DEEPAK SHAMBHU DAS BHALLA (HUF), MUMBAI V. ITO 15(3)(2), MUMBAI

ITA 7194/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8756 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 01-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Accommodation entries
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7194/MUM/2014 ASSESSMENT YEAR: 2005 - 06 M/S DEEPAK SHAMBHU DAS BHALLA (HUF) 181/182, TOWER A - 3, GODREJ GARDEN ENCLAVE, VIKHROLI (E) MUMBAI - 400079. VS. ITO - 15(3)(2) MUMBAI. PAN NO. AAFHB1790P APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. ARJU GARODIA , DR DATE OF HEARING : 04/09 /2017 DATE OF PRONOUNCEMENT : 31/10/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2005 - 06 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 26 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). M/S DEEPAK SHAMBHU DAS BHALLA (HUF) ITA NO. 7194/MUM/2014 2 2. WE FIND THAT THE CASE WAS FIXED FOR HEARING BEFORE THE TRIBUNAL ON VARIOUS DATES LIKE 21.06.2016, 25.08.2016 AND 0 4.09.2017. NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATES. HENCE WE ARE PROCEEDING TO DISPOSE OF THIS APPEAL AFTER HEARING THE LD. DR AND GOING THROUGH THE RELEVANT MATERIALS ON RECORD. 3. THE GROU NDS OF AP PEAL FILED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] WAS JUSTIFIED IN UPHOLDING THE ASSESSMENT ORDER BASED ONLY ON THE CERTAIN I NCRIMINATING DOCUMENTS AND STATEMENTS OF MR. MUKESH CHOKSI ABOUT HIS MODUS OPERANDI RELATING TO SOME OF HIS ACTIVITIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] HAS ERRED IN UP HOLDING THE ASSERTION MADE BY ASSESSING OFFICER WHILE HOLDING THE SHARE TRANSACTION OF THE APPELLANT AS BOGUS THOUGH THE AO HAS NOT SUBSTANTIATED THE SAME BY PRODUCING ANY EVIDENCE IN SUPPORT OF THE SAME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] HAS ERRED IN CONFIRMING THE ADDITION OF RS.22, 50,915/ - MADE BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES WHICH THE APPELLANT HAS DECLARED AS LONG TERM CAPITAL GAIN ELIGIBLE FOR EXEMPTION U/S 10(38) OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] HAS ERRED IN CONFIRMING THE ADDITION OF RS. 22, 50,915/ - WHICH THE AO HAS MADE ONLY ON PRESUMPTION AND SURMISES, IGNORING THE EVIDENCES RELATING TO SALE AND M/S DEEPAK SHAMBHU DAS BHALLA (HUF) ITA NO. 7194/MUM/2014 3 PURCHASE TRANSACTIONS OF THE SHARE INVESTMENTS SUBMITTED BY THE APPELLANT BEFORE THE ASSESSING OFFICER, WHICH IS AGAINST THE PRINCIPLE OF NATUR AL JUSTICE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] HAS ERRED IN CONFIRMING THE ADDITION OF RS.22, 50,915/ - BY SIMPLY APPLYING THE DECISIONS OF THE HONBLE ITAT IN MUKESH CHOKSI GROUP OF CASES AS A COROLLARY. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME - TAX (APPEALS) - 26 ['THE CIT (A)'] HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,917/ - MADE BY THE ASSESSING OFFICER AS COMMISSION @ 0.15% CHARGED BY THE SHARE BROKER. 3.1 THE ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND CHALLENGING THE REOPENING BY THE AO. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE INVESTIGATION WING REG ARDING SHARE TRANSACTIONS CARRIED OUT BY THE ASSESSEE WITH M/S GOLDSTAR FINVEST SECURITIES PVT. LTD. DURING THE SEARCH CARRIED OUT BY THE D EPARTMENT ON M/S MAHASAGAR SECURITIES PVT. LTD. ON 25.11.2009 AND SUBSEQUENT DATES, IT WAS FOUND THAT THE ABOVE CONCE RNS INCLUDING M/S GOLDSTAR FINVEST SECURITIES PVT. LTD. WERE ENGAGED IN PROVIDING BOGUS BILLS OF TRANSACTIONS IN SHARES AND SECURITIES. THE AO FOUND FROM THE INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT DURING THE YEAR THE ASSESSEE HAD PURCHASED 5,000 SHA RES OF M/S TALENT INFOWAY LTD. ON 20.08.2014 THROUGH M/S GOLDSTAR FINVEST SECURITIES PVT. LTD. FOR A CONSIDERATION OF RS.3,60,300/ - . ON VERIFICATION OF THE RETURN, THE AO FOUND THAT THE ASSESSEE HAS SOLD 23,000 SHARES OF TALENT INFOWAY FOR RS.19,9 0,207/ - THROUGH M/S M/S DEEPAK SHAMBHU DAS BHALLA (HUF) ITA NO. 7194/MUM/2014 4 MAHASAGAR SECURITIES PVT. LTD. AND CLAIMED LONG TERM CAPITAL GAINS (LTCG) OF RS.18,82,502/ - ON IT. OUT OF THESE, 13,000 SHARES WERE STATED TO BE PURCHASED FROM RUSHABH INVESTMENTS ON 29.04.2003. THE ASSESSEE COULD NOT FURNISH THE DETAIL OF OTHER PURCHASES BEFORE THE AO. THE AO OBSERVED THAT THE TALENT INFOWAY S HARES CLAIMED TO BE SOLD DURING THE YEAR WERE NOT OUT OF SHARES PURCHASE D DURING THE YEAR SINCE THE ASSESSEE HAD SHOWN LTCG OF THESE SHARES. ALSO THE ASSESSEE HAD CLAIMED LTCG ON S ALE OF 450 SHARES OF RELIANCE INDUSTRIES AND 150 SHARES OF ASIAN PAINTS FOR RS.2,13,208/ - AND RS.47,500/ - RESPECTIVELY. THE ASSESSEE COULD NOT FILE COPY OF PURCHASE BILLS OF THESE SHARES. THE AO ALSO FOUND THAT THE SALE BILLS WAS NOT ISSUED BY THE SHARE BR OKER REGISTERED WITH THE S TOCK E XCHANGE. THEREFORE, HE MA DE AN ADDITION OF RS.2,60,708/ - . THE ASSESSEE HAD CLAIMED LTCG OF RS.20,85,630/ - ON SALE OF SHARES. TO CLAIM THIS LTCG, THE ASSESSEE HAD SHOWN SALE CONSIDERATION OF M/S TALENT INFOWAY SHARES THROUG H M/S MAHASAGAR SECURITIES OF RS.19,90,207/ - . THE AO ARRIVED AT A FINDING THAT SUCH CLAIM OF EXEMPTION U/S 10(38) IS NOTHING BUT BOGUS CAPITAL GAINS CREATED THROUGH ACCOMMODATION ENTRIES. THEREFORE, HE TREATED THE ABOVE SUM OF RS.19,90,207/ - AS INCOME FROM OTHER SOURCES AND BROUGHT IT TO TAX. FURTHER, THE AO MADE AN ADDITION IN RESPECT OF COMMISSION TO GET ACCOMMODATION ENTRY @ 0.15% OF THE TOTAL GAIN WHICH COMES TO RS.3,526/ - . M/S DEEPAK SHAMBHU DAS BHALLA (HUF) ITA NO. 7194/MUM/2014 5 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD . CIT(A). WE FIND THAT THE LD. CIT(A) AGREED WITH THE REASONS GIVEN BY THE AO AND CONFIRMED THE ABOVE DISALLOWANCES. 6. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE DISMISS THE ADDITIONAL GROUND FILED BY THE ASSESSEE AGAINST REOPENING AS THE AO HAD RECEIVED SPECIFIC INFORMATION AS DELINEATED AT PARA 4 HEREINBEFORE ABOUT BOGUS ENTRIES OBTAINED BY THE ASSESSEE. WE FIND THAT THE BROKER OF THE ASSESSEE THROUGH WHOM THE SALES WERE MADE I.E. M/S MAHASAGAR SECURITIES (P.) LTD. IS A GROUP CONCERN OF SHRI MUKESH CHOKSI. WE ALSO FIND THAT SHRI CHOKSI WAS EXAMINED ON OATH U/S 131 OF 11.12.2009 BY THE DDIT ( INV), UNIT - I (4), MUMBAI AND HIS STATEMENT WAS RECORDED. A PERUSAL OF THE ABOVE STATEMENT SHOWS THAT SHRI CHOKSI WAS ENGAGED IN PROVIDING ONLY ACCOMMODATION ENTRIES. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEA L IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2017. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/10/2017 RAHUL SHARMA, SR. P.S. M/S DEEPAK SHAMBHU DAS BHALLA (HUF) ITA NO. 7194/MUM/2014 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI