2016 (11) TMI 439

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....of Rs. 23,20,279/- including long term capital gains (LTCG) of Rs. 6,94,327/- on sale of shares of M/s. Talent Infoway Ltd. Subsequently, in view of the search and survey action conducted in the case of Shri Mukesh Choksi and his companies, it came to light that the said companies were engaged in the business of providing accommodation entries to various persons to book bogus capital gains. The Assessing Officer (AO), on receipt of information in this regard from the Investigation Wing of the Income Tax Department that the assessee is one of the parties who sold the shares of M/s. Talent Infoway Ltd. through Shri Mukesh Choksi's companies initiated proceedings to reopen the case under section 147of the Income Tax Act, 1961 (in short 'th....

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....IT(A) apart from upholding the AO's action in reopening the assessment for A.Y. 2004-05, also upheld the AO's action in treating the LTCG as income from undisclosed sources as he was of the view that it is amply clear that the assessee had failed to produce details of purchase of shares alleged to have been obtained in the earlier years. Observing that in view of the statement of Shri Mukesh Choksi, that he took money from the parties (which included the assessee) who came to him for accommodation bills on the basis of which he used to prepare bogus and back dated 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, the learned CIT(A) ....

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.... the assessee was heard in support of the ground No. 1. According to the learned A.R., the AO's action in reopening the assessment for A.Y. 2004-05 under section 147 of the Act was bad in law since the income returned in the return of income filed, i.e. Rs. 23,20,278/- and the assessed income is the same in the order of assessment dated 21.12.2011, except for the fact that the income which had been admitted as LTCG has been treated as undisclosed income of the assessee from other sources. Secondly, section 149 of the Act provides that if the notice under section 148 is issued after the period of four years from the end of the relevant A.Y. 2004-05, i.e. after 31.03.2009, then the income chargeable to tax which has escaped assessment should ....

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....ement of third party without providing the assessee opportunity to cross examine Shri Mukesh Choksi that his companies were giving bogus entries for capital gain. The learned A.R. contended that the AO's view that these shares are undisclosed and that the income on sale thereof has not been offered for taxation is without basis and therefore the addition of the same as undisclosed income requires to be deleted, since he has not only brushed aside the stack of evidence which the assessee had filed, but also not given cogent reasons or basis for reaching the conclusion he did. 4.2 Per contra, the learned D.R. placed strong reliance on the impugned order of the learned CIT(A). 4.3.1 We have heard the rival contentions of both the parties and....