INCOME TAX OFFICER 24 (1) (5) , MUMBAI V. DAYANAND T KHANDAGLE , MUMBI

ITA 5887/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4981 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Search and seizure; Accommodation entries
• Section: 143(3); 72; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 5887 / /20 19 (. . 2009-10 ) ITA NO.5887/MUM/2019 (A.Y.2009-10) ITO, 24(1)(5), ROOM NO. 523, 5 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012. ...... / APPELLANT VS. DAYANAND T. KHANDAGLE (HUF), B/2, FLAT NO.03, CHAKRAVARTHAY ASHOK SOCIETY, TARUN BHARAT SOCIETY, CHAKALA, ANDHERI (EAST), MUMBAI-400069 PAN: AAFHD7209B ..... / RESPONDENT / APPELLANT BY : SH. SANJAY J. SETHI / RESPONDENT BY : NONE / DATE OF HEARING : 16/06/2021 / DATE OF PRONOUNCEMENT : 01/09/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-36, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] ' DATED 28.06.2019 FOR THE ASSESSMENT YEAR (AY) 2009-10. 2 . 5887 / /20 19 (. .2009-10 ) ITA NO.5887/MUM/2019 (A.Y.2009-10) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE FILED RETURN OF INCOME FOR AY 2009-10 INTER-ALIA DECLARING LONG TERM CAPITAL GAIN (LTCG) OF RS. 8,72,578/- ON SALE OF 13000 SHARES OF SYSTEM COR. THE ASSESSEE HAD PURCHASED THE SAID SHARES IN THE YEAR 2005 FOR RS.46,352/- AND SOLD THE SHARES DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL FOR RS.9,18,830/-. THE SAID SHARES WERE TRANSACTED BY THE ASSESSEE THROUGH ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. (IN SHORT ALLIANCE). THE ASSESSEE CLAIMED LTCG FROM SALE OF SHARES AS EXEMPT U/S 10(38) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER(AO) HELD THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM THE COMPANY BELONGING TO MUKESH CHOKSI GROUP. ALLIANCE BEING ONE OF THE GROUP CONCERN OF MUKESH CHOKSI THERE ARE NO ACTUAL PURCHASE AND SALE TRANSACTION OF SHARES. THE AO DISBELIEVED THE LTCG DECLARED BY THE ASSESSEE, AND MADE ADDITION OF RS. 9,20,400/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28.12.2016 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE FACTS AND PLACING RELIANCE ON THE DECISION RENDERED IN THE CASE OF PEASS ENGINEER PVT. LTD. VS. DCIT 72 TAXMANN.COM 302 (GUJ.) DELETED THE ENTIRE ADDITION. HENCE, THE PRESENT APPEAL BY THE REVENUE. 3. SH. SANJAY J. SETHI REPRESENTING THE DEPARTMENT SUBMITTED THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT THE PREMISES OF MUKESH CHOKSHI. DURING SEARCH MUKESH CHOKSHI IN HIS SWORN STATEMENT ADMITTED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES THROUGH VARIOUS COMPANIES INCLUDING M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. THE 3 . 5887 / /20 19 (. .2009-10 ) ITA NO.5887/MUM/2019 (A.Y.2009-10) ACCOMMODATION ENTRIES ARE PROVIDED AGAINST CASH RECEIPTS. IN LIEU OF CASH, CHEQUES ARE ISSUED TO THE RESPECTIVE PARTIES. THE LD. DR FURTHER POINTED THAT THE TRIBUNAL IN THE CASE OF M/S GOLD STAT FINVEST PVT. LTD. (ITA NOS. 4625/MUM/2005, 5000/MUM/2005), M/S MAHASAGAR SECURITIES PVT. LTD. (ITA NO. 4624/MUM/2005, M/S ALPHA CHEMIC TRADE AGENCIES PVT. LTD. (ITA NO. 4999/MUM/2005) AND M/S MIHIR AGENCIES PVT. LTD. (ITA NO. 4912/MUM/2005) I.E. THE CONCERNS BELONGING TO MUKESH CHOKSHI HELD THAT THESE CONCERNS ARE ACCOMMODATION ENTRY PROVIDERS. THE LD. DR FURTHER POINTED THAT ONCE IT HAS BEEN ADMITTED BY THE OPERATOR THAT FIRMS HAVE BEEN FLOATED BY HIM TO PROVIDE ACCOMMODATION ENTRIES, ANY TRANSACTION CARRIED OUT BY THOSE FIRMS WOULD LACK GENUINENESS. THE LD. DR PRAYED FOR REVERSING THE FINDINGS OF CIT(A) AND UPHOLDING THE ADDITION MADE IN ASSESSMENT ORDER. 4. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF THE AUTHORITIES BELOW EXAMINED. THE AO HAS MADE ADDITION PRIMARILY ON THE GROUND THAT M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. THROUGH WHOM THE ASSESSEE HAS CARRIED OUT TRANSACTION OF PURCHASE AND SALE OF SHARES BELONGS TO MUKESH CHOKSHI GROUP. THE AO DISBELIEVE SHARE TRANSACTION CARRIED OUT BY THE ASSESSEE THROUGH THE AFORESAID CONCERN AND THUS, MADE ADDITION OF THE ENTIRE CONSIDERATION FROM SALE OF SHARES DECLARED BY THE ASSESSEE. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) DELETED THE ADDITION INTER-ALIA HOLDING: (1) TRANSACTION OF PURCHASE AND SALE OF SHARES WAS DELIVERY BASED, THE SHARES WERE CREDITED TO THE DMAT ACCOUNT AND ON SALE, THE SAME WERE DEBITED TO THE DMAT ACCOUNT. THE SALE AND PURCHASE OF SHARES WERE FOUND TO BE GENUINE; 4 . 5887 / /20 19 (. .2009-10 ) ITA NO.5887/MUM/2019 (A.Y.2009-10) (2) THE ASSESSEE HAS RECEIVED PAYMENT AGAINST SALE OF SHARES THROUGH BANKING CHANNEL. SOURCE OF SALE PROCEEDINGS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE WERE FOUND TO BE GENUINE; (3) THE AO HAS ACCEPTED THE GENUINENESS OF THE TRANSACTIONS OF THE SALE OF SHARES CARRIED OUT THROUGH REGISTERED BROKER; (4) THE TRANSACTION OF SALE OF SHARES ON THE FLOOR OF BSE WAS FOUND TO BE GENUINE; (5) THE ASSESSEE IN AY 2006-07 HAD TRANSACTED IN SHARES THROUGH ALLIANCE, THE PROFIT/LOSS ON THE TRANSACTION WAS DULY REFLECTED IN THE RETURN OF INCOME FOR THE RELEVANT PERIOD. THE ASSESSING OFFICER ACCEPTED GENUINENESS OF THE TRANSACTION CARRIED OUT BY THE SAME BROKER; (6) ALLIANCE HAD FILED AN AFFIDAVIT CONFIRMING THAT ALLIANCE HAD SOLD SHARES TO THE ASSESSEE; AND (7) THE ASSESSEE WAS NOT PROVIDED OPPORTUNITIES TO CROSS-EXAMINE THE DEPONENT ON WHOSE STATEMENT, THE REVENUE HAS MADE ADDITION. ONCE, THE ASSESSEE HAS DISCHARGED HIS ONUS TO SUBSTANTIATE THAT THE SHARES WERE PURCHASED AGAINST PAYMENT AND THE SHARES WERE DULY RECEIVED/CREDITED TO THE DMAT ACCOUNT; ON SALE, SHARES WERE DEBITED FROM DMAT ACCOUNT OF THE ASSESSEE AND THE PAYMENT WAS CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE AND THAT THE SHARES WERE TRANSACTED AT FLOOR OF BSE, THE TRANSACTION CANNOT BE HELD TO BE NON GENUINE MERELY ON THE BASIS OF STATEMENT MADE BY THIRD PART, MORE SO, WHEN NO OPPORTUNITY TO CROSS EXAMINE THE PERSON MAKING THE STATEMENT IS AFFORDED TO THE ASSESSEE. 5. THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT ABOVE FINDINGS OF THE CIT(A). WE FIND NO REASON TO INTERFERE WITH THE WELL REASONED ORDER OF THE 5 . 5887 / /20 19 (. .2009-10 ) ITA NO.5887/MUM/2019 (A.Y.2009-10) CIT(A) IN DELETING THE ADDITION. THEREFORE, THE APPEAL OF THE REVENUE LACKS MERIT AND IS LIABLE TO BE DISMISSED. WE HOLD AND DIRECT ACCORDINGLY. 6. IN THE RESULT, IMPUGNED ORDER IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY , THE 01 ST DAY OF SEPTEMBER, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, / DATED: 01/09/2021 SK, PS 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. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI