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Manish C. Jogani, HUF, Sandeep C. Jogani (HUF) , Girish C. Jogani (HUF) , Champaklal D. Jogani (HUF) Versus ITO-16 (2) (2) , Mumbai

2015 (11) TMI 1126 - ITAT MUMBAI

Addition u/s 68 - whether the Securities Transaction Tax (STT) has been paid on the purchase and sale of shares? - Held that:- The Revenue, on its part, has though made out a case, has not brought on record all the relevant facts. Also, it cannot be denied that the assessee is entitled to be furnished a copy of all the materials being relied upon by the Revenue toward impugning the assessee’s reliance on the said documents, and an opportunity to set up its defense. The issue to my mind is factua .....

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, where under such similar circumstances the additions have been confirmed, so that the issue in all the cases, to be decided on the facts and circumstances of each case, is with regard to the discharge or otherwise of the burden of proof on the assessee to satisfactorily explain the nature and source of the impugned credits

The matter accordingly would stand to be restored to the file of the Assessing Officer for adjudication afresh, even as indicated during hearing. The assessees sh .....

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et of four Appeals by different Assessees, agitating the dismissal of their appeals contesting their respective assessments u/s. 143(3) r/w s. 147 of the Income Tax Act, 1961 ( the Act hereinafter) dated 07.2.2014 for the assessment year (A.Y.) 2008-09 by the Commissioner of Income Tax (Appeals)-27, Mumbai ( CIT(A) for short) vide his separate orders of even date (20.10.2014). The issue/s arising being common, the appeals were posted for hearing, and were accordingly, heard together. 2. It was, .....

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s stands effected; the bank account/s reflecting the receipt, etc. The Revenue, however, based on the deposition by one, Shri Mukesh Choksi, who and his companies, in the business of market intermediaries and dealers in securities, were subject to search on 25.11.2009, initiated proceedings, in all the cases, of which the present four are a part, where the LTCG had arisen on the basis of the transactions through his companies. Toward this, he would take the Bench to the relevant part of the impu .....

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CIT(A), in appeal, has made abundant reference to case law. The same is principally toward showing that the burden of proof, which is on the assessee, has been discharged, and that in the facts and circumstances of the case the credits are unproved. The same does not impugn the assessee/s case in any manner, even whose name does not appear in the statements of Shri Mukesh Choksi being relied upon. At this stage, on being asked by the Bench if the assessee had been supplied the copies of the said .....

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the copy of the said statements could not be countenanced in-as-much as there is nothing on record to show that the same were ever applied for. The assessee has not brought on record anything to rebut the Revenue s reliance on the said statements, which impinge directly on the validity of the documents being relied upon. 3. The parties have been heard and the record perused. The first thing observed in the matter is that the assessee has not been supplied a copy of the statements being relied u .....

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ce thereof to the assessee, and being brought on record, form as it does, as it would appear, the substratum of the Revenue s case. The assessee/s - who is admittedly a beneficiary of the credits on transactions carried through the said companies, objection, however, holds little merit. The statements, being pursuant to a search action at the business premises of Sh. Mukesh Choksi and his companies, were not qua any specific assessee but specific to his business/es, covering all the persons tran .....

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cally stated in the said statements, is thus of little consequence. In fact, the reassessment proceedings are not under challenge, so that the relevance of the materials with the Revenue, or the validity of the reasons recorded, is not in dispute. Again, as observed by the Bench, how could, even de hors the said statements, credence be given to the bills/contract notes, as furnished, when the registration of M/s. Alliance Intermediaries & Network Pvt. Ltd., a sub broker affiliated to M/s. IS .....

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terms of the law/procedure, even otherwise required to be time stamped, also bearing the unique identification number (UIN) (and which bears reference to his PAN) of the client, while in the present case there is considerable doubt if the transactions are market transactions, i.e., through the market/exchange. The assessee s plea for cross examination is, again, misconceived. In-as-much as the assessee relies on the evidences furnished by Sh. Mukesh Choksi or his companies, i.e., in the form of .....

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s shifts, and who was required to produce and examine him (Mukesh M. Choksi), if he wanted to rebut the Revenue s reliance on his subsequent statements. In fact, Sh. Mukesh Choksi as well as his companies stand black listed by SEBI on the ground of being engaged in clandestine activities, even as noted by the Tribunal in the case of Ratanchand J. Oswal & Rishi R. Oswal (in ITA Nos. 4998 & 4999/Mum/2009 dated 28.03.2013) vide para 4.2 of its order. Clearly, therefore, their capacity to fu .....

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owing cases, having been relied upon by the Revenue in another such case (Rinku Shah - in ITA No. 4311/Mum/2014 for A.Y. 2005-06): 1) M/s. Gold Star Finvest P. Ltd. (in ITA Nos. 4625/Mum/2005 & 5000/Mum/2005 dated 28.03.2008 for A.Y. 2002-03); 2) Richmond Securities P. Ltd. (Subsequently known as Mahasagar Securities P. Ltd. and now known as Alag Securities) (in ITA No. 4624/Mum/2005 dated 29.08.2008 for the A.Y. 2002-03) and M/s. Apha Chemie Trade Agencies Pvt. Ltd. (in ITA No. 4999/Mum/200 .....

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on at the stipulated rate could be assessed as income in their hands. By necessary, nay, direct implication, the entries/credits are not genuine. Coming to the facts of the case, it is observed that though the Revenue has made a clear and thorough analysis of the obtaining legal framework, relying on abundant case law, which has not been rebutted, the facts have not been similarly collated & analyzed, with a view to determine the issue at large, which is principally factual, i.e., if the tra .....

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er? Who is the seller/s, from whom therefore the delivery would flow, and to whom the payment/s would be made? Is there any contemporaneous evidence to exhibit the purchase (as well as the rate), which is crucial also from the point of view that it is only where the holding period is for a minimum of 12 months that the gain arising on the transfer of the shares qualifies to be a LTCG. Like-wise, for the sale. Is the sale supported by market quote/s? What is the basis of the sale rate/s, which is .....

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as spot transactions, i.e., where both the actual delivery (of shares) as well as the payment there-against is concluded immediately, i.e., on the very same day of the contract or, maximum, the next day (s. 2(i) of Securities Contract Regulation Act, 1956). In what capacity, then, has the broker acted, who therefore could not have acted as one? This is apart from the fact that it is otherwise not eligible to act as one in view of the cancellation of the registration. One could in fact continue f .....

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is well settled, and toward which some binding decisions may be cited: CIT vs. Sri Meenakshi Mills Ltd. [1967] 63 ITR 609 (SC) Juggilal Kamlapat vs. CIT [1969] 73 ITR 702 (SC) CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC) McDowell & Co. Ltd. vs. Commercial Tax Officer [1985] 154 ITR 148 (SC) Workmen, Associated Rubber Industry Ltd. vs. ARI Ltd. [1986] 157 ITR 77 (SC) CIT v. Akshay Textile Trading & Agencies (P.) Ltd. [2008] 304 ITR 401 (confirming that there was no departure from the .....

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he realm of a factual matter, is thus whether the assessee has been able to satisfactorily prove the impugned credit, i.e., as would satisfy a man of normal prudence, acting reasonably, as where with regard to his own affairs. In other words, is the assessing authority, in being not satisfied with the assessee s explanation, backed of-course by the materials relied upon, acting reasonably. Being, of-course, where and to the extent required/relevant, duly informed of the applicable law/procedure. .....

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x (STT) has been paid on the purchase and sale of shares. This is as it is only where the STT is chargeable, that an exemption u/s. 10(38) enures. No material has been brought on record by the assessee to establish its case, besides claiming reliance on the documents, and which gets impugned in view of the statements, the existence of which is not doubted; rather, accepted, requesting for cross examination. The Revenue, on its part, has though made out a case, has not brought on record all the r .....

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