MR JAGDISH H. SHAH, MUMBAI V. THE ITO 10(3)(2), MUMBAI

ITA 357/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3683 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 11-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Salary income; Accommodation entries
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.357/MUM/2011 ( %' ( / ASSESSMENT YEAR: 2006-07) JAGDISH H. SHAH 14, SHARAD INDUSTRIAL ESTATE, LAKE ROAD, BHANDUP (W), MUMBAI - 400078 ' / VS. INCOME TAX OFFICER 10(3)(2) ROOM NO.259, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAQPS6968P ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 11.05.2016 !' /DATE OF PRONOUNCEMENT:12.08.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 15.11.2010 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 22, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2006-07. ASSESSEE BY: SHRI NONE DEPARTMENT BY: SHRI AGNES P. THOMAS ITA NO.357/M/2011 A.Y. 2006-07 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE INCOME OF RS.6,70,059/- IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT INCOME FROM LONG TERM CAPIT AL GAINS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE TRANSACTI ON OF PURCHASE AND SALE OF SHARES M/S. MICRO TECHNOLOGIES LTD. ARE NOT GENUINE TRANSACTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN NOT GIVING AN OPPORTUNITY TO CROSS EXAMINE MR.MUKESH CHOKESY, WHOSE STATEMENT HAS BEEN RELIED ON BY THE CIT(A) AND THE ASSESSING OFFICER I N CONCLUDING THAT THE TRANSACTIONS ARE NOT GENUINE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT AN AMOUNT OF RS.55,806/- AS UNEXPLAINED INVESTMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THAT TAKI NG THE AMOUNT OF RS.55,806/- AS UNEXPLAINED INVESTMENT HA S LEAD TO DOUBLE ADDITION AS THE APPELLANT HAS ALREADY OFF ERED THE AMOUNT OF RS.55,603/- AS SPECULATION INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 02.01.2007, DECLARING A TOTAL INCOME T O THE TUNE OF RS.2,15,110.00. THE RETURN WAS PROCESSED U/S.143(3 ) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) AND NOTICES U/S .143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE . THE ASSESSEE HAS DECLARED INCOME FROM SALARY, BUSINESS, LONG TERM CA PITAL GAINS AND ITA NO.357/M/2011 A.Y. 2006-07 3 INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER A SSESSED THE INCOME TO THE TUNE OF RS.9,40,980/-. THE ASSESSEE WAS NOT SATISFIED FROM THE ASSESSMENT ASSESSED BY THE ASSESSING OFFIC ER, THEREFORE, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONF IRMED THE ORDER OF THE ASSESSING OFFICER. THEREFORE, ASSESSEE HAS FIL ED THE APPEAL BEFORE US. ISSUE NO. 1 &5:- 4. ISSUE NO.1 AND 2 ARE INTERCONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER OF ADJUDICATION. NONE APPEARED ON BEHA LF OF THE ASSESSEE. THE LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS A RGUED THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE INCOME TO THE TUNE OF RS.6,70,059/- AS INCOME FROM OTHER SOURCES. THEREFORE, THE ORDER PASSED BY THE CIT(A) ON THIS GROUND IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. THE ASSESSEE HAS SHOWN THE LONG T ERM CAPITAL GAIN ON SALE OF 2100 SHARES OF MICRO TECHNOLOGIES LTD. SOLD TO THE TUNE OF RS.6,77,059/-. THE COST PRICE OF THE SAID SHARES W ERE SHOWN AS RS.25,210/- AND LONG TERM CAPITAL GAIN WAS CALCULAT ED AS RS.6,44,849/-. THE ASSESSEE ALSO INFORMED THAT THE SHARE OF MICRO TECHNOLOGIES LTD. WERE PURCHASED FROM MAHASAGAR SEC URITIES LTD. ON 30.06.2004 AND SOLD THROUGH SUNCHAN SECURITIES LTD. ON 24.01.2006. THE ASSESSING OFFICER RECORDED THE STATEMENT OF SHR I MUKESH CHOKSI, DIRECTOR OF MAHASAGAR SECURITIES PVT. LTD. DATED 03 .12.2008 WHO STATED THAT THE ASSESSEE DID NOT PURCHASE THE SHARE S OF MICRO ITA NO.357/M/2011 A.Y. 2006-07 4 TECHNOLOGIES LTD. THROUGH THE BROKER. THE ENTRIES ARE ONLY THE ACCOMMODATION ENTRIES. THE ASSESSING OFFICER DID N OT RELY UPON THE STATEMENT OF SHRI MUKESH CHOKSI HOWEVER CONDUCTED F URTHER INQUIRY TO KNOW THE VERACITY OF THE CASE. THE ASSESSEE DID ENQUIRY FROM INTERCONNECTED STOCK EXCHANGE OF INDIA LTD. BUT NO SUCH TRADES WERE RECORDED THERE. THE ASSESSEE CLAIMED TRANSACTION F ROM THE MAHASAGAR SECURITIES PVT. LTD. WHICH WAS ALSO EARLIER KNOWN A S RICHMOND SECURITIES PVT. LTD. ASSESSING OFFICER FURTHER CON DUCTED THE ENQUIRY AND CAME TO KNOW THAT THE RICHMOND SECURITIES PVT. LTD. WAS AN EXPELLED MEMBER OF THE INTERCONNECTED STOCK EXCHANG E OF INDIA W.E.F. 21.06.2004 AND THE PURCHASE OF 2100 SHARES OF MICRO TECHNOLOGIES LTD. THROUGH MAHASAGAR SECURITIES PVT. LTD. ON 30.0 6.2004 WAS NOT GENUINE. APPARENTLY, IT IS CLEAR THAT NO PURCHASE OF THE SHARES OF MICRO TECHNOLOGIES LTD. WERE MADE EITHER THROUGH RI CHMOND SECURITIES OR MAHASAGAR SECURITIES PVT. LTD. ASSES SEE ALSO EXPLAINED THAT BY VIRTUE OF ORDER DATED 16.12.2008 HE OFFERED NET SALE OF RS.6,44,849/- AS SHORT TERM CAPITAL GAIN. REGARDIN G SPECULATION PROFIT OF RS.55,603/- ALSO, THE DIRECTOR OF BROKER ALLIANC E INTERMADITERIES & NETWORK PVT. LTD. SHRI MUKESH CHOKSI ATTENDED IN RE SPONSE TO SUMMON AND DEPOSED THAT THE TRACTION WITH REFERENCE TO THIS ALSO ACCOMMODATION ENTRIES. ONE BEING CONFRONTED, THE ASSESSEE DID NOT OFFER ANY EXPLANATION BEFORE ASSESSING OFFICER. AC CORDINGLY, ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT PU RCHASED SHARES OF MICRO TECHNOLOGIES LTD. AND THE TRANSACTIONS WERE B OGUS. IT WAS ALSO ITA NO.357/M/2011 A.Y. 2006-07 5 OBSERVED THAT THE OPENING BALANCE IN ASSESSEES HDF C BANK ACCOUNT AS ON 01.01.2005 WAS NIL AND CREDIT OF 2100 SHARES OF MICRO TECHNOLOGIES LTD. ON 24.01.2006 AND DEBIT ON 25.01. 2006 ALSO MAKES IT CLEAR THAT THE ASSESSEE HAS GOT THE SHARES TRANS FERRED ON THE DATE OF SALE I.E. ON 24.01.2006. ASSESSING OFFICER ALSO NO TED THAT THE ASSESSEE HAD NOT DISCLOSED DIVIDEND IN ITS ACCOUNT ALTHOUGH MICRO TECHNOLOGIES LTD. HAD DECLARED FINAL DIVIDEND @ 10% ON 09.08.2005 WITH THE RECORD DATE ON 05.09.2005. IF THE ASSESSE E HOLDS THESE SHARES W.E.F. 30.06.2004 HE SHOULD SHOW THE RECEIVED DIVID END WHICH IS NOT ON RECORD. THEREFORE THE ASSESSEE DID NOT PURCHAS E THE SHARES OF MICRO TECHNOLOGIES LTD. PM 30.06.2004. MOREOVER, T HE ASSESSEE DID NOT PRODUCE THE PROOF OF PAYMENT TO THE BROKER OR A NY OTHER CREDIBLE EVIDENCE ON RECORD. IT IS ALSO ON RECORD THAT THE ASSESSEE FAILED TO FURNISH DETAILS REGARDING INVESTMENT IN SHARES OF P ARAMOUNT COMM. LTD., IND MERCHANT BANK AND INDIA BULL FINANCE LTD. THE INVESTMENT IN THESE SHARES OF RS.55,806/- IS MORE OR LESS CORR ESPONDING TO THE SPECULATION PROFIT OF RS.55,603/- DISCLOSED BY THE ASSESSEE WHICH IS ADMITTED AS BOGUS BY BROKER SHRI MUKESH CHOKSI. TH E ASSESSING OFFICER TREATED THIS INVESTMENT OF RS.55,806/- AS U NEXPLAINED INVESTMENT. 5. MOREOVER NOTHING CAME INTO THE NOTICE THAT AN AM OUNT OF RS.55,806 HAS BEEN ADDED ONLY ON THE BASIS OF STATE MENT OF SHRI MUKESH CHOKSI. THE ASSESSING OFFICER DEDUCTED THE TAX BY GOING ITA NO.357/M/2011 A.Y. 2006-07 6 THROUGH THE ACCOUNTS OF ASSESSEE AS WELL AS ON THE BASIS OF DOCUMENTS OF THE OTHER CONNECTING FIRMS. THEREFORE, THE TRA NSACTIONS WERE NOT FOUND GENUINE EVEN AT THIS APPELLATE STAGE ALSO NO JUSTIFIABLE FACTS AND MATERIALS ARE AVAILABLE TO WHICH IT CAN BE ASSUMED THAT THE ASSESSING OFFICER WRONGLY CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER. EVEN AFTER THE SERVICES OF THE NOTICES ASSESSEE DID NOT BOTHER OF IT. 6. KEEPING IN VIEW OF THE CASE OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE MATTER IS NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED :12 TH AUGUST, 2016 MP MP MP MP ITA NO.357/M/2011 A.Y. 2006-07 7 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI