IMRAN A TANKIWALA, MUMBAI V. ITO WD 13(2)(1), MUMBAI

ITA 7372/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3680 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 01-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MATHURIA SHRI MAHENDER BISHNOI
• Keywords: Principle of natural justice
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.7372 /MUM/2013 ( %' ( / ASSESSMENT YEAR: 2004-05) SHRI IMRAN A. TANKIWALA C/O. SAIF MARINE, 220, VYAPAR BHAVAN, 49, DMELLO ROAD, CARNAC BUNDER, MUMBAI - 400009 ' / VS. THE INCOME TAX OFFICER WARD 13(2)(1) 425, AAYAKAR BHAVAN, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAAPT7403Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 09.05.2016 !' /DATE OF PRONOUNCEMENT: 12.08.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 05.09.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 24, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2004-05. ASSESSEE BY: SHRI M. S. MATHURIA DEPARTMENT BY: SHRI MAHENDER BISHNOI ITA NO.7372/M/2013 A.Y. 2004-05 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN LAW AS WELL AS IN THE CIRCU MSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS ERRED IN ADJUDICATING THAT THE IMPUGNED ASSESSMENT ORDER PAS SED U/S.143(3) R.W.S.147 BY THE ITO, WARD 13(2)(1), MUM BAI WITHOUT LEGAL INITIATION OF PROCEEDINGS U/S.147 AND WITHOUT ISSUE / SERVICE OF NOTICE U/S.148 IS VALID AND LEGAL. 2. ON THE FACTS AND IN THE LAW AS WELL AS IN THE CI RCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS ERR ED IN ADJUDICATING THAT THE IMPUGNED ASSESSMENT ORDER PAS SED U/S.143(3) R.W.S. 147 BY THE ITO, WARD 13(2)(1), MU MBAI WITHOUT ISSUE / SERVICE OF NOTICE U/S.143(2) IS VAL ID AND LEGAL. 3. ON THE FACTS AND IN LAW AS WELL AS IN THE CIRCUM STANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS ERRED IN ADJUDICATING THAT INITIATION OF PROCEEDINGS U/S.147 BY ISSUE OF NOTICE U/S.148 DATED 28.03.2011 Y NON-JURISDICTIONA L OFFICER [I.E. ITO WARD 17(3)(1)] IS VALID AND LEGAL . 4. ON THE FACTS AND IN LAW AS WELL AS IN THE CIRCUM STANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS ERRED IN ADJUDICATING THAT EVEN AFTER INFORMING ON 11.04.2011 [VIDE LETTER DATED 05.04.2011] BY THE APPELLANT TO THE SAID NON- JURISDICTIONAL OFFICER THAT LEGAL AND VALID JURISDICTION LIES WITH THE ITO, WARD 13(2)(1), MUMBAI, THE SAID NON- JURISDICTIONAL OFFICER CONTINUED THE PROCEEDINGS BETWEEN 11.04.2011 TILL 22.11.2011 IS VALID AND LEGAL EVEN THOUGH--- [A] APPELLANTS RETURN OF INCOME FOR ASSESSMENT YE AR 2004-05 WAS NOT AVAILABLE IN HIS CHARGE; [B] SAID ITO WARD 17(3)(1) WAS HAVING LEGAL AND VA LID JURISDICTION TO CONTINUE THE PROCEEDINGS TILL 17.11 .2011 WITHOUT TRANSFERRING THE PROCEEDINGS TO THE JURISDI CTIONAL ITO, WARD 13(2)(1), MUMBAI. 5. ON THE FACTS AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT LACUNAE IF ANY IS COVERED BY SECTION 292B OF THE I.T.ACT, 1961. ITA NO.7372/M/2013 A.Y. 2004-05 3 6. ON THE FACTS AND IN LAW, THE LEARNED CIT(A) HAS PATENTLY ERRED IN HOLDING THAT NON-JURISDICTIONAL OFFICERS ACTION OF NOT PROVIDING REASON RECORDED AND APPROVAL SOUGH T TO THE APPELLANT, EVEN THOUGH LEGAL AND VALID DEMAN D WAS MADE BY THE APPELLANT VIDE LETTER DATED 05.04.2011 [FILED ON 11.04.2011] IS VALID. 7. THE JURISDICTIONAL ITO, WARD 13(2)(1), MUMBAI [A] HAS NOT RECORDED ANY REASON IN TERMS OF SECTION 147 / 148(2); [B] HAS NOT OBTAINED APPROVAL IN TERMS OF SECTION 151(2) [C] HAS NOT ISSUED / SERVED LEGAL AND VALID NOTICE U/S.148--- BEFORE ISSUE OF NOTICE U/S.142(1) / 143(2) DATED 29 .11.2011 AND 30.11.2011 RESPECTIVELY. 8. THE JURISDICTIONAL ITO, WARD 13(2)(1), MUMBAI HAS ERRED IN PASSING IMPUGNED ASSESSMENT ORDER WITHOUT PROVID ING COPIES OF [A] REASONS RECORDED BY HIM THAT---- [I] INCOME CHARGEABLE TO TAX FOR ASSESSMENT YEAR : 2004-05 HAS ESCAPED ASSESSMENT IN TERMS OF SECTION 147 OR [II] THE APPELLANT FAILED TO FILE HIS RETURN OF INCOME U/S.139 / 142(1) / 148 OR [III] THE APPELLANT FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT. [B] REPORT FILED WITH JURISDICTIONAL JT.CIT / ADDL. CIT AND SANCTIONED BY THE SAID JURISDICTIONAL JT.CIT/ADDL.CIT FOR ISSUE OF NOTICE U/S.148. [C] ALLEGED INFORMATION RECEIVED FROM DDIT(INV), UN IT- 1(4), MUMBAI; [D] ALLEGED STATEMENT OF A PERSON NAMED SHRI MUKESH M. CHOKSI [E] ORDERS OF ITAT, MUMBAI IN ITA NO.7372/M/2013 A.Y. 2004-05 4 [I] ITA NOS. 4625/MUM/2005 AND 5000/MUM/2005 IN CASE OF MESSRS GOLD STAR FINVEST PVT. LTD. [II] ITA NO.4624/MUM/2005 IN CASE OF MESSRS. RICHMOND SECURITIES PVT. LTD., [III] ITA NO.4999/MUM/2005 IN CASE OF MESSRS ALPHA CHEMIE TRADE AGENCIES PVT. LTD. [IV] ITA NO.4912/MUM/2005 IN CASE OF MESSRS. MIHIR AGENCIES PVT. LTD. 9. THE JURISDICTIONAL ITO, WARD 13(2)(1), MUMBAI HAS ERRED IN PASSING IMPUGNED ASSESSMENT ORDER WITHOUT PROVID ING CROSS EXAMINATION OF THE PERSON NAMED SHRI MUKESH M . CHOKSI ON WHOSE ALLEGED STATEMENT HE HAS RELIED FOR MAKING IMPUGNED ASSESSMENT. 10. ON THE FACTS AND IN LAW, IMPUGNED ASSESSMENT OR DER REQUIRED TO BE QUASHED BEING BAD IN LAW AB INITIO A ND IS PASSED WITHOUT LEGAL AND VALID INITIATION OF PROCEE DINGS U/S.147 / 148; WITHOUT APPROVAL OF THE COMPETENT AU THORITY AND WITHOUT PROVIDING REASONS / CROSS EXAMINATION O F THE APPELLANT 11. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDI CE TO ONE ANOTHER AND THE APPELLANT CRAVE LEAVE TO ADD, TO AL TER AND / OR AMEND ANY OF THE FOREGOING GROUNDS AND TO MAKE N EW OR ADDITIONAL SUBMISSIONS AT THE HEARING OF THE APPEAL AS WELL AS TO SUBMIT FRESH DOCUMENTS AND INFORMATION AS ADV ISED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ITO 17( 1)(3), MUMBAI AFTER RECORDING THE REASON FOR INITIATING PROCEEDIN GS U/S.147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) AND OBTA INING THE SANCTION OF ADDL. CIT 17(1), MUMBAI, HAS ISSUED NOTICE U/S.1 48 OF THE ACT AND SERVED UPON THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 05.04.2011 HAS STATED THAT HIS ORIGINAL RETURN FILED U/S.139(1 ) OF THE ACT BE TREATED ITA NO.7372/M/2013 A.Y. 2004-05 5 AS REPLY TO THE NOTICE AS RETURN FILED AGAINST THE NOTICE ISSUED U/S.148 OF THE ACT IN WARD 13(2)(1) ON 25.10.2004 VIDE INWA RD NO.1321001457 AND ALSO REQUESTED TO ISSUE THE REASO NS. THEREAFTER, ON REQUEST OF THE ASSESSEE BY VIRTUE OF LETTER DATE D 22.11.2011, THE ITO 17(1)(3) HAS TRANSFERRED THE CASE RECORD TO THI S CHARGE. THEREAFTER, NOTICE U/S.143(2) OF THE ACT AND NOTICE U/S.142(1) OF THE ACT WERE ISSUED AND CALLING FOR DETAILS. THE ASSES SEE FILED THE OBJECTIONS WHICH WERE REJECTED BY STATING THE FOLLO WING REASONS:- THIS IS TO STATE THAT, ON THE BASIS OF INFORMATION RECEIVED FROM DIT(INV.), UNIT 1(4), MUMBAI, THE ITO 17(1)(3), M UMBAI HAVING TERRITORIAL JURISDICTION OVER THE RESIDENTIA L ADDRESS OF THE ASSESSEE HAS CORRECTLY FORM AN OPINION AND ON YOUR REQUEST TRANSFERRED THE CASE RECORD TO THIS CHARGE BEING HA VING RETURN FILED WITH THIS CHARGE, YOU HAVE BEEN ASK TO GIVE E XPLANATION AND DETAILS VIDE LETTER DATED 29.11.2011. HENCE TH E PROCEEDINGS U/S.148 HAS BEEN CORRECTLY INITIATED AND HAVING JUR ISDICTION OVER THE CASE YOUR REQUEST TO DROP THE PROCEEDINGS IS RE JECTED AND ONCE AGAIN YOU HAVE BEEN ASKED TO SUBMIT THE EXPLAN ATION & DETAILS AS ASK FOR IN EARLIER LETTERS AND SHOULD RE ACH TO THIS OFFICE WITHIN 3 DAYS OF RECEIPT OF THIS LETTER. FAILURE T O DO SO WILL BE CONSIDERED AS NO EXPLANATION TO BE SUBMITTED AND AC CORDINGLY ORDER WILL BE MADE ON THE BASIS OF RECORD AVAILABLE . ITA NO.7372/M/2013 A.Y. 2004-05 6 THE ASSESSEE VIDE LETTER DATED 12.12.2011 HAS SUBMI TTED THAT YOUR IMPUGNED NOTICE U/S.142(1) AND 143(2) DATED: 2 9.11.2011, HAS BEEN ISSUED AS A MATTER OF COURSE. IT IS HUMBL Y SUBMITTED THAT IMPUGNED NOTICE CALLING FOR CERTAIN INFORMATIO N IS BAD IN LAW AB INITIO. ANY PROCEEDING INITIATED AGAINST THE IMPUGNED NOTIC E WHICH IS BAD IN LAW AB INITIO WILL BE AGAINST THE PRINCIPAL S OF NATURAL JUSTICE. 4. THE ASSESSEE RECEIVED THE LONG TERM CAPITAL GAIN FROM THE BUNIYAD CHEMICALS TO THE TUNE OF RS.1,81,184/-. TH E INFORMATION WAS RECEIVED FROM THE DDIT(INV.) UNIT 1(4), MUMBAI, T HAT THE ASSESSEE HAS TAKEN BOGUS LONG TERM CAPITAL GAIN ENTRIES FROM M/S.GOLD STAR FINVEST PVT. LTD. SHRI MUKESH CHOKSI IN HIS STATEME NT DATED 11.12.2009 HAS STATED THAT HE IS ENGAGED IN THE BUS INESS OF GIVING (I) SPECULATION PROFIT ADJUSTMENT ENTRIES, II) SHORT TE RM PROFIT ADJUSTMENT ENTRIES, III) LONG TERM CAPITAL GAINS ADJUSTMENT EN TRIES AND (IV) SHARE APPLICATION ADJUSTMENT ENTRIES THROUGH VARIOU S COMPANIED FLOATED BY HIM INCLUDING M/S.GOLDSTRAM FINVEST PVT. LTD. IT WAS FOUND THAT THE ASSESSEE WAS BENEFICIARY OF THE MR. MUKESH CHOKSI THEREFORE, THE RECEIPT OF THE SALE OF SHARE OF BUNI YAD CHEMICALS OF RS.1,81,184/- WAS TREATED FROM UNDISCLOSED FUNDS AN D ADDED TO THE INCOME OF THE ASSESSEE. FEELING AGGRIEVED THE ASSE SSEE FILED AN ITA NO.7372/M/2013 A.Y. 2004-05 7 APPEAL BEFORE CIT(A) WHO CONFIRMED THE ORDER, THERE FORE THE PRESENT APPEAL HAS BEEN FILED BEFORE US. ISSUE NO.1 TO 2 & 7 TO 10:- 5. UNDER THESE ISSUES THE ADDITION TO THE TUNE OF R S.1,83,768/- WAS CHALLENGED. INFACT DDIT(INV.) UNIT 1(4), MUMBAI, INFORMED THE ASSESSEE OFFICER THAT THE ASSESSEE HAS TAKEN THE B OGUS LONG TERM CAPITAL GAIN ENTRIES FROM M/S. GOLD STAR FINVEST PV T. LTD. SHRI MUKESH CHOKSHI IN HIS STATEMENT DATED 11.12.2009 HAS STATE D THAT HE WAS ENGAGED IN THE BUSINESS OF GIVING (I) SPECULATION PROFIT ADJUSTMENT ENTRIES, (II) SHORT TERM PROFIT ADJUSTMENT ENTRIES , (III) LONG TERM CAPITAL GAINS ADJUSTMENT ENTRIES AND (IV) SHARE AP PLICATION ADJUSTMENT ENTRIES THROUGH VARIOUS COMPANIED FLOATED BY HIM IN CLUDING M/S. GOLDSTAR FINVEST PVT. LTD. THE ADDITION WAS MADE O N THE BASIS OF THE STATEMENT OF SHRI MUKESH CHOKSHI. THE CONTENTION O F THE ASSESSEE IS THAT THE ASSESSEE ACQUIRED 1900 EQUITY SHARES OF BU NIYAD CHEMICALS LTD. THROUGH SHARE BROKER M/S. MAHASAGAR SECURITIES PVT. LTD., WHICH ARE REGISTERED WITH SEBI UNDER REGISTRATION NO. INB 230683331/23- 10777, AND ARE SUB-BROKER OF NSE MEMBER ISE SECUR ITIES & SERVICES LTD. HE BOUGHT 1900 EQUITY SHARES OF M/S. BUNIYAD CHEMICALS LTD. ISSUED BY THE COMPANY OF SHAILA M. CHOKSI. THESE SHARES WERE TAKEN FROM THE ABOVE SAID BROKER, THE C OMPANY TRANSFERRED THE SHARE WITH HIS NAME ON 31.05.2002. THE COPIES OF SHARES CERTIFICATES WERE ATTACHED. THESE SHARES W ERE DEMATERIALIZED ITA NO.7372/M/2013 A.Y. 2004-05 8 WITH DENA BANK. APPLICATION FOR DEMATERIALIZATION REQUEST FORM WITH EXTRACT OF SAID DEMAT ACCOUNT CONFIRMING DEMATERIAL IZATION OF SHARES ARE ATTACHED HEREWITH AND COLLECTIVELY MARKED AS E XHIBIT O. SAID 1900 SHARES WERE SOLD THOUGH ABOVE NAMES SHARE BROK ER IN OFF MARKET TO INFRA LEASE FINANCIAL SERVICES LTD. IN FO LLOWING THREE LOTS DATE OF SALE NUMBER OF SHARES SOLD SOLD TO SALES CONSIDERATION 25.11.200 3 600 INFRA LEAS FINANCIAL SERVICES LTD. 58,032 27.11.200 3 700 INFRA LEAS FINANCIAL SERVICES LTD. 67,704 28.11.200 3 600 INFRA LEAS FINANCIAL SERVICES LTD. 58,832 TOTAL 1,83,768 THESE SALES WERE EFFECTED FROM DEMAT ACCOUNT NO.101 11342 WITH DENA BANK. SALES CONSIDERATION OF RS.1,83,768/- AR E DEPOSITED IN APPELLANTS SAVING BANK ACCOUNT NO. HS 7310 OF CENT RAL BANK OF INDIA. COPIES OF RELEVANT PAGES OF SAID BANK ACCOU NT IS ATTACHED HEREWITH AND MARKED AS EXHIBIT P. 6. NOW IT IS TO BE SEEN WHETHER THE STATEMENT OF SH RI MUKESH CHOKSI IS SUFFICIENT TO THE ADDITION OF RS.1,83,76 8/- EXCEPTT THE STATEMENT OF SHRI MUKESH CHOKSI THERE IS NO MATERI AL AVAILABLE TO THE ASSESSING OFFICER FOR THE SAID ADDITION. NO OPPORT UNITY OF CROSS EXAMINATION OF SHRI MUKESH CHOKSI WAS GIVEN TO THE ASSESSEE. IT IS ITA NO.7372/M/2013 A.Y. 2004-05 9 NOT IN DISPUTE THAT THE SALES WERE EFFECTED FROM D EMAT ACCOUNT NO.10111342 WITH DENA BANK. SALE CONSIDERATION OF RS.1,83,768/- WERE DEPOSITED IN THE APPELLANTS SAVING BANK ACCOU NT NO. HS 7310 OF CENTRAL BANK OF INDIA. THERE IS NO COGENT AND CONV INCING MATERIAL WITH THE ASSESSING OFFICER FOR THE ABOVE SAID BOGUS TRANSACTION TO THE TUNE OF RS.1,83,768/-. AS DISCUSSED ABOVE THE STAT EMENT OF SHRI MUKESH CHOKSI IS NOT SUFFICIENT TO ARRIVE AT THIS C ONCLUSION THAT THE TRANSACTION WITH M/S. GOLD STAR FINVEST PVT. LTD. IS BOGUS SPECIFICALLY IN THE CIRCUMSTANCES WHEN NO OPPORTUNI TY WAS GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE SHRI. MUKESH CHOK SI. THE NUMBER OF DECISIONS HAVE COME IN FAVOUR OF THE ASSESSEE WH ICH WERE BASED UPON THE STATEMENT OF SHRI MUKESH CHOKSI. IN THIS REGARD WE ALSO FOUND SUPPORT OF LAW SETTLED IN ITA NO.3632/MUM/201 0 DATED 29.07.2011 IN CASE OF ITO 14(3)(1) VS. SMT. NAVNEET A MEHTA. 7. THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ADDITION TO THE TUNE OF RS.1,83,768/- IS WRONG AGAI NST LAW AND FACTS AND IS HEREBY ORDERED TO BE DELETED. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVEN UE. ISSUE NO.3 TO 6:- 8. SINCE THE ISSUE NO.1 TO 2 AND 7 TO 10 HAVE ALREA DY BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THEREFORE DECISION ON TH ESE ISSUES ONLY ITA NO.7372/M/2013 A.Y. 2004-05 10 BECAME AN ACADEMIC IN NATURE. THEREFORE THERE IS N O NEED TO DECIDE THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED 12 TH AUGUST, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI