TaxTMI 
TaxTMI 
2015 (5) TMI 472
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.... share application money in crores from the various companies floated by Shri Mukesh Chokshi. It was reported that the director of the said concern had admitted about introducing unaccounted income as share application, while receiving unaccounted money either in cash or by way of transfer of funds. Hence, notice under section 148 of the Act was issued to the assessee to reassess the escaped income. The assessee was asked to give name of the allottee companies & their addresses, name of the banks and cheque numbers and amount received as share application money. From the submission of the assessee it was observed by the AO that the share applicants were the same name of which appeared in the list of 42 companies of Mahasagar Securities P. Ltd. of Shri Mukesh Chokshi, a chartered accountant by profession, who had floated these companies from the office of Sadashiv CHS, Santacruz (E) and none of the companies was doing genuine business. Hence, share application money amounting to Rs. 4,25,00,000/- allegedly shown as received from such hawala companies was held as unexplained cash credits under section 68 of the Act and added to the total income. Being aggrieved by the order of the AO....
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....or whom they were claiming to be sub-brokers and all the bills raised by them were illegal, unauthorized and against the provisions of the SCRA Act, 1956. On the basis of the details obtained during the search by the investigation wing, it was noted that the assessee also had made sales and purchases of shares of M/s Buniyad Chemicals Ltd t h r o u g h M / s . Gold Star Finvest P .Ltd which had provied t h e accommodation entries. M/s Buniyad Chemicals Ltd as well as M/ s. Gold Star Finvest P.Ltd were floated by Mukesh Chokshi only. Since it was admitted by Mukesh Chokshi that he was providing accommodation entries only through its various companies, accordingly a notice u/s. 148 was issued after recording the reasons. 4. As per the reasons recorded, we found that the AO was having sufficient reasons to believe that there was an escapement of income, accordingly, he was justified in reopening the assessment uls.147 of the Act. Hence, the ground No.1 raised by the assessee is dismissed." 5. In the case in hand, the reopening was made on the basis of information regarding receipt of accommodation entries of share capital provided by the group companies of Shri Mukesh Chokshi an....
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....borated by any material evidence and therefore the additions can not be made solely on the general statement of Sh. Chokshi, especially in the light of the evidences, confirmations etc. provided by the assessee to prove the genuineness of the transactions in question. The Ld. A.R. has relied upon the following decisions in this respect: 1. Jafferali K. Rattonsey vs. DCIT (2012) 53 SOT 220 (Mumbai) 2. Jyoti D. Shah vs. ITO, ITA No.1843/Mum/2012 3. Mukesh R Marolia vs. Addl. CIT (2006) 6 SOT 247 (Mum) 4. ITO vs. Radhika R. Toshniwal, ITA No.1331/Mum/2010 5. ACIT vs. RAvindra Toshniwal, ITA No.1356/Mum/2010 6. CIT vs. Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom) 7. ACIT vs. Gagandeep Infrastructure Pvt. Ltd., ITA No.5784/Mum/2011 8. Mukesh C. Dagli vs. ITO, ITA No.2260/Mum/2008, ITA No.2261/Mum/2009 9. Smt. Shashi K. Lahoti vs. ITO, ITA No.7637/Mum/2013 10. CIT vs. Oasis Hospitalities Pvt. Ltd. (2011) 333 ITR 119 (Delhi) 11. Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 723 (Bom.) 12. ITO vs. JJ Multitrade Pvt. Ltd., ITA No.2158 & 2159/Mum/2014 13. Shri Jatin P. Ajmera vs. ITO, ITA No.7859/M/2011 14. Smt. Ananya Singh vs. ACIT, ITA N....
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....n contention raised by the assessee to agitate aforementioned addition in an appeal field before Ld. CIT(A) were as under: (i) The share application form is the confirmation of the share applicant. The share allotment in compliance of Companies Act 1956 in Form No.2 is factually evident of the share capital. (ii) Funds of the share capital subscription are through banking channel and reflected in the bank statement. (iii) The allotment of the shares are recorded in the minutes of the company which are kept in accordance with the applicable provisions of the Companies Act 1956. (iv) All share subscription of the company are duly incurred by corporate entities having Income tax Permanent Account Number and are filing returns of income and are duly assessed and thus, identity of the shareholders is also established. (v) Applicant's name is not mentioned in any of the statement of Mr. Mukesh C. Choksi Group recorded by the IT Department. 3.1 Thus, it was submitted that addition could not be made under section 68 of the Act. To substantiate above contentions following evidences were also referred. - Memorandum and Article of Association. - Copy of ROC Form No.2 (....
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....TO 14(3)1 v/s. Mrs. Radhika Ravindrakumar Toshniwal, ITA 1331/M/2010, e) Smt. Shashi K. Lahoti V/s. ITO 14(2)(3) (ITA No.7637/Mum/2013. f) Smt. Jyoti D.Shah v/s. ITO 21(1)(2) (ITA 1843/Mum/2012). 5.1 Copies of the decision in the case of ITO vs. Mrs. Radhika Ravindrakumar Toshniwal (supra), Smt. Jyoti D. Shah vs. ITO (supra), Smt. Shashi K. Lahoti vs ITO (supra) are also filed to substantiate that in similar cases addition has been deleted by the Tribunal. 5.1 Without prejudice it was submitted that tax effect in both the cases is lower than Rs. 4.00 lacs and according to latest Circular issued by CBDT vide Instruction No.5/2014 [ F No. 279/MISC.142/2007-ITJ(PT)] dated 10/07/2014 and in view of the decision of Hon'ble Bombay High Court in the case of CIT vs. Smt. Vijaya Kavekar (2013 30 taxmann.com 412) the instruction will apply to earlier appeals also, therefore, the Departmental appeal should be dismissed. 6. We have heard both the parties and their contentions have carefully been considered. The assessee had filed evidence to support the receipt of share application money which was supported by copies of share application money, confirmation from shareholder and ....
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....decision of the Tribunal in the case of Mukesh R. Marolia wherein it has been held that off market transaction is not a unlawful activity and there is no relevance in seeking details of share transaction from stock exchange when the sale was not on stock exchange and relying upon it for making addition. 13. As regards points (b) & (c) above, we find that the assessee has filed relevant documentary evidence before the AO but the AO has failed to consider the same. The CIT[A] in his order has considered the said evidence and has come to the conclusion that the share transactions are genuine. However, as held by the Tribunal in the case of Rajinidevi A. Chowdhary [cited supra], which is on similar set of facts, the AO could have verified from the Registrar of companies as to whether the shares have been transferred and the names of the shareholders in whose names shares have been transferred. The decision of the Tribunal in the case of Rajinidevi A. Chowdhary has also been upheld by the jurisdictional High Court as taken note of by this Tribunal in the case of Shri Pinakin L. Shah [cited supra], to which one of us i.e. the Judicial Member, is a party. In these facts and circumstances ....