AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 821
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....e by Shri Mukesh Choksi in order to enable his clients to declare speculations profit/loss, Short Term Capital Gain, Long Term Capital Gain, profit/loss on account of commodity trading etc., introduces share application money or introduces money in the form of gifts, as admitted by him in his sworn statements given in connection with search and seizure operations and during the scrutiny assessment proceedings consequent to search and seizure operations'. AO further noted that 'as per information received, Shri Mukesh Choksi group has given accommodation bill of Rs. 5,08,45,425/- to the assessee. The cost value of the bill is only Rs. 83,002/-. Thus, assessee reaped benefit of Rs. 5,07,22,422/- through fake bills received from Shri Mukesh Choksi and group during the year under consideration i.e., FY. 2006-07 relevant to the AY. 2007-08'. Accordingly, he has recorded that he has 'reason to believe that income chargeable to tax to the tune of Rs. 5,07,22,422/- as escaped assessment for the AY 2007-08 as per the provisions of Sec.147 of the I.T. Act'. It was also on record that approval from Addl.CIT, Range- 6 was received on 24-03-2014 and notice was issued accordingly. 3. In the c....
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....der dt. 06-04-2017, partly allowed the contentions of assessee that purchase cost is to be given credit. Accordingly, the amount of addition was restricted to the capital gain amount of Rs. 4,64,41,737/-. However, Ld.CIT(A) rejected the contentions on reopening of assessment u/s. 147 and also on exemption claimed u/s.10 on the Long Term Capital Gain. Ld.CIT(A) changed the head of income as 'income from other sources' and directed the AO to tax the amount after giving credit for the purchase cost of shares at Rs. 15,98,415/-. The contentions that if statement of Shri Mukesh Choksi is to be considered, then, proceedings u/s. 153C should have been initiated and not u/s. 147 were also rejected. 5. Contesting the above order of the Ld.CIT(A), assessee originally raised many grounds and filed various sets of additional grounds in the course of appellate proceedings. Many of the grounds are repetition of the same issue and more or less like submissions on the same point. The summarised contentions of assessee in various grounds can be stated as under: a. Reopening of assessment is bad in law; b. Reliance on the statement of Shri Mukesh Choksi, is bad in law; ....
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....abad, is one among them. During the Asst. years 2007-08 and 2008-09 the assessee has entered into share transactions, the details of which are as under: Sl. No. Asst.Year Purchase Sale 1 2007-08 83002.97 50805425 2 2008-09 4475495 3723913.5 The information as above is forwarded for necessary action at your end as the jurisdiction over the case vests with you. information as above is forwarded for necessary action at your end as the jurisdiction over the case vests with you. Yours faithfully, Sd/-xxxxxx ( P. MADHU ) Incometax Officer, Ward 6(3), Hyderabad 6.1. The statement of Shri Mukesh Choksi placed on record by the Department indicates that the statement was recorded u/s. 131 in the O/o. DCIT, Central Circle-4(6), on 16- 01-2013 whereas the search u/s. 132 of the Act in the case of Shri Mukesh Choksi and his group cases seems to have happened on 25-11-2009 as referred in the statement. If the search happened on 25-11-2009 and if Shri Mukesh Choksi has given statement on 132(4), the same could have been the basis for consequential proceedings in almost all the c....
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.... 2. At the outset we wish to inform that the compact disc (CD) containing the Transaction Statement of Beneficial Owner (BO) account viz., Client ID: 10088992, DP ID: IN300079 held in the name of 'Aditya Sree Ram Ji Magapu' and bills issued by Alliance Intermediaries & Network Pvt. Ltd as forwarded vide your above office letter was received in damage (broken) status at NSDL. 3. Accordingly, we have extracted Transaction Statement from our electronic records in respect of BO account (Client ID: 10088992, DP ID: IN300079) of 'Aditya Sree Ram Ji Magapu' for the period from the date of opening of BO account (i.e., July 15, 2006) till the date of your above office letter (i.e., November 10, 2014); which is enclosed and marked as Annexure 'A'. 4. From the above Transaction Statement it is observed that the credit of securities (i.e., equity shares of Alchemist Ltd., Lok Housing & Constructions Limited, Maharashtra Polybutenes Limited, MMTC Limited, Paramount Communication Ltd. and Shree Ram Urban Infrastructure Ltd) were received in the BO account (Client ID: 10088992, DP ID: IN300079) of Shri Aditya Sreeramji on various dates [from July 31, 2006 to September 1....
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....addresses are provided above. The communication received from NSDL do indicate that assessee has a 'client ID' and 'DP ID' and transactions were through the said broker M/s. AINP Ltd., and the transactions were undertaken on Inter-connected Stock Exchange of India Limited whose address was given by NSDL. In view of the categorical confirmation received from NSDL and fact that these transactions have happened through the account of assessee in NSDL the contention of Revenue that both the M/s. AINP Ltd., and Inter-connected Stock Exchange of India Limited were suspended during that period cannot be accepted. There is nothing on record justifying the stand taken by AO. Even though AO tried to enquire from the stock exchange, the stock exchange which AO enquired is NSE and BSE, not Inter-connected Stock Exchange of India Limited. 6.4. In the written submissions filed by the department at various points of time, it is mainly on the statement of Shri Mukesh Choksi, that was relied wherein he has accepted that he has undertaken providing accommodation bills. Since from the time of search to the time of final statement more than three years have passed, the veracity of the statement ....
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....letter dated 16.03.2015 placed in paper book at page 85 is extracted hereunder for ready reference : "The scrutiny assessment proceedings for the Asst. year 2007-08 in your case are pending with the undersigned. As requested by you, letter from NSE stating that M/ s. Alliance Intermediateries & Network Pvt. Ltd. is not a broker/ subbroker with them is hereby provided. You have requested this office to summon Mr. Mukesh Choksi for crossverification. But, the assessment in your case is made basing on the information furnished by NSE and the material provided by yourse if. Hence, there is no necessity of producing Mr. Mukesh Choksi for your cross verification". (emphasis supplied) 10.1 This indicates that Revenue is not having any information and even though the assessment is reopened on that basis as communicated in the reasons for reopening, A.O. simply denies the same in order to avoid cross-examination to be provided to the assessee. Under these circumstances, since neither the communication from CCIT, Mumbai nor the so-called statement of Mr. Mukesh Chokshi was provided either for verification or for crossexamination, it cannot be stated that A.O. has any 't....
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....t with the action of the A.O. either for reopening of assessment or for treating the transactions as bogus, since the very basis for reopening the assessment was not provided to the assessee nor an opportunity was given to cross-examine the so called Mr. Chokshi. There is no basis for treating the said transactions as not genuine. Considering the documents placed on record and the case law relied, we have no hesitation in directing the A.O. to accept the long term capital gains and short term capital gains declared by Smt. Sarita Devi and short term capital gains declared by Ms. Nitika Kumari under the head "Capital Gains" only. The grounds are accordingly allowed". 6.5. However, in this case Revenue filed the statements and communications on record for the first time without confronting to assessee earlier. But the facts are same. Respectfully following the decision stated above, we have no hesitation to hold that the action of AO in reopening the assessment based on the statement of Shri Mukesh Choksi to hold the transaction as bogus is not supported by any evidence. 6.6. Assessee has furnished the information with reference to purchase of shares [though in cash] which was ....