PRAMOD B. AGARWAL(HUF), MUMBAI V. INCOME TAX OFFICER-21(2)(5), MUMBAI

ITA 6581/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0227 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 13-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMLATHA
• Assessee Lawyers: D C JAIN
• Keywords: Reopening of assessment; Income from undisclosed sources; Search and seizure; Opportunity of cross examination; Earning of tax free income; Speculation loss; Corroborative evidences; Accommodation entries
• Section: 143(3); 133A; 14A; 133(6); 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SH. R. C. SHARMA , AM & SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 6581 & 6582/MUM/2017 ( / ASSESSMENT YEAR: 2007 - 08 & 2008 - 09 ) PRAMOD B. AGARWAL (HUF) C/O - D.C. JAIN AND CO. 75, BOMBAY MUTUAL BLDG, 293, DR. D.N. ROAD, FORT, M UMBAI - 400001 / VS. ITO 21(2)(5) 107, PIRAMAL CHAMBER, LALBAUG, M UMBAI - 400012 . ./ ./ PAN NO. AA BHP3681F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI D. C. JAIN, AR / RESPONDENTBY : MS. N. HEMLATHA, DR / DATE OF HEARING : 06 .02 .1 8 / DATE OF PRONOUNCEMENT : 21/02/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE PRESENT TWO APPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMIS SIONER OF INCOME TAX (APPEALS) - 2 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 33 , MUMBAI, DATED 24.08.17 FOR A.Y. 20 0 7 - 08 & 2008 - 09 RESPECTIVELY. 2. SINCE THE ISSUES RAISED IN THESE TWO APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENI ENCE, THESE TWO APPEALS ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. I.T.A. NO. 6581 /MUM/201 7 (AY 2007 - 08 ) 3. FIRST OF ALL WE TAKE UP ASSESSEE S APPEAL IN I.T.A. NO. 6581 /MUM/201 7 (AY 2007 - 08 ) ON THE GROUNDS MENTIONED HEREIN BELOW: - 1) UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE SHORT TERM CAPITAL GAINS OF RS. 518073/ - OUT OF TOTAL SHORT TERM CAPITAL GAINS OF RS. 1344690/ - AS UNDISCLOSED INCOME UNDER THE HEAD INCOME FROM THE OTHER SOURCES, AS ASSESS ED BY THE ASSESSING OFFICER. 2) UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 22671/ - MADE BY THE ASSESSING OFFICER EXPENSES 3 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) INCURRED AND CLAIMED AS SHARE TRADING EXPENSES IN EARNING THE SHORT TERM CAPITAL GAINS. 3/ UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 1160,615/ - INCOME FROM UNDISCLOSED SOURCES MADE BY THE ASSESSING OFFICER. 3 (A) :THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT: I/ THE AMOUNT OF RS. 1160615/ - IS THE RECEIPT ON ACCOUNT OF SALE OF SHARES RECEIVED THROUGH CHEQUE AND FROM MIS. MANGAL DAS SECURTIES PVT. LTD. 4/ UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 68368/ - MADE BY THE ASSESSING OFFICER ASSUMING BROKERAGE MIGHT HAVE BEEN PAID. 5/ UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 2500/ - OUT OF RS. 6247/ - ON ACCOUNT OF EXPENSES FOR EXEMPT INCOME U/S. 14A R.W. R ULE 8D. MADE BY THE ASSESSING OFFICER. 6) THE APPELLANTS CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE THE GROUND/S OF APPEAL AT OR BEFORE THE HEARING OF APPEAL. 4 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 4 . THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 2007 - 08 ON 30.07.2007 DECLARING TOTAL INCOME AT RS. 14,11,059/ - . THE RETURN WAS PROCESSED U/S.143(1) OF THE I.T.ACT. 5. AS PER T HE BACKGROUND OF THE CASE , THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO THE EFFECT THAT A SE ARCH AND SEIZURE ACTION U/S.132 OF THE INCOME TAX ACT, 1961 WA S UNDERTAKEN IN THE CASE OF M/S. MAHASAGAR SECURITIES P. LTD. AND ITS GROUP COMPANIES MAINLY M/S. MIHIR AGENCIES P. LTD., M/S. GOLDSTAR FINVEST P. LTD. AND M/S. ALLIANCE INTERMEDIARIES P. LTD. O N 25.11.2009 ON THE BASIS OF INFORMATION RECEIVED FROM THE FINANCIAL INTELLIGENCE UNIT, NEW DELHI REGARDING SUSPICIOUS TRANSACTIONS IN THE BANK ACCOUNT OF M/S. MAHASAGAR SECURITIES PVT.LTD. ON 25.11.2009. THE SEARCH AND SEIZURE ACTION REVEALED THAT SHRI MU KESHCHOKSI WHO IS A CHARTERED ACCOUNTANT BY PROFESSION HAD FLOATED 34 COMPANIES FROM HIS OFFICE AT SHREE SADASHIV CHS, SANTACRUZ(E), MUMBAI 400 055. THERE WAS NO GENUINE BUSINESS CARRIED OUT BY AN OF THESE CONCERNS AND THEY WERE ALL ENGAGED IN THE BUSINESS OF ISSUING BOGUS BILLS FOR PROVIDING LONG TERM CAPITAL GAIN/LOSS, 5 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) SPECULATION PROFIT OR LOSS. THE COMPANIES RUN BY SHRI MUKESHCHOKSI WERE RECEIVING COMMISSION FOR ALL THESE ACTIVITIES. THE SEARCH ACTION FURTHER REVEALED THAT NONE OF THE COMP ANIES RUN BY S HRI MUKESHCHOKSI HAD VALID LICENCE AS A BROKER TO TRADE ANY STOCK EXCHANGE AS ON THE DATE OF SEARCH DURING THE PERIOD WHEN THE ALLEGED TRANSACTIONS WERE CARRIED OUT FOR THE BENEFICIARIES. AS PER THE INFORMATION PASSED BY THE INVESTIGATION WING THE VARIOUS KINDS OF BILLS PROVIDED BY MUKESHCHOKSI GROUP OF COMPANIES ARE AS UNDER: - I) SPECULATION PROFIT ENTRIES II) SHORT TERM CAPITAL GAIN/LOSS III) LONG TERM CAPITAL GAIN IV) COMMODITY BILLS V) DERIVATIVE PROFIT/LOSS VI) ONE TIME ENTRY/SHARE APPLICATION MONEY VII) BOGUS SALES INVOICES ON THE BASIS OF INFORMATION RECEIVED FROM DIT (I & C), NEW DELHI, THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRY FROM UNSCRUPULOUS BROKERS, THE ASSESSING OFFICER, AFTER RECORDING REASONS, RE - OPENED THE ASSESSMENT FOR A.Y.2007 - 08 ON 21.03.2014 BY ISSUE OF NOTICE U/S.148 OF THE I.T. ACT, 1961 AND THE SAME WAS DULY SERVED ON THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 11.08.2014 OBJECTED TO REOPENING OF ASSESSMENT 6 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) UNDER VARIOUS ISSUES AND THE SAME WAS DISPOSED OFF BY THE AO VIDE LE TTER DATED 18.09.2014. SUBSEQUENTLY, THE CASE WAS REOPENED UNDER SEC.147 R.W.S. 151(L) OF THE ACT AND THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE I.T. ACT, 1961. AGGRIE VED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND L D. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES , PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. 6. ALTHOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS, BUT WE THINK THAT GROUND NO. 3 AND 3(A) BE ADJUDICATED FIRSTLY AS THE DECISION OF THE OTHERS ARE DEPENDENT UPON THE DECISION OF GROUND NO. 3 AND 3(A), THEREFORE THESE GROUNDS ARE FIRSTLY TAKEN FOR DECISION. GROUND NO. 3 & 3(A) . 7 . THESE GROUND S RAISED BY THE ASSESSEE ARE INTER - CONNECTED AND INTER - RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. 7 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) CIT(A) IN CONFIRMING THE ADDITIONS OF RS. 11,60,615/ - BY CONSIDERING THE SAME AS INCOME FROM UNDISCLOSED SOURC ES, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 8 . AT THE VERY OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS WHICH WERE RAISED BEFORE LD. CIT(A) AND THE SAME ARE CONTAINED IN PARA NO . 20 OF THE ORDER OF LD. CIT(A) WHICH IS REPRODUCED BELOW: - 20. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AR OF THE APPELLANT HAS SUBMITTED AS UNDER: - RE: ADDITION OF RS. 11606151 - STATING INCOME FROM UNDISCLOSED SOURCES, THE LEARNED ASSESSING OFFICER HAS STATED IN PARA NO. 13 OF THE ASSESSMENT ORDER: - THE TRANSACTION ENTERED IN TO BY THE ASSESSEE WITH WS. AFFIANCE INTERMEDIARIES & NET WORK PVT. LTD. IS NOTHING BUT A BOGUS TRANSACTION, WHEREBY A VALIANT ATTEMPT WAS MADE BY THE ASSESSEE TO PROJECT IT AS A TRANSACTION ENTERED INTO THROUGH A RECOGNIZED STOCK EXCHANGE, THROUGH A BROKER/SUB - BROKER AND WELL AS TO PROJECT THAT 8 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) HE HAS EARNED A LONG TERM CAPITAL GAIN IN THE SAID TRANSACTION. ON THE CONTRARY, THE FACTS AND CIRCUMSTAN CES OF THE CASE NARRATED ABOVE GO AGAINST THE PURPORTED FACT OF TRANSACTION IN SHARES CLAIMED BY THE ASSESSEE. HOWEVER, IN VIEW OF DISCUSSION /EXPLANATION AS ABOVE, IT IS AMPLY PROVED THAT THE SALE VALUE IS A BOGUS FLACTITIOUS ENTRY AND HENCE RS. 1160615/ - IS ADDED BACK AS INCOME FROM UNDISCLOSED SOURCES TO THE TOTAL INCOME OF THE ASSESSEE. S.NO. NAME OF THE SHARES QTY. PURCHASE VALUE SALE PRICE SHORT TERM CAPITAL GAIN 1) SUNDARAM MUL 35000 413631 709675 296044 2) PARAMOUNT COM 4000 228912 450940 2220 28 642543 1160615 518072 THE APPELLANT HAS DECLARED THE SHORT TERM CAPITAL GAINS ON SALE/PURCHASE SHARES OF DIFFERENT COMPANIES. A STATEMENT OF SHORT TERM CAPITAL GAINS IS FILED BEFORE THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. A COPY OF THE SAME IS AT PAGE NO . THE PAPER BOOK. THE LEARNED ASSESSING OFFICER HAS DOUBTED ABOUT THE AFORESAID TWO SCRIPTS AND CONCLUDED THAT: I) THE TRANSACTION ENTERED INTO BY THE ASSESSEE WITH MIS. ALLIANCE INTERMEDIARIES & NET WORK PVT. LTD., IS NOTH ING BUT A BOGUS TRANSACTION. II) HE HAS EARNED A LONG TERM CAPITAL GAINS IN THE SAID TRANSACTION. 9 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) III) THE SALE VALUE IS A BOGUS / FICTITIOUS ENTRY AND HENCE RS. 1160615/ IS ADDED DACK AS INCOME FROM UNDISCLOSED SOURCES. IT IS SUBMITTED THAT: I ) THE APPELLANT HAS PRODUCED THE COPIES OF THE BILLS FOR PURCHASE OF SHARES THROUGH WS. ALLIANCE INTER MEDIATERIES & NET WORK PVT. LTD. II) THE PAYMENTS ARE MADE BY CHEQUE WHICH IS DULY REFLECTED IN THE BANK STATEMENTS. I II) SHARES ARE DULY REFLECTED IN TH E DEMATE ACCOUNT. I V) THE APPELLANT HAS DECLARED SHORT TERM CAPITAL GAINS ON THE SALE OF AFORESAID SHARES AND NOT THE LONG TERM CAPITAL GAINS AS MENTIONED BY LEARNED ASSESSING OFFICER. V) THE APPELLANTS HAS SOLD THE AFORESAID SHARES THROUGH M/S. MAN GALDAS SECURITIES PVT. LTD. AND SALE PROCEED IS RECEIVED THROUGH THEM. A STATEMENT OF SALE / PURCHASE OF SHARES THROUGH M/S. MAN GALDAS SECURITIES PVT. LTD. IS FILED BEFORE THE ASSESSING OFFICER AND COPY OF THE SAME IS AT PAGE NO. IN THE PAPER BOOK. VI) THE LEARNED ASSESSING OFFICER HAS CONCLUDED THAT SALE VALUE OF RS. 1160615/ - IS BOGUS AND FACTIOUS ENTRY THE APPELLANT HAS RECEIVED THE SALE CONSIDERATION 10 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) THROUGH M/S. MANGALDAS SECURITIES PVT. LTD., AND NOT THROUGH M/S. ALLIANCE INTERMEDIARIES & NET W ORK PVT. LTD., WHERE THE TRANSACTIONS WITH WS. ALLIANCE INTERMEDIARIES & NET WORK PVT. LTD., HAS BEEN TREATED AS BOGUS TRANSACTION. VII) THE LEARNED ASSESSING OFFICER HAS TREATED THE SALE CONSIDERATION OF RS. 1160615/ - AS INCOME FROM UNDISCLOSED SOURCES, W HEREAS THE APPELLANT HAS FILED THE FULL DETAILS OF THE SALE /PURCHASES OF THE TRANSACTION AND THE PAYMENTS ARE RECEIVED THROUGH THE BANKING CHANNELS. THE ADDITION ON ACCOUNT OF THE SALE VALUE OF RS. 1160615/ - IS ON THE BASIS OF ASSUMPTIONS AND CONJECTURES, WHICH IS BAD IN LAW. THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI HAS HELD IN CASE OF ACIT VS. G. V. SONS THAT WE CAN NOT ACCEPT A BOLD STATEMENT MADE BY THE A. O. THAT ANY TRANSACTION / BUSINESS DONE WITH A PARTY WOULD BE SHAM SIMPLY BECAUSE THE OPPOSITE PA RTY BESIDE DOING REGULAR BUSINESS WAS ALSO INDULGING IN PROVIDING ACCOMMODATION ENTRIES, SIMPLY ON THE BASIS OF STATEMENT GIVEN, WITHOUT AFFORDING AN OPPORTUNITY OF CROSS EXAMINATION OF THE SAID PARTY TO THE ASSESSEE. IN VIEW OF THE FACTS AND CIRCUMSTANCES , THE ADDITION OF RS. 11 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 11606151 - MADE BY THE LEARNED ASSESSING OFFICER MAY PLEASE BE DELETED.' 9 . ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS PASSED BY REVENUE AUTHORITIES. 10 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALS O PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY TH E REVENUE IN PARA NO. 17 TO 24 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 21 TO 24 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 21. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. MY OBSERVATIONS ARE AS UNDER: - 22. IT IS FOUND THAT THE AO HAS FORMED HIS VIEW ABOUT THE BOGUS NATURE OF THE PURCHASES MADE BY THE APPELLANT FROM THE ABOVE PARTIES ON THE BASIS OF 12 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) INFORMATION RECEIVED FROM THE DIT (I &C), NEW DELHI, REGARDING FICTITIOUS PURCHASES/ SALES OF SHARES TREATING IT AS ACCOMMODATION ENTRIES WHEREIN THE ASSESSEE WAS A BENEFICIARY OF ACCOMMODATION BILLS PROVIDED BY MUKESHCHOKSI AND ONE OF HIS GROUP COMPANIES M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LT D. WITHOUT ACTUAL DELIVERY OF SHARES/SECURITIES OF PURCHASE AND SALES. IN THIS REGARD, THE AO HAS CARRIED OUT NECESSARY VERIFICATION AND ENQUIRY TO ESTABLISH THAT THE PURCHASES FROM M/S. PARAMOUNT CORPORATION LTD. AND M/S, SUNDARAM MULTI PAPER LTD. (MUL) A RE BOGUS AND NON - GENUINE. (I) M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. REPLIED THAT NO INFORMATION IS AVAILABLE WITH IT AS ALL DOCUMENTS ARE SEIZED BY THE INCOME - TAXDEPARTMENT.(II) NOTICE U/S 133(6) OF THE I.T. ACT WERE ISSUED TO BSE AND NSE WITHRESP ECT TO THE DETAILS OF M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. BSE VIDE LETTER DATED 05.02.2014 HAS INFORMED THAT M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. IS NOT REGISTERED WITH IT. NES HAS STATED VIDE LETTER DATED 29.01.2014 THAT THE DATE OF REGISTRATION OF M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. WAS 12.10.2000, WHICH GOT CANCELLED ON 19' FEB., 2004. HENCE FOR THE YEAR UNDER CONSIDERATION, NO TRANSACTION WAS CARRIED OUT THROUGH THE EXCHANGE. 13 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) (III) NOTICES U/S 133(6) OF THE ACT WERE ISSUED AT THE ADDRESSES OF M/S.PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. M/S. PARAMOUNT CORPORATION LTD. VIDE LETTER DATED 14.01.2014 REPLIED THAT NO SHARE TRANSFER IN THE NAME OF THE APPELLANT HAD TAKEN PLACE. THERE IS NOTING ON RECOR D TO SUGGEST THAT M/S. SUNDARAM MULTI PAPER LTD. CONFIRMED THE TRANSACTION OF SHARES. (IV) IN THE STATEMENT OF MUKESHCHOKSI,. IT IS ADMITTED THAT ITS GROUP CONCERNM/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. HAS NOT CARRIED OUT ANY GENUINE TRANSACTIONS A ND ONLY ACCOMMODATION ENTRIES ARE PROVIDED BY THEM. (V) THE APPELLANT VIDE LETTER DATED 11.08.2014 HAS ADMITTED THAT HE HASPURCHASED THE SHARES OF M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. FROM M/S ALLIANCE INTERMEDIATES TO THE EXT ENT OF RS. 2,28,912/ - AND RS. 4,13,631/ - RESPECTIVELY. (VI) THE AO HAS ALSO GIVEN THE FINDINGS THAT THE TRANSACTIONS, AS CLAIMED BYTHE APPELLANT MUST HAVE TAKEN PLACE OFF MARKET WITHOUT INVOLVEMENT OF STOCK MARKET. AS PER THE SEC. 13 OF SCR ACT, IN SUCH TRA NSACTIONS PAYMENTS FOR THE PURCHASES AND DELIVERY OF SHARES MUST TAKE PLACE WITHIN 48 HOURS OF THE CONTRACT. IT IS ALSO BROUGHT ON RECORD THAT ALTHOUGH THE 14 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) APPELLANT HAS SHOWN DATE OF PURCHASES AS 25.09.2006 AND 09.06.2006 RESPECTIVELY, THERE IS NO EVIDENC E REGARDING ACTUAL DELIVERY OF SHARES WITHIN 48 HOURS. THIS CLEARLY ESTABLISHES THE SHAM NATURE OF THE TRANSACTIONS. 23. THESE FINDINGS OF ENQUIRES WERE MADE AVAILABLE TO THE APPELLANT DURING THECOURSE OF ASSESSMENT PROCEEDINGS. THE REPLY OF THE APPELLANT WAS DULY CONSIDERED BY THE AO AND THE IMPUGNED ADDITION OF RS. 11,60,615/ - HAS BEEN MADE, TREATING THE PURCHASE VALUE OF THE SHARES AS NIL. THEREFORE, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. AR THAT SUFFICIENT OPPORTUNITIES WERE NOT GIVEN WHILE MAKING THE IMPUGNED ADDITION. AT THE SAME TIME, I DONOT AGREE WITH THE APPELLANT THAT THE IMPUGNED ADDITION IS MADE PURELY ON THE BASIS OF STATEMENT OF MUKESHCHOKSI WITHOUT CORROBORATIVE EVIDENCES. AS DISCUSSED IN THE PRECEDING PARAGRAPH, THE AO HAS MADE NECESSA RY VERIFICATION AND FIELD ENQUIRIES TO ASCERTAIN THE GENUINENESS OF TRANSACTIONS APART FROM UTILIZATION OF THE STATEMENT OF MUKESHCHOKSI. 24. DURING THE APPELLATE PROCEEDINGS, IT IS CLAIMED THAT THE APPELLANTS HAS SOLDTHE AFORESAID SHARES THROUGH M/S. MANG ALDAS SECURITIES PVT. LTD. AND SALE PROCEED IS RECEIVED THROUGH THEM. IT IS 15 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) OBSERVED FROM THE WRITTEN STATEMENT THAT, AS ADMITTED, THE APPELLANT HAD PURCHASED THE SHARES UNDER QUESTION THROUGH M/S. ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. IT IS ALSO OBSE RVED THAT DURING APPELLATE PROCEEDINGS, THE APPELLANT HAS NOT COMMENTED UPON THE RESULT OF ENQUIRES CARRIED OUT DURING ASSESSMENT PROCEEDINGS. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED, I AM IN AGREEMENT WITH THE AO THAT SHA RES M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. CLAIMED TO BE PURCHASED THROUGH M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. ARE MERELY ACCOMMODATION ENTRIES AND HENCE THE SALE PRICE OF RS. 11,60,615/ - SHOWN AS SALE VALUE WILL REPR ESENT INCOME EARNED FROM UNDISCLOSED SOURCES. THUS, THE ADDITION MADE BY THE AO IS CONFIRMED. AS SUCH, THE GROUND OF APPEAL NO. 3 AND 7 ARE DISMISSED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND THAT LD. CIT(A) HAS RIGHTLY APPRECIATED THE INVESTIGATION AND VERIFICATIONS CARRIED OU T BY THE AO WHEREIN, THE AO AFTER METICULOUSLY CARRYING OUT NECES SARY VERIFICATION AND ENQUIRY HAD ESTABLISH ED THAT THE 16 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) PURCHASES FROM M/S. PARAMOUNT CORPORATION LTD. AND M/S, SUNDARAM MULTI PAPER LTD. (MUL) ARE BOGUS AND NON - GENUINE. IN THIS RESPECT, NECE SSARY N OTICE S U/S 133(6) OF THE I.T. ACT WERE ALSO ISSUED BY THE AO TO THE BSE AND NSE FOR SEEKING DETAILS OF M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. THROUGH WHOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE SHARES. THE BSE VIDE LETTER DATED 05. 02.2014 HAS INFORMED THAT M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. IS NOT REGISTERED WITH IT WHEREAS THE N S E HAS STATED VIDE LETTER DATED 29.01.2014 THAT THE DATE OF REGISTRATION OF M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. WAS 12.10.2000, WHICH GOT CANCELLED ON 19' FEB., 2004. ON THE BASIS OF THESE INFORMATION, AO REACHED TO THE CONCLUSION THAT FOR THE YEAR UNDER CONSIDERATION, NO TRANSACTION WAS CARRIED OUT THROUGH THE EXCHANGE. AS FAR AS THE ANOTHER NOTICE ISSUED BY THE AO TO M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. IS CONCERNED, IN THIS RESPECT, M/S ALLIANCE INTERMEDIATES AND NETWORK PVT. LTD. HAD GIVEN SPECIFIC REPLY THAT THEY HAVE NO INFORMATION AS ALL THE DOCUMENTS HAVE ALREADY BEEN SEIZED BY THE INCOME TAX DEPARTMENT. 17 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) WE ALSO NOTED THAT AO HAD ISSUED NOTICES U/S 133(6) OF THE ACT AT THE ADDRESSES OF M/S. PARAMOUNT CORPORATION LTD. AN D M/S. SUNDARAM MULTI PAPER LTD AND IN RESPONSE TO THE SAID NOTICE S , M/S. PARAMOUNT CORPORATION LTD. VIDE LETTER DATED 14.01.2014 CATEGORICALLY REPLIED THAT NO SHARE S WERE TRANS FER RED IN THE NAME OF THE ASSESSEE AND THE ASSESSEE HAD NOT PLACED ANYTHING ON RECORD TO SUGGEST THAT M/S. SUNDARAM MULTI PAPER LTD. HAD CONFIRMED THE TRANSACTION OF SHARES. APART FROM ABOVE, WE FURTHER NOTICE D THAT REVENUE AUTHORITIES HAVE ALSO CONSIDERED THE STATEMENT OF MUKESH CHOKSI WHEREIN HE HAS ADMITTED THAT HIS GROUP CONCERN M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. HAS NOT CARRIED OUT ANY GENUINE TRANSACTIONS AND ON THE CONTRARY ADMITTED THAT ONLY ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID CONCERNS . ON THE BASIS OF THE ABOVE INFORMATION S SOUGHT DURING THE COURSE OF INVESTIGATION, AO ALTERNATIVELY REA CHED TO THE CONCLUSION THAT THE TRANSACTIONS, AS CLAIMED BY THE ASSESSEE MUST HAVE TAKEN PLACE OFF MARKET WITHOUT INVOLVEMENT OF STOCK MARKET. IT WAS FURTHER NOTICED BY THE REVENUE AUTHORITIES THAT A S PER THE SEC. 13 OF SCR ACT, IN SUCH TRANSACTIONS , PAYMENTS FOR THE 18 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) PURCHASES AND DELIVERY OF SHARES MUST TAKE PLACE W ITHIN 48 HOURS OF THE CONTRACT . ON THE CONTRARY, THE ASSESSEE COULD NOT PLACE ON RECORD ANY EVIDENCE REG ARDING ACTUAL DELIVERY OF GOODS WITHIN 48 HOURS WH ICH ALSO CLEARLY ESTABLISH THAT ALLEGED TRANSACTIONS ARE SHAM AND BOGUS IN NATURE. WE ALSO NOTICED THAT T HE FINDINGS OF THE AO COLLECTED DURING THE INQUIRIES WERE MADE AVAILABLE TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BUT INSTEAD OF SUBSTANTIATING HIS STAND, THE ASSESSEE HAD MADE ONLY BALD STATEMENTS. THEREFORE, CONSIDERING THE FACTS OF THE PRESENT CASE, THE AO HAS RIGHTLY MADE ADDITIONS O F RS. 11,60,615/ - THEREBY TREATING THE PURCHASE VALUE OF THE SHARES AS NIL. DURI NG THE COURSE OF ARGUMENTS, OUR ATTENTION WAS ALSO DRAWN BY LD. D R TOWARDS THE ORDERS PASSED BY THE COORDINATE BENCH OF HONBLE ITAT IN THE CASE OF DISHA N. LALWANI VRS. ITO IN ITA NO. 6398/MUM/2012 WHEREIN THE COORDINATE BENCH OF HONBLE ITAT HAS ALSO CON SIDERED THE CONDUCT OF SHRI MUKESHCHO KSI AND HIS ASSOCIATED COMPANY /GROUP CONCERNS IN PROVIDING BOGUS ACCOMMODATION ENTRIES AND IT WAS CATEGORICALLY HELD THAT OFF MARKET TRANSACTIONS WERE CARRIED OUT BY THE 19 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) BENEFICIARIES IN COLLUSION WITH SHRI MUKESH CHOK SHI AND THE SAID TRANSACTIONS WERE ALTHOUGH GIVEN THE COLOUR OF THE GENUINE TRANSACTION BUT THE FACT REMAINS THAT ONLY PAPER WORK WAS DONE IN LIE U OF CASH AND THERE WAS NO ACTUAL GAIN/TRANSACTION. AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUT HORITIES AS WELL AS CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITIONS MADE BY AO. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LDCIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND NO. 3 RAISED BY THE ASSESSEE STANDS DISMISSED. 11. APART FROM ABOVE, LD. AR WHILE RAISING GROUND NO. 3(A) SUBMITTED BEFORE US THAT THE ASSESSEE HAS SOLD THE AFORESAID SHARES THROUG H M/S MANGAL DAS SECURIT IES PVT. LTD AND SALE PROCEED HAVE ALREADY BEEN RECEIVED THROUGH CHEQUE . 20 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) IN THIS REGARD, WE ARE OF THE VIEW THAT SINCE , WE HAVE ALREADY UPHELD THE ORDER OF LD. CIT(A) REGARDING ADDITION OF RS. 11,60,615/ - TREATING THE PURCHASE VALU E OF SHARES AS NIL AND BY HOLDING THAT THE SAME WERE ONLY ACCOMMODATION ENTRIES. HENCE THE SALE PRICE OF RS. 11,60,615/ - WAS ALSO CORRECTLY HELD AS INCOME EARNED FROM UNDISCLOSED SOURCES . THEREFORE, IN VIEW OF OUR FINDINGS IN GROUND NO. 3, THIS GROUND RAIS ED BY THE ASSESSEE STANDS DISMISSED . NOW WE DEAL WITH OTHER GROUNDS RAISED BY THE ASSESSEE. GROUND NO. 1 . 12 . THIS GROUNDS RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE SHORT TERM CAPITAL GAINS OF RS. 5 , 18 , 073/ - OUT OF TOTAL SHORT TERM CAPITAL GAINS OF RS. 13 , 44 , 690/ - AS UNDISCLOSED INCOME UNDER THE HEAD INCOME FROM THE OTHER SOURCES, AS ASSESSED BY THE ASSESSING OFFICER. 21 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 13 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAIS ED BY THE REVENUE IN PARA NO. 25 TO 27 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) I S CONTAINED IN PARA NO. 27 AND 27.1 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 27. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE MATERIALAVAILABLE ON RECORD. MY OBSERVATIONS ARE AS UNDER: - 27.1. IT IS FOUND THAT THE AO HAS REDUCED THE SHORT TERM CAPITAL GAINS BY RS. 5,18,072/ - WHICH WAS CLAIMED TO BE EARNED ON THE PURCHASES OF SHARES FROM M/S SUNDARAM MUL AND M/S PARAMOUNT CORPORATION LTD., THROUGH M /S ALLIANCE INTERMEDIATES &NET WORK PVT. LTD., TREATING IT AS FICTITIOUS. HENCE, IT IS REDUCED FROM THE TOTAL SHORT TERM CAPITAL GAINS OF RS. 13,67,361/ - AND BRING DOWN THE STCG AT RS. 8,49,289/ - . ONCE IT HAS BEEN HELD IN THE PRECEDING PARAGRAPHS THAT THE SHARES M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. CLAIMED TO BE 22 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) PURCHASED THROUGH M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. ARE MERELY ACCOMMODATION ENTRIES AND HENCE THE SALE PRICE OF RS. 11,60,615/ - SHOWN AS SALE VALUE WILL R EPRESENT INCOME EARNED FROM UNDISCLOSED SOURCES, THERE IS FULL JUSTIFICATION IN THE ACTION OF THE AO IN REDUCING THE STCG AT RS. 8,49,289/ - . MOREOVER, THERE IS NO SCOPE FOR ALLOWING ANY EXPENDITURE AS CLAIMED QUA THE FICTITIOUS SHARE TRANSACTIONS. HENCE, T HE COMPUTATION OF STCG TO BE INCLUDED IN TOTAL INCOME OF THE ASSESSED IS IN ORDER. HENCE, GROUND OF APPEAL NO. 2 IS DISMISSED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE ARE OF THE CONSIDERE D VIEW THAT SINCE WE HAVE ALREADY UPHELD THE ORDER OF LD. CIT(A) BY HOLDING THAT THE SHARES OF M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. CLAIMED TO HAVE BEEN PURCHASED THROUGH M/S ALLIANCE INTER MEDIATES & NETWORK PVT. LTD. WERE MER ELY ACCOMMODATION ENTRIES, THEREFORE THE SALE PRICE OF RS. 11,60,615/ - SHOWN AS SALE VALUE WILL REPRESENT INCOME EARNED FROM UNDISCLOSED SOUR CES. 23 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) HENCE IN THESE CIRCUMSTANCES, WE UPHELD THE DECISION OF LD. CIT(A) WHEREIN LD. CIT(A) HAS APPRECIATED THE ACT ION OF AO IN REDUCING THE STCG A T RS. 8,49,289 / - . MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LDCIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMIS SED . GROUND NO. 2. 14 . THIS GROUNDS RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 22671/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXPENSES INCURRED AND CLAIMED AS SHARE TRADING EXPENSES IN EARNING THE SHORT TERM CAPITAL GAINS. 24 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 15 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISE D BY THE REVENUE IN PARA NO. 28 TO 30 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) I S CONTAINED IN PARA NO. 30, 30.1 TO 30.3 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 30. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS OF THE LD. AR OF THEAPPELLANT ON THIS ISSUE AND THE MATERIAL AVAILABLE ON RECORD. MY OBSERVATIONS ARE AS UNDER: - 30.1. IN THIS REGARD, I AGREE WITH THE L D. AR THAT IN THE APPELLANT'S CASE, NO MATERIAL IS BROUGHT ON RECORD OR IN THE ASSESSMENT ORDER THAT THERE WAS ANY SEARCH ACTION U/S. 132 OR SURVEY U/S. 133A OF I.T. ACT. THEREFORE, THERE IS NO QUESTION OF ANY MATERIAL COLLECTED, GATHERED OR SEIZED DURING THE SEARCH/ SURVEY PROCEEDINGS FOR THE PURPOSE OF SECTION 292C OF THE I.T. ACT AS NOTED IN THE ASSESSMENT ORDER. 25 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 30.2 IT IS ALSO BROUGHT ON RECORD THAT INTEREST ON PPF AMOUNTING TO RS. 73,8031 - IS EXEMPT FROM TAX U/S. 10. SHARE TRADING EXPENSES OF RS. 30,13 6/ - INCLUDES THE SERVICE, TAX, STT DEL. CHARGES, STAMP DUTY AND OTHER CHARGES OUT OF WHICH THE APPELLANT HAS CLAIMED ONLY RS. 22,671/ - OUT OF SHORT TERM CAPITAL GAINS IN THE COMPUTATION OF INCOME. MOREOVER, THE SPECULATION LOSS OF RS. 1,01,450/ - SHOWN I TH E BALANCE SHEET IS NEITHER CLAIMED AS LOSS TO BE CARRIED FORWARD FOR FURTHER ADJUSTMENT IN SUBSEQUENT ASSESSMENT YEARS. 30.3 IN THE PRECEDING PARAGRAPHS, IT IS HELD THAT RS. 22671/ - CLAIMED AS EXPENSES AGAINST STCG IS CORRECTLY DISALLOWED BY THE AO. HOWEVE R, WITH RESPECT TO OTHER DISALLOWANCES, THE AO IS DIRECTED TO EXAMINE THE CLAIM OF THE APPELLANT AND ALLOW THOSE WHICH ARE EITHER NOT TAXABLE AS PPF OR NOT CLAIMED IN THE P & L A/C BUT DISALLOWED IN THE ASSESSMENT ORDER. THUS GROUNDS OF APPEAL NO. 4 TO 4(I II) ARE PARTLY ALLOWED. AFTER HAVING GONE THROUGH THE AFOREMENTIONED ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS MATERIAL PLACED ON RECORD AND AFTER CONSIDERING THE SUBMISSION MADE BY BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY CONSIDERED THE FACTS OF THE CASE AND CONCLUDE IN PARA NO. 30.3 OF 26 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) ITS ORDER THAT A SUM OF RS. 22,671/ - CLAIMED BY THE ASSESSEE AS EXPENSES AGAINST STCG ARE CORRECTLY DISALLOWED. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RE CORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LDCIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 4. 16 . THIS GROUNDS RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 68 , 368/ - MADE BY THE ASSESSING OFFICER ASSUMING BROKERAGE MIGHT HAVE BEEN PAID. 17 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AU THORITIES. 27 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 31 TO 34 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) I S CONTAINED IN PARA NO. 34 AND 34.1 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 34. I HAVE ALSO CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS OF THE LD AR OF THE APPELLANT. MY OBSERVATIONS ARE AS UNDER: - 34.1. AS STATED IN THE PRECEDING PARAGRAPHS THE SHARES M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. CLAIMED TO BE PURCHASED THROUGH M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. ARE FOUND TO BE MERELY ACCOMMODATION ENTRIES AND ADDITI ON/DISALLOWANCES TO THAT EFFECT HAS BEEN CONFIRMED BY THE UNDERSIGNED. IN THIS BACKGROUND, IT IS OBSERVED THAT MUKESHCHOKSI IN HIS STATEMENT REQUIRED DURING THE SEARCH PROCEEDINGS HAD CONFIRMED THAT HIS GROUP ENTITIES ARE PROVIDING ACCOMMODATION ENTRIES FO R SOME COMMISSION FROM THE BENEFICIARIES. THEREFORE, IT IS BUT LOGICAL TO ESTIMATE THE COMMISSION INCOME WITH RESPECT TO ACCOMMODATION ENTRIES RECEIVED BY THE APPELLANT @ 5% OF SHORT TERM CAPITAL GAINS OF RS. 13,67,361/ - . HENCE, IN MY OPINION, ESTIMATION O F RS. 28 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) 68,368/ - AS COMMISSION PAID FOR AVAILING ACCOMMODATION ENTRIES IS IN ORDER AND HENCE THE SAME IS CONFIRMED. THUS, GROUND OF APPEAL NO. 5 AND 5(A) ARE REJECTED. AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS MATERIAL PL ACED ON RECORD AND AFTER CONSIDERING THE SUBMI SSION MADE BY BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT SINCE WE HAVE ALREADY UPHELD THE ORDER OF LD. CIT(A) THAT THE SHARES OF M/S. PARAMOUNT CORPORATION LTD. AND M/S. SUNDARAM MULTI PAPER LTD. CLAIMED TO BE PURCHASED THROUGH M/S ALLIANCE INTERMEDIATES & NETWORK PVT. LTD. ARE MERELY ACCOMMODATION ENTRIES AND ADDITIONS /DISALLOWANCE TO THAT EFF ECT HAS ALREADY BEEN CONFIRMED. THEREFORE IN OUR CONSIDERED VIEW THAT LD. CIT(A) HAS R IGHTLY UPHELD THE ESTIMATION OF COMMISSION WITH RESPECT TO ACCOMMODATION ENTRIES @ 5% OF SHORT TERM CAPITAL GAIN. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT(A). THEREFORE, THERE ARE NO 29 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULT ANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 5. 18 . THIS GROUNDS RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 2500/ - OUT OF RS. 6247/ - ON ACCOUNT OF EXPENSES FOR EXEMPT INCOME U/S. 14A R.W. RULE 8D. MADE BY THE ASSESSING OFFICER. 19 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL P LACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 35 TO 38 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. 30 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) CIT(A) IS C ONTAINED IN PARA NO. 38 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 38. THE ABOVE SUBMISSIONS OF THE LD. AR OF THE APPELLANT HAVE BEEN CONSIDERED.AS CLAIMED BY THE APPELLANT, THE EXEMPT INCOME FROM DIVIDEND OF RS. 2,500/ - ONLY WAS EARNED DURING THE YEAR UNDER CONSIDERATION, THE AO IS DIRECTED TO RESTRICT THE ADDITION MADE U/S 14A AT RS. 2,500/ - . THUS, GROUND OF APPEAL NO. 6 AND 6(A) ARE PARTLY ALLOWED. AFTER HAVING GONE THROUGH T HE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS MATERIAL PLACED ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS CORRECTLY RESTRICTED THE ADDITION MADE U/S 14A OF THE I.T. ACT AT RS. 2,500/ - BY RELYING UPON THE ORDERS PASSED BY COORDINATE BE NCH OF HONBLE ITAT IN ITA NO. 8581/MUM/11 IN THE CASE OF SYLVEX CABLE CO. PVT. LTD VRS. DCIT WHEREIN IT WAS HELD THAT DISALLOWANCE U/S 14A R.W.R. 8D SH OULD NO T EXCEED THE DIVIDEND INCOME EARNED BY THE ASSESSEE. THEREFORE IN OUR CONSIDERED VIEW THAT LD. CI T(A) HAS RIGHTLY RESTRICTED THE ADDITION MADE U/S 14A OF I.T. ACT IN THE CASE OF ASSESSEE. 31 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LDCIT(A). THEREFORE, T HERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 6 20 . THIS GROUND IS GENERAL IN NATURE THUS REQUIRES NO SPECIFIC ADJUDICATION. ITA NO. 6582/MUM/2017 (AY 2008 - 09 ) 21 . NOW WE TAKE UP ASSESSEE S APPEAL IN ITA NO. 6582/MUM/2017 FOR AY 2008 - 09 . SINCE WE HAVE ALREADY DECIDED THE SIMILAR G ROUNDS OF APPEAL IN ITA NO. 6581 /M UM/2017 FOR AY 2007 - 08 ON MERITS. THEREFORE , FOLLOWING OUR OWN DECISION IN ITA NO. 6581 /MUM /17 , WE APPLY THE SAME FINDINGS IN THE 32 I.T.A. NO. 6581 & 6582 /MUM/201 7 PRAMOD B. AGARWAL (HUF) PRESENT APPEAL IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY WHICH IS APPLICABLE MUTATIS MUT ANDIS . 22 . IN THE NET RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEB , 2018 . SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21 . 02 .201 8 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI