KUNAL A SHAH, MUMBAI V. ITO 16(2)(1), MUMBAI

ITA 6230/MUM/2014

• Counselvise Citation: 623019914 RSA 2014
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-08-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 08-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Accommodation entries
• Section: 69

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (ACCOUNTANT MEMBER . . , ./ I.T.A. NO . 6229/ MUM/20 14 ( / ASSESSMENT YEAR : 2005 - 06 ) MISS KINJAL A SHAH, 131, BRIJ KUTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16(2)(1), MATRU MANDIR, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : ASCPS1080N ./ I.T.A. NO . 6230/ MUM/20 14 ( / ASSESSMENT YEAR : 2005 - 06 ) MR.KUNAL A SHAH, 131, BRIJ KUTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16(2)(1), MA TRU MANDIR, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AWPPS7098A ./ I.T.A. NO 6255/ MUM/20 14 ( / ASSESSMENT YEAR : 2005 - 06 ) MISS.NILAXI V SHAH, 131, BRIJ KUTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16(2)(1), MATRU MANDIR, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAQPS1670N ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 2 ./ I.T.A. NO 6256/ MUM/2 0 14 ( / ASSESSMENT YEAR : 2005 - 06 ) MISS.PANNA A SHAH, 131, BRIJ KUTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16(2)(1), MATRU MANDIR, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AMZPS1862P ./ I.T.A. NO . 629 0 / MUM/20 14 ( / ASSESSMENT YEAR : 20 0 5 - 06 ) MR.VIJAY N SHAH, 131, BRIJ KUTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16 ( 2 )( 1 ), MATRU MANDIR, MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAQPS1675K ./ I.T.A. N O. 6291/ MUM/20 14 ( / ASSESSMENT YEAR : 2005 - 06 ) MR. AJAY N SHAH, 131, BRIJ K UTIR, 68, NEPEAN SEA ROAD, RUNGTHA LANE, MUMBAI - 400006 / VS. INCOME TAX OFFICER, 16(2)(1), MATRU MANDIR, MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AA EHA5086N IN ITA NOS.6229, 6230, 6255 AND 6256/MUM/2014 / APPELLANT S BY SHRI B V JHAVERI / RSPONDENT BY SHRI K P R R MURTY ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 3 IN ITA NO.6290 AND 6291/MUM/2014 / APPELLANTS BY SHRI B V JHAVERI / RSPONDENT BY SHRI MAURY A PRATAP / DATE OF HEARING : 10 .8 . 201 5 / DATE OF PRONOUNCEMENT : 4. 9 . 201 5 / O R D E R PER B ENCH: ALL THESE APPEALS HAVE BEEN FILED BY THE ASSESSEES MENTIONED ABOVE A GAINST THE ORDERS PASSED BY LD CIT(A) IN THEIR RESPECTIVE HANDS FOR THE ASSESSMENT YEARS STATED IN THE CAUSE TITLE. SINCE THE ISSUES URGED IN ALL THESE APPEALS ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDE R, FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS, THE ASSESSEES ARE ASSAILING THE DECISION OF LD CIT(A) IN CONFIRMING THE ASSESSMENT OF ALLEGED CAPITAL GAINS EARNED BY EACH OF THEM. 3. I HEARD THE PARTIES AND PERUSED THE RECORD. THE FACTS REL ATING TO THE ISSUE UNDER CONSIDERATION ARE THAT THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIONS IN THE HANDS OF MUKESH CHOKSI AND GROUP OF COMPANIES. IT IS STATED THAT SEARCH OFFICIALS RECORDED STATEMENT FROM SHRI MUKESH CHOKSI, WHEREIN HE ADMITTED THAT HE AND HIS GROUP OF COMPANIES WERE ENGAGED IN GIVING ACCOMMODATION BILLS TO VARIOUS PERSONS FOR PURCHASE AND SALE OF SHARES, WHICH WOULD RESULT IN GENERATION OF BOGUS CAPITAL GAINS. HENCE, THE REVENUE RECOVERED THE DETAILS OF TRANSACTIONS OF PURCHASE AND SALES FROM THE COMPUTERS OF SHRI MUKESH CHOKSI AND HIS ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 4 GROUP OF COMPANIES. IT APPEARS THAT THE SAID DETAILS CONTAINED THE NAMES OF THE ASSESSEES HEREIN. ACCORDINGLY, THE DDI (INV.) FORWARDED THOSE DETAILS TO THE ASSESSING OFFICER OF THE ASSESSEES HE REIN AND ON THE BASIS OF THOSE INFORMATION, THE PRESENT ASSESSMENTS HAVE BEEN RE - OPENED BY THE ASSESSING OFFICER. 4. THESE ASSESSEES SUBMITTED BEFORE THE ASSESSING OFFICER THAT THEY HAVE NOT USED THE SERVICES OF SHRI MUKESH CHOKSI AND HIS GROUP OF COMP ANIES FOR CARRYING OUT SHARE TRANSACTIONS AND ACCORDINGLY DENIED THE ALLEGATION OF PROCURING ACCOMMODATION BILLS FROM THEM. IT WAS SUBMITTED THAT THE ALLEGED CAPITAL GAINS NOTED DOWN BY THE DDI (INV.) HAVE NOT BEEN DECLARED BY THESE ASSESSEES IN THEIR RES PECTIVE RETURNS OF INCOME. THESE ASSESSEES ALSO SUBMITTED THEIR RESPECTIVE BANK ACCOUNTS AND CONTENDED THAT THE ALLEGED TRANSACTIONS DO NOT FIND PLACE IN THE BANK ACCOUNTS. THE AO REJECTED ALL THOSE CONTENTIONS AND ASSESSED THE CAPITAL GAINS CLAIMED TO H AVE BEEN RECEIVED BY THEM AS PER THE INFORMATION GIVEN BY DDI, AS UNDISCLOSED INVESTMENTS U/S 69 OF THE ACT. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THESE ASSESSEES HAVE FILED THESE APPEALS BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARIN G, THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITIONS MERELY ON THE BASIS OF INFORMATION RECEIVED FROM DDI (INV.) WITHOUT CORROBORATING THE SAME WITH ANY OTHER CREDIBLE MATERIAL. HE SUBMITTED THAT THESE ASSESSEES HAVE NOT PRO CURED THE ALLEGED ACCOMMODATION BILLS FOR SHARE TRANSACTIONS AND HENCE THEY DID NOT OFFER ANY SUCH INCOME IN THEIR RESPECTIVE RETURN OF INCOME. HE FURTHER SUBMITTED THAT THE BANK ACCOUNTS OF THESE ASSESSEES DO NOT DISCLOSE TRANSACTIONS RELATING TO ALLEGED PURCHASE AND SALE. HE SUBMITTED THAT THESE ASSESSEES HAVE NOT RECEIVED THE SHARES OR MONEY. FURTHER, ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 5 THERE IS NO EVIDENCE TO SHOW THAT THESE ASSESSEES HAVE MADE ANY INVESTMENT OUT OF THE ALLEGED BOGUS CAPITAL GAINS. ACCORDINGLY, THE LD A.R SUBMITTED THA T THE QUESTION OF ASSESSING THE NON - EXISTENT INCOME OR NON - EXISTENT ASSET DOES NOT ARISE AT ALL. ACCORDINGLY HE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ASSESSING THE ALLEGED CAPITAL GAINS IN THE HANDS OF THESE ASSESSEES AND THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. THE LD A.R SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE DIVISION BENCH OF MUMBAI TRIBUNAL IN THE CASE OF SHEETAL PRITAM BHATIJA (ITA NO.69/MUM/2014 DATED 22.07.2015) AND THE DIVISION BENCH HAS DELETED IDENTICAL ADDITIONS MADE BY THE AO IN THE ABOVE SAID CASE. THE LD A.R ALSO RELIED UPON SOME MORE DECISION IN ORDER TO CONTEND THAT THE ADDITIONS MADE IN THE HANDS OF THESE ASSESSEES ARE LIABLE TO BE DELETED. 6. ON THE CONTRARY, THE LD D.R PLACED STRO NG RELIANCE ON THE ORDERS PASSED BY LD CIT(A). HE SUBMITTED THAT THE DEPARTMENT IS HAVING DEFINITE INFORMATION WITH IT TO SHOW THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES IN ORDER TO GENERATE BOGUS CAPITAL GAINS. ACCORDINGLY HE SUBMITTED THAT TH E LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 7. AS SUBMITTED BY THE LD A.R, AN IDENTICAL ISSUE WAS CONSIDERED BY THE DIVISION BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF SHEETAL PRITAM BHATIJA (SUPRA) AND THE D IVISION BENCH DELETED THE IDENTICAL ADDITION WITH THE FOLLOWING OBSERVATIONS: - 6. IT IS CLEAR FROM THE ABOVE, THAT ASSESSEE WAS NOT IN RECEIPT OF ANY ACCOMMODATION ENTRY EITHER FROM M/S MAHASAGAR SECURITIES PVT LTD OR FROM MR. MAYUR M CHOKSI, NOR ANY CORROBORATIVE EVIDENCE WAS PLACED ON RECORD BY THE AO TO SUBSTANTIATE ITS CONTENTION THAT M/S MAHASAGAR SECURITIES PVT LTD HAS GIVEN CHEQUE OF RS.5,20,215/ - AS AN ACCOMMODATION ENTRY. WE HAD ALSO VERIFIED THE BALANCE SHEET OF ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 6 THE ASSESSEE FILED BEFORE THE LOWER AUTHORITIES AS WELL AS BANK STATEMENT PLACED ON RECORD, WHEREIN THERE IS NO CREDIT ENTRY OF RS.5,20,215/ - . THE ASSESSEE HAS ALSO CONFIRMED THAT SHE HAS ONLY ONE BANK ACCOUNT. MERELY ON THE PLEA THAT COMPUTER OF M/S MAHASAGAR SECURITIES PVT LTD IND ICATED ISSUE OF ACCOMMODATION ENTRY IN THE NAME OF ASSESSEE, THE AMOUNT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE, UNLESS AO BRINGS ON THE RECORD COGENT EVIDENCE TO SHOW THAT AMOUNT WAS ACTUALLY RECEIVED BY ASSESSEE OR CREDITED IN HER BANK ACCOUNT. IT IS ALSO NOT THE CASE OF AO THAT BANK ACCOUNT OF MAHASAGAR SECURITIES PVT LTD INDICATES ANY ISSUE OF CHEQUE IN THE NAME OF ASSESSEE. MERELY ENTRY IN COMPUTER FOUND AT THE PREMISES OF MAHASAGAR SECURITIES PVT LTD COULD NOT BE MADE THE BASIS OF ADDITION IN T HE HANDS OF ASSESSEE UNLESS SOME CORROBORATIVE EVIDENCE IS BROUGHT ON RECORD BY AO TO SUBSTANTIATE THE STAND THAT ASSESSEE WAS IN RECEIVE OF SUCH BOGUS ENTRY. UNDER THESE CIRCUMSTANCES, IN THE ABSENCE OF ANY EVIDENCE ON RECORD, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR ADDING A SUM OF RS.5,20,215/ - AS BOGUS LTCG IN THE HANDS OF THE ASSESSEE. 8. IN THE INSTANT CASES ALSO, THE CONTENTIONS OF THE ASSESSEE ARE THAT THEY HAVE NOT PROCURED THE ALLEGED ACCOMMODATION BILLS IN ORDER TO GENERATE BOG US CAPITAL GAINS. THEY HAVE SUBMITTED THAT THE CAPITAL GAINS DECLARED BY THEM RELATE TO THE SHARES PURCHASED AND SOLD THROUGH SOME OTHER BROKERS. IN SUPPORT OF THE SAME, THESE ASSESSEES HAVE FURNISHED RELEVANT BROKER NOTES. IT IS ALSO THE CONTENTIONS OF THESE ASSESSEES THAT THE ALLEGED CHEQUES HAVE NOT BEEN RECEIVED BY THEM AT ALL AND HAD THEY RECEIVED THE CHEQUES, THEY WOULD HAVE DISCLOSED THE ALLEGED CAPITAL GAINS IN THEIR RESPECTIVE RETURN OF INCOME. ACCORDINGLY IT WAS CONTENDED THAT THE ALLEGED CAPI TAL GAINS COULD NOT HAVE BEEN ASSESSED AS UNEXPLAINED INVESTMENTS IN THEIR HANDS, SINCE NONE OF THE DOCUMENTS COULD BE RELATED TO THEIR BANK ACCOUNTS OR OTHER RECORDS. 9. I NOTICE THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITIONS SOLELY ON TH E BASIS OF INFORMATION RECEIVED FROM THE DDI (INV.). WE NOTICE THAT THE ASSESSING OFFICER HAS NOT TAKEN STEPS TO ASCERTAIN THE DETAILS OF ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 7 CHEQUES, THE MANNER OF ENCASHMENT OF THE SAME, THE BANK ACCOUNTS THROUGH WHICH THE ALLEGED CHEQUES WERE ENCASHED ETC. , IN ORDER TO ASCERTAIN THE TRAIL OF MOVEMENT OF CHEQUES IN ORDER TO FIND OUT AS TO WHETHER THESE ASSESSEES HAVE BEEN BENEFITED OR NOT. THE CONTENTIONS OF THE ASSESSEE THAT THEY HAVE NOT RECEIVED THE CHEQUES HAVE NOT BEEN DISPROVED BY THE ASSESSING OFFICE R. IT IS NOT UNDERSTANDABLE AS TO HOW THE ASSESSING OFFICER COULD ASSESS THE ALLEGED BOGUS CAPITAL GAINS IN THE HANDS OF THESE ASSESSEES, WHEN THESE ASSESSEES HAVE NOT DISCLOSED THE SAME IN THEIR RESPECTIVE BOOKS OF ACCOUNTS OR IN THE INCOME TAX RETURN S. THOUGH THERE IS A POSSIBILITY THAT THESE ASSESSEES MIGHT HAVE ENCASHED THE ALLEGED BOGUS CAPITAL GAINS THROUGH SOME OTHER BANK ACCOUNTS, YET THE SAID INFERENCE WOULD BE AGAINST THE HUMAN PROBABILITIES AS NO PRUDENT PERSON WOULD AVAIL BOGUS CAPITAL GAIN WITH THE PURPOSE OF NOT DISCLOSING THE SAME. HENCE, IN THE ABSENCE OF ANY OTHER CORROBORATIVE MATERIAL TO SHOW THAT THESE ASSESSEES HAVE RECEIVED THE CHEQUES FROM MUKESH CHOKSHI AND HIS GROUP OF COMPANIES AS PER THE INFORMATION AVAILABLE IN THEIR COMPUTE R RECORD WHICH COULD BE CORROBORATED WITH ANY OTHER MATERIAL AND FURTHER IN VIEW OF THE FACT THAT THESE ASSESSEES HAVE DENIED THE SAID RECEIPTS, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFIC ER. I NOTICE THAT THE TAX AUTHORITIES HAVE TAKEN THE VIEW THAT THESE ASSESSEES HAVE FAILED TO DISCHARGE THE BURDEN PLACED UPON THEM, BUT THERE SHOULD NOT BE ANY DISPUTE THAT IT WOULD BE DIFFICULT FOR ANYONE TO PROVE THE NEGATIVE TRUTH. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, I AM OF THE VIEW THAT THE IMPUGNED ADDITIONS ARE LIABLE TO BE DELETED. ACCORDINGLY, I SET ASIDE THE ORDERS PASSED LD CIT(A) UNDER CHALLENGE AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITIONS. ITA NO . 6290 AND 6291 / MUM/20 14 AND OTHER FOUR APPEALS 8 11. IN THE RESU LT, ALL THE APPEALS FILED BY THE RESPECTIVE ASSESSEES ARE ALLOWED. PRONOUNCED ACCORDINGLY ON 4TH SEPT 2015. 4TH SEPT , 2015 SD ( . . / B.R. BASKARAN) / ACCOUNTANT MEMBER MUMBAI: 4TH SEPT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FIL E. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI