ACIT CIR 19(3), MUMBAI V. FAROOQ MANSURI, MUMBAI

ITA 5049/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1585 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 22-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-08-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SINGH
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Gift; Accommodation entries; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESDIENT AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 5049/M/2008 ASSESSMENT YEAR: 2004-05 ASSTT. COMMISSIONER OF INCOME-TAX, APPELLANT 19(3), ROOM NO. 305, 3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI 400 012 VS. FAROOQ MANSURI NOVELTY FURNISHINGS, RESPONDENT 249, NAVAL KUNJ, LINKING ROAD, OFF NATIONAL COLLEGE, BANDRA (WEST), MUMBAI 400 050 APPELLANT BY : SHRI K. SINGH RESPONDENT BY : MR. VIJAY KOTHARI ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- XIX, MUMBAI, PASSED ON 23 RD MAY, 2008 FOR THE ASSESSMENT YEAR 2004-05 WHEREIN THE REVENUE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) XIX, MUMBAI ERRED IN HOLDING THAT THE LONG T ERM CAPITAL GAIN RECEIVED BY THE ASSESSEE IN THE SCRIP SURYADEE P SALT & CHEMICAL WAS A GENUINE TRANSACTION ESPECIALLY WHEN THE CIT(A) HAS NOT COUNTERED THE DEEP INVESTIGATION DON E BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O ESPECIALLY WHEN SOME OF THE FACTUAL ASPECT HAS BEEN WRONGFULLY INTERPRETED BY CIT(A). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN HOLDING THAT THE TRANSACTION WAS GE NUINE WITHOUT APPRECIATING THE FACTS OF THE CASE UNDER CO NSIDERATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONCLUDING THAT THE TRANSACTION OF SURYADEEP SALT IS GENUINE ONE WHEN THE RATIO OF THE CASE OF S OMNATH MANI [100 TTJ 917] CLEARLY SAYS IF FACTS AND CIRCUMSTAN CES SO ITA NO. 5049/M/08 FAROOQ MANSURI 2 WARRANT THAT IT DOES NOT ACCORD WITH THE TEST OF HU MAN PROBABILITIES, TRANSACTIONS HAVE BEEN HELD TO BE NO N-GENUINE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED, IN HOLDING THAT THE ADDITION OF 15% O F CAPITAL GAIN AS COMMISSION FOR ARRANGING THE GIFT IS UNWARRANTED IN THE SITUATION WHEN THERE IS A CONFESSIONAL STATEMENT OF MR. SHAH TO RECEIVE THE COMMISSION AND OPPORTUNITY TO CROSS EXAMINE HAS BEEN GIVEN TO ASSESSEE. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RE STORED. 2. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF ITAT VIDE ITA NO. 5050/MUM/2008 AND 5051/MUM/2008 FOR AY 2004-05 IN T HE CASES OF ISLAMUDDIN MANSURI AND IQBAL HUSSEIN MANSU R ORDER DATED 23 RD FEBRUARY, 2010 WHEREIN IDENTICAL ISSUES RAISED BY THE REVENUE WERE DISMISSED BY THE ITAT. FOR THE SAKE OF READY REFERENCE, THE GROUNDS RAISED IN THE SAID APPEALS A ND THE FINDINGS THEREON ARE REPRODUCED BELOW:- GROUNDS OF APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) XIX, MUMBAI ERRED IN HOLDING THAT THE LONG T ERM CAPITAL GAIN RECEIVED BY THE ASSESSEE IN THE SCRIP SURYADEE P SALT & CHEMICAL WAS A GENUINE TRANSACTION ESPECIALLY WHEN THE CIT(A) HAS NOT COUNTERED THE DEEP INVESTIGATION DON E BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O ESPECIALLY WHEN SOME OF THE FACTUAL ASPECT HAS BEEN WRONGFULLY INTERPRETED BY CIT(A). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN HOLDING THAT THE TRANSACTION WAS GE NUINE WITHOUT APPRECIATING THE FACTS OF THE CASE UNDER CO NSIDERATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONCLUDING THAT THE TRANSACTION OF SURYADEEP SALT IS GENUINE ONE WHEN THE RATIO OF THE CASE OF S OMNATH MANI [100 TTJ 917] CLEARLY SAYS IF FACTS AND CIRCUMSTAN CES SO WARRANT THAT IT DOES NOT ACCORD WITH THE TEST OF HU MAN PROBABILITIES, TRANSACTIONS HAVE BEEN HELD TO BE NO N-GENUINE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED, IN HOLDING THAT THE ADDITION OF 15% O F CAPITAL GAIN ITA NO. 5049/M/08 FAROOQ MANSURI 3 AS COMMISSION FOR ARRANGING THE GIFT IS UNWARRANTED IN THE SITUATION WHEN THERE IS A CONFESSIONAL STATEMENT OF MR. SHAH TO RECEIVE THE COMMISSION AND OPPORTUNITY TO CROSS EXAMINE HAS BEEN GIVEN TO ASSESSEE. FINDINGS OF THE ITAT 23. AFTER GIVING OUR ANXIOUS CONSIDERATIONS TO THE REASONS GIVEN BY THE LD. CIT(A), WE CONCUR WITH HIS FINDING THAT THE TRANSACTIONS OF PURCHASE AND SALE OF THE SHARES OF M/S SURYADEEP LTD. AS CLAIMED BY THE ASSESSEES CANNOT B E DOUBTED. ACCORDINGLY, GROUND NOS. 1 TO 4 IN BOTH TH E APPEALS ARE DISMISSED. 24. NOW THE NEXT IS IN RESPECT OF DELETING THE ADDI TIONS TOWARDS ALLEGED PAYMENT OF 15% COMMISSION TO SHRI S HAH FOR ARRANGING ALLEGED ACCOMMODATION ENTRIES. THE AO ALS O MADE ADDITION AT 15% OF CAPITAL GAIN DECLARED BY THE ASS ESSEES WHICH IS IN RESPECT OF COMMISSION PAID TO SHRI SHAH . WE HAVE ALREADY HELD THAT THERE IS NO CREDITWORTHINESS TO T HE DEPOSITIONS MADE B SHRI SHAH AS HE KEPT CHANGING HI S STATEMENTS. MOREOVER, THERE IS ALSO CONTRADICTIONS ON THIS ISSUE AS AT ONE STAGE HE STATED THAT HE WAS PAID 2 TO 3% COMMISSION AND IN SUBSEQUENT STATEMENTS HE STATED THAT HE WAS PAID 15% COMMISSION ?. OTHER THAN CONTRADICTORY STATEMENTS O F SHRI SHAH, NOTHING IS ON RECORD TO CORROBORATE THE STATE MENT OF SHRI SHAH. IT IS ALSO NOT THE CASE OF THE AO THAT SHRI S HAH HAS DECLARED ANY COMMISSION AS STATED BY HIM. ONLY LAST PARA OF THE ASSESSMENT ORDER DEALS WITH THIS ADDITION AND O N PERUSAL OF REASONS THIS ADDITION IS ONLY MADE ON THE BASIS OF CONTRADICTORY STATEMENTS OF SHRI SHAH AND NOTHING M ORE. IN OUR OPINION, LD. CIT(A) RIGHTLY DELETED THE ADDITION AN D WE CONCUR WITH SAME. IN THE RESULT GROUND NO. 5 IS DISMISSED IN BOTH THE APPEALS. OTHER GROUNDS ARE GENERAL IN NATURE. 25. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 3. IT IS FURTHER SUBMITTED THAT THE ABOVE ORDER OF ITAT HAS BEEN FOLLOWED IN OTHER CASES IN ITA NOS. 5046/MUM/06 & 5 052/MUM/08 VIDE ORDER DATED 16.04.2010 AND IN ITA NO. 4977/M/0 8 VIDE ORDER DATED 30.04.2010. 4. AFTER HEARING THE LEARNED DR, WE FIND THAT THE G ROUNDS RAISED IN THE APPEAL UNDER CONSIDERATION ARE IDENTICAL TO THAT OF THE CASES DECIDED BY THE ITAT IN ITA NO. 5050 & 5051/MUM/08 C ITED SUPRA, OF WHICH GROUNDS AND FINDINGS OF THE ITAT HAVE BEEN REPRODUCED ABOVE. WE, THEREFORE, RESPECTFULLY FOLLOW THE ORDER OF ITAT AND IN ITA NO. 5049/M/08 FAROOQ MANSURI 4 THE LIGHT OF THAT WE DISMISS THE GROUNDS RAISED BY THE REVENUE IN THE CASE UNDER CONSIDERATION. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JUNE, 2010. SD/- SD/- (D. MANMOHAN) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED: 23 RD JUNE, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, FBENCH, I.T. A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 23.6.10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 23.6.10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER