TMI Blog2014 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition made – Sale and purchase of scrips – Held that:- The purchase as well as the sale transactions of the scrips was not genuine - The reason for taking this view is that the purchase rate had not tallied with the rate as per BSE website and that the purchases have also been made in cash - only paper transactions have been made because there was no evidence of physical delivery of the shares - The AO was right in asking the details of the dividend if any received during the holding period - But no such information was provided at any stage of proceeding. Even, the entries in the Demat Account were not sacrosanct because the AO had found on investigation that those were all “off market” transactions - those companies were nothing but entry providers - it was proved beyond doubt that Mahasagar Group was engaged in the business of issuance of fraudulent bills – thus, the order of the CIT(A) is upheld – Decided against Assessee. - ITA No. 436/Ahd/2013 - - - Dated:- 9-5-2014 - Shri Mukul Kr. Shrawat And Shri N. S. Saini,JJ. For the Petitioner : Shri O. P. Batheja, Sr. D. R., For the Respondent : Shri R. N. Vepari, AR ORDER Per Shri Mukul Kumar Shrawat, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been revealed that the Mahasagar Securities Pvt. Ltd. its related group company, out of which ones being M/s. Alliance Intel. Mediateries and network Pvt. Ltd. from whom the assessee has sold the shares of various companies. On verification of the return of income filed, the assessee has sold the following shares of the various companies as on 28.02.2005 vide Bill No. CC/2005/039/5 dated 28.02.2005. Sr. No. Name of the company No of Share Amount 1 Channel Guide 3400 Rs. 39,950/- 2 Broadban Ltd. 17000 Rs. 65,200/- 3 D. Karuna Cable 12500 Rs. 2,89,605/- 4 Sacheta Metals 2600 Rs. 85,280/- Total Rs, 4,80,035/- During the course of search proceeding it was revealed that the Mahasagar Securities Pvt. Ltd. and its related group of 34 odd companies (the prominent ones being M/s. Alliance Intermediaries Network Pvt. Ltd., M/s. Mihir Agencies Pvt. Ltd., M/s. Gold star Finvest Pvt. Ltd. etc- all run by Mukesh Choksi) were engaged in fraudulent biling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities. In absence of any such clear finding in search about assessee having been involved in it, there can be only reason to suspect and not reason to believe. On this legal point, he has placed reliance on various judgments. 1. Rajesh Jhaveri Stock Brokers (P) Ltd., 196 CTR 105 (Guj) 2. SFIL Stock Broking Ltd., 41 DTR 98 (Del) 3. Sarthak Securities Co. P. Ltd., 329 ITR 110 (Delhi) 4. Aslam Ulla Khan, 321 ITR 150 (Karn) 5. M.B. Traders, 41 DTR 441 (Nag) 6. Signature Hotels (P) Ltd., 60 DTR 30 7. Radheshyam Mohanlal Maheswari, 12 ITR 429 8. Mahadev Trading Co., 65 DTR 140 (Ahd) 9. Durga Prashad Goyal, 98 ITD 227 10. Bhubaneswar Stock Exchange, 96 ITD 480 (Cuttack) 11. Yakub Ali Gopal Singh Party (Wine Contractor), 98 TTJ 821 12. Hindustan Dorr Oliver Ltd., 4 DTR 61 (Bom) 13. Bakulbhai Ramanlal Patel, 56 DTR 212 (Guj) 14. Poonam Rani singh, 97 ITD 390 15. Shree Rajasthan Syntex Ltd., (SLP(c)No.8167 of 2009), 313 ITR 27 16. Batra Bhatta Company, 321 ITR 526 (Del.) Finally, he has submitted that the share transactions were genuine because the purchase of shares was as early as on 24th of April, 2001. Those shares stood refle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 5.1 Although, the admitted factual position is that for A.Y. 2005-06, the AO was required to issue notice u/s.148 within 4 years from the end of relevant assessment year. Meaning thereby, the AO should have issued the notice u/s.148 upto 31st March, 2010. However, the admitted factual position was that the notice u/s.148 was issued on 23rd of March, 2011. Because the notice was issued after the expiry of four years as prescribed in the statute, therefore, we have to examine the correct position of law as prescribed under the Ist Proviso to Section 147 of IT Act. It was not disputed that the assessee is in individual capacity has filed the Income Tax Return for Rs.88,664/- on 13th of February, 2006, which was processed u/s.143(1) of IT act. The proviso prescribes that no action should be taken u/s.147 after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the share transaction consequent upon the search on M/s. Mahasagar Securities and a statement of Mukesh Chokshi u/s.132(4). The AO had doubted the genuineness of the share transaction. It was noted that the assessee had claimed sale of the following shares. Sr. No. Name of the Company No. of shares Amount 1. Channel Guide 3400 Rs.39,950/- 2. Broadban Ltd. 17000 Rs.65,200/- 3. D. Karuna Cable 12500 Rs.2,89,605/- 4. Sacheta Metals 2600 Rs.85,280/- Total: Rs.4,80,035/- 7.1 The AO had asked to furnish the Demat Account for the period of 2003-04 and 2004-05. The query of the AO was as under: 1. Demat account for the period F.Y. 2003-04, 2004-05 2. Bank statement for indicating the purchase of shares. 3. Date of purchase of the shares, its sale during the F.Y. 2004-05 and from whom the shares have been purchased and how the purchase considerations have been paid. 4. Brokers Contract note for the purchase of the above stated s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO after investigation was as under: On the basis of the above information furnished by the A.R. of the assessee, in order to verify the genuineness of the transactions a notice under section 133(6) of the Act was issued on 16.12.2011 to NSDL, Mumbai to verify the transaction which have been shown as per Demat Account furnished by the assessee. Further they were asked to furnish the share transactions shown through Demat accounts to verify whether those transactions have been completed either by relevant pay in or pay out or off market transaction. In response to the said notice, the NSDL vide letter dated 23.12.2011 has furnished the information that In this regard, the details of off market transfers reflecting the given SOT are enclosed in a compact discrepancy as per the format given in Annexure-A. [Annexure B-7 pages] 3.8 On going through the enclosed annexure it is found that in all the above 4 scrip s i.e. Channel Guide India, Globus Corporation, IOL Net Com Ltd. and Sacheta Metals Ltd., in comparison with the copy of demat account filed, it is stated that on both the dates i.e. on 25.2.2005 and 28.2.2005, the above share transaction are not genuinely delivered agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alpha Chemie Trade Agencies Pvt. Ltd. have also filed their returns declaring is to be in the business of an entry provider and estimating its income @15% of total receipts from entry seekers. The same has been accepted in the assessment order dated 12.11.2008 for the A.Y.2007-08 u/s. 143(3) by ACIT (OSD)-1, Central Range-7, Mumbai. The Hon. ITAT has already declared this company as entry providers and later assessments are based upon this decision. 3.16 It proved beyond doubt that the Mahasagar Group companies are engaged in the business of issue of fraudulent bills of short term and capital gain in the name of fictitious persons. The assessee is also involved in such fictitious transactions which are evident from the fact that the assessee has furnished the return of income from the sale of share which is carried out of Market transaction. The purchase consideration has been paid in cash and purchased date has been misrepresentation to show that the shares were held more than 1 year but in fact the same were purchased in genuine. The assessee has not furnished any details regarding application made for demat of such shares. The claim of the assessee that the shares were pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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