USHA RAVISHANKAR SINGH, MUMBAI V. ITO 26(3)(5), MUMBAI

ITA 7119/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9332 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: K KOTRESH
• Keywords: Accommodation entries; Cancellation of registration; Penny stocks

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 7119 /MUM/ 201 6 (ASSESSMENT YEAR 20 0 7 - 0 8 ) MR S . USHA RAVISHAN KAR SINGH 6 B - 207, BLUE NILE G.L. COMPOUND, IIT MAIN GATE POWAI , MUMBAI - 400 076 . PAN : AMRPS 93 01B VS. ITO 2 6 (3)( 5 ) MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI K. KOTRESH DEPARTMENT BY SHRI RAM TIWARI DATE OF HEARING 2 0 .9. 201 7 DATE OF PRONOUNCEMENT 2 7 . 9 . 201 7 O R D E R THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 30 - 08 - 2016 PASSED BY LD CIT(A) - 38, MUMBAI FOR ASSESSMENT YEAR 2007 - 08 CONFIRMING THE ADDITION OF RS.5,64,309/ - RELATING TO SHARE TRANSACTIONS. THOUGH THE REGISTRY HAS NOTED THAT THE APPEAL IS BARRED BY LIMITATION BY 37DAYS, WE NOTICE THAT THE A SSESSEE HAS FURNISHED A CERTIFICATE OBTAINED FROM THE OFFICE OF LD CIT(A) FOR THE DATE OF SERVICE OF NOTICE, AS PER WHICH THE APPEAL IS WITHIN THE TIME LIMIT. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE AO REOPENED THE ASSESSMENT OF THE YEAR U NDER CONSIDERATION UPON RECEIVING INFORMATION THAT THE ASSESSEE HAS AVAILED BOGUS ENTRIES OF CAPITAL GAINS FROM COMPANIES BELONGING TO MUKESH CHOKSHI GROUP. IN THE SEARCH CONDUCTED, SHRI MUKESH CHOKSI HAD ADMITTED THAT HE AND HIS GROUP OF COMPANIES ARE EN GAGED IN PROVIDING ONLY ACCOMMODATION BILLS. THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED 1000 SHARES OF M/S HINDUSTAN ZINK LTD ON FOR AN AGGREGATE CONSIDERATION OF RS.4,16,911/ - THROUGH M/S ALLIANCE INTERMEDIARIES AND NETWORK P LTD SOLD THEM FOR A CONS IDERATION OF RS.3,25,106/ - AND ACCORDINGLY MR S . USHA RAVISHANKAR SINGH 2 SHORT TERM CAPITAL GAIN OF RS.1,47,398/ - AND OFFERED THE SAME IN HIS RETURN OF INCOME BY PAYING TAX AT CONCESSIONAL RATE. 3. SINCE TRANSACTIONS OF PURCHASES AND SALES HAVE BEEN ENTERED THOUGH THE MUKESH CHOKSI G ROUP OF COMPANIES, THE AO TREATED THE TRANSACTIONS AS SHAM AND ACCORDINGLY HELD THAT THE ASSESSEE HAS ONLY AVAILED ACCOMMODATION ENTRIES. ACCORDINGLY HE ASSESSED THE PURCHASE CONSIDERATION OF RS.4,16,911/ - AS WELL AS SHORT TERM CAPITAL GAINS OF RS.1,47,39 8/ - AS INCOME OF THE ASSESSEE UNDER INCOME FROM OTHER SOURCES. THE LD CIT(A) ALSO CONFIRMED THE SAME. 4. THE LD A.R SUBMITTED THAT THE MUKESH CHOKSI GROUP WAS OPERATING INTO THE SHARES OF PENNY STOCKS LIKE TALENT INFOWAY, BUNIAD CHEMICALS ETC. HOWEVE R, THE ASSESSEE HEREIN HAS PURCHASED SHARES OF COMPANIES WHICH ARE LISTED IN THE STOCK EXCHANGES AND STILL TRADED THEREIN. HE SUBMITTED THAT THE CONSIDERATION FOR PURCHASE AND SALE OF SHARES HAVE BEEN ROUTED THROUGH BANKING CHANNELS AND FURTHER THE STOCKS HAVE ENTERED INTO THE DEPOSITORY ACCOUNT OF THE ASSESSEE. ACCORDINGLY HE SUBMITTED THAT THERE IS NO REASON TO SUSPECT THE GENUINENESS OF PURCHASE AND SALE OF SHARES. HE FURTHER SUBMITTED THAT THE AO HAS SIMPLY RELIED UPON THE STATEMENT GIVEN BY SHRI MUK ESH CHOKSI, WITHOUT CONSIDERING THE EVIDENCES/DOCUMENTS FURNISHED BY THE ASSESSEE. THE LD A.R SUBMITTED THAT THE SHARES WERE PURCHASED AND SOLD BY THE ASSESSEE THROUGH M/S ALLIANCE INTERMEDIARY AND THE CANCELLATION OF ITS REGISTRATION WOULD NOT AFFECT, OT HERWISE GENUINE TRANSACTION OF PURCHASE AND SALES. ACCORDINGLY HE SUBMITTED THAT THE ORDER PASSED BY LD CIT(A) WAS NOT JUSTIFIED. 5. ON THE CONTRARY, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER PASSED BY LD CIT(A). 6. HAVING HEARD RIVAL SUBM ISSIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. THE ASSESSEE HAS PURCHASED SHARES, WHICH WERE NOT CONSIDERED TO BE SHARES BEING OPERATED BY MUKESH CHOKSI GROUP. THE PURCHASED SHARES HAVE ENTERED INTO THE DEPOSITORY ACCOU NT OF THE MR S . USHA RAVISHANKAR SINGH 3 ASSESSEE, WHICH FACT PROVES THE GENUINENESS OF PURCHASES. FURTHER THE PAYMENT FOR PURCHASES HAS BEEN GIVEN BY WAY OF CHEQUE AND HENCE THE GENUINENESS OF PAYMENTS ALSO STAND PROVED. THE DELIVERY OF SHARES ON THEIR SALE, HAS BEEN MADE FROM THE DE POSITORY ACCOUNT, MEANING THEREBY, THE GENUINENESS OF SALES ALSO STAND PROVED. THE SALE CONSIDERATION HAS BEEN RECEIVED THROUGH BANKING CHANNELS, MEANING THEREBY, THE GENUINENESS OF RECEIPT OF SALE CONSIDERATION ALSO STANDS PROVED. IT IS NOT THE CASE OF T HE AO THAT THE PRICE OF PURCHASE/SALES WAS NOT IN TUNE WITH MARKET RATES. THE ASSESSEE HAS FURNISHED EVIDENCES TO SUPPORT THE CLAIM OF PURCHASE AND SALES IN THE FORM OF BROKER NOTES, THE BANK STATEMENTS AND DE - MAT STATEMENTS. IN MY VIEW, THESE DOCUMENTS S UFFICIENTLY PROVE THE GENUINENESS OF PURCHASE AND SALE OF SHARES. 7. ON THE CONTRARY, THE TAX AUTHORITIES HAVE SIMPLY PLACED RELIANCE ON THE STATEMENT GIVEN BY SHRI MUKESH CHOKSI. WHEN THE DOCUMENTARY EVIDENCES, THAT TOO EXTERNAL EVIDENCE, SUPPORT TH E CASE OF THE ASSESSEE, I FIND NO REASON IN PLACING RELIANCE SOLELY ON THE GENERAL STATEMENT GIVEN BY SHRI MUKESH CHOKSI. THE CANCELLATION OF REGISTRATION OF THE BROKER LICENSE OF M/S ALLIANCE INTERMEDIARY, IN MY VIEW, WOULD NOT NULLIFY THE EVIDENCES FURN ISHED BY THE ASSESSEE, SINCE THE PAYMENTS AND DELIVERY OF SHARES HAVE BEEN PROVED. AS CONTENDED BY LD A.R, THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE EVIDENCES FURNISHED BY THE ASSESSEE. 8. IN VIEW OF THE FOREGOING DI SCUSSIONS, I AM OF THE VIEW THAT THERE IS NO REASON TO SUSPECT THE GENUINENESS OF PURCHASE AND SALE TRANSACTIONS OF SHARES. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.4,16,911/ - RELATING TO PURCHAS E VALUE OF SHARES AND ASSESS THE INCOME OF ` 147,398/ - AS SHORT TERM CAPITAL GAINS. MR S . USHA RAVISHANKAR SINGH 4 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 7 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 7 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FIL E. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI