9911796707
TMI Blog2023 (11) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... ces; therefore, they argued it together taking lead year as assessment year 2015 - 16. Therefore, we dispose of all these seven appeals by this common order. 03. Assessee is an individual and is assessed to income tax showing income derived from salaries, house property, capital gain and other sources. Assessee has filed his return of income under section 139 (1) for all these years. Subsequently search and seizure action under section 132 of the Act was carried out on 4/2/2016 in-group case. Assessee is one of the person covered in those searches. During the course of search assessee's statement were recorded on 4/2/2016, 5/2/2016, 7/2/2016 under section 132 (4) of the act. Further, he was also examined during assessment proceedings also on 20/12/2018. 04. Assessee had filed an application before The Income Tax Settlement Commission [ITSC] on 28/12/2017, assessee wanted to revise the same as per application dated 10/1/2018, which was rejected, and accordingly settlement petition of the assessee stood dismissed as per order dated 11/1/2018. 05. Pursuant to such order of ITSC, notices under section 153A of the act were issued to the assessee on 6/2/2016. 06. For assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from house property with respect to the same four properties owned by the assessee as well as one more property at big splash was computed and added to the total income of the assessee. Income from HOUSE property with respect to 5 properties was added at Rs. 429,223/- and total income was computed at Rs. 25,267,303/-. Thus, except the income from property the total income of the assessee was accepted as it is. 010. For assessment year 2014 - 15, return of income was filed on 6/1/2017 in response to notice and section 153A of the income tax act at Rs. 28,394,060/- for which notice under section 143 (2) was issued on 24/1/2017. During the year a) Assessee was found to be owner of five properties for which no income was offered; therefore, the learned assessing officer estimated an income of Rs. 504,475/- as its income under the head income from property. (1) property is 39/103 at FAM cooperative housing society, the income from property was estimated at Rs. 16,207/- at the rate of 5% of the total cost of property, (2) and (3) shop number 7, 10 was considered on the basis of the deemed rent offered by the assessee for assessment year 2016 - 17 at Rs. 83,306/- for each of the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for unusual rise in the share price, which is confirmed by the parties that they have rigged share price of that company with a view to give exit to many beneficiaries, the learned assessing officer treated the long-term capital gain as bogus and made an addition of Rs. 109,174,422/-. 011. For assessment year 2015 - 16, learned AO found that a) Assessee is owner of six properties for which assessee has not offered income from property. The assessee was found to be owner of [1] 501/601 Crosica plot for which the deemed rent as per property tax bill was estimated at Rs. 16,878, [2] for property at 39/103 navi Mumbai 5% of total cost of the property was deemed to be annual income estimated of Rs. 16,207, [3] for shop 7 Casa Blanca navi Mumbai deemed annual value was estimated at Rs. 91,636 based on the computation for assessment year 2016 - 17 where the deemed rent was taken at Rs. 108,000 offered by the assessee, [4] for shop No 10 in casa blanca navi Mumbai based on the income offered by the assessee the total income was determined at Rs. 91,636, [5] for Property at c-7 and c-8 Big Spalsh , navi Mumbai based on the property tax bill the deemed annual value was estimated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Income from house property (in Rupees) Disallowance of exemption under section 10 (38) of the act on account of allegedly bogus long-term capital gain (in Rupees) Undisclosed income (in Rupees) 2010 - 11 78,96,470 203,727 198,000 82,98,197 2011 - 12 87,34,940 215,107 89,50,047 2012 - 13 2,15,71,430 227,625 2,17,99,055 2013 - 14 2,48,38,080 429,223 2,52,67,303 2014 - 15 2,83,94,060 504,475 10,91,74,422 13,80,72,957 2015 - 16 2,44,38,590 562,807 31,40,85,020 33,54,86,417 2016 - 17 2,46,85,690 89,929 2,47,75,619 016. Against addition in assessment orders, assessee preferred an appeal before the learned CIT (A). The learned CIT - A on submissions made by the assessee, called for remand report from learned AO. Remand report was submitted on 3/10/2020, 2/3/2020 and 1/2/2021. The rejoinders of the assessee were also taken on record. Based on submissions made, remand report and rejoinders, he passed up appellate order for assessment year 2010 - 11 on 26/10/2021, on 15/3/2021 for assessment year 2011-12, 2012 - 13 and 2016 - 17 and on 31/3/2021 for ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmining annual value in accordance with the law, not deduction maintenance charges, vacancy allowance and percent deduction under section 24 (1) of the act. iii. Denial Of exemption Under section 10 (38) of the act for assessment year 2013 - 14 of Rs. 109,174,422/- and Rs. 3,185,020/- for assessment year 2015 - 16 iv. changing jurisdiction under section 127 of the act without passing any order and also giving a copy of such order to the assessee v. passing of the order without issue of Notice U/s 143 (2) of the act by the new incumbent assessing officer i.e. deputy Commissioner of income tax 5 (2), Mumbai within the permitted time vi. levy of interest under section 234B of the act vii. Violation of the principles of natural justice. 019. Fact shows that search took place on 4/2/2016 in case of assessee. As on the dates of search assessment years up to assessment year 2014 - 15 [From AY 2010-11 to AY 2014-15] were concluded assessment. The assessment year 2015 - 16 was abated assessment. Therefore, it is apparent that assessment up to assessment year 2014 - 15 can only be disturbed, if there is any incriminating material found during the course of search qua that AY. If f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Accordingly, he upheld the applicability of provisions of section 153A of the act holding that there is incriminating material available with the Department unearthed during the course of search in the form of the balance sheet of the assessee where he is found to be owner of three properties, of which assessee has declared annual value of only one property and therefore with respect to income from house property, the learned AO has incriminating material available with him. Therefore, there is no infirmity in making the addition so far as incriminating material is concerned. 023. Before us, assessee has submitted [1] three paper books, [2] one compilation of various judicial precedents wherein 11 judicial precedents were relied upon and [3] 69-page fact sheet to support the case of the assessee. During the course of hearing, several legal as well as factual arguments were advanced. Several judicial precedents were cited on the issue of incriminating material, challenging additions on merits and violation of principles of natural justice. We have carefully considered all the evidences and judicial precedents placed before us. Judicial precedents would be dealt with at appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch in case of Arihant universal reality Ltd 141 taxmann.com 249 and Agrawal entertainment Ltd 72 taxmann.com 340, assessment year 2015 - 16 is also a concluded assessment year. viii. Thus, the claim of the learned authorized representative is that all the assessment years up to assessment year 2015 - 16 are unabated assessment years, which could have been disturbed only on the basis of incriminating material found during the course of search. He extensively referred to page number 65 of the fact sheet wherein several judicial precedents are relied upon. ix. The assessee mainly relied on judicial precedents including of the honourable jurisdictional High Court in CIT versus continental warehouse Corporation (2015) 374 ITR 645, Murli Agro products Ltd 49 taxmann.com 172 and of the honourable Delhi High Court in case of Kabul Chawla 380 ITR 573 and lata Jain 384 ITR 543 as well as several other judicial precedents laying the same principle. 026. The learned departmental representative vehemently opposed argument of the assessee and stated that a) there was a balance sheet, which was found during the course of search which was not at all disclosed earlier to assessing officer, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim, it is always found from the accomplices of the scheme. It is found in this case also. Only requirement is that it should be found from the search on the assessee. In this case, search was on assessee, which resulted in to consequential searches and material is found. It is in accordance with provision of section 153 A of the act. Therefore, claim of assessee about absence of incriminating material is false. d) He completely read the statement of assessee, Mr. Bhatt, Mr. Kalpesh, Mr. Piyush and also referred to several documents found from Mr. Bhatt, which clearly proves according to him that claim of long-term capital gain of the assessee, is false. He submits that on holistic reading of the statements of all the persons, clinching evidences found from Mr. Bhatt, corroborative statement of Mr. Kalpesh and Mr. Piyush clearly shows that there is not only an incriminating material but also corroborative statement of many persons. e) He further referred to Q 37 of statement of Mr. Kalpesh Manharlal jani where 12 folders were found. He referred to Statement of Mr. Vipul Bhatt where in Q 58 he referred to 17 files of 3400 pages where in annexure 14 of 284 pages is completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch took place on 4/2/2016. Assessee filed return of Income u/s 139(1) of the Act on 25/3/2011 at Rs. 996,620/-. This return was not assessed. Therefore, on the date of search, i.e. on 4/2/2016, the assessment for assessment year 2010 - 11 was concluded. Therefore, according to the binding judicial precedents, such income could have been enhanced only based on incriminating material found during the course of search related to such enhancement. If there is no incriminating material found during the course of search, no addition could have been made by the learned assessing officer. The only material referred by the learned AO is the balance sheet of the assessee where certain properties are shown. Further, when this issue was raised before the learned CIT - A, he held that the existence of immovable properties in the name of the assessee itself is an incriminating evidence. It is stated by the learned departmental representative before us that those immovable properties are disclosed in the balance sheet of the assessee and the assessee before the lower authorities never disclosed such balance sheet and therefore, unearthing balance sheet of the assessee, during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore it is apparent that during the course of search for assessment year 2010 - 11 there is an incriminating material with respect to the undisclosed income of cash expenditure, balance sheet found during the course of search which was not disclosed by the assessee to the learned assessing officer from which it has been gathered that assessee is owner of the various properties, income from which is not disclosed under the head income from house property. For assessment year 2011 - 12 to 2014 - 15 identical facts are emerging where incriminating material in the form of balance sheet is found by the learned assessing officer. 031. For assessment year 2014-15 and 2015 - 16, the assessee has also earned long-term capital gain claiming exemption under section 10 (38) of the act. For that assessment year, identical addition on account of income from house property on the basis of the balance sheet found during the course of search is made. The issue that also arises is that whether with respect to the claim of the exemption of capital gain under section 10 (38) is there any incriminating material found during the course of search. The fact shows that the search took place on the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of sale of penny stock and unaccounted income was unearthed during the course of search. Thus we do not find any infirmity in the order of the learned assessing officer in assuming jurisdiction under section 153A of the act for all those assessment years and making addition on account of income from house property, undisclosed income and disallowance of exemption under section 10 (38) of the act for all these assessment years so far as jurisdiction is concerned. 034. Of course, merits of each of the addition would be decided separately as per separate grounds raised. 035. With respect to the argument of the assessee that for assessment year 2015 - 16 an intimation was issued on 19/1/2016 which is prior to date of search on 4/2/2016 and therefore assessment year 2015 - 16 is also a concluded assessment year and does not abate. For this proposition, he has relied upon the two decisions of the coordinate benches. A question was specifically raised to learned AR that despite time limit available for issue of notice under section 143 (2) of the act on the date of search, can it be said that merely issue of an intimation prior to the date of search makes the assessment for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a concluded assessment. 038. The learned authorized representative's attention was drawn to the decision of the honourable Delhi High Court in case of Chintels India Ltd. V DCIT [2017] 84 taxmann.com 57 (Delhi)/[2017] 249 Taxman 630 (Delhi) wherein in paragraph number 21 it has been held that till the date of expiry of time limit for issuance of notice under section 143 (2) of the act, the assessment despite intimation under section 143 (1) issued to the assessee, the assessment does not stands concluded assessment and will abate. The learned authorized representative rests his case on the above to tribunal decisions. 039. In view of the above discussion, we reject the contention of the assessee that even the assessment year 2015 - 16 is also a concluded assessment and shall not abate merely because the intimation is issued on 19/1/2016 and search took place on 4/2/2016 despite time limit available as on the date of search for issuance of notice under section 143 (2) of the act. 040. Accordingly, we hold that assessment year 2010 - 11 to assessment year 2014 - 15 are unabated assessment years, which has been disturbed by the learned assessing officer, based on the incriminating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtmental representative vehemently opposed the above submission of the assessee and stated that the order of the learned CIT - A in this case is absolutely clear. There is a transfer of case in the same city. The order passed under section 127 of the act is also available. If there is a transfer of case from one assessing officer to another assessing officer in the same city there is no requirement of giving any notice to the assessee or any opportunity of hearing. He submits that the decision in case of Sahar hospitality Ltd does not apply to the facts of the case as in that case the transfer was from one state to another i.e. from Delhi to Mumbai. Here the transfer is within same city. He extensively referred to the provisions of section 127 of the act. 043. On careful perusal of the argument of the both the parties and the orders of the lower authorities, we do not find any merit in the argument of the learned authorized representative. In this case, the transfer is within one city and there is no requirement of giving any opportunity of hearing to the assessee in such circumstances. There is an administrative order passed under section 127 of the act therefore the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied by the assessee. The claim of the assessee is that if there is a change in the person who was earlier occupying the post of deputy Commissioner of income tax Central Circle 5 (2) Mumbai and therefore the claim of the assessee that such new person should also issue a notice under section 143 (2) of the act. He submits that all the judgments relied upon by the assessee are with respect to the issue of notice under section 143 (2) in time and are not dealing with any issue that in case Mr. X assumes the charge at the same post in place of Mr. Y, both should have issued notice under section 143 (2) of the act. He submits that such is not the mandate of the law and the argument of the learned authorized representative is devoid of any merit. 046. We have carefully considered the rival contention and perused the order of the learned lower authorities. The claim of the assessee is that that notice is required to be issued every time under section 143 (2) of the act if there is change in person holding that post and that too within the time permitted, when different persons has assumed charge on transfers etc. Thus simply speaking the claim of the assessee is that if the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision in the income tax act to grant an opportunity of hearing before charging of interest under section 234B of the income tax act. It is not the case of the assessee that no interest can be charged under section 234B of the income tax act or no opportunity is given for hearing during assessment proceedings. Accordingly, ground number 6 of the appeal of the assessee is dismissed. 050. Ground number 7 of appeal is with respect to the determination of the total income. The argument of the assessee is that assessee was assessed at Rs. 335,486,417/- against the returned income of Rs. 24,438,590 by making an addition of Rs. 311,047,827. We find that this ground is general, no arguments were advanced by the learned authorized representative, and hence, it is dismissed. 051. Ground number 8 of the appeal of the assessee is against the serious violation of the natural justice. The claim of the learned authorized representative is mentioned at page number 49 of his fact sheet. The learned authorized representative states that the appellant has requested for issue of summons under section 131 or notices under section 133 (6) to the various persons whose alleged statements were relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted the affidavit and retraction statement. He submits that the statement of Mr. Piyush Rasiklal Shah has also been obtained by the learned assessing officer who is the chartered accountant of the assessee. The statement of Mr. Kalpesh Manharlal Jani is the person who is the director of sunrise Asian limited and who is known to the assessee because the assessee has traded in that script and earned a huge long-term capital gain. With respect to the claim of the assessee that an appraisal report copy should be given to the assessee, there is no provision in the law of such information and internal document required to be given to the assessee. It is not the claim of the assessee that not all the evidences are placed before him for confrontation. He submitted that assessee could have produced all these persons before the learned AO has all these persons are known to the assessee which assessee has done by producing the affidavit of Mr. Vipul Bhatt along with his retraction statement. Therefore, there is no violation of any of the principles of natural justice by the learned assessing officer. 053. We have carefully considered the rival contention and perused the orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties. He further states that the learned AO has not granted deduction of vacancy allowance, as well as deduction of men shipping taxation and maintenance charges and also standard deduction under section 24 of 30% of the annual value. The arguments of the assessee are stated that page number 8-12 of fact sheet filed before us. The learned authorized representative reiterated the same arguments. 055. The learned departmental representative supported the order of the learned assessing officer and CIT - A. He submitted that the standard rent has not been determined in respect of the properties and therefore the learned assessing officer has taken the rate of return on the cost of acquisition of such properties which is supported by the decision of the honourable Punjab and Haryana High Court. He further stated that as the properties are not let out during the year, vacancy allowance could not be granted which is in accordance with the law. He submits that the deduction for Municipal taxation and maintenance charges are already inbuilt when the rate of return of the cost of acquisition of the property is chargeable to tax. 056. We have carefully considered the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property, the learned CIT - A has held that that appellant is owner of flat number 13 and flat number 14 of model House operating housing society, Sion, Mumbai. Assessee provided the working of the deemed rental income of the above 2 properties as per property tax levied by the Mumbai municipal Corporation which was not accepted by the AO. The learned assessing officer took 5% of the cost of acquisition of the property to determine standard rate. Undisputedly the Maharashtra rent control Act 1999 is applicable to the properties, however; the standard rent of the area in which the properties are situated has not been fixed under that act. Therefore, standard rent is not available of those properties. Assessee has also not produced any evidence about the standard rent of those properties according to that act. Therefore, there is no point in stating that the learned assessing officer has not attempted to determine the standard rent. Even assessee could also not do that despite being the owner of the property. Therefore, now the option left is to determine the annual value of the property. The claim of the assessee is that in view of the decision of the honourable Bombay High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from house property. ii. With respect to the deduction of Municipal taxes, there is no requirement for reducing the income of the assessee where the learned assessing officer has estimated the percentage of the cost of the equity as rate of return on the investment. In fact, the deduction of municipal taxes is inbuilt in the taxability of 5% estimated by the learned assessing officer. iii. With respect to granting deduction of 30 % we find that such deduction is available u/s 24 (a) of the Act. This deduction is unqualified and assessee is eligible for the same. No reasons are shown to us why assessee is same. We direct the LD AO to grant deduction of 30% of annual value to the assessee in terms of provision of section 24 (a) of the Act. iv. With respect to the vacancy allowance, the facts are clear that those properties are not let out during the whole of the year and therefore there is no question of granting any vacancy allowance to the assessee. This is the mandate of the decision of honorable Punjab and Haryana High Court in 76 taxmann.com 349. The SLP filed by the assessee against that decision has also been dismissed. In view of that precedent, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31.01.2012 by way of preferential allotment. (Pg. 323 of PB). The appellant continues to hold substantial shares of Santoshima Asian Limited till date. The appellant had purchased some shares in the year 2014 at a price of Rs. 500 per share which price was less than the average selling price. A scheme of Amalgamation had been entered into between Santoshima Trade links Limited. Conart Traders Limited being Transferor Co. and a listed company Sunrise Asian Limited. Transferee Co. and was approved by Honorable Bombay High Court by an order dt. 22.03.2013. In pursuance of scheme of amalgamation, new equity shares were allotted to on 24.05.2013. The said shares were De-materialized with depository on 24.05.2013. (Pg. 446 to 449 of PB). Active trading of shares of Sunrise Asian Limited on Stock Exchange started on 17.08.2011 and for the shares held by appellant started on 30.01.2013 (Active Trading-Large volume). (Pg. 471 to 485 of PB) Said shares were then sold by your appellant through Registered Stock Brokers -Anand Rathi Share & Stock Brokers Ltd.. F6 Finserve Pvt. Ltd. on various days during the period from 18.11.2013 to 25.02.2015 on issue of electronically generated contract no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proof of brokerage and demat charges paid (Pg. 450 to 470 of PB) xix. Proofs of payment of STT. stamp duty, brokerage and other charges (Pg. 486 to 583 & 450 to 470 of PB) c) he further submitted that the learned assessing officer as well as the learned Commissioner of income tax (A) has accepted the above evidences and has not disputed the same by making any independent enquiry. d) He further referred to the several judicial precedent wherein assessee prove the genuineness of said transaction by producing contract for sale and purchases, bank statement of broker, Demat account showing transfer in and out of share and also the abstract of transaction furnished by stock exchange, there is no justification for making an addition. e) He further referred that in several judicial precedents involving Sri Vipul Bhatt and sunrise Asia Ltd it has been held that the assessee has discharged onus by filing evidence in support of genuineness of transaction of purchase and sale no addition could be made on the basis of statement of Shri Vipul Bhatt. f) He further submitted that the assessee has discharged onus of proof by submitting the plethora of evidences, which has not been thrown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that it has been acquired out of its own money is devoid of any merit. f) He submits that even the Demat agencies stated by Mr. Bhatt are used by the assessee. Thus the broker who sold the shares, the Demat agencies, the exit providers are all stooge of Mr. Vipul Bhatt. In each of the explanation of the assessee the names of the same persons appears for purchase of shares, for sale of shares for dematerialization of shares and for exit providers who are part of the income price of Mr. Vipul Bhatt. g) The evidence produced by the assessee does not have any credential in view of above facts. Even otherwise these evidences are necessary for the claim of exemption under section 10 (38) of the act. h) He submits that there is no answer available with the assessee that how he came to know about the preferential offer of that company and whether he has attended any of the meetings of the above company at the time of amalgamation, allotment, annual general meetings etc. when the assessee has invested along with his other family members such a huge amount in a company, and assessee is not aware or could not show any of the notices of the meeting or his attendance, the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular trader. o) He further states that the decision in case of Swati Bajaj of honourable Calcutta High Court squarely covered the issue against the assessee so far as the issue of cross-examination is concerned. p) He further submits that none of the decisions relied upon by the assessee of either the tribunal on the high courts dealing with the facts, which are in the case of the assessee. q) He further states that the assessee has relied upon the several judicial decisions of the coordinate benches wherein the name of Mr. Bhatt and sunrise Asian Ltd appears and the additions are deleted, all those decisions does not apply to the facts of the case because in those cases the statement of Mr. Vipul but specifically recorded in the search of the assessee himself has been used along with the evidences found. r) He in the end submitted that more than 10000 pages of incriminating documents are found, special annexure 14 relates to transaction of Moraj Group only. Details of Exit providers are also found. If that is not enough to prove that transaction is not genuine, no tons of material can help the case of revenue. s) He said what inquiry ld AO is required to carry of fake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been dealt with as under:- "085. Ground number 2 of the appeal is with respect to the addition of Rs. 40 lakhs/- under section 68 of the income tax act and ground number 4 is with respect to the addition of sale proceeds of Rs. 61,405,822 claimed exempt under section 10 (38) of the act which is stated to be an accommodation entry obtained by the assessee from the accommodation entry provider Mr. Vipul Bhatt. 086. With respect to denial of exemption under section 10 (38) of the act main argument of the assessee is as under:- i. Assessee has provided the details of the company, the brokers, proof and evidence of the transaction of purchase and sales of the shares before the assessing officer and no infirmity is found in this details. The assessee submitted all the details with respect to the acquisition of the shares and sale of those shares at each of the stage of the process of acquisition and sale. The assessee further relied upon the plethora of judicial precedents, wherein it has been held that where assessee proves genuineness of the said transaction by producing contract for sale and purchase of the shares, bank statement of the brokers, Demat account showing trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 40 lakhs on 30/9/2013 is a genuine loan and out of the accounted source of the lender company. ii. The loan was given by the lenders out of the lawful sources being fund received by the banking channel and the details of the source of loans of lender together with loan confirmation giving name, address, permanent account number, bank statement of the source party was also produced. iii. Lenders are assessed to tax having regular sources of income which is established by explaining the source of lending as well as the bank statement iv. Assessee has discharged its onus cast upon the her of disclosing the identity, creditworthiness and genuineness of the transaction which has not been proved incorrect by the assessing officer v. He further stated that in some of the cases involving Mr. Bhatt, wherein this company is directly involved in giving the loan, the coordinate benches have held that no addition could have been made. Further loans advanced by the group companies on the basis of unsubstantiated statement and report, Where the borrower has discharged its burden by filing adequate evidences. addition deserves to be deleted. 088. The learned departmental representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also do not have any credentials. f. Documentary evidences are bound to be there in case of bogus arranged transactions. In view of the persons statement, those documents loses their credibility. Then AO is not requested to carry out any further inquiry on those none genuine documents. What purposes of making an inquiry, when the parties itself say that those are bogus . Then, AO is not required to carry out any further inquiry on those non genuine documents, no purpose could have been served g. Persons who purchased, the shares, (assessee) does not know anything about the company, mode of acquisitions, mode of sales, when the shares were split and when the shares were sold at what price those shares are sold, despite assessee and her family earning bogus exempt gains of Rs 37 crores. It is a fit case that preponderance of probability shows that the claim of the assessee is bogus. h. He further stated that annual average income of the assessee is Rs 10 lakhs Per Annum. The assessee has earned Rs 10 Crores as Long- term capital gain. How it is possible that assessee does not know, how these income is earned. He referred to the statement of the assessee recorded u/s 132 (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed the exemption for i. Rs 61405822/- for Ay 2014-15, ii. Rs 27593986/- for AY 2015-16 and iii. Rs 14587601/- for Ay 2016-17. It is the claim of the LD AO that family of the assessee has shown long-term exempt capital gain of Rs 37 Crores in the same company. The LD AR has not denied this fact. 090. Similarly, is the case of an unsecured loan of Rs. 40 lakhs received from the same company i.e. Santoshima Trade link Ltd added under section 68 of the Income Tax Act by the AO and confirmed by the CIT[A]. 091. Both the accommodation entries of unsecured loan as well as long-term capital gain are stated to be arranged through Mr. Vipul Vidhur Bhatt. Therefore, it is necessary to analyze what he says on these transactions. Assessee has not furnished the complete statement of Mr. Vipul Vidhur Bhatt in its paper book but has submitted complete affidavit of retraction statements. Ld DR has placed before us the complete statement of Mr. Bhatt which runs in to several pages containing 90 questions and most of questions are answered stating how Moraj Group has used accommodation entries in the form of loans, capital gains etc through him. 092. Statement of Mr. Vipul Vidhur B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 347 different such entities. He further referred/the nature of accommodation entries provided by him in answer to question number 18. In answer to question number 21, he categorically says that in his capacity as the managing director of the above company he uses sunrise Asian limited for providing bogus long-term accommodation entries and he is the operator of the scheme and have managed the affairs of that company. In answer to question number 22, he once again gave the detailed modus operandi of how bogus long-term accommodation entry in the above script was provided. In response to that question, he also referred to Santoshima Trade link Ltd. He explains that for providing the bogus long-term capital gain accommodation entries unaccounted cash was taken from the beneficiaries and the same was routed into the accounts of some companies/firms/individuals managed and controlled by him and thereafter the routed funds were used to purchase the shares of sunrise Asia Ltd held by the beneficiaries of bogus long-term capital gain. His answers to question number 23 - 29 explain his modus operandi. In response to question number 29, he also mentions the name of several other persons w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 12, the entries of unsecured loans were given. At the same time, 5 (five) members of Gurnani family were also allotted shares of Santoshima Trade link Ltd on preferential basis. The plan was to give entry of short-term capital loss entry in Moraj group of companies during 2011 - 12 and subsequently, bogus longterm capital gain accommodation entry in the personal files of Gurnani family. Subsequently, Gurnani family received the shares of sunrise Asian limited against the shares of Santoshima Trade link Ltd. after the amalgamation of later with the former. Thereafter, the share prices of M/s sunrise Asian limited was artificially rigged up by me. When the share price of sunrise Asia Ltd reached up to a desired level, Mr. Piyush Shah after consulting Mr. Mohan Gurnani and Ms Priya Gurnani asked me to sell the shares. I used to receive RTGS/ cash which was used to purchase the shares of Gurnani family through my controlled entities." 093. Further, in response to question number 49, he explained that what is the amount of cash that has been received by him for giving accommodation entry of long-term capital gain to Gurnani family members. He explains that he used to get cash picked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re always confirmed with Mr. Piyush rasiklal Shah. Next orders were always confirmed after confirmation and receipt of RTGS. In answer to question number 54, he also referred to the commission income received by him and how he shared this commission with others. In response to question number 58, there were 17 annexure seized from his possession, which contains the details of bogus accommodation entries, details of RTGS received, and paid for bogus long-term capital gain accommodation entries. In response to question number 16 while explaining annexure A - 14 the name of Mr. Piyush Rasiklal Shah was also mentioned. At page number 175 onwards the papers were impounded wherein it is mentioned that " Piyushbhai c/o Moraj". Similar entries were found at page number 195 where a sum of Rs 2.46 cores were received in the name of same persons were Mentioned. The total annexure A - 14 was explained that these sums were received as RTGS from Moraj group which were used to purchase shares of the Gurnani family. In response to question number 61, he further mentioned the details of several intermediaries used by him. In this question, he refers to the name of PiyushBhai who is a chartered acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be completed because of some payment issues. He is stated himself very well known to the Gurnani family and the auditor of his companies of Moraj group. He also explained what is the business of Mr. Gurnani. He names 11 entities where he is the auditor of Gurnani family -controlled companies. He also submits that he is a director in Granada Chem Pharma Limited where Mr. Mohan is also a director. 095. Statement of Mr. Mohan Gurnani was taken under section 132 (4) of the act on 4 February 2016 wherein he could not provide the details of Demat account and stated he does not have any details of his Demat account. In response to question number 23, he refused stating that he does not know Shri Vipul Bhatt and he has never met him. In response to question number 8, he categorically states that though he does not have any direct relation with Mr. Vipul Bhatt but his CA Mr. Piyush Shah has arranged the loans and advances. In response to question, number 15, he submits that he came to know about sunrise Asian India Ltd through his broker and chartered accountants advise of Shri Piyush Shah. In response to question number 16 about the business activity of sunrise Asian limited, he subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore retracted. However, in the retraction statement there was no evidences produced before any authorities about his modus operandi, various names he has given for Demat accounts, various exit providers, various accomplices, shri Piyush Shah, loan entries of Moraj group for land acquisitions, various documentary evidences found in several annexure, 343 dummy entities controlled by him , business of sunrise Asian Limited, its directors and many more things. His only statement was that his earlier statement is patently false. 098. In view of i. statement of the accommodation entry provider Mr. Vipul Bhatt ii. Statement of assessee's chartered accountant shri Piyush Shah iii. Confirmation of statement of Mr. Mohan and Priya about Shri Piyush Shah iv. ignorance of the assessee and her father about the company its working or even where about of the company x. non service of 133 (6) notices to companies xi. pending information from BSE xii. association with the chartered accountant who operated and worked as link between Assessee group and Accommodation entry providers, xiii. approaching settlement commission and withdrawal of application later xiv. Acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made and the test of preponderance of probabilities have to be applied and while doing so, we cannot lose sight of the fact that the shares of very little known companies with insignificant business had a steep rise in the share prices within the period of little over a year. The Income-tax department was not privy to such peculiar trading activities as they appear to have been done through the various stock exchanges and it is only when the assesses made claim for a LTCG/STCL, the investigation commenced. As pointed out the investigation did not commence from the assessee but had commenced from the companies and the persons who were involved in the trading of the shares of these companies, which are all classified as penny stocks companies. Therefore, the argument of the assessee that the copy of the investigation report has not been furnished, the persons from whom statements have been recorded have not been produced for cross examination are all contention which has to necessarily fail for several reasons which we have set out in the proceedings paragraphs. To reiterate, the assessee we not named in the report and when the assessee makes the claim for exemption the onus of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule in MCDowell & Co. Ltd. (supra) was considered in Azadi Bachao Andolan (supra) and Vodafone International Holdings (supra) and it is in the manner explained in these decisions the rule in McDowell & Co. Ltd. (supra) needs to be applied. From paragraph 138 onwards the Hon'ble Supreme Court considered in detail as to why McDowell and what it says and what it does not say. The argument of Mr. Bagaria would primarily rests on as to what would mean by a sham transaction as a legal one and it is pointed out that all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. Further by referring to the decision in Vodafone International Holdings (supra), it is submitted that the revenue cannot start with the question as to whether the transaction was a tax deferment/avoidance but the revenue should apply the "look at" test to ascertain its true legal nature and that genuine strategic planning had not been abandoned. Further the revenue has to establish on the basis of facts and circumstances surrounding the transactions that the impugned transaction is a sham or tax avoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are exactly the parties, which were mentioned in the statement of Mr. Bhatt. Assessee has transferred shares of one demat account to another demat account of her own for which there is no reason. All the depositories are mentioned as his associate in these penny stock transactions by Mr. Bhatt. 0102. Naturally, the transaction of penny stock happens at the regulated stock exchange only where time and date stamp and securities transaction tax are paid. This is the necessary conditions of claiming exemption under section 10 (38) of the act. Further, the pay-in and payout at the stock exchange always happens through the banking channel and therefore it is a mandatory condition. It is nobody's case that that the shares can be sold at the exchange and the brokers will pay seller cash. Therefore as these are the mandatory conditions, those does not weigh much in deciding whether the transaction is genuine or not. 0103. Price rise of shares of Sunrise Asian Limited Mr. Vipul Bhatt in his original statement has already stated how he has arranged the price rigging in the shares of the above company starting from Rs. 62 to Rs. 600 plus. There was no corporate announcement support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow, who and when the money is provided in cash or RTGS for arranged sale at stock exchange etc. Ld AR could not show us single decision out of those decisions relied, where these facts exits/considered. Hence, we reject reliance on those decisions. 0107. Reliance on the Decision of honourable Bombay High court in case of PRINCIPAL COMMISSIONER OF INCOME TAX - 31, MUMBAI VERSUS INDRAVADAN JAIN, HUF INCOME TAX APPEAL NO. 454 OF 2018 July 12, 2023 was misplaced for the reason that in that case the assessee purchased the shares on stock exchange platform and not through preferential allotment. "The tribunal while dismissing the appeals filed by the Revenue also observed on facts that these shares were purchased by respondent on the floor of stock Exchange and not from the said broker, deliveries were taken, contract notes were issued and shares were also sold on the floor of stock Exchange.' However in the present case it was acquired in preferential allotment that too was investigated by SEBI and found to be Fraudulent. 0108. Decision of Honourable Bombay high court in case of Shyam Pawar [Income Tax Appeal No. 1568 of 2012, Income Tax Appeal No. 1569 of 2012, Income Tax Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t what should be onus on the assessee. Firstly assessee in her family as stated to have received Rs 37 crores of exempt capital gain in a non descript listed company operated by the accommodation entry provider, who has confessed that he has provided accommodations entries to the beneficiaries , including assessee, Confirmed by SEBI in adjudication order for same time in which assessee has sold these shares. In our view, a wanderer who does not know anything about the shares, did not attend any meetings of the companies , even do not know the nature of the business of the company, company is not found at the place where notices issued u/s 133 (6) , invest Rs 1 Cr in 2012 and earns Rs. 10 crores in 2015- 16 [ her family earns whopping Rs 37 Crores] is really a fantastic story. This needs to be rejected at threshold itself not only because preponderance of probability is against the assessee but also the facts found form Vipul Bhatt [ documentary evidences i.e. various annexure] proves that story is fake . 0111. Now we come to Para no 78 of that decision where the decision of Honourable supreme court in case of Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 (SC) was considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading is thin. SEBI order is relevant in case of 89 entities passed in this case for such synchronized trading. 0114. We have also noticed fact that Mr. Vipul Vidhur Bhatt has retracted his statement by filing an affidavit dated 2 November 2016 and further on 9 June 2017, he has stated that whatever he stated in the statement earlier is patently false. However while retracting the statement originally given, he did not give any evidence that those annexure which are found from his place wherein the name of the assessee and the full transaction is recorded is incorrect. Reading of statement of Mr. Vipul Bhatt clearly gives an idea how closely and how long he is associated with the group providing accommodation entries. He names the concern of the assessee and her family members as if he is associated with the group for a long time. 0115. In view of this, even if we ignore the original statement given by the accommodation entry provider and his retraction later on, those evidences still remain which needs to be examined, now, independently to ascertain whether the amount of loan taken by the assessee and the amount of long- term capital gain earned by the assessee is genuine or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical purposes as indicated above. 063. In the result, appeal of the assessee for assessment year 2015 - 16 in ITA number 713/M/2021 is partly allowed. 064. ITA number 2089/M/2021 is filed by the assessee for assessment year 2010 - 11. a) Ground number 1 is with respect to the challenge to jurisdiction under section 153A which is identical to ground number 1 of the appeal for assessment year 2015 - 16 which has been dismissed by us, accordingly there is ground is dismissed. b) Ground number 2 is with respect to the addition of Rs. 203,727/- as income from house property, which is identical to ground number 2 of the appeal of the assessee for assessment year 2015 - 16, which is partly allowed. Accordingly, this ground of appeal is also partly allowed. c) Ground number 3 is with respect to the addition of Rs. 198,000 is income from undisclosed sources. We find that as per paragraph number 5 of assessment order the learned assessing officer has discussed this issue that on the basis of page number 56 there is an unaccounted income of Rs. 198,000 based on the loose paper found during the course of search. The assessee explained that as those pages does not have any dates but mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und number 5 of the appeal of the assessee for assessment year 2015 - 16 challenging that when there is a change in the incumbent assessing officer, there should be a fresh notice under section 143 (2) of the act. This ground is been dismissed by us for assessment year 2015 - 16, therefore we also dismiss ground number 5 with similar reasons. h) Ground number 6 is against the levy of interest under section 234A, 234B and 234C. This is identical to ground number six in appeal of the assessee for assessment year 2015 - 16 except the interest charged under section 234A and 234B. We have dismissed that ground stating that interest charged is mandatory and consequential in nature. For the same reason we also dismiss ground number six of the appeal. i) Ground number seven is general in nature wherein specific arguments have been raised, therefore it is dismissed. j) Ground number eight is against the violation of natural justice principles by the learned assessing officer, same is identical to ground number eight of the appeal of the assessee for assessment year 2015 - 16 which we have partly allowed and covered in our decision for ground number 3 of the appeal of the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the appeal for assessment year 2015 - 16, therefore with similar direction we dispose of this ground of appeal. h) Accordingly, ITA number 710/M/2021 for assessment year 2011 - 12 is partly allowed. 066. ITA number 711/M/2021 is filed by assessee for assessment year 2012 - 13 and ITA number 712/M/2021 for assessment year 2013 - 14 are having the identical grounds as raised in assessment year 2011 - 12. For the reason stated therein while disposing the appeal of the assessee for assessment year 2011 - 12, we also dispose of all the grounds of the appeal for assessment year 2012 - 13 and 2013 - 14 with identical reasoning. Accordingly, ITA number 711/M/2021 and ITA number 712/M/2021 of the assessee for assessment year 2012 - 13 and 2013 - 14 are partly allowed. 067. ITA number 709/M/2021 is filed by the assessee for assessment year 2014 - 15 having identical grounds in the appeal of the assessee compared to appeal for assessment year 2015 - 16. We have already disposed of appeal of the assessee for assessment year 2015 - 16 partly allowing the same. Therefore, for the reasons given in the appellate order for assessment year 2015 - 16, the appeal of the assessee is partly a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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