SAPNA JAYWANT SHAH, MUMBAI V. ITO WD 16(3)(2), MUMBAI

ITA 7262/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2747 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMANATH S UKKALI
• Keywords: Reopening of assessment; Unexplained investment; Search and seizure; Salary income; Accommodation entries; Reason to believe
• Section: 143(3); 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SM C BENCH , MUMBAI BEFORE SRI MAHAVIR SINGH, J UDICIAL MEMBER ITA NO .7262 /MUM/2014 (A.Y.:2008 - 09 ) SMT. SAPNA JAYWANT SHAH, K - 4, BLOCK, V. P. ROAD, SIKKA NAGAR, GIRGAON, MUMBAI 400 004 VS. THE INCOME TAX OFFICER, WA RD - 16(3) (2), MUMBAI PAN: AHEPM 6145 R APPELLANT .. RESPONDENT APPELLANT BY MS. VINITA SHAH, AR RESPONDENT BY SHRI SOMANATH S. UKKALI, DR DATE OF HEARING 20 - 06 - 2016 DATE OF PRONOUNCEMENT 08 - 07 - 2016 O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OU T OF THE ORDER OF THE CIT (A) - 27 , MUMBAI PASSED IN APPEA L NO. CIT (A) - 26 /16 (3 ) ( 2)/459 /13 - 14 DATED 11 - 09 - 2014 . ASSESSMENT WAS FRAMED BY THE IT O , WARD - 16(3)(2) , MUMBAI FOR ASSESSMENT YEAR 20 08 - 09 VIDE HIS ORDER DATED 21 - 02 - 2014 PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE (ACT). 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST ASSUMPTION OF JURISDICTION BY THE AO FOR REOPENING OF ASSESSMENT U/S 147 READ WITH SECTION 148 OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS EARNING SALARY INCOME AND INCOME FROM OTHER SOURCES. SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. ON 25 - 11 - 2 009 AND SUBSEQUENT DATES ON THE BASIS OF FIU ALERT INFORMATION RECEIVED REGARDING SUSPICIOUS TRANSACTIONS IN VARIOUS BANK ACCOUNTS OF THE ASSESS EE AND OTHER COMPANIES, WHEREIN S/SHRI MUKESH CHOKSHI AND JAYESH K. SAMPAT ARE DIRECTORS. DURING THE COURSE OF T HE OPERATION IT IS REVEALED THAT THAT M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS 34 GROUP COMPANIES ARE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND ARE ENGAGED IN PROVIDING BOGUS ENTRIES FOR SPECULATION ITA NO. 7262 /MUM/20 1 4 2 PROFIT/LOSS, SHORT TERM/LONG TERM CAPITAL GAIN/LOSS , SHARE APPLICATION MONEY, PROFIT/LOSS ON COMMODITIES TRADING. IN THE STATEMENT OF SHRI MUKESH CHOKSHI RECORDED DURING THE COURSE OF SEARCH, HE HAS ADMITTED THAT ACCOMMODATION ENTRIES ARE PROVIDED TO VARIOUS PERSONS. ACCORDING TO THE AO THE ASSESSEE IS ALS O BENEFICIARY OF THE ABOVE FRAUDULENT TRANSACTION. ACCORDING TO THE AO, THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES/BILLS AND PURCHASE OF SHARES OF IND. BANK MER, ESSAR OIL, RELIANCE N. R. JAI CORPORATION OF RS.8,49,774/ - DURING THE FINANCIAL YEAR 2008 - 09 RELEVANT TO THIS ASSESSMENT YEAR 2009 - 10 FROM M/S. ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD. FOR THIS, THE AO RECORDED THE FOLLOWING REASONS U/S 148 OF THE ACT AND THE RELEVANT PORTION OF THE SAME READS AS UNDER: - 2. FROM THE DATA COLLECTED BY THE CCIT (CENTRAL) - I, MUMBAI, IT IS REVEALED THAT THE ABOVE MENTIONED ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS.8,49,774/ - DURING THE F. Y. 2007 - 08 RELEVANT TO A. Y. 2008 - 09 THROUGH ALLIANCE INTERMEDIATORIES & NETWORK PVT. LTD. IN RESPECT OF SHARES OF M/S. RELIANCE N. R. THIS IS NOTHING BUT INCOME EARNED FROM A SOURCE NOT DISCLOSED TO THE DEPARTMENT IN HIS RETURN OF INCOME. HENCE, THE ASSESSEE HAS SUPPRESSED THE PRIMARY FACTS REQUIRED IN THE RETURN OF INCOME. 3. IN VIEW OF T HE ABOVE FACT S AND AFTER GOING THROUGH THE RECORDS AVAILABLE, I HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX TO THE TUNE OF RS.8,49,774/ - OR ANY OTHER INCOME CHARGEABLE TO TAX WHICH COMES TO MY NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS FOR RE - ASSESSM ENT, HAS ESCAPED ASSESSMENT, WITHIN THE MEANING OF PROVISIONS OF SEC 147 OF THE ACT, 1961. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS FAILED TO DISCLOSE TRUE AND COMPLETE PARTICULARS OF ITS INCOME FOR THE YEAR UNDER CONSIDERATION. ACC ORDINGLY, THE CAS E IS BEING RE - OPENED U/S 147 OF THE I. T. ACT 1961 FOR ASST. YEAR 2008 - 09. THE AO FINALLY TREATED THIS TRANSACTIONS AS ACCOMMODATION ENTRIES AND MADE ADDITION OF RS.27,33,578/ - . AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A), WHO ALSO CONFIRM ED THE ACTION OF THE AO. AGGRIEVED, NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE OUTSET, THE LEARNED COUNSEL STATED THAT THE TRIBUNAL IN ITA NO.7263/MUM/ 2014 FOR ASSESSMENT YEAR 2008 - 09, EXACTLY ON IDENTICAL FACTS, IN ASSESSEES GROUP CASE S I.E. IN THE CASE OF SANGEETA R. SHAH VS. ITO VIDE ORDER DATED 19 - 01 - 2015 HAS QUASHED THE REOPENING BY OBSERVING IN PARA 9 AND 10 AS UNDER: - ITA NO. 7262 /MUM/20 1 4 3 9. JOINING THE ISSUE THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD TO JUSTIF Y THAT THE ASSESSEE PURCHASED THE SHARES OF OTHER COMPANIES AND EVEN IN THE BALANCE SHEET ASSESSEE HAS NOT SHOWN EITHER AVAILABILITY OF SHARES OR PURCHASE OF SHARES OF ESSAR OIL, JAI CORPORATION, ETC. EVEN AT THIS STAGE THERE IS NOTHING ON RECORD TO SUGGES T THAT THE ASSESSEE HAD EITHER PURCHASED OR SOLD THOSE SHARES AT A LATER DATE. THE AO HAD NOT AT ALL APPLIED HIS MIND WHILE REOPENING THE ASSESSMENT EXCEPT MECHANICALLY ISSUING NOTICE UNDER SECTION 148 OF THE ACT. HE THUS STRONGLY CONDEMNED THE ACTION OF T HE AO ON THE GROUND THAT THE BASIC TENET OF TAXATION IS THAT THE AO SHOULD NOT PROCEED ON A MATTER UNLESS THE CONDITIONS PRESCRIBED THEREIN ARE PROPERLY SATISFIED. SECTION 147 USES THE EXPRESSION HAS REASONS TO BELIEVE WHICH IMPLIES THAT IT IS FOR THE AO TO ACT INDEPENDENTLY BY LOOKING INTO THE INFORMATION GATHERED BY HIM AND HE CANNOT MERELY BORROW THE VIEW TAKEN BY SOMEBODY ELSE. 10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. ADMITTEDLY, THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT T HE ASSESSEE PURCHASED AND SOLD SHARES OF ESSAR OIL, JAI CORPORATION, ETC. JAI CORPORATION, ETC. THE FIGURE OF RS.4,18,437/ - IS NOT TALLYING WITH ANY MATERIAL ON RECORD WHICH AMPLY PROVE THAT THE AO HAD MECHANICALLY ISSUED NOTICE UNDER SECTIO N 148 OF THE ACT. SIMILAR MISTAKE WAS COMMITTED BY THE CIT (A) BY REPRODUCING THE GROUNDS OF APPEAL OF SOME OTHER ASSESSEE WHILE PASSING THE ORDER, WHICH AMPLY SHOWS THAT BOTH THE AUTHORITIES BELOW HAD NOT APPLIED THEIR MINDS TO THE FACTS OF THE CASE. SINC E THE AO ISSUED NOTICE WITHOUT PROPER RECORDING OF HIS SATISFACTION THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, I AM OF THE FIRM VIEW THAT REOPENING OF ASSESSMENT IS BAD IN LAW AND I ORDER ACCORDINGLY. ON QUERY FRO M THE BENCH, THE LEARNED SR. DR COULD NOT CONTROVERT THE ABOVE FACTS THAT THIS ISSUE IS SQUARELY COVERED BY THE ABOVE TRIBUNAL JUDGME NT. THE FACTS BEING IDENTICAL, TAKING A CONSISTENT VIEW, I ALSO QUASH THE REOPENING OF ASSESSMENT. 5. SINCE, THE MAIN ISS UE RELATING TO REOPENING OF ASSESSMENT HAS BEEN QUASHED, THE OTHER TWO ISSUES IN THE ASSESSEES APPEAL RELATING TO CONFIRMATION OF ADDITION OF RS.27,33,578/ - MADE U/S 69 ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT AND ON ACCOUNT OF ALLEGED COMMISSION PAID IN CASH @2% OF RS.27,33,578/ - REQUIRE NO ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 08 /0 7 / 201 6 . SD/ - ( MAHAVIR SINGH ) JUDICIAL MEMBER MUMBAI , DATED 08 / 7 / 201 6 LAKSHMIKANTA DEKA/SR.PS ITA NO. 7262 /MUM/20 1 4 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI DATE INITIAL DICTATION PAD ATTACHED WITH THE DRAFT ORDER YES 1. DRAFT DICTATED ON 20 - 06 - 16 SR.PS 2. DRAFT PLACED BE FORE AUTHOR 2 1 - 06 - 16 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON 8/7/16 SR.PS 7. FILE SENT TO THE BENCH CLE RK 8/7/16 SR.PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT ( A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//