REKHA NILESH SHAH,MUMBAI V. ITO, WARD 32(3)(2), MUMBAI

MA 205/MUM/2024

AI Insights

The case revolves around the transactions of shares of Blazon Marbles Ltd. by the assessee, Rekha Nilesh Shah. Initially, the assessee purchased 20,000 shares off-market from Shri Chirag Dinesh Kumar Shah, which were later sold, with a substantial number sold back to the same individual. The Income Tax Officer (ITO) raised suspicions about these transactions, leading to an assessment order that was contested by the assessee. The Tribunal's earlier decision upheld the ITO's assessment, leading the assessee to file a miscellaneous application for recall, which was dismissed. The Tribunal's decision was based on the lack of any obvious patent mistake in the original order and the reasoning that the transactions appeared to be pre-arranged.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470666 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 12-08-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PUSHKARAJ BHANGEPATIL
• Assessee Lawyers: BHUPENDRA SHAH
• Section: 254(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDUCIAL MEMBER MA No. 205/Mum/2024 (Arising out of ITA No. 2300/Mum/2023) Assessment Year: 2013-14 Rekha Nilesh Shah B-2001 2002Thyme Garden, Grove Phase 2 Chikuwdi, Kant Park Borivali West, Mumbai- 400092. PAN: AAPPS 3012 H Vs. ITO, Ward-32(3)(2), Mumbai (Appellant) (Respondent) Present for: Assessee by : Shri Bhupendra Shah Revenue by : Shri Pushkaraj Bhangepatil, Sr. DR Date of Hearing : 11.10.2024 Date of Pronouncement : 25.11.2024 O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: Vide miscellaneous application, the assessee has submitted as under: “1. With reference to above said impugned order dt. 17/5/2024 received by us on 17/5/24, it is submitted as follows: a. At Para No. 9, it is observed by the Honorable Bench that, \"It is an undisputed fact that the assessee had purchased 20,000 shares of Blazon Marbles Ltd. off market on 11.3.2011. The said shares were purchased by the assessee from Shri Chirag Dinesh Kumar Shah. Undoubtedly, payment for purchases of 35,000 equity shares was made by cheque. Subsequently, when the shares were listed on Bombay Stock Exchange in April, 2011, shares were split in ratio 1:5. The assessee was allotted 50,000 shares, against 20,000 shares purchased by her. The shares ITA No. 2300/Mum/2023 Rekha Nilesh Shah 7 purchased by assessee @ 1.75 per share were sold at Rs. 211 to Rs. 228/- per share in MA No. 205/Mum/2024 Rekha Nilesh Shah 2 April/May 2012. It is relevant to note that though the assessee had sold shares of Blazon Marbles Ltd. online through broker but the substantial shares were sold to by Shri Chirag Dinesh Kumar Shah i.e. the person from whom the assessee had originally purchased shares off market. This shows that there was live nexus between purchase and sale of shares. The assessee has not denied the fact of sale of shares of Blazon Marbles Limited to Shri Chirag Dinesh Kumar Shah. Thus, purchase of shares off-line and sale of shares on-line to same person raises reasonable suspicion of transaction being pre-arranged.\" 2. Our reply against the observation made by Honorable ITAT Regarding the quantity of shares purchased & split * Your appellant has purchased 20000 shares of Blazon Marbles Ltd (Formerly known as Shubham Granites Ltd) on 10/03/2011 from Mr Chirag Dinesh Kumar Shah and paid Rs. 35000/- by cheque (Bank: Bank of India, Chq No 052234) in the F.Y. 2010-11. * The appellant had given the shares to Purva Sharegistry (India) Pvt Ltd on 19.03.2011 for transfer of shares from the name of Chirag Dinesh Kumar Shah to appellant's name. Copy of receipt of Purva Sharegistry (India) Pvt Ltd is enclosed herewith for your records. * The said shares were dematerialized in April 2011 and the change of the name of the said company took place in the F.Y. 2011-12. * Details of shares No of shares purchased in March 2011 – off market (Shubham Granites) 20000` Shares sold in May 2012 and STT also paid (Blazon Marbles) (Shares sold before split) 15000 Balance shares lying in Demat A/c (Blazon Marbles) 5000 Shares split – for every 1 share – 5 new shares 25000 Shares lying in Demat A/c after split till date (Blazon Marbles) 25000 Sl No As per assessment order Page 9/10-para 802 Remarks Actual facts 1 20000 shares purchased Correct information 20000 shares purchased 2 Split and became 50000 shares Incorrect information First 15000 shares sold and balance MA No. 205/Mum/2024 Rekha Nilesh Shah 3 with AO 5000 shares were split to 25000 (Ratio 1:5) Regarding the quantity of shares sold Sl No As per assessment order Page 10-para 8.4 Remarks Actual facts 1 20000 shares sold for Rs. 3288065/- Incorrect information of quantity sold with AO 15000 shares sold for Rs. 3288065/- Regarding the details of buyer to whom shares were sold * At Page No 10, Para 8.4, Assessing Officer has given details of ITS available on record, where it has been mentioned that assessee has sold 75000 shares (Wrong Qty) to 9 buyers and out of which one of the buyer is Mr Chirag Shah, from whom the assessee has purchased shares. Firstly, asseessee has not sold 75000 shares, she has sold only 15000 shares and details of the same including the date, trade no and trade time is given below but nowhere the Ld Assessing Officer has given the details about the trade no and trade time of the 9 buyers listed in the Assessment Order. Without such information how it is possible to make a nexus that Mr Chirag Shah is the buyer as well as seller. Purchase Details Sale Details Date 07.03.2011 28.04.2012 29.05.2012 31.05.2012 Quantity 20000 5000 2565 7435 Amount 35000 1137993 563030 1567675 Mode Offline Online Online Online Treade No ------ 1015 1035 1009 Trade Time ------ 12.20.26 15.27.36 12.54.44 * None can be aware of the buyers who buys online on screen based transactions. * The AO never confronted the numbers of shares bought by the said 9 buyers. MA No. 205/Mum/2024 Rekha Nilesh Shah 4 3. Further assessee has sold 15000 shares online whereas Chirag Shah has purchased 12500 out of such 75000 shares as per assessment order but no nexus that shares sold by the assessee has been purchased by Chirag Shah. 4. We had filed booklet of case laws vide paper book dated 21.11.2023 which were never considered by the Hon’ble Bench. These are against the presumption raised by the Bench on cash trail etc. 5. In view of the above omissions, we request you to please recall the impugned order & oblige. We therefore request you to kindly fix a fresh date of hearing at the earliest and oblige. We therefore request Your Honours to pass the order u/s 254(2) and oblige.” 2. Heard both the sides and perused the material on record. ITAT vide ITA No. 2300/M/2023 dated 17.05.2024 held that assessee had purchased 20000 shares of Blazon Marbles Ltd. off market on 11.03.2011. The said shares were purchased by the assessee from Shri Chirag Dinesh Kumar Shah. The shares purchased by the assessee @ 1.75% per share were sold at Rs. 211/- to Rs. 228/- per share in April/May, 2012. The ITAT has categorically held that though the assessee had sold shares of Blazon Marbles Ltd. online through broker but the substantial shares were sold to Shri Chirag Dinesh Kumar Shah i.e. the person from whom the assessee had originally purchased shares off market. At para 8.4 of the assessment order, the AO had mentioned ITS details of the assessee available on record and the assessee had sold 12500 shares to Shri Chirag Dinesh Kumar Shah of Blazon Marbles (formerly known as Subham Granite Ltd.). The assessee had also purchased 20000 shares off market from Shri Chirag Dinesh Kumar Shah for a consideration of Rs. 35,000/-. At para 9 of the order, the ITAT after considering the material placed on record held that the shares purchased by the MA No. 205/Mum/2024 Rekha Nilesh Shah 5 assessee @ 1.75 per shares were sold at Rs. 211 to Rs. 228 per share of Blazon Marbles Ltd. The ITAT has categorically concluded that at para 9 of the order that substantial shares were sold to Shri Chirag Dinesh Kumar Shah i.e. the person from whom the assessee had originally purchased shares off market. 3. We find the ITAT had passed a detailed order on the issue of shares purchased and sold to the same person and on the issue of genuineness of the transaction of purchases and sale of penny stock. In the light of the above facts and circumstances, we consider that the power of rectification u/s 254(2) of the Act can be exercised only when the mistake which is sought to be rectified is obvious patent mistake, which is apparent from record and not a mistake which is required to be established by arguments and by long drawn process on reasoning on point of which there may conceivably be two opinions, therefore, we don’t find any reason to interfere and the miscellaneous application filed by the assessee is dismissed. 4. In the result, miscellaneous application filed by the assessee is dismissed. Order pronounced in the open court on 25.11.2024. Sd/- Sd/- (RAHUL CHADHARY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 25.11.2024 Biswajit, Sr. P.S. MA No. 205/Mum/2024 Rekha Nilesh Shah 6 Copy to: 1. The Appellant: 2. The Respondent: 3. The CIT, 4. The DR //True Copy// [ By Order Assistant Registrar ITAT, Mumbai Benches, Mumbai "