TaxTMI 
TaxTMI 
2018 (2) TMI 1877
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....69C of Rs. 20,786/- of alleged unaccounted commission paid @ 2% on alleged bogus share transaction. Apropos ground challenging reopening 3. Brief facts of the case are that in this case, return of income was filed on 30th March 2009 declaring total income at Rs. 2,71,805/-. The same was processed under section 143(1). Subsequently information was received by the Assessing Officer from o/of DG1T(C&IB), New Delhi that assessee has taken accommodation entry from M/s. Magasagar Securities Pvt. Ltd. (a company in the Mahasagar Securities Pvt. Ltd. group share scam case) of Rs. 10,32,289/-. Accordingly, notice u/s. 148 of the Act was issued on 28th March 2014 after duly recording the reason for the same. Subsequently the assessment was completed u/s. 147 r.w.s. 143(3) of the Act after making an addition of Rs. 10,39,289/- on account of bogus share transactions and Rs. 20,786/- being commission paid to the broker for arranging accommodation entries in the form of share transactions. 4. On the assessee's appeal against the reopening, the ld. Commissioner of Income Tax (Appeals) dismissed the same by holding as under: 4.2 I have considered the facts of the case and also perused the mat....
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....ar as his jurisdiction to initiate the proceedings u/s 147 is concerned. 4.4 Receipt of afore-stated information from the DGIT(C&IB), New Delhi in my considered view is fresh and tangible material which has live link and nexus with the formation of belief that the income of the assessee has escaped assessment, and keeping in view that the original assessment was not framed u/s 143(3) of the Act and no opinion was ever formed by the ld. AO and hence, there is no change of opinion, and also keeping in view the ratio of decision of Hon'ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers Private Limited (2007) 291 ITR 500 (SC), reopening of the assessment is upheld. 5. Against the above order, the assessee is in appeal before the ITAT. 6. I have heard both the counsels and perused the records. As regards the reopening of the issue, on a careful consideration I note that the assessment in this case was based on information received from DGIT(Investigation) that the assessee has taken accommodation entry from M/s. Mahasagar Securities Pvt. Ltd. (a company in the Mahasagar Securities Pvt. Ltd. group share scam case) of Rs. 10,32,289/- and, therefore, it has indul....
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....vant material on which a reasonable person could have formed a requisite belief Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction ITO v. Selected Dalurband Coal Co, (P.) Ltd. (1996) 217 ITR 597 (Supreme Court): Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (Supreme Court)." 7. The above discussion and precedent from Apex Court fully justify the validity of reopening in this case. Further I find that the Ld. CIT(A) has carefully examined the issue and has properly appreciated the issue. Hence, I do not find any infirmity in the same. Accordingly, I uphold the order of the Ld. CIT(A) on the issue of reopening. Since, the issue has been decided on the basis of the Hon'ble Apex Court decision, the other case laws referred by assessee are not supporting the assessee's case. Apropos ground relating to merits of addition 8. Brief facts of the issue as per Assessing Officer's order reads as under: "5. On perusal of submissions and return of income filed, the investigation carried by the undersigned reveals that the assessee has purcha....
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....d are nothing but colorable device using forged and fabricated bills / contract note for the purpose of evasion of tax. Accordingly I strongly hold that assessee has entered into bogus shares transactions lo the tune of Rs. 10,39,289/- and the same is brought to tax by adding the equivalent amount to the total income of the assessee. Penalty proceedings under section 271(l)(c) are initiated for furnishing inaccurate particulars of income and thereby evading the tax liability. 7. Addition under section 69C on account of commission paid towards shares broking Vide para no. 6 it is well established fact brought on records that the assessee has entered into bogus shares transactions to the tune of Rs. 10,39,289/- and the same is brought to tax by adding the equivalent amount to the total income of the assessee. For the commission paid towards such transactions carried by the assessee, I estimate @ 2% of Rs. 10,39,289/- (bogus shares transactions) amounting to Rs. 20,786/- as commission paid towards share broking is brought to tax under the provisions of 69C of the I. T. Act 1961. 9. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) upheld the Assessing Officer....
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....f the said scrip in short span of time as claimed by the assessee. On perusal of submissions and return of income filed, the investigation carried by the undersigned reveals that the assessee has purchased share from Cable Corporation of India Ltd. through Mahasagar Securities Pvt. Ltd. and Alliance Intermediateries & Network Pvt. Ltd. During the course of assessment proceedings, it is noticed that LINK INTIME INDIA PVT. LTD. is the registrar authority of Cable Corporation of India Ltd. An information under section 133(6) vide letter dated 25.02.2015 is called for from LINK INTIME INDIA PVT. LTD. regarding genuineness of transactions in scripts/commodity held by the assessee during the FY under consideration. LINK INTIME INDIA PVT. LTD. vide letter dated 27.02.2015 stated the assessee (shareholder) is not holding any shares under demat account no. IN2301151/22161785 in the above mentioned company i.e. Cable Corporation of India Ltd.). The assessee has failed to furnish any explanation as to why the shares have been shown as dematerialized just before the date of sale whereas he has shown the date of purchase of shares as 1.11.2006. 11. Thereafter the ld. Commissioner of Income Tax....
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....cer has held that it is clear that the assessee through Mahasagar Securities Pvt. Ltd. has shown transactions which are colorable devise using forged and fabricated bills and contract notes for the purpose of evasion of tax. On these transactions, the Assessing Officer has also estimated 2% commission and, accordingly, he has made the above said disallowance. 15. Upon the assessee's appeal, the ld. Commissioner of Income Tax (Appeals) has given a finding that dealing in shares by the assessee in the above script has to be taken as dealing in penny stock which was in the form of accommodation entries and hence the entire sale consideration of this scrip has to be treated as unexplained cash credit within the menaing of section 68 of the Act. 16. I find that the facts of the case indicate that the assessee has claimed to have purchased share from Cable Corporation of India Ltd. through Mahasagar Securities Pvt. Ltd. and Alliance Intermediateries & Network Pvt. Ltd. These intermediateries are companies operated by Shri Mukesh Choksi and are involved in providing bogus entries. On enquiry, the Assessing Officer has found that for the said company Cable Corporation of India Ltd., Link....
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....ate Limited. The proceeds from the aforesaid sale transaction were directly credited by the broker in the Savings Bank Account of the assessee in the Union Bank of India. The assessing officer did not accept the case of the assessee that she was entitled to exemption under Section 10(38) of the Income Tax Act. The assessing officer held that the aforesaid transactions of purchase of two penny stock shares for Rs. 60,000/, the merger of the companies with a new company and the sale of the shares for Rs. 11,58,930/fell within the ambit of adventure in the nature of trade and the assessee had profited by Rs. 13,98,930/. The assessing officer, therefore, brought the aforesaid amount to tax under the head 'business income'. (ii) Being aggrieved by the order of the assessing officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). The appeal filed by the assessee was dismissed and so was the subsequent appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunal. (iii) On hearing the learned counsel for the assessee and on a perusal of the orders of the income tax authorities, it appe....