KUNAL ASHOK AGARWAL, MUMBAI V. ITO WD 16(2)(1), MUMBAI

ITA 6164/MUM/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5430 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJORE SATISHCHANDRA
• Keywords: Reopening of assessment; Income from undisclosed sources; Accommodation entries; Capital Gains
• Section: 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' H ' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 6164 /MUM/ 2014 (ASSESSMENT YEAR: 2006 - 07 ) SHRI KUNAL ASHOK AGARWAL 13, C - 1, MATRU ASHISH 39, NEAPEANSEA ROAD MUMBAI 400036 VS. INCOME TAX OFFICER - 16(2)(1) MATRUM MANDIR MUMBAI 400007 PAN AFQPA1873G APPELLANT RESPONDENT APPELLANT BY: SHRI SASHANK DUNDU RESPONDENT BY: SHRI RAJORE SATISHCHANDRA DATE OF HEARING: 17 .10.2018 DATE OF PRONOUNCEMENT: 30 . 10.2018 O R D E R PER SANDEEP GOSAIN, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 27 , MUMBAI DATED 19 . 08 .201 4 AND IT RELATES TO A.Y. 2006 - 07 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE VALIDITY OF THE NOTICE ISSUED U/S. 148 AND THE ORDER PASSED IN PURSUANCE TO THE U /S.143(3) R.W.S. 147 AND WHILE DOING SO HE AMONGST OTHERS FAILED TO APPRECIATE: A. THAT THERE WAS NO INCOME CHARGEABLE TO TAX WHICH HAD ESCAPED ASSESSMENT; B. THAT THE REASONS STATED FOR REOPENING OF ASSESSMENT WERE NOT HAVING ANY RELATION TO THE FACTS ON RECORD FOR THE RELEVANT PREVIOUS YEAR; C. THAT MERELY ON THE DEPOSITION OF S HRI MUKESH CHOKSI ON 25.11.2009, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ADDITION OF THE CONSIDERATION PAID FOR PURCHASE OF SHARES WAS WRONGLY MADE UNDER THE HEAD 'INCOME ITA NO. 6164 /MUM/ 2014 SHRI KUNAL ASHOK AGARWAL / INCOME TAX OFFICER - 16(2)(1) 2 FROM UNDISCLOSED SOURCES' IN SO FAR AS THE ENTIRE CONSIDERATION FOR PURCHASE OF SHARES OF RS. 8,34,273.41, WAS PAID TO THE BROKER BY ACCOUNT PAYEE CHEQUE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ASSESSING THE CAPITAL GAINS OF RS. 12,92,630/ - AS INCOME FROM UNDISCLOSED SOURCES . 3 . AT THE VERY OUTSET THE LEARNED A.R. SUBMITTED THAT IDENTICAL ISSUES HAVE ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DEEPIKA ASHOK AGARWAL, A FAMILY MEMBER OF THE ASSESSEE IN ITA NO. 6163/MUM/2014 FOR A.Y. 2006 - 07. THE OPERATIVE PORTION OF THE ORDER IS EXTRACTED BELOW: - 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTED FACTS ARE, THE ASSESSEE CLAIMED TO HAVE PURCHASED 68,500 SHARES OF SUCHETA METALS WORTH ` 834418=52, THROUGH A SHARE BROKING COMPANY ALLIANCE INTE RMEDIARIES AND NETWORK PVT. LTD. THE ASSESSEE ALSO CLAIMED TO HAVE SOLD THE SHARES FOR A SALE CONSIDERATION OF ` 20,51,375 AND HAS DECLARED CAPITAL GAIN OF ` 12,16,956=49. IT IS ALSO EVIDENT, IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS SUBMITTED ALL RELEVANT AND NECESSARY DETAILS SUCH AS DEMAT STATEMENT, BROKER BILLS PERTAINING TO PURCHASE AND SALE OF SHARES, BANK STATEMENT COPIES REFLECTING SHARE TRANSACTIONS BEFORE THE ASSESSING OFFICER. AS AGAINST THE AFORESAID DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE TO PROVE THE SHARE TRANSACTIONS, THE ASSESSING OFFICER HAS TREATED THE SHARE TRANSACTION AS SHAM / BOGUS BY SOLELY RELYING UPON THE STATEMENT OF SHRI MUKESH CHOKSI, DIRECTOR OF MAHASAGAR SECURITIES PVT. LTD. AND ALLIANCE INTERMEDIARIES NETWOR K PVT. LTD., WHEREIN HE ALLEGEDLY ADMITTED OF HAVING PROVIDED ACCOMMODATION ENTRIES ONLY AND THERE WAS NO SHARE TRANSACTION ACTUALLY MADE. APART FROM THE STATEMENT OF SHRI MUKESH CHOKSI, THE ASSESSING OFFICER HAS NOT REFERRED TO ANY OTHER MATERIAL OR EVIDE NCE WHICH COULD CORROBORATE OR CONCLUSIVELY PROVE THE FACTS STATED BY SHRI MUKESH CHOKSI. MOREOVER, IT IS UNCONTROVERTED FACT THAT THE STATEMENT RECORDED OF SHRI MUKESH CHOKSI, UNDER SECTION 131 AND OTHER ADVERSE MATERIALS CLAIMED TO BE IN THE POSSESSION O F THE DEPARTMENT, WHICH WERE UTILISED FOR TREATING THE SHARE TRANSACTIONS OF THE ASSESSEE AS SHAM / BOGUS WAS NEVER CONFRONTED TO THE ASSESSEE NOR THE ASSESSEE WAS SUPPLIED WITH THOSE MATERIALS. FURTHER, THE ASSESSEE WAS NOT ALLOWED THE OPPORTUNITY TO CROS S EXAMINATION SHRI MUKESH CHOKSI, TO TEST THE VERACITY OF STATEMENT MADE BY HIM UNDER SECTION 131 OF THE ACT. THOUGH, THE ASSESSEE RAISED THIS ISSUE BEFORE THE LEARNED COMMISSIONER (APPEALS), BUT THE LEARNED COMMISSIONER (APPEALS) HAS NEITHER PROPERLY CONS IDERED NOR APPRECIATED THE CONTENTION OF THE ASSESSEE. IN OUR VIEW, WITHOUT CONFRONTING THE STATEMENT OF THIRD PARTY ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE THE ADDITION AND WITHOUT ITA NO. 6164 /MUM/ 2014 SHRI KUNAL ASHOK AGARWAL / INCOME TAX OFFICER - 16(2)(1) 3 ALLOWING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE CONCERN ED PERSON NO ADDITION CAN BE MADE ON THE BASIS OF SUCH UNTESTED MATERIAL. MORE SO, WHEN THE ASSESSEE HAS BROUGHT ON RECORD DOCUMENTARY EVIDENCE TO DEMONSTRATE THAT THE SHARE TRANSACTIONS WERE GENUINE. WE HAVE NOTED, IN A DISPUTE OF IDENTICAL NATURE IN THE CASE OF SHRI CHANDRAKANT G. PATEL (HUF) V/S ITO, ITA NO.2705/MUM./2004, DATED 25TH MAY 2004, DATED 25TH MAY 2016, THE CO ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE OTHER DECISIONS RELIED UPON BY THE ASSESSEE HAVE ALSO EXPRESSED SIMILAR VIEW. IN FACT, THE HON'BLE JURISDICTIONAL HIGH COURT HAS APPROVED SUCH VIEW EXPRESSED BY THE TRIBUNAL IN SANDEEP R. SHOREWALA V/S ITO, ITA NO.16120/8MUM./ 2007 DATED 14TH MAY 2010 (JUDGMENT OF HIGH COURT IN ITA NO.2009 OF 2009 D ATED 18TH SEPTEMBER 2009). IN VIEW OF THE AFORESAID, WE HOLD THAT THE ADDITION MADE BY THE ASSESSING OFFICER TREATING THE SHARE TRANSACTION AS SHAM / BOGUS IS UNSUSTAINABLE. ACCORDINGLY, WE DELETE THE ADDITION MADE BY SETTING ASIDE THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). AS WE HAVE DECIDED THE ISSUE ON MERIT, THERE IS NO NEED TO ADJUDICATE THE LEGAL ISSUE RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. 4 . SINCE THE ISSUE IN THIS APPEAL IS IDENTICAL TO THE ISSUES RAISED IN ITA NO. 6163/MUM/2014 FOR A.Y. 2006 - 07, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2018 . SD/ - SD/ - ( B.R. BASK ARAN ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30 OCTOBER, 2018 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) - 27 , MUMBAI 4 . THE CIT - 16 , MUMBAI 5 . THE DR, H BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.