KAMAL JAJOO, MUMBAI V. DCIT CEN CIR 31, MUMBAI

ITA 5115/MUM/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7373 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Cost of acquisition; Accommodation entries
• Section: 153A; 201; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO. 5115 /MUM./201 3 ( ASSESSMENT YEAR : 20 1 0 1 1 ) SHRI. KAMAL JAJOO, FLAT NO. 4/2B JAI HIND ESTATE, DR AM RD, BHULESHWAR KALBADEVI RD, MUMBAI PAN ADQABVPJ3150A . APPELLANT V/S DCIT, CEN CIR 31, AAYAKAR BHAVAN, 4 TH FLOOR, MUMBAI . RESPONDENT ITA NO. 5114 /MUM./201 3 ( ASSESSMENT YEAR : 20 10 11 ) SMT. NITA JAJOO, FLAT NO. 4/2B JAI HIND ESTATE, DR AM RD, BHULESHWAR KALBADEVI RD, MUMBAI PAN ADQPJ2030A . APPELLANT V/S DCIT, CEN CIR 31, AAYAKAR BHAVAN, 4 TH FLOOR, MUMBAI . RESPONDENT ITA NO. 5116 /MUM./2013 ( ASSESSMENT YEAR : 201 0 1 1 ) SHRI. KAMAL JAJOO HUF, FLAT NO. 4/2B JAI HIND ESTATE, DR AM RD, BHULESHWAR KALBADEVI RD, MUMBAI PAN ADQABVPJ3150A . APPELLANT V/S 2 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF DCIT, CEN CIR 31, AAYAKAR BHAVAN, 4 TH FLOOR, MUMBAI . RESPONDENT ASSESSEE BY : K. GOPAL & MS. NEHA PARANJPE, AR REVENUE BY : ANADI VARMA, CIT DR DATE OF HEARING 14.10 .2019 DATE OF ORDER 31 .10 .2019 O R D E R PER SAKTIJIT DEY, J.M. THE CAPTIONED APPEALS BY THREE DIFFERENT ASSESSEES ARE DIRECTED AGAINST THREE SEPARATE ORDERS , ALL DATED 27.05.2013 , OF LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) 40 , MUMBAI , PERTAINING TO ASSESSMENT Y EAR 2010 11 . SINCE , FACTS INVOLVED AND ISSUES RAISED IN ALL THESE APPEALS ARE M ORE OR LESS COMMON AND ASSESSEE S BELONG TO THE SAME GROUP, A S A MATTER OF CONVENIENCE , ALL THESE APPEALS ARE CLUBB ED TOGETHER AND DISPOSED OF IN A COMBINED ORDER. 2. SINCE FACTS RELATING TO THE DISPUTED ISSUE ARE MOSTLY COMMON IN ALL THESE APPEALS , FOR TH E SAKE OF BREVITY, WE PROPOSE TO DISCUSS THE FACTS AS INVOLVED IN ITA NO. 5114/MUM/2013 WHICH IS TAKEN UP AS THE LEAD APPEAL. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 4. THE LD. CIT (APPEAL S ) ERRED IN CONFIRMING THE ADDITION MADE BY LD. DCIT BY DISALLOWING ` . 20,48,048/ AS PURCHASE CONSIDERATION IN RELATION TO LONG TERM CAPITAL GAIN DECLARED AS ADDITIONAL INCOME UNDER SECTION 132(4). 3 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF 5 . THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF LD. DCIT OF TREATING THE ACCOUNTED PORTION OF COST OF ACQUISITION AS UNACCOUNTED AND THEREBY ERRED IN MAKING ADDITION OF ` . 20,48,048/ 3. BRIEFLY THE FACTS ARE, THE ASSESSEE HITHERTO IS AN INDIVIDUAL. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN CASE OF ASSESSEES HUSBAND SHRI. KAMAL JAJOO AND THE ASSESSEE AS WELL AS OTHERS IN THE GROUP WERE ALSO COVERED UNDER THE SAID SEARCH AND SEIZURE OPERATION. IN COURSE OF SUCH SEARCH AND SEIZURE OPERATION , APART FROM UNACCOUNTED CASH AND JEWELLE RY A NUMBER OF INCRIMINATING DOCUMENT S IN THE FORM OF LO O SE PAPERS AND DIARIES WERE ALSO FOUND AND SEIZED. STATEMENT UNDER SECTION 132(4) OF THE ACT WAS ALSO RECORDED FROM SHRI. KAMAL JAJOO , WHEREIN , HE ADMITTED THAT HE IS CARRYING ON UNACCOUNTED TRADING IN PROPERTIES AND THE CASH GENERATED OUT OF SUCH ACTIVITIES HAVE BEEN BROUGHT BACK INTO THE BUSINESS IN THE FORM OF EXEMPTED RECEIPT SUCH AS LONG TERM CAPITAL GAIN , SHARE APPLICATION MONEY AND ALSO USED TO PURCHASE SILVER AND GOLD BULLION. HE ALSO ADMITTED OF HAVING OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF LONG TERM CAPITAL GAIN ON PAY MENT OF COMMISSION TO INTRODUCE/ REG ULA RIZE HIS UNACCOUNTED INCOME TO THE TUNE OF ` . 28,04,88,014/ . IN THE SAID STATEMENT , SHRI . KAM A L JAJOO ALSO CAME FORWARD TO OFFER THE UNACCOUNTED INCOME IN THE FOLLOWING MANNER. 4 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF FINANCIAL YEAR KAMAL JAJOO NITA JAJOO KAMAL JAJOO (HUF) TOTAL 2008 09 2,32,84,983 + 3,49,275 2,48,04,857 + 3,72,073 4,08,25,419 + 6,12,381 9,02,48, 988/ 2009 10 3,83,48,859 + 5,75,233 + 6,00,00,000 + 3,00,000 4,59,47,514 + 6,89,213 3,58,69,169 + 5,38,038 18,22,68 ,026/ 2010 11 79,71,000 79,71,00 0/ TOTAL 28,04,8 8,014/ 4. IN TERMS WITH THE DECLARATION MADE BY SH. KAMAL JAJOO IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT , THE ASSESSEE FILED A RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING UNDISCLOSED INCOME OF ` . 4,59,47,517 / AS BUSINESS INCOME INSTEAD OF LONG TERM CAPITAL GAIN . FROM THE DETAILS AVAILABLE ON RECORD, THE ASSESSING OFFICER OBSERVED THAT THE TOTAL SALE CONSIDERATION OF SHARES HAS BEEN CLAIMED BY THE ASSESSEE AT ` . 4,93,34,876/ . WHEREAS , THE ASSESSEE HAS OFFERED UNDISCLOSED INCOME OF ` . 4,59,47,517/ . SINCE , ASSESSEES HUSBAND , SHRI. KAMAL JAJOO , HAD ACCEPTED THE ENTIRE LONG TERM CAPITAL GAIN RELATING TO SALE OF SHARE S AS BOGUS , THE ASSESSING OFFICER OBSERVED THAT THE TOTAL SALE CONSIDERATION OF ` . 4,93,34,876/ SHOULD BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. SINCE , THE ASSESSEE HAD DISCLOSED AN AMOUNT OF ` . 4,59,47,517 / , THE ASSESSING OFFICER HELD THAT THE DIFFERENTIAL AMOUNT OF ` 33,87,361/ SHOULD ALSO BE TREATED AS INCOME OF THE ASSESSEE. HOWEVER, S INCE , OUT OF THE 5 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF AFORESAID AMOUNT A SUM OF ` . 13,39,313/ WAS ALREADY ADDED TO THE INCOME OF THE ASSESSEE IN EARLIER YEAR, T HE ASSESSING OFFICER MADE AN ADDITION OF ` . 20,48,048/ . THOUGH , THE ASSESSEE CHALLENGED T HE AFORESAID ADDITION BEFORE LEARNED COMMISSIONER (APPEALS ) , HOWEVER , SHE WAS UNSUCCESSFUL. SHRI K. GOPAL, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ASSESSEE HAS OFFERED THE UNACCOUNTED INCOME UNDER THE HEAD BUSINESS AND PROFESSION AND THE ASSESSING OFFICER HA S ALSO A SSESSED THE INCOME UNDER THE VERY SAME HEAD. HE SUBMITTED , THE SALE CONSIDERATION OF ` . 4,93,34,876/ WAS NEVER CLAIMED AS EXPENDITURE BY THE ASSESSEE. DRAWING OUR ATTENTION TO THE RETURN OF INCOME FILED BY THE ASSESSEE ORIGINALLY AS WELL AS UNDER SECTION 153A OF THE ACT , LEARNED COUNSEL SUBMITTED , THOUGH , THE TOTAL SALE CONSIDERATION FROM SALE OF SHARES WAS SHOWN AT ` . 4,93,34,876/ . HOWEVER, THE ASSESSEE HAS OFFERED THE ACTUAL BOGUS CAPITAL GAIN OF ` . 4,59,47,517/ . HE SUBMITTED , THERE IS NO DISPUTE THAT THE AMOUNT OF ` . 20,48,048/ WAS PAID IN CHEQUE . THEREFORE , IT CANNOT BE HELD AS BOGUS. DRAWING OUR ATTENTION TO THE COMPUTATION OF INCOME , HE SUBMITTED , THE ASSESSEE HAD NEVER CLAIMED THE AMOUNT OF ` . 20,48,048/ AS DEDUCTION. THEREFORE, THERE IS NO REASON TO ADD THE AMOUNT TO THE INCOME OF THE ASSESSEE AS ADDITIONAL UNDISCLOSED INCOME. 6 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF SHRI ANADI VARMA, T HE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , FROM THE VERY BEGINNING THE ASSESSEE HAS CLAIMED THE AMOUNT OF ` . 4.93 CRORER AS THE SALE CON SIDERATION. THEREFORE , T HE CONTENTION OF THE ASSESSEE THAT SHE HAS NOT CLAIMED IT AS DEDUCTION IS WITHOUT ANY BASIS. HE SUBMITTED , LEARNED COMMISSIONER (A PPEALS) HAS GIVEN A FACTUAL FIN D I NG THAT PAYMENTS GIVEN IN CHEQUE WERE RETURNED BACK TO ASSESSEE IN CASH. THER E FORE, IT IS NOTHING BUT A CASH CONVERSION EXERCISE BY THE ASSESSEE. THIS FACT HAS ALSO BEEN VERY CATEGORICALLY ADMITTED BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THUS , HE SUBMITTED , THE ADD ITION MADE SHOULD BE SU STAINED. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. UNDISPUTED FACTS ARE , IN COURSE OF A SEARCH AND SEIZURE OP ERATION CONDUCTED IN CASE OF SHRI KAMAL JAJOO AND HIS FAMILY MEMBERS , APART FROM UNEXPLAINED CASH AND JEWELLERY VARIOUS OTHER INCRI MINATING MATERIALS WERE FOUND AND SEIZED. IN A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT DURING SEARCH AND SEIZURE OPERATION AS WELL AS IN POST SEARCH PROCEEDING S SHRI KAMAL JAJOO ADMITTED OF HAVING EARNED UNACCOUNTED INCOME FROM THE BUSINESS OF TRADING IN PROPERTIES . HE HAD ALSO ADMITTED THAT TO REGULARIZE SUCH ACCOUNTED I NCOME AND INTRODUCE IT TO HIS ACCOUNT, THE ASSESSEE OBTAINED ACCOMMODATION ENTRIES OF LONG TERM CAPITAL GAIN F ROM A WELL 7 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF KNOWN ENTRY PROVIDER. ACCORDINGLY, HE CAME FORWARD TO DECLARE UNDISCLOSED LONG TERM CAPITAL GAIN OF ` . 28,04,88,014/ IN HIS OWN NAME, IN THE NAME OF HIS WIFE NITA JAJOO AND KAMAL JAJOO (HUF) . IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE FOLLOW ED UP THE DECLARATION MADE AT THE TIME OF SEAR CH BY OFFERING UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153(A) OF THE ACT. HOWEVER, THE UNDISCLOSED INCOME WAS SHOWN UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. OF COURSE, THE ASSESSING OFFICER IN HIS OWN WISDOM HAS ALSO ASSESSED THE UNDISCLOSED INCOME UNDER THE HEAD BUSINESS AND PROFESSION. UNDISPUTEDLY , THE SALE CONSIDERATION TOWARDS SALE OF SHARES FOR THE P UR POSE OF ACCOMMODATION ENTRY OBTAINED IN THE SHAPE OF LONG TERM CAPITAL GAIN FROM THE ENTR Y PROVIDER HAVE BEEN SHOWN BY THE DIFFERENT ASSESSEES AS UNDER: NITA JAJOO ` . 4,93,34,876/ KAMAL JAJOO ` . 3,85,91,770/ KAMAL JAJOO (HUF) ` . 4,12,34,798/ WHEREAS , IN THE RETURN OF INCOME FILED IN PURSUANCE TO NOTICES ISSUED UNDER SECTION 153(A) OF THE ACT, THE CONCERNED ASSESSEES HAVE OFFERED UNDISCLOSED INCOME AT A LESSER FIGURE BY ADJUSTING THE AMOUNT ALLEGEDLY PAID TOWARDS PURCHASE OF SHARES. WHEN THE ASSESSEE HAS ADMITTED THAT THE ENTIRE TRANSACTION RELATING TO PURCHASE AND SALE OF SHARE IS A SHAM TRANSACTION AND IN THE NATURE OF ACCOMMODATION 8 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF ENTRIES AVAILED FOR REGULARIZING THE UNACCOUNTED INCOME DERIVED FROM THE PROPERTY TRANSACTION , THE ENTIRE AMOUNT REPRESENTING THE SALE OF SHARES HAS TO BE TREATED AS THE INCOME OF THE ASSESSEE. THE ASSESSE E CANNOT BE GRANTED ANY BENEFIT FOR HER/HIS OWN MISDEED. AS COULD BE SEEN FRO M THE GROUNDS RAISED , THE ASSESSEE HAS SPECIFICALLY MENTIONED THAT THE DISPUTED ADDITION IS WITH REGARD TO PURC HASE CONSIDERATION IN RELATION TO LONG TERM CAPITAL GAIN DECLARED AS ADDITIONAL INCOME. WHEN THE ENTIRE TRANSACTION RELATING TO LONG TERM CAPITAL GAIN IS ADMITTED LY A BOGUS TRANSACTION AND IS USED AS A DEVICE TO INTRODUCE UNACCOUNTED MONEY , NO BENEFIT CAN BE GIVEN TO THE ASSESSEE. THE MERE FACT THAT A PART OF THE PURCHASE CONSIDERATION OF SHARES WAS PAID THROUGH CHEQUE WOULD NOT PROVIDE EVEN A SHRED OF GENUINENESS TO THE SAID TRANSACTION. IN SUCH CIRCUMSTANCES , THE CONCLUSION DRAWN BY LEARNED COMMISSIONER (APPEALS) THAT THE AMOUNT PAID IN CHEQUE WAS RECEIVED BACK BY THE ASSESSEE IN CASH APPEARS TO BE CONVINCING CONSIDERING THE DUBIOUS MEANS ADOPTED BY THE ASSESSEE TO INTRODUCE THE UNACCOUNTED MONEY TO MAINSTREAM . IN THE AFORESAID VIEW OF THE M ATTER, WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. ACCORDINGLY, THE ADDITION MADE IS SUSTAINED. OUR DECISION HEREINABOVE WOULD APPLY MUTATIS MUTANDIS TO THE OTHER TWO APPEALS , BEING , ITA NO S . 511 5/MUM/2013 AND 5116/MUM/2013 AS WELL. 9 SHRI KAMAL JAJOO SMT. NITA JAJOO & SHRI KAMAL JAJOO HUF 6. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 .10.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31 .10.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER SH ASSISTANT REGISTRAR ITAT, MUMBAI