REKHA DINESH SHAH, MUMBAI V. ITO WD 16(3)(2), MUMBAI

ITA 7392/MUM/2014

• Counselvise Citation: 739219914 RSA 2014
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN
• Keywords: Reopening of assessment; Unexplained investment; Search and seizure; Accommodation entries
• Section: 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' SMC ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 7392/MUM/2014 (ASSESSMENT YEAR: 2008 - 09 ) SMT. REKHA DINESH SHAH VS. INCOME TAX OFFICER 18 - B ALAKNANDA CHS V.P. ROAD, MUMBAI 400004 WARD 16(3)92) MUMBAI PAN - AAGPS8072A APPELLANT RESPONDENT APPELLANT BY: SHRI RAKESH JOSHI RESPONDENT BY: SHRI K. RAVIKIRAN DATE OF HEARING: 08.10. 2015 DATE OF PRONOUNCEMENT: 08 . 10 .2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 27, MUMBAI AND IT PERTAINS TO A.Y. 2008 - 09. 2. FOLLOWING REVISED GROUNDS WERE RAISED BY THE ASSESSEE: - 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN REOPENING THE COMPLETED ASSESSMENT WITHOUT RECORDING THE PROPER REASONS, HENCE THE ASSESSMENT IS BAD IN LAW. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION U/S. 69 OF THE INCOME TAX ACT, 1961 OF RS.4,17,223/ - BY TREATING THE INVESTMENT MADE IN SHARES AS ALLEGED UNEXPLAINED INVESTMENT, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. ON THE FACT AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.8,334/ - ON ACCOUNT OF ALLEGED COMMISSION PAID IN CASH, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 7392/MUM/2014 SMT. REKHA DINESH SHAH 2 3. FACTS N ECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. CONSEQUENT TO THE SEARCH AND SEIZURE CARRIED OUT IN THE CASE OF M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS RELATED GROUP THE DDIT (INV) WAS OF THE OPINION THAT M/S. ALLIANCE INTERMEDIARIES AND NETW ORK PVT. LTD. AND OTHER GROUP COMPANIES WERE ALL RUN BY SHRI MUKESH CHOKSHI AND HIS ASSOCIATES AND THEY ARE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND THEY ARE ALSO ENGAGED IN PROVIDING ENTRIES FOR SPECULATION, SHORT TERM/LONG TERM CAPITAL GAIN/LOSS, ETC . AS PER THE INFORMATION RECEIVED THE AO REOPENED THE ASSESSMENT FOR ASSESSMENT YEAR UNDER CONSIDERATION AND WAS OF THE OPINION THAT THE ASSESSEE HEREIN HAD OBTAINED ENTRIES/ BILLS AND HAD SHOWN PURCHASE OF SHARES OF ESSAR OIL, RELIANCE N.R. AND JAI CORPOR ATION TO THE TUNE OF ` 4,17,223/ - DURING THE FINANCIAL YEAR 2007 - 08 RELEVANT TO A.Y. 2008 - 09 FROM M/S. ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD., WHICH IS NOTHING BUT INVESTMENT UNDER SECTION 69 OF THE ACT FROM A SOURCE UNDISCLOSED TO THE DEPARTMENT. AC CORDINGLY THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF ` 10,72,340/ - . 4. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE WAS ASSESSED TO TAX FOR THE PAST SEVERAL YEARS AND FOR THIS YEAR ALSO THE RETURN OF INCOME WAS FILED DECLARING TOTAL INCOME OF ` 6,46,769/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER IT WAS SOUGHT TO BE REOPENED ON THE GROUND THAT THE ASSESSEE PURCHASED SHARES WORTH ` 4,17,223/ - THROUGH M/S. ALLIANCE INTERMEDIARIES AND NETWORK PVT. LTD. AND THEY ARE N OTHING BUT ACCOMMODATION ENTRIES. IT WAS ALSO CONTENDED THAT THE ASSESSEE MERELY PURCHASED SHARES OF RELIANCE NATURAL RESOURCES TO THE TUNE OF ` 1,51,110/ - WHICH WAS SOLD IN THE NEXT YEAR AND THE LONG TERM CAPITAL GAINS WERE ASSESSED TO TAX. IT WAS ALSO SUBMITTED THAT ON IDENTICAL CIRCUMSTANCES THE ITAT DELETED SIMILAR ADDITION. 5. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE WAS REQUIRED TO PROVIDE COMPLETE INFORMATION IN RESPECT OF THE TRANSACTIONS AND TO SHOW ITA NO. 7392/MUM/2014 SMT. REKHA DINESH SHAH 3 AS TO WHY IT CANNOT BE TREATED AS ACCOMMODATION ENTRY BUT THE ASSESSEE FAILED TO FURNISH ANY INFORMATION. HE ALSO RECORDED A FINDING THAT UNDER SIMILAR CIRCUMSTANCES A FINDING OF FACT HAS BEEN RECORDED THAT THE TRANSACTION HAD NOT TAKEN PLACE AT ALL THROUGH ANY STOCK EXCHANGE AND THEY WERE ONLY FICTITIOUS BILLS PREPARED TO SHOW THAT THE TRANSACTIONS HAVE TAKEN PLACE THROUGH STOCK EXCHANGE AND THIS FACT REMAINS UNCONTROVERTED. HE THUS AFFIRMED THE ACTION OF THE AO. 6. FURTHER AGGRIEVED, ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL. BY WAY OF REVISED GROUNDS ASSESSEE RAISED A LEGAL CONTENTION CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT , IN ADDI TION TO CHALLENGING THE ADDITION MADE BY THE AO UNDER SECTION 69 OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED ATTENTION OF THE BENCH TO PAGES 13 AND 16 OF THE PAPER BOOK TO SUBMIT THAT THE ASSESSEE IN FACT PURCHASED SHARES OF ONLY RELIANCE NATURAL RESOURCES, WHICH WERE SOLD IN SUBSEQUENT YEAR AND THE CAPITAL GAIN THEREOF WAS OFFERED TO TA X (CLA IMED AS EXEMPT) WHEREAS THE AO H AS WRONGLY FORMED THE OPINION THAT ASSESSEE PURCHASED SHARES OF ESSAR OIL, RELIANCE NATURAL RESOURCES AND JAI CORPORATION. HE PLACED RELIANCE UPON THE DECISION OF THE IAT SMC BENCH IN THE CASE OF SMT. SANGEETA RAMESH SHAH (ITA NO. 7263/MUM/2014 DATED 29.01.2015) WHEREIN , UNDER SIMILAR CIRCUMSTANCE , THE TRIBUNAL HELD THAT THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE PURCHASED AND SOLD SHARES OF ESSAR OIL, JAI CORPORATION, ETC. AND ALSO OBSERVED THAT THE AM OUNT MENTIONED IN THE ASSESSMENT ORDER IS NOT TALLYING WITH THE MATERIAL ON RECORD WHICH AMPLY PROVES THAT THE AO MECHANICALLY ISSUED NOTICE UNDER SECTION 148 OF THE ACT AND THEREFORE REOPENING WAS HELD TO BE INVALID. 7. THE LEARNED D.R. ALSO ADMITTED THAT TH E FACTS AND CIRCUMSTANCES IN THIS CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SMT. SANGEETA RAMESH SHAH (SUPRA). 8. HAVING REGARD TO THE RIVAL SUBMISSIONS , I AM OF THE VIEW THAT THE AO HA D ISSUED NOTICE WITHOUT PROPER RECORDING OF SATISFACTION AND ITA NO. 7392/MUM/2014 SMT. REKHA DINESH SHAH 4 HENCE RE OPENING OF ASSESSMENT IS BAD IN LAW. UNDER THE CIRCUMSTANCES THE PROCEEDINGS INITIATED BY THE AO UNDER SECTION 148 IS BAD IN LAW . 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER , 2015. SD/ - (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 8 TH OCTOBER , 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 27 , MUMBAI 4. THE CIT 16 , MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI