NIMISHA C. SHAH, MUMBAI V. ACIT CEN CIR 32, MUMBAI

ITA 8459/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88662 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-03-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 13-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N PADMANABAN
• Keywords: Search and seizure; Reason to believe; Reassessment proceedings
• Section: 153A; 147; 68; 148

Judgement Text

SMT NIMISHA C SHAH ITA NO. 8 459 /M/20 1 1 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI , . . , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N K BILLAIYA , ACCOUNTANT MEMBER ITA NO. : 8 4 5 9 /MUM/20 1 1 (ASSESSMENT YEAR: 200 3 - 0 4 ) SMT NIMISHA C SHAH , B - 106, SANJAY APARTMENTS, S.V.P. ROAD, BORIVALI (WEST), MUMBAI - 400 092 .: PAN: A NEPS 5714 B VS ASST. COMMISSIONER OF INCOME TAX CIRCLE 32 , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANANT N PAI RESPONDENT BY : SHRI N PADMANABAN /DATE OF HEARING : 2 4 - 03 - 201 5 / DATE OF PR ONOUNCEMENT : 24 - 03 - 201 5 ORDER . . , : PER N K BILLAIYA , A M : TH IS IS AN APPEAL BY THE ASSES S EE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 41, MUMBAI DATED 12. 1 0.2011 PERTAINING TO AY 2003 - 04. 2. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE G ROUNDS OF APPEAL WITH GROUNDS NO. 1 & 2, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AND ADDITION OF RS. 20 , 5 1 , 8 97/ - MADE BY THE AO U/S 68 OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE OR IGINAL RETURN FILED ON 30.09.2003 DECLARING TOTAL INCOME AT RS. 2,59,020/ - WAS PROCESSED AND ACCEPTED U/S 143(1) OF THE ACT. 4. A SEARCH AND SEIZURE ACTION WAS TAKEN IN THE CASE OF EARTH GROUP CASES. ACCORDINGLY, NOTICE U/S 153A WAS ISSUED IN RESPONSE SMT NIMISHA C SHAH ITA NO. 8 459 /M/20 1 1 2 TO WHICH THE ASSESSEE FURNISHED RETURN OF INCOME DECLARING SAME INCOME AS WAS RETURNED IN THE ORIGINAL RETURN OF INCOME. 5. THE RETURN OF INCOME WAS ONCE AGAIN ACCEPTED BY ORDER DATED 26.0 2 .2007 MADE U/S 153A OF THE ACT. 6. SUBSEQUENTLY , INFORMATION HAS BE EN RECEIVED FROM THE OFFICE OF THE DDIT (INV.) MUMBAI VIDE LETTER DATED 31.03.2010 STATING THAT ONE MR. MUKESH M CHOKSI OF M/S MAHASAGAR SECURITIES PVT LTD HAS ADMITTED IN HIS STATEMENT THAT ALL THE TRANSACTIONS C A R R I ED OUT BY ITS VARIOUS COMPANIES ARE BO GUS AND HE HAS BEEN PROVIDING ACCOMMODATION BILLS. IT WAS INFORMED TO THE AO THAT THIS ASSESSEE IS ALSO ONE OF THE BENEFICIARIES OF THE ACCOMMODATION BILLS GIVEN BY MR. MUKESH M CHOKSI OF MAHASAGAR SECURITIES PVT LTD. BASED ON THIS INFORMATION ASSESSEES C ASE WAS ONCE AGAIN REOPENED AFTER RECORDING THE REASONS. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS IN RELATION TO THE CLAIM OF CAPITAL GAINS. THE ASSESSEE FILED NECESSARY DETAILS SUPPORTING ITS CLAIM BY FILING VARIOUS CONTRACT NOTES, BANK STATEMENTS, BROKERS NOTE AND TRANSACTION STATEMENTS. 7. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE AO MADE ADDITIONS U/S 68. AGGRIEVED BY THIS, THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE CIT(A). IN SO FAR AS THE CHALLENGE OF REOPENING IS CONCERNED, THE CIT(A) RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RAJESH Z AVERI STOCK BROKERS P LTD , 291 ITR 500, THE CIT(A) HELD THAT THE AO HAS RIGHTLY ISSUED NOTICE U/S 148 OF THE ACT. IN SO FAR AS THE ADD I TION OF RS. 2 0 ,51,897/ - IS CONCERNED , THE CIT(A) RELYING UPON THE INVESTIGATION WINGS (INVESTIGATION) IN THE CASE OF MR. MUKESH M CHOKSI , THE CIT(A) OBSERVED THAT THE ASSESSEE HAS DELIBERATELY SHOWN THIS AS LONG TERM CAPITAL GAIN TO AVOID THE P AYMENT OF TAXES, THE CIT(A) FURTHER OBSERVED THAT THE AO HAS RIGHTLY ASSESS ED THE SUM OF RS. 2 0,5 1 , 897/ - AS UNEXPLAINED U/S 68 OF THE ACT. 8. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. SMT NIMISHA C SHAH ITA NO. 8 459 /M/20 1 1 3 9. THE COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN CLAIMED A ND STATED BEFORE THE LOWER AUTHORITIES. THE COUNSEL DREW OUR ATTENTION TO THE RELEVANT DOCUMENTS IN THE PAPER BOOK BROUGHT BEFORE US . I T IS THE SAY OF THE COUNSEL THAT THE REOPENING IS BAD IN LAW. PER CONTRA, THE DR STRONGLY RELIED UPON THE ORDERS OF THE R EVENUE AUTHORITIES . IT IS THE SAY OF THE DR THAT THE REOPENING OF THE ASSESSMENT MADE BY THE AO IS AS PER THE PROVISIONS OF THE LAW. 10. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCE BROUGHT BEFORE US. 11. THE REASONS FOR REOPENING OF THE ASSESSMENT ARE DATED 30.03.2010 AND READ AS UNDER: REASON FOR REOPENING M/S NIMISHA C SHAH, AY 2003 - 04 INFORMATION HAS BEEN RECEIVED THAT ONE SHRI MUKESH CHOKSI (2) SHRI JAYESH K SANPAT AR RUNNING M/S MAHASAGAR SECUR ITIES PVT LTD) AND OTHER 3 4 OLD COMPANIES. DURING THE COURSE SEARCH, IT WAS REVEALED THAT THESE COMPANIES (ALL RUN BY MUKESH CHOKSI) WERE ENGAGED IN FRAUDULENT BILLINGS ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFIT/LOSS SHORT TERM /LONG TERM CAPITAL GAIN/LOSS PROFIT/LOSS FROM COMMODITY TRADING (THROUGH MCX) AND HAD BEEN CONTINUING THIS BUSINESS FROM MANY YEARS. SHRI MUKESH CHOKSI HAS STATED IN HIS STATEMENT THAT ALL THE TRANSACTION CARRIED OUT BY HIS VARIOUS COMPANIES ARE BOGUS AND HE ONLY PROVIDES ACCOMMODATION BILLS. ON PERUSAL OF RECORDS AVAILABLE, IT IS REVEALED THAT THE ASSESSEE MS NIMISHA C SHAH HAS SHOWN SHORT TERM CAPITAL GAIN TO THE TUNE OF RS. 26,030/ - AND LONG TERM CAPITAL GAIN TO THE TUNE OF RS. 48,90,000/ - AND FURTHER TA KEN EXEMPTION BY INVESTING IN RURAL ELEC CORP. LTD BONDS AND NHAI BONDS. AS PER INFORMATION RECEIVED, THE ASSESSEE HAS ALSO TAKEN ACCOMMODATION BILLS AND SHOWN CAPITAL GAINS ACCORDINGLY IN HIS RETURN. HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED. ISSUED NOTICE U/S 148. SD/ - (DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 32, MUMBAI 12. IT IS CLEAR THAT ON 30 TH MARCH, 2010, THE AO DECIDED TO REOPEN THE ASSESSMENT BASED ON THE INFORMATION RECEIVED IN THE CASE OF MR. MUKESH CHOK SI OF MAHASAGAR SECURITIES PVT LTD. SURPRISINGLY, THE INFORMATION ON THE BASIS OF WHICH THE ISSUE IS REOPENED WAS RECEIVED BY THE AO ON 31.03.2010, PARA 4 AND PARA 5 OF THE ASSESSMENT ORDER ADMIT THESE FACTS, THESE OBSERVATIONS OF SMT NIMISHA C SHAH ITA NO. 8 459 /M/20 1 1 4 THE AO IN THE ASSESSMENT ORDER ARE NOT ONLY SELF - CONTRADICTORY BUT ALSO DESTROYS ENTIRE VALIDITY OF NOTICE ISSUED U/S 148 OF THE ACT. THESE DOCUMENTS MAKE IT CLEAR BEYOND ALL DOUBTS THAT ON THE DATE OF THE RECORDING OF REASON FOR REOPENING THE ASSESSMENT, THE AO HAD NO INFORMATION WHATSOEVER. 13. ON THESE VERY CONTRADICTORY FACTS, WE SET ASIDE NOTICE ISSUED U/S 148 OF THE ACT HOLDING THAT THE NOTICE ISSUE D WAS WITHOUT ANY BASIS, WE ALSO SET ASIDE THE ASSESSMENT MADE U/S 147 OF THE ACT IN PURSUANCE OF THIS NOTICE ISSUED U/S 148 OF THE ACT. T HE REASSESSMENT PROCEEDINGS ARE QUASHED. GROUND NO. 1 & 2 ARE ALLOWED. 14. AS WE HAVE QUASHED THE REASSESSMENT PROCEEDINGS, WE DO NOT FIND IT NECESSARY TO DECIDE THE ISSUE RESULTING TO THE ADDITIONS MADE U/S 68 OF THE ACT. 15. IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2015. SD/ - SD/ - ( ) ( . . ) ( VIJAY PAL RAO ) ( N K BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI, DATE: 24 TH MARCH, 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 41 , MUMBAI. 4) THE CIT - CENTRAL - III , MUMBAI. 5) , , / THE D.R. B BENCH, MUMBAI. 6) COPY TO GUARD FILE. SMT NIMISHA C SHAH ITA NO. 8 459 /M/20 1 1 5 / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS