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2016 (4) TMI 702 - ITAT MUMBAI

2016 (4) TMI 702 - ITAT MUMBAI - TMI - Unexplained expenditure u/s 69C for the commission paid to the brokerage company for arranging bogus bills - AO added income from other sources which was long term capital gain from shares by treating the same as bogus for the reasons that the company M/S Goldstar Finvest Pvt Ltd was a group company of Mr Mukesh Chokshi which was involved in issuing bogus bills for purchase - Held that:- the basis of additions by the AO is completely unfounded and the AO ma .....

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confirming the same is also wrong. In view of our observation in hereinabove we allow this ground in favour of assessee by deleting the addition - Decided in favour of assessee - I.T.A. No.2587/Mum/2013 - Dated:- 26-2-2016 - SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Gajendra Golchha For The Respondent : Shri Naveen Gupta ORDER PER RAJESH KUMAR, AM : This appeal by the assessee is directed against the order dated 22/02/2013 of Commissioner of Income Tax (Appeals)- 3 .....

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ught not to have been made. 2. The learned CIT (Appeals) has erred in confirming the addition of ₹ 55,050/- as income as unexplained expenditure u/s. 69C. reasons assigned by him for doing the same are wrong and insufficient. Provisions of the Act ought to have been properly constructed before disallowing the same. Regards being had to the fact and circumstances of the case, the said disallowance ought not to have been made. 3. The leaned CIT (Appeals) has erred in confirming the interest .....

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as made by the AO for the reason that the said income was accruing from the transaction with M/s. Gold Star Finance Pvt. Ltd. company belonging to Mukesh Choksi. The brief facts of the case are that the assessee filed his return of income on 06/10/2003 declaring the income of ₹ 1,13,824/-. During the year the assessee sold the 8,200 Equity shares of M/s. Buniyad Chemicals Ltd. on 21.11.2002 which were purchased on 20/04/2001 for ₹ 5,205/- thereby making a long term capital gain of &# .....

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in bogus billing of shares since many years on commission basis and the assessee s name appeared in the list of beneficiary of M./S Goldstar Finvest Pvt Ltd.The assessee was asked to furnish the details of transactions with M/S Goldstar finvest Pvt Ltd. The assessee vide letter dated 23.08.2010 replied that he purchased 8200 equity shares of M/S Buniyad Chemicals Ltd for ₹ 5,205/- on 20.04.2001 through M/S Goldstar Finvest Pvt Ltd. and after purchase, these shares were transferred in his n .....

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ket floated by Mr Ckokshi and his associate companies including M/S Goldstar Finvest Pvt Ltd and the fact was also admitted by Mr Mukesh Chokshi and his group companies during the course of search u/s 132 of the Act that they were carrying on a hawala rocket by supplying bogus bills for equity shares for making speculative profit, short term gain and long term gain and the list of beneficiary included the name of the assessee. The enquiry by the AO from National Stock Exchange revealed that no t .....

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d in hawala scam and thus doubted the entire process of purchase and the sale was also different from routine one as it was made just four days before the physical shares were de-materialized. The CIT(A) held that this was web of deception as Mr Mukesh Chokshi himself admitted during search that he was involved in issuing bogus bills of shares purchase and sales of listed companies on the prices these scrips were traded in the exchanges and the mere fact that the sales proceeds were routed throu .....

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ded in favour of the assessee under similar facts. The ld AR submitted that the AO made the additions on the basis of statement of Mr Mukesh Chokshi upon search u/s 132 on him and his group companies. On the basis of list of beneficiaries extracted from the computer of M.S Goldstar Finvest Pvt Ltd the additions could not be made by ignoring and disregarding all other facts such as the shares were genuinely purchased for a consideration, duly transferred in the name of the assessee and then d-mat .....

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3-04, dated 04.09.2015 the para 6 of the decision is extracted as under:- 6.We have heard the rival submissions and perused the material on record.We find that the AO had made addition to the income of the assessee of ₹ 27.32 lakhs u/s.68 of the Act on the basis of the report of the investigation wing of the department, that the officers of the wing had carried out a search and seizure action in the case of Mukesh Choksi group concerns who were engaged in the business of providing accommod .....

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ved that shares were actually transferred in the name of the assessee, that sale of the shares and receiving the sale proceeds through banking channels is not in doubt, that Mukesh Choksi had not alleged that the transactions in question were tainted, that the assessee was not allowed cross examination of Mukesh Choksi with regard to the transactions entered in to by her.Considering the above facts, we are of the opinion that the FAA was justified in reversing the order of the AO.The information .....

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11. The foregoing discussions would show that the tax authorities have proceeded to assess the amount of ₹ 1.00 crores on suspicion, conjectures and surmises. Further they have not disproved the various documents furnished by the assessee in support of purchase and sale of shares by conducting specific enquiries with the brokers who had purchased and sold the shares on behalf of the assessee. The strong fact relating to the dematerialization of shares was not disproved by the tax authoriti .....

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t been disproved by the tax authorities. The shares were sold in the off-market and hence the transaction of sales was not routed through the stock exchange. The shares were held in the name of the partners on behalf the assessee firm and hence, naturally, the name of assessee firm would not find place in the transactions. Under these set of facts, the letters issued by the Stock Exchange could not be relied upon by the tax authorities. The case law relied upon by the Ld CIT(A) were also not fou .....

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fficer to delete the assessment of ₹ 1.00 crore made in the hands of the assessee. (iii) Masuma S Tankiwala Vs ITO ITA No1867/Mum/2014 AY 2004-05 dated 27.11.2014 para 5 is extracted below:- 5. After hearing the learned DR and after perusing the material placed on my record, I am of the opinion that the facts of the present case are similar to the earlier appeal decided by the Tribunal on similar facts in the case of Shri Anantrai B Shah vs. ITO, vide order dated 14.12.2012 in ITA No.1842/ .....

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complete details ie. purchase of shares, share certificate, Demat account, confirmation from Buniyad Chemicals Limited of whose shares were purchased. Consideration was paid through account payee cheque, therefore, there is no material against the assessee from which it can be said that the transaction entered by the assessee was not genuine. It is further noticed that in case of Kataria Ketan Ishwarlal (supra), the additions were made on the basis of statement of Shri Mukesh Chokshi. The Tribun .....

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s were genuine. It is not a case of the department, whatever the consideration was paid by the assessee through cheque for purchasing of shares have come back to the assessee under the garb of bogus purchases as there is no evidence against the assessee. Keeping in mind all these facts and circumstances of the case, I hold that the addition made and sustained on account of purchase of shares only on the basis of statement of Mukesh Chokshi, was not justified. Therefore, the same is deleted. 5. I .....

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