Smt.Kavitha Tilok W/o. S.Tilokchand Dhariwall, Bangalore V. Commissioner of Income-Tax, Bangalore

ITA 928/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9221 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIA JT
• Assessee Lawyers: VIMALCHAND DHARIWAL
• Keywords: Principle of natural justice; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.928/BANG/2016 ASSESSMENT YEAR : 2008-09 SMT. KAVITA TILOK, W/O. S. TILOKCHAND DHARIWALL, PROP. M/S. JINENDRA BANKERS, NO.47/2, SRINIVASA NILAYA, II CROSS, CAMBRIDGE ROAD, ULSOOR, BANGALORE 560 008. PAN: AAVPB 6535A VS. THE INCOME TAX OFFICER, WARD 9(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI VIMALCHAND DHARIWAL, CA RESPONDENT BY : SHRI R.K. JHA, JT. CIT(DR) DATE OF HEARING : 27.12.2016 DATE OF PRONOUNCEMENT : 28.12.2016 O R D E R THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN PAS SING THE ORDER IN THE MANNER IT IS PASSED BY HIM. THE IMPUGN ED ORDER BEING BAD IN LAW, VOID AB INTIO AND REQUIRED TO BE QUASHED. 2. IN ANY CASE AND THE WITHOUT PREJUDICE THE ORDER HAVING BEEN PASSED IN TOTAL DISREGARD OF AND IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, MAKES THE ORDER BAD IN LAW AND LIABLE TO BE QUASHED. ITA NO.928/BANG/2016 PAGE 2 OF 4 3. THE APPELLANT IS REGULARLY DEALING IN SHARES AN D THIS TRANSACTION HAS ALSO TO BE ACCEPTED AS SUCH. 4. THE ASSESSING OFFICER HAS ERRED IN MAKING VARIO US OBSERVATIONS AND COMING TO VARIOUS CONCLUSIONS, WIT HOUT ANY PROOF OR EVIDENCE. AND SUCH OBSERVATIONS AND CONCLU SIONS NEED TO BE IGNORED, 5. THE COPY OF SWORN STATEMENT OF SRI MUKESH CHOKS HI WAS NOT MADE AVAILABLE TO THE APPELLANT, TO KNOW THE RE ASON FOR RE-OPENING OF MY CASE. 6. THE ENTIRE BASIS FOR THE IMPUGNED ORDER IS THE SWORN STATEMENT OF SRI MUKESH CHOKSHI. AND THE SAME WAS N OT MADE AVAILABLE TO THE APPELLANT TO KNOW THE REASON FOR R E-OPENING OF THE CASE, AND WITH-OUT GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO HAVE A SAY IN THE MATER. 7. FURTHER A COPY OF ORDER OF THE HIGH COURT OF KA RNATAKA AT BENGALURU DATED 25TH FEBRUARY, 2015, WAS ALSO EN CLOSED, WHEREIN THE HON'BLE JUSTICE MR. B.S.PATIL HAS ALLOW ED THE WRIT PETITION NO.39379/2014 (T-IT), UNDER SAME CIRC UMSTANCES. 8. AND THE LEARNED ASSESSING OFFICER HAS NOT CONSI DERED THE ORDER OF THE HIGH COURT OF KARNATAKA AT BENGALU RU, WHICH IS IN THE FAVOUR OF THE ASSESSEE. 9. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE AD DUCED AT THE TIME OF HEARING IT IS REQUESTED THAT THE IMPUGN ED ORDER BE QUASHED AND THE RETURNED INCOME FROM LONG-TERM CAPI TAL GAINS BE ACCEPTED. THE ASSESSMENT OF THE AMOUNT U/S.68 BE DELETED AND THE INTEREST ALSO BE DELETED. 9. WITH THIS BACKGROUND THE ASSESSEE HAS PREFERRED THIS APPEAL. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION THAT THE ASSESSEE HAS MAINTAI NED THE ENTIRE RECORD WITH RESPECT TO THE PURCHASE AND SALE TRANSACTIONS IN SHARES, BUT THE AO HAS TREATED THESE TRANSACTIONS TO BE SHAM AND MADE THE ADDITION U/S. 68 OF ITA NO.928/BANG/2016 PAGE 3 OF 4 THE ACT. IT WAS FURTHER CONTENDED THAT THE AO HAS DISALLOWED THE CLAIM OF LONG TERM CAPITAL GAIN OF THE ASSESSEE HAVING RELIE D UPON THE STATEMENT OF MR. MUKESH CHOKSHI, WHICH WAS NEVER CONFRONTED TOT THE ASSESSEE. THEREFORE, THE ADDITION MADE BY THE AO DESERVES TO BE DELETED. 3. THE LD. DR, ON THE OTHER HAND, HAS CONTENDED THA T SEARCH WAS CONDUCTED UPON MR. MUKESH CHOKSHI AND HIS GROUP CON CERNS AT MUMBAI. DURING THE COURSE OF HIS STATEMENT, HE HAS ADMITTED THAT HE WAS ENGAGED IN GIVING ACCOMMODATION ENTRIES THROUGH HIS ALLEGED STOCK BROKING COMPANIES FOR DECLARING PROFITS FROM PURCHASE AND S ALE OF SHARES TO PERSONS WHO WANTED TO BOOK ENTRIES FOR THE PURPOSE OF FICTITIOUS PROFITS/ LOSSES IN THEIR BOOKS, WHICH IS NOTHING BUT ACCOMMO DATION ENTRIES THROUGH MIDDLEMEN WHO OPERATE BETWEEN THE CLIENTS AND THE A LLEGED STOCK BROKING COMPANIES FLOATED BY MR. MUKESH CHOKSHI. ON THE BA SIS OF THIS STATEMENT OF MR. MUKESH CHOKSHI, THE AO HAS DISALLOWED THE CL AIM OF LONG TERM CAPITAL GAIN ACCRUED ON SALE OF SHARES IN THE HANDS OF ASSESSEE. 4. THE ADDITION MADE BY THE AO WAS CONFIRMED BY THE CIT(APPEALS). ON PERUSAL OF THE RECORD, I FIND THAT THE STATEMENT OF MR. MUKESH CHOKSHI WAS THE SOLE BASIS FOR TREATING THE TRANSACTIONS AS SHAM, BUT THE STATEMENT WAS NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, I AM OF THE VIEW THAT THE REVENUE CANNOT MAKE AN ADDITION WITHOUT CONFRONTING THE EVIDENCE TO THE ASSESSEE, WHICH IS SOLELY RELIED UPON FOR MAKING SU CH ADDITION. I, THEREFORE, SET ASIDE THE ORDER OF CIT(APPEALS) AND RESTORE THE MATTER TO THE ITA NO.928/BANG/2016 PAGE 4 OF 4 AO WITH A DIRECTION TO FIRST CONFRONT THE STATEMENT OF MR. MUKESH CHOKSHI TO THE ASSESSEE, ON WHICH HE INTENDS TO RELY UPON AND AFTER OBTAINING THE COMMENTS OF THE ASSESSEE, HE CAN PROCEED WITH THE A SSESSMENT PROCEEDINGS. IF THE ASSESSEE SEEKS TO CROSS-EXAMIN E MR. MUKESH CHOKSHI, THE AO SHOULD ALLOW CROSS-EXAMINATION BEFO RE RELYING UPON HIS STATEMENT. ACCORDINGLY, THE APPEAL IS DISPOSED OF. 5. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DECEMBER, 2016. SD/- (SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH DECEMBER, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.