Shri.Niren Mehta, Bangalore V. Income-Tax Officer, Bangalore

ITA 695/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5374 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS JT BENGALURU
• Assessee Lawyers: H N KHINCHA
• Keywords: Capital asset; Principle of natural justice; Accommodation entries
• Section: 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.695/BANG/2017 ASSESSMENT YEAR : 2007-08 SHRI NIREN MEHTA, # 258, 44 TH CROSS, 9 TH MAIN, 5 TH BLOCK, JAYANAGAR, BANGALORE 560 041. PAN: ACMPM 7980K VS. THE INCOME TAX OFFICER, WARD 5(2)(4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SMT. SWAPNA DAS, JT.CIT(DR)(ITAT)-2, BENGALURU DATE OF HEARING : 15.05.2017 DATE OF PRONOUNCEMENT : 19.05.2017 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PA SSING THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED C IT(A) HAS ERRED IN CONFIRMING THE SAME. THE ORDERS AS PASSED ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 2. THE IMPUGNED ORDER AS PASSED BY THE ASSESSING OFFICER WAS WITHOUT JURISDICTION AND ALSO PASSED VIOLATING THE PRINCIPLES AND NATURAL JUSTICE AND THEREFORE IT IS BAD IN LAW AND NONEST IN LAW IS REQUIRED TO BE QUASHED. ITA NO.695/BANG/2017 PAGE 2 OF 5 3. IN ANY CASE AND WITHOUT PREJUDICE THE CONDITIO N PRECEDENT FOR ISSUE OF NOTICE U/S. 148 OF THE ACT BEING NOT P RESENT ALL THE CONSEQUENTIAL PROCEEDINGS BECOME BAD IN LAW AND ARE LIABLE TO BE QUASHED. 4.1. IN ANY CASE WITHOUT PREJUDICE, THE LEARNED A SSESSING OFFICER HAD ERRED IN NOT ACCEPTING THE GAIN ON SALE OF SHARES AS GAIN ON SALE OF CAPITAL ASSET (SHORT TERM) DESPITE THE OVERWHELMING EVIDENCE AND PROOF, IS AGAINST LAW AND FACTS IS TO BE REJECTED. THE CLAIM OF THE APPELLANT OF SHORT TE RM CAPITAL GAIN BEING RIGHT IN LAW AND ON FACTS IS TO BE ACCEP TED 4.2. THE LEARNED ASSESSING OFFICER HAD ERRED IN T REATING A SUM OF RS. 2,13,926/- AS INCOME FROM OTHER SOURCES, ON THE GROUND THAT THE TRANSACTION IN SHARES ARE NOT GENUINE. THE ACTION OF ASSESSING OFFICER BEING CONTRARY TO BOTH FACTS AND LAW IS TO BE REJECTED. 4.3. THE LEARNED ASSESSING OFFICER HAD ERRED 'IN N OT APPRECIATING THE FACTS AND EVIDENCE AVAILABLE. THE CONCLUSIONS DRAWN BY ASSESSING OFFICER ARE WITHOUT ANY BASIS, B ASED ON SURMISES AND CONJECTURES ARE TO BE DISREGARDED. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DISMISSING THE APPEAL IN LIMINE ON THE GRO UND THAT THE APPEAL WAS NOT PROSECUTED BY THE APPELLANT. THE APP ELLANT HAS NOT BEEN RECEIVED ANY HEARING NOTICE, COULD NOT HAVE AT TENDED THE HEARING. THEREFORE, THE IMPUGNED ORDER PASSED BY TH E CIT(A) IS BAD IN LAW AND LIABLE TO BE QUASHED. 6. THE APPELLANT DENIES THE LIABILITY TO PAY INTER EST U/S. 234B AND 234C OF THE LT. ACT. 1961. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 7. IN VIEW OF THE ABOVE, AND ON OTHER GROUNDS TO B E ADDUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORD ER PASSED BY THE AUTHORITIES BELOW BE QUASHED OR ATLEAST THE ADDITIO N MADE TO BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER WITH THE SUBMISSION THAT ITA NO.695/BANG/2017 PAGE 3 OF 5 SEARCH WAS CONDUCTED IN A GROUP OF SHRI MUKESH CHOK SI AND ON THE BASIS OF THE STATEMENT OF MUKESH CHOKSI, THE AO HAS TREAT ED THE SHARE TRANSACTIONS ENTERED UPON BY THE ASSESSEE AS BOGUS AND MADE THE ADDITION OF THE SAME IN THE HANDS OF THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTEND ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS ASK ED FOR OPPORTUNITY TO CROSS-EXAMINE SHRI MUKESH CHOKSI, WHOSE STATEMEN T IS BEING RELIED UPON FOR MAKING THE ADDITION IN THE HANDS OF ASSESS EE; BUT THE ASSESSEE HAS NOT BEEN AFFORDED OPPORTUNITY TO CROSS-EXAMINE HIM. RATHER, STATEMENT OF MUKESH CHOKSI RECORDED DURING THE COUR SE OF HIS OWN ASSESSMENT WAS ALSO NOT CONFRONTED TO THE ASSESSEE. THEREFORE, THE ADDITIONS MADE IN THE HANDS OF ASSESSEE ARE NOT SUS TAINABLE IN THE EYES OF LAW. 4. THE LD. DR, ON THE OTHER HAND, HAS PLACED RELIAN CE UPON THE ORDER OF CIT(APPEALS). 5. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, I FIND THAT DURING THE COURSE OF SEARCH CONDUCTED UPON THE MUKESH CHOKSI GROUP, STATEMENT OF MUKESH CHOKSI WAS RECORDED AND IN HIS STATEMENT HE HAS ADMITTED THAT HE WAS PROVID ING ACCOMMODATION ENTRIES TO THOSE WHO WERE INTERESTED TO EARN CAPITA L GAIN. ON A CAREFUL PERUSAL OF THE ASSESSMENT ORDER, I FIND THAT THERE IS NO FINDING WITH REGARD TO THE SUPPLY OF STATEMENT OF MUKESH CHOKSI TO THE ASSESSEE. MOREOVER, ITA NO.695/BANG/2017 PAGE 4 OF 5 NOTHING IS AVAILABLE ON RECORD, WHEREFROM IT COULD BE INFERRED THAT ASSESSEE WAS EVER ALLOWED TO CROSS-EXAMINE MR. MUKESH CHOKSI . IT IS SETTLED POSITION OF LAW THAT STATEMENT OR THE EVIDENCE WHIC H IS BEING RELIED UPON BY THE AO FOR MAKING THE ADDITION IN THE HANDS OF ASSE SSEE, THE SAME SHOULD BE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE SHOU LD BE ALLOWED TO CROSS-EXAMINE THE WITNESS IN THIS REGARD. 6. FROM A CAREFUL PERUSAL OF THE ORDERS OF LOWER AU THORITIES, IT IS QUITE EVIDENT THAT STATEMENT OF MR. MUKESH CHOKSI WAS REL IED ON FOR MAKING THE ADDITION, BUT ASSESSEE WAS NEVER ALLOWED TO CROSS-E XAMINE HIM. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION IN THE HANDS OF ASSESSEE, WITHOUT ALLOWING THE ASSESSEE TO CROSS- EXAMINE MR. MUKESH CHOKSI, WHOSE STATEMENT WAS RELI ED UPON FOR MAKING THE ABOVE ADDITIONS. I ACCORDINGLY SET ASIDE THE O RDER OF CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF AO WITH A DIRECTI ON TO FIRST CONFRONT THE STATEMENT OF MR. MUKESH CHOKSI TO THE ASSESSEE AND ALLOW HIM TO CROSS- EXAMINE MR. MUKESH CHOKSI TO DIG OUT THE TRUTH IN T HIS REGARD. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MAY, 2017. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE, DATED, THE 19 TH MAY, 2017. / D ESAI S MURTHY / ITA NO.695/BANG/2017 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.