NILIMA D. KARDILE, NAVI MUMBAI V. ITO 22(3)(3), MUMBAI

ITA 6759/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0385 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS JYOTHILAKSHMI NAYAK
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Accommodation entries
• Section: 143(3); 69; 148; 132

Judgement Text

P AGE | 1 B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ./ I.T.A. NO. 6759 /MUM/201 4 ( / ASSESSMENT YEAR : 20 07 - 08 ) SMT. NILIMA D. KARDILE, B - 703, KAILASH VAIBHAV, PLOT NO. 21, SECTOR 11, KOPAR KHAIRANE, NAVI MUMBAI 400 709. / V. INCOME TAX OFFICER 22(3)(3), MUMBAI. ./ PAN : ADOPK4107D ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI J.P. BAIRAGRA REVENUE BY : MRS. JYOTHILAKSHMI NAYAK / DATE OF HEARING : 21 - 03 - 2017 / DATE OF PRONOUNCEMENT : 16 - 06 - 2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21 - 08 - 2014 PASSED BY CIT(APPEAL) - 33, MUMBAI, FOR THE ASSESSMENT YEAR 2007 - 08, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) R.W.S 147 OF THE INCOME - TAX ACT,1961 (FOR SHORT ACT), DATED. 30.12.2013. THE ASSESSEE HAD ASSAILED THE ORDER PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX - APPEALS HEREINAFTER REFERRED TO AS CIT(APPEALS) - I. CIT APPEALS), ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE FINDINGS' OF THE ASSESSING OFFICER, TREATING AS P AGE | 2 RS.20,64,121/ - AS UNEXPLAINED INVESTMENT U/S.69 AS AG AINST 'SALE CONSIDERATION OF SHARES' DECLARED BY THE ASSESSEE AND CONSEQUENTLY, IN NOT ACCEPTING THE 'SHORT TERM CAPITAL GAIN' OF RS.10,00,700/ - AS DECLARED BY THE APPELLANT FROM THE SAID SALE OF SHARES. 2. THAT IN VIEW OF THE SUBMISSIONS, EVIDENCE, JUDI CIAL PRONOUNCEMENT AND MATERIAL PLACED ON RECORD THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF SHORT TERM CAPITAL GAIN OF RS.10,00,700/ - FROM SALE OF SHARES. 3. THE TRANSACTION IN SHARES BEING GENUINE AND SUFFICIENT EVIDENCES WERE PRODUCED, THE SHORT TERM CAPITAL GAINS SHOWN BY THE APPELLANT MAY BE ACCEPTED AND ADDITIONS CONFIRMED BY THE CIT(APPEALS) BE DELETED. 4. THE ORDER AND THE FINDINGS OF THE LEARNED A.O, WHICH ARE AFFIRMED BY THE CIT(APPEALS) ARE BASED PURELY ON CONJECTURES , SURMISES, SUSPICION AND HYPOTHESIS AND ARE LIABLE TO BE SET ASIDE. THE REASONS GIVEN BY HIM IN THIS REGARD ARE INCORRECT AND UNJUSTIFIED. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME FOR A.Y. 2007 - 08 ON 27 TH AUGUST, 2007 , DECLARING AN INCOME OF RS. 12,21,144/ - , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THAT SEARCH PROCEEDINGS WERE CONDUCTED ON 25 TH NOVEMBER, 2009 UNDER SEC. 132 OF THE INCOME - TAX ACT, 1961 IN THE CASE OF M/S MAHASAGAR G ROUP O F CASES AND THE STATEMENT OF THE KEY PERSON OF THE GROUP, VIZ. SHRI MUKESH CHOKSI WAS RECORDED ON OATH. THAT SH. MUKESH CHOKSI IS STATED TO HAVE ADMITTED IN HIS STATEMENT THAT HE AND HIS GROUP COMPANIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATI ON ENTRIES, AND THUS AS A FACILITATOR WERE CATERING TO THE NEEDS OF THEIR CLIENTS TO DECLARE BOGUS TRANSACTIONS, VIZ. SPECULATION PROFIT/LOSS, LTCG/STCG, PROFIT/LOSS ON ACCOUNT OF COMMODITY TRADING, INTRODUCTION OF SHARE APPLICATION MONEY AND GIFT TRANSACT IONS. THAT IT IS CLAIMED THAT THE NAME AND ADDRESSES OF THE BENEFICIARIES OF SUCH ACCOMMODATION ENTRIES WAS PROVIDED TO THE DEPARTMENT BY SH. MUKESH CHOKSI AND THE NAME ALONGWITH THE PAN NUMBER OF THE ASSESSEE FIGURED IN THE LIST OF SUCH BENEFICIARIES. THA T IN THE BACKDROP OF THE AFORESAID INFORMATION THE P AGE | 3 CASE OF THE ASSESSEE WAS REOPENED AND A NOTICE U/S 148 WAS SERVED UP ON THE ASSESSEE ON 25 - 03 - 2013. THE REASONS FOR REOPENING OF THE CASE OF THE ASSESSEE WERE CONVEYED TO HIM BY MAKING AVAILABLE A COPY OF T HE REASONS TO BELIEVE ON 11.07.2013. 4. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD IN HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2007 - 08, REFLECTED AN INCOME OF RS. 10,00, 700/ - BY WAY OF SHORT TERM CAPITAL GAIN (STCG) ON SALE OF SHARES, AS UNDER: - S.NO NAME OF THE SCRIP PURCHASE AMOUNT PURCHASE DATE/BILL NO. SALE AMOUNT BILL DETAILS 1 PARAMOUNT COMMUNICATIONS 5,72,425/ - 2006139 DATED 25.07.06 11,29,306 0607163 DATED 17.11.06 2 MICRO TECHNO 4,94,920 2006138 DATED 25.07.06 9,34,815 0607163 DATED 17.11.06 THAT IT CAME TO THE NOTICE OF THE A.O. THAT THOUGH THE ASSESSEE HAD PURCHASED THE AFORESAID SHARES THROUGH M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. (WHICH IS A GROUP COMPANY OF SH. MUKESH CHOKSI), VIDE THE LATTERS BILL DATED 25.07.2006, HOWEVER THE PAYMENT TO THE SAID BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. (SUPRA) WAS DEFERRED AND WAS MADE ON 17.11.2006, I.E ON THE SAME DAY WHE N THE SO CALLED SALE OF SHARES TOOK PLACE. THAT IN THE BACKDROP OF THE FACT THAT THE CASE OF THE ASSESSEE WAS IN ITSELF REOPENED ON THE GROUND THAT HER NAME FIGURED IN THE LIST OF THE PERSONS WHO HAD TAKEN ACCOMMODATION ENTRIES DURING THE YEAR, THE PECULIA R MANNER IN WHICH THE ASSESSEE HAD KEPT THE PAYMENT OF THE PURCHASE CONSIDERATION OF THE SHARES IN ABEYANCE TILL THE DATE OF THEIR SALE FURTHER SUPPLEMENTED THE DOUBTS IN THE MIND OF THE A.O. THE A.O THUS HAVING SERIOUS DOUBTS AS REGARDS THE GENUINENESS AN D VERACITY OF THE PURCHASE OF SHARES AS PROJECTED BY THE ASSESSEE, AND RESULTANTLY THE TRANSACTION LEADING TO GENERATION OF STCG IN THE HANDS OF THE ASSESSEE, AS A WHOLE, THUS CALLED UPON HER TO PUT FORTH AN EXPLANATION AND JUSTIFY THE SAME. THE ASSESSEE I N HER ATTEMPT TO DISPEL THE DOUBTS RAISED BY THE A.O. AS REGARDS THE GENUINENESS OF THE PURCHASE P AGE | 4 TRANSACTION, THEREIN SUBMITTED THAT AS DURING THE RELEVANT PERIOD, I.E APRIL 2006 TO 14.12.2006 SHE WAS IN A FAMILY WAY AND HAD CERTAIN HEALTH ISSUES, THEREFOR E SHE HAD SHIFTED TO HER MOTHERS HOUSE AT VILE - PARLE (E). IT WAS THUS SUBMITTED BY THE ASSESSEE THAT DUE TO CHANGE OF HER ADDRESS THE BILLS OF THE BROKER WERE RECEIVED BY HER LATE, WHICH RESULTANTLY LED TO DELAY IN MAKING THE PAYMENT OF THE PURCHASE CONSI DERATION OF THE SHARES. THE A.O. HOWEVER BEING OF THE VIEW THAT THE ASSESSEE HAD FAILED TO ADDUCE ANY EVIDENCE THAT THE BILL OF THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. (SUPRA) WAS RECEIVED BY HER LATE, AND RATHER CONTRARY TO HER CLAIM THAT SHE WAS INDISPOSED DURING THE SAID PERIOD, A CURSORY GLANCE OF HER BANK STATEMENT FOR THE RELEVANT PERIOD, I.E APRIL, 2006 TO 14.12.2006 REVEALED THAT SHE WAS ACTIVELY OPERATING HER BANK ACCOUNT AND HAD CARRIED OUT MULTIPLE TRANSACTIONS, VIZ. PA YMENT OF PROFESSIONAL TAX, RECEIVING BACK LOAN FROM ONE M/S KALSA BUILDERS PVT.LTD, INVESTING IN PPF ACCOUNT, PAYMENT OF ADVANCE TAX, AS WELL AS CERTAIN CASH WITHDRAWALS AND DEPOSITS, WHICH CLEARLY MILITATED AGAINST HER EXPLANATION AND DISPROVED THE SAME, THEREFORE DECLINED TO ACCEPT THE EXPLANATION TENDERED BY THE ASSESSEE. 5. THE A.O FURTHER OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE BROKER WAS NOT WILLING TO TRANSFER THE SHARES IN HER ACCOUNT DUE TO LACK OF PAYMENT, IN ITSELF STOOD CONTRADIC TED FROM THE VERY FACT THAT THE SAID SHARES WERE TRANSFERRED TO HER ACCOUNT, VIZ. ON 15.11.2006 (2000 SHARES OF MICRO TECHNO AND 5000 SHARES OF PARAMOUNT COMMUNICATIONS) AND ON 16.11.2006 (2000 SHARES OF MICRO TECHNO), WHICH WERE TRANSFERRED EVEN BEFORE TH E PAYMENT WAS CLEARED. THE A.O THUS ON A CONJOINT PERUSAL OF THE AFORESAID FACTS, WHICH AS PER HIM GLARINGLY DISPROVED THE GENUINENESS OF THE PURCHASE OF THE AFORESAID SHARES AS CLAIMED BY THE ASSESSEE, THUS CONCLUDED THAT THE ASSESSEE HAD NEVER MADE ANY G ENUINE PURCHASE OF SHARES AND RATHER HAD ONLY TAKEN ACCOMMODATION ENTRIES IN ORDER TO BRING HER UNACCOUNTED MONEY IN THE MAIN STREAM BY LAUNDERING THE SAME P AGE | 5 IN THE GARB OF STCG, WHICH ATTRACTED LOW TAX RATES. THE A.O THUS IN BACKDROP OF HIS AFORESAID OBSERV ATIONS THUS FINALLY CONCLUDED THAT THE ASSESSEE HAD ENTERED INTO A SHAM TRANSACTION. THE A.O FURTHER OBSERVED THAT WHILE FOR THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD.(SUPRA) THROUGH WHOM THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED T HE SHARES WAS NOT TRACEABLE, THEREFORE FACILITATING THEIR CROSS EXAMINATION WAS NOT POSSIBLE, WHILE FOR AN OPPORTUNITY TO CROSS EXAMINE SH. MUKESH CHOKSI (SUPRA) WAS THOUGH PROVIDED TO THE ASSESSEE, HOWEVER THE SAME TOO COULD NOT MATERIALIZE AS THE SAID PE RSON FAILED TO APPEAR BEFORE THE A.O ON THE STIPULATED DATE. BE THAT AS IT MAY, THE A.O. BEING OF THE VIEW THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE OF SHARES, THEREFORE CONCLUDED THAT THE AMOUNT OF RS. 20,64,121/ - RECEIV ED IN HER BANK ACCOUNT ON 23 - 11 - 2006 COULD NOT BE CHARACTERIZED AS SALE PROCEEDS RECEIVED FROM A SIMPLICITER SALE OF SHARES. THE A.O THUS TREATING THE AMOUNT OF RS. 20,64,121/ - (SUPRA) AS AN UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE U/S 69, THEREI N ASSESSED THE LATTERS INCOME AT RS. 21,84,570/ - . 6. THE ASSESSEE BEING AGGRIEVED WITH THE ASSESSMENT ORDER CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE IN ORDER TO FORTIFY HER CONTENTION THAT SHE HAD CARRIED OUT GENUI NE PURCHASE AND SALE OF SHARES THROUGH THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD., THEREIN RAISED MULTIPLE CONTENTIONS. HOWEVER, THE CIT(A) IN THE BACKDROP OF THE FACT THAT THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES & NETWORK PVT. L TD.(SUPRA) FROM WHOM THE ASSESSEE HAD PURCHASED THE SHARES WAS ADMITTEDLY PROVIDING ACCOMMODATION ENTRIES WITHOUT CARRYING OUT ANY ACTUAL TRANSACTION, THUS CONCLUDED THAT THE FACT THAT THE ASSESSEE HAD PURCHASED THE SHARES IN THE MONTH OF JULY, 2006, BUT T HE TRANSACTION WAS COMPLETED ONLY IN THE MONTH OF NOVEMBER, 2006, I.E AFTER A GAP OF FOUR MONTHS, WHICH WAS FOLLOWED BY SALE OF SHARES ON THE SAME DATE, VIZ. 17.11.2006, THUS DID GO TO PROVE THAT THE PURCHASE OF SHARES P AGE | 6 CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE IN THE MONTH OF JULY, 2006 WAS MERELY A PAPER TRANSACTION AND WITHOUT ANY SUBSTANCE. THE CIT(A) THUS CONCLUDING THAT THE ASSESSEE HAD AS A MATTER OF FACT ONLY UNDERTAKEN ACCOMMODATION ENTRIES, THEREFORE, REJECTED THE APPEAL BY OBSERVING AS UNDER: - I HAVE GONE THROUGH THE ARGUMENTS OF THE APPELLANT AS WELL AS ORDER OF THE AO. IN THE INSTANT CASE THE APPELLANT HAS CHALLENGED THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE INTIMATION U/S 143(1) WAS ISSUED BY THE AO WHERE NO SUCH ADJUSTMENTS WER E MADE NOR THE AO HAD TAKEN UP SCRUTINY ASSESSMENT BY ISSUING THE NOTICE U/S 143(2) OF THE ACT AND, THEREFORE, ACCORDING TO THE APPELLANT A NOTICE ISSUED AFTER THE GAP OF FIVE YEARS IS BAD IN LAW. I AM UNABLE TO SUBSCRIBE TO THE VIEW OF THE APPELLANT SINCE IN THE INSTANT CASE THE AO HAD RECEIVED AN INFORMATION THAT THE APPELLANT WAS A BENEFICIARY OF ACCOMMODATION ENTRY PROVIDED BY GROUP OF COMPANIES FORMED BY O NE MR. MUKESH CHOKSHI. FURTHER THE SAID MUKESH CHOKSHI HAD ADMITTED BEFORE THE INCOME TAX AUTHORIT IES THAT HE AND HIS COMPANIES WERE MERELY ISSUING ACCOMMODATION BILLS FOR FACILITATING LTCG AND STCG WITHOUT ACTUALLY INVOLVING IN ACTUAL TRANSACTIONS. IT IS NOT IN DISPUTE THAT THE APPELLANT HAD SHOWN TO HAVE PURCHASED SHARES FROM ONE OF THE COMPANIES FLO ATED BY THE SAID MR. MUKESH CHOKSHI AND, THEREFORE, IN VIEW OF THE SPECIFIC INFORMATION RECEIVED BY THE AO, IT WAS HIS BOUNDEN DUTY TO ISSUE THE NOTICE U/S 147, SINCE PRIMA FACIE HE HAD REASONS TO BELIEVE THAT THE INCOME IN THE INSTANT CASE HAD ESCAPED THE ASSESSMENT. THEREFORE I AM IN AGREEMENT WITH THE ACTION OF THE AO IN REOPENING THE ASSESSMENT AS SUCH. 2.6 AS REGARDS ADDITION OF RS.10, 00 ,700/ - , IT IS OBSERVED THAT THE APPELLANT HAD PURCHASED THE SHARES OF PARAMOUNT COMMUNICATION AND MICRO TECHNO AS P ER BILL DATED 25 - 07 - 2006 OF M/S ALLIANCE INTERMEDIARIES AND NETWORK PRIVATE LIMITED WHICH IS A GROUP COMPANY OF MR. MUKESH CHOCKSHI. IT IS ALSO RELEVANT TO NOTE THAT IN THE INSTANT CASE THOUGH THE PURCHASES WERE MADE IN THE MONTH OF JULY 2006 THE ACTUAL TR ANSACTIONS WAS COMPLETED IN THE MONTH OF NOVEMBER, 2006 I.E. ALMOST AFTER A GAP OF FOUR MONTHS. IT IS ALSO RELEVANT TO NOTE THAT EVEN THE SALE OF THE SAID SCRIPTS WERE MADE IMMEDIATELY AFTER ACTUAL TRANSACTION BEING UNDERTAKEN. THIS CLEARLY INDICATES THAT THE PURCHASES SHOWN TO HAVE MADE IN THE MONTH OF JULY WAS MERELY A PAPER TRANSACTION WITHOUT ANY SUBSTANCE IN IT WHICH WAS CONFIRMED BY THE FACT THAT THE SAID M/S ALLIANCE INTERMEDIARIES HAD ALREADY ADMITTED THAT THE CONTRACT NOTE ISSUED BY IT WAS MERELY AN ACCOMMODATION ENTRY AND THAT NO ACTUAL TRANSACTIONS WERE EFFECTED ON SUCH DATE. THEREFORE, WHAT IS APPARENT CANNOT BE TREATED AS REAL SINCE THERE ARE COMPELLING REASONS TO BELIEVE P AGE | 7 THAT THE APPARENT WAS NOT REAL. THE APPELLANT HAS RELIED ON SOME JUDICIAL PRONOUNCEMENTS TO SUPPORT ITS CLAIM THAT ADDITION MADE BY THE AO IS BAD IN LAW. I AM UNABLE TO ACCEPT THE ARGUMENT OF THE APPELLANT SINCE IN THE INSTANT CASE THE TRANSACTIONS ENTERED INTO BY THE APPELLANT ARE ALIEN TO THE NORMAL PRACTICE FOLLOWED IN THE M ARKET. FIRSTLY DELIVERY IN THE APPELLANT'S ACCOUNT WAS RECEIVED IN THE MONTH OF NOVEMBER, 2006 AS AGAINST ACTUAL TRANSACTION BEING EFFECTED IN THE MONTH OF JULY. THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE DEFICIENCY IN SUCH TRANSACTION AND HAD PUT FORWAR D AN ALIBI THAT SINCE SHE WAS PREGNANT SHE HAD GONE TO HER MOTHER'S HOUSE AND HENCE THIS DELAY. I AM IN AGREEMENT WITH THE OBSERVATION OF THE AO IN THIS REGARD THAT IF SHE HAD SHIFTED TO HER MOTHER'S HOUSE HOW COULD SHE ISSUE VARIOUS CHEQUES DURING THE SAM E PERIOD AND IF SHE COULD ISSUE THE CHEQUES FOR OTHER TRANSACTIONS, SHE COULD HAVE ALSO ISSUED THE CHEQUES FOR PURCHASE OF SHARES. IT IS WELL SETTLED LAW THAT THE DUTY IS CAST ON THE ASSESSEE TO EXPLAIN THE TRANSACTIONS IN HIS/HER ACCOUNTS AND FAILURE TO D O SO THE AO IS JUSTIFIED IN TAKING THE ADVERSE VIEW ON THE BASIS OF MATERIAL AVAILABLE WITH HIM. THE HON'BLE SUPREME COURT IN CASE OF SUMATI DAYAL HAS HELD THAT ORDINARILY THE APPARENT SHOULD BE TREATED AS REAL, HOWEVER, IF THE CIRCUMSTANCES SUGGEST OTHERW ISE, THE AO IS ENTITLED TO GO INTO THE ROOT OF THE TRANSACTIONS AND MAKE THE ASSESSMENT ACCORDINGLY. THE OBSERVATION OF THEIR LORDSHIP IS REPRODUCED AS UNDER: 'THERE IS NO DISPUTE THAT THE AMOUNTS WERE RECEIVED BY THE APPELLANT FROM VARIOUS RACE CLUBS ON THE BASIS OF WINNING TICKETS PRESENTED BY HER. WHAT IS DISPUTE IS THAT THEY WERE REALLY THE WINNINGS OF THE APPELLANT FROM THE RACES. THIS RAISES THE QUESTION WHETHER THE APPARENT CAN BE CONSIDERED AS REAL. AS LAID DOWN BY THIS COURT, APPARENT MUST BE CON SIDERED REAL. AS LAID DOWN BY THIS COURT, APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. (SEE : COMMISSIONER OF INCOME TAX V. DURQA PRASAD MORE, (1971) 82 ITR 540, AT PP. 545, 547)'. 2.7 IN THE INSTANT CASE WHAT IS DISPUTED IS THE ACTUAL TRANSAC TION OF CAPITAL GAINS WHICH IS BASED ON THE MATERIAL WHICH DOES NOT SUPPORT THE APPELLANT'S CLAIM OR BY ANY STRETCH OF IMAGINATION THROUGH CIRCUMSTANTIAL EVIDENCE AND APPLYING TEST OF HUMAN PROBABILITIES FOR THE REASONS STATED HEREIN BEFORE. THEREFORE, CON SIDERING THE FACTS OF THE CASE AND MATERIAL PRODUCED BEFORE ME, I AM IN AGREEMENT WITH THE AO THAT THE CLAIM OF THE APPELLANT OF INCOME TO BE TAXED AS SHORT TERM CAPITAL GAINS IS P AGE | 8 UNACCEPTABLE AND THAT THE APPELLANT HAS UNDER THE GUISE OF STCG HAS TRIED TO INTRODUCE HER OWN UNACCOUNTED INCOME AND, THEREFORE, ADDITION MADE BY THE AO IS CONFIRMED. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING BEFORE US, THE LEARN ED AUTHORIZED REPRESENTATIVE (IN SHORT A.R.) FOR THE ASSESSEE REITERATED THE SUBMISSIONS WHICH WERE RAISED BEFORE THE LOWER AUTHORITIES, AND FURTHER IN ORDER TO FORTIFY HIS CONTENTION THAT THE ASSESSEE HAD CARRIED OUT A GENUINE PURCHASE AND SALE TRANSACT ION, THEREIN DREW OUR ATTENTION TO THE COPY OF THE PURCHASE BILLS, COPY OF THE SALE BILLS, COPY OF DEMAT ACCOUNT NO. 17468516 WITH HDFC BANK, COPY OF DELIVERY INSTRUCTION SLIPS AND COPY OF SB A/C NO. 47966 WITH ABHUDAYA CO - OPERATIVE BANK LTD. FROM WHICH TH E PAYMENTS FOR PURCHASE OF SHARES HAD BEEN MADE. THE LD. A.R. SUBMITTED THAT THE LOWER AUTHORITIES HAD DRAWN ADVERSE INFERENCES WITH REGARD TO THE GENUINENESS OF THE PURCHASE AND SALE TRANSACTIONS OF THE SHARES CARRIED OUT BY THE ASSESSEE, FOR THE REASON T HAT THE LATTER HAD DELAYED IN MAKING THE PAYMENT OF THE PURCHASE CONSIDERATION OF THE SHARES TO THE BROKER. THE LD. A.R SUBMITTED THAT THOUGH THERE WAS A JUSTIFIABLE REASON EXPLAINING THE DELAY IN MAKING THE PAYMENT TO THE BROKER, BUT EVEN OTHERWISE THE SA ME BY NO STRETCH OF IMAGINATION COULD FORM A BASIS FOR CHARACTERIZING THE PURCHASE TRANSACTION CARRIED OUT BY THE ASSESSEE AS A BOGUS TRANSACTION. THE LD. A.R. IN ORDER TO FORTIFY HIS CONTENTION THEREIN SUBMITTED THAT NOW WHEN THE ASSESSEE HAD SUBSTANTIATE D THE GENUINENESS OF THE PURCHASE OF SHARES ALONGWITH THE SOURCE FROM WHERE THE PURCHASE CONSIDERATION WAS PAID, THEREFORE THE LOWER AUTHORITIES HAD ERRED IN DRAWING ADVERSE INFERENCES AS REGARDS THE GENUINENESS AND VERACITY OF THE PURCHASE AND SALE TRANSA CTION. IT WAS THUS SUBMITTED BY THE LD. A.R THAT IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX, THE CONSIDERATION RECEIVED ON SALE OF SHARES COULD NOT HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE AS AN UNEXPLAINED P AGE | 9 INVESTMENT U/S 69 OF THE ACT. THE LD. A.R. IN ORDER TO SUPPORT HIS AFORESAID CONTENTION, THEREIN RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - 1. CIT VS. MUKESH RATILAL MAROLIA (ITA NO. 456 OF 2007; DATED. 07.09.2011) 2. MUKESH RATILAL MAROLIA V. ADDL. CIT RG. 15(2), [2006] 6 SOT 247 (MU M) 3. JAFFERALI K. RATTONSEY V. DCIT (ITA NO. 5068/MUM/2009 - 53 SOT 220, [2012] 23 TAXXMANN.COM 21 (MUMBAI) . 4. DCIT V. M/S SHARDA CREDITS PVT. LTD., ITA NO. 3415/MUM/2007 A . Y. 2001 - 02 DATED 9 TH FEBRUARY, 2009. THE LD. A.R TAKING SUPPORT OF THE AFORESAID JUDICIAL PRONOUNCEMENTS SUBMITTED THAT IN THE BACKDROP OF THE DOCUMENTARY EVIDENCES, VIZ. COPY OF PURCHASE BILLS, COPY OF SALE BILLS, COPY OF CONTRACT NOTES ISSUED BY THE BROKER, COPY OF DEMAT ACCOUNT WITH HDFC BANK, COPY OF SB A/C NO. 4766 WITH ABHUDAYA C O.OP. BANK LTD., COPY OF CHEQUES ISSUED FOR PURCHASE OF SHARES, COPY OF DELIVERY INSTRUCTION SLIP, SCRIP - WISE SUMMARY ISSUED BY THE BROKER AND THE CONFIRMATION OF THE BROKER TO WHOM THE SHARES HAD BEEN SOLD, ALONG WITH COPY OF THE LATTERS BANK ACCOUNT, IT COULD SAFELY BE CONCLUDED THAT THE INITIAL ONUS AS WAS CAST UPON THE ASSESSEE TO PROVE THE GENUINENESS AND VERACITY OF THE PURCHASE/SALE TRANSACTION OF THE SHARES HAD DULY BEEN DISCHARGED. THE LD. A.R. FURTHER SUBMITTED THAT THOUGH ADVERSE INFERENCES HAD B EEN DRAWN IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE STATEMENT OF MR. MUKESH CHOKSI (SUPRA) WHO WAS THE WITNESS OF THE DEPARTMENT, BUT HOWEVER HIS CROSS EXAMINATION HAD NOT BEEN FACILITATED TO THE ASSESSEE 8. PER CONTRA, THE LD. DEPARTMENTAL REPRES ENTATIVE (IN SHORT D.R) DREW OUR ATTENTION TO THE COPIES OF THE CONTRACT NOTES PLACED AT PAGE 15 TO 20 OF T H E ASSESSEES PAPER BOOK (APB), AND THEREIN SUBMITTED THAT THE FACT THAT THE SAME WERE FUDGED AND TAILOR MADE TO THE NEED OF THE ASSESSEE COULD B E GATHERED FROM THE VERY FACT THAT THE SAME WERE UNSIGNED. THE LD. D.R. FURTHER SUBMITTED THAT THE SALE OF THE SHARES P AGE | 10 HAD NOT TAKEN PLACE AT THE FLOOR OF THE STOCK EXCHANGE, BUT WERE OFF MARKET TRANSACTIONS. IT WAS FURTHER SUBMITTED BY THE LD. D.R. THAT THOUGH THE PURCHASE TRANSACTIONS OF THE SHARES, AS CLAIMED BY THE ASSESSEE TOOK PLACE ON 27.7.2006, BUT HOWEVER THE PURCHASE CONSIDERATION WAS PAID TO THE BROKER ONLY AFTER THE SHARES WERE TRANSFERRED TO DEMAT ACCOUNT, AND THE SAME WERE THEREAFTER IMMEDIA TELY SOLD ON 17.11.2006. IT WAS VEHEMENTLY SUBMITTED BY THE LD. D.R. THAT THERE WAS NO REASON FOR THE BROKER TO HAVE WAITED FOR A PERIOD OF FOUR MONTHS FOR THE PURCHASE CONSIDERATION, AND THE EXPLANATION ON THE PART OF THE ASSESSEE IN HER ATTEMPT TO JUSTI FY THE DELAY IN MAKING THE PAYMENT TO THE BROKER WAS PROVED TO BE FALSE AND NOTHING BETTER THAN AN EYE WASH. THE LD. D.R., THUS, ON THE BASIS OF THE AFORESAID CONTENTIONS SUBMITTED THAT THE LOWER AUTHORITIES HAD RIGHTLY CONCLUDED THAT THE ASSESSEE HAD MERE LY TAKEN ACCOMMODATION ENTRIES FROM THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD (SUPRA) AND AS A MATTER OF FACT HAD ONLY CARRIED OUT PAPER TRANSACTIONS WITH NO SUBSTANCE. IT WAS THUS AVERRED BY THE LD. D.R. THAT AS THE APPEAL OF THE A SSESSEE WAS DEVOID OF ANY MERITS, THEREFORE THE SAME WAS LIABLE TO BE DISMISSED. 9. WE HAVE HEARD THE ARGUMENTS OF THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US, AS WEL L AS CONSIDERED THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE PARTIES. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT THE ASSESSEE HAD TRIED TO DISPEL THE DOUBTS AS REGARDS THE STCG ON THE SALE OF SHARES, AS STOOD REFLECTED BY HER IN THE INCOME TAX RETURN FOR THE YEAR UNDER CONSIDERATION . WE FIND THAT THE ASSESSEE IN ORDER TO FORTIFY THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTION OF SHARES , AS PROJECTED AND CLAIMED BY HER IN THE RETURN OF INCOME, HAD THERE IN TAKEN SUPPORT OF DOCUMENTS EVIDENCING THE ENTIRE CHAIN OF EVENTS RELATABLE TO THE PURCHASE AND SALE OF SHARES ON 25.07.2006 AND 17.11.2006 , RESPECTIVELY. WE ARE OF THE CONSIDERED VIEW THAT THE A.O P AGE | 11 HAD VETTED THE CLAIM OF THE ASSESSEE AS REGARDS THE GENU INENESS OF THE PURCHASE TRANSACTION OF SHARES WHICH AS PER THE ASSESSEE WAS CARRIED OUT ON 25.07.2006 , NOT ON THE BASIS OF ANY EXTRANEOUS MATERIAL, BUT RATHER BY REFERRING TO THE DOCUMENTS WHICH HAD BEEN PLACED ON RECORD BY THE ASSESSEE TO FORTIFY HER CLAI M OF STCG ON THE SALE OF SHARES , VIZ. COPY OF PURCHASE BILLS, COPY OF SALE BILLS, COPY OF CONTRACT NOTES ISSUED BY THE BROKER, COPY OF DEMAT ACCOUNT WITH HDFC BANK, COPY OF SB A/C NO. 4766 WITH ABHUDAYA CO - OPERATIVE . BANK LTD., COPY OF CHEQUES ISSUED FOR P URCHASE OF SHARES, COPY OF DELIVERY INSTRUCTION SLIP, SCRIP - WISE SUMMARY ISSUED BY THE BROKER AND THE CONFIRMATION OF THE BROKER THROUGH WHOM THE SHARES HAD BEEN SOLD, ALONG WITH A COPY OF THE LATTERS BANK ACCOUNT , AND AFTER OBSERVING CERTAIN SERIOUS FALLA CIES AND INFIRMITIES IN THE SAME, HAD THUS DRAWN ADVERSE INFERENCES IN RESPECT OF THE PURCHASE TRANSACTION OF SHARES PROJECTED AND CLAIMED BY THE ASSESSEE IN HER RETURN OF INCOME . 10. WE SHALL NOW TEST THE CREDIBILITY OF THE CLAIM OF THE ASSESSEE IN RESP ECT OF THE GENUINENESS OF THE PURCHASE TRANSACTION, AS RAISED BY HER IN THE RETURN OF INCOME, IN THE BACKDROP OF THE MATERIAL PLACED ON RECORD, OBSERVATIONS ARRIVED AT BY THE LOWER AUTHORITIES AND THE AVERMENTS RAISED BY THE LD. A.R BEFORE US. WE HAVE P ERUSED THE MATERIAL AVAILABLE ON RECORD, OBSERVATIONS OF THE LOWER AUTHORITIES AND THE CONTENTIONS OF THE LD. A.R RAISED BEFORE US. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE L D. A.R HAD AVERRED THAT THE ASSESSEE BY PLACING ON RECORD OF THE LOWER AUTHOR ITIES THE AFORESAID OVERWHELMING DOCUMENTARY EVIDENCES , HAD THUS DISCHARGED THE INITIAL ONUS AS WAS CAST UPON HER TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE AND SALE TRANSACTION OF SHARES, BUT ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SAID CONTEN TION . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT SERIOUS LAPSES AND DEFECTS EMERGES , BOTH IN THE DOCUMENTS FILED BY THE ASSESSEE, AS WELL AS THE CONTENTIONS RAISED BEFORE US BY THE LD. A.R., VIZ. (I). THE CONTRACT NOTE S ARE FOUND TO BE UNSIGNED BY THE BROKER ; (II). NO P AGE | 12 JUSTIFIABLE REASON BEING THERE AS REGARDS KEEPING IN ABEYANCE FOR A PERIOD OF 4 MONTHS (APPROX) THE PAYMENT OF THE PURCHASE CONSIDERATION OF SHARES TO THE BROKER, VIZ. M/S ALLIANCE INTERMEDIARIES AND NETW ORK PVT. LTD (SUPRA), WHOSE CREDIBILITY IN ITSELF WAS UNDER SERIOUS DOUBTS IN LIGHT OF ADMISSION OF SH. MUKESH CHOKSI ; (III). THE DEMATERIALIZATION OF SHARES WITHOUT MAKING OF PAYMENT TO THE BROKER; AND (I V ). THE SALE OF THE SHARES ON THE SAME DAY AFTER PA YMENT OF THE PURCHASE CONSIDERATION, ARE CERTAIN SERIOUS INFIRMITIES, WHICH WHEN READ IN THE BACKDROP OF THE FACTS OF THE CASE, THUS DOES NOT INSPIRE ANY CONFIDENCE AS REGARDS THE GENUINENESS OF THE PURCHASE OF THE SHARES , AS CLAIMED BY THE ASSESSEE, AND T HE RESULTANT CLAIM OF STCG RAISED BY THE ASSESSEE IN HER RETURN OF INCOME. WE CANNOT REMAIN OBLIVIOUS OF THE FACT THAT NOW WHEN THE ASSESSEE HAD CLAIMED GENERATION OF INCOME UNDER THE HEAD STCG ON SALE OF SHARES, THER E FORE A VERY HEAVY ONUS WAS CAST UPON H ER TO SUBSTANTIATE THE GENUINENESS OF THE SAID TRANSACTION . WE MAY AT THIS STAGE OBSERVE THAT NOW WHEN IT WAS ADMITTED BY SH. MUKESH CHOKSI THAT HE AND HIS GROUP COMPANIES (INCLUDING M/S ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD) HAD INDULGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES, THEREFORE IN THE BACKDROP OF THE SAID FACTUAL POSITION EVEN MUCH MORE HEAVY ONUS WAS CAST UPON THE ASSESSEE TO SUBSTANTIATE BEYOND ANY SCOPE OF DOUBT THAT HER PURCHASE AND SALE TRANSACTION OF SHARES THROUGH THE SAID BROKER, AND THE STCG EMERGING THERE FROM, WAS WELL IN ORDER, WHICH WE WOULD NOT HESITATE TO OBSERVE HAD NOT BEEN DISCHARGED IN SUM AND SUBSTANCE BY THE ASSESSEE IN THE PRESENT CASE. 11. WE THOUGH ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R T HAT NOW WHEN THE A.O HAD RELIED ON THE STATEMENT OF SH. MUKESH CHOKSI (SUPRA), THEREIN THE ASSESSEE WAS VESTED WITH A RIGHT TO CROSS EXAMINE THE SAID PERSON, FAILING WHICH ADVERSE INFERENCES ON THE BASIS OF THE LATTERS STATEMENT COULD NOT JUSTIFIABLY BE DR AWN. WE HOWEVER FIND , THAT AS STANDS GATHERED FROM THE FACTS AVAILABLE ON THE RECORDS OF THE LOWER AUTHORITIES AND OBSERVED BY US HEREINABOVE, THAT THOUGH IT P AGE | 13 REMAINS AS A MATTER OF FACT THAT TH E CASE OF THE ASSESSEE WAS REOPENED FOR THE REASON THAT THE NAM E OF THE ASSESSEE WAS STATED TO HAVE FIGURED IN THE LIST OF THE BENEFICIARIES WHO ARE STATED TO HAVE TAKEN ACCOMMODATION ENTRIES FROM SH. MUKESH CHOKSI AND HIS GROUP COMPANIES, BUT THEN THE LOWER AUTHORITIES HAD NOT MERELY ACTED ON THE SAID STAND ALONE STA TEMENT OF THE SAID PERSON , VIZ. SH. MUKESH CHOKSI AND DISCARDED THE CLAIM OF THE ASSESSEE AND DRAWN ADVERSE INFERENCES IN HER HANDS. WE RATHER FIND THAT THE A.O IN THE BACKDRO P OF THE AFORESAID INFORMATION, AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE AS SESSEE TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE OF SHARES , AS PROJECTED BY HER IN THE RETURN OF INCOME, HAD THEREIN VETTED THE CLAIM OF THE ASSESSEE IN T H E BACKDROP OF THE DOCUMENTS WHICH WERE PLACED ON RECORD BY THE ASSESSEE IN SUPPORT THEREOF. WE FIND THAT THE AFORESAID SERIOUS LAPSES AND DEFECTS EMERGING FROM THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, AS DISCUSSED BY US HEREINABOVE, AND PERUSED BY US DURING THE COURSE OF HEARING OF THE APPEAL SERIOUSLY JEOPARDIZ ES THE CLAIM OF STCG ON SALE OF SHARES RAISED BY THE ASSESSEE IN HER RETURN OF INCOME. WE MAY HEREIN OBSERVE, THAT IN CASE THE ASSESSEE ON THE BASIS OF CONCRETE AND IRREBUTABLE EVIDENCE WOULD HAD SUCCESSFULLY ESTABLISHED THAT ITS CLAIM OF STCG RAISED IN T HE RETURN OF INCOME WAS WELL IN ORDER, BUT THE A.O WITHOUT DISLODGING THE SAID CLAIM HAD PROCEEDED WITH ON THE BASIS OF A STAND ALONE STATEMENT OF THE AFORESAID THIRD PARTY RECORDED AT THE BACK OF THE ASSESSEE , WITHOUT AFFORDING ANY OPPORTUNITY OF CROSS - EX AMINATION TO THE ASSESSEE, THEN THE SAME WOULD HAD CALLED FOR AN INDULGENCE ON OUR PART. HOWEVER, IN THE CASE OF THE PRESENT ASSESSEE, WE FIND THAT AS THE CLAIM OF THE ASSESSEE IS DISPROVED ON THE BASIS OF THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE, AS WELL AS CERTAIN MATERIAL ISSUES WHICH HAD REMAINED UNANSWERED BY THE ASSESSEE TILL DATE, THEREFORE WE DO NOT FIND ANY REASON TO DISTURB THE WELL REASONED ORDER OF THE CIT(A). WE BEING OF THE CONSIDERED VIEW THAT AS THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE TRANSACTION OF SHARES, THEREFORE HER CLAIM OF STCG GENERATED ON THE P AGE | 14 SALE OF SHARES CANNOT BE ACCEPTED. WE THUS BEING OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS AS STOOD CAST UPON HER, AS REGARD S THE GENUINENESS OF THE PURCHASE OF SHARES, THEREFORE THE LOWER AUTHORITIES HAD RIGHTLY HELD THE AMOUNT OF RS. 20,64,121/ - (SUPRA) AS STOOD CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE AS THE LATTERS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT , WHICH THEREAFTER HAD BEEN SUSTAINED BY THE CIT(A) . WE THEREFORE FINDING NO REASON TO DISLODGE THE WELL REASONED ORDER OF THE CIT(A), THUS UPHOLD THE SAME. 10. THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 16 TH JUNE , 2017. SD/ - SD/ - ( B.R. BASKARAN) ( RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 16.06.2017 [ . . ./ R.K. , EX. SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED, MUMBAI 4. / CIT - CONCERNED, MUMBAI 5. , , / DR, ITAT, MUMBAI B BENCH 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P AGE | 15 SR.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER