9911796707
TMI Blog2013 (11) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Department on 28.06.2006. This was on the basis of the information with the Revenue that the said company, as well as its Director, Shri Mukesh M. Choksi, were engaged in giving accommodation entries for Long Term Capital Gains, business loss, etc. as per the requirements of the clients, against the receipt of cash, on commission basis. Enquiries were conducted with the various banks; Shri Mukesh M. Choksi operating several bank accounts in the names of various companies, including MSPL. Shri Mukesh M. Choksi on being examined on oath thereat, admitted to extending accommodation (hawala) entries for profit or loss, as the case may be, explaining the modus operandi being followed toward the same. The assessee's, i.e., Shri Ratanchand J. Oswal (father) and Shri Rishi R. Oswal (son), were found to be among the beneficiaries on the basis of these enquiries. A survey action u/s.133A was, accordingly, conducted at the business premises of M/s. Hiden Packaging Machines Pvt. Ltd., in which the assessee's are directors, on 28.12.2006. Accommodation entries toward capital gains were found to have been taken in the name of not only the assessees, but their family members and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11,82,136/- in the case of Sh.Rishi Oswal); and the Short Term Capital Gains (at Rs.21,37,712/- & Rs.47,48,304/- in the case of S/Shri Ratanchand Oswal & Rishi Oswal respectively) as 'income from other sources'. Similarly, on an examination of the share transactions carried out through other brokers, yielding gains at Rs.81,71,409/- and Rs.25,37,493/- in the case of father and son respectively, the same were also treated as business income, as against STCG returned by them. These are the two issues being agitated in the present appeals by the assessee. 3.1 Before us, the primary contention of the ld. AR, the counsel for the assessee-appellants, was that there was no admission by Shri Ratanchand J. Oswal of the share transactions carried out through MSPL, or of the gifts received by the different family members, as being bogus, i.e., despite his having conceded to the income disclosed as LTCG, as well as of the amounts received by way of 'gifts', as being income from other sources, and returning the same as such subsequently. The assesse/s had full documentary evidences in respect thereof, and in fact these details as well as the vouchers were also produced before the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal, the same would, therefore, also hold in the case of the income assessed as business income, i.e., as against Short Term Capital Gains (STCG) returned by the assessee. 3.2 The ld. DR, on the other hand, would submit that the order by the tribunal dated 23.03.2010 (supra) for A.Y. 2004-05 in the case of Shri Rishi Oswal (HUF) and others, as well as by the hon'ble high court approving the same, are in respect of penalty proceedings and, therefore, of not much relevance in the instant proceedings, which are quantum proceedings. That is, the benefit of doubt that stood extended to the assessee/s in the penalty proceedings would not automatically result in the share transactions with MSPL being regarded as genuine in the quantum proceedings. With regard to the charge of extrapolation, the same is misconceived. The survey date on the assessee is in December, 2006, whereat all the transactions through MSPL, i.e., irrespective of the year to which they pertain, were under cloud. The specific questions in respect of the profits for the A.Y's. 2002-03 to 2004-05 was in view of the transactions for these years being under investigation by the Department through the survey operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well. 4. We have heard the parties, and perused the material on record. We shall proceed to discuss and adjudicate the issues arising in seriatim. 4.1 As regards the first issue, the Revenue relies on the fact of admission by Shri Ratanchand J. Oswal vide his deposition u/s.133A dated 28.12.2006, which stands also confirmed by his son, Shri Rishi R. Oswal, the second appellant (refer PB pgs.110-114 in ITA No.4999/Mum/2009), which we have gone through in its entirety. The scrips dealt in as well as the modus operandi followed being the same in respect of the share transactions of the companies in which Shri Mukesh M. Choksi is a director, principally MSPL, the Revenue infers the 'capital gains' returned for this year to be also only accommodation or hawala entries, so that the same were only bogus transactions, so routed to evade tax inasmuch as long term capital gains is subject to tax at a concessional rate, besides being eligible for exemption u/s.54F, which stands also availed of for some years. The admission is not retracted at any stage; rather, duly honoured by filing 'revised returns', admitting the said income as 'income from other sources', paying full tax thereon; STCG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the assessee/s in the facts and circumstances of its case. Firstly, the tribunal relies on the decision in the case of CIT v. Suresh Chand Mittal [2001] 251 ITR 9 (SC) in accepting the assessee's case, so that no penalty could be levied where the income stood accepted per the revised return/s, albeit to purchase peace and avoid vexatious litigation. As such, the assessee/s, disputing the additions made and sustained in appeal in the instant case, how we wonder could the said decision and, consequently, the order by the tribunal, apply to its case for the current year? Two, the assessee/s had already filed 'revised returns', paying full taxes thereon, i.e., for the earlier years, so that the assessee's challenge to the quantum assessment/s for the current year would itself imply that it considers the facts and circumstances for the current year as different from that obtaining for the earlier years, so that admittedly a decision for those, earlier years, would have no direct application for the current year. Thirdly, even for those years, we find that the tribunal was moved by the fact that there was no investigation or further inquiry by the Revenue, which relied only on the 'ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in appropriate circumstances he could disregard or pierce the veil of documentary evidence set up by the tax payer. Reference in this context may be made, inter alia, to the decisions in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC); CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC); and Juggilal Kamlapat vs. CIT [1969] 73 ITR 702 (SC). We have found the Revenue's inference in treating the impugned transactions for the current year at par with that for the preceding years as reasonable and based on valid materials. No contrary materials or evidence has been in fact led by the assessee/s at any stage of the proceedings. We, accordingly, find no infirmity in the orders of the authorities below qua this issue, and endorsing their findings, uphold the impugned order/s. We decide accordingly, dismissing Ground No. 1 (in ITA No. 4998/Mum/2009) and Ground Nos. 1 & 2 in ITA No. 4999/Mum/2009. 5. This brings us to the second issue, which concerns the treatment of the income arising on the assesse/s's share transactions through other brokers as 'business income' as against 'Short Term Capital Gains' (STCG) returned by the assessee/s in the sum of Rs. 81.71 lacs and Rs. 25.37 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat borrowed, on which interest has been claimed and allowed. To us, it is a clear case of systematic activity being perused with a profit motive, deploying capital and bearing the concomitant risk, both business and financial, inasmuch as the borrowed capital stands also deployed. In our clear view, therefore, no infirmity inflicts the Revenue finding their nature as of business, and assessing the income accordingly as business income. No doubt, the ld. CIT(A) has branded these transactions as also not genuine. We are, however, unable to see as to how the same improves, as sought to be projected before us by the ld. AR, if not actually undermines the assessee's case further. For any person to invest such sums in a trade, of which he, as is apparent, knows nothing or in any case not much about and, further, is notorious for being speculative, is highly suspect. Couple this with the 'fact' that he has been for years using the said channel to route his unaccounted profits/money, apart from the device of 'gifts', and the reasons for the ld. CIT(A) in holding thus are not far to seek or justify. We are, however, not inclined to dwell on this aspect further. This is as the fact remains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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