEY HAVE FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HEREIN HAD SOUGHT FOR CROSS - EXAMINATION OF SHRI MUKESH CHOKSHI, SINCE THE AO FRAMED THE ASSESSMENT ON THE STRENGTH OF THE STATEMENT GIVEN BY SHRI MUKESH CHOKSHI. HE SUBMITTED THAT THE A SSESSEE WAS NOT AFFORDED THE OPPORTUNITY TO CROSS EXAMINE SHRI MUKESH CHOKSHI. ACCORDINGLY, THE LD AR SUBMITTED THAT THE AO SHOULD NOT MADE THE ADDITIONS BY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, HE PRAYED THAT THE ASSESSEE SHOULD BE P ROVIDED WITH ADEQUATE OPPORTUNITY TO CROSS EXAMINE SHIR MUKESH CHOKSHI. THE LD AR SUBMITTED THAT THE SAME WOULD HELP THE ASSESSEE TO SUPPORT THE SHARE TRANSACTIONS. 5. THE LD DR COULD NOT SUCCESSFULLY REBUT THE PLEA PUT FORTH BY THE LD AR, THOUGH HE PLACE D STRONG RELIANCE ON THE IMPUGNED ORDERS. 6. 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 ASSESSEE HEREIN AND THE SAID ACTION OF THE AO VIOLATES THE PRIN CIPLES OF NATURAL JUSTICE. FURTHER, AS SUBMITTED BY THE LD AR, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITIONS ONLY ON THE BASIS OF STATEMENT GIVEN BY SHRI MUKESH CHOKSI. ACCORDINGLY, I AM OF THE VIEW THAT THE ASSESSEE HEREIN SHOULD BE PROVIDED WIT H ADEQUATE OPPORTUNITY TO CROSS EXAMINE SHRI MUKESH CHOKSHI. ACCORDINGLY, I SET ASIDE THE ORDER OF THE CIT (A) IN RESPECT OF THE ADDITIONS REFERRED ABOVE AND RESTORE THEM TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THESE ISSUES AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE SHRI MUKESH CHOKSI AND ALSO AFTER CONSIDERING ANY OTHER INFORMATION AND EXPLANATIONS THAT MAY BE FURNISHED BY THE ASSESSEE. THE ASSESSEE, NO DOUBT, SHALL COOPERATE WITH THE AO IN THE FRESH PROCEEDINGS BEFORE HIM. 3 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 4. FROM THE ABOVE, WE FIND, THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO THAT OF THE ONES IN THE CASE OF HUSBAND OF THE ASSESSEE, DECIDED BY THE TRIBUNAL (SUPRA). CONSIDERING THE COMMONALITY OF THE ISSUES AS WELL AS RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA), DATED 8.7.2016, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR ADJUDICATING THE MATTER AFRES H IN TUNE WITH THE TERMS AND DIRECTIONS GIVEN BY THE TRIBUNAL IN THE SAID ORDER. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 8 T H MAY, 2017. S D / - S D / - ( SANDEEP GOSAIN) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 08.05.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI