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2016 (3) TMI 925 - ITAT MUMBAI

2016 (3) TMI 925 - ITAT MUMBAI - TMI - Transaction of speculation income and short term capital gain - whether are not genuine - treating sales proceeds of share of Crazy Infotech as income from other sources - Held that:- The assessees before us are beneficiary of accommodation entry provided by Shri Mukesh Chokshi and his associates. Before us, the assessee has not contradicted the factual finding recorded in the impugned order, thus, considering the totality of facts, we find no infirmity in .....

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ed 04/02/2015, of the ld. First Appellate Authority, Mumbai. The ground raised is that the ld. First Appellate Authority erred in observing that transaction of speculation income and short term capital gain are not genuine and further that sales proceeds of share of Crazy Infotech amounting to ₹ 2,28,188/- and ₹ 2,45,416/-, respectively is income from other sources, without considering the submissions of the assessee. 2. During hearing of these appeals, the ld. counsel for the assess .....

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reference:- 3.2 Facts of the case and submission of the Ld. A.R. have been considered carefully. There is no dispute considering the facts that sum of ₹ 31,110/- constitutes the sum of ₹ 2,28,188j- assessed as speculation income and further payment dt.28.03.2007 by cheque ₹ 2,492/-. Therefore, the AO is directed to delete the addition of ₹ 31,110/- made separately in the assessment order. 3.2.1 There is also no dispute of facts that all the transactions are from M/s. All .....

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ccordingly the cheque as desired by the beneficiaries have been issued. For these reasons ITAT has held in Mukesh Chokshi group concerns that income of all these concerns has to be determined independent of the transactions but @ 0.15% of the gross value of all cheques issued from the bank accounts of such concerns. The income was held assessable is the net income -earned by Shri Mukesh Chokshi and his associates in providing the accommodation 'entries. The cases in which ITAT has held so ar .....

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e Trade Agencies Pvt. Ltd. in ITA No.4999/Mum/2005 for the A.Y.2002-03. (c) Decision in ITA No.4912/Mum/2005 dated 30.05.2008, in the case of M/s. Mihir Agencies Pvt. Ltd. 3.3.1 Based upon these ITAT orders, all the concerns inCluding M/s. Alliance Intermediaries and Network P. Ltd., M/s. Gold Star Finvest P. Ltd. and M/s. Alpha Chemie Trade Agencies Pvt. Ltd. have also filed their returns declaring it to be in the business of an entry provider and estimating its income @0.15% of total receipts .....

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uding the appellant for showing bogus Long Term Capital Gain and other incomes/losses as required by various persons. For accommodation entries provided by Shri Mukesh Chokshi and his associates, his net income @0.15% of total transactions has been shown as income and has been accepted by the ITAT. 3.3.3 The assessee is also one beneficiary of accommodation entry provided by Shri Mukesh Chokshi and his Associates. The entity used in this case is M/s. Alliance Intermediaries Network Ltd. Therefor .....

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tality it is hereby held that sum of Rs.l,97,078/- is rightly assessed by the AO Income from other sources. AO is directed to modify the assessment by assessing sale proceeds of shares of Crazy Infotech Ltd. of ₹ 2,28,188/- as income of the assessee under the head Income from other sources. Accordingly, total income is to be determined as - (i) Speculation income shown Rs.1,77,634/- (ii) Interest income as shown ₹ 73,120/- (iii) Income from other sources Rs.2,28,188/ - 4. In the resu .....

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ed u/s 147 of the Act after recording the reasons and issuance of notice u/s 148 of the Act dated 28/03/2013. The assessee attended the proceedings. The reasons for reopening the assessment were also provided to the assessee. The reasons have been reproduced in para 3 of the assessment order. It is noted that the assessee, an individual, declared short term capital gains on the sale of shares and also income from other sources. The assessee is beneficiary of bogus accommodation entries from M/s .....

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ed 23/12/2013, as is evident from para 8 (pages 4 to 7) of the assessment order. The assessee also responded to the show cause notice which has also been considered. Finally, the Assessing Officer treated the amount of ₹ 31,110/- (being purchase cost of 2800 shares) as unexplained money and added to the return income of the assessee u/s 69 of the Act, the so called profit was also treated as unexplained money and the differential amount of ₹ 2,28,245/- with respect to bogus purchases .....

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decisions have already been quoted by the ld. Commissioner of Income Tax (Appeals). During hearing, before us, the assessee has not confronted the observation made in the impugned order. In fact, Mr. Mukesh Chokshi was not doing genuine share transaction and was merely providing bogus entries and showing bogus long term/short term capital gains. It is also noted that identically, in the following cases, order dated 16/11/2015:- Manish C. Jogani, (HUF) vs ITO (ITA N0.7344/Mum/2014) Sandeep C.Joga .....

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ies (ITA No.4624/Mum/2005) order dated 29/08/2008, M/s Apha Chemie Trade Agencies (ITA No.4999/Mum/2005), M/s Mihir Agencies pvt. Ltd. (ITA No.4912/Mum/2005) order dated 30/05/2008 and M/s Alliance Intermediateries and network Pvt. Ltd. were considered. The relevant portion of the order dated 16/11/2015 is reproduced hereunder:- This is a set 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 Inco .....

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the genuineness of the longterm capital gain (LTCG) on the sale of shares. The appellant/s had on their part furnished all the relevant documents, i.e., toward establishing the validity of their claim, viz. the bills and contract notes for the purchase and sale of the relevant shares; De-mat account, through which the delivery of the shares 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 compan .....

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the assessee s reliance on the said documents has been brought on record by the Revenue. Why, even cross examination of the deponent, specifically asked for, was not provided, and toward which he would advert to the letter dated 02.12.2013 (duly submitted on that date), submitted during the assessment proceedings (PB pgs. 10-14). The ld. 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 .....

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s issued the relevant bills and contract notes, i.e., on the basis of which the truth of the transactions is being claimed, admits to the same being bogus, i.e., not representing actual transactions, how would it matter if the assessee s name is not specifically stated in the said statements? The assessee s plea of having been not supplied 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 h .....

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appears to be well aware of the contents of the said statements, which was in fact conceded to by the ld. AR during hearing, explaining that the reassessments in other cases too had been initiated by the Revenue on the basis of the said statements, which are thus in common knowledge. Even so, the same would not substitute a formal conveyance 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 adm .....

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not genuine, but that the entire business as carried out through such hawala companies, is sham and bogus, only a make believe, being carried with a view to provide accommodation entries for a charge, even as admitted per the said depositions, and which is understood to be the substance thereof. The contention of the name being not specifically 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 .....

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2.2004. Further, the transactions were admittedly not carried out through the stock exchange, as again clarified by the National Stock Exchange (refer para 2.4.3 of the impugned order). What value, then, the said bills/contract notes, issued by such companies, which could not have acted as brokers or sub-brokers? The contract notes are, in 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 .....

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n be substantiated and corroborated by the evidences/materials found in search. The credibility of the bills and contract notes is even otherwise in serious doubt, with the transactions being not market transactions, so that the broker could not have acted as such, i.e., as a market intermediary. It is, thus, the assessee, on whom the onus 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 .....

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y the tribunal on the basis that these entries do not represent or arise out of genuine transactions, but are only accommodation entries, assessing their income by estimating the same by applying a percentage on the gross receipt as per their bank accounts. Reference toward this, being information in the public domain, is made to the following 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. .....

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ork P. Ltd., (assessment order u/s.143(3) dated 12.11.2008 for A.Y.2007-08/by ACIT(OSD-1), Central Range-7, Mumbai)). That is, the tribunal, the final fact finding authority, has itself found, as a fact, that these companies were engaged in the business of providing accommodation entries to various entry seekers, so that only the commission 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 .....

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require providing him opportunity to explain the different aspects of the transactions. Several questions arise, in the matter, and which would require being suitably addressed. Whether the shares under reference were purchased from the market, or are off market transactions. What is the basis of the purchase price in the case of the latter? 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 .....

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t) rate in terms of the credentials or fundamentals of the company? Who are the buyers of the shares, to whom the delivery thereof would be made and from whom the consideration flows, and who therefore represent the source of the credit. Where claimed as off-market transactions, the same could only be on principal to principal basis, and 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 .....

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e applicability or otherwise of section 68 of the Act in the present case. Also relevant, would be the materials found during search in-as-much as they may indicate if the statements are corroborative and, further, if the modus operandi adopted, as explained therein, corroborates the facts and incidents of the case. The law in the matter 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] .....

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3] 260 ITR 6 (Bom) It needs to be appreciated that though the Revenue has sought to impugn the transaction/s as bogus/not genuine, the issue is qua the applicability of section 68, whereby the statute itself casts a burden of proof on the assessee to satisfactorily explain the nature and source of a credit. The issue, which is purely in the 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 pru .....

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elekha Banerjee & Othrs. v. CIT (1963) 49 ITR 112 (SC) Kalekhan Mohammed Hanif v. CIT (1963) 50 ITR 1(SC) CIT v. Durga Prasad More (supra) CIT v. Biju Patnaik (1986) 160 ITR 674 (SC) Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) CIT vs. P. Mohanakala &Others (2007) 291 ITR 278 (SC) Then, again, whether the Securities Transaction Tax (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 h .....

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ning the assessee s reliance on the said documents, and an opportunity to set up its defense. The issue to my mind is factually indeterminate. Reliance on the decisions by the tribunal in cases of other persons availing such credits; the issue being principally factual, would be of little assistance. This is stated as the ld. AR claims of about 15-20 cases by the Mumbai Benches of the tribunal in the recent months, where, under such circumstances, the appeals by the assessee are claimed to have .....

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