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TMI Blog2018 (1) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... . This proposition is duly supported in the case of CIT vs. Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] . The overwhelming evidence are available with the revenue that the share transactions reflected by the assessee were bogus transaction routed through bogus entities managed by Shri Mukesh Choksi and Associates. The assessee has given no cogent reason to counter the aforesaid findings. The Assessing Officer has clearly mentioned in the show cause that after examining the transactions and after thorough verification of details submitted by the assessee, he was not convinced. In these circumstances, in my considered opinion, it is clear from the factual date noted hereinabove that the assessee has entered into dubious transaction meant to reflect its undisclosed income in the garb of long term capital gain. - Decided against assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ub : Assessment -proceedings 143(3) r.w.s. 147of"IT Act for A.Y. 2008-09 reg. Please refer to the above. You are requested to recall the reasons for re-opening of your case for A.Y, 2008-09 i.e. obtained accommodation entries for both purchase and sale of ₹ 15,77,033/-. You have denied that you have made any purchase/sale of shares through Mukesh Choksi/his entities. However, this office has proof/ information that yon have obtained accommodation entries from Mukshi Choksi & Associates during A.Y. 2008- 09 for ₹ 15,77,033/- (copy of said information is attached herewith). In view of the above facts and the fact is that in his sworn- in statement, Shri Mukesh Choksi identified you as the beneficiary of the accommodation entries provided by him. It is clearly established that you had never purchased any shares through M/s. Alliance Intermediaries & Network Put Ltd an entity managed by Mukesh Choksi and Associates but only obtained accommodation entries from them. Hence you are requested to furnish any documentary evidence to show that you have not obtained any accommodation entries from M/s. Mukesh Choksi & Associates. In the event of you failing to do so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings, existence, and not adequacy of reasons, is material. This view is supported by the decision in case of Rajesh Jhaveri Stock Brokers (P) Ltd. 291 ITR 500 (SC), CARTIER SHIPPING CO. LTD. 40 DTR 459 (Mumbai Trib), Praful Chunilal Patel 148 CTR (Guj.). The sufficiency of reasons cannot be looked into by courts and there must be recording of prima facie belief has also been held in cases of Raymond woolen mills 236 ITR 34 (SC), Phool Chand Bjaranglal 203 ITR 456 (SC), K R Sadayappan 63 ITR 219 (SC). In case of Multi Screen Media (P) Ltd. 324 ITR 54 (Bom) the jurisdictional high court after considering the decision in case of CIT vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) has observed as under : "Where the AO purports to exercise power under s.147 within a period of four years from the end of the relevant assessment year, the condition precedent to the exercise of the power is the existence of a reason to believe that any income chargeable to tax has escaped assessment. The expression 'reason to believe' must obviously be that of a prudent person and it is on the basis of the reasons recorded by the AO that the question as to whether there was a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer and held as under: 4.2.1 I have considered the submissions of the Ld AR on merits and perused the assessment order. In the report of the DDIT(Inv) dated 26/3/2010, which has been sent to all officers in Mumbai after the search operation in case of Mukesh Chokshi, which forms the very basis of the reopening, it has been elaborately discussed that Shri Mukesh Chokshi with the 'maize/smoke screen' of several companies floated by him was running the racket of providing accommodation bills. Shri Mukesh Chokshi in his statement during the search on 11.12.2009 had also clearly stated that all transactions carried by his companies were in nature of accommodation bills. The statement of Mukesh Chokshi is not a bald statement but it is supported by the details of modus of operation in his statement recorded by the investigation wing. It has been clearly brought out in the DDITs report that M/s Alliance Intermediates and Network Pvt. Ltd was also one of the entities controlled by Mukesh Chokshi. 4.2.2 Enquiries by investigation wing from main broker M/s Interconnect Stock exchange of India (ISE) who was registered broker of NSE were made by investigation wing. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by Mukesh Chokshi duly corroborated by independent enquiries made from the main brokers M/s ISE and ISS. This view is supported by decisions in cases of P Mohankala 291 ITR 278(SC), Diza Holdings 255 ITR 573(ker), Precision finance 208 ITR 265(Cal) , 187 ITR 596(Cal) etc, wherein it has been held that mere fact that transactions are through banking channels is of no consequence by itself. 4.2.4 The decision of Mukesh R Marolia 6 SOT 247(Mum) relied by Ld ARis not applicable to the appellant because in that case the primary reason to disbelieve the appellant was earning of huge profit in a short span of time and further there were contradictory statements wherein some brokers admitted that the transactions were genuine. But in the case of the appellant, besides the statement of MukeshChokshi explaining the detail modus of accommodation entries, the admission of the appellant the transactions were not done through the demat account and the admission of appellant that the AO added the entire ₹ 15,77,033/- whereas his gains from Alliance Network is Rs.l3,04274/-as intimated during the course of assessment proceedings as well proves the contrary to what has been claimed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounding circumstances, human conduct and preponderance of probabilities; (it) Rules of evidence do not govern income tax proceedings and the AO is not fettered or bound by technical rules contained in the Indian Evidence Act and is entitled to act on material which may not be accepted as evidence in a court of law; (iii) In clandestine transactions, it is impossible to have direct evidence or demonstrative proof of every move and when the assessee is not forthcoming with proper facts and chooses to be elusive and evasive, the AO has no choice but to take recourse to estimate. The only caveat is that it should be reasonable and based on material available on record. It should not be perverse or based merely on conjectures. (iv) The IT. Dept was carrying out investigations in difficult circumstances ascribable to the sensitive nature of inquiries, their ramification on national politics and public perception. It was very difficult to get information and documents and to examine concerned links due to the premeditated surreptitious cover up of transactions and smokescreen corporate Jugglery; (v) There is no presumption in law that the AO is supposed to discharge an impossi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,274) as this amount pertains to dealing with other brokers. 8. Against the above order, the assessee is in appeal before the ITAT. 9. I have heard both the counsels and perused the records. The ld. Counsel of the assessee placed reliance upon several case laws from Hon'ble Bombay High Court and ITAT, Mumbai for the proposition that similar additions had been deleted. 10. Per contra, the ld. Departmental Representative also relied upon the several decisions of the ITAT where similar additions have been upheld. 11. Upon careful consideration, I find that in this case cogent and credible information was received that the assessee has obtained accommodation entries from entities managed by Shri Mukesh Choksi and Associates. Shri Mukesh Choksi has admitted that the group was engaged in fraudulent billing activities and giving accommodation entries in order to enable the clients to declare speculation profit/loss, short term capital gain/long term capital gain, profit/loss on account of accommodated trading, introduction of share application money, or introduction of money in the form of gifts, etc. Information was received that the assessee had obtained accommodation entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 59,738/- on 10.04.2006. These were sold on 22.06.2007 and 20.07.2007 for a total consideration of ₹ 13,63,775/-. How can the value of share whose average cost is less than ₹ 2 would jump to average sale price of ₹ 40/- in such a short term signifying an unimaginable jump of 2000% in case of a little known company with nominal activity has no economic or financial basis. This is further made grave by the following discussion where the revenue has unearthed, that the said company, Cable Corporation was managed by Shri Mukesh Choksi and Associates and the broker in this case namely M/s. Alliance Intermediates and Network Pvt. Ltd. was also managed by Shri Mukesh Choksi. 14. It is further noted that Shri Mukesh Choksi had admitted as mentioned above regarding the entities controlled by him providing accommodation entries in various forms. The entity from which the assessee has transacted namely M/s. Alliance Intermediates and Network Pvt. Ltd. was also one of the entities controlled by Shri Mukesh Choksi. The investigation by the Investigation Wing had established that the bills issued by M/s. Alliance Intermediates and Network Pvt. Ltd. and claiming to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities managed by Shri Mukesh Choksi and Associates. The assessee has given no cogent reason to counter the aforesaid findings. The Assessing Officer has clearly mentioned in the show cause that after examining the transactions and after thorough verification of details submitted by the assessee, he was not convinced. In these circumstances, in my considered opinion, it is clear from the factual date noted hereinabove that the assessee has entered into dubious transaction meant to reflect its undisclosed income in the garb of long term capital gain. In such circumstances, as held by Hon'ble Apex Court in the case of Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), the Revenue authorities are not supposed to put on blinkers but had to look into the surrounding circumstances and the contemporaneous evidence. This proposition also draws support from the Hon'ble Jurisdictional High Court decision in the case of Sanjay Bimalchand Jain vs. Pr. CIT order dated 16.12.2017 on identical facts. Hon'ble jurisdictional High Court has expounded as under: The assessee had indulged in a dubious share transaction meant to account for the un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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