Suresh Maheshwari HUF, Mumbai V. Dy. Commissioner on Income-tax-25(1), Mumbai, Mumbai

ITA 3904/MUM/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2113 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-05-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 31-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Principle of natural justice; Accommodation entries; Capital Gains
• Section: 69; 148; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “G”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 3904/M/2023 Assessment Year: 2014-15 M/s. Suresh Maheshwari HUF 431, Akshay Girikunj, Bldg.- 3, Parliament Road, Andheri (West) – 400058. Andheri Railway Station S.O. PAN: AABHS3934A Vs. Dy. Commissioner of Income –Tax-25(1), Room No. 206, 2 nd Floor, Matru Mandir, Tardeo Road, Mumbai- 400007. (Appellant) (Respondent) Present for: Assessee by : Shri Rajesh Shah, C.A. Revenue by : Shri Prashant Mahajan, Sr. D.R. Date of Hearing : 07 . 05 . 2024 Date of Pronouncement : 29 . 05 . 2024 O R D E R Per : Ratnesh Nandan Sahay, Accountant Member: 1. These appeals have been filed by the appellant against the order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the „Act‟ in short] dated 21/09/2023 for the Assessment Year 2014-15. 2. The following grounds have been raised in ITA No. 3904/M/ 2023:- ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 2 “1. The Ld. CIT(A) has erred in confirming the addition of ₹ 73,94,850/- u/s 68 of the Act by treating long term capital gains as bogus. 2. The Ld. CIT(A) has erred in natural justice for confirming the addition as the Ld. AO has not provided any cogent materials or cross examination to the assessee. 3. The Ld. CIT(A) has erred in confirming the addition made by Ld. AO for 2,21,845/-on account estimation of commission being 3 percent of ₹ 73,94,850/- as unexplained expenditure. 4. The appellant reserves the right to add, alter, amend or withdraw any grounds of appeal.” 3. The facts of the case, in brief, are that the return of income for A.Y. 2014-15 was filed on 05/07/2014 declaring total income at Rs.27,24,880/-. The return was duly process u/s. 143(1) of the IT Act, 1961. Subsequently, information was received in the ITD system of the IT Department from investigation wing of the IT Department, Calcutta that accommodation entries were provided by the entry providers where unaccounted cash was introduced through a layer of transaction to show it as genuine. The details of the modus operandi have been given in the body of the assessment order as to how the entire process was manipulated in order to defraud the revenue. 4. The assessing officer noted that the assessee was also one of the beneficiaries of the entire manipulative transactions as per the details given as under. ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 3 Scrip Code Scrip Name Buy/Sell Quantity Trade Count Trade Value 531228 RANDER CORP SELL 15000 33 10,42,500 530561 RAD GLOBAL SELL 75000 247 63,52,350 Total 73,94,850 5. Accordingly, notice u/s. 148 was issued to the assessee on 29/03/2017 after reopening of the assessment by recording reasons therein. The assessing officer, after making a detail discussion in the impugned assessment order, made the addition of Rs.73,94,850/- u/s. 68 of the Act on the ground that the claim of the assessee that it has earned Long Term Capital Gain (LTCG) on account of sale of shares of Rander Corporation and Radford Global and exempted u/s. 10(38) of the IT Act was found to be a bogus transaction. Further, a sum of Rs.2,21,845/- being 3% of the sale value of Rs.73,94,850/- was also added u/s. 69 C of the Income Tax Act as unexplained expenditure on account of commission paid for arranging the entire transactions of bogus LTCG. 6. The Ld. CIT Appeal upheld the order of the assessing officer on the ground that the case was squarely covered by the decision of Hon‟ble Calcutta High Court dated 14/06/2022 in the case of PCIT- 5, Kolkata vs. Swati Bajaj [(IA No. ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 4 GA/2/2022) and 90 others] the details of which have been given in the impugned order of the Ld. CIT Appeal issued vide Appeal No. 3904 of 2023 for the assessment year 2014- 15. Ld. CIT Appeal also confirmed the addition of Rs.2,21,845/- made u/s. 69 C of the Act on the ground that the assessee must have paid a commission of 3% of the total trade value of Rs.73,94,850/- for arranging and facilitating the entire transactions as genuine. 7. Aggrieved by the order of the Ld. CIT Appeal, the appellant has filed this appeal. During the course of hearing before us, the Ld. Counsel of the appellant submitted a Paper Book containing details of the decisions held by various Courts and Tribunals on this issue. He also referred to the decision of the Hon‟ble ITAT Mumbai “C” Bench in ITA No. 3256/Mum/2022 for the assessment year 2014-15 in the case of Chirag Tej Prakash Dangi vs. ITO Ward 26(1)(5) Mumbai dated 20.02.2024 wherein the Hon‟ble Tribunal has already held that the buy/sale of shares of Radford Global as genuine on the ground that the sale of shares has taken place through online platform of the stock exchange and the sales consideration has been received by the stock broker through banking channels. ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 5 8. Now coming to the buy/sale of shares of Rander Corporation, the appellant‟s counsel, in addition to the decisions of the various courts and Tribunals on this issue, specifically referred to the decision of the coordinate Bench of ITAT Mumbai in ITA. No. 2427/Mum/ 2023 dated 23.11.2023 in the case of Uttam M Jain, HUF vs. Addl./Joint/Deputy/ACIT/ITO in which one of the Members of this bench was part of that Bench, has also held following the decision of the jurisdictional High Court in the case of Pr.CIT vs. Indravadan Jain HUF (ITA No.454 of 2018 dated 12 th July 2023) that the transaction in shares cannot be held to be bogus if the assessee is a regular investor in shares and transacted the transaction of sale and purchase through stock exchange and shares were dematerialized and subsequently sold after a year on 25/05/2011 and it is also not a case of the Assessing Officer or the Revenue Department that the assessee or the brokers from whom the assessee had purchased and sold the shares, were involved in rigging /price shooting. 9. The departmental Representative, on the other hand, has placed reliance on the order of the Ld. Assessing officer and the Ld. CIT Appeal. ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 6 10. We have considered the rival submissions and found that the coordinate benches of ITAT (Mumbai) have already held that unless there is specific evidence of rigging and manipulation in the transactions of shares the same cannot be treated as bogus simply on the basis of the investigation carried out by the investigation wing of the Income Tax Department. The SEBI has also not pointed out any specific instance of rigging in shares in the case of the appellant. Thus, respectfully following the decisions of the Coordinate Bench of ITAT, Mumbai (Supra), we also hold that in the absence of any cogent evidence of manipulation, the entire transactions in shares, which have taken place through stock exchange and banking channels, cannot be treated as bogus. Accordingly the addition made by the AO is deleted. 11. Similarly, since the share transactions were not treated as bogus, the estimated addition on account of commission paid for arranging and facilitating the entire transactions cannot be held to be justified.. 12. In the result, the appeal is allowed. Order pronounced in the open court on 29.05.2024. ITA No. 3904/M/2023 M/s. Suresh Maheshwari HUF 7 Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (RATNESH NANDAN SAHAY) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 29.05.2024. Snehal C. Ayare, Stenographer Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.