PUSHPA M SHAH, MUMBAI V. ITO 19(3)(3), MUMBAI

ITA 436/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78758 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 15-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: SANJAY N KAPADIYA
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries; Reassessment proceedings
• Section: 143(3); 147; 131; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C SHARMA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 436/MUM/2013 ASSESSMENT YEAR: 2004-05 MS. PUSHPA M. SHAH MOHANLAL JAI & CO. CHARTERED ACCOUNTANTS 10, CHARTERED HOUSE, GR. FLOOR, DR. C.H. STREET, MARINE LINES MUMBAI- 400 002 VS. ITO 19(3)(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI- 400 020 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :-AANPS 9314 C ASSESSEE BY : SHRI SANJAY N. KAPADIYA REVENUE BY : SHRI M. L. PERUMAL DATE OF HEARING : 02.04.2014 DATE OF PRONOUNCEMENT : 22.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-30, MUMBAI DATED 09.11.2012 FOR THE ASSES SMENT YEAR 2004-05. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD.CIT(A) IN UPHOLDING THE VALIDITY OF THE RE-OPENING OF THE ASS ESSMENT U/S 147 AND THE CONSEQUENT DISALLOWANCE/ADDITION OF RS.5,07,300/- M ADE BY THE AO AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL DURI NG THE YEAR UNDER CONSIDERATION HAD DECLARED A TOTAL INCOME OF RS.11,55,408/- AND T HE SAID RETURN WAS ACCEPTED BY THE AO U/S 143(1) OF THE INCOME-TAX ACT. LATER ON, BASED ON THE INFORMATION RECEIVED FROM DDIT (INV.), UNIT 1(4), MUMBAI, THE A O ISSUED NOTICE U/S 148 OF THE ACT AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, IN BRIEF, WA S DUE TO THE INFORMATION OBTAINED VIDE SEARCH AND SEIZURE OPERATION CARRIED U/S 132 OF THE ACT IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. & OTHER COMPANI ES. ACCORDING TO THE REVENUE, THE GROUP OF COMPANIES WAS INDULGING IN PROVIDING B OGUS SPECULATION/PROFIT LOSS, ITA NO. 436/MUM/2013 MS. PUSHPA M. SHAH ASSESSMENT YEAR: 2004-05 2 SHORT TERM CAPITAL GAIN/LOSS, COMMODITIES PROFITS/L OSS ON COMMODITY TRADING. THE LIST OF CLIENTS EXTRACTED FROM THE COMPUTER DATA SEIZED FROM THE OFFICE PREMISES OF M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED GROU P COMPANIES INCLUDING M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., M/S. M IHIR AGENCIES PVT. LTD., M/S. GOLDSTAR FINVEST PVT. LTD. CONSISTED OF MORE THAN 3 000 BENEFICIARIES. THE ASSESSEE WAS OBSERVED TO BE ONE OF THE BENEFICIARIES, WHO HA D TRANSACTED THROUGH M/S. GOLDSTAR FINVEST PVT. LTD. IN THE SHARES OF M/S. BU NIYAD CHEMICALS. 3.1 THE ASSESSEE HAD BOUGHT SHARES OF BUNIYAD CHEMI CALS LTD THROUGH GOLDSTAR FINVEST P. LTD. AND SOLD THESE SHARES, THEREBY, TRE ATED THE GAIN AS LONG TERM CAPITAL GAIN. THEREAFTER, THE ASSESSEE INVESTED THE SAID LT CG IN RURAL ELECTRIFICATION BOND FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54EC OF T HE ACT. HOWEVER, THE AO REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE LONG TERM CAPITAL GAINS EARNED FROM SHARE TRANSACTIONS OF BUNIYAD CHEMICAL TO THE TUNE OF RS.5,07,300/- AS BOGUS TRANSACTIONS AND ACCORDINGLY TREATED THE SUM AS UNE XPLAINED INVESTMENT OF THE ASSESSEE WITHIN THE MEANING OF SECTION 68 OF THE AC T. THE SAID ADDITION WAS BASED ON THE STATEMENT OF SHRI M.M. CHOKSHI, A DIRECTOR I N THE COMPANIES WHERE THE AFOREMENTIONED SEARCH AND SEIZURE OPERATION WAS CAR RIED OUT, RECORDED U/S 131 OF THE ACT ADMITTING THAT CHEQUES/DDS FOR ACCOMMODATIO N ENTRIES OF VARIOUS BENEFICIARIES AGAINST THE RECEIPT OF CASH & THIRD P ARTY CHEQUES FOR GIVING ACCOMMODATION ENTRIES TO THE BENEFICIARIES. ON APPE AL, THE LD.CIT(A) UPHELD THE VALIDITY OF REOPENING/REASSESSMENT PROCEEDINGS AND ALSO THE ADDITION MADE BY THE AO. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE I S IN APPEAL BEFORE US. 4. HAVING REGARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, IT HAS BEEN BROUGHT TO OUR NOTICE THAT SIMILAR ADDITIONS/DISALL OWANCES MADE IN THE HANDS OF OTHER BENEFICIARIES BASED ON THE STATEMENT OF M.M. CHOKSI HAS BEEN DELETED BY THE TRIBUNAL AS NOTHING HAS BEEN FOUND AGAINST THE ASSE SSEES. IT HAS FURTHER BEEN OBSERVED THAT IN SOME OF THE CASES OF THE BENEFICIA RIES, THE HONBLE JURISDICTION HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL. IN THIS CON NECTION, THE ORDER OF THE TRIBUNAL IN THE CASE OF MAYUR M. SHAH (HUF) VS. ITO IN ITA NO. 2390/MUM/2013 IS IMPORTANT. THE RELEVANT FINDING OF THE TRIBUNAL IN THE SAID CASE IS EXTRACTED HEREUNDER:- ITA NO. 436/MUM/2013 MS. PUSHPA M. SHAH ASSESSMENT YEAR: 2004-05 3 9. I HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIA L ON RECORD, I FOUND THAT IN CASE OF SHRI RAVINDRAKUMAR TOSHWNIWAL (SUPRA) AN D IN CASE OF MUKESH R. MAROLIA, DECIDED IN ITA NO. 456/2007, VIDE ORDER DA TED 07.09.2011, THE SHARES FOR MAROLIA WERE PURCHASED THROUGH M/S. GOLD STAR FINVEST LTD. AND AFTER CONSIDERING THE STATEMENT OF MR. CHOKSHI, THE BENCHES HELD THAT THE TRANSACTIONS DONE BY THE ASSESSEE WERE GENUINE AND NOTHING WAS FOUND AGAINST THESE ASSESSEES. THE DECISIONS OF THE TRIBU NAL HAVE BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT IN BOTH OF THESE CASES. COPIES OF THESE ORDERS ARE PLACED ON RECORD AT PAGES 18 & 41, RESPECTIVELY. IN THE CASE OF ASSESSEE, FACTS ARE SIMILAR AND NOTHING WAS FOUN D AGAINST THE ASSESSEE. THE STATEMENT OF MR. MUKESH CHOKSHI WAS RECORDED SO METIME IN THE YEAR OF 2009, WHEREAS TRANSACTION OF PURCHASE AND SALES WER E HELD IN ASSESSMENT YEAR 2002-03 & 2003-04. TAKING INTO CONSIDERATION A LL THESE ASPECTS AND TAKING INTO CONSIDERATION THE VARIOUS DECISION OF T HE TRIBUNAL, WHICH HAVE BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH C OURT, I HOLD THAT THE TRANSACTION FOR PURCHASE AND SALE OF SHARES IN THE PRESENT CASE ALSO CANNOT BE HELD AS BOGUS AS NO MATERIAL WAS FOUND AGAINST T HE ASSESSEE DIRECTLY. 10. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I DELETE BOTH THESE ADDITIONS I.E. RS.3,09,310/- AND RS.15,466/- IT IS PERTINENT MENTION THAT IN THE CASE HAND ALSO, NOTHING SPECIFIC HAS BEEN FOUND AGAINST THE ASSESSEE. CONSIDERING THE SIMILARITY FA CTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE, WE HOLD THAT THE TRANSACTION OF P URCHASE OF SALE OF SHARES CANNOT BE HELD AS BOGUS AS NO MATERIAL HAS BEEN FOUND AGAI NST THE ASSESSEE DIRECTLY. SINCE THE ADDITIONAL DISALLOWANCE HAS BEEN DELETED ON MER ITS, THE ISSUE OF ADJUDICATING THE VALIDITY OF REOPENING/REASSESSMENT PROCEEDINGS IS N OT REQUIRED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF APRIL, 2014. SD/- SD/- (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22.04.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.