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2015 (12) TMI 1502
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....- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the transaction of purchase and sale of shares of M/s N.E. Electronics by the assessee through M/s Mahasagar Securities Pvt Ltd and M/s Goldstar Finvest Pvt Ltd to be genuine transaction and directing AO to treat the resultant gain of Rs. 12,65,745/- as LTCG instead of income from undisclosed sources u/s 68 of the Act, treating the same as dubious transaction based on the fact that the ITAT, Mumbai in ITA No. 4625/Mum/2005 has quantified the income of M/s Goldstar Finvest Pvt Ltd for AY 2002-03 at 0.15% of the total turnover treating it as an entry provider. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the income of Rs. 12,65,745/0 to be assessable under the head Capital Gain whereas the same was assessable as income from undisclosed sources u/s 68 of the I.T. Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering the deduction u/s 54EC is allowable". 3. Whereas, in the Cross Objection and in the pleading before us, the assessee has challen....
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....bogus speculation profit/loss, short term / long term capital gain/loss, share application money, commodities profit/loss on commodity trading and said activities were going on for many years. M/s Mahasagar Securities was engaged in the business of issuing bogus bills for which Shri Mukesh Chokshi, director of this company floated various companies, prominent among them is M/s Goldstar Finvest Securities Pvt. Ltd. Shri Hasmukh J Shah ( PAN AAHPS 8085 N) is one of the beneficiaries appearing in the list Forwarded by the DDIT (Inv), Unit (4), Mumbai who has reported to have obtained bogus entries worth Rs. 12,95,345/- through M/s Goldstar Finvest Securities Pvt. Ltd. These alleged transactions of purchase and sale of shares have been taken place during F.Y. 2003-04 relevant for A.Y. 2004-05. 3. In the statement recorded of Shri Mukesh Chokshi, the director of the company, M/s Goldstar Finvest Pvt. Ltd., he has clearly admitted that M/s Goldstar Finvest Pvt. Ltd. was engaged in the business of providing accommodation entries in nature of bogus long term capital gains. This fact is also strengthened by the fact M/s Goldstar Finvest Pvt. Ltd. itself in the appeal proceedings fo....
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....rchases and sales on which long-term-capital-gain and short-term-capital-gain has arisen. The assessee submitted that he had duly shown the purchase of shares in the Balance sheet as on 31st March, 2002 filed along with the return of income for AY 2002-2003. Along with that, the assessee had also filed a copy of contract notes, bills for purchase, letters from the assessee written to the company viz. N.E. Electronics Ltd for transfer of shares in assessee's name and letter from the said company showing the transfer of the shares in the name of the assessee. Further, the assessee had filed Dematerialization Form etc. to show that shares were credited in the Demat account and also filed entire details of sale contract and the sale bills along with the bank statement to prove the genuineness of the transactions. All these details were filed before the AO during the course of original assessment proceedings which have also been enclosed from pages 2 to 45 of the paper book. After considering these information and details, the AO accepted the LTCG by sale of shares and granted the exemption u/s 54EC. Thus, there was a specific enquiry and examination by the AO with regard to the LTCG on....
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....all material facts necessary for the assessment. Once there is no failure on part of the assessee, then the assessee's case cannot be reopened beyond the period of 4 years as prescribed in Proviso to section 147. In support, catenas of decisions were also relied upon by the Ld. Counsel. Alternatively, he submitted that, on merits this issue stands squarely covered by the series of decisions of the Tribunal on similar kind of transactions in other cases with the group entities of Mukesh Chokshi, the compilation of which has been filed separately in paper book Part-II. 8. On the other hand, Ld. CIT DR, submitted that the details which were filed by the assessee during the course of the assessment proceedings pertained to long-term-capital-gain in respect of sale of shares, which were accepted as such because, AO was only examining the claim of section 54EC. The AO did not have any idea about the modus operandi about the Mukesh Chokshi Group providing such kind of accommodation entry through his companies like Goldstar Finvest Pvt Ltd. The entire modus operandi and sham transaction was unearthed only during the course of search and seizure action in the case of Mukesh Chokshi and h....
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...., 2002, the assessee has shown investment in shares of N.E. Electronics Pvt. Ltd at Rs. 29,600/- which is the subject matter of entire dispute. In support of the said investment made in shares, the assessee had also filed a copy of Contract Notes dated 18.04.2001 and also the copy of purchase bills dated 24.04.2001 issued by the stock broker, M/s Goldstar Finvest Pvt. Ltd along with the receipts for the payment received towards purchase of shares. Immediately thereafter, the assessee had written a letter to the company N.E. Electronics Pvt. Ltd to transfer these shares in the name of the assessee and also furnished the details of shares scripts along with the distinctive numbers, number of shares and folio number. In response, N.E. Electronics Pvt. Ltd vide letter and intimation dated 30.05.2011 to the assessee informed that, the shares bought by the assessee of this company have been transferred in the name of the assessee. Thus, way back in April and May 2001, the assessee had shown purchases and also got the shares transferred in his own name from the company, that is, this entire disclosure was reflected in the Balance sheet and in the return of income filed for the assessment ....
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....see whether the second condition under which the embargo of time limit of 4 years can be lifted or not. From the perusal of the 'reasons recorded', it is seen that:- (i) Information has been received from DDIT (Inv.-IV) Unit 1(4), Mumbai vide letter dated 07.03.2001 informing that a search and seizure action u/s 132(1) has been undertaken in the case of Mahasagar Securities Pvt Ltd, wherein it was found that the said company and its related 34 Group Companies were engaged in fraudulent billing activities and in the business of providing bogus speculation profit / loss, shortterm / long-term capital gain / loss etc. Shri Mukesh Chokshi and Director of the said company had floated these companies which included M/s Goldstar Finvest Pvt Ltd & M/s Mahasagar Securities Pvt Ltd. The assessee was also one of the beneficiaries as it has transacted with these companies and his name appears in the list forwarded by Investigation Wing informing that, assessee too have obtained bogus entries worth Rs. 12,95,345/- through M/s Goldstar Finvest Pvt Ltd & M/s Mahasagar Securities Pvt Ltd.; (ii) In the statement recorded of Shri Mukesh Chokshi, he has clearly admitted that M/s Gol....
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.... Shri Mukesh Chokshi it is evident that there is no mention or whisper about the assessee has taken accommodation entry to the assessee. The other most important fact here is that, the AO has not uttered a word about failure on the part of the assessee for disclosing the true and correct material facts. Such ascribing of failure of the assessee in the "reasons recorded" itself is mandatory, because from the reasons alone, it can be gathered whether there was any failure on the part of the assessee or not so as to acquire jurisdiction for reopening the case beyond the period of 4 years. There is not an iota of allegation of failure on the part of the assessee to disclose material facts. Such an assignment is mandatory as held by various High Courts including that of jurisdictional High Court in case of Tata Business Support Services Ltd. Vs. DCIT 232 Taxman 702, Idea Cellular Ltd vs DCIT, 301 ITR 407. 12. Even otherwise also, as stated in detail in the foregoing paragraphs, the assessee's purchase of the shares were not only conclusively disclosed in much earlier assessment years but also the entire material facts relating to purchase and sale have been disclosed which have been ....
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....ong-term-capital-gain on the sale of shares of N E Electronics Pvt Ltd which was purchased on 19.04.2001 for Rs. 27,750/- and sold on 09.06.2003 and 27.06.2003 for Rs. 12,13,520/-. The resultant long-term-capital-gain of Rs. 11,86,250/- was invested in bonds specified u/s 54EC. In this case also, exactly similar disclosure was made along with the return of income and before the AO during the course of the revenue assessment proceedings. Such an assessment completed u/s 143(3) after scrutinizing the details of purchase of shares, transfer of shares in the name of the assessee and then sale of share through Demat account, the cases has been reopened u/s 148 vide notice dated 28.03.2011 i.e. much beyond the period of 4 years from the end of the relevant assessment year. Here in this case also, the exactly similar reasons have been recorded which are as under:- 1. Information has been received from DDIT(Inv) Unit I(4), Mumbai vide letter dated 07.03.2011 that a search & seizure action u/s 132 of the I.T. Act was undertaken in the case of M/s Mahasagar Securities Pvt. Ltd. by DDIT (Inv) Unit I(4), Mumbai on 25.11.2009 on the basis FlU information regarding suspicious transactio....