TMI Blog2011 (5) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... - 5506 AND 5507 (MUM.) OF 2009 - - - Dated:- 25-5-2011 - R.V. EASWAR, R.K. PANDA, JJ. A.P. Singh for the Appellant. Shashi Tulsiyan for the Respondent. ORDER R.V. Easwar, President. The appeals are by the revenue and the cross objections are by the assessee. They all pertain to the assessment years 2001-02 and 2002-03. Since they were all heard together, they are disposed of by a common order. 2. We shall first state the facts in brief. The assessee is an individual deriving income by way of salary and from other sources. In respect of the assessment year 2001-02, the original assessment was completed under section 143(3) read with section 147 of the Income-tax Act, 1961, on 29-3-2006, determining the total income at Rs. 14,75,980 as against the returned income of Rs. 5,79,060. In this reassessment, the Assessing Officer took the view that the assessee had created and claimed a bogus loss of Rs. 12,88,237 on account of purchase and sale of mutual funds and has purchased bogus short-term capital gain of Rs. 6,63,093 on account of purchase and sale of shares from M/s. Richmond Securities Pvt. Ltd. and M/s. Alembic Securities Pvt. Ltd. After recording re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y order dated 26-6-2007, deleted the addition of Rs. 12,51,937 and directed the Assessing Officer to accept the aforesaid amount as short-term capital gain on sale of shares and not as unexplained expenditure. Against the decision of the CIT(A), no appeal was filed by the revenue to the Tribunal. A copy of the order of the CIT(A) for the assessment year 2002-03 is placed at pages 273 to 279 of the paper book. A perusal thereof shows that the CIT(A) has followed the ratio of the decision of the Tribunal in the case of Mukesh R. Marolia (supra) in coming to the conclusion that the amount represented short-term capital gains on sale of shares and cannot be added as unexplained expenditure of the assessee. 5. In the meantime search and seizure proceedings under section 132 of the Act were taken against the assessee as part of the group of six cases on 28-6-2006. The basis of the search was that there was information in the possession of the department that these six parties were booking profits by making bogus claims of capital gains on purchase and sale of shares of penny stock companies, of which a company by name Bolton Properties Ltd. was one. Consequent to the search, assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in paragraph 9 of the assessment order, which has given rise to the present proceedings. In this statement, the substance is that Shri Mukesh Choksi has mentioned the names of four share broking concerns who were stated to be engaged in issuing share adjustment entries and to fulfil the said object, amounts were received either in cash or through cheque from entry seekers in favour of the following companies:-- (1) M/s. Alpha Chemie Trade Agency (P.) Ltd.; (2) M/s. Mihir Agencies (P.) Ltd.; (3) M/s. Talent Infoway (P.) Ltd.; and (4) Mukesh Choksi, Individual. Shri Mukesh Choksi further stated that the amounts received from the entry seeking parties were deposited in the bank account of the above four entities. He also explained the modus operandi adopted by which entries were given for commission of 0.15 per cent. He admitted that the purchase and sale of shares shown through the share broking companies were only accommodating entries. To a question as to whether the contract notes for purchase and sales of shares issued in favour of the assessee during the period relevant to the assessment year 2001-02 were genuine, Shri Mukesh Choksi answered that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a mandatory requirement for initiating action under section 153A of the Act. Further, section 153A starts with a non obstante clause which stipulates that proceedings can be initiated under the section notwithstanding anything contained in section 147 and in this view of the matter the assessee's contention that the assessment having already been made under section 147 the present proceedings are invalid is totally misplaced. For these reasons the assessee's objection to the validity of the assessments for both the years was rejected. 10. So far as the merits are concerned, for the assessment year 2001-02, the CIT(A) held that the addition of Rs. 6,63,093 was deleted by the CIT(A) vide order dated 26-6-2007 by following the order of the Tribunal in the case of Mukesh R. Marolia (supra) and that against the decision of the CIT(A) no appeal was filed by the Income-tax department before the Tribunal. The CIT(A) further noted that the earlier CIT(A) has rightly placed reliance on the order of the Tribunal cited above. He further noted that the only change from the facts before the earlier CIT(A) is the subsequent statement given by Shri Mukesh Choksi before the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount actually represented short-term capital gains. 13. The assessee has come in cross objection for both the years challenging the decision of the CIT(A) that the assessments made under section 153A read with section 143(3) are valid. The cross objections are delayed by 19 days. An affidavit has been filed along with an application for condonation of the delay. It is stated therein that since the CIT(A) had decided the appeals in favour of the assessee by deleting the additions, the assessee bona fide believed that she need not file any appeal to the Tribunal. However, when discussions regarding regular tax matters took place with the assessee's authorized representative, the assessee brought the orders of the CIT(A) to his notice. Thereupon, the authorized representative advised the assessee to file cross objections against the decision of the CIT(A) upholding the validity of the assessments. The assessee immediately hastened to file the cross objections before the Tribunal and in the process there occurred a delay of 19 days. It is stated that the delay is not wilful and should be condoned. 14. On a careful consideration of the prayer, we are satisfied that the delay was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the orders of the CIT(A) became final between the parties. Even assuming that section 153A is vast and sweeping and the only condition therein is that there should be a search on the assessee, it would be against all cannons of justice and public policy to construe the section as giving authority to the Assessing Officer to disturb the finality of matters and make additions which have been held to be not justified. The revenue ought to have kept the matter alive by filing appeals to the Tribunal. As between the parties the orders of the CIT(A) deleting the additions have become final and have to be respected. It is a matter of no consequence that Shri Mukesh Choksi gave a further statement and affidavit during the present proceedings. It is a question of jurisdiction of the Assessing Officer to even attempt to examine matters which have already attained finality. In any case, the evidence of Shri Mukesh Choksi in the course of the present proceedings is nothing but a reiteration of what he stated in the course of the earlier reassessment proceedings. His evidence does not carry matters further in favour of the department. 17. Finality of assessments or judicial orders passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bound to take recourse to section 147 or section 148 of the Act. But that is only for the purpose of initiating proceedings for assessment under section 153A of the Act. It does not mean, in our humble opinion, that matters that have already been decided between the parties and had reached finality can be disturbed and brought back to assessment. If such a power is given to the Assessing Officer, he could even nullify decisions of the High Courts and the Supreme Court, a power which would be wholly inconsistent with the law of the land. Section 153A cannot be construed in such a manner. 19. For the above reasons we are of the view that contention (b) of the assessee is well founded and the Assessing Officer has no jurisdiction to include the same additions, which were deleted by the CIT(A) earlier and whose orders have become final, in the assessments made under section 153A of the Act. 20. The cross objections are thus allowed. 21. In the view we have taken, it is not necessary to discuss the merits of the additions canvassed in the appeals by the department. However, since the matter was argued before us even on merits, we consider it proper to decide the department's app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponse thereto NSE stated that the trade numbers mentioned in the contract notes were incomplete and not in conformity with NSE's system of maintaining the trade numbers. From this the Assessing Officer inferred that the contract notes contained bogus numbers. On these facts the Assessing Officer in the course of the earlier reassessment proceedings held that the assessee had declared bogus purchase and sale of shares and shown bogus capital gains in order to introduce her own unaccounted income into the books. 22. All the above facts are seen mentioned in paragraph 7.1 of the impugned assessment order and strong reliance has been placed thereon in addition to the statement recorded from Shri Mukesh Choksi in the course of the present proceedings and the affidavit filed by him on 4-5-2008/5-12-2008. 23. The assessee has placed strong reliance on the order of the ITAT in the case of Smt. Varunadevi Shorewala v. ITO [IT Appeal No. 1611 (Mum.) 2007 (assessment year 2001-02), dated 7-5-2009; ITO v. Mr Sandeep R. Shorewala, HUF [IT Appeal Nos. 5722 5723/Mum./2007 (assessment years 2001-02 2002-03), dated 26-2-2009; and Mukesh R. Marolia's case (supra). These three orders have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court observed that a man indulging in double speaking cannot be said to be a truthful man at any stage and no Court can decide on which occasion he was truthful. Apart from this, what we find is that the statement and the affidavit relied upon by the Assessing Officer in the present proceedings merely reiterate Shri Mukesh Choksi's earlier statement given in the course of the search operations in his case. They do not carry the case of the department much ahead. The earlier statement of Shri Mukesh Choksi has been the subject-matter of scrutiny by the Tribunal in the case of Sandeep R. Shorewala, HUF (supra), which we have noted in the preceding paragraph. The decision of the Tribunal in the case of Sandeep R. Shorewala, HUF (supra) has been followed by the Tribunal in the case of Smt. Varunadevi Shorewala (supra). Both these cases are connected to the assessee's case and the facts are also similar except that in the present case the further development is that there was a search on 28-6-2006 resulting in assessments made under section 153A read with section 143(3), in the course of which Shri Mukesh Choksi made a statement on 26-11-2008 and also submitted an affidavit o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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