MR.PINESH ANRAJ SHAH, MUMBAI V. INCOME TAX OFFICER 19(2)(5), MUMBAI

ITA 4515/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4310 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANS
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Accommodation entries; Set aside; Capital Gains
• Section: 148

Judgement Text

P A G E | 1 ITA NO. 4515/MUM/2018 AY. 2009 - 10 MR. PINESH ANRAJ SHAH VS. INCOME TAX OFFICER 19(2)(5) IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4515/MUM/2018 (ASSESSMENT YEAR: 2009 - 10 ) MR. PINESH ANRAJ SHAH SHUBHLAXMI STEEL, 15, 1 ST PARSIWADA LANE, B/H, ALANKAR CINEMA, MUMBAI 400 004 VS. INCOME TAX OFFICER - 19(2)(5) MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 PAN ACAPS6368M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJIV KHANDELWAL , A.R RESPONDENT BY: SHRI ASHUTOSH RAJHANS , D.R DATE OF HEARING: 11 .03 .2019 DATE OF PRONOUNCEMENT: 1 3 .03 .2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 53, MUMBAI , DATED 16.05.2018 FOR A.Y. 2009 - 10, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT IT ACT), DATED NIL. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLO WING GROUNDS OF APPEAL : THE FOLLOWING GROUNDS OF APPEAL ARE INDEPENDENT OF, AND WITHOUT PREJUDICE TO, ONE ANOTHER . 1. THE INCOME TAX OFFICER - 19(2)(5), MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) ERRED IN ISSUING NOTICE UNDER SECTION 148 OF THE ACT. P A G E | 2 ITA NO. 4515/MUM/2018 AY. 2009 - 10 MR. PINESH ANRAJ SHAH VS. INCOME TAX OFFICER 19(2)(5) THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ISSUE OF NOTICE UNDER SECTION 148 IS WITHOUT JURISDICTION, BAD IN LAW AND HENCE, NEEDS TO BE QUASHED. 2. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 53, MUM BAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN FRAMING AN EX - PARTE ORDER. THE APPELLANT CONTENDS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) OUGHT NOT TO HAVE FRAMED AN EX - PARTE ORDER. 2. BRIEFLY STATED, THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 10.03.2010 , DECLARING TOTAL INCOME AT RS. 2,59,130/ - . THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC.147 OF THE I.T ACT. IN COMPLIANCE, IT WAS SUBMITTED BY THE ASSESSEE THAT HIS ORIGINAL RETURN OF INCOME FILED UNDER SEC.139 OF THE INCOME TAX ACT, 1961 (FOR SHORT IT ACT) MAY BE TREATED AS A RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SEC.148 OF THE IT ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT TH E ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAIN (FOR SHORT LTCG) OF RS.11,17,411/ - ON SALE OF SHARES OF M/S BLUE PRINT AS EXE MPT UNDER SEC. 10(38) OF THE IT ACT. THE A.O RECEIVED INFORMATION FROM THE D IRECTORATE OF I NVESTIGATION, KOLKATA REGARDING CERTAI N COMPANIES LISTED ON KOLKATA STOCK EXCHANGE WHICH WERE FACILITATING GENERATION OF ACCOMMODATION ENTRIES OF BOGUS LTCG. ON THE BASIS OF THE INFORMATION RECEIVED , IT WAS OBSERVED BY THE A.O THAT SURVEY PROCEEDINGS CONDUCTED AT THE PREMISES OF S/SH. ASHOK KU MAR KAYAN & SUNIL KUMAR KAYAN REVEALED THAT CASH WAS DEPOSITED IN THE ACCOUNT OF M/S GALAXY TRADING COMPANY I.E A PROPRIETARY CONCERN OF BISWAJIT MANDAL, FROM WHERE MONEY WAS ROUTED THROUGH RTGS TO THE ACCOUNTS OF THE AFOREMENTIONED PERSONS VIZ. S/ S H. ASH OK KUMAR KAYAN & SUNIL KUMAR KAYAN. AS IS DISCERNIBLE FROM THE RECORDS, IT WAS NOTICED BY THE A.O THAT S HRI . ASHOK KUMAR KAYAN WAS PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGUS LTCG IN CONNIVANCE WITH ENTRY OPERATORS AND PROMOTERS OF SCRIPS LISTED WITH THE KOLKATA STOCK P A G E | 3 ITA NO. 4515/MUM/2018 AY. 2009 - 10 MR. PINESH ANRAJ SHAH VS. INCOME TAX OFFICER 19(2)(5) EXCHANGE. IN THE BACKDROP OF THE AFORESAID INFORMATION , IT WAS NOTICED BY THE A.O THAT THE CONTRACT NOTES OF SHARES THAT WERE PURCHASED BY THE ASSESSEE DID NOT MENTION THE TIME OF TRADE. THE A.O NOT INSPIRED WITH THE GENUINENESS OF T HE AFORESAID PURCHASE TRANSACTION SUMMONED THE ASSESSEE UNDER SEC.131 OF THE I . T ACT IN ORDER TO SEEK HIS EXPLANATION AS REGARDS THE SAME. A S THE ASSESSEE FAILED TO COMPLY TO THE AFORESAID NOTICE ISSUED BY THE A.O , THEREFORE, HE TREATED THE LTCG OF RS.11,1 7,358/ - AS NON GENUINE AND HELD THE AMOUNT OF RS.12,09,092/ - CLAIMED BY THE ASSESSEE AS THE SALE PROCEEDS OF SHARES AS HIS DEEMED INCOME UNDER SEC.68 OF THE I . T ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IN THE COURSE O F THE APPELLATE PROCEEDINGS THE ASSESSEE DESPITE SPECIFIC DIRECTIONS OF THE CIT(A) FAILED TO PLACE ON RECORD CERTAIN DOCUMENTARY EVIDENCE VIZ. RETURN OF INCOME, BALANCE SHEET, COMPUTATION OF INCOME, COMPUTATION OF CAPITAL GAINS, PURCHASE/SALE OF SHARES, LE DGER ACCOUNT, PAYMENT MADE/RECEIVED HIGHLIGHTED IN THE BANK STATEMENTS AND COPY OF THE D EMAT ACCOUNT . IN THE BACKDROP OF THE AFORESAID FACTS , THE CIT(A) OBSERVING THAT THE ASSESSEE HAD FAILED TO FURNISH ANY SUBMISSION OR EVIDENCE TO SHOW AS TO HOW THE VIEW TAKEN BY THE AO WAS INCORRECT, THEREFORE, UPHELD THE ADDITION MADE BY HIM UNDER SEC.68 OF THE I . T ACT. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A .R) FOR THE ASSESSEE SUBMITTED THAT AS THE ASSESSEE DUE TO CERTAIN COMPELLING REASONS COULD NOT PLACE ON RECORD THE REQUISITE DOCUMENTS AS DIRECTED BY THE CIT(A), THEREFORE, THE LAT T ER HAD BY WAY OF AN EX - PARTE ORDER DISMISS ED THE APPEAL. IT WAS SUBMITTE D BY THE LD. A.R THAT AS THE DOCUMENTARY EVIDENCE SUBSTANTIATING THE GENUINENESS AND VERACITY OF THE PURCHASE/SALE P A G E | 4 ITA NO. 4515/MUM/2018 AY. 2009 - 10 MR. PINESH ANRAJ SHAH VS. INCOME TAX OFFICER 19(2)(5) TRANSACTION O F SHARES UNDER CONSIDERATION WERE NOW AVAILABLE WITH THE ASSESSEE , THEREFORE, THE MATTER MAY BE RESTORED TO THE FILE OF THE CIT( A) FOR FRESH ADJUDICATION. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) DID NOT OBJECT TO THE RESTORING OF THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, AS THE ASSESSEE DESPITE SPECIFIC DIRECTIONS HAD FAILED TO PLACE ON RECORD THE REQUISITE DOCUMENTS TO SUPPORT THE VERACITY OF THE SHARE TRANSACTIONS AND T HE LTC G OF RS.11,17,358/ - CLAIMED AS EXEMPT UNDER SEC.10(38) OF THE IT ACT , THEREFORE, THE CIT(A) WAS CONSTRAINED TO DISPOSE OFF THE APPEAL BY WAY OF AN EX - PARTE ORDER AND THE ADDITION MADE BY THE A.O UNDER SEC.68 WAS SUSTAINED . WE FIND THAT THE CHARACTERI SATION OF THE SHARE TRANSACTION CARRIED OUT BY THE ASSESSEE AS A BOGUS/SHAM TRANSACTION BY THE LOWER AUTHORITIES IS BACKED BY THE REASON THAT THE ASSESSEE HAD FAILED TO SUBSTANTI AT E THE GENUINENESS AND THE VE RACITY OF THE SAID TRANSACTION ON THE BASIS OF S UPPORTING DOCUMENTS. AS OBSERVED BY US HEREINABOVE, IT IS THE CLAIM OF THE LD. A.R THAT THE DOCUMENTS CORROBORATING THE GENUINENESS OF THE SHARE TRANSACTION COULD NOT BE FILED BEFORE THE LOWER AUTHORITIES AS THE SAME AT THE RELEVANT POINT OF TIME WERE NOT READILY AVAILABLE WITH THE ASSESSEE . I T IS SUBMITTED BY THE LD. A.R THAT AS THE SAID DOCUMENTS ARE NOW AVAILABLE WITH THE ASSESSEE, THEREFORE, IN CASE THE MATTER IS RESTORED TO THE FILE OF THE CIT(A), THEN THE ASSESSEE WOULD BE ABLE TO FORTIFY THE VERACITY OF THE SHARE TRANSACTION AND THE RESULTANT CLAIM OF EXEMPTION RAISED UNDER SEC.10(38) IN THE RETURN OF INCOME. P A G E | 5 ITA NO. 4515/MUM/2018 AY. 2009 - 10 MR. PINESH ANRAJ SHAH VS. INCOME TAX OFFICER 19(2)(5) 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION AND ARE OF THE CONSIDERED VIEW THAT KEEPING IN VIEW THE AFORESAID FACTUAL POSITION THE MATTER IN AL L FAIRNESS REQUIRES TO BE RESTORED TO THE FILE OF TH E CIT(A) FOR FRESH ADJUDICATION AFTER CONSIDERING THE DOCUMENTARY EVIDENCE THAT WOULD BE PLACE D ON RECORD BY THE ASSESSEE IN SUPPORT OF HIS AFORESAID CLAIM. AS OBSERVED BY US HEREINABOVE, THE LD. D.R HAD STATED THAT HE WOULD HAVE NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE CIT(A). WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE MATTER TO THE FILE OF THE CIT(A), WHO IS DIRECTED TO RE - ADJUDICATE THE ISSUE UNDER CONSIDER ATION. NEEDLESS TO SAY , THE CIT(A) SHALL IN THE COURSE OF THE SET ASIDE PROCEEDINGS AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 9 . THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 3 . 03.2019 S D / - S D / - (M.BALAGANESH) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 1 3 .03 .2019 PS. ROHIT / 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