ITO 20(2)(1), MUMBAI V. MUSTAFA M. SHAMA, MUMBAI

ITA 4303/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3722 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 10-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, ITA. NO. 4303/MUM/2015 (ASSESSMENT YEAR:2007-08) I.T.O.-20(2)(1), MUMBAI APPELLANT VS. SHRI MUSTAFA MOHAMMED SHAMA B-701, 7 TH FLOOR, FATIMA APT., 109, MORLAND ROAD, BYCULLA, MUMBAI 400 008 RESPONDENT PAN: AAKPS5781J /BY APPELLANT : SHRI CHANDRA VIJAY, D.R. /BY RESPONDENT : SHRI MARLON REGO, A.R. /DATE OF HEARING : 10.08.2016 /DATE OF PRONOUNCEMENT : 12.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-32, MUMBAI, DATED 28.04.2015 FOR A.Y. 2007-08 ON FOLLOW ING GROUNDS: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF INCOME FROM ITA NO. 4303/MUM/15 A.Y. 07-08 [ITO VS. SHRI MUSTAFA M. SHAMA] PAGE 2 UNDISCLOSED SOURCE TOWARDS PURCHASE OF SHARES OF RS.20,61,668/- AND ON ACCOUNT OF SALE OF SHARES OF RS.26,25,489/- INSPITE OF THE FACT THAT ALL THE TRANSACTIONS DONE THROUGH MUKESH CHOKSI GROUP COMPANY AND SHRI MUKESH CHOKSI HAS ACCEPTED IN HIS STATEMENT ON OATH DATED 16-01-2013 THAT HE WAS ONLY INVOLVED IN GIVING ACCOMMODATION ENTRIES. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT ACKNOWLEDGING THE REPLY RECEIVED FROM NSC LTD. WHEREIN IT WAS MENTIONED THAT NO TRADE WERE EXECUTED ON EXCHANGE RECORD DURING THE F.Y. 2006-07 AND HAS DELETED THE ADDITIONS MADE BY THE A.O. IN THIS REGARD. 2.1 IN THIS CASE, CERTAIN INFORMATION WAS RECEIVED FROM CIT(CENTRAL)-IV, MUMBAI IN RESPECT OF BENEFICIARIES OF M/S. MAHASAGAR SECURITIES PVT. LTD. AND MUKESH CHOKSI GR OUP, ON WHOM SEARCH ACTION U/S.132 WAS CONDUCTED ON 25.11.2009. THE SAID GROUP COMPANIES WERE REPORTED LY ENGAGED IN FRAUDULENT BILLING ACTIVITIES PROVIDING BOGUS SPECULATION PROFIT/LOSS, LONG TERM/SHORT TERM CAPIT AL GAINS/LOSS ETC. SHRI MUKESH CHOKSI HAD STATED THAT HE WAS ONLY INVOLVED IN GIVING ACCOMMODATION ENTRIES, AND IDENTIFIED 829 NAMES OF BENEFICIARIES. IT WAS REVE ALED THAT ASSESSEE WAS ONE OF THE BENEFICIARIES, WHO HAD TAKE N ACCOMMODATION ENTRY OF RS.20,61,668/- TOWARDS PURCH ASE OF SHARES AND RS.26,25,489/- TOWARDS SALE OF SHARES . IT WAS REVEALED ON ENQUIRY U/S.133(6) OF THE ACT FROM NSE THAT THE REGISTRATION OF M/S. ALLIANCE INTERMEDIATE RIES & ITA NO. 4303/MUM/15 A.Y. 07-08 [ITO VS. SHRI MUSTAFA M. SHAMA] PAGE 3 NETWORK PVT. LTD. AS A REGISTERED SUB-BROKER AFFILI ATED TO ISE SECURITIES AND SERVICES LTD. (A TRADING MEMBER OF E XCHANGE) WAS CANCELLED IN FEBRUARY 2004. ASSESSING OFFICER REPRODUCED THE SUBMISSIONS MADE BY ASSESSEE IN PARA 3.2 OF ASSESSMENT ORDER, WHICH WAS NOT FOUND ACCEPTABLE BY HIM AND HE MADE ADDITION OF RS.20,61,668/- TOWARDS PURCHASE OF SHARES AND RS.26,25,488/- TOWARDS SALE OF SHARES, BASED ON INFORMATION RECEIVED ABOUT ASSESSE E BEING BENEFICIARY OF ACCOMMODATION ENTRIES. 2.2 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) GRA NTED RELIEF TO ASSESSEE. 2.3 SAME HAS BEEN OPPOSED BEFORE ME ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT IN FACTS AND CIRCUMSTANCES, CIT(A) ERRED IN DELETING THE ADDITIO NS MADE BY ASSESSING OFFICER ON ACCOUNT OF INCOME FROM UNDI SCLOSED SOURCE TOWARDS PURCHASE OF SHARES OF RS.20,61,668/- AND ON ACCOUNT OF SALE OF SHARES OF RS.26,25,489/- INSP ITE OF ALL THE TRANSACTIONS DONE THROUGH MUKESH CHOKSI GROUP COMPANY AND SHRI MUKESH CHOKSI HAS ACCEPTED IN HIS STATEMENT ON OATH THAT THAT HE WAS ONLY INVOLVED IN GIVING ACCOMMODATION ENTRIES. IN FACTS AND CIRCUMSTANCES, CIT(A) ALSO ERRED IN NOT ACKNOWLEDGING THE REPLY RECEIVED FROM NSC LTD. WHEREIN IT WAS MENTIONED THAT NO TRADE WERE EX ECUTED ITA NO. 4303/MUM/15 A.Y. 07-08 [ITO VS. SHRI MUSTAFA M. SHAMA] PAGE 4 ON EXCHANGE RECORD DURING THE F.Y. 2006-07 AND HAS DELETED THE ADDITIONS MADE BY ASSESSING OFFICER IN THIS REGARD. ACCORDINGLY, THE ORDER OF CIT(A) BE SET AS IDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHE R HAND, LD. AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CI T(A). 2.4 AFTER GOING THROUGH THE SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIA L ON RECORD, I FIND THAT: 2.4.1 FIRST ISSUE IS WITH REGARD TO ADDITION OF RS.20,61,668/- TOWARDS PURCHASE OF SHARES. AS PER INFORMATION SUBMITTED BY ASSESSEE, HE PURCHASED SHA RES OF BEML WORTH RS.12,30,626/-, WHICH WERE SOLD FOR RS.13,58,807/-. THE RESULTING INCOME OF RS.1,28,181 /- HAS BEEN OFFERED TO TAX. ASSESSEE HAS ALSO SHOWN PURCH ASE OF SHARES OF CABLE CORPORATION, APTECH & IFCI FOR RS. 8,27,469/- DURING THE YEAR, WHICH WERE SOLD IN SUBS EQUENT YEAR. THE TOTAL PURCHASES OF RS.12,30,626 + 8,27,46 9 = RS.20,58,095/- ALMOST RECONCILES WITH THE ADDITION MADE TOWARDS PURCHASES. ASSESSING OFFICER MADE THE SAI D ADDITION AS INCOME FROM UNDISCLOSED SOURCES, WITHOU T SPECIFYING THE SECTION UNDER WHICH ADDITION HAS BEE N MADE. ASSESSING OFFICER HAS PRESUMED UNACCOUNTED CASH IN HANDS OF ASSESSEE TO THE EXTENT OF PURCHASES SHOWN IN THE BOOKS. HOWEVER, IT WAS FOUND THAT ASSESSEE HAS NOT MADE AN Y PAYMENT TOWARDS PURCHASES. IN THE FIRST SET OF PURC HASE ITA NO. 4303/MUM/15 A.Y. 07-08 [ITO VS. SHRI MUSTAFA M. SHAMA] PAGE 5 TRANSACTIONS, ASSESSEE HAS ONLY RECEIVED NET INCOME OF RS.1,28,181/- WITHOUT MAKING ANY INITIAL PAYMENT, A ND THE SAID INCOME HAS BEEN OFFERED TO TAX AND ALSO ASSESS ED AS SUCH BY ASSESSING OFFICER. IN THE SECOND SET OF PUR CHASE TRANSACTIONS, ASSESSEE HAS NOT MADE ANY PAYMENT TOW ARDS SAID PURCHASES DURING THE YEAR. IN THESE CIRCUMSTAN CES, WHEN THERE IS NO PAYMENT ENTRY APPEARING IN ASSESSE E'S BOOKS, THE QUESTION OF SOURCE THEREOF DOES NOT ARIS E THEREFORE, CIT(A) WAS JUSTIFIED IN DELETING THE ADD ITION IN QUESTION. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM MY SIDE. I UPHOLD THE SAME. 2.4.2 NEXT ISSUE IS WITH REGARD TO RS.26,25,489/- TOWARDS SALE OF SHARES. IT APPEARS THAT FIGURE SEE MS TO HAVE TAKEN FROM THE STATEMENT OF MR. MUKESH CHOKSI THAT ASSESSEE HAS TAKEN ACCOMMODATION ENTRY RS.26,25,489 /- TOWARDS SALE OF SHARES. HOWEVER, IT WAS FOUND IN TH E BODY OF ASSESSMENT ORDER, NO ATTEMPT HAS BEEN MADE TO RECON CILE THE SAID FIGURE WITH THE ACTUAL TRANSACTIONS SHOWN BY ASSESSEE DURING THE YEAR. ASSESSEE HAS SHOWN SALE OF BEML SHARES FOR RS.13,58,807/- AGAINST WHICH INCOME OF RS.1,28,181/- WAS ALREADY OFFERED TO TAX AND ASSESS ED AS SUCH BY ASSESSING OFFICER. THERE WERE NO OTHER REP ORTED SALES, AGAINST WHICH INCOME WAS NOT OFFERED TO TAX. THERE WAS NO INFORMATION ON RECORD TO SUGGEST THAT ASSESS EE HAS RECEIVED ANY CONSIDERATION AGAINST SAID SALES IN CA SH. IN THESE CIRCUMSTANCES, ADDITION MADE WAS NOT FOUND ITA NO. 4303/MUM/15 A.Y. 07-08 [ITO VS. SHRI MUSTAFA M. SHAMA] PAGE 6 SUPPORTED BY PROPER FINDING OF FACTS, HENCE SAME WA S NOT FOUND TO BE SUSTAINABLE BY CIT(A). IN VIEW OF ABOV E, THE ADDITION MADE BY ASSESSING OFFICER WAS GUIDED BY TH E INFORMATION RECEIVED FROM SWORN STATEMENT OF MR. MU KESH CHOKSI, HOWEVER, THE FACTS ON RECORD DO NOT JUSTIFY THE ADDITIONS MADE. IN THIS SITUATION, CIT(A) WAS JUST IFIED IN HOLDING THAT ADDITION MADE OF RS.20,61,668/- & RS.26,25,489/- CANNOT BE SUSTAINED AND SAME WAS RIG HTLY DELETED BY HIM. THIS REASONED FINDING OF CIT(A) NE EDS NO INTERFERENCE FROM MY SIDE. I UPHOLD THE SAME. 3. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF AUGUST, 2016. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER MUMBAI: DATED 12/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. BY ORDER / , / , ,