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The Income-tax Officer, Ward-26 (2) (2) , Mumbai Versus Shri Vishal Vinod Shah

2016 (8) TMI 1133 - ITAT MUMBAI

Addition under the head “ Income from other sources” - income from undisclosed sources - Held that:- CIT(A) has rightly pointed out that the assessment order is single page cryptic order in which the addition of ₹ 43,52,980/- has been made to the returned income, which is primarily based on the solitary statement of Shri Mukesh Choksi recorded by the DDIT(Inv.)(1)(4), Mumbai. The led. CIT(A) has also rightly considered the factual position of the present case, wherein no independent enquir .....

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eculiar facts of the present case, we have also noticed that the AO has not fully complied with the directions given by the ld. CIT(A) as per page No.11 & 12 of the paper book. - Thus we hold that the ld.CIT(A) has passed a well reasoned speaking order and no new circumstances of facts have been brought before us to deviate from or to interfere into well a reasoned and judicious findings recorded by the ld. CIT(A). - Decided against revenue - ITA No.4209(Mum) 2014 - Dated:- 10-8-2016 - SHRI .....

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ng the addition of ₹ 43,52,980/- by holding that the assessee was not granted the opportunity of cross examination of Shri Mukesh Choksi, Managing Director of Mahanagar Securities Pvt.Ltd. without appreciating that the powers of CIT(A) are co-terminus with the powers of Assessing Officer and he could have given the opportunity of cross examination of Shri Mukesh Choksi to the assessee instead of pointing out the lacuna in the remand report of the Assessing Officer and consequently deleting .....

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nd circumstances of the case the ld. CIT(A) has erred in not appreciating the findings of the Assessing Officer s remand report as well as DDIT(Inv.) Unit-1(4), Mumbai. 4. On the facts and circumstances of the case, the ld. CIT(A) has erred in not considering the discrepancies and shortcomings pointed out by the Assessing Officer in remand report for unexplained investment in purchase of shares of M/s Buniyad Chemicals ltd., 5. The appellant prays that the order of the ld. CIT(A) on the above gr .....

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ficer that in this case, the information was received from DDIT(Inv.)-1(4), Mumbai that the assessee was involved in purchase of entries of shares profit of ₹ 43,52,980/-. The assessee was asked to explain the sources of the same and since the ld. AR could not give satisfactory explanation to the AO, therefore, the AO while taking into consideration the statements recorded of Shri Mukesh Choksi by the DDIT(Inv.)-1(4), reached to the conclusion that the assessee has invested his own money f .....

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allowed the appeal; filed by the assessee and deleted the additions of ₹ 43,52,980/- and treated the profit on the sale of shares to be long term capital gains vide order dated 27-03-2014. 4. Aggrieved by the order of the ld. CIT(A) the revenue preferred the present appeal before us on the grounds mentioned above. ] 5. Ground nos.5 & 6 are general in nature and it does not require any specific adjudication. 6. Ground nos. 1 to 4 in this appeal are inter-connected and inter- related th .....

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ed hereunder; 3. 3 I have considered the submission of the AR and order of the AO as well as remand reports and rejoinder. It has been clarified by the AO, vide letter dated 04.01.2012 that the assessee's case was originally with ITO 16(1)(1), Mumbai and the PAN was also lying with him only. Accordingly, he issued notice u/s.148. Notice u/s 143(2) dated 26/05/20 I 0 was also issued by him for initiating scrutiny assessment proceedings, which was duly served on the assessee. Thereafter when t .....

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I) was issued on 09.12.20 LO and was .served by Speed Post, fixing the hearing on 16.12.20 I O. Shri. Deepak Shah, CA attended on w0.12.2010 to whom also a copy of the said notice was handed over. He requested for time and the case was adjourned to 24.12.2010 on which date no one attended. Shri Deepak Shah attended on 27.12.2010 on which date no one attended. Shri Deepak Shah attended on 27.12.2010 on which date no one attended. Shri Deepak Shah attended and filed details. Thus it cannot be sai .....

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tly met by AR in their rejoinder dated 22/03/2014. The AO has pointed out a number of discrepancies and shortcomings in the assessee's explanation regarding the share transactions, especially w.r.t. scrips of Buniyad Chemicals.' It is alleged that since the shares were stated to be financed out of speculative profits and the assessee did not pay for these shares separately, the purchase is doubtful. This and the discrepancy pointed out in para 2.1 and para 3 regarding the number of scrip .....

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o AY 2002-03 and not to the year under consideration. Accordingly, the effect of the discrepancies has to be considered in AY 2002-03 only, for which the AO is 'free to t¥<e-necessary action as per law. The contention of the AO in the concluding paragraph to enhance the income of the assessee for AY 2002-03 by ₹ 33,732 for unexplained investment in shares of Buniyad Chemicals . It is alleged that since the shares were stated to be financed out of speculative profits and the asse .....

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tes of scrips bought and sold being very different from what is shown in the bills submitted by the appellant, it is seen that bills leading to share profits relate to Assessment Year 2002-03 and not to the year under consideration. Accordingly, the effect of the discrepancies has to be considered in Assessment Year 2002-03 ONLY, for which the Assessing Officer is free to take necessary action as per law. The contention of the Assessing Officer in the concluding paragraph to enhance the income o .....

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G shown be not treated as 'income from undisclosed sources', has been brushed aside by the AO without bringing out any valid argument or reason. No shortcoming or inconsistency has been pointed out. in the explanation furnished and it has been rejected outright. The assessment order is a single page cryptic order in which the addition of ₹ 43,52,980/- has been made to the returned income, which is primariIy based on the statement of Shri. Mukesh Choks] recorded by the DDlT (Inv.) 1 .....

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the long-term gain as undisclosed income under section 69A, was the statement of Shri Chokshi only. No independent inquiry seems to have been done by the Assessing Officer to verify whether the statement of Mukesh Chokshi admitting to issuing bogus bills, was correct in the case of the assessee or not, especially when the assessee had vehemently denied the same during assessment proceedings and had submitted relevant details and bills. In the light of these facts, the allegation of the appellan .....

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of statement of Shri Mukesh Chokshi was not provided to the assessee before conclusion of the assessment and no opportunity for his cross-examination was accorded during assessment proceedings. Even during the remand proceedings, the cross-examination could not materialize. In such circumstances it does not matter that Shri Mukesh Chokshi continues to stick to his statement given during search that he was giving accommodation entries to the persons seeking such entries, when .seen against the ab .....

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d that the statement given by him before DDIT(lnv) was a general statement and did not apply in that case. Thus statement of Shri Mukesh Chokshi cannot be relied upon blindly without due verification in each case. Thus, statement of Shri Mukesh Chokshi cannot be relied upon blindly without due verification in each case, which the Assessing Officer has failed to do. The decision of jurisdictional High Court in the case of Mukesh R Marolia 6 SOT 247 (Mum) and of Mumbai ITAT in the cases of Mayur M .....

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therefore directed to be deleted. The profit on sale of impugned shares is to be brought to tax as Long Term Capital Gain, as shown in the return and deduction u/s 54F is to be allowed. Grounds of appeal number 6 to 8 are therefore allowed to this extent. Since no ground of appeal is added/altered/deleted ground of appeal number 9 is disposed off as dismissed . 8. Even during the course of argument the ld. DR argued that the CIT(A) had erred in law in deleting the additions by holding that the .....

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n the decision in the case of CIT Vs Kanpur Coal Syndicate (53 ITR 225(SC) (1964) Jute Corpn.of India Ltd Vs CIT (53 Taxmann 85 (SC)(1990) & CIT Vs K.S.Dattreya (197 Taxmann 151 (Kar) (2011). The ld.DR further argued that the CIT(A) has not appreciated the findings of AO s remand report as well as the DDIT(Inv.) and has only considered the discrepancies and shortcomings pointed out by the AO in remand report for unexplained investments in purchase of shares of M/s Buniyad Chemicals Ltd., 9. .....

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Mukesh Choksi, given by the AO during the course of remand report. Further our attention was also drawn to page no.46 to 48 of paper book which contains the statement of Shri Mukesh Choksi, recorded by the ITO- 17(1)(2). As per the ld. AR, the AO has passed the order of assessment primarily basing on the statement of Shri Mukesh Choksi, recorded by the DDIT(Inv.)(1)(4) Mumbai and submitted that even the copy of the said statement was not provided to the assessee during the course of assessment p .....

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ndisclosed income u/s 69A was based on the solitary statement of Shri Mukesh Choksi. The ld. AR relied upon the decision of the Co-ordinate Bench of ITAT Mumbai in ITA No.6248(Mum)/2012for the assessment year 2003-04 in the case of Shri Kamlesh Mundra Vs ITO, in which the Judicial Member is the author of the said order. By referring to the said order, ld. AR submitted that the issue in the aforementioned case was also similar to the issue involved in the present case. 10. After hearing the couns .....

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lower authorities and after considering the same, we have observed that the co-ordinate Bench of ITAT Mumbai has already dealt with the similar issue in ITA No. 1175/Mum/2012 and ITA No. 1176/Mum/2012 where in also the assessee s in those cases have dealt with the share transaction with the same companies. We referred the operative para of ITA No. 1175/Mum/2012 titled Smt. Durgadevi Mudra vs. ITO and the same is reproduced here in below: I have heard the parties and perused the record. The Ld. .....

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455/M/2007(Bom) iii) ITO vs. Truptic Shah -ITA 6455/M/2007(Bom) iv) Chandrakant Babulal Shah -ITA 6108/M/2009(Bom) v) ACIT vs. Shri Ravindrakumar Thshinwal -ITA5302/M/2008(Bom) 5. He, therefore, pleaded for accepting the claim of the assessee in respect of long-term capital gain. I have also heard the Ld. D.R. 6. I find that in the present case, the assessee has produced the bills showing the purchase of the shares. The assessee also proved that the shares were sold through the share broker and .....

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tion as such, whereas, in the present case, the Assessing Officer did not treat the sale of shares as bogus. He has only examined the purchase of shares and doubted the date of purchase. But in the computation he has given benefit to the same cost of purchase of shares and taxed the long term capital gain offered as short term capital gain only. As far as the date of purchase is concerned, the evidence on record indicate that the assessee had indeed earned speculation profit by sale of APTECH sh .....

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No. 15021 and certificate Nos. 105744 to 105848. The Assessing Officer neither questioned the said company nor disproved the transfer of share certificates by 30/6/2000. The only basis for arriving at the conclusion that the transaction is not genuine is on the basis of the statement given by Mr. Mukesh Chokshi on 20-6-2004/20-6-2002 before the DDIT (Inv.) with reference to certain transactions undertaken by Mr. Mukesh Chokshi and his group of companies, mainly Gold Finvest Pvt. Ltd. Richmond S .....

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in the transactions which were originally enquired by the DDIT (Inv.) on 26-4-2002. Even though the modus operandi was explained and stated that they were getting 0.5% commission in arranging the transactions, nothing was concluded against the assessee in the said statement. The Assessing Officer in the course of assessment again recorded the statement under section 131 on 9-11-2006 in which question No. 4 and 5 which are extracted in the assessment order itself. The main reliance is on questio .....

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; "8. This statement was relied upon by the Assessing Officer to state that the purchase bills are issued showing fictitious profit. However, the assessee was not given an opportunity to cross examine Mr. Mukesh Chokshi and when an opportunity was given and assessee was present Mr. Mukesh Chokshi was not available. The only basis for this above statement is that the payments are not made immediately but even statement itself indicate that they were capital gains earned by the assessee as sp .....

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hereas the assessee furnished transaction details) the bank accounts) purchase and sale of other listed companies) speculation profit and loss and also evidence in the form of balance sheet filed much before the said shares were sold. The sale of shares was undertaken in December 2001 whereas the return for AY 2001-2002 was filed by August 2001 itself indicating the purchase of shares and outstanding amounts to M/ s. Golden Finvest Ltd in the statements. In view of the documentary evidence in fa .....

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ital gain and subsequent deduction under section 54EC of the Act as the assessee invested the capital gains in REC Bonds. We do not see any reason to agree with the findings of the' Assessing Officer and also the findings of the CIT (A). In fact, the CIT (A) has went ahead in treating the entire transaction as bogus and confirmed the action of the Assessing Officer while holding "this will be more for an unexplained receipt of money of the appellant. Hence, Assessing Officer had rightly .....

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ssee has proved the genuineness of the share transactions and there is no justification to disallow the claim of the assessee in respect of the long-term capital gain. I, accordingly, direct the A.O. to allow the same. Accordingly, ground no.2 is allowed. Assessee's appeal is partly allowed. In addition we have also analyse the orders passed in ITA No. 1176/Mum/2012 titled Shri Mahesh Mundra vs. ITO the operative para is reproduced here in below: I have heard the parties. In this case also t .....

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opt the facts mentioned in the case of Smt. Durgadevi Mundra as well as the reasons. In this case also the A.O. assessed capital gain declared by the assessee as 'income from other sources'. I, therefore, following my reasons and decision in the case of Smt. Durgadevi Mundra (supra) allow ground no.2 in this appeal also and direct the A.O. to assess the long-term capital gain declared by the assessee as such and accept the same. 7. After analyzing the afore mentioned orders, we found tha .....

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apital gain merely on the basis of information received from DDIT which is based on admission of Shri Mukesh Chokshi. Therefore accordingly, we direct the AO to assess the long term capital gain declared by assessee as such and accept the same. 11. Apart from analyzing the aforesaid order, we have also noticed in paper book at pages 11 & 12 wherein specific directions were given by the ld. CIT(A) to the AO to provide opportunity of cross examination to the assessee. But even inspite of that .....

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assed by the CIT(A) in the present case as well as the earlier orders by the Hon ble ITAT, Mumbai Bench in similar case and an after taking into consideration the documents relied upon by the assessee, we are of the considered view that the ld. CIT(A) has rightly pointed out that the assessment order is single page cryptic order in which the addition of ₹ 43,52,980/- has been made to the returned income, which is primarily based on the solitary statement of Shri Mukesh Choksi recorded by t .....

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