TaxTMI 
TaxTMI 
2016 (3) TMI 676
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....- without giving to the appellant copy of the material, statement report u/s 133(6) etc. relied in assessment and thereby violating the principles of natural justice. Ld. CIT(A) ought to have held the impugned order illegal and unlawful. 2.1 The ld. CIT(A) has grievously erred in law and or on facts in confirming the addition of Rs. 1,43,042/- as unexplained income from fictitious transaction with Mahasagar Securities Ltd. group, though the same was duly supported by evidence and reflected in the original return. 2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) has grievously erred in upholding addition of Rs. 1,43,042/- as unexplained income from fictitious transaction with Mahasagar Securities Ltd. group. 3.1 The ld. CIT(A) has grievously erred in upholding that notice of reopening u/s 148 and proceedings initiated were not illegal and unlawful. Since the conditions precedent for reopening the assessment were not satisfied the entire reopening u/s 147 was bad in law and without jurisdiction. 4.1 The ld. CIT(A) has grievously erred in holding that LTCH on sale of SSNL bonds was not exempt from tax. 2. Brie....
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....d. (TM code 10777), a registered trading number of the Exchange. The date of registration of M/s Alliance Intermediaries & Network Pvt. Ltd. in the capital market segment is October 12,2000. The registration was cancelled on February 19, 2004. The assessee has furnished the bills dated 9/8/2005 of Alliance Intermediaries & Network Pvt. Ltd. through whom the assessee has shown Sardar Sarovar Bonds were as the registration of the said has been cancelled by the NSC on 19/2/2004 name Alliance Intermediaries & Network Pvt. Ltd. In the return of income assessee has shown only income from other source of Rs. 2,48,989/- and after claiming the deduction of Rs. 1,00,000/- the net income is shown of Rs. 1,48,989/-. The income from long term capital gain on sale of Sardar Sarovar Bond has been claimed as exempt income u/s 10(38) of the IT Act. 6.3 Considering the above facts, it is proved that the assessee has taken accommodation entries from the Mahasagar group of companies and is not able to prove transactions of shares of Rs. 1,43,042/-. Therefore, the amount of investment in shares of Rs. 1,43,042/- is treated as unexplained income and added to the total income of the assessee. Si....
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....of relevance is the existence of reasons to make the AO believe that there has been under- assessment of the assessee's income for a particular year.[Ref, Central Provinces Manganese Ore Co. Ltd. vs. ITO (1991) 59 taxmann 17 (SC)' Further Hon'ble Patna High Court in Mahasukhram Madanlal vs. CIT (1956) 28 ITR 299 (Patna) held as follows :- "The ITO has jurisdiction to initiate a proceeding under section 34 of the 1922 Act if upon information presented before him the ITO believes in good faith that income has escaped assessment. The jurisdiction of the ITO to start a proceeding under section 34 of the 1922 Act cannot obviously depend upon the ultimate result of the proceedings. Even if it is found ultimately upon enquiry that there has been no escapement of income, it is, not a sound argument to advance that the ITO has no jurisdiction to initiate the proceeding. The test of jurisdiction is not the ultimate result of the enquiry but the test is, whether the ITO entertained a bona fide belief upon the definite information presented before him that income has escaped." The ratio of above judgments are squarely applicable to the present case in the present....
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.... the AO had not provided copy of said statement of Shri Chokshi on which he has placed heavy reliance though the appellant had asked for the copy as well as cross examination of Shri Chokshi vide letter dated 6/1/2014. It is now well settled position in law that the assessment made by AO without furnishing the copy of all such material relied upon for the purpose of assessment is illegal and against the principles of natural justice and equity. Refer to case of Dakeshwari Cottom Mills Ltd. ITR..... In case of Kishanchand Chetlaram vs. CIT 125 ITR 713)(SC) it was held that the addition made on the basis of material collected behind the back of the assessee and without allowing opportunity to cross examine was unjustified, Similarly, in case of Shri Maulik Shah (307 ITR 137 ) (Guj) (SLP rejected as per 322 ITR-2 (ST), it was held that simply on the basis of statement of a third party without any corroborative evidence, no adverse view can be taken or addition made. (b) Secondly, The AO has failed to appreciate that the testimony of Shri Chokshi was not reliable in the sense that he has subsequently changes his statements to suit his convenience at various points of time. At the time ....
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....roker Alliance Intermediaries (P) Ltd. Hon'ble ITAT, Mumbai in Mukesh Choksi vs. ACIT in ITA No. 2299/M/2010 A.Y.02-03, ITA No. 2300/M/2010, A.Y.2006-07 and in ITA No 2301/M/2010, A.Y.07-08 have observed as follows:- "2. Briefly stated facts of the case are that there was a search conducted in case of one Shri Hitesh M.Bagthariya on 28.6.2006 during the course of which in his statement recorded under section "! 32(4) he had stated that he was an entry operator and he used to arrange cheques of M/s Mahasagar Securities Pvt. Ltd. and M/s.Goldstar Finvest Pvt. Ltd. It was also stated by him that Mr. Mukesh Chowkshi, the assessee in this appeal, had floated various companies including his personal capacity for providing accommodation entries to the entry seekers. A survey under section 133A was also carried out on the same day at the business premises of Mr. Mukesh Chowkshi and his concern M/s. Mahasagar Securities Pvt, Ltd. Shri Chowkshi at the time of survey admitted that the following companies had been operating at the address and they were engaged in providing accommodation entries: i) M/s.GoldstarFinvest (P) Ltd. ii) M/s.Richmond Securities (P) Ltd.....
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....awful. (2) Treating the sale consideration of sale of Sardar Sarovar Bonds as unexplained income at Rs. 1,43,042/-. 6. First we take the legality of reopening of the case u/s 147 of the Act by issuing notice u/s 148 of the Act. During the course of hearing before us ld. AR has referred and relied on the decision of Coordinate Bench in the case of Sonal Arpit Doshi vs. ITO in ITA No. 366/Ahd/2015 for Asst. Year 2006-07 vide order dated 21.10.2015 wherein it was submitted that similar reasons of reopening of assessment u/s 147 of the Act were given by the Assessing Officer, wherein purchase and sale transaction regarding shares and securities made through group companies belong to Shri Mukesh Choksi which was known as Mahasagar Securities Ltd. and coordinate bench quashed the assessment order by deciding that the notice u/s 148 of the Act was not valid because Assessing Officer has not recorded his satisfaction in the notice with regard to escapement of income. 7. From going through the facts of the case we find that the facts are not similar to the facts of the case referred by ld. AR in the decision of co-ordinate bench in the case of Sonal Arpit Doshi vs. ITO (supra....
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....e consideration of Sardar Sarovar Bonds effected by the assessee through Alliance Intermediaries & Network Pvt. Ltd. on 9.8.2005. We, therefore, are of the view that ld. CIT(A) was correct in upholding that notice of reopening u/s 148 was not illegal and unlawful. Therefore, this ground of the assessee is dismissed. 9. The next ground is against the action of ld. CIT(A) confirming the addition of Rs. 1,43,042/- as unexplained income from fictitious transaction with Mahasagar Securities Ltd. group. During assessment proceedings u/s 143(3) r.w.s. 147 of the Act the Assessing Officer observed that in the computation of income assessee has shown long term capital gain of Rs. 1,31,208/- from sale of Sardar Sarovar bonds on 9.8.2005 and the sale consideration of Rs. 1,42,008/-. This sale of Sardar Sarovar bonds was effected through sub-broker of NSE namely M/s Alliance Intermediaries & Network Pvt. Ltd. through settlement No.2005152 dated 9.8.2005. On going through the search records of Mukesh Choksi group it was noticed by Assessing Officer that the registration of M/s Alliance Intermediaries & Network Pvt. Ltd. was cancelled on 19th February, 2004 whereas assessee has furnished cont....
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....ds and further details of the transfer of the Sardar Sarovar bonds mentioned in the contract note may have been easily verified by taking information from Sardar Sarovar office regarding share transfer. This exercise seems to have not been done by the Assessing Officer. In view of the fact that assessee has submitted various information along with computation of income filed with original return of income prior to date of search and further supporting evidence supplied by assessee proving that some transaction has happened on 9.8.2005 by sale of Sardar Sarovar bonds which have been acquired by the assessee in January, 1995 and have been sold on 9.8.2005 after paying service tax and turnover charges through broker of National Stock Exchange mentioning three bonds in the contract note, then it was the duty of the Assessing Officer to verify the genuineness of the transaction through the share transfer department of Sardar Sarovar bonds after taking necessary information including distinctive number of Sardar Sarovar bonds from the assessee. Therefore, in our view this matter needs to be remitted back to the file of Assessing Officer with the instruction of providing necessary opportu....