TaxTMI 
TaxTMI 
2018 (10) TMI 1396
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....e the learned AO should be directed to allow the claim of exempt income. 3. That the appellant craves liberty to add, amend, alter and delete any grounds of appeal before the final hearing." 3. The assessee in ground no.1 has challenged the assessment framed u/s 147 of the Act. 4. Briefly stated facts are that the assessee in the present case is an individual and deriving her income from other sources. The assessee in the F.Y. 2007-08 has purchased certain shares of ZEN Shavings Ltd. through M/s Alliance Intermediaries & Network Pvt. Ltd. (for short AINPL). The necessary details of the purchases stand as under: Sr. No. Date of purchase Value of purchase Payment of purchase date of dematerialized 1. 13.08.2007 & 28.08.2007 5,02,774.00 02.04.2008 March, 2009 4.1 The assessee sold these shares in the year under consideration for Rs. 92,56,189/- only. Thus, the assessee has earned long term capital gain income of Rs. 87,57,789/- which was claimed as exempted u/s 10(38) of the Act. However, the AO during the assessment proceedings observed certain facts as detailed under: i. The company through which the assessee purchased the ....
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....o whom accommodation entries have been provided. The assessee's name appeal- in the list of the beneficiaries During the year under consideration the assessee has claimed to have sold through the entity M/s Alliance Intermediateries & Network Pvt. Ltd 178000 shares of Zen Shaving on 31.08.2009 for a sum of Rs. 92, 56.1 89; - which alleged to have been purchased m the period relevant 10 AY 2008-09. It is pertinent to draw attention to a vital fact that the stock exchange had expelled the entity Alliance Intermediateris & Netwurk Pvt. Ltd from the exchange system. On the analysis of the tangible information received in this regard, and the admission of Shri Mukesh Choksi to having provided accommodation entries, I have reason to behave that income chargeable to tax in the garb of capital gaim amounting to Rs. 92,56,189/- has escaped assessment within the meaning of the Sec. 147 of the I T Act, 1961 for AY 2010-11. A notice u/sec. 148 r.w.s. 147 is, therefore, being issued to re-assess such income and also any other income, chargeable to Lax which has escaped assessment, which comes to my notice subsequently in. the course of the re-assessment proceedings for AY 2010-2011....
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....m the end of the AY 2010-11. Thus, the issues of change of opinion while reopening the assessment is not involved in_ the present case. 4.3.2. The assessment has been reopened on account of specific information received by the AO regarding the bogus long Term Capital Gain shown by the appellant. Such information is on the basis of statement given by Mr. Mukesh Choksi and other incriminating documents found during the course of search in his group companies, which were found to be in the business of providing accommodation entries. Reopening of assessment under similar circumstances has been upheld by the Hon'ble High Court of Gujarat and other Courts in several decisions. 4.3.2.1. The issue of reopening of an assessment completed u/s.143(3), after four years from the end of relevant assessment year, on the basis of information given by the Investigation Wing, Mumbai on the basis of search & survey conducted in the case of Shri Praveen Kumar Jain and his Group concerns, has been decided by the Hon'ble High Court of Mumbai, in its decision in the case of [2016] 71 taxmann.com 64 (Bombay), Bright Star Syntex (P.) Ltd. In this decision, the Court has held as f....
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....ssessing Officer found that the information received indicated that the eight companies mentioned in the reasons belonged to Mr. Praveen Kumar Jain group and formed the basis of his reasonable belief. At this stage the Assessing Officer has merely to establish that there is justification for him to form a reasonable belief that income chargeable to tax had escaped assessment and not conclusively prove the same. The reliance by the petitioner on the decision of the Apex Court in S.P. Chaliha case (supra) rendered in a completely different fact situation can have no Court in Rushab Enterprises (supra). We find the decision of this Court was rendered in the context of the assessment being reopened beyono a period of 4 years from the end of the relevant assessment year In the facts of that case and on the basis of reasons recorded therein, the Court held that there was no basis for having reasonable belief that income chargeable to tax has escaped assessment. Albeit, the Court aoes record that an Assessing Officer does nave power to reopen an assessment, provided there was tangible material to form a reasonable belief that income chargeable to tax has escaped assessment. In the present....
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....aterial indicated that 20 dummy companies of Mr.Arun Dalmia were engaged in money laundering and the income-tax evasion. The said entities included Basant Marketing Pvt. Ltd. also. From the analysis of details furnished and the beneficiaries reflected, which are spread across the country, the CIT, Kolkata, suspected the accommodation entry related to the assessment year 2006-07 as well, this information has been provided to Director General of Income-tax, Kolkata, who in turn, communicated to the Chief Commissioner of Income-tax, Ahmedabad. Further revelation of investigation as could be noticed from the record examined (file) deserves no reflection in this petition. Insistence on the part of the petitioner to provide any further material forming the part of investigation carried out against Dalmias also needs to meet with negation, as the law requires supply of information on which Assessing Officer recorded her satisfaction, without necessitating supply of any specific documents. The proceedings initiated under section 147 of the Act would not be rendered void on non-supply of such document for which confidentiality is claimed at this stage, following the decision of the Delhi Hi....
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.... of the assessment order on 11/3/2016. As per the direction Hon'ble Gujarat High Court in the case of Sahakari Khand Udhyog Mandal Ltd. vs. ACIT (370 ITR 107) (2015), the Id. AO is required to provide the reasons for the reassessment within 30 days; allowing the assessee to file objections against the reason, for reassessment within 60 days. The ld.AO has not followed said course of action and therefore in view of the Judgment of the Hon'ble Jurisdictional Gujarat-High court in the case of Bharatmaiya Memorial Foundation vs. DCIT (SCA No 20513 of 2017) dated 22/11/2017, the reassessment proceedings is required to be quashed. Copy o judgment in the case of Bharatmaiya Memorial Foundation is submitted herewith as Annexure CL-3 & 4. Please Refer para 11 & 12 of the said judgement. 3. That from the perusal of the reasons for the reassessment it is evident that the learned AO has reopened the assessment under section 147 of the Act; (a) Only on account of information received from the DIT(I &C), Ahmedabad and (b) he has not applied his mind for the reassessment proceedings as; (i) in the reasons for the reassessment there is no reference ....
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....ions of the Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) and considering the facts in totality, the claim of the assessee cannot be denied on the basis of presumption and surmises in respect of penny stock by disregarding the direct evidences on record relating to the sale/purchase transactions in shares supported by broker's contract notes, confirmation of receipt of sale proceeds through regular bonking channels and the demat account. 19. As mentioned elsewhere and as agreed by the Representatives of both the sides; since the facts are common in all the impugned appeals, all the appeals by the assessees are allowed. The Assessing Officer is directed to treat the surplus as Long Term Capital Gain and allow the exemption as claimed by the assessees. 20. In the result, all the appeals filed by the assessee are allowed. The copy of the order of the Hon'ble Ahmedabad ITAT in the case of Bharti Somchand Shah (Sr. No.10-11) & Others Vs ITO (ITA No.925- 926/Ahd/2015-Order dated 21 October, 2016) is submitted in the submission of Case law-Page PN 3-11). E. Laxman S Patel Vs CIT (327 ITR 290) (Guj)- "The legal effect....
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....opy of Demat statement of HDFC Bank is submitted herewith as Annexure PB-7. d. The copy of the Purchase and sales Bills were submitted before the ld.AO and the sample copy of sale bills of the said shares are submitted herewith as Annexure PB-8-13. 2. Accordingly, the complete details of purchases and sales i.e. evidence of share purchase in the shape of copy purchase bill/ Contract note, copy of bill, statement of Demat A/c and corresponding effects in bank statements reflecting transfer of shares, copy of sales bill have been submitted. The genuineness of transaction is to be accepted on account of supporting document/ evidences furnished by the assessee before the authorities below and in this regard reliance is placed on following judgments/order:- A. ACIT vs. Vineet Suresh Chandra Agrawal vide ITA No. 1442/Ahd/2013 dated 6th Jan, 2017, its relevant para is as under:- "In view of these glaring facts, the assessment of Smt. Jaya Agrawal and the fact that the relevant purchases for AY 2004-05 have been held to be genuine, we see no infirmity in the order of ld. CIT(A) in deleting these additions. On the issues of Shri Chokshi, Mahasagar Securit....
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....iate its claim that transactions of the purchase and sale of shares are genuine. Even otherwise the holding of the shares by the assessee at the time of allotment Copy of the said order is submitted herewith as Annexure CL-5-12. subsequent to the amalgamation/merger is not in doubt, therefore, the transaction cannot be held as bogus. Accordingly we delete the addition made by the AO on this account." 4. Without prejudice to the above facts, the shares purchased through off market trade the same cannot be considered non- genuine ignoring the facts that the purchases are accepted by Department in preceding assessments and purchases and sales are affected by cheques. In this regard Hon'ble ITAT Mumbai in the case of Mukesh Moralia [[2006] 6 SOT 247] and wherein it has been held as under: 10.3 Purchase and sale of shares outside the floor of Stock Exchange is not an unlawful activity. Off-market transactions are not illegal, ft is always possible for the parties to enter into transactions even without the help of brokers. Therefore, it is not possible to hold that the transactions reported by the assessee were quite sham on the legal proposition arrived at by the ....
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....ns, we have carefully perused the orders of the authorities below. As mentioned elsewhere, we have considered the facts in YTA No.810/Ahd/2015. We find that the assessee had purchased 3000 shares of Telant Info Ltd from M/s. Mahasagar Securities Pvt Ltd on April 2004. The consideration was paid and the payment of consideration is not in dispute. The shares of Telant Info Ltd were listed in the Bombay Stock Exchange at that point of lime. The shares so purchased were sold through M/s. Alliance Intermediateries & Network Pvt Ltd and the consideration was received by cheque. It would be pertinent to mention here that though the shares were purchased in physical form, the same were sent to the company with share application form and the shares were transferred by the company in the name of the purchaser. Thereafter, the shares were transferred in the demat account, from where they were sold. It is not the case of the Revenue that the consideration paid by the assessee at the time of purchase of shares was received back in cash, nor it is the case of the Revenue that the sale consideration received by the assessee was returned back in cash. It is also not the case of the Revenue that th....
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....pellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of crossexamination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject mailer of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the d....
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....the sides; since the facts are common in all the impugned appeals, all the appeals by the assessees are allowed. The Assessing Officer is directed to treat the surplus as Long Term Capital Gains and allow the exemption as claimed by the assessees." 9.2 We also note that the view taken by the Hon'ble ITAT in the case as discussed above was also upheld by the Hon'ble Gujarat High Court in the case of PCIT vs. Bharti Somchad Shah in Tax Appeal No.1023 of 2017, wherein it was held as under: "1. The appellant-revenue in this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) has challenged the order dated 21.10,2016 made by the Income Tax Appellate Tribunal, Ahmedabad Bench B in ITA No.926/And/2015 for assessment year 2008-09, by proposing the following questions stated to be substantial questions of law: [A] Whether the Appellate Tribunal Is correct in law and on facts in not considering the statement of Shri Mukesh M. Chokshi taken on oath u/s. 132(4) of the Act and is binding as evidence or not? [B] Whether the Appellate Tribunal is correct in law and on facts in deleting the additions without appreciating the fact....