ITO 33(2)(4), MUMBAI V. NEETA ASHOK SHAH, MUMBAI

ITA 7462/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101275 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN
• Keywords: Unexplained cash credit; Additional evidence; Accommodation entries
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' SMC ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 7462/MUM/2014 (ASSESSMENT YEAR: 2007 - 08 ) INCOME TAX OFFICER - 33(2)(4) VS. SMT. NEETA ASHOK SHAH ROOM NO. 101, 1ST FLOOR C - 11, PRATHAKSHAKAR BHAVAN BKC, BANDRA (E), MUMBAI - 051 B - 602/601, HARMONY APTS A.C. ROAD, NEAR DAMODAR WADI KANDIVALI (E), MUMBAI 400101 PAN - ARKPS1661E APPELLANT RESPONDENT APPELLANT BY: SHRI K. RAVIKIRAN RESPONDENT BY: NONE DATE OF HEARING: 07.10.2015 DATE OF PRONOUNCEMENT: 12 . 10 .2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) 35, MUMBAI AND IT PERTAINS TO A.Y. 2007 - 08. 2. F OLLOWING GROUNDS WERE URGED BEFORE THE TRIBUNAL: - (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS CORRECT IN IGNORING THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT PROVE THAT THE TRANSACTIONS IN SHARES WERE ENTERED THROUGH A RECOGNIZED STOCK EXCHANGE AND RULING IN FAVOUR OF THE ASSESSEE DESPITE THE FACT THAT THE A SSESSEE NEVER PRODUCED THE DEMA T ACCOUNT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDEN CE OF THE ASSESSEE I.E DEMAT ALC WITHOUT GIVING THE AO AN OPPORTUNITY IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES. NO TRANSACTION ID OF THE DEMAT STRIPS WERE GIVEN TO THE AO. AS SUCH THE AO COULD NOT VERIFY THE CORRESPONDING PAYMENTS THROUGH ECS VIS A VIS THE TRANSACTION ID'. ITA NO. 7462/MUM/2014 SMT. NEETA ASHOK SHAH 2 (III) WHETHER THE LD.CIT(A)S AFTER TAKING CO GNIZANCE OF THE FACT THAT MUKESH CHOKSHI HAS ON THE DATE OF SEARCH & (SUBSEQUENTLY ALSO) STATED THAT HIS STATEMENT THAT ALL THE TRANSACTIONS CARR I ED OUT BY HIS VARIOUS COMPANIES ARE BOGUS AND HE ONLY PROVIDES ACCOMMODATION BILLS. WITHOUT PREJUDICE, THE LD.CIT(A)S COULD HAVE REMANDED THE MATTER TO AO TO ALLOW THE ASSESSEE TO CROSS EXAMINE MUKESH CHOKSHI AND CALLED FOR FURTHER REMAND. (IV) WHETHER THE LD.CIT(A)S AFTER TAKI NG CO GNIZANCE OF THE FACT IN PAGE 5 OF HIS ORDER THAT THE SUB - BROKER ALLIANCE INTERMEDIARIES & NETWORK PRIVATE LIMITED ADMITTED DURING ITS OWN ASSESSMENT THAT IT WAS IN THE BUSINESS OF ACCOMMODATION ENTRY, WAS RIGHT IN HOLDING THAT THE PURCHASE OF THE SHAR ES BY THE ASSESSEE THROUGH THIS SUB - BROKER WAS GENUINE. THE LD.CIT(A)S FAILED TO REMAND THE MATTER TO THE AO FOR CROSS EXAMINATION OF THE ASSESSEE. (V) WHETHER THE LD.CIT(A)S AFTER OBSERVING THAT THE AO ERRED IN CONFIRMATION FROM BSE INSTEAD OF NSE, WAS RI GHT IN ACCEPTING CLAIM OF ASSESSEE WITHOUT ASKING THE O TO OBTAIN CONFIRMATION FROM NSE REGARDING TRANSACTIONS MADE THROUGH THE SUB - BROKER ALLIANCE INTERMEDIARIES & NETWORK PRIVATE LTD. & JOINDER CAPITAL SERVICES LTD. WHEREAS IN THE INSTANT CASE, THE ASSES SEE WAS INFORMED OF THE REASONS FOR REOPENING THE CASE. (VI) WHETHER THE LD.CIT(A)S WAS CORRECT IN IGNORING THE FACT THAT THE ASSESSEE NEVER REQUESTED FOR CROSS - EXAMINATION BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND HOLDING THAT THAT AO DID NOT PR OVIDE THE OPPORTUNITY TO CROSS - EXAMINE. (VII) WHETHER THE LD.CIT(A)S AFTER RELYING ON THE DECISIONS OF THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF ACIT VS. UTARA S.SHORAWALLA AND OTHERS IN IT NO.55606/5507/MUM12009 CO NO. 107/MUM/2010 ORDER 25.5.201 1 FOR A .Y 2001 - 02 AND 2002 - 03 WAS CORRECT IN NOT DIRECTING THE AO TO CROSS - EXAMINE AND FURNISH THE REMAND REPORT. (VIII) THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS OF UNEXPLAINED CASH CREDIT OF RS.2,50,843/ - AND UNEXPLAINED CASH CREDIT OF RS.13,140/ - BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. I HAVE HEARD THE LEARNED D.R. AND CAREFULLY PERUSED THE RECORD. ITA NO. 7462/MUM/2014 SMT. NEETA ASHOK SHAH 3 4. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. FOR THE YEAR UNDER CONSIDERATION ASSESSEE DECLARED TOTAL INCOME OF ` 1,06,682/ - ON 20.03.2009 WHICH INCLUDES LONG TERM CAPITAL GAIN OF ` 13,140/ - , WHICH IS CLAIMED AS EXEMPT. INFORMATION WAS RECEIVED BY THE AO, DURING THE COURSE OF STATEMENT GIVEN BY SHRI MUKESH CHOKS H I ON 16.01.2013, THAT HE HAD PROVIDED ACCOMMODATION ENTRIES TO SEVERAL PEOPLE INCLUDING THE ASSESSEE HEREIN. THEREFORE THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT AND A NOTICE UNDER SECTION 142(1) WAS ISSUED ALONG WITH A QUESTIONNAIRE CALLING UPON THE ASSESSEE TO FURNISH DETAILS OF PURCHASE OF SHARES AND DETAILS OF D - MAT ACCOUNTS, PROOF OF PAYMENT MADE ON PURCHASE, ETC. UPON GOING THROUGH THE INFORMATION THE AO HAD CONCLUDED THAT ASSESSEE HAD TAKEN BOGUS/ACCOMMODATION E NTRIES AND THE ENTIRE TRANSACTION IS NOTHING BUT ACCOMMODATION ENTRIES FROM M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. HE THEREFORE ADDED A SUM OF ` 2,50,843/ - AS UNEXPLAINED CASH CREDIT. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHERE IN IT WAS CONTENDED THAT THE STATEMENT OF SHRI MUKESH CHOKS H I IS GENERAL AND ASSESSEES NAME WAS NOT SPECIFICALLY MENTIONED AND NO CROSS INFORMATION HAS BEEN PROVIDED. IT WAS ALSO CONTENDED THAT THE SHARES HAVE BEEN CREDITED IN D - MAT ACCOUNT OF THE ASSESSE E. THE PAYMENT TOWARDS PURCHASE OF SHARES HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE. SHARES HAVE BEEN SOLD THROUGH A REPUTED STOCK BROKER. HE HAS ALSO FURNISHED THE ENTIRE EVIDENCE IN RESPECT OF PURCHASE AND SALE OF SHARES. 6. HAVING REGARD TO THE SUBMISSIONS MAD E BEFORE THE FIRST APPELLATE AUTHORITY THE LEARNED CIT(A) PERUSED THE RECORD AND NOTICED THAT DURING THE YEAR ONLY 200 SHARES OF MMTC WAS PURCHASED WHEREAS THE SHARES OF IFCI AND JAI CORPORATION WERE SOLD DURING THE PRESENT YEAR. SHE FURTHER OBSERVED THAT MERE STATEMENT OF THIRD PARTY WOULD NOT BE SUFFICIENT TO DOUBT A TRANSACTION AND THE ASSESSEE SHOULD HAVE BEEN ITA NO. 7462/MUM/2014 SMT. NEETA ASHOK SHAH 4 GIVEN AN OPPORTUNITY TO CONFRONT THE PERSON BY WAY OF CROSS EXAMINATION WHEREAS , IN THE INSTANT CASE THE ASSESSEE , HAS NOT BEEN GIVEN AN OPPORTUNIT Y. RELIANCE WAS PLACED UPON THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF ACIT VS. UTARA S. SHORAWALLA IN ITA NO. 5506/5507/MUM/2009 DATED 25.05.2011 WHEREIN THE TRIBUNAL OBSERVED THAT SHRI MUKESH CHOKS HI S REPORT CANNOT BE THE SOLE BASIS FOR MAKING AN ADDITION. THE LEARNED CIT(A) FURTHER OBSERVED THAT IN THE STATEMENT OF SHRI MUKESH CHOKS H I THERE IS NO REFERENCE TO THE ASSESSEE AS SUCH. IN FACT THE ASSESSEE PRODUCED BROKERS NOTE ; THE TRANSACTION HAS BEEN ENTERED INTO D - MAT ACCOUNT AND THE AO HAS NOT FOUND ANY REASON TO DOUBT THE SAME. UNDER THE CIRCUMSTANCES THE ADDITION MADE BY THE AO WAS SET ASIDE BY THE LEARNED CIT(A). 7. AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE CASE OF THE LEARNED D.R. IS THAT THE CIT(A) COULD HAVE REMANDED THE MATTER TO THE AO TO ALLOW THE ASSESSEE TO CROSS EXAMINE SHRI MUKESH CHOKS H I OR CALLED FOR FURTHER REPORT RATHER THAN SETTING ASIDE THE DISALLOWANCE AND ALSO CONTENDED THAT THE ASSESSEE NEVER PRODUCED THE D - MAT ACCOUNT BEFORE THE AO DURING THE ASSESSMENT PROCEEDI NGS. IT WAS ALSO SUBMITTED THAT THE LEARNED CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE, I.E. D - MAT ACCOUNT , WITHOUT GIVING THE AO AN OPPORTUNITY , IN VIOLATI O N OF RULE 4 6 A OF THE INCOME TAX ACT. 8. THE APPEAL WAS POSTED FOR HEARING ON 02.09.2015 BY SENDING NOTICE TO THE ASSESSEE BY RPAD. SINCE THE BENCH DID NOT FUNCTION ON THAT DAY , THE CASE WAS ADJOURNED TO 07.10.2015 BY ANNOUNCING THE DATE THROUGH NOTICE BOARD. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. IN FACT NO MATERIAL WAS FILED BY THE ASSESSEE TO SHOW THAT COPY OF D - MAT ACCOUNT, ETC. WERE FILED BEFORE THE AO. SINCE THE PLEA OF THE REVENUE IS THAT NO OPPORTUNITY WAS GIVEN TO THE AO WHILE ADMITTING ADDITIONAL EVIDENCE, IN THE INTEREST OF SUBSTANTIAL JUSTICE , I AM OF THE VIEW THAT THE MATTER DESERV ES TO BE SET ASIDE TO THE FILE OF THE CIT(A) WHO IS TO RECONSIDER THE MATTER IN ACCORDANCE WITH LAW ITA NO. 7462/MUM/2014 SMT. NEETA ASHOK SHAH 5 AFTER GIVING THE AO THE REQUISITE OPPORTUNITY OF BEING H EARD IN CONSONANCE WITH RULE 46 A OF THE INCOME TAX RULES. WITH THESE OBSERVATIONS THE APPEAL FILED B Y THE REVENUE IS TREATED A ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER , 2015. SD/ - (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 12 TH OCTOBER , 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 35 , MUMBAI 4. THE CIT 25 , MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI