TMI Blog2015 (12) TMI 1502X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment sought to be reopened was beyond the period of 4 years. The ‘reason to believe’ entertained by the AO in such cases should be such that, whether there is any failure on the part of the assessee to disclose truly or full all material facts because that is a point of jurisdiction which AO has to acquire to reopen the competed assessment u/s 143(3). The information received from the Investigation wing was that assessee had also transacted with the said companies, i.e., it was also one of the beneficiary appearing in the list forwarded by the DDI(IT). There is no specific mention that, whether the particular transaction undertaken by the assessee of N.E. Electronics Pvt Ltd was a bogus transaction. From the perusal of the statement recorded of Shri Mukesh Chokshi it is evident that there is no mention or whisper about the assessee has taken accommodation entry to the assessee. The other most important fact here is that, the AO has not uttered a word about failure on the part of the assessee for disclosing the true and correct material facts. Such ascribing of failure of the assessee in the “reasons recorded” itself is mandatory, because from the reasons alone, it can be gathered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the head Capital Gain whereas the same was assessable as income from undisclosed sources u/s 68 of the I.T. Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering the deduction u/s 54EC is allowable . 3. Whereas, in the Cross Objection and in the pleading before us, the assessee has challenged the validity of reopening u/s 147 on the ground that:- Firstly, the earlier assessment of the assessee was completed after detail scrutiny u/s 143(3) and there being no tangible material coming on record, the reopening of such an assessment u/s 147 amounts to change of opinion ; Secondly, the reopening has been done after the expiry of 4 years from the end of the relevant assessment year; therefore, such a reopening is barred by limitation within the terms of Proviso to section 147. Since the issues raised in Cross Objections are purely jurisdictional and legal ground which goes to the very root of the validity of the proceedings, therefore, same are being taken-up first. 4. The brief facts qua the validity of reopening of the case u/s 147 are that, assessee has filed his return of income u/s 139(1) on 29.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Mukesh Chokshi, the director of the company, M/s Goldstar Finvest Pvt. Ltd., he has clearly admitted that M/s Goldstar Finvest Pvt. Ltd. was engaged in the business of providing accommodation entries in nature of bogus long term capital gains. This fact is also strengthened by the fact M/s Goldstar Finvest Pvt. Ltd. itself in the appeal proceedings for the A.Y.2002-03 admitted before the I.T.A.T., Mumbai that it is an entry provider. The I.T.A.T. vide its order dated 28.03.2008 in ITA No.4625/Mum/2005 5000/Mum/2005 for the A.Y. 2002-03 in the case of M/s Goldstar Finvest Pvt. Ltd. has accepted this claim and declared the company as an entry provider and ordered that its income should be computed @ 0.15% of total entries provided by this company. It is also pertinent to note here that M/s Goldstar Finvest Pvt. Ltd. has been filing its return of income since A.Y. 2002-03 till date by declaring its business as an entry provider and has been computing its income @0.15% of total amount of entries provided. 4. In the light of the above facts, it is evident that the transactions shown by the assessee with M/s Goldstar Finvest Pvt Ltd are nothing but colourable devices using f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . All these details were filed before the AO during the course of original assessment proceedings which have also been enclosed from pages 2 to 45 of the paper book. After considering these information and details, the AO accepted the LTCG by sale of shares and granted the exemption u/s 54EC. Thus, there was a specific enquiry and examination by the AO with regard to the LTCG only after detail scrutiny, the assessee s claim was accepted. 7. Now, after having made such a disclosure by the assessee and assessment having being completed by the AO in the aforesaid manner, the case has been reopened u/s 147 on the ground that, during the course of search and seizure action in the case of M/s Mahasagar Securities Pvt. Ltd and director of this company, Shri Mukesh Chokshi, it came to the limelight that one of his company M/s Goldstar Finvest Pvt Ltd was engaged in providing the accommodation entries by way of bogus long-term-capital-gain and since assessee had transaction with M/s Goldstar Finvest Pvt. Ltd, therefore, all the transactions shares routed through this company is nothing but a colourable device and bogus. After obtaining of the copy of the reasons recorded , the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, AO was only examining the claim of section 54EC. The AO did not have any idea about the modus operandi about the Mukesh Chokshi Group providing such kind of accommodation entry through his companies like Goldstar Finvest Pvt Ltd. The entire modus operandi and sham transaction was unearthed only during the course of search and seizure action in the case of Mukesh Chokshi and his associated companies. It was in the course of search and seizure action, it was found that assessee was also one of the beneficiary party, which has under taken bogus share transaction with the companies floated by Mukesh Chokshi. Even in the case of Goldstar Finvest Pvt Ltd, the Tribunal has held that, this company has earned commission income from providing accommodation entry. This entire information is sufficient to entertain the reason to believe that, the transaction is not only bogus but assessee s claim is also bogus and, therefore, there is a escapement of income. This itself goes to show that there is failure on the part of the assessee to disclose fully and truly all material facts, because the facts that were disclosed by the assessee have been subsequently found to be false. 9. We have h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oker, M/s Goldstar Finvest Pvt. Ltd along with the receipts for the payment received towards purchase of shares. Immediately thereafter, the assessee had written a letter to the company N.E. Electronics Pvt. Ltd to transfer these shares in the name of the assessee and also furnished the details of shares scripts along with the distinctive numbers, number of shares and folio number. In response, N.E. Electronics Pvt. Ltd vide letter and intimation dated 30.05.2011 to the assessee informed that, the shares bought by the assessee of this company have been transferred in the name of the assessee. Thus, way back in April and May 2001, the assessee had shown purchases and also got the shares transferred in his own name from the company, that is, this entire disclosure was reflected in the Balance sheet and in the return of income filed for the assessment year 2002-03. After the disclosure of such purchase of shares, the assessee got these shares dematerialised in Indian Overseas Bank on 14.01.2003. These shares were purchased in the month of April 2001 and were sold in the month of June, 2003. The sales of these shares have been made through Demat account and the payments have been recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken in the case of Mahasagar Securities Pvt Ltd, wherein it was found that the said company and its related 34 Group Companies were engaged in fraudulent billing activities and in the business of providing bogus speculation profit / loss, shortterm / long-term capital gain / loss etc. Shri Mukesh Chokshi and Director of the said company had floated these companies which included M/s Goldstar Finvest Pvt Ltd M/s Mahasagar Securities Pvt Ltd. The assessee was also one of the beneficiaries as it has transacted with these companies and his name appears in the list forwarded by Investigation Wing informing that, assessee too have obtained bogus entries worth ₹ 12,95,345/- through M/s Goldstar Finvest Pvt Ltd M/s Mahasagar Securities Pvt Ltd.; (ii) In the statement recorded of Shri Mukesh Chokshi, he has clearly admitted that M/s Goldstar Finvest Pvt Ltd was engaged in the business of providing accommodation entries in the nature of bogus long-term-capital-gain. This fact is also strengthen by the fact that in the case of the company it has been admitted uptil the stage of the ITAT that it has been providing accommodation entry and its income was computed on commission inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons recorded itself is mandatory, because from the reasons alone, it can be gathered whether there was any failure on the part of the assessee or not so as to acquire jurisdiction for reopening the case beyond the period of 4 years. There is not an iota of allegation of failure on the part of the assessee to disclose material facts. Such an assignment is mandatory as held by various High Courts including that of jurisdictional High Court in case of Tata Business Support Services Ltd. Vs. DCIT 232 Taxman 702, Idea Cellular Ltd vs DCIT, 301 ITR 407. 12. Even otherwise also, as stated in detail in the foregoing paragraphs, the assessee s purchase of the shares were not only conclusively disclosed in much earlier assessment years but also the entire material facts relating to purchase and sale have been disclosed which have been subjected to the scrutiny also. If there is no specific information or material that such a disclosure was wrong or false, the AO cannot acquire jurisdiction for reopening the case beyond the period of 4 years in terms of Proviso to section 147. The duty of the assessee is limited to disclose truly and fully all material facts and it is for the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the return of income and before the AO during the course of the revenue assessment proceedings. Such an assessment completed u/s 143(3) after scrutinizing the details of purchase of shares, transfer of shares in the name of the assessee and then sale of share through Demat account, the cases has been reopened u/s 148 vide notice dated 28.03.2011 i.e. much beyond the period of 4 years from the end of the relevant assessment year. Here in this case also, the exactly similar reasons have been recorded which are as under:- 1. Information has been received from DDIT(Inv) Unit I(4), Mumbai vide letter dated 07.03.2011 that a search seizure action u/s 132 of the I.T. Act was undertaken in the case of M/s Mahasagar Securities Pvt. Ltd. by DDIT (Inv) Unit I(4), Mumbai on 25.11.2009 on the basis FlU information regarding suspicious transactions taking place in the bank accounts of this company and its related companies. The Director of these companies were (i) Shri Mukesh M Chokshi and (ii) Shri Jayesh K Sampat 2. During the course of search, it was revealed that M/s Mahasagar unties Pvt. Ltd. and its related 34 group companies (one of the prominent ones ng M/s Goldstar F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax and Laundering of her unaccounted income. Hence an amount of ₹ 12,14,000/- represent the undisclosed income of Smt. Saryu H Shah f or the AY 2004-05 which has escaped assessment. Since the entire facts and reasons are same, therefore, our finding given in the aforesaid appeal of Shri Hasmukh J Shah will apply mutatis mutandis and, therefore, in view of our finding given therein, that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, therefore, the reopening of the assessment u/s 147 beyond a period of 4 years is not permissible will apply in the present case also, as the assessee had completely disclosed all these material facts which has also been subjected to the scrutiny. Thus, the reasons recorded by the AO do not clothe the AO to acquire jurisdiction for reopening the case u/s 147 and hence such a reopening is bad in law and deserves to be quashed. Accordingly, we quash the impugned assessment order passed u/s 147 r.w.s. 143(3). Accordingly, the Cross Objection raised by the assessee is allowed. 18. In view of these finding, the Departmental appeal which is purely on merit is accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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