OMPRAKASH B SALECHA, MUMBAI V. ITO 4(2)(1), MUMBAI

ITA 6716/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8740 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-01-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 19-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREMARANEL J
• Keywords: Income from undisclosed sources; Search and seizure; Tangible material; Accommodation entries
• Section: 143(3); 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAL LAL NEGI , JUDICIAL MEMBER ITA NO. 6716/MUM/2013 (ASSESSMENT YEAR: 2005-06) SHRI OMPRAKASH B. SALECHA VS. INCOME TAX OFFICER - 4(2)(1) B - 104, CHANDRA APARTMENTS S.V.P. ROAD, BORIVALI (W) MUMBAI 400103 ROOM NO. 644, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN ANSPS5306A APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI PREMARANEL J. DATE OF HEARING: 16.01.2017 DATE OF PRONOUNCEMENT: 18.01.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- 8, MUMBAI DATED 11.09.2013 FOR A.Y. 2005-06. 2. THE FACTS OF THE CASE, BRIEFLY STATED, ARE AS UNDER : - 2.1 THE ASSESSEE, IN BUSINESS AS WHOLESALER OF IRON AND STEEL, FILED HIS RETURN OF INCOME ON 31.03.2006 DECLARING TOTAL INCO ME OF ` 1,22,904/-. THE ASSESSING OFFICER (AO) INITIATED PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') TO REOPEN THE ASSESSMENT FOR A.Y. 2005-06 ON THE BASIS OF INFORMATION RECEIVED FROM T HE DDIT (INV), UNIT 1(4), MUMBAI VIDE LETTER DATED 07.03.2011, THAT PUR SUANT TO SEARCH UNDER SECTION 132 OF THE ACT IN THE CASE OF MAHASAGAR SEC URITIES P. LTD. GROUP IT WAS FOUND THAT, INTER ALIA, THE ASSESSEE IN THE CAS E ON HAND WAS ALSO A BENEFICIARY OF TAKING BOGUS BILLS, ENTRIES OF CAPIT AL GAINS/BOGUS PROFITS, ETC. IN CONNECTION WITH SHARE TRANSACTIONS IN THE YEAR U NDER CONSIDERATION. THE ASSESSMENT WAS REOPENED WITH THE PRIOR PERMISSION O F THE ADDL. CIT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE ON ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 2 25.03.2011. THE ASSESSMENT WAS COMPLETED UNDER SECT ION 143(3) OF THE ACT VIDE ORDER DATED 26.12.2011, WHEREIN THE ASSESS EES INCOME WAS DETERMINED AT ` 17,78,359/-, BY TAKING THE SALE PROCEEDS OF 35000 S HARES OF SACHETA METALS AMOUNTING TO ` 16,55,455/-, TRANSACTED THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. OF THE MAHASAGAR GROUP OF CONCERNS, AS UNACCOUNTED INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 26.1 2.2011 FOR A.Y. 2005-06, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT(A)-8, MUMBAI. THE LEARNED CIT(A) DISMISSED THE ASSESSEES APPEAL VIDE ORDER DATED 11.03.2011. 3. AGGRIEVED BY THE ORDER OF THE CIT(A)-8, MUMBAI DATE D 11.03.2013 FOR A.Y. 2005-06, THE ASSESSEE HAS PREFERRED THIS APPEA L RAISING THE FOLLOWING GROUNDS: - 1.1 THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN U PHOLDING THE ORDER OF THE ASSESSING PASSED U/S 143 R.W.S. 147 OF THE I NCOME TAX ACT, 1961 WITHOUT FULFILLING THE CONDITIONS NECESSA RY FOR PASSING AN ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX AC T, 1961. 1.2 THE LD. CIT(A) FAILED TO APPRECIATE THAT THE O RDER U/S 143 R.W.S. 147 WAS PASSED IN CONTRAVENTION OF THE PROVISIONS O F LAW AND WITHOUT FOLLOWING DUE PROCESS OF LAW AND HENCE THE SAME IS INVALID AND ILLEGAL AND THE SAME REQUIRED TO BE QUA SHED. 1.3 THE APPELLANT PRAYS THAT THE INVALID AND ILLEG AL ORDER PASSED U/S 143 R.W.S. 147 IN CONTRAVENTION OF THE PROVISIONS O F LAW AND WITHOUT FOLLOWING THE DUE PROCESS OF LAW BE QUASHED . WITHOUT PREJUDICE TO THE ABOVE 2.1 THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN UP HOLDING THE ORDER OF THE ASSESSING OFFICER MAKING UNJUSTIFIED AND UNTENA BLE ADDITION OF RS. 16,55,455/- WITHOUT CONSIDERING THE MERITS O F THE CASE IN A PROPER LIGHT. 2.2 THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN UP HOLDING THE ORDER OF THE ASSESSING OFFICER BY IGNORING THE FACTS ON RECO RD AND NOT PASSING A SPEAKING ORDER. 2.3 THE LD CIT(A) FAILED TO APPRECIATE THAT HAVING REGARD TO THE FACTS OF THE CASE INCLUDING THE REMAND REPORT SUBMITTED B Y THE ASSESSING OFFICER NO ADDITION CAN BE MADE TO THE DE CLARED INCOME OF THE APPELLANT AND THE ADDITION MADE BY TH E ASSESSING OFFICER IS TOTALLY UNJUSTIFIABLE AND UNTENABLE. ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 3 2.4 THE APPELLANT PRAYS THAT THE ASSESSING OFFICER BE DIRECTED TO DELETE THE UNJUSTIFIED AND UNTENABLE ADDITION OF RS . 16,55,455/- TO THE DECLARED INCOME. 3. THE APPELLANT CRAVES PERMISSION TO ADD, ALTER, A MEND OR VARY TO ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL ON OR BEF ORE THE DATE OF THE HEARING OF THE APPEAL. 4. THE HEARING OF THIS APPEAL WAS FIXED ON A NUMBER OF OCCASIONS, BUT ON ALL THESE DATES, NONE WAS PRESENT FOR THE ASSESS EE NOR WAS ANY ADJOURNMENT OF HEARING SOUGHT BY THE ASSESSEE. EVEN ISSUE OF NOTICE BY RPAD DID NOT ELICIT ANY COMPLIANCE FROM THE ASSESSE E. ON 16.01.2017 WHEN THE CASE WAS CALLED FOR HEARING, NONE WAS PRES ENT ON BEHALF OF THE ASSESSEE. HOWEVER, THE LEARNED D.R. FOR REVENUE WAS PRESENT AND READY TO ARGUE THE CASE FOR REVENUE. IN THESE CIRCUMSTANCES, AS LAID OUT ABOVE, WE ARE OF THE OPINION THAT THE ASSESSEE IS NOT INTERES TED IN PURSUING THIS APPEAL. WRITTEN SUBMISSIONS (TWO PAGES) WERE FILED ON 13.07.2015. WE, THEREFORE, PROCEED TO DISPOSE OFF THIS APPEAL WITH THE ASSISTANCE OF THE LEARNED D.R. FOR REVENUE AND THE MATERIAL ON RECORD . 5. GROUND NOS. 1.1 TO 1.3 VALIDITY OF THE ORDER OF A SSESSMENT PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. 5.1 IN THESE GROUNDS, THE ASSESSEE CONTENDS THAT TH E LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF ASSESSMENT PASSED U NDER SECTION 143(3) R.W.S. 147 OF THE ACT WHICH WAS PASSED WITHOUT FOLL OWING THE PROVISIONS OF LAW AND THEREFORE THE ORDER OF ASSESSMENT IS BEING INVALID IS TO BE QUASHED. IN WRITTEN SUBMISSIONS, FILED ON 13.07.2015, THE AS SESSEE CONTENDS AS UNDER: - 1. MY ASSESSMENT WAS RE-OPENED U/S 147 VIDE NOTIC E U/S 148 DT. 25/03/2011. MY TAX REPRESENTATIVES REQUESTED FOR RE ASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT AND OPPOR TUNITY TO RAISE OBJECTIONS AGAINST THE RE-OPENING OF THE ASSESSMENT WHICH WAS DENIED TO ME. NO NOTICE U/S 143(2) WAS ISSUED TO ME BEFORE COMMENCEMENT OF ASSESSMENT PROCEEDINGS. HENCE, AS P ER THE FOLLOWING JUDGMENTS OF THE HON. SUPREME COURT AND O THER APPELLATE AUTHORITIES THE ASSESSMENT PASSED U/S 143(3) R.W.S. 147 IS INVALID GKN DRIVESHAFTS (INDIA) LTD V. ITO 259 ITR 19 (SC) K. S. SURESH V. DCIT 279 ITR 61 (MAD) SMT. KAMLESH SHARMA V. B. L. MEENA, ITO 287 ITR 337 (DEL). ITO V. SMT. SUKHINI P. MODI 295 ITR 169 ITAT, AHMED ABAD CIT V. C. PALANIAPPAN 284 ITR 257 (MAD) ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 4 5.2 PER CONTRA, THE LEARNED D.R. FOR REVENUE SUBMIT S THAT THIS VERY SAME GROUND WAS RAISED BY THE ASSESSEE BEFORE THE LEARNE D CIT(A) AND WAS DISMISSED. IT IS CONTENDED THAT EXCEPT FOR MAKING T HE ABOVE AVERMENTS, NO MATERIAL EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO CONTROVERT THE FINDING OF THE LEARNED CIT(A) IN THE IMPUGNED O RDER, UPHOLDING THE VALIDITY OF PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT AND OF THE RESULTANT ORDER OF ASSESSMENT PASSED UNDER SECTION 143(3) R.W.S 147 OF THE ACT DATED 26.12.2011. THE LEARNED D.R. FOR REVENUE FURTHER CONTENDED THAT THE ASSESSEES AVERMENTS THAT THE REASONS RECORDED FOR INITIATION OF ASSESSMENT PROCEEDINGS, REQUESTED FOR BY THE ASSESS EE, WERE NOT GIVEN TO HIM BY THE AO FOR RAISING OBJECTIONS TO THE REOPENING O F ASSESSMENT, IS PATENTLY FALSE, AS THE DETAILS ON RECORD SHOW THAT SUCH A RE QUEST WAS MADE NOT BEFORE THE AO, BUT ONLY BEFORE THE LEARNED CIT(A) IN APPEL LATE PROCEEDINGS VIDE LETTER DATED 13.01.2013. ALL THE JUDICIAL PRONOUNCEMENTS C ITED BY THE ASSESSEE (SUPRA) WERE ALREADY CITED BY THE ASSESSEE AND HAVE ALSO BEEN CONSIDERED BY THE LEARNED CIT(A) WHILE DISPOSING OFF THE APPEAL. IN VIEW OF THE ABOVE, THERE BEING NO MERIT IN THE ASSESSEES CLAIM, THIS GROUND IS TO BE REJECTED. 5.3.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AN D PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIN D FROM A PERUSAL OF THE IMPUGNED ORDER, THAT THE LEARNED CIT(A) AFTER CONSI DERING THE SUBMISSIONS OF THE ASSESSEE VIDE LETTERS DATED 06.11.2012, 23.0 1.2013 AND 28.01.2013, THE REMAND REPORT OF THE AO DATED 06.02.2013 DISMIS SED THE ASSESSEES APPEAL ON THESE GROUNDS HOLDING AS UNDER AT PARAS 2 .2 AND 2.3 OF THE IMPUGNED ORDER: - 2.2 DURING THE APPELLATE PROCEEDINGS, THE APPELLAN T FILLED SUBMISSIONS AND CHALLENGED THE VALIDITY OF INITIATI ON OF PROCEEDINGS U/S. 147 OF THE ACT ON THE GROUND THAT THERE WAS AB SOLUTELY NO MATERIAL ON RECORD OF THE ASSESSING OFFICER THAT TH E INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT. THE NOTICE U/S. 1 48 WAS ISSUED MERELY ON THE BASIS OF SOME VAGUE INFORMATION RECEI VED FROM THE DDIT (INV), UNIT-1(4), MUMBAI AND THAT THE ASSESSING OFF ICER HAS TOTALLY FAILED TO PRODUCE ANY EVIDENCE WHATSOEVER REGARDING CONCEALMENT OF INCOME BY THE APPELLANT. 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE GONE THROUGH THE RECORDS AND THE CONTENTION OF THE APPELLANT I FIND THAT THE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT PROCEEDINGS BAS ED ON THE ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 5 TANGIBLE MATERIAL WHICH WAS OBTAINED DURING THE SEA RCH & SEIZURE OPERATION IN THE CASE OF M/S MAHASAGAR SECURITIES P VT. LTD IT IS A MATTER OF RECORD THAT M/S MAHASAGAR SECURITIES PVT. LTD AND ITS GROUP OF COMPANIES WERE ENGAGED IN FRAUDULENT BILLING ACT IVITIES AND WERE IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT/ LOSS SHORT TERM/LONG TERM CAPITAL GAINS/LOSS SHARE APPLICATION MONEY, CO MMODITIES PROFIT/LOSS ON COMMODITY TRADING (THROUGH MCX) THER EFORE TO SAY THAT NO TANGIBLE MATERIAL EXISTS FOR REOPENING OF THE AS SESSMENT IS NOT A CORRECT STATEMENT OF FACT. IT IS ALSO A MATTER OF F ACT THAT THE APPELLANT HAD SOLD 35,000 SHARES OF SACHETA METALS TO M/S ALL IANCE INTERMEDIARIES & NETWORK PVT. LTD MUMBAI THE NUMBER OF SHARES SOLD AND THE AMOUNT OF SALE PRICE MATCHES WITH THE BROKE RS NOTE AND BANK STATEMENT SUBMITTED BY THE APPELLANT THEREFORE, THE RE IS SUFFICIENT EVIDENCE BEFORE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. THERE IS NO MERIT IN THE CONTENTION OF THE AUTHORISED REP RESENTATIVE OF THE APPELLANT AND THE DECISION OF THE ASSESSING OFFICER IS ACCORDINGLY UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 5.3.2 TAKING INTO CONSIDERATION THE FINDINGS OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER AND THE MATERIAL ON RECORD, WE ARE O F THE OPINION THAT APART FROM RAISING GROUNDS AND MAKING AVERMENTS (SU PRA), NO MATERIAL EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) IN UPHOLDING THE VAL IDITY OF THE AOS ACTION IN REOPENING OF THE ASSESSMENT FOR A.Y. 2005-06. IN TH AT VIEW OF THE MATTER, WE DISMISS THE GROUND RAISED BY THE ASSESSEE. 6. GROUND NOS. 2.1 TO 2.4 ADDITION OF ` `` ` 16,55,455/- 6.1 IN THESE GROUNDS, THE ASSESSEE ASSAILS THE IMPU GNED ORDER OF THE LEARNED CIT(A) FOR UPHOLDING THE ADDITION OF ` 16,55,455/- WITHOUT CONSIDERING THE MERITS OF THE CASE IN PROPER LIGHT SINCE THE ADDITION IS UNJUSTIFIABLE AND UNTENABLE. IN WRITTEN SUBMISSIONS FILED ON 13.07.2015, THE ASSESSEE FURTHER CONTENDS AS UNDER: - 2. DURING THE YEAR UNDER CONSIDERATION I HAD PURC HASED 35000 SHARES OF SUCHETA METALS LTD A LISTED COMPANY FOR A CONSIDERATION OF RS.16,49,957/- THROUGH SUNCHAN SECURITIES AS PER CO PY OF THE CONTRACT CUM BILL DT. 28/3/2005. THE SAID SHARES WE RE SOLD THROUGH M/S ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD FO R A CONSIDERATION OF RS.1384319/- VIDE BILL DT. 21/3/2005. THEREBY I HAD INCURRED A LOSS OF RS.265638/- IN THE TRANSACTION OF PURCHASE AND SALE. THESE PURCHASE AND SALE WAS RECORDED IN MY BOOKS OF ACCOU NTS AND THE RESPECTIVE ACCOUNTS OF THE BROKERS ARE ALSO REFLECT ED IN MY BALANCE SHEET FILED WITH MY RETURN OF INCOME. THESE FACTS H AVE BEEN ACCEPTED BY THE ASSESSING OFFICER. THERE IS NO DISPUTE REGAR DING FACTS. ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 6 THE REASON FOR THE RE-OPENING WAS THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT, 1961 WAS CONDUCTED IN THE CASE OF M/S MAHASAGAR SECURITIES PVT. LTD AND IT'S RELATED GROU P OF 34 ODD COMPANIES. ACCORDING TO THE STATEMENT OF THE DIRECT OR OF THE COMPANY MR. MUKESH CHOKSI, THE COMPANIES WERE ENGAGED IN FR AUDULENT BILLING ACTIVITIES AND IN BUSINESS OF PROVIDING BOGUS SPECU LATION PROFIT/LOSS IN SHARES AND COMMODITIES TO PERSONS. IF THIS IS THE C ASE THEN ONLY THE LOSS OF RS. 265638/- WHICH I HAVE CLAIMED CAN BE DI SALLOWED. HOW CAN THE ENTIRE SALE PROCEEDS OF RS.16,55,455/- BE TREAT ED AS MY INCOME. IN THE REMAND REPORT THE ASSESSING OFFICER HAS CLEARLY CONFIRMED THAT I HAD PURCHASED 35000 SHARES ON 28/03/2005 FOR RS.16, 36,250/- AND SOLD THE SAME ON 21/03/2005 FOR RS. 1391250/-. THIS FACT IS RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE, WHAT HAS BEEN CLAIMED IS ONLY LOSS OF RS.265638/- WHICH IF IT CAN BE PROVED THAT THE ABOVE ENTRIES ARE ACCOMMODATION ENTRIES, CAN BE DISALLOWED. THE A SSESSING OFFICER HAS NOT BEEN ABLE TO PROVE WITH ANY EVIDENCE WHATSO EVER THAT THE PURCHASE AND SALE OF SHARES MADE BY ME WERE ACCOMMO DATION ENTRIES. THERE IS NO EVIDENCE TO PROVE THAT I HAVE INDULGED IN ACCOMMODATION ENTRIES. THE COPY OF THE STATEMENT RE CORDED HAS NOT BEEN FURNISHED TO ME NOR HAVE I BEEN GIVEN OPPORTUN ITY TO FURNISH DETAILS AND CROSS EXAMINE THE PARTIES WHO HAVE GIVE N STATEMENT. NO EVIDENCE HAS BEEN LED BY THE ASSESSING OFFICER TO S HOW THAT I HAVE PAID OR RECEIVED CASH FROM THE ABOVE PARTIES. THE L D. CIT(A) HAS NOT CONSIDERED THE ABOVE FACTS AND THE SUBMISSIONS MADE BY MY TAX REPRESENTATIVE BEFORE HIM. HE HAS MERELY PASSED A N ON-SPEAKING ORDER REJECTING MY BOTH GROUNDS OF APPEAL WITH SWEE PING STATEMENTS. I HAVE NOT INDULGED IN ACCOMMODATION ENTRIES AND TH E AMOUNT OF LOSS CLAIMED BY ME IN TRADING IN SHARES IS ONLY RS. 2656 38/-. 6.2 PER CONTRA, THE LEARNED D.R. SUBMITTED THAT ALL SUBMISSIONS PUT FORTH BY THE ASSESSEE HAVE ALREADY BEEN CONSIDERED BY THE LEARNED CIT(A) INCLUDING THE AOS REMAND REPORT. IT IS SUBMITTED T HAT SINCE THE AVERMENTS BY THE ASSESSEE BEFORE THE TRIBUNAL DO NOT CONTROVE RT THE FINDINGS OF THE AUTHORITIES BELOW, THE ASSESSEES GROUNDS ON THIS I SSUE BE DISMISSED. 6.3.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AN D PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUD ING THE ASSESSEES SUBMISSIONS. WE FIND FROM A PERUSAL OF THE IMPUGNED ORDER THAT THE LEARNED CIT(A) AFTER CONSIDERING THE ASSESSEES SUB MISSIONS VIDE LETTERS DATED 6.11.2012, 23.01.2013 AND 28.01.2013 AND THE AOS REMAND REPORT DATED 06.02.2013 DISMISSED THE ASSESSEES APPEAL ON THESE GROUNDS HOLDING AS UNDER AT PARAS 3.1 TO 3.4 OF THE IMPUGNE D ORDER: - 3.1 THE FACTS OF THE CASE ARE THAT AN INFORMATION W AS RECEIVED FROM DDIT (INV),UNIT-1(4), MUMBAI THAT A SEARCH & SEIZUR E ACTION U/S. 132 ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 7 OF THE ACT WAS TAKEN AGAINST M/S. MAHASAGAR SECURIT IES PVT. LD. (NOW ALAG SECURITIES PVT. LTD.) ON 25/11/2009. DURI NG THE SEARCH IT WAS REVEALED THAT M/S. MAHASAGAR SECURITIES PVT. LT D. AND ITS RELATED GROUP OF 34 ODD COMPANIES WERE ENGAGED IN FRAUDULEN T BILLING ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS S PECULATION PROFIT/LOSS SHORT TERM/LONG TERM CAPITAL GAIN/LOSS, SHARE APPLICATION MONEY, COMMODITIES PROFIT/LOSS ON COMMODITY TRADING . THE DDIT (INV), UNIT-1(4), MUMBAI HAS ALSO FORWARDED EXTRACT OF COM PUTER DATA SEIZED FROM THE SAID APPELLANT PREMISES WHICH CONTAINS A L IST OF BENEFICIARIES OF SUCH TRANSACTIONS WHICH INCLUDES THE NAME OF SHR I OMPRAKASH B SALECHA WHO HAD ENTERED INTO TRANSACTIONS OF SALE O F SHARES FOR THE PERIOD RELATING TO AY 2005-06 TO THE TUNE OF RS 165 5455/-AS UNDER - NAME OF SCRIP SALE QUANTITY PURCHASE QUANTITY SACHETA METALS 16,55,455 35000 0 0 3.1.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT WAS ASKED VIDE LETTER. DATED 19/7/2011 TO EXPLAIN THE T RANSACTIONS AS APPEARING IN THE BOOKS OF M/S ALLIANCE INTERMEDIARI ES & NET WORK PVT. LTD FOR THE PERIOD 1/4/2004 TO 31/3/2005 OBTAI NED BY THE DDIT (LNV) DURING THE SEARCH OPERATION THE APPELLANT MAD E SUBMISSIONS WHICH WAS CONSIDERED BY THE ASSESSING OFFICER BUT N OT ACCEPTED AS THE ASSESSING OFFICER OBSERVED THAT IN THE STATEMEN T ON OATH RECORDED OF MR. MUKESH CHOKSI, DIRECTOR ON 25/11/2009, MR. C HOKSI ADMITTED THAT ACCOMMODATION BILLS FOR SPECULATE PROFITS AND DELIVERY PROFITS WERE ISSUED FOR CURRENT YEAR AS WELL AS FOR EARLIER YEARS. ALSO IN REPLY, THE APPELLANT FILED BROKERS NOTES AND BANK STATEMEN T BILLS IN RESPECT OF PURCHASE AND SALE OF SHARES AND IT WAS NOTICED T HAT THERE WAS NO DEALING WITH THE BROKERS MENTIONED IN THE LETTER BU T THERE WERE DEALINGS WITH OTHER BROKERS. THERE WERE SERIES OF T RANSACTIONS OF PURCHASES AND SALES WHICH WERE REFLECTED IN THE APP ELLANT'S BOOKS. HOWEVER, THE AO FOUND THAT THE APPELLANT HAD SOLD 3 5000 SHARES OF SUCHETA METALS THROUGH M/S ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. THE NUMBER OF SHARES SOLD AND THE AMOUNT OF SA LE PRICE ALSO MATCHED WITH THE BROKER'S NOTES AND BANK STATEMENT. THE AO FURTHER NOTICED THE NAME OF THE APPELLANT AMONG OTHER BENEF ICIARIES IS APPEARING IN THE LIST OF BENEFICIARIES OF SUCH BOGU S TRANSACTIONS FROM THE COMPUTER DATA SEIZED BY THE DDIT (INV), UNIT-1( 4), MUMBAI. THE AO FURTHER NOTICED THAT THESE TRANSACTIONS WERE NOT DO NE THROUGH THE STOCK EXCHANGE BUT THE BILLS SHOW THEM TO BE SO AND APPEAR TO BE GENUINE. MOREOVER, IN THE STATEMENT RECORDED ON 25/ 11/2011 WHILE GIVING ANSWER TO QUESTION REGARDING THE MODUS OPERA NDI, SHRI MUKESH CHOKSI HAS STATED THAT 'I RUN VARIOUS COMPANIES WHI CH ARE SHOWN AS EITHER BROKER OR DEALER TO A STOCK EXCHANGE BUT ALL THESE CONCERNS ARE PRESENTLY DEFAULTER AND NONE OF THEM ARE ENTITLED T O OPERATE ON ANY OF THE STOCK EXCHANGE. IT IS FURTHER CONFESSED BY MR. MUKESH CHOKSI THAT THEY HAVE VARIOUS FRANCHISES WHO ARE ALSO CALLED 'A GENTS OR INTERMEDIATE'.' HE ALSO STATED THAT THEY GIVE SIGNE D BLANK CHEQUE BOOKS TO THEIR FRANCHISE/AGENTS TO OPERATE A PARTIC ULAR BANK ACCOUNT ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 8 OF PARTICULAR BRANCH. ALL THE DEPOSITS WHETHER IN C ASH OR CHEQUES AND THE WITHDRAWALS ARE MADE BY SUCH FRANCHISES/AGENTS. IF A PARTY WANTS TO CARRY OUT A BIG TRANSACTION TO CLAIM BOGUS PROFITS THEY DEPOSIT THE AMOUNT IN CASH OR CHEQUE IN THE ACCOUNT AND THEY GET THEIR CHEQUE CLEARED. MOREOVER, THE ASSESSING OFFICER ALS O OBSERVED THAT DURING SEARCH OPERATIONS IT WAS NOTICED THAT THERE WAS NO GENUINE BUSINESS BEING CARRIED OUT BY ANY OF THE CONCERNS A PPEARING IN THE LIST FOR PROVIDING LONG TERM CAPITAL GAINS/LOSS, SPECULA TION PROFIT OR LOSS. IN THE LIGHT OF THE ABOVE REASONS, THE ASSESSING OFFIC ER TREATED THE AMOUNT OF RS.16,55,455/- BEING SALE PROCEEDS OF VAR IOUS SHARES AS PER LEDGER ACCOUNT AS UNACCOUNTED INCOME OF THE APP ELLANT FOR THE YEAR UNDER CONSIDERATION AND TAXED. 3.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL OF THE APPELLANT VIDE THEIR LETTER DATED 6 TH NOVEMBER, 2012 HAS INTER-ALIA STATED AS UNDER :- 'DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD PURCHASED 35000 SHARES OF SUCHETA METALS LTD., A LI STED COMPANY FOR A CONSIDERATION OF RS.16,49,957/- THROU GH SUNCHAN SECURITIES AS PER COPY OF THE CONTRACT CUM BILL ATTACHED HEREWITH DATED 28/3/2005. THE SAID SHARES WERE SOLD THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD FOR A CONSIDERATION OF RS.13,84,319 VIDE BILL DATED 21/3/ 2005. THEREBY HE HAD INCURRED A LOSS OF RS.2,65,638/- IN THE TRANSACTION OF PURCHASE AND SALE. THESE PURCHASE AN D SALE WAS RECORDED IN THE BOOKS OF ACCOUNTS AND THE RESPE CTIVE ACCOUNTS OF THE BROKERS ARE ALSO REFLECTED IN THE B ALANCE SHEET OF THE APPELLANT. THESE FACTS HAVE BEEN ACCEPTED BY THE AO. THERE IS NO DISPUTE REGARDING FACTS. THE ASSESSMENT HAS BEEN REOPENED BY THE AO. THE REA SON FOR THE REOPENING WAS THAT A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED GROUP OF 34 OD D COMPANIES. ACCORDING TO THE STATEMENT OF THE DIRECTOR OF THE C OMPANY MR. MUKESH CHOKSI, THE COMPANIES WERE ENGAGED IN FRAUDU LENT BILLING ACTIVITIES AND IN BUSINESS OF PROVIDING BOG US SPECULATION PROFIT/LOSS IN SHARES AND COMMODITIES TO PERSONS. A CCORDING TO THE STATEMENT IF A PROFIT OF RS.7,00,000/- IS TO BE SHOWN, CASH OF RS.100000 IS TAKEN AND A CONTRACT OF APPROXIMATE LY RS.1,00,000/- IS MADE AND CHEQUE IS ISSUED. THEY RE CEIVE COMMISSION OF 0.15% AND THEY OFFER THE INCOME ON TH E BASIS OF SUCH COMMISSION. NOWHERE IS IT STATED THAT THE SAID COMPANY HAD CARRIED OUT SUCH TYPE OF TRANSACTION THE APPELL ANT. IT WAS FOUND FROM THE COMPUTER DATA THAT THE APPELLANT HAD SOLD 35000 SHARES OF SUCHETA METALS FOR RS. 16,55,455/- THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. HE NCE, ACCORDING TO THE AO THIS AMOUNT IS UNDISCLOSED INCO ME OF THE APPELLANT. THE AO PROCEEDED TO COMPLETE THE ASSESSM ENT BY INCLUDING THE AMOUNT IN THE DECLARED INCOME OF THE APPELLANT. ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 9 THE AO HAS COMPLETELY IGNORED THE FACT THAT THE APP ELLANT CANNOT SELL WHAT HE HAS NOT PURCHASED. HE HAS COMPL ETELY IGNORED THE PURCHASE OF SHARES. THE FIGURE MENTIONE D BY HIM IS ALSO NOT CORRECT. THE SHARES WERE SOLD FOR RS. 13,8 4,319/- AS PER CONTRACT NOTE AND NOT RS. 16,55,455/-. NEITHER THE COPY OF THE STATEMENT RECORDED OF MR. MUKESH CHOKSI WAS FUR NISHED TO THE APPELLANT NOR THE COPY OF THE CONTRACT NOTE SHO WING CONSIDERATION OF RS.16,55,455/- WAS PRODUCED BY THE AO BEFORE THE APPELLANT. MR. MUKESH CHOKSI HAS NOT STA TED ANYWHERE AS PER INFORMATION GIVE BY THE AO THAT HE HAS CARRIED ON ANY SUCH TRANSACTION WITH THE APPELLANT. THE AO HAS MERELY ACTED ON VAGUE INFORMATION AND IGNORING THE FACTS O N RECORD AND MADE ADDITION OF THE ENTIRE AMOUNT OF RS.16,55, 455/- IN THE STATEMENT OF MR. MUKESH CHOKSI IT IS CLEARLY ME NTIONED THAT ONLY PROFIT OR LOSS WAS ARRANGED FOR. IN THIS CASE, ENTIRE SALES PROCEEDS HAVE BEEN TAKEN AS INCOME. SUCH ADDITION T O INCOME CANNOT BE SUSTAINED. IT AT ALL ONLY THE PROFIT AND LOSS ARRANGED FOR CAN BE CONSIDERED AND NOT THE SALE PROCEEDS OF SHARES. THE AO HAS MERELY RELIED ON INCORRECT INFORMATION RECEI VED BY HIM WITHOUT ANY PROOF OR EVIDENCE TO JUSTIFY HIS ADDITI ON.' 3.3 IN THIS CASE, DURING APPELLATE PROCEEDINGS, A R EMAND REPORT WAS ALSO CALLED FROM THE ASSESSING OFFICER VIDE THIS OF FICE LETTER DATED 29/1/2013. IN THE REMAND REPORT DATED 6/2/2013, THE ASSESSING OFFICER AFTER EXAMINING THE ISSUE HAS REPORTED AS U NDER 'IN THIS CASE, THE ASSESSMENT WAS PASSED U/S. 143(3 ) RWS 147 ON 26.12.2011. THE ASSESSMENT WAS REOPENED DUE TO INFORMATION RECEIVED FROM DDIT (INV) UNIT-1(4) VIDE LETTER NO. DDIT(INV)/U-1(4)/MAHASAGAR INFO SHARING/2010-11, DT D. 07.03.2011 THAT A SEARCH AND SEIZURE ACTION U/S. 13 2 OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. MAHASAGAR SECURIT IES PVT. LTD. (NOW M/S. ALAG SECURITIES PVT. LTD.) ON 25.11. 2009. THE DDIT (INV), UNIT-1(4), MUMBAI HAD ALSO FORWARDED TH E EXTRACT OF COMPUTER DATA SEIZED FROM THE SAID ASSESSEE'S PREMI SES WHICH CONTAINS LIST OF BENEFICIARIES OF SUCH TRANSACTIONS WHICH INCLUDES THE NAME OF SHRI ORNPRAKASH B. SALECHA WHO HAD ENTERED INTO TRANSACTIONS FOR SALE OF SHARES FOR TH E PERIOD RELATING TO A.Y. 2005-06 TO THE TUNE OF RS. 16,55,4 55/-. AS PER THE INFORMATION CONTAINED IN THE LETTER DT. 07.03.2 011, THE ASSESSES HAD SOLD 35000 SHARES OF SUCHETA METALS TH ROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., M UMBAI. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS MADE A SUBMISSION VIDE LETTER DT. 28.01.2013 STATIN G THAT THE ADDITION OF RS,16,55,455/- IS BASED ON THE ALLEGED SALE TRANSACTION OF 35000 SHARES OF SUCHETA METALS THROU GH BROKER M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. TH E ASSESSEE HAS SUBMITTED BROKERS NOTES FOR PURCHASE AND SALE O F 35000 SHARES. ON PERUSAL OF THE BROKER NOTES SUBMITTED BY THE ASSESSEE, THE FOLLOWING FACTS ARE REVEALED :- ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 10 1. THE DETAILS OF PURCHASE &, SALE CONTRACT NOTES PERTAINING TO SHARES OF SUCHETA METALS TRADED THROUGH THE BROK ER SUNCHAN SECURITIES LTD. IS AS FOLLOWS: - QUANTITY PURCHASED DATE OF PURCHASE RATE 5000 SHARES 04.03.2005 31.00 4500 SHARES 10.03.2005 30.78 750 SHARES 22.03.2005 40.32 3500 SHARES 28.03.2005 46.75 1500 SHARES 29.03.2005 49-35 27000 SHARES 30.03.2005 43.80 1300 SHARES 28.04.2005 (NOT PERTAINING TO AY -2005-06 39.94 371 SHARES 04.04.2005 (NOT PERTAINING TO AY -2005-06 37.50 QUANTITY SOLD DATE OF SALE RATE 4000 SHARES 22.06.2005 (NOT PERTAINING TO AY -2005-06 23.26 3500 SHARES 14.06.2005 (NOT PERTAINING TO AY -2005-06 22.55 2421 SHARES 14.06.2005 (NOT PERTAINING TO AY -2005-06 23.80 8300 SHARES 09.08.2005 (NOT PERTAINING TO AY -2005-06 31.20 10700 SHARES 09.08.2005 (NOT PERTAINING TO AY -2005-06 30.88 4000 SHARES 08.08.2005 (NOT PERTAINING TO AY -2005-06 30.58 300 SHARES 02.02.2005 (NOT PERTAINING TO AY -2005-06 11.97 THE DETAILS OF SALE CONTRACT NOTES PERTAINING TO SH ARES OF SUCHETA METALS TRADED THROUGH BROKER M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. QUANTITY SOLD DATE OF SALE RATE 27600 SHARES 05.08.2005 (NOT PERTAINING TO AY -2005-06 30.15 35000 SHARES 21.03.2005 39.75 IT IS NOTICED THAT IN THE CONTRACT NOTES OF M/S. AL LIANCE INTERMEDIARIES & NETWORK PVT. LTD., THE NAME OF MR. OMPRAKASH B. SALECHA IS TYPED AS MR OM SALECHA ON THE CONTRACT NOTES. THE ADDRESS MENTIONED IS RANJIT STUDIO, DADAR-(E), AND PAN / G1R NO IS BLANK (COPY ENCLOSED-ANNEXURE-1). THE NOTE ON ACTIVITIES OF COMPANIES OF THE MAHASAGA R GROUP OF COMPANIES FORWARDED BY THE DDIT(INV), UNIT-1(4), MU MBAI, AS PER PARA 7 IS QUOTED BELOW :- ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 11 ' BOGUS SALES INVOICES : THE COMPANIES OF THE MAHASAGAR GROUP OF COMPANIES ARE ALSO ISSUING BOGUS SALES INV OICES TO VARIOUS CONCERNS. THE MODUS IS THAT DETAILS OF THE GOODS TO BE INCLUDED IN THE SALES INVOICES IS PROVIDED BY THE P ARTY THROUGH HIS AGENT'. SOME OF THESE AGENTS ARE COMMON AS THE ONES WHO REFER CLIENTS FOR BOGUS SHARE TRANSACTIONS. CHEQUE IS RECEIVED FROM THE PARTY BY THE AGENT OR BY THE GROUP COMPANI ES. THESE ARE DEPOSITED IN BANK ACCOUNTS, THEN CASH RECEIVED FROM THE OTHER CLIENTS FOR GIVING ENTRY TO THEM ARE RETURNED BACK TO THESE ALLEGED PURCHASERS. COMMISSION RATES TO AGENTS/DIRE CT CLIENTS DEFER FROM PERSON TO PERSON AND ACCORDINGLY TO THE TYPE OF BILL.' AS PER THE COMPUTER SHEET OF M/S. ALLIANCE INTERMED IARIES & NETWORK PVT. LTD., PAGE 994 & 995 DTD. 10.01.2008 S EIZED DURING THE SEARCH PROCEEDINGS (COPY ENCLOSED-ANNEXURE-I1), THE CLIENT MR OMPRAKASH B. SALECHA HAS NET CREDIT OF RS . 16,53,746.08 (RS. 16,55,455 1,708.92). THE DATES OF THESE SALES ARE 28.3.2005, 29.3.2005 AND 30.3.2005. DURING THE SEARCH PROCEEDING, IN THE STATEMENT OF S HRI MUKESH CHOKSHI, DIRECTOR OF ALLIANCE INTERMEDIARIES & NETW ORK PVT. LTD. HAS EXPLAINED THE MODUS OPERANDI OF THE COMPANY AND 0.3 AND Q.10 ARE AS FOLLOWS :- 'Q.3) PLEASE STATE IN DETAILS WHAT YOUR BUSINESS AC TIVITY IS AND WHAT ARE THE CONCERNS IN WHICH YOU ARE DIRECTOR ALO NGWITH COMPLETE ADDRESSES AND PAN OF EACH CONCERN. ANS.- GENERALLY, WHO HAVE CASH IN HAND AND UNACCOUN TED INCOME ASK FOR ENTRIES TO MAKE ACCOMMODATION IN THE IR BOOKS OF ACCOUNTS. I PROVIDE PROFIT AND LOSS ENTRY THROUGH M Y VARIOUS COMPANIES SEEKING SUCH ENTRIES. THE FOLLOWING ARE T HE NAMES OF MY COMPANIES IN WHICH I AM DIRECTOR ALONGWITH JAYES H SAMPAT, N. M. MISHRA BUILDING, OLD NAGARDAS ROAD, A NDHENI (E), MUMBAI-93. ALL MY COMPANIES OPERATE FROM THE S AME PREMISES AT BLOCK 1-1, SRI SADASHIV SOCIETY, 6 TH ROAD, SANTACRUZ-(EAST). 1. M/S. MIHIR AGENCIES PVT. LTD. 2. M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD 3. M/S. ALPHA CHEMIE TRADE AGENCIES F'VT. LTD. 4. WS. TALENT INFOWAY LTD. 5. M/S. BUNIYAD CHEMICALS LTD. 6. M/S. GOLDSTAR FIN VEST PVT. LTD. 7. M/S. RICHMOND SECURITIES PVT. LTD. (NOW KNOWN AS M/S. MAHASAGAR SECURITIES PVT. LTD.) 8. M/S. KAYCEE SHARE BROKING PVT. LTD. Q.10) WHAT DOES 'OTE' TRANSACTION STANDS FOR? ANS.- MY COMPANY ALSO ISSUES ACCOMMODATION BILLS FO R ONE SIDE TRANSACTION, I.E. EITHER FOR PURCHASES OR FOR SALES . WHEN PURCHASE BILLS ARE ISSUED, THE PARTIES GIVE ME CHEQ UES AND ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 12 RETURN THE CASH AFTER DEDUCTING MY COMMISSION. WHEN I ISSUE SALES BILLS, THE ASSESSEE GIVES ME CASH AND I RETUR N HIM THE CORRESPONDING CHEQUE.' FROM THE ABOVE FACTS, IT IS CLEAR THAT THIS SALES B ILL BEING BOGUS IS AN ACCOMMODATION BILL AS IN QUESTION NO. 40, THE DIRECTOR, MR. MUKESH CHOKSHI HAS MENTIONED THAT M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD WAS BANNED BY SEB I FROM TRADING IN 2008. THE COPY OF THE INFORMATION FORWAR DED BY THE DD1T (INV.) UNIT-1(4), MUMBAI IS ALSO BEING FORWARD ED HEREWITH (COPY ENCLOSED, ANNEXURE-III). IN VIEW OF THE ABOVE, YOU ARE KINDLY REQUESTED NOT TO CONSIDER THE SUBMISSIONS MADE BY THE ASSESSEE AND DECIDE THE APPEAL ON THE FACTS AND MERITS OF THE CASE.' 3.3.1 THE REMAND REPORT WAS FORWARDED TO THE APPELL ANT WHEREIN THE APPELLANT VIDE HIS LETTER DATED 21/01/2013 MADE FOL LOWING SUBMISSIONS WHICH IS REPRODUCED AS UNDER: THE REMAND REPORT CLEARLY POINTS OUT THE FACT THAT 35000 SHARES OF SUCTIETA METALS WERE PURCHASED FOR RS. 16 ,36,250/- ON 28.03.2005 AND SOLD ON 21.3.2005 FOR RS. 13,91,2 50/- RESULTING IN LOSS OF RS. 2,45,000/-. A PERUSAL OF T HE BROKER'S PURCHASE AND SALE NOTES WILL INDICATE THAT AN AVERA GE SALE AND PURCHASE RATE IS MENTIONED BY THE AG AND HE HAS ALS O NOT CONSIDERED THE BROKERAGE AND OTHER CHARGES. IF THE CORRECT FIGURES ARE TAKEN, THEN THE TOTAL LOSS IS RS. 2,65, 638/-. THE FACT THAT THE APPELLANT HAS INCURRED LOSS IN THE TRANSAC TION HAS NOW BEEN CONFIRMED AND ACCEPTED BY THE AO. THE AO IN HER REMAND REPORT HAS STATED THAT THE DDI T (INV), UNIT-1(4) HAD FORWARDED THE EXTRACT OF COMPUTER DAT A WHICH ALLEGEDLY CONTAINS LIST OF BENEFICIARIES INCLUDING THE NAME OF THE APPELLANT. MR. MUKESH CHOKSHI DIRECTOR OF MIS. ALLI ANCE INTERMEDIARIES & NETWORK PVT. LID. IN HIS STATEMENT HAS NOWHERE MENTIONED THAT THE APPELLANT WAS ONE OF THE BENEFICIARIES. JUST BECAUSE THE ACCOUNT OF THE APPE LLANT IS APPEARING IN THE BOOKS OF ACCOUNTS, THE AO HAS ASSU MED THAT HE IS ONE OF THE BENEFICIARIES, MR. MUKESH CHOKSI H AS ONLY STATED THAT GENERALLY PEOPLE WHO HAVE CASH ON HAND AND UNACCOUNTED INCOME ASK FOR ENTRIES TO ACCOMMODATE I N THEIR BOOKS OF ACCOUNTS. HE HAS NOT STATED THAT THE APPEL LANT WAS ONE OF SUCH PERSONS. HE MAY BE PROVIDING ACCOMMODAT ING ENTRIES TO SOME PEOPLE. THIS DOES NOT IMPLY THAT TH E APPELLANT WAS ONE OF THEM. THE APPELLANT HAS PROVED WITH HIS RECORDS THAT HE HAS ENTERED INTO GENUINE PURCHASE AND SALE TRANSACTION IN WHICH HE HAS INCURRED LOSS THE DETAILS GIVEN BY THE APPELLANT MATCH WITH THE RECORDS MAINTAINED BY THE CONCERNED PARTIES. HENCE THE SHARE TRADING LOSS INCURRED BY THE APPELL ANT IS GENUINE. IL I. ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 13 IT IS CLEAR FROM THE STATEMENT GIVEN BY MR. MUKESH CHOKSI THAT THEY USED TO PROVIDE PROFIT AND LOSS ENTRY TO SOME PEOPLE WHO HAVE CASH IN HAND. IT HAS NOT BEEN PROVED BY THE AG THAT THE APPELLANT HAD SUCH CASH IN HAND. THE INCOME DECLARE D BY THE APPELLANT HAS BEEN ACCEPTED BY THE AO AS IT IS; THE AG WAS NOT ABLE TO PROVE THAT THE APPELLANT HAD ANY OTHER SOUR CE OF INCOME WHICH WOULD GENERATE EXTRA CASH ON HAND NEEDED FOR SUCH ACCOMMODATING ENTRIES. THE FACT THAT THERE WAS A PU RCHASE AND SALE TRANSACTION OF SHARES HAS BEEN CONFIRMED AND. ACCEPTED BY THE AO. EARLIER THE AO HAD ONLY CONSIDERED ALLEGED SALE TRANSACTION OF RS.16,55,455/- IN THE ASSESSMENT ORD ER AND HAD MADE AN ADDITION OF RS. 16,55,4551- TO THE DECLARED INCOME WITHOUT CONSIDERING THE COMPLETE FACTS. NOW AFTER T HE APPELLANT POINTED OUT THAT THERE CAN BE NO SALE WITHOUT PURCH ASE AND THAT THE SALE VALUE IS RS.16,55,455/- IS NOT CORRECT. TH E AO HAS CONFIRMED THE FACT THAT THERE WAS PURCHASE TRANSACT ION OF RS.16,36,250/- AND SALE TRANSACTION OF RS.13,91,250 /- AND THAT THERE WAS LOSS INCURRED IN THE TRANSACTION AS CLAIMED BY THE APPELLANT. THEREFORE, THE ADDITION OF RS. 16,55 ,455/- BASED ON WRONG AND INCOMPLETE FACTS CANNOT BE SUSTAINED U NDER ANY CIRCUMSTANCES. THE FACTS GIVEN BY THE AO IN HER REM AND REPORT CLEARLY INDICATE THAT THE APPELLANT HAS INCURRED A LOSS IN THE TRANSACTION AND THE SAME HAS BEEN CORRECTLY RECORDE D IN THE BOOKS OF THE APPELLANT. THIS LOSS IS INCLUDED IN TH E TOTAL INCOME DECLARED BY THE APPELLANT AND THE SAME HAS BEEN ACC EPTED BY THE AO AND HENCE THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. WE WOULD LIKE TO INFORM YOU THAT THE COPY OF THE IN FORMATION FORWARDED BY THE DDIT(INV), UNIT-1(4), HAS NOT BEEN RECEIVED BY US. IN ADDITION TO THE ABOVE, WE REQUEST YOU TO CONSIDE R THE SUBMISSIONS MADE BY US VIDE OUR LETTER NO. 199/PVD/ 2012-13, DTD. 23.01.2013.' 3.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, CONTENTION OF THE ASSESSING OFFICER AND THE SUBMISSIONS & ARGUMEN TS OF THE APPELLANT. I AM IN AGREEMENT WITH THE OBSERVATION O F THE ASSESSING OFFICER. THERE IS NO MERIT IN THE ARGUMENTS OF THE AUTHORISED REPRESENTATIVE AND THE SAME IS ACCORDINGLY REJECTED . THIS GROUND OF APPEAL IS DISMISSED. 6.3.2 TAKING INTO CONSIDERATION THE FINDINGS OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER AND THE MATERIAL ON RECORD, WE ARE O F THE OPINION THAT THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCE TO CONTRAVENE THE FINDINGS OF THE LEARNED CIT(A) (SUPRA). IN THAT VIEW OF THE MATTER, WE DISMISS THE GROUNDS 2.1 TO 2.4 RAISED BY THE ASSESS EE. ITA NO. 6716/MUM/2013 SHRI OMPRAKASH B. SALECHA 14 7. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2005- 06 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY, 2017. SD/ - SD/ - (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 18 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -8, MUMBAI 4. THE CIT - 4, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.