ITO 24(1)(2), MUMBAI V. ANANTHAKRISHNA L. BELUR, MUMBAI

ITA 4650/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0158 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESPANDE
• Assessee Lawyers: PRATAB JAIN
• Keywords: Unexplained investment; Search and seizure; Rule of consistency; Accommodation entries
• Section: 143(3); 133(6); 147; 131; 69; 148; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 4649/MUM/2016 (ASSESSMENT YEARS- 2008-09) ITO-24(1)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012. VS. SHRI ANANTHAKRISHNA L BELUR 501, 502, KESHAVA CHS LTD. BUILDING NO.2, JAYANAGAR, LINKING ROAD, DAHISAR (E), MUMBAI-400068. PAN: AAEPB9058R (APPELLANT) (RESPONDENT) ITA NO. 4650/MUM/2016 (ASSESSMENT YEARS- 2009-10) ITO-24(1)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012. VS. SHRI ANANTHAKRISHNA L BELUR 501, 502, KESHAVA CHS LTD. BUILDING NO.2, JAYANAGAR, LINKING ROAD, DAHISAR (E), MUMBAI-400068. PAN: AAEPB9058R (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAURABH DESPANDE (DR) ASSESSEE BY : SHRI PRATAB JAIN (AR) DATE OF HEARING : 07.08.2017 DATE OF PRONOUNCEMENT : 29.08.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER 1. THESE TWO APPEAL BY REVENUE UNDER SECTION 253 OF TH E INCOME-TAX ACT (THE ACT) ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSI ONER OF INCOME-TAX (APPEALS)-36, MUMBAI (LD. CIT(A), DATED 29.04.2016 FOR ASSESSMENT YEAR (AY) 2008-09 & 2009-10. THE LEARNED COMMISSIONER ( APPEALS) PASSED THE ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 2 CONSOLIDATED ORDER WHICH IS IMPUGNED IN BOTH THE AP PEALS, HENCE, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDED BY CON SOLIDATED ORDER 2. THE BRIEF FACTS FOR AY 2008-09 ARE THAT THE ASSESS EE FILED HIS RETURN OF INCOME FOR ON 24.07.2006 DECLARING TOTAL INCOME OF RS. 54,96,700/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQU ENTLY, THE ASSESSMENT WAS RE-OPENED BY ISSUING NOTICE U/S 148, DATED 28.0 3.2013. THE ASSESSMENT WAS RE-OPENED ON THE INFORMATION THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN CASE OF M/S MAHASAGAR SECURITIES PVT . LTD. AND ITS RELATED GROUP CONCERN ON 25.11.2009. IN THE SEARCH, IT WAS REVEALED THAT SH. MUKESH CHOKSI WAS MANAGING 34 COMPANIES. SH. MUKESH CHOKSI WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN ORDER TO ENABLE THE PARTIES TO DECLARE SPECULATION PROFIT LOSS, SHORT TERM & LONG TERM CAP ITAL GAIN WITHOUT ANY ACTUAL TRANSACTION. MUKESH CHOKSI IDENTIFIED 829 NA MES OF THE BENEFICIARY AND CERTIFIED THAT THEY ARE ACCOMMODATION ENTRIES. IN THE LIST OF BENEFICIARY THE ASSESSEE WAS ONE OF SUCH BENEFICIARY. IN RESPON SE TO THE NOTICE UNDER SECTION 148, THE ASSESSEE CONTENDED VIDE HIS REPLY DATED 18 APRIL 2013 THAT RETURN ALREADY FILED MAY BE TREATED AS COMPLIANCE T O THE NOTICE. THE ASSESSEE DEMANDED REASONS FOR ISSUANCE OF NOTICE UNDER SECTI ON 148 AND THE SAME WAS PROVIDED TO THE ASSESSEE. THE ASSESSMENT WAS COMPLE TED UNDER SECTION143 (3) R.W.S.147 ON 26 TH OF MARCH 2014. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER TREATED THE SHORT TERM CAPITAL GAI N OF RS. 50,79,206/- AS ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 3 INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE UNDE R SECTION 68. THE ASSESSING OFFICER ALSO ESTIMATED 5% OF THE AMOUNT O F BOGUS ENTRIES AS EXPENSES INCURRED FOR OBTAINING SUCH BOGUS ENTRIES AND ADDED TO THE SAME IN THE INCOME OF ASSESSEE. 3. SIMILARLY, FOR ASSESSMENT YEAR 2009-10, THE ASSESSM ENT WAS ALSO REOPENED UNDER SECTION 147. THE NOTICE UNDER SECTION 148 DAT ED 28 MARCH 2013 WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED HIS REPL Y VIDE REPLY 18 TH APRIL 2013 AND CONTENDED THAT THE RETURN ALREADY FILED MAY BE TREATED AS COMPLIANCE TO THIS NOTICE. THE REASONS FOR REOPENING WERE SUPPLIE D TO THE ASSESSEE. THE ASSESSING OFFICER REOPENED THE ASSESSMENT ON THE BA SIS OF SIMILAR REASONS AS MENTIONED IN PARA (2) ABOVE. THE ASSESSMENT WAS COM PLETED UNDER SECTION 143(3) R.W.S.147 ON 24 TH MARCH 2014. THE ASSESSING OFFICER DURING THE RE- ASSESSMENT PROCEEDING NOTICED THAT THE ASSESSEE CLA IMED FROM SPECULATION GAIN ON SALE OF SHARES OF M/S HDFC LTD AND HDFC BAN K LTD. THE ASSESSEE WAS ASKED TO EXPLAIN THE PROFIT/ LOSS IN THESE ACCO UNTS. THE AO CONCLUDED THAT NO DETAILS WERE PROVIDED AND THESE TRANSACTION S WERE TREATED AS BOGUS AND THE SALE PROCEEDS WAS TREATED AS UNEXPLAINED IN VESTMENT UNDER SECTION 69 OF THE ACT 4. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION U/S 6 8 OF RS 50,79,206/- AND ESTIMATED THE EXPENDITURE @ 5% OF RS. 2,53,690/- F OR AY 2008-09 AND THE ADDITION OF RS. 92,50,459/- UNDER SECTION 69 FOR AY 2009-10 WAS ALSO ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 4 DELETED. THUS, BEING AGGRIEVED BY THE ORDER OF COMM ISSIONER (APPEALS), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED DR FOR TH E REVENUE SUPPORTED THE ORDER OF AO. IT WAS ARGUED THAT THE INVESTIGATION T EAM OF THE REVENUE CARRIED A SEARCH AND SEIZURE ACTION IN CASE OF M/S MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED GROUP CONCERN ON 25.11.2009. I N THE SEARCH, IT WAS REVEALED THAT SH. MUKESH CHOKSI WAS MANAGING 34 COM PANIES. SH. MUKESH CHOKSI WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRI ES IN ORDER TO ENABLE THE PARTIES TO DECLARE SPECULATION PROFIT LOSS, SHO RT TERM & LONG TERM CAPITAL GAIN WITHOUT ANY ACTUAL TRANSACTION. MUKESH CHOKSI IDENTIFIED 829 NAMES OF THE BENEFICIARY AND CERTIFIED THAT THEY AR E ACCOMMODATION ENTRIES. IN THE LIST OF BENEFICIARY THE ASSESSEE WAS ONE OF SUCH BENEFICIARY. THE ASSESSING OFFICER PROVIDED THE ASSESSEE FULL OPPORT UNITY TO PROVE THE GENUINENESS OF THE TRANSACTION OF STCG AND THE SPEC ULATION GAIN, DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF TRANSACTION. THE LEARNED CIT (A) DELETED THE ADDITI ONS FOR BOTH THE ASSESSMENT YEARS WITHOUT GIVING THE OPPORTUNITY TO THE ASSESSING OFFICER. ON THE OTHER HAND THE LEARNED AR FOR THE ASSESSEE SUPP ORTED THE ORDER OF LE CIT(A) IN BOTH THE YEARS. IT WAS ARGUED THAT THE AO FAILED TO APPRECIATE THE FACTS OF THE CASE PROPERLY. THE LD CIT(A) BEFORE C ONSIDERING THE SUBMISSION ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 5 AND THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSE SSEE, PROVIDED THE OPPORTUNITY TO THE AO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A SSESSMENT WAS FOR AY WAS REOPENED ON 28.03.2013 UNDER SECTION 147 OF THE ACT . THE ASSESSEE WAS SERVED WITH NOTICE UNDER SECTION 148 OF THE ACT. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE APPEARED BEFORE THE AO AND CONTES TED THE PROCEEDING. THE AO WHILE FRAMING THE ASSESSMENT ORDER NOTICED THAT ASSESSEE HAS SUBMITTED THE STATEMENT OF SHORT TERM CAPITAL GAIN (STCG). FO R VERIFICATION OF GENUINENESS OF TRANSACTION, THE AO ISSUED NOTICE U/ S 133(6) TO BOMBAY STOCK EXCHANGE (BSE), MS SYDNEY MIRANDA AND MS. ASH WINI GORAKSHA. SUMMONS U/S 131 OF INCOME-TAX ACT WAS ALSO ISSUED T O MUKESH CHOKSI AND M/S ALLIANCE INTERMEDIATERIES & NET WORK P. LTD. TH E BOMBAY STOCK EXCHANGE RESPONDED THAT THE SCRIPTS OF M/S ALLIANCE INTERMEDIATERIES & NET WORK P. LTD. ARE NOT LISTED ON BSE. IN RESPONSE TO THE NOTICE SHRI MUKESH CHOKSI, DIRECTOR OF M/S ALLIANCE INTERMEDIATERIES & NET WORK P. LTD. STATED THAT HE PROVIDED ENTRIES TO THE ASSESSEE IN FINANCI AL YEAR (FY) 2006-07 AND ASSESSEE WAS ONE OF THE PERSON WHO HAVE AVAILED ACC OMMODATION ENTRY OF FOR BOGUS CAPITAL GAIN. THE ASSESSEE WAS CONFRONTED WITH THE STATEMENT OF MUKESH CHOKSI, DIRECTOR OF ACTION FINANCIAL SERVICE S AND THE REPLY OF BSE AND WAS ASKED TO EXPLAIN THE FACTS. IN RESPONSE TO THE NOTICE OF AO, THE ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 6 ASSESSEE CONTENDED THAT THERE WAS NO SPECULATION SH ARE TRANSACTION DURING THE YEAR, THE NAME OF BROKER IS M/S ALLIANCE INTERMEDIA TERIES & NETWORK PVT. LTD. AND SKYKES RAY EQUITIES (I) LTD., THE ASSESSE E FURNISHED CONTRACT NOTE AND FURTHER CONTENDED THAT ALL THE PAYMENT WERE MAD E THROUGH DMAT ACCOUNT. THE AO NOT ACCEPTED THE CONTENTION OF THE ASSESSEE AND TREATED THE STCG AS BOGUS AND AMOUNT OF RS. 50,79,206/- WAS ADD ED AS UNDISCLOSED INCOME OF ASSESSEE U/S 68 OF THE ACT. THE AO ALSO A DDED THE ESTIMATE EXPENDITURE @ 5% OF RS. 2,53,960/-. BEFORE THE FIR ST APPELLATE AUTHORITY, THE ASSESSEE MADE THE SIMILAR CONTENTION AS MADE BEFOR E THE ASSESSING OFFICER. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERIN G THE FACTS OF THE CASE OBSERVED THAT ASSESSING OFFICER HAS MERELY USED INF ORMATION RECEIVED FROM THE DDIT(INVESTIGATION) UNIT-4 MUMBAI, AND THE STAT EMENT OF MUKESH CHOKSI WITHOUT ESTABLISHING FACT THAT THE APPELLANT HAS REALLY OBTAINED ACCOMMODATION ENTRY OR ACTUAL PURCHASE AND SALE OF DIFFERENT SHARES. THE ASSESSING OFFICER FAILED TO ESTABLISH ANYTHING MORE , CONTRARY TO THE CLAIM OF THE ASSESSEE. IT WAS FURTHER OBSERVED THAT WHEN TH E ASSESSEE HAS SUBMITTED NAME OF BROKER, DATE OF CONTRACT, SECURITY NAME, QU ALITY AND AMOUNT OF THE SALE AS WELL AS PURCHASE AND THE COPIES OF SALE AND PURCHASE BILLS REGARDING SHORT-TERM CAPITAL GAINS, THEN IT WAS THE RESPONSIB ILITY OF THE ASSESSING OFFICER TO REBUT THE CLAIM OF ASSESSEE WITH THE HEL P OF CONTRARY EVIDENCE IN HIS POSSESSION. THE ASSESSEE HAS CLEARLY CLARIFIED THAT THE TRANSACTION WAS ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 7 MADE THROUGH M/S ALLIANCE INTERMEDIARIES AND NETWOR K PRIVATE LIMITED AND WHICH HAVE BEEN SHOWN /ENTERED IN THE COMPUTER OF M /SALLIANCE INTERMEDIARIES NETWORK PRIVATE LIMITED, WHICH ITSEL F CONFIRMED THAT ALL TRANSACTION WAS MADE BY ASSESSEE THROUGH THE ALLIAN CE INTERMEDIARIES AND NETWORK PRIVATE LIMITED ARE GENUINE. THE IDENTITY O F BROKER IS NOT DISPUTED BY THE ASSESSING OFFICER, THE TRANSACTIONS WERE ALS O FOUND IN THE COURSE OF SURVEY ITSELF. HENCE, THERE IS NO DISPUTE ABOUT THE PURCHASE OF SHARES. THE ASSESSEE HAS DISCHARGED PRIMARY ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF TRANSACTION AND SUBMITTED THE COPIES OF BROKER NOTE AND PURCHASE AND SALE OF SHARES, DEMAT STATEMENT, BANK STATEMENT REFLECTING THE PAYMENT MADE TO THE BROKER AND PAYMENT RECEIVED FRO M THE SKIES RAYS EQUITIES PRIVATE LTD FOR THE SALE OF SHARES ALONG W ITH COMPUTATION OF SHORT- TERM CAPITAL GAIN AND ALL SHARE TRANSACTION HAS BEE N REFLECTED IN THE DEMAT STATEMENT. THE LEARNED COMMISSIONER (APPEALS) CONCL UDED THAT ASSESSING OFFICER COULD NOT DISPROVE THE TRANSACTION BY BRING ING ANY ADVERSE EVIDENCE ON RECORD WHEN THE TRANSACTION WERE ROUTED THROUGH BANKING CHANNEL AND HAS BEEN REFLECTED IN THE BANK PASSBOOK AND DEMAT ACCO UNT FOR PURCHASE AND SALE OF SHARES. THE LEARNED COMMISSIONER (APPEALS) RELIED UPON THE DECISION OF MUKESH R MAROLIA VS ADIT 6 SOT 247(MUM) DECIDED BY THE TRIBUNAL, WHICH HAS BEEN UPHELD BY HONBLE BOMBAY HIGH COURT. THE LD COMMISSIONER (APPEALS) ALSO RELIED UPON THE DECISIO N OF TRIBUNAL IN CASE OF ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 8 FAMILY MEMBERS OF THE ASSESSEE IN ITA NO.1490 /M/20 11 IN SOWMYASHREE L BELUR VS ACIT FOR AY 2006-07DATED 09.10.2015 AND SH. LAXMINARAIAN A. BELUR FOR AY 209-10 DATED 09.07.2014 AND (WIFE O F ASSESSEE) B.L. RANGANAYKI VS DCIT DATED 20.05.2014 FOR AY 2006-07 AND 2008-09. THE LD COMMISSIONER (APPEALS) WHILE GRANTING RELIEF TO THE ASSESSEE FOLLOWED THE DECISION OF TRIBUNAL IN ASSESSEES GROUP/FAMI LY MEMBERS AND DELETED THE ADDITION AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE SHORT-TERM CAPITAL GAINS OF RS. 50,79,206/-. CONSIDERING THE F ACT THAT THE LD. COMMISSIONER (APPEALS) FOLLOWED THE DECISION OF TR IBUNAL IN ASSESSEES GROUP CASE AND DELETED THE ADDITION. THE LD DR FOR THE REVENUE HAVE NOT BROUGHT ANY CONTRARY DECISION IN OUR NOTICE THAT TH E DECISION OF TRIBUNAL IN ASSESSEES GROUP/ FAMILY MEMBERS CASE WAS REVERSED BY HONBLE HIGH COURT. . THUS WE DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDER PASSED BY LD COMMISSIONER (APPEALS). THUS THE GROUND NO.1 &2 RAISED BY REVENUE ARE DISMISSED. 7. GROUND NO.3 RELATES TO DELETION OF ADDITION OF RS. 2,53,960/- BEING THE EXPENSES RELATED TO THE SHARE TRANSACTION. THE LD C OMMISSIONER (APPEALS) WHILE DELETING THE ADDITION MADE UNDER SECTION 68, TREATED THE GAIN AS SHORT- TERM CAPITAL GAINS AND DELETED THE CONSEQUENTIAL AD DITION ON ACCOUNT OF EXPENSES. IN OUR OPINION WHEN THE MAIN ADDITION UND ER SECTION 68 HAS BEEN TREATED AS STCG, THUS, THE CONSEQUENTIAL DISALLOWA NCE WAS ALSO LIABLE TO BE ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 9 DELETED, WHICH HAS BEEN DELETED BY LD COMMISSIONER( APPEALS). THUS, THERE IS NO INFIRMITY IN THE ORDER PASSED BY COMMISSIONER (APPEALS). HENCE, THIS GROUND RAISED BY REVENUE IS ALSO FAILED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. 9. ITA NO. 4650/M/20016 FOR AY 2009-10. AS DISCUSSED A BOVE THE ASSESSING OFFICER MADE ADDITION OF RS. 92,50,459/- UNDER SECT ION 69 BY NOT ALLOWING THE SPECULATION GAIN EARNED BY THE ASSESSEE ON THE BASIS OF INFORMATION OF DCIT (INVESTIGATION) UNIT-4 MUMBAI. THE LD COMMISSI ONER (APPEALS) ON SIMILAR FACTS AND ON SIMILAR GROUNDS OF APPEAL ALLO WED THE SHORT-TERM CAPITAL GAINS IN FAVOUR OF ASSESSEE. THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE NOT MORE VARIANCE EXCEPT TREATING THE SPECULATION GAIN AS UNEXPLAINED INVESTMENT. CONSIDERING THE FACT THAT W E HAVE ALREADY DISMISSED THE APPEAL OF REVENUE FOR ASSESSMENT YEAR 2008-09, THUS FOLLOWING THE PRINCIPLE OF CONSISTENCY THE APPEAL FOR THE YEAR UN DER CONSIDERATION IS ALSO DISMISSED WITH THE SIMILAR OBSERVATION. IN THE RESU LT APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-10 IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF AUGUST 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) (VICE-PRESIDENT) JUDICIAL MEMBER MUMBAI; DATED 29/08/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. ITA NO.4649 & 4650/M/2016 SHR I ANANTHAKRISHNA L BELUR 10 BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/