TMI Blog2017 (10) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order of the Commissioner of Income Tax(Appeals)-2, Ahmedabad, dated 05/01/2015 for the Assessment Year (AY) 2007-08, on the following Grounds: i. The Learned Commissioner of Appeals-II, has erred in facts and in law, in confirmed addition Amt. of ₹ 5,26,782/- as a Income from other sources, which Learned Income tax Officer has added as a unexplained credit u/s. 68 of Income Tax Act. The Learned Income Tax Officer has also not granted Long Term capital gain u/s.10(38) of I. T. Act. ii. The Assessment made U/s.143.(3) r.w.s.147 is invalid, as it was made beyond the period of limitation laid down in section 153 of the Act. iii. That the appellant craves leave to add, to alter, to amend, to modify, Substitute, delete and/or rescind all or any of the GROUNDS OF APPEALS on or before the final hearing, if necessary so arises. 2. The relevant facts as culled out from the materials on record are as under:- On verification of the statement of income filed, it is seen that the assessee has claimed Long Term Capital Gain of ₹ 5,26,782/- on sale of shares of Talent Infoways, the transaction of which was entered into through Mahasagar Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made transactions of purchase and sale of shares through Mahasagar Securities Pvt. Ltd. and Alliance Intermediateris Network Pvt. Ltd. respectively and during the year you have shown sale consideration of ₹ 5,35,510/- received from Alliance Intermediateris Network Pvt. Ltd. It is further seen that you have claimed exemption u/s.10(38) of the I.T. Act, for an amount of ₹ 5,36,782/-. In this connection, you are requested to explain the following; 1. A search operation was carried out in the case of Mahasagar Securities Pvt. Ltd. Group on 25/11/2009. One of the company included in the said group was Alliance Intermediateris Network Pvt. Ltd. through whom you have stated to be carried on the said transaction resulting into exempted capital gain. During the course of search statement of Shri Mukesh Choksi, director of the companies was recorded on 26/11/2009. In answer to question No.4, Shri Mukesh Choksi, deposed that he is engaged in fraudulent building activities and in the business of providing bogus speculation profit/loss, STCG/LTCG/loss, share application money etc. In view of the above, the purchase and sale of shares of Talent Infoway from Mahasagar Securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I. T. Act. As stated above, a search operation was carried out in the group cases controlled by Shri Mukesh Chokshi, Gold Star Finvest Pvt. Ltd. was one of the company subjected to search, and statement of Shri Mukesh Chokshi, director of Gold Star Finvest Pvt. Ltd., was also recorded u/s.132(4) of the I.T. Act, on 26/11/2009. Shri Mukesh Chokshi, has deposed that the companies in which he is one of the directors are engaged in issuing share adjustment entries and the company used to receive amount either in cash or through cheques from entry seekers for a meager commission of 0.15%. As the assessee has shown LTCG on sale of shares, the transaction of which was entered into with Alliance Intermediateris Network Pvt. Ltd., the assessee was given a show cause notice for explanation. However, the assessee failed to offer any explanation about the so called transactions except saying that transactions for purchase and sale of shares are genuine. In the statement of Shri Mukesh Chokshi he categorically stated that the companies controlled by him are indulging in accommodation entries and they used to receive either in cash or through cheques from entry seekers. The assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. There is also nothing on record to suggest that the shares were never with the assessee. On the contrary, the shares were thereafter transferred to demat account. The demat account was in the name of the assessee, from where the shares were sold. In our understanding of the facts, if the shares were of some fictitious company which was not listed in the Bombay Stock Exchange/National Stock Exchange, the shares could never have been transferred to demat account. Shri Mukesh Choksi may have been providing accommodation entries to various persons but so far as the facts of the case in hand suggest that the transactions were genuine and therefore, no adverse inference should be drawn. In the light of the decisions of the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular banking channels and the demat ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not genuine. He therefore confirmed the additions made by the AO. The assessee is thus in appeal before us. 4. We have heard the rival contentions and have also gone through the record. The Ld. AR at the outset has stated that the case of the assessee is covered by a series of Tribunal decisions in various cases wherein on similar statement of Shri Mukesh Chokshi, the cases were reopened and additions were made. In all these cases, the Tribunal has decided the issue of long term capital gain in favour of the assessee as the said statement of Shri Mukesh Chokshi was a general statement and could not be corroborated by any material evidence. He relied upon the following decisions in this respect: 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. We find that the facts of the above stated cases were all most identical to that of the assessee. In the case of Kataria Ketan Ishwarla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has allowed the claim of the assessee observing as under: 11. Having heard both the parties and having considered their rival contentions, we find that the AO has treated the said transactions as bogus transactions on the ground that a) The sale transactions were not on the floor of the ASEL but were off market transactions; b) The address of the M/s Buniyad Chemical Ltd. and M/s Talent Infoway Ltd. was the same and the contact person for M/s Buniyad Chemical Ltd. on the floor of ASEL was Shri Mukesh Chokshi. c) Mr. Mukesh Chokshi had stated that the sale proceeds have been paid to the assessee through the funds provided by the assessee. 12. As regards point (a) above, we find that the issue is covered by the decision of the Tribunal in the case of Mukesh R. Marolia wherein it has been held that off market transaction is not a unlawful activity and there is no relevance in seeking details of share transaction from stock exchange when the sale was not on stock exchange and relying upon it for making addition. 13. As regards points (b) (c) above, we find that the assessee has filed relevant documentary evidence before the AO but the AO has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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