ITO 17(2)(4), MUMBAI V. SMT. AMINA I. RANGARI, MUMBAI

ITA 7543/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100922 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-03-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE
• Assessee Lawyers: DR P DANIEL; S M MAKHIJA
• Keywords: Unexplained cash credit; Search and seizure; Accommodation entries
• Section: 143(3); 54F; 32; 68; 148; 132

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI A BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PARTHASAR ATHY CHOUDHURY,JUDICIAL MEMBER /. ITA NO. 7543 /MUM/201 1 , / ASSESSMENT YEAR - 200 3 - 04 INCOME TAX OFFICER - 17(2)(4) 2 ND FLOOR , ROOM NO.220 PIRAMAL CHAMBERS, LALBAUG, PAREL MUMBAI. VS SMT. AMINA I . RANGARI BUILDING NO.2 ROOM NO.10 KIDWAI NAGAR, WADALA R.A. KIDWAI ROAD MUMBAI - 400 0 31 . PAN: A A APR 9083 C ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : DR. P. D ANI EL & MR. S.M. MAKHIJA / REVENUE BY : SHRI S.R. KIRTANE / DATE OF HEARING : 0 2 - 09 - 2015 / DATE OF PRONOUNCEMENT : 04 - 0 9 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.19.8.2011OF CIT(A) - 29, MUMBAI, THE ASSESSING OFFICER(AO), HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE RELIEF TO BENEFICIARY OF DUBIOUS TRANSACTION I.E. ASSESSEE'S ON THE BASE FACT THAT ITAT, MUMBAI HAS QUANTIFIED INCOME OF M/S. GOLDSTAR FINVEST PVT. LTD. FOR A.Y. 2002 - 03 AT 0.15% OF VARIOUS DUBIOUS TRANSACTION AS AN ENTRY PROVIDER WAS EXAMINED IN THE CASE OF M/S. GOLDSTAR (PVT.) LTD. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(AO HAS ERRED IN NOT APPLYING RULE 46A OF THE IT RULES 1962 FOR CROSS EXAMINE OF THE SHRI MUKESH CHOKSHI 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING INCOM E OF RS.27,33,262J - FALL UNDER THE HEAD CAPITAL GAIN INSTEAD OF INCOME FALL U/S. 68 OF THE IT ACT, 1961 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING THE DEDUCTION U/S. 54F AS ALLOWABLE. 5. THE APPELLANT PRAYS THAT THE ORDER THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. BRIEF FACTS: 2. AN AC TION U/S. 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF MAHASAGAR SECURITIES PVT. LTD. ON 25.11.2009 BASED ON THE INFORMATION THAT THE GROUP COMPANIES, INCLUDING M/S. GOLDSTAR FINVEST PVT. LTD. (GFPL) WERE ENGAGED IN PROVIDING BOGUS BILLS OF TRANSACTIONS IN SHARES AND SECURITIES, THAT THE DIRECTORS OF THE COMPANIES WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND IN THE ITA/ 7543 /M/ 1 1 - AMINA R 2 BUSINESS OF PROVIDING NON GENUINE SPECULATION PROFIT/LOSS, LONG TERM AND SHORT TERM CAPITAL GAIN/ LOSS FOR TRADING IN SHARES AND SECURI TIES AS WELL AS IN COMMODITIES. DURING THE COURSE OF SEARCH FROM THE SEIZED COMPLETED DATA A LIST OF CLIENTS/BENEFICIARIES WHO HAD TAKEN ENTRIES F R O M ABOVE COMPANIES WAS EXTRACTED.THE INVESTIGATION WING REPORTED THAT THE TRANSACTIONS ENTERED INTO BY THE BENEFIC IARIES WITH THE GROUP CONCERNS WAS BOGUS AND THE SAME REPRESENTING THE UNDISCLOSED INCOME OF THE BENEFICIARIES FOR THE AY . 20 03 - 04. THE ASSESSEE WAS REPORTED TO BE ONE OF THE BENEFICIARIES APPEARING IN THE LIST PREPARED BY THE INVESTIGATION WING.IT WAS FOUN D BY THE AO THAT ASSESSEE HAD NOT FILED THE RETURN OF INCOME THOUGH S HE HAD BEEN ALLOTTED PAN ON 19.12.2002. A LETTER WAS ISSUED TO THE ASSESSEE TO VERIFY WHETHER SHE HAD FILED ANY RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION OR NOT. AS THE ASSESSEE S TATED THAT SHE HAD NOT FILED RETURN OF INCOME FOR 20 03 - 04, SO THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON 30.3.2010.IN RESPONSE TO NOTICE, SHE FILED HER RETURN ON 10.8.2010 DECLARING TOTAL INCOME AT RS.7.04 LACS.THE AO COMPLETED THE ASSESSMENT ON 15.12.2010 U/ S. 143(3) R.W.S 147 OF THE ACT, DETERMINING THE INCOME OF THE ASSESSEE AT RS.27. 69 LACS. 3. EFFECTIVE GROUND OF APPEAL IS ABOUT ALLOWING RELIEF TO THE ASSESSEE ABOUT THE TRANSACTIONS ENTERED INTO WITH MAHASAGAR SECURITIES GROUP.DURING THE ASSESSMENT PROC EEDINGS THE ASSESSING OFFICER MADE AN ADDITION OF R S.27,33,262/ - U/S. 68 OF THE ACT RELATING TO SALE OF SHARES IN FOLLOWING FOUR SCRIPS: NAME OF SCRIP S ALE CONSIDERATION (RS.) BUNIYAD CHEMICALS LTD. 6.28 LACS NE ELECTRONICS LTD. 7.79 LACS PRIME CA PITAL MARKETS LTD. 5.38 LACS MANTA ONLINE 7.86 LACS THE ASSESSEE CLAIMED THAT SHE HAD EARNED LTCG AS SHE WAS HOLDING THE SHARES FOR MORE THAN ONE YEAR.THE AO ISSUED A SHOW CAUSE NOTICE TO HER STATING THAT THE SO CALLED SALE OF SCRIPS BY THE HER WAS NOT GENUINE. THE AO HELD THAT OFFICERS OF THE INVESTIGATION WING HAD EXAMINED THE DIRECTOR OF GFPL - MUKESH CHOKSI AND HAD FOUND THAT THE CO MPANY HAD NOT DONE BUSINESS TH ROUGH BROKER OR STOCK EXCHANGE, THAT THE DELIVERY OF THE SHARES HAD NOT BEEN MADE WITHIN 4 8 HRS OF THE CONTRACT, THAT M UKESH CHOKSI HAD ADMITTED THAT GFPL WAS ENGAGED IN THE BUSI NESS OF PROVIDING ACCOMMODATION - ENTR IES, THAT GFPL HAD ADMITTED IN THE APPEAL PROCEEDINGS ,FOR THE YEAR 20 02 - 03 , BEFORE THE T RIBUNAL OF PROVIDING ENTRIES, THAT THE TRIBUN AL HAD ACCEPTED THE COMPANY TO BE AN ENTRY PROVIDER AND HAD ORDER FOR COMPUTING ITS INCOME AT 0.15% OF TOTAL ENTRIES, THAT THE SHARES SOLD BY GFPL HAD NOT BEEN IMMEDIATELY TRANSFERRED TO ASSESSEES DEMAT ACCOUNT, THAT THEY HAD COME TO ASSESSEES DEMAT ACC OUNT ONLY A FEW DAYS BEFORE THE SALE, THAT BUNIYAD CHEMICALS WAS CONTROLLED BY MUKESH C HOKSI GROUP, THAT THE ASSESSEE HAD PURCHASED THE SHARES OF BUNIYAD CHEMICALS AND NE E LECTRONICS AT RS . 0.55 AND AT RS.2.05 PER SHARE RESPECTIVELY, THAT THE SALE HAD BEEN SHOWN AT RA N GE OF RS.75 TO RS. 79 IN THE CASE OF NEE AND @ RS.62.50 TO RS. 74 / - IN CASE OF BUNIYAD C HEMICALS LTD., THAT THE BILLS WERE FORGED IN ORDER TO GENERATE LTCG, THAT THE PRICE RISE SHOWED THE FRAUDULENT NATURE OF TRANSACTIONS.THE AO DID NOT MAKE ANY COMMENT ABOU T THE REMAINING T W O SCRIPS BUT ADDED THE CAPITAL GAINS ARISING FROM THOSE SCRIPS TO T HE TOTAL INCOME OF THE ASSESSEE . FINALLY,THE AO TAXED THE SALE PROCEEDS OF ALL THE ABOVE REFERRED FOUR SCRIPS,AS INCOME FROM UNEXPLAINED SOURCES U/S. 68 OF TH E ACT. 4. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE A UTHORITY (FA A ) AND MADE ELABORATE SUBMISSIONS BEFORE HIM. AFTER CONSIDERING THE SUBMISSIONS ITA/ 7543 /M/ 1 1 - AMINA R 3 OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FA A HELD THAT THE ASSESSEE HAD PURCHASED 9000 SHARES OF BUNIYAD CHEMICALS LTD. ON 31.6.2001 AND SOLD THEM ON 3.10.2002, AT THE FOLIO NOS. AND THE COPIES OF SHAR E CERTIFICATES WERE SUBMITTED , THAT THE SEAL OF THE COMPANY PROVED THE TRANSFER OF THE SHARES, THAT THERE WAS NO SPECIFIC STATEMENT BY MUKESH C HOKSI THAT THE TRANSACTION IN QU ESTION WAS FORGED OR COOKED UP, THAT THE PAYMENT TO THE BROKER HAD BEEN MADE BY BOOK ADJUSTMENTS FROM STCG EARNED IN AY 20 02 - 03, THAT THE ASSESSEE HAD FILED HER RETURN AND HAD CLAIMED THAT THE TRANSACTIONS WAS OFF MARKET, THAT THERE WAS NO ADVERSE EVIDENCE TO PROVE THAT DELIVERY OF SHARES WAS NOT TAKEN ON 30 TH J UNE , 2001,T HAT THE TRIBUNAL HAD QUANTIFIED INCOME OF GFPL FOR AY 20 02 - 03 @ 0 .15% OF VARIOUS DUBIOUS TRANSACTIONS, THAT THE TRIBUNAL HAD TAKEN TRANSFER/CLEARING ENTRIES OF THREE BANK ACCOUNTS OF GFPL NAMELY BANK OF BARODA ACCOUNT, CITI BANK ACCOUNT AND CO - OPERATIVE BANK OF AHMEDABAD ACCOUNT, THAT THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE RELATED TO KURUR VY A SYA BANK LTD., FORT MUMBAI, T HAT THERE WAS ENOUGH EVIDENCE TO CONCLUDE THAT THE SHARES WERE HELD BY THE ASSESSEE SINCE 30 TH JUNE 2001, THAT THE ASSESSEE HAD NOT BEEN GIVEN A CHANCE OF CROSS EXAMINING MUKESH CHOKSI, THAT AT THE POINT OF SALE THE PRICE OF SHARE WAS QUOTED AT THE PRICE S OLD BY THE ASSESSEE, THAT THE FLUCTUATION IN PRICE COULD NOT BE A REASON TO HOLD THAT THE TRANSACTIONS WERE NOT GENUINE , THAT THE SALE PRICE HAD BEEN RECEIVED BY CHEQUES.THE FAA FURTHER HELD THAT SIMILAR WERE THE FACTS FOR THE TRANSACTIONS OF THE SCRIPS NE ELECTRONICS LTD. HE FURTHER OBSERVED THAT THE ASSESSEE HAD PURCHASED 5000 AND 7500 SHARES OF PRIME CAPITAL AND MANTRA ONLINE RESPECTIVELY ON 9.8.2001 AND 28.6.2001 RESPECTIVELY THAT THOSE SHARES WERE SOLD 30.9.2001 , THAT THE TRANSACTIO NS WERE THROUGH STOCK EXCHANGE, THAT THE TRANSACTIONS WERE ALSO NOT THROUGH GFPL, THAT NO FURTHER ADVERSE EVIDENCE HAD B EEN PLACED ON RECORD BY THE AO, THAT THE SHARES HAD BEEN DEMATED AND SOLD, THAT THE SALE PRO CEEDS WERE RECEIVED BY CHEQUES, THAT THE SALE PROCEEDS COULD NOT BE TAXED AS INCOME FROM OTHER SOURCES OR AS UNEXPLAINED CREDIT U/S. 68 OF THE ACT 5. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE AO AND STATED THAT THE INVESTIGATION WING OF THE DEPARTMENT HAD FOUND THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS WITH THE MUKESH CHOKSI GROUP WHO WAS PROVIDING ACCOMMODATION ENTRIES.AUTHORISED REPRESENTATIVE (AR) ARGUED THAT THE ASSESSEE HAD PROVED PURCHASE AND SALE OF SHARES WITH DOCUMENTARY EVIDENCE,THAT THE SHARES WERE HELD FOR A PERIOD OF MORE T HAN ONE YEAR,THAT TWO OF THE SCRIPS WERE SOLD STOCK EXCHANGE.HE RELIED UPON THE CASE OF 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.WE FIND THAT THE AO HAD MADE ADDITION TO THE INCOME OF THE ASSESSEE OF RS.2 7. 3 2 LAKHS U/S.68 OF THE ACT ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT,THAT THE OFFICERS OF THE WING HAD CARRIED OUT A SEARCH AND SEIZURE ACTION IN THE CASE OF MUKESH CHOKSI GROUP CONCERNS WHO WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODAT ION ENTRIES,THAT THE WAS INFORMED THAT THE ASSESSEE WAS BENEFICIARY OF THE ENTRIES PROVIDED BY ONE OF THE MUKESH CHOKSI GROUP CONCERN I.E.GFPL,THAT THE HAD CLAIMED LTCG FOR FOUR SCRIPS,THAT TWO OUT OF FOUR WERE SOLD ON STOCK EXCHANGE AND REMAINING TWO WERE SOLD OFF MARKET,THAT THE FAA HAD GIVEN CATEGORICAL FINDING OF FACT THAT THE ASSESSEE WAS HOLDING THE SHARES FOR MORE THAN ONE YEAR,THAT FOLIO NO AND COPIES OF CERTIFICATES WERE MADE AVAILABLE TO THE AO,THAT THE STAMP OF THE COMPANY PROVED THAT SHARES WERE ACTUALLY TRANSFERRED IN THE NAME OF THE ASSESSEE ,THAT SALE OF THE SHARES AND RECEIVING THE SALE PROCEEDS THROUGH BANKING CHANNELS IS NOT IN DOUBT,THAT MUKESH CHOKSI HAD NOT ALLEGED THAT THE TRANSACTIONS IN QUESTION WERE TAINTED, THAT THE ASSESSEE WAS NOT A LLOWED CROSS EXAMINATION OF ITA/ 7543 /M/ 1 1 - AMINA R 4 MUKESH CHOKSI WITH REGARD TO THE TRANSACTIONS ENTERED IN TO BY HER.CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE FAA WAS JUSTIFIED IN REVERSING THE ORDER OF THE AO.THE INFORMATION RECEIVED BY THE AO WAS A GOOD STAR TING POINT FOR FURTHER INVESTIGATION BUT WAS NOT A RELIABLE EVIDENCE TO MAKE ADDITION U/S.68 OF THE ACT.THE ASSESSEE HAD DISCHARGED THE BURDEN OF PROVING THE GENUINENESS OF TRANSACTIONS AND THEREFORE CONFIRMING THE ORDER OF THE FAA,WE DECIDE EFFECTIVE GROU ND OF APPEAL AGAINST THE AO. CASES RELIED UPON BY THE AR ALSO SUPPORT THE VIEW TAKEN BY THE FAA. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER ,2015. 4 TH , 2015 SD/ - SD/ - ( / PARTHASARATHY CHOUDHURY) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 04 . 09 . 2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BEN CH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.