TMI Blog2015 (12) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... i Sanjay Garg, Judicial Member For the Petitioner : Shri Alok Johri, D.R. For the Respondent : Shri D.V. Lakhani, A.R. ORDER Per Sanjay Garg, Judicial Member: The above titled appeals have been preferred by the Revenue against the common order dated 27.07.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to AY 2008-09 and AY 2009-10. As the facts and issues involved in both the appeals are similar and the impugned order of the Ld. CIT(A) is also common in both the appeals, hence the same are taken together for disposal with this common order. 2. The brief facts of the case as drawn out from the impugned order and the available record on the file are that a search and seizure operation was carried out u/s. 132 of the I.T. Act at the business premises of assessee on 04.03.2010 situated at 208, Ashirwad Building, Ahmedabad Street, Carnac Bunder, Mumbai. During the course of search it was found that assessee had been maintaining its books of accounts at another premises situated at 20, Bhatia Niwas, 233/235, Samuel Street, Masjid Bunder, Mumbai - 400 009. Therefore, the said premise was covered for survey action u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In the return filed in response to the notice u/s 153A, the amount declared as undisclosed income in the statement of Shri Ajay Kumar, Director of the company during the search action had not been disclosed. The AO observed that all the above said 7 companies have been doing their business from the same place and that these concerns were also not well established companies. A total of ten companies (8 companies in AY 2008-09 2 companies in AY 2009-10), names of which have been mentioned in the assessment order, had subscribed to the shares of these companies including the assessee. The AO further noted that the above concerns were sister concerns and their nature and the modus operandi was same as that of the assessee company. The AO further observed that the search and seizure operation was also conducted on one Shri Mukesh Chokshi, who was operating many companies through which he was indulged in providing the bogus entries including long term capital gain, short term capital gain, losses, speculative losses and share application money etc. It was also observed that two companies of Mr. Mukesh Chokshi, i.e. M/s. Talent Infoway and M/s. Mihir Agencies have also made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, observed that 10 companies had subscribed the share application money in the assessee company. The papers relating to the identity, creditworthiness and genuineness of the transaction relating to these companies were submitted by the assessee to the AO. The AO had also made bank enquiry in this respect but no discrepancy or incriminating evidence was found. The Ld. CIT(A) further noted that no incriminating document relating to the share application money was found or seized during the course of search. Further in respect to the companies, M/s. Mihir Agencies P. Ltd. M/s. Talent Infoway Ltd. in which one Mr. Mukesh Choksi has been a director, the Ld. CIT(A) observed that these companies had been registered with the registrar of companies. These companies had subscribed to the shares of the assessee company in AY 2009-10. The Ld. CIT(A) in this respect observed that during assessment proceedings, the Ld. AR of the assessee had submitted all the details relating to these companies. All the companies were having PAN and independently and regularly assessed to tax. Complete details of cheque number., date of cheque, bank a/c. share allotment letters giving detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income of the assessee and he had offered it for taxation. He therefore has contended that subsequent retraction is nothing but an afterthought of the assessee. The Ld. DR has further contended that Sh. Mukesh Chokshi was a hawala dealer, hence the share application money received by the assessee was the result of a bogus transaction. The Ld. DR in this respect has relied upon the decision of the co-ordinate bench of the Tribunal in the case of Gold Star Finvest (p) Ltd. [2013] 33 Taxmann.com 129. The Ld. DR has also referred to the decisions of the Tribunal in the case of M/s. Richmand Securities Pvt. Ltd. in ITA No.4624/Mum/2005 dated 29.8.2008 and further in the case M/s. Mihir Agencies Pvt. Ltd. in ITA No.4912/Mum/2005 dated 30.5.2008 wherein the decision in the case of M/s Gold Star Finvest (P) Ltd has been followed. 7. The Ld. A.R. on the other hand has relied upon the documents produced before the lower authorities and has reiterated the submissions as were made before the lower authorities. Inviting our attention to the case record relating to AY 2008-09, the Ld. AR has pointed out that none of the companies who had invested in the assessee company in the AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted. The Ledger Account confirmation in the books of Investor company was also submitted. The board resolution was not available with assessee as the assessee has got no legal right to ask for copy of board resolution when complete information about the investments made was available. The evidence relating to the net worth of the investing companies was also submitted. The Ld. DR on the other hand, though, has fairly admitted that no direct incriminating material against the assessee was found during the search action, he, however, has contended that it is a case of circumstantial evidence which is corroborated with the admission of one of the directors of the assessee company. At this stage the Ld. AR has pointed to the question No. 15 in the statement of Sh. Ajay Kumar, Director of the company, wherein it was pointed out to him that one Mr. Jose Mathews had on 4.3.2010, during the course of survey in the case of Shree Global Trade fin. Ltd., had stated that the share application received in case of the assessee from certain companies had been obtained by paying cash. In reply to question No. 15, it has been stated by the said Sh. Ajay Kumar that the statement given by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstrated that he was given an impression that in view of the statement of Sh. Mukesh Chokshi and Sh. Mr. Jose Mathews in some other search or survey actions, it was established that the assessee had received unexplained investment, in response to which he stated that he has come to know about these facts then only as revealed by the department and taking into consideration the fact and circumstances as were before him when these question were put to him, he agreed to offer the amount as unexplained income of the company. In view of this the Ld. AR has submitted that no reliance can be placed on the statement of Sh. Ajay Kumar who was neither in any way connected with the activities of the company when the transaction took place nor his admission was based on his personal knowledge, rather he agreed to admit the additions on the basis of facts presented to him i.e. the alleged unreliable statements of Mukesh Chokshiand Mr. Jose Mathews. 10. The Ld. AR has further explained that during the assessment proceedings, the assessee vide different letters including letter dated November 30, 2011 had explained to the Assessing Officer all the above facts and that the disclosure was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the confession as to the undisclosed income. Any action on the contrary shall be reviewed adversely. CBDT has also referred to the fact that if the confession statements are taken which are not based on credible evidence then later they are retracted. In the present case also, not a single incriminating material was found during the search action. The addition is made purely on the basis of declaration made by Sh Ajay Kumar, Director. The Ld. AR has relied upon the following decisions in this respect. (a) DCIT vs Pramukh Builders ITA No. 2170/Ahd./1999 A.Y. 1994-95 dated 6.7.2007 Reported in 115TTJ p. 330 (Third Member) (b) CIT vs. K. Bhuvanendra and Others 303 ITR p. 235 (Madras High Court) (c) S. Khader Khan Son Reported in 300 ITR p. 157 (Madras High Court) (d) Oriental Containers Ltd. vs. ACIT (2010) 6 Taxmann.com 121 (Mum). (e) Prem Sons ITA No.4698/MUM/2006 AY 2003-04 dt. 15/1/2009 (f) KalashbenManharlalChokshi 174 Taxmann pg.466 (Guj.High Court) (g) Rajesh Jain ITA No.SSA No.203/Del/2003 reported in 100 TTJ 929 12. We have gone through the above case laws relied upon by the Ld. AR. We find that in the above mentioned Judicial decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein while determining the income of that assessee, the Tribunal has estimated the income at certain percentage. The Ld. AR has however submitted that the ratio of this decision cannot overrule the decisions of Bombay High Court and several Mumbai ITAT decisions as relied upon by him. He has further relied upon the following decisions wherein the additions made by the AO on the basis of general statement of Mukesh Chokshi have ultimately been deleted by the higher authorities. 1. Kataria Ketan Ishwarlal Vs. ITO - ITA No.4304/M/2007 decided on 30.04.2010. 2. ACIT Vs. Shri Ravindrakumar Toshniwal - ITA No.5302/M/2008 decided on 24.02.2010 3. ITO Vs. Truptic Shah - ITA No.1442/M/2010 decided on 29.04.2011 4. Smt. Manjulaben L. Shah Vs. ITO - ITA No.3112/M/2014 decided on 31.10.2014 5. M/s SDB Estate private ltd. vs. ITO ITA No. 584/M/2015 decided on 15.04.2015 6. M/s. Yamuna Estate Pvt. Ltd. vs. ITO ITA No.2672/M/2012 decided on 09.09.2015 7. CIT vs. Rajni Devi A. Choudhry (Bom. HC) ITA NO. 1333of 2008 decided on 27.4.2009 8. Shri Mukesh R. Marolia vs. Additional CIT (2006) 6 SOT 247 (Mum) 9. CIT vs. Shri Mukesh R. Marolia in ITA No.456 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed aside. The Tribunal under such circumstances deleted the addition. The Revenue took the matter to the Hon'ble Bombay High Court. The Hon'ble Bombay High Court, while adjudicating the above issue in the case styled as CIT vs. Shri Mukesh R. Marolia in ITA No.456 of 2007 decided on 07.09.2011, observed that though there was some discrepancy in the statement of director (Mr. Mukesh Chokshi) of M/s. Richmond Securities Pvt. Ltd. regarding the sale transaction, but owing to the factual finding given by the Tribunal on the basis of evidences furnished by the assessee, the decision of the Tribunal cannot be faulted. The Hon'ble Bombay High Court upheld the finding of the Tribunal holding the sale transactions as genuine. The Department preferred appeal before the Hon'ble Supreme Court. The Hon'ble Supreme Court dismissed the SLP No.20146/2012 styled as CIT vs. Shri Mukesh R. Marolia vide order dated 27.01.14. Similarly in the case of CIT vs. M/s. Kesar A. Gada in ITA No.300 of 2013 decided on 21.01.15 wherein the AO, while making the additions under section 68 of the Act, had relied upon the statement of Mr. Mukesh Chokshi that he had given various accommoda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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