EASTERN SALES AGENCIES, MUMBAI v. PR CIT 22, MUMBAI

ITA 2186/MUM/2017 | 2013-2014
Pronouncement Date: 01-11-2017 | Result: Dismissed

Appeal Details

RSA Number 218619914 RSA 2017
Assessee PAN AAIPA3251B
Bench Mumbai
Appeal Number ITA 2186/MUM/2017
Duration Of Justice 7 month(s) 2 day(s)
Appellant EASTERN SALES AGENCIES, MUMBAI
Respondent PR CIT 22, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 01-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 01-11-2017
Assessment Year 2013-2014
Appeal Filed On 29-03-2017
Judgment Text
- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ./ I.T.A. NO. 2186/MUM/2015 ( / ASSESSMENT YEAR: 2006 - 07 ) MRS. CHITRA AGARWAL C/O. LAXMI VENTURES INDIA LTD. 36/40 MAHALAXMI BRIDGE ARCADE MAHALAXMI MUMBAI - 400 034 / VS. ASST. CIT - 16(1) MUMBAI ./ ./ PAN/GIR NO. AAIPA 3251 B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI HARIDAS BHAT / RESPONDENT BY : MS. HEMALATHA / DATE OF HEARING : 29.08.2017 / DATE OF PRONOUNCEMENT : 01.11 .2017 / O R D E R PER SHAMIM YAHYA A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 MUMBAI (CIT(A) FOR SHORT) DATED 16.02.2015 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2006 - 07. 2. THE GROUNDS OF APPEAL READ AS UNDER: 2 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT 1. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE RE - OPENING THE ASSESSMENT U/S. 147 OF THE I T ACT 1961 BY THE ASSISTANT COMMISSIONER OF INCOME TAX: A. ON THE BASIS OF VAGUE AND UNCERTAIN INFORMATION THAT THE APPELLANT HAD TAKEN ACCOMMODATION ENTRIES FROM M/S. MAHASAGAR SECURITIES GROUP WITHOUT SUFFICIENT AND RELEVANT MATERIAL ON RECORDS TO PROVE THE BASIS OF SUCH OPINION BY LD. CIT (A). B. YOUR APPELLANT PLEADS THAT THE ASSESSMENT MADE IN GROSS VIOLATION OF THE PRO VISIONS OF THE ACT BE QUASHED AND THAT THE RETURNED TOTAL INCOME OF RS.25 82 669/ - BE ACCEPTED AND THE ADDITION MADE TO SUCH RETURNED INCOME OF RS.5 57 609/ - BE DELETED AND THE TOTAL INCOME BE ASSESSED AT RS.25 82 669/ - 2. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE REJECTION MADE BY THE ASST. COMMISSIONER OF INCOME TAX AGAINST THE OBJECTION RAISED BY THE APPELLANT VIDE HER LETTER DATED 18.11.2013 TO THE REOPENING PROCEEDINGS PURSUANT TO NOTICE U/S 143 (2) R.W.S 147 OF IT ACT DATED 25.03.2013. 3. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ASSESSMENT PROCEEDINGS TAKEN UP BY THE ASST. COMMISSIONER OF INCOME TAX AND CONFIRMING THE ORDER PASSED BY HIM IN SERIOUS VIOLATION OF THE PROVISIONS OF NATURAL JUSTICE ON VARIOUS COUNTS INCLUDING O N ACCOUNT OF: I) RELYING ON THE THIRD PARTY STATEMENTS WHICH WERE GIVEN UNDER DURESS II) NOT EXAMINING THE EVIDENCES PRODUCED BY YOUR APPELLANT DURING THE COURSE OF ASSESSMENT AND IGNORING THE SAME 4. WITHOUT PREJUDICE TO ABOVE TH E LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASST. CO MMISSIONER OF INCOME TAX OF RS. 5 46 675 / - TOWARDS BOGUS PURCHASE OF SHARES AS UNEXPLAINED EXPENDITURE U /S.69C OF THE INCOME TAX ACT 1961 WHEREAS THE CIT (A) HAS FAILED TO CONSIDE R THE FACT THAT THESE PURCHASE OF SHARES WERE GENUINE AND DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT AND ROUTED THROUGH THE DEMAT STATEMENT OF THE APPELLANT. 5. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE AD DITIONS MADE BY THE A.O . OF RS. 10 934 / - AS UNEXPLAINED EXPENDITURE U /S. 69C OF I T ACT 1961 @ 2% OF RS. 5 46 675 / - TO OBTAIN FICTITIOUS BILLS WHICH HAS BEEN PURCHASED FROM M/S. ALLIANCE INTERMEDIATERIES & NETWORK PVT LTD. 3 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT 6. THE LEARNED CIT(A) HAS ERRED IN GRANTING PARTIAL R ELIEF AND CONFIRMING THE TREATMENT GIVEN BY THE A.O. FOR SHORT TERM CAPITAL GAIN AMOUNTING TO RS.19 47 429/ - ARISEN ON SALE OF SHARES TO BE TAXED AS INCOME FROM OTHER SOURCES. 7. YOUR APPELLANT DENIES ANY LIABILITY OF PAYMENT OF INTEREST AND FURTHER SUBM ITS THAT THE INTEREST WAS CHARGED IN VIOLATION OF THE PROVISION OF NATURAL JUSTICE IN AS MUCH AS NO OPPORTUNITY FOR HEARING WAS GIVEN. THE APPELLANT PLEADS THAT THE INTEREST SO LEVIED BE DELETED. 3. AT THE OUTSET IN THIS CASE THE LD. COUNSEL OF THE ASS ESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING GROUND NO S . 1 2 3 7 8 AND 9. ACCORDINGLY THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 4. BRIEF FACTS OF THE CASE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT TH E PAN DATABASE AND THE INFORMATION RECEIVED FROM CIT(C) - IV MUMBAI REVEALED THAT M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS GROUP COMPANIES FLOATED BY MUKESH CHOKSHI WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND PROVIDING BOGUS SPECULATION PROFIT / LO SS SHORT / LONG TERM CAPITAL GAIN / LOSS. ON THE BASIS OF DOCUMENTS SEIZED DURING SEARCH AT THE PREMISES OF THESE HAWALA CONCERNS IT WAS REVEALED THAT THE ASSESSEE 'S NAME EXISTED IN THE LIST OF DUBIOUS DEALS. TAKING INTO ACCOUNT ALL THE FACTS SUBMITTED B Y THE ASSESSEE THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES IN THE FRAUDULENT SHARE TRANSACTIONS CARRIED OUT BY MUKESH CHOKSHI M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. ETC. WHICH WERE MERE ACCOMMODATION . ACCORDIN GLY RS. 5 46 67 5 / - WAS TREATED AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE HEAD 'INCOME FROM OTHER SOURCES' AND ADDED 4 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT TO THE TOTAL INCOME COMMISSION PAYABLE ON SUCH ACCOMMODATION ENTRIES WHI C H MUST HAVE BEEN PAID IN CASH @ 2% OF RS.5 46 675/ - C AME TO RS.10 934/ - WAS ALSO ADDED TO THE TOTAL INCOME. SHORT TERM CAPITAL GAIN OF RS.19 47 429/ - WAS ALSO TREATED AS INCOME FROM OTHER SOURCES. 5. AGAINST THE ABOVE ORDER THE A SSESSEE APPEALED BEFORE THE LD. CIT(A) CHALLENGING BOTH THE REOPENING AS WELL AS THE MERITS OF THE CASE. BY A VERY ELABORATE ORDER THE LD. CIT(A) UPHELD THE REOPENING. DESPITE R AISING THE ISSUE OF REOPENING IN THE GROUNDS OF APPEAL THE LD. COUNSEL OF THE ASSESSEE HAS NOT PRESSED THE GROUND RELATING TO VALIDITY OF REOPENING. HENCE THE CO GENCY OF MATERIALS RELIED UPON BY THE REVENUE AUTHORITIES FOR REOPENING THE CASE REMAINS UNASSAILED. ON MERITS OF THE CASE THE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDING AS UNDER: 2.4.18 IN VIEW OF THE FACTS NOTED ABOVE IT IS AMPLY CLEAR THAT THE APPE LLANT HAD FAILED TO PROVE THE PURCHASE OF SHARES OF M/S. MARUTI INFRASTRUCTURE LTD. AND M/S. SUNDARAM MULTI PAP LTD. ALLEGED TO HAVE BEEN OBTAINED EARLIER. IN RESPONSE TO THE QUERY REGARDING THE SOURCE OF PURCHASE THE APPELLANT MERELY STATED THAT IT WAS SUPPORTED BY A BROKER'S NOTE FROM M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. HO WEVER IN VIEW OF THE STATEMENT OF SHRI MUKESH CHOKSI THAT HE TOOK MONEY FROM THE PARTIES WHO CAME TO HIM FOR ACCOMMODATION BILLS ON THE BASIS OF WHICH HE USED TO PREPARE BOGUS AND BACKDATED ACCOUNTS IN THE NAMES OF THESE PARTIES FOR PROFIT WHICH IN TURN WERE SHOWN TO HAVE BEEN UTILIZED FOR PURCHASE OF SHARES OF THE BOGUS COMPANIES FLOATED BY HIM THERE IS NO GAINSAYING THE FACT THAT THE APPELLANT WAS COMPLETELY INVOLVED IN ROUTING OF HER UNACCOUNTED INCOME AND CONVERTING IT INTO ALLEGED CAPITAL GAIN. IN THIS REGARD LD. A.O. HAS GIVEN A FINDING OF FACT THAT WHEN THE INFORMATION WAS CALLED FOR U/S. 131 FROM NSE LTD. AND IDBI CAPITAL MARKET SERVICES LTD. REGARDING THE TRANSAC TION DONE BY THE APPELLANT THROUGH THE ALLEGED BROKER IT WAS STATED BY NSE THAT REGISTRATION OF M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WAS CANCELLED ON 19 - 02 - 2004 . SIMILARLY IDBI CAPITAL MARKET SERVICES PVT. LTD. INFORMED THAT THERE WERE NO 5 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT TRA NSACTIONS OF THE ABOVE SHARES IN THE APPELLANT'S DEMAT ACCOUNT DURING MAY - JULY 2005. SHARES OF M/S. MARUTI INFRASTRUCTURE LTD. CLAIMED TO HAVE BEEN PURCHASED ON 17 - 05 - 2005 CAME TO BE REFLECTED IN DEMAT ACCOUNT ON 08 - 12 - 2005 AND WERE SOLD THE NEXT DAY ON 0 9 - 12 - 2005. MOREOVER 12 100 SHARES OF M/S. SUNDARAM MULTI PAP LTD. WERE NOWHERE REFLECTED IN THE DEMAT ACCOUNT. THUS THESE WERE MERE PAPER TRANSACTIONS . 2.4.19 I DO HOWEVER FIND THAT LD. AR IN HIS WRITTEN SUBMISSION HAS STATED THAT THE APPELLANT HAD ES TABLISHED THE GENUINENESS OF PURCHASE AND SALE OF SHARES AS PHYSICAL DELIVERY OF THE SHARES WERE TAKEN SUPPORTED BY SHARE CERTIFICATES. FURTHER ACCORDING TO HIM ALL THE SHARES WERE SUPPORTED BY CONTRACT NOTES QUANTITY PRICE AT WHICH SOLD TOTAL SALE CO NSIDERATION BILLS OF BROKERS ETC. AND THE SALE PRICE WAS RECEIVED BY ACCOUNT PAYEE CHEQUE WHICH WAS CREDITED TO THE APPELLANT'S BANK ACCOUNT. THUS ACCORDING TO HIM SATE AND PURCHASE OF SHARES WERE CONCLUSIVELY PROVED AND SAME COULD NOT BE WISHED AWAY BY THE REVENUE BY INDULGING IN SURMISES AND CONJECTURES. 2.4.20 THE GENERAL RULE IS THAT 'BURDEN OF PROOF IS ALWAYS ON THE AUTHORITY WHO ASSERTS A PROPOSITION OR FACT WHICH IS NOT SELF - EVIDENT. THE BURDEN OF P ROOF HAS TWO SHADES OF MEANING. IN THE PRIMAR Y SENSE IT MEANS THE BURDEN OF ESTA BLISHING THE CASE. THE SECOND MEANING OF 'BURDEN OF PROOF IS ON THE PRINCIPLE OF EVIDENCE . IN THE SECOND SENSE THE BURDEN WOULD BE SHIFTED FROM ONE PARTY TO THE OTHER AS AN D WHEN ADEQUATE EVIDENCE TO DISCHARGE THE BUR DEN THAT LAY ON A PARTY IS PRODUCED BY THAT PARTY. 2.4.21 THE ONUS TO PROVE THAT APPARENT IS NOT THE REAL ONE IS ON THE PARTY WHO CLAIMS IT TO BE SO AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DAULAT RAM RAWATMULL [1973] 87 ITR 349 AN D CIT V. DURGA PRASAD MORE [1971] 82 ITR 540. IN THE CASE OF DURGA PRASAD MORE (SUPRA) IT HAS BEEN HELD BY THE APEX COURT THAT THOUGH AN APPARENT STATEMENT MUST BE CONSIDERED REAL UNTIL IT WAS SHOWN THAT THERE WERE REASONS TO BELIEVE THAT APPARENT WAS NO T THE REAL. IN A CASE WHERE AN AUTHORITY RELIED ON SELF SERVING RECITALS IN DOCUMENTS IT WAS FOR THE PARTY TO ESTABLISH THE PROOF OF THESE RECITALS; THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT REALITY OF SUC H RECITALS. 2.4.22 IT IS ALSO A SETTLED LEGAL PROPOSITION THAT IF NO EVIDENCE IS GIVEN BY THE PARTY ON WHOM THE BURDEN IS CAST THE ISSUE MUST BE FOUND AGAINST HIM. THEREFORE ONUS IS ALWAYS ON A PERSON WHO ASSERTS A PROPOSITION OR FACT WHICH IS NOT SELF EVIDENT. THE ONUS AS A DETERMINING FACTOR OF THE WHOLE CASE CAN ONLY ARISE IF THE TRIBUNAL WHICH IS VESTED WITH THE AUTHORITY TO DETERMINE FINALLY ALL 6 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT QUESTIONS OF FACT FINDS THE EVIDENCE PRO & CON SO EVENLY BALANCED THAT IT CAN COME TO NO CONCLUSION THEN THE ONUS WILL DETERMINE THE MATTER. NEEDLESS TO SAY THAT THE ONUS IS HEAVY OR LIGHT DEPENDING ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THERE CANNOT BE ANY DOUBT THAT ONUS AS A DETERMINING FACTOR COMES INTO PLAY WHERE EITHER THERE IS NO EVIDE NCE ON EITHER SIDE OR WHERE IT IS EQUALLY WORTHLESS OR WHERE IT IS EQUALLY BALANCED. IT IS IMPERATIVE TO MENTION HERE THAT WHERE SUCH IS NOT THE CASE AND ALL AVAILABLE EVIDENCE IS CONSIDERED WITHOUT REFERENCE TO THE ONUS AND WITHOUT RELYING ON THE CIRCUM STANCES THAT ONUS LIES ON A PARTICULAR PARTY THE ISSUE IS DETERMINED ON FACTS AND THE ONUS CANNOT BE SAID TO HAVE INFLUENCED THE DECISIONS. HOWEVER IN THE IMPUGNED CASE BEFORE ME I FIND THAT THE APPELLANT HAS MISERABLY FAILED TO ADDUCE ANY RELIABLE EVID ENCE AND HENCE ISSUE OF ONUS IS HEAVILY CAST AGAINST HER. 2.4.23 THE HON'BLE SUPREME COURT IN THE CASE OF CHUHARMAL V. CIT [1988] 250 / 38 TAXMAN 190 HIGHLIGHTED THE FACT THAT THE PRINCIPLE OF EVIDENCE LAW ARE TO BE IGNORED BY THE AUTHORITIES BUT AT TH E SAME TIME HUMAN PROBABILITY HAS TO B E THE GUIDING PRINCIPLE SINCE THE AO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AS H ELD BY THE HON'BLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 775. THE HON'BLE SUPREME COU RT IN THE CASE OF CHUHARMAL ( SUPRA) HELD THAT WHAT WAS MEANT BY SAYING THAT EVIDENCE ACT DID NOT APPLY TO THE PROCEEDINGS UNDER INCOME - TAX ACT 1961 WAS THAT THE RIGOURS OF RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT WAS NOT APPLICABLE; BUT THAT DID NOT MEAN THAT WHEN THE TAXING AUTHORITIES WERE DESIROUS OF INVOKING THE PRINCIPLES OF EVIDENCE ACT IN PROCEEDINGS BEFORE THEM THEY WERE PREVENTED FROM DOING SO. IT WAS FURTHER HELD BY THE HON'BLE APEX COURT THAT ALL THAT SECTION 110 OF THE EVIDENCE ACT 1872 DID WAS TO EMBODY A SALUTARY PRINCIPLE OF COMMON LAW JURISPRUDENCE VIZ WHERE A PERSON WAS FOUND IN POSSESSION OF ANYTHING THE ONUS OF PROVING THAT HE WAS NOT ITS OWNER WAS ON THAT PERSON. THUS THIS PRINCIPLE COULD BE ATTRACTED TO A SET OF CIRCU MSTANCES THAT SATISFIES ITS CONDITIONS AND WAS APPLICABLE TO TAXING PROCEEDINGS. 2.4.24 AS REGARDS THE ISSUE OF CROSS - EXAMINATION IN T DEVASAHAYA NADARV. C/7[1964]51 ITR 20 (MAD.) IT WAS HELD: 'IT CANNOT BE LAID DOWN AS A GENERAL PROPOSITION OF LAW TH AT THE INCOME - TAX DEPARTMENT CANNOT RELY UPON ANY EVIDENCE WHICH HAS NOT BEEN SUBJECTED TO CROSS - EXAMINATION. AN ITO OCCUPIES THE POSITION OF A QUASI - JUDICIAL TRIBUNAL AND IS NOT BOUND BY THE RULES OF THE EVIDENCE ACT BUT HE MUST ACT IN CONSONANCE WITH NA TURAL JUSTICE AND ONE SUCH RULE IS THAT HE SHOULD NOT USE ANY 7 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT MATERIAL AGAINST AN ASSESSEE WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY TO MEET IT. HE IS NOT BOUND TO DIVULGE THE SOURCE OF HIS INFORMATION. THERE IS NO DENIAL OF NATURAL JUSTICE IF THE ITO RE FUSES TO PRODUCE AN INFORMANT FOR CROSS - EXAMINATION THOUGH IF A WITNESS IS EXAMINED IN THE PRESENCE OF THE ASSESSEE THE ASSESSEE MUST BE ALLOWED TO CROSS - EXAMINE HIM. THE RANGE OF NATURAL JUSTICE IS WIDE AND WHETHER OR NOT THERE HAS BEEN VIOLATION OF NATU RAL JUSTICE WOULD DEPEND ON THE FACTS AND CIRCUMSTANCES OF THE CASE.' 2.4.25 THE SUPREME COURT HAD ALSO AN OCCASION TO CONSIDER THE APPLICABILITY OF THE PRINCIPLES OF NATURAL JUSTICE IN R.S. DASS V. UNION OF INDIA AIR 1967 SC 593. REFERRING TO THE SAME T HE SUPREME COURT IN CHAIRMAN BOARD OF MINING EXAMINATION V. RAMJEE AIR 1977 SC 965 INTER ALIA HELD AS FOLLOWS : NATURAL JUSTICE IS NO UNRULY HORSE NO LURKING LAND MINE NOR A JUDICIAL CURE ALL. IF FAIRNESS IS SHOWN BY THE DECISION MAKER TO THE MAN P ROCEEDED AGAINST THE FORM FEATURES AND THE FUNDAMENTALS OF SUCH ESSENTIAL P ROCESSUAL PROPRIETY BEING CONDITIONAL BY THE FACTS AND CIRCUMSTANCES OF SUCH SITUATION NO BREACH OF NATURAL JUSTICE CAN BE COMPLAINED OF. UNNATURAL EXPANSION OF NATURAL JUSTICE REFERENCE TO THE ADMINISTRATIVE REALITIES AND OTHER FACTORS OF A GIVEN CASE CAN BE EXASPERATING. WE CAN NEITHER BE FINICAL NOR FINANCIA L BUT SHOULD BE FLEXIBLE YET FIRM IN THIS JURISDICTION 2.4.26 IN GTC INDUSTRIES LTD. V. ASSISTANT COMMISSIONER O F INCO [1998] 65 ITD 380 (BOM) IT WAS HELD AS UNDER: '705. IN OUR OPINION RIGHT TO CROSS - EXAMINE THE WITNESS WHO MADE ADVERSE REPORT IS NOT AN INVARIABLE ATTRIBUTE OF THE REQUIREMENT OF THE DICTUM ' A UDI ALTERAM PARTEM'. THE PRINCIPLES OF NATURAL JUSTIC E DO NOT REQUIRE FORMAL CROSS - EXAMINATION. FORMA L CROSS - EXAMINATION IS A PART OF PROCEDURAL JUSTICE IT IS GOVERNED BY THE RULES OF EVIDENCE AND IS THE CREATION OF COURT. IT IS PART OF LEGAL AND STATUTORY JUSTICE AND NOT A PART OF NATURAL JUSTICE THEREF ORE IT CANNOT BE LAID DOWN AS A GENERAL PROPOSITION OF LAW THAT THE REVENUE CANNOT RELY ON ANY EVIDENCE WHICH HAS NOT BEEN SUBJECTED TO CROSS - EXAMINATION.' (EMPHASIS SUPPLIED IN ALL QUOTATIONS) 2.4.27 TO SUM UP I WOULD LIKE TO QUOTE THE LANDMARK CASE O F STATE BANK OF INDIA V. S.K. SHARMA AIR 1996 SC 364 WHERE THE HON'BLE APEX COURT OBSERVED : 'JUSTICE MEANS JUSTICE BETWEEN THE PARTIES. THE INTEREST OF JUSTICE EQUALLY DEMAND THAT THE GUILTY SHOULD BE PUNISHED AND THAT TECHNICALITIES AND 8 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT IRREGULARITIES WH ICH DO NOT OCCASION FAILURE OF JUSTICE ARE NOT ALLOWED TO DEFEAT THE ENDS OF JUSTICE. PRINCIPLES OF NATURAL JUSTICE ARE BUT THE MEANS TO ACHIEVE THE END OF JUSTICE. THEY CANNOT BE PERVERTED TO ACHIEVE FROM OPPOSITE END.' 2.4.28 IN VIEW OF THE ABOVE I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAD ROUTED HER UNACCOUNTED INCOME IN THE GUISE OF PURCHASE AND SALE OF SHARES. HAVING CONSIDERED THE GAMUT OF FACTS BROUGHT BEFORE ME AS ALSO THE STATEMENT OF MUKESH CHOKSI RECORDED ON OATH ON 11.12.2009 WHERE HE CLEARLY ADMITTED THAT BOTH THE SALE AND PURCHASE BILLS ISSUED BY HIM WERE FOR BOGUS TRANSACTIONS ADDED WITH THE FACT THAT IN THE APPELLATE PROCEEDINGS FOR A.Y.2002 - 03 BEFORE THE HON'BLE ITAT MU'MBAI M/S. GOLDSTAR FINVEST PVT. LTD. ONE OF THE HAWALA CONCERNS OF MUKESH CHOKSHI HAD ADMITTED THAT IT WAS AN ENTRY PROVIDER AND THE SAME WAS ACCEPTED BY THE HON'BLE TRIBUNAL IN ITA NO.4625/MUM/2005 & 5000/MUM/2005 IN ITS ORDER DATED 28.03.2008 I HAVE NO HESITATION IN HOLDING THAT THE APPELLANT HAD ENGAGED IN BOGUS TRANSACTIONS TO CONVERT HER UNDISCLOSED INCOME INTO CAPITAL GAIN SO AS TO AVOID ANY TAXATION. 2.4.29 HOWEVER HAVING COME TO THE ABOVE CONCLUSION I ALSO FIND THAT THE LD. ADOED SHORT TERM CAPITAL GAIN OF ? A 61 629/ - ON SALE OF SHARES WHICH WERE P UR CHASED THROUGH BROKERS OTHER THAN M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LT D . WITHOUT ASSIGNING ANY REASONS AS TO HOW THE SAID PURCHASE WAS OF A SIMILAR N ATURE AS THE ONE MADE THROUGH THE HAWALA CONCERN OF MUKESH CHOKSHI VIZ. ALLIANCE INTERMEDIARIE S & NETWORK PVT. LTD. 2.4.30 IT IS TRITE LAW THAT NO ASSESSMENT CAN BE FRAMED MERELY ON THE BASIS OF CONJECTURES AND SURMISES. IN SMT. SUSHILA SURESH MALGE VS. ACIT [2012] 26 TAXMANN.COM 53 (MUM.) IT WAS HELD AS UNDER: 'THERE IS ALREADY EVIDENCE ON RE CORD THAT ASSESSEE'S WIFE HAS BEEN FILING THE RETURNS MUCH BEFORE THE SEARCH AND THERE WERE SCRUTINY ASSESSMENTS IN HER CASE AS WELL. JUST BECAUSE HER AFFAIRS ARE BEING LOOKED AFTER BY HER HUSBAND IT DOES NOT MEAN THAT SHE IS BENAMI. IN CASE THE ASSESSING OFFICER HAS TO HOLD THAT SHE IS BENAMI IT SHOULD BE BASED ON EVIDENCE AND BURDEN IS ON THE REVENUE. UNLESS THERE IS EVIDENCE NO ADDITION SHOULD BE MADE IN THE HANDS OF HER HUSBAND ON MERE CONJECTURES SURMISES AND PRESUMPTIONS. THESE ASPECTS SHOULD BE E XAMINED BY THE ASSESSING OFFICER AND ONLY WHEN THERE IS CLEAR EVIDENCE/FINDINGS ADDITION OF INCOME OF WIFE CAN BE MADE IN THE HANDS OF THE ASSESSEE OTHERWISE THEY SHOULD BE EXAMINED SEPARATELY/INDEPENDENTLY WITHOUT GETTING PREJUDICED BY EARLIER ORDERS OF THE ASSESSING OFFICER I.E. THE ASSESSING OFFICER SHOULD DETERMINE THE UNDISCLOSED INCOME SEPARATELY IN RESPECTIVE HANDS.' 9 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT 2.4.31 SIMILARLY WHILE DEALING WITH POWERS OF CIT U/S 263 HON'BLE MUMBAI BENCH OF ITAT IN INDEXCO INTERNATIONAL VS. DCIT [2004] 8 8 I TD 293 (MUM.) HELD AS UNDER: 'IN THE GARB OF EXERCISING POWERS UNDER SECTION 263 THE COMMISSIONER CANNOT INITIATE PROCEEDINGS WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN THE MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED. SUCH ACTION WILL BE AGAINST THE WELL ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS. IT IS WELL ESTABLISHED THAT REVISIONAL POWER UNDER SECTION 263 IS QUASI - JUDICIAL PO WER HEDGED IN WITH LIMITATION AND HAS TO BE EXERCISED SUBJECT TO THE SAME AND WITHIN ITS SCOPE AND AMBIT. THE COMMISSIONER PERFORMS A QUASI - JUDICIAL ACT UNDER SECTION 263 AND HIS DECISION CANNOT BE BASED UPON HIS WHIMS OR CAPRICE. HE HAS TO ACT JUSTLY AND FAIRLY. THE POWER HAS TO BE EXERCISED OBJECTIVELY AND DISPASSION ATELY AND THEREAFTER CONCLUSIONS HAVE TO BE DRAWN ON THE BASIS OF MATERIAL ON RECORD IN ACCORDANCE LAW. HOWEVER PERUSAL OF THE IMPUGNED ORDERS OF THE COMMI SSIONER WOULD GO TO REVEAL THAT HE HAD BASED HIS CONCL USIONS PURELY ON CONJECTURES AND SURMISES AND NOT ON AN A PPRECIATION OF MATERIAL ON RECORD IN THE RIGHT PERSPECTIVE.' 2.4.32 HON'BLE BOMBAY HIGH COURT ALSO HAD AN OCCASION T: - OF ASSESSMENT BASED ON CONJECTURES AND SURMISES IN THE CASE OF C; INCOME - TAX - 21 MUMBAI V. UTTAMCHAND JAIN [2009] 182 TAXMA N 243 (BOM) WHERE IT WAS HELD AS UNDER: 'THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD GIVE - CASH TO MR. SANJAY SAXENA. THE ASSESSING OFFICER HAS NOT CHOSEN TO EXAMINE MR. SANJAY SAXENA TO ESTABLISH THAT CASH WAS GIVEN BY THE ASSESSEE TO MR. TR IVEDI THROUGH MR. SANJAY SAXENA. PERUSAL OF THE REASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS NOT MADE ANY EFFORTS TO LINK THE CASH RECEIVED AND DEPOSITED BY MR. TRIVEDI IN HIS BANK ACCOUNT WAS IN FACT PAID BY THE ASSESSEE. IN OTHER WORDS THE DE CISION OF THE ASSESSING OFFICER IN DISCARDING THE SALE AND HOLDING THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM MR. TRIVEDI REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE IS BASED ON CONJECTURES AND SURMISES AND IS NOT BASED ON ANY INDEPENDENT EVIDENC E GATHERED PRIOR TO OR DURING THE COURSE OF REASSESSMENT PROCEEDINGS. IN THESE CIRCUMSTANCES IN THE ABSENCE OF ANY COGENT EVIDENCE BROUGHT ON RECORD THE DECISION OF THE TRIBUNAL IN HOLDING THAT THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THE NEXUS BETW EEN THE CASH AMOUNT DEPOSITED IN THE BANK ACCOUNT OF MR. TRIVEDI IS ATTRIBUTABLE TO THE CHEQUE ISSUED BY MR. TRIVEDI IN FAVOUR OF THE ASSESSEE 10 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT CANNOT BE FAULTED. CONSEQUENTLY THE DECISION OF THE TRIBUNAL IN DELETING THE ADDITION OF RS. 10 35 562 CANNOT BE FAULTED.' 2.4.33 IN THE CASE OF POOJA BHATT VS. ACIT 79 ITD 205 THE HON'BLE MUMBAI ITAT DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED ON MONEY PAID FOR PURCHASE OF FLAT. THE ITAT HELD AS UNDER: 'THERE MAY BE A STRONG SUSPICION OF PAYMENT OF ON - MONEY I N RESPECT OF THE PROPERTY DEALS BUT NO ADDITION CAN BE MADE ON MERE SUSPICION. IT IS ESTABLISHED PRINCIPLE OF LAW THAT HOWSOEVER STRONG IT MAY BE IT DOES NOT TAKE THE PLACE OF PROOF.' 2.4.34 THEREFORE WHEREAS I SUSTAIN THE ADDITION ON ACCOUNT OF BOGUS SH ORT TERM CAPITAL GAIN ON ALLEGED SALE OF SHARES WHICH WERE PURPORTEDLY PURCHASED THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. I DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION IN RESPECT OF SHORT TERM CAPITAL GAIN ON SALE OF SHARES PURCHASED TH ROUGH BROKERS OTHER THAN M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. TO THE EXTENT OF 5 61 629/ - . ACCORDINGLY THE GROUNDS RAISED ARE PARTLY ALLOWED. 2.4.35 GROUND NO. 5 IS AGAINST THE 2% ADDITION OF COMMISSION ON THE ACCOMMODATION ENTRIES PROCURED. AS IT IS RELATED TO GROUND NOS. 4.1 4.2 AND 6 AND HAVING CONFIRMED THE SAME I HAVE NO HESITATION IN CONFIRMING THE A DDITION MADE BY THE LD. AO IN RESPECT OF TRANSACTIONS ROUTED THROUGH M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. 6. AGAINST THE ABO VE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ALL THE NECESSARY DOCUMENTARY EVIDENCE MAY FURNISH BEFORE THE AUTHORITIES BELOW AND THAT SHOULD BE TAKEN INTO ACCOUNT AND ACCORDINGLY THE ADDITION IS NOT AT ALL SUSTAINABLE. 8. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ISSUE IN THIS CASE RELATES TO ACCOMMODATION ENTRY OBTAINED FROM SHRI MUKESH CHOKSI. HE SUBMITTED THAT T HE AUTHORITIES BELOW HAVE PASSED A VERY REASONABLE ORDER. 11 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT FURTHERMORE HE PLACED RELIANCE UPON THE DECISION OF THIS ITAT IN THE CASE OF DISHA N. LALWANI VS. ITO IN ITA NO. 6398/MUM/2012 FOR ASSESSMENT YEAR 2003 - 04 IN THIS CASE VIDE ORDER DATED 22.03.2017 . T HE REOPENING AS WELL AS THE ADDITION IN THE SIMILAR CASE OF AN ACCOMMODATION ENTRY THROUGH SHRI MUKESH CHOKSI WAS UPHELD. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS CLEARLY ENGAGED INTO MONEY LAUNDERING ACTIVITY. AS SUCH HE PLEADED THAT THE ASSESSEE SHOULD BE HELD ACCOUNTABLE FOR THE MONEY LAUNDERING ACTIVITY SHE HAS ENGAGED INTO. 9. UPON CAREFUL CONSIDERATION I NOTE THAT THE ASSESSING OFFICER RECEIVED INFORMATION THAT M/S. MAHASAGAR SECURITIES GROUP AND ITS GROUP COMPANI ES FLOATED BY SHRI MUKESH CHOKSI WERE ENGAGED IN FRAUDULENT BILLING ENTRIES AND PROVIDING BOGUS ACCOMMODATION PROFIT/LOSS AND SHORT/LONG TERM CAPITAL GAIN/LOSS. ON THE BASIS OF THE DOCUMENTS SEIZED DURING SEARCH AT THE PREMISES OF THIS HAWALA CONCERNS IT WAS REVEALED THAT THE ASSESSEES NAME IS EXHIBITED IN THE LIST OF DUBIOUS BILLS. UNDER THESE CIRCUMSTANCES THE ASSESSMENT WAS REOPENED. THE LD. COUNSEL OF THE ASSESSEE HAS NOT PRESSED THE ISSUE ARISING TO REOPENING. HENCE THE COGENCY OF DOCUMENTS RELATIN G TO REOPENING REMAINS UNASSAILED. IN RESPONSE TO QUERY REGARDING THE SOURCE OF PURCHASE THE ASSESSEE HAD MERELY STATED THAT IT WAS SUPPORTED BY P APER WORK FROM M/S. ALLIANCE INTERMEDIARIES & NETWORK P VT . LTD. HO WEVER IN VIEW OF THE STATEMENT OF SHRI MUK ESH CHOKSI THAT HE TOOK MONEY FROM THE PARTIES WHO CAME TO HIM FOR ACCOMMODATION BILLS ON THE BASIS OF WHICH HE USED TO PREPARE BOGUS AND BACKDATED ACCOUNTS IN THE NAMES OF THESE PARTIES FOR PROFIT WHICH IN TURN WERE SHOWN TO HAVE 12 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT BEEN UTILIZED FOR PURCHAS E OF SHARES OF THE BOGUS COMPANIES FLOATED BY HIM THERE IS NO GAINSAYING THE FACT THAT THE APPELLANT WAS COMPLETELY INVOLVED IN ROUTING OF HER UNACCOUNTED INCOME AND CONVERTING IT INTO ALLEGED CAPITAL GAIN. IN THIS REGARD LD. A.O. HAS GIVEN A FINDING OF FACT THAT WHEN THE INFORMATION WAS CALLED FOR U/S. 131 FROM NSE LTD. AND IDBI CAPITAL MARKET SERVICES LTD. REGARDING THE TRANSACTION DONE BY THE APPELLANT THROUGH THE ALLEGED BROKER IT WAS STATED BY NSE THAT REGISTRATION OF M/S. ALLIANCE INTERMEDIARIES & NETWORK PVT. LTD. WAS CANCELLED ON 19 - 02 - 2004 . SIMILARLY IDBI CAPITAL MARKET SERVICES PVT. LTD. INFORMED THAT THERE WERE NO TRANSACTIONS OF THE ABOVE SHARES IN THE ASSESSEE S DEMAT ACCOUNT DURING MAY - JULY 2005. SHARES OF M/S. MARUTI INFRASTRUCTURE LTD. C LAIMED TO HAVE BEEN PURCHASED ON 17 - 05 - 2005 CAME TO BE REFLECTED IN DEMAT ACCOUNT ON 08 - 12 - 2005 AND WERE SOLD THE NEXT DAY ON 09 - 12 - 2005. MOREOVER 12 100 SHARES OF M/S. SUNDARAM MULTI PAP LTD. WERE NOWHERE REFLECTED IN THE DEMAT ACCOUNT. THUS THESE WERE MERE PAPER TRANSACTIONS . 10. FROM THE ABOVE IT IS AMPLY CLEAR THAT THE ADDITION IN THIS CASE IS BASED UPON THE COGENT MATERIALS. AS M ENTIONED HEREINABOVE THE FACTS AND CIRCUMSTAN CES OF THE CASE CLEARLY INDICATE THAT THE ASSESSEE HAS ENTERED INTO THE SHA M TRANSACTIONS WITH THE HELP OF GROUP COMPANIES OF SHRI MUKESH CHOKSI. THE PAPER WORKS CREATED IN THIS REGARD ARE MERELY SMOKESCREEN . THE HONBLE APEX COURT IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD M ORE [1971] 82 ITR 540 (SC) 13 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT HAS EXPOUNDED THAT THE REVENUE AUTHORITIES CANNOT PUT ON BLINKERS BUT HAVE TO LOOK INTO THE SURROUNDING CIRCUMSTANCES AS WELL. HENCE I FIND THAT THE ADDITION IN THIS CASE IS PROPERLY JUSTIFIED. I FURTHER NOTE THAT THIS TRIBUNAL IN THE CASE OF DISHA N. LALWANI (SUPRA) HAD UPHELD SIMILAR ADDITIO N BY ELABORAT ELY DISCUSS ING THE ISSUE AND HAS CONCLUDED AS UNDER: IN THE AFORESAID ORDER AN ELABORATE DISCUSSION HAS BEEN MADE BY HONBLE DELHI HIGH COURT. LIKEWISE THE INDORE BENCH OF THE TRIBUNAL IN THE CASE OF AGARWAL COAL CORPORATION HAS CONSIDERED VARIOUS DECISIONS AND FINALLY DECIDED IN FAVOUR OF THE REVENUE. IF THE FACTS OF THE PRESENT APPEAL ARE ANALYZED ON THE TOUCH SCALE OF AFORESAID DECISIONS ONE FACT IS CLEARLY OOZING OUT THAT MERELY A PAP ER WORK WAS CAMOUFLAGED BY THE ASSESSEE WITH THE HELP OF SHRI MUKESH CHOKSHI AND ITS ASSOCIATES FIRMS. IT IS ALSO UNDISPUTED FACTS THAT THE STATEMENT TENDERED BY SHRI MUKESH CHOKSI WAS NEITHER CONTRADICTED NOR PROVED TO FALSE THEREFORE WE FIND NO INFIRMI TY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THUS ON MERIT ALSO THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS AFFIRMED. 11. IN THE BACKGROUND DISCUSSION AND PRECEDENT I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY I UPHOLD THE SAME. 12. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01.11.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 01.11.2017 . . ./ ROSHANI SR. PS 14 ITA NO. 2186/MUM/2015(A.Y. 2006 - 07 ) MRS. CHITRA AGARWAL VS. ASST. CIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. / DR ITAT MUMBAI 6. / GUARD F ILE / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI