9911796707
TMI Blog2018 (10) TMI 1396X X X X Extracts X X X X X X X X Extracts X X X X ..... t the surplus as Long Term Capital Gains and allow the exemption as claimed by the assessee. The re-assessment proceedings initiated u/s 147 of the Act is not sustainable. Accordingly, we quash the order framed u/s 147 of the Act. Decided in favour of assessee. - ITA No. 726/Ahd/2017 - - - Dated:- 15-10-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER For The Assessee : Shri Prakash D. Shah, A.R. For The Revenue : Shri S. N. Dev, Sr. D.R. ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the appellate order of the learned Commissioner of Income-Tax (Appeals)-I, Vadodara [ CIT(A) in short] relevant to Assessment Year 2010- 11. 2. Assessee has raised the following grounds of appeal:- 1. That the learned Commissioner of Income Tax (Appeals) has erred in law and facts by upholding the reassessment proceedings and therefore the order passed by the learned AO is required to be quashed. 2. That the learned Commissioner of Income Tax (Appeals) has erred in law and facts by confirming the disallowance of Long Term Capital Gain of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n claimed by the assessee was referred as bogus capital gain. 4.3 On question by the AO for the observations as discussed above the assessee replied that she cannot be panelized for the non registration of AINPL with recognized stock exchange. The assessee in support of her long term capital gain income filed necessary details of purchase and sales. However, the ld AO was of the view that the income of the assessee has escaped assessment and accordingly issued a notice u/s 148 of the Act. The AO recorded the reasons to believe for escapement of income before issuing the notice u/s 147 of the Act which reads as under: Information has been received from DITfl CI) Ahmadabad that a search and seizure action was earned out on 25.11.2009 in the case of Mukesh Choksi Group. Shri Mukesh Choksi in his statement recorded under oath stated that he was into providing accommodation entry in the garb of bogus capital gain through various entities controlled and operated by him, One such entity which was involved in providing accommodation entry is M/s Alliance Intermediataries Network Pvt. Ltd. It was unearthed during the course of search proceedings that the assessee is one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been challenged specifically. But, the appellant has made specific arguments in this behalf in the written submission filed. Hence/ the issue of reopening of the assessment is dealt with first. 4.3.1. As can be seen from the assessment order as well as from the written submissions filed by the appellant's AR, the AO had received specific information from CCIT (Central-I) Mumbai that the appellant had shown Long Term Capital Gain on account of sale and purchase of shares through M/s. Alliance Intermediaries Network Pvt. Ltd. belonging to Mukesh Choksi Group. During the course of search action in this group, Shri Mukesh Choksi had stated in his sworn statement that he was only involved in giving accommodation entries. He had aiso identified the appellant's name along with other 828 names of beneficiaries after perusing all the data with respect to appellant at the time of giving such statement. Accordingly, the AO has recorded his reason to believe and reopened the assessment on account of accommodation entries taken by the appellant in respect of purchase and sale of shares of Zen Shaving Ltd. It is also pertinent to note here that the appellant had filed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether there is material available with the Assessing Officer to form a reasonable belief that income chargeable to tax has escaped assessment and for that purpose ensure that the material is not vague and/or irrelevant. However at this stage i.e. on issue of reopening notice, the Assessing Officer is not required to have conclusive evidence that income chargeable to tax has escaped assessment but is only required to have reasonable belief of the same. The reasons recorded must on the basis of the material available establish a link between the material available and the conclusion. This should lead to prima facie view that income chargeable to tax has escaped assessment. At this stage, we are not required to consider the merits of the case nor the sufficiency or correctness of the material but only whether the Assessing Officer had reason to believe on the material available that income chargeable to tax has escaped assessment. 7. We find that the reasons in support of the impugned notice indicates that the Assessing Officer has received definite information that one Mr. Praveen Kumar Jain and the companies controlled by him was in the business of providing accommodation entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endrakumar Gupta. This decision relates to AY.2006-07. A scrutiny assessment u/s.143(3) had been completed in respect of the original assessment proceedings and during such proceedings, the assessee had provided the addresses, PAN and details of amounts invested as also confirmation letters. On basis of this, order u/s.143(3) was completed on 22/12/2008. Subsequently, the notice u/s,148 was issued on 28/03/2013 which was beyond period of four years from the end of relevant assessment year. The Hon'ble Court has examined all the relevant judicial pronouncement in this regard and after discussing the same held as follows:- 21. This Court has examined the belief of the Assessing Officer to a limited extent to inquiry as to whether there was sufficient material available on record for the Assessing Officer to form a requisite belief whether there was a live link existing of the material and the income chargeable to tax that escaped assessment. This does not appear to be the case where the Assessing Officer on vague or unspecific information initiated the proceedings of reassessment, without bothering to form his own belief in respect of such material. We need to notice tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of ld CIT(A) assessee is in appeal before us. 6. The ld AR before us filed a paper book which is running from pages 1-13 and submitted as under: WRITTEN SUBMISSION With reference of the appeal of the assessee, the appellant most respectfully take liberty to submit the written for yow land perusal: Ground No.1- Validity of issue of notice u/s 148 of the Act 1. The basis of addition in the assessment order and the reasons for the reassessment are different. In the reasons for the reassessment, allegation is for the Bogus Sale of ₹ 92,56,189/- whereas the claim under section 10(38) of ₹ 87,57,789/-has been rejected and in view of the following judgments, the reassessment proceeding is bad in law:- ( a) CIT Vs. Mohd Juned Dadani, [2013) 355 ITR 172 (Guj). ( b) CIT Vs. Jet Airways (1) Ltd. (2011) 331 ITR 236 (Bom) ( c) Shri Bhadresh K. Shah Vs (ITA No.89/Ahd/2012) -Copy of the said order is submitted herewith as Annexure CL-1 2 For Ready reference the copy of the reasons for the reassessment along with its covering letter of the Id.A1 is submitted herewith as Annexure PB-1 2. 2. In pursuance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para of Page No.8 of the order of the ld. CIT(A)). The said course of action of the Id.AO is against the principal of the natural justice and therefore claim of the appellant is required to be allowed and in this regard reliance is placed on the following judgments/order of :- A. Hon ble Apex Court's order of SLP dismissal in the case of CIT Vs Sunita Dhadda (403 ITR 309)(St) SLP dismissal. B. Judgement of the Hon'ble Apex Court in the case of Andaman Timber Industries Vs. CCE (Civil App No. 4228 of 2006)(281 CTR 241)(SC). C. Judgment of the Hon'ble Apex Court's in the case of Kishanchand Chelaram Vs CIT [(1980) 125 ITTR 713 (SC)] that the income tax authorities could not rely upon any statement which has not been confronted to the assessee and in respect of which the assessee has not been given opportunity to cross examine. D. Hon'ble Jurisdictional Gujarat High Court's order in the case PCIT Vs Bharti Somchand Shah (Tax Appeal No.1023 of 2017) dated 22/1/2018 (Copy submitted in the submission of Case law-Page Number (PN) 1-2); wherein the order of the Hon'ble Ahmedabad ITAT, in the case of Bharti Somchand Shah (Sr No.10-11) Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully following the judgment of Hon. Supreme Court, in the case of Andaman Timber Industries (supra) the judgment of Hon. Jurisdictional High Court in the case of Chartered Speed Pvt. ltd. (supra) and decisions of the Co-ordinate Bench in the case of Dhwani Mahendra Shah (supra) and Chartered Motors Pvt. Ltd. (supra) we allow this ground of assessee and quash the re-assessment proceedings u/s 143(3) r.w.s. 147 of the Act dated 18.3.2014. Copy of the letter dated 11/3/2016 addressed to the Id.AO, in relation to cross examination is submitted here1 as Annexure PB 3 -4 2. That the investigation on broker is concerned, the assessee is in no way concerned with the activity of broker and there is no fault of the assessee; as the assessee has made the investment in shares and; a. Against the purchase of shares of Zen Shavings in August 2007, its payment has been made through cheque in the AY 2008-09 and which has been accepted by the department in the said earlier year. In support of the payment through cheque, the copy of the relevant page of Bank pass book is submitted herewith as Annexure PB 5-6. b. Delivery of shares has been received and it has been demateriali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent sale during the year, receipt of sale consideration through bank accounts and further there is no dispute with reference to the sale of shares through the stock exchange as confirmed by the NSDL (in the communication to the AO extracted above) we are of the opinion that Revenue has failed to establish that the transaction are Since assessee's claim for exemption in Long Term Capital Gain is supported by the including the transaction in DMAT account and sales through the stock exchange, the claim u/s.10(38) of the Act cannot be denied, based on the assumptions and presumptions which are not supported by any evidence. In view of that the grounds raised by assesses on merits are allowed. AO is directed to treat the gains as such and allow the benefit u/s. 10(38). Copy of the said order is submitted herewith as Annexure CL-13-21. D. Nisha jain vs Ito, Jaipur on 31 January, 2018 ITA No. 368 /JP/2017 In view of the above facts and circumstances of the case, we are of the considered opinion that the addition made by the AO is based on mere suspicion and surmises without any cogent material to show that the assessee has brought back his unaccounted income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Ld DR before us submitted that the payment for the purchase of shares was made after a long time. Similarly, the shares were dematerialized after 18 months from the date of purchase. Ld DR in support of his claim relied on the order of Sudhir Balraj Jumani-HUF IN ITA No. 1570/Ahd/2012 Smt. Sushila D. Shah Vs. ITO, ward-7 (3) in appeal No. 1151/Ahd/2015. The ld. DR vehemently supported the order of authorities below. 8. The ld. AR in his rejoinder submitted that the Tribunal after passing the orders as quoted by the ld DR has changed its stands and allowed the appeal of the assessee in the cases as discussed above. Accordingly, the relief was given to the assessee. 9. We have heard the rival contentions and perused the materials available on record. In the instant case, the assessee has declared long term capital gain of ₹ 87,57,789/- which was treated by the AO as bogus long term capital gain. The view taken by the AO was subsequently confirmed by the ld CIT(A). 9.1 At the outset, we find in the identical facts and circumstances in the case of Shri Pratik Suryakant Shah vs ITO and others in ITA Nos. 810/Ahd/2015 and others has decided the issue in favor of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disturb the Commissioners orders. 15. The Hon'ble Apex Court held as under:- According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of tire Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority, As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 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. 18. 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 account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above referred decision of this court, it is not necessary to set out the facts and contentions in detail. For the reasons recorded in the order dated 12.9.2017 passed by this court in Tax Appeal No.674 of 2017, it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise any question of law, much less, a substantial question of law as proposed or otherwise. The appeal, therefore, fails and is, accordingly, summarily dismissed. 9.3 The facts of the case on hand are exactly identical to the facts as discussed above. Therefore, the principles laid down by the Tribunal which were subsequently confirmed by the Hon ble Gujarat High Court are squarely applicable to the facts in the case on hand. Therefore respectfully following the same we hold that the re-assessment proceedings initiated u/s 147 of the Act is not sustainable. Accordingly, we quash the order framed u/s 147 of the Act. As we have decided the issue in favour of the assessee by holding that the assessment proceedings are invalid, we are not inclined to adjudicate the issue on merit. Hence, the ground of appeal of the assessee is allowed. 10. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
