TaxTMI 
TaxTMI 
2023 (11) TMI 822
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....rder. 02. Fact shows that appellant is an individual assessed to income tax. She derives income from salary, house property, business and income from other sources by maintaining regular books of accounts. Search and seizure action u/s 132 of the act was carried on 4/2/2016. Therefore the assessment for assessment year 2010-11 to 2014-15 were carried out by issuing a notice u/s 153A of the Act and for assessment year 2015-16 and 2016-17 carried out u/s 153A rws 143 (3) of the act. 03. Status of return filed by the assessee u/s 139 (1) of the Act and u/s 153A of the act in response to the notice is as under :- A.Y. F.Y. Original Return u/s 139 Return u/s 153A Date of filing Returned Income Date of filing Returned Income 10-11 09-10 25.03.2011 9,96,620 13.01.2017 10,23,860 11-12 10-11 21.06.2012 4,77,180 12.01.2017 4,77,180 12-13 11-12 31.08.2012 14,24,850 13.01.2017 14,24,850 13-14 12-13 31.07.2013 44,85,040 12.01.2017 44,85,040 14-15 13-14 30.07.201 44,59,850 ....
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..../3/2021 15-16 1,25,428 2,75,93,986 - Confirmed the addition as per appellate order dated 30/3/2021 16-17 69,090 1,45,87,601 - Confirmed the addition made by the ld AO by order dated 30/3/2021 07. Therefore as per the above table, the LD CIT [A] confirms all the additions made by the LD AO. Hence, for all these years the assessee is in appeal before us. 08. Thus, In all these 7 appeals filed by the assessee from assessment year 2010-11 to 2016-17 wherein Assessee has challenged the i. Addition under head of income from House Property, ii. Addition on account of Bogus Long term capital gain and iii. Addition u/s 68 of the Act of unsecured loan. AY 2010-11 09. ITA number 715/M/2021 for assessment year 2010-11 is filed by the assessee against the appellate order passed by the Commissioner Of Income Tax, Appeals-53, Mumbai (the learned CIT-A) dated 12/3/2021 dismissing the appeal of the assessee. By this Appellate order, appeal filed by the assessee against the assessment order passed u/s 143 (3) read with Section 153A of the act dated 26/12/2018 by the Deputy Commissioner of income tax-Central Circle-5 (2), Mumb....
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....in confirming the action of the AO in estimating such income without any basis and not allowing deduction u/s 23 (1) (C) and Section 24 of the act and proceeded in gross violation of natural justice and further erred in confirming the action of the AO in making addition in respect of annual value for which no material of whatsoever nature was found and/or seized and thereby erred in law enacting in excess of the scope and the powers vested u/s 153A of the act. b) Your appellant submits that the learned CIT (A) has failed to appreciate the fact that no notional income was taxable u/s 22 Under the head income from house property and that in the alternative vacancy allowance should have been granted u/s 23 (1) (C) by the AO and in the further alternative without prejudice, the annual value should have been restricted to lower of the standard rent or municipal value, which should have further been reduced by the municipal tax paid and by standard deduction u/s 24 at the rate of 30% of adjusted ALV and the appellant further submits that no material of whatsoever nature was found and/or seized during the course of search u/s 132 of the act in the hands of your appellant and that....
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....sed an order not permitted in law b) your appellant submits that no notice u/s 143 (2) was issued by the new incumbent AO DCIT Central Circle 5 (2), Mumbai within the permitted time and the consequent assessment was bad in law c) your appellant prays that the assessment made without issue of notice u/s 143 (2) be quashed GROUND NO 5 :- Levy of interest u/s 234A of Rs. 15,656/-, u/s 234B of Rs. 127,818/- and u/s 234C of Rs. 7 240/-[Para 8, page number 18 of CIT (A) order dated 12/03/2021/] a) this the learned CIT (A) erred in law and on facts in confirming the action of the learned AO in levying interest u/s 234A of Rs. 15,656/-, u/s 234B of Rs. 127,818/- and u/s 234C of Rs. 7240 in the course of assessment and further erred in levying interest in gross violation of the provisions of income tax act without giving any opportunity of hearing and without passing any speaking order for the levy of interest. b) Your appellant denies any liability of payment of interest and further submits that the tax was paid as per the provisions of the law and the return was filed as per the provisions of Section 139 (1) read with Section 153A/153D ....
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....in the interest of substantial justice, we adjudicate these grounds in spite of these infirmities. 012. For all these years the grounds raised are similar except where there are new issues, therefore, we proceed to decide the appeals of the assessee. 013. The fact shows that based on search conducted on 4/2/2016, Assessee filed an application before The Income Tax Settlement Commission [ITSC] on 28/12/2017. Per letter dated 10/1/2018 assessee sought permission to file revised application which was rejected as per order dated 11/1/2018 u/s 245D (1) of the act and therefore the assessment proceedings were revived. 014. For AY 10-11, notice u/s 153A was issued on 5/1/2017 against which the assessee filed return of income on 13/1/2017 at returned income of Rs. 1,023,860/-. Notice u/s 143 (2) was issued on 24/1/2017 and assessment proceedings were initiated. 015. During the course of assessment proceedings, the learned assessing officer noted that there are certain immovable properties appearing in the balance sheet of the assessee, which was unearthed during search. However, notional income as annual income under the head Income from House Property was not shown from the sa....
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....jurisdiction from one AO to another AO within the same city there is no requirement of opportunity of hearing to the assessee. iv. With respect to the violation of principles of natural justice challenged before him as per ground number 7, he dismissed this ground holding that AO has made an addition of notional rent in respect of more than one house property owned by assessee, the addition made on the basis of the details provided by the appellant and therefore there is no violation of the principle of natural justice. v. On the merits of the addition of Rs. 227,625/-, he held that both the House properties are located in Mumbai and Maharashtra Rent Control Act is applicable to properties, therefore the ld AO was duty-bound to determine "standard rent" as per the Maharashtra Rent Control Act. As there is no standard rent fixed for the above property, return on investment in the property would be a guiding factor determining standard rent of the property. Accordingly, he confirmed the chargeability of income arising out of these two properties; he also confirmed denial of various deductions such as vacancy allowance etc. Accordingly, the addition on the merit was ....
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.... @ of 30% of such value. He further submits that assessee is also entitled to vacancy allowance u/s 23 (1) (C) of the act. He submitted that when learned CIT [A] admitted that standard rent is applicable, the learned AO should have attempted on his own to determine the standard rent as held by Honourable Bombay High Court in Tiptop Typography [48 taxmann.com 19]. He also submitted that assessee has paid municipal taxes and maintenance charges which should have been allowed as a deduction in view of the decision of coordinate bench in case of Sharmila Tagore [150 Taxman 4]. With respect to vacancy allowance, he referred to several judicial precedents of coordinate benches. He also submitted that according to Section 24 (1) of the Act, deduction of 30% should have been allowed to the assessee. Accordingly, he submitted that there is no jurisdiction to make this addition, the addition made deserves to be deleted, if same is upheld, the assessee should have been granted benefit of standard rent and also deduction from that of vacancy allowance and standard deduction of 30%. 021. The learned departmental representative vehemently supported the orders of the lower authorities. He subm....
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....pute total income. 024. We have carefully considered the rival contentions and perused the orders of the lower authorities. All the decision cited by the parties are perused, but now culminated and subsumed in the decision of Honourable Supreme court in case of Abhisar Buildwell Pvt Ltd, [supra] therefore, now none of them is required to be further discussed. If in a concluded assessment, there is an incriminating material LD AO is authorized to make addition on account of incriminating material and other income to compute total income. In absence of any incriminating material, the concluded assessment cannot be disturbed. 025. In this case, search took place on 4/2/2016. Assessee filed return of Income u/s 139(1) of the Act on 25/3/2011 at Rs. 996,620/-. This return was not assessed. Therefore, on the date of search, i.e. on 4/2/2016, the assessment for assessment year 2010-11 was concluded. Therefore, according to the binding judicial precedents, such income could have been enhanced only based on incriminating material found during the course of search related to such enhancement. If there is no incriminating material found during the course of search, no addition could hav....
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....he addition deserves to be upheld holding that assumption of jurisdiction u/s 153A is valid. Accordingly, ground number 1 of the appeal of the assessee is dismissed. 028. As we have already upheld that there is incriminating material found during the course of search related to the addition made by the learned AO in the concluded assessment for assessment year 2010-11, the addition deserves to be upheld, therefore now other grounds needs to be adjudicated. 029. Fact shows that assessee is owner of various premises. Those premises are required to be taxed under the head income from house property as per the scheme of the act. The claim of the assessee is that the assessee is owner of 3 premises of which 2 premises are self occupied. Further, the remaining premises remained vacant as the same were held for letting out or sale and could not be let out during the year. The assessee has paid regular municipal taxes and maintenance thereon. The claim of the assessee is that there was no liability to any notional income under section 22 under the head income from house property. The learned assessing officer disregarded the explanation of the assessee and held that those properties ....
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....also not do that despite being the owner of the property. Therefore, now the option left is to determine the annual value of the property. The claim of the assessee is that in view of the decision of the honourable Bombay High Court in case of Tiptop Typography [48 taxmann.com 19], the LD AO should have determined on standard rent. In the present case, the standard rent has not at all been determined by the BMC and therefore no fault can be found with the assessing officer to determine the so. Further in case of Tiptop Typography in paragraph number 33 the honourable High Court has noted that "However, in all the appeals before us, the factual position is that the property or part thereof is let or given on leave and license basis.", Fact was that the properties were let out during the year. This is not the case of the properties owned by the assessee. Thus the property was not let, therefore the provisions of section 23 (1) (b) and (c) does not apply. The case of the assessee falls under section 23 (1) (a). Therefore, the annual value of the property would be the sum for which the property might reasonably be expected to let from year to year. The learned assessing officer has con....
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....nce to the assessee. This is the mandate of the decision of honorable Punjab and Haryana High Court in 76 taxmann.com 349. The SLP filed by the assessee against that decision has also been dismissed. In view of that precedent, we do not find any merit in the claim of the assessee for allowability of vacancy allowance. 031. In view of the above facts, ground number 2, is allowed partly. 032. Ground number 3 is with respect to the change of jurisdiction. The claim of the assessee that the original jurisdiction is with The Income Tax Officer Ward 10 (3) 4) Mumbai and no order was passed under section 127 to transfer the case to the Deputy Commissioner of income tax, Central Circle-5 (2) Mumbai. Therefore, the assessee was objecting to the assessment asking for its quashing. However the fact as stated by the learned CIT-A clearly shows that principal Commissioner of income tax-15 Mumbai passed an order under section 127 of the act on 14/12/2016 and the case of the assessee was centralized with the Deputy Commissioner of income tax, Central Circle-5 (2), Mumbai. Therefore it is not the case that there was no order passed by the learned principal Commissioner of income tax. By the ....
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.... assessing officer has issued notice under section 143 (2) of the act which has been served on the assessee and this fact has not been denied. On change of jurisdiction by a statutory order, there is no provision of law that search new incumbent should also issue a new notice u/s 143(2) of the Act and that too within the permitted time. In view of this ground number 5 of the appeal of the assessee is dismissed. 034. Ground number 6 of the appeal with respect to the levy of interest u/s 234A, B and C are consequential and therefore those are dismissed. 035. Ground number 6 of the appeal is general in nature, no arguments were advanced, therefore same is dismissed 036. Ground number 7 is with respect to the violation of principles of natural justice is also not required to be adjudicated in view of our decision in ground number 1 of the appeal of the assessee, therefore dismissed. 037. Accordingly, appeal of the assessee in ITA number 715/M/2021 for assessment year 2010-11 is partly allowed. ITA No. 716/Mum/2021 (Assessment Year 2011-12) ITA No. 708/Mum/2021 (Assessment Year 2012-13) ITA No. 714/Mum/2021 (Assessment Year 2013-14) 038. For assessment year 2011-....
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....53A and unearthing any incriminating material during the course of search, ground number 2 is with respect to the merits of the addition of Rs. 279,660, ground number 3 is with respect to the change of jurisdiction without giving assessee opportunity, ground number 4 is non-issue of notice under section 143 (2) of the act by the new incumbent once again, ground number 5 is with respect to the levy of interest under section 234A, 234B, 234C, ground number 6 is general with respect to the total income as and ground number 7 is with respect to the violation of the principles of natural justice. Thus, it is apparent that except the change of the amount, there is no difference in this appeal of the assessee compared to appeal for assessment year 2010-11. 043. Both the parties agreed before us that their arguments are similar to the arguments advanced in the appeal of the assessee or assessment year 2010-11 and there is no change in the facts and circumstances of the case except that one more property has been included by the learned AO for making an addition Under the head income from house property. 044. For assessment year 2012-13 in ITA number 708/M/2021 is filed by the assesse....
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....e facts and circumstances of the case. 049. Appeal for assessment year 2013-14 is filed by the assessee against appellate order passed by the learned CIT (A) 53, Mumbai as per order dated 15/3/2021 where the appeal filed by the assessee was dismissed. Assessee filed appeal before the learned CIT-A against assessment order passed u/s 153A read with Section 143 (3) dated 26/12/2018 passed by the learned assessing officer. 050. Assessee originally filed return of income on 31/7/2013 declaring income of Rs. 4,485,040/-. This return was accepted as it is and not selected for scrutiny. Subsequently search took place on 4/2/2016, based on which the notices u/s 153A was issued to the assessee on 5/1/2017, which was complied by the assessee by filing the return of income on 12/1/2017 at the same income. 051. The learned assessing officer during the course of assessment proceedings noted that assessee has one property at 104, Central facility building, agricultural produce marketing committee, Navi Mumbai four which the income from house property is required to estimate at Rs. 51,909/- which has not been offered by the assessee and therefore the returned income filed by the assessee....
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....ng concluded assessment years, in view of the incriminating material found during the course of search, following the decision of the honourable Supreme Court in case of Abhisar Buildwell private limited (supra), addition made by the learned assessing officer based on those incriminating material assuming jurisdiction u/s 153 A is upheld. Accordingly, ground numbers 1 of the appeal for all these three assessment years are dismissed. 056. Ground number 2 of the appeal for all those years are with respect to the addition made on account of the annual value of house property not disclosed by the assessee earlier but found on the basis of the balance sheet and unearthed during the course of search, is identical to ground number 2 of the appeal for assessment year 2010-11 wherein we have confirmed the addition but directed ld AO to grant deduction u/s 24(a) of the Act. Therefore, for the similar reasons we also partly allow ground number 2 of the appeal of the assessee for all those years. 057. Ground number 3 of the appeal for all those years is with respect to the change of jurisdiction as per the order passed under section 127 of the income tax act which is identical to ground ....
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....s 127 of the act is passed vi. notice u/s 143 (2) was not issued by the successor in the versions of the learned assessing officer where there is a change in the charge vii. levy of interest u/s 234B and C viii. assessment of income ix. Violation of principles of natural justice by not bringing any material on record and not furnishing the copies of the material used against the assessee and not facilitating the cross-examination. 064. Facts shows that assessee filed her return of income for assessment year 2014-15 on 30/7/2014 declaring a total income of Rs. 4,459,850/- computed after deducting exemption from long-term capital gain u/s 10 (38) of the act amounting to Rs. 58,804,187/ -. This return of income was accepted, as it is not picked up for scrutiny. 065. Subsequently search and seizure action u/s 132 of the act was carried out on 4/2/2016, case of the assessee was also covered there in, and therefore notice u/s 153A issued on 5/1/2017 in compliance of which the assessee filed return on 12/1/2017 declaring the same income. The learned assessing officer picked up this return for scrutiny and assessed the same at Rs. 61,985,390/-. He ....
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....or in sunrise Asian limited for 2½ years ago. He also stated that he is not aware of anything related to that company and he refused to have any link with the above company. He categorically stated that Mr. Bhatt is managing and controlling that company. Consequently, search under section 132 (4) was also conducted on Shri Vipul Vidhur Bhatt on 5/2/2016, who in a statement under section 132 (4) has categorically stated that he is an entry operator. He is operating sunrise Asian limited as a bogus, paper entity and this company is used by him for providing bogus long-term capital gain accommodation entries to the various beneficiaries for commission including the assessee. Further, on an analysis of the trade data of the trading of this company the information available was collected and further enquiries were conducted on some of the entities, which has purchased the shares of this company, same confirmed by Mr. Vipul Vidhur Bhatt. He also identified in his statement, all transactions of bogus long-term capital gain, as well as loan transactions, how accommodation entries were arranged by Bogus MOU s, shown the money trail, named his other partners in this activities, also n....
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....scharged as it submitted the details of loan received, loan repaid, Ledger account of the lenders, loan confirmation by lender stating its name, address and permanent account number, bank statement of the lender, audited annual accounts of the lender, bank statement to show that the loan has been repaid, source of loan of the lender, affidavit of the lender, net worth statement of the lenders, certificate of incorporation of lender company, their assessment orders, the annual returns filed with the Ministry of corporate affairs and application of funds by lenders on repayment of loan by the assessee. It was also stated that there is no cash deposit in the bank accounts of the lenders while giving loans and nor was there any cash withdrawals in such accounts on repayment. 071. The learned assessing officer rejected the explanation of the assessee for the reason that assessee has not denied the facts on record that company is one of the paper companies of Mr. Vipul Bhatt. Adequate documentary evidences have been found in his premise to prove this fact. Further, assessee has not brought any material contrary to the conclusion that the companies were real in terms of business, stand....
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....t assessee has acquired the shares through preferential allotment of Santoshima trade link Ltd which [subsequently amalgamated with sunrise Asian Ltd] on 31/1/2012 (5 lakh shares) at a cost of Rs. 1,00,00,000/- which were sold partly in assessment year 2014-15 and partly in assessment year 2015-16 and 2016-17. The reason for making the addition is that search dated 4/2/2016 on sunrise Asia Ltd, the statement u/s 132 (4) of the act of the director Mr. Kalpesh Manharlal Jani was recorded. He submitted that one Shri vipul vidhur Bhatt, his cousin brother, has used his name and has appointed him as a director in this company who is managing the affairs. Therefore, action u/s 132 of the act was also taken on 5/2/2016 on Mr. Bhatt. He accepted in his statement u/s 132(4) that he is an entry operator and sunrise Asia Ltd is a bogus paper entity, which was used by him for providing bogus long-term capital gain accommodation entries to the various beneficiaries for commission. On analysis of trade data that who are the entities purchasing the above shares, information was collected and further enquiries were conducted about who purchased the shares. On enquiry, it was found that all the ent....
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....al contrary to the conclusion that the companies were real in terms of business and standing etc.. Therefore, learned AO came to conclusion that company did not have any real business at the time of transaction. vi. The learned assessing officer has further noted that assessee earned Rs. 37 crores in the name of family members of the group in financial year 2011-12 to 2015-1216 in similar manner by obtaining accommodation entries from Mr. Vipul Vidhur Bhatt. It was on the search and seizure action these transactions have been unearthed. The AO in paragraph number 6.2 further held that assessee has not denied the factual record that the company is one of the paper companies of Shri Vipul Vidhur Bhatt. Adequate documentary evidences have been found in his premises to prove this fact. The facts also clearly shows that the simultaneous search under section 132 of the Act conducted on M/s sunrise Asian limited on 4/2/2016, Wherein statement of the directors of that company were recorded under section 132 (4) of the Act, director submitted that Shri Vipul Bhatt has used his name and has appointed him as a director in the above company for 2 ½ years ago. Therefore, search ....
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....ing accommodation entry of long-term capital gain through the company operated by him, where the company in which assessee has earned long-term capital gain is also mentioned, the manner of giving accommodation entry is also mentioned therefore nothing else is required to be proved by the AO xi. The retraction is at behest of assessee group ---, only a course adopted as corrective step to reduce the damage. Nothing was shown that the original statement made by him i.e. Mr. Bhatt is not valid. He did not deny the evidences found, his explanation etc. Retraction is just to save the assessee from consequences. Original confessional statements were based on evidences, which are not denied. xii. Investment pattern, sale of shares, the price variation, without support of financial backing of the company, the holding period, clearly proves that the whole transaction was crafted carefully to deceive the tax. Therefore, the long-term capital gain earned by the assessee is not genuine. 075. Accordingly assessment order was passed under section 143 (3) read with section 153A of The Income Tax Act 1961 on 26/12/2018 determining total income of the assessee at Rs. 69,985,39....
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....Bhatt is also not allowed. The learned CIT-A noted that though the assessee has filed a large number of documents but such documents in case of an entry operator and the main concern does not carry any evidentiary value and such are of no significance at all. These are held to be self-serving documents, which are obtained by the assessee from the dubious concerns of Mr. Vipul Bhatt for proving accommodation entries to be genuine. Accordingly, he confirmed the addition under section 68 of the act of Rs. 40 lakhs holding that assessee has failed to establish genuineness of the above loan. iv Ground number 3, the assessee also challenged the addition of 119,718/- as income from house property under section 22 of the act as per the past year, the learned CIT-A following his decision in assessee's own case for earlier years dismissed the same. v Ground number 4 was with respect to denial of exemption under section 10 (38) of the income tax act with respect to the sale of shares of a company which is found to be operated by the entry operator. With respect to addition of Rs. 61,405,822/- by treating the sale proceeds on sale of shares of sunrise Asian limited as und....
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....s details from the assessee during the course of assessment proceedings but same are not submitted the learned assessing Officer further held that the retraction made by Mr. Vipul Bhatt cannot be accepted as reliable as there was no material to doubt veracity of the original statement. The learned AO further objected to the admission of the additional evidence. Second remand report was submitted on 2/3/2020. The AO further stated that he has sent enquiries letter under section 133 (6) to Santoshi ma trading private limited and sunrise Asian limited at address provided by the assessee, however the said letter were returned back by postal authorities with remark "left." Once again, enquiries letter was submitted to the different address and there "the parties were not known" remark by the postal authorities. The learned assessing officer further sent the details with respect to the information collected from the website of Bombay stock exchange and SEBI. The Bombay stock exchange further submitted a compact disc vide letter dated 24/10/2019, which was also enclosed with the remand report. The copies of the order passed by the income Tax Settlement commission in case of the assessee w....
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....f Rs. 61,405,822 by dismissing ground number 4. vi All other grounds were also dismissed. 077. Against the appellate order, now, the assessee is in appeal before us. Assessee has submitted the paper book containing 898 pages to support her case. Written fact sheet was also filed.[combined for all 7 appeals] 078. So far as the provisions of section 153A, the taxability of income from house property, non issue of notice under section 143 (2) of the act, violation of principles of natural justice, change in the jurisdiction of the assessee within the same city without giving an opportunity of hearing to the assessee are also same as were made in the earlier years. 079. The first ground of appeal is with respect to the addition made by the learned assessing officer exceeding the scope of the provisions of section 153A of the act. Fact shows that the search took place on 4/2/2016. In the assessment year 2014-15, original return under section 139 was filed on 30/7/2015. Therefore, this assessment year on the date of search on 4/2/2016 was completed. Therefore, it could have been disturbed only on account of incriminating material found during the course of search. In th....
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....here is an incriminating material also with respect to the claim of the assessee under section 10 (38) of the act. 081. Honourable Supreme Court in case of Abhisar Buildwell private limited (supra) has held that in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the Assessing Officer would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the Assessing Officer including the income declared in the returns. Therefore, in the present case before us, there can be an addition on the basis of the incriminating material which has been made by the learned assessing officer on account of income from house property and further addition on account of the income under section 68 as well as under section 10 (38) of the act. 082. Even otherwise, when it is not denied by the assessee that the balance sheet was not disclosed to the revenue from which the assets were found, income of which is chargeable to tax under the head income from house property, even the addition of the capital gain claimed as ....
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.... assessee, where the learned AO has not thrown back the onus on the assessee. iv. Share price of that company was Rs. 500 approximately in financial year 2012-13 which rose to Rs. 565 in the subsequent year and then to Rs. 615 in the later year. Therefore, shares commanded good price which was higher than the selling price of the appellant and therefore there is no unusual appreciation by the assessee. v. The shares are properly dematerialized and those were transacted in and out from that account. The assessee further relied upon the decision of coordinate bench that has been upheld by the honourable Bombay High Court. vi. Shares are traded on recognized stock exchange through registered broker approved by the Security and exchange board of India therefore, it cannot be said to be non genuine. vii. The learned assessing officer has recorded incorrect facts about the exit providers, which are not at all into any business and are only the paper companies viii. it was submitted that the receipt and payment through banking channels, no material found seized during the course of search relevant to the addition, entries for purchase and sale ....
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....ssee and her family members, clearly proves that the capital gain earned by the assessee is bogus. With respect to the addition, it was submitted that the issue is squarely covered against the assessee by the decision of the honourable Calcutta High Court in case of Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta)/[2022] 288 Taxman 403 and of the honourable Supreme Court in case of CIT V Suman Poddar [2019] 112 taxmann.com 330 (SC)/[2020] 268 Taxman 320 (SC). Ld DR Submitted that all these decision, which have been cited by the LD AR, are all considered in that decision and therefore, no more decisions can be stated to be in favour of the assessee in such a bad facts of the case. b. On the issue of cross-examination, he referred to Para No 59, 60,65,88 and 90 of decision of Honourable Kolkata High court in case of Swati Bajaj. Even otherwise it is submitted that Shri Vipul Bhatt has retracted the statement is known to assessee, he has given an affidavit in assessee's case, then now where is the question of cross examination of Vipul Bhatt. He submits that it is not the case of the assessee that Mr. Bhatt is not an accommodation entry provider, not known to assessee and it....
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....e, the claim of the AR that there are decisions in case of several assessees where same entry operator is referred, is of no consequences. j. He also submitted that SEBI has levied fine of Rs 1 Crore on 86 entities for fraudulent trading for the same period. Thus, it proves that trading of the assessee is bogus and manipulated. The Trading period is 16 October 2012 to 30 September 2015. This is available in public domain. SEBI had conducted an investigation in the scrip of Sunrise Asian Ltd. from October 16, 2012, to September 30, 2015, based on a reference received from the Principal Director of Income Tax (Investigation), Kolkata. The probe was meant to ascertain whether there was any violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations 2003 by certain entities while trading. In the investigation, SEBI discovered that pursuant to allotment of shares under the scheme of amalgamation, Sunrise Asian and its then directors had devised an arrangement whereby 83 connected entities had manipulated the price of the scrip in four patches of trading during the investigation period, violating PFUTP norms. The regulator found that 77 out of the 8....
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....nse to question number 14, he categorically states that he is an entry operator and bogus accommodation entry provider. In response to question number 15, he categorically states that sunrise Asian limited is a listed company, which is a paper/bogus company, and he is using this entity for providing bogus accommodation entries to the various beneficiaries. He controls the entire activities/affairs of this company and all the directors of the company are dummy directors. These directors are appointed by him and are controlled by him. He submits that he is an entry operator of share of this company and he manages the entire affair/activities of this company and is in absolute control of Sunrise Asian Limited. He further submits that the share price of this company was artificially rigged up at the Bombay stock exchange with an objective to provide bogus long-term capital gain/accommodation entries to various beneficiaries, for which he charges a commission on cash between 4 -5% for long-term capital gain. He also refers to Santoshima Trade link Ltd stating that this is a bogus paper company, which is being used for providing bogus accommodation entries to the various beneficiaries. H....
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....uced Mr. Mohan Gurnani family to him for providing bogus long-term capital gain. He also gave the date -wise reference in question number 34, how the share prices of sunrise Asian limited were rigged up after preferential allotment in Santoshima Trade link Ltd. In response to question number 35, he referred to being in control of several entities, which are used for routing, and layering of funds for purchasing the shares of the beneficiaries of long-term capital gain. In reference to question number 39, whether he knows Mr. Mohan Thakurdas Gurnani, he replied that yes, he knows him and he is a director/promoter of Moraj group of companies. He and his family members have taken accommodation entry of loans, long-term capital gain in the books through the shares of sunrise Asian limited. In response to question number 40, he stated that Sri Gurnani was introduced to him by Shri Piyush rasiklal Shah. In response to question number 41, he says that Piyush Shah informed him about Sri Mohan Gurnani and told him that Shri Mohan Gurnani wants to book bogus long-term accommodation entries in his personal files and the files of his family members. In response to question number 42, he explai....
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....nsecured loans and it was used to purchase the shares of sunrise Asian limited. Sometimes, the shares were sold and the unsecured loans were returned after the sale of shares. This was done as per the mutual convenience. Further, in response to question number 50, he gives the name of the various persons of the Gurnani family, how many shares allotted to them, what is the sale price and what is the total amount of money received by him for allotment of the shares of Santoshima Trade link Ltd. However, he mentions the five names of Gurnani family, but he tells that the shares were sold only from the account of Mr. Mohan Gurnani, Ms. Priya Mohan Gurnani and Ms. Deepa Gurnani. He also submits that bogus capital gain could not be arranged in the name of other entities because of cash crunch. In response to question number 51, whether he has ever met Mr. Mohan Gurnani/ Priya Gurnani and Deepa Gurnani, his categorical answer was that he did not meet them personally at any time however the entire deal was done through Shri Piyush Rasiklal Shah (chartered accountant) and he has spoken to Priya Gurnani once or twice about 4-5 months back. In response to question number 52, that who used to ....
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.... to 343 entities, which are related to various bogus accommodation entry entities to various beneficiaries are shown. In response to question number 78-88, he explains the various exit providers. In question number 87, he also gives the names of various entities, which have the several trades from assessment year 2009-10 to the date of his statement. He submits their permanent account number and to what extent they have provided accommodation entries to the various beneficiaries. The name of sunrise Asian Ltd appears there prominently and in huge volume. His statement continued for 90 questions. On perusal of his statement, it is apparent that he refers to the assessee, her family, her chartered accountant, her office accountant, the manner of receiving cash, the manner of transaction of sale etc. To say it succinctly, it is a complete modus operandi of an accommodation entry provider that how bogus loans are shown the color of genuineness and how the bogus long term exempt capital gain is arranged by managing from the stage of acquisition till the stage of disposal by misuse of platform of stock exchange. It shows how he manages demat agencies, exit providers, routing of cash or R....
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....uestion number 18. In response to question number 21, he says that he does not know anything about the penny stock and he has never heard these words. However in question number 22, he says that CA Piyush Shah who is known to him for the last two decades but now he has been withdrawn from the work. He was also questioned about the petition filed before settlement commission and why it was withdrawn. He did not answer what is manner of disclosure and how unaccounted income was earned.. Assessee did not bring those facts on record till date. 096. Statement of Assessee Ms. Priya Mohan Gurnani was recorded on 20/12/2018 wherein in answer to question number 8, she has categorically stated that she does not have any direct relationship with Mr. Vipul Bhatt however her CA Mr. Piyush Shah has arranged an investor for the plots of land purchased by Moraj group of companies. She replied in negative about the several land deals. With respect to the investment in sunrise Asian limited, she stated that her father had decided about the investment in these companies. In response to question number 14, she referred to certain brokers, which were also referred to in the statement of Mr. Bhatt. T....
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.... xi. Transaction of transferring share from one demat account to another where shares could have been sold from any demat account particularly when those demat agencies were mentioned as part of scheme by Mr. Bhatt xii. Synchronized trade pattern of putting order on stock exchange platform and in seconds trade takes place in a non descript company xiii. Identification of exit providers controlled by Mr. Bhatt xiv. Trail of money and commission in several annexure found where name of the assessee, her CA, cash / RTGS receipt were mentioned along with commission of Mr. Bhatt coupled with the RTGS and Cash from assessee matching with sale of shares of assessee or her family xv. Bald retraction of Mr. Vipul Bhatt by affidavit without any evidences and not denying any documents found Documentary evidences of purchase, sales confirmation etc provided by the assessee loses its sanctity. Even otherwise, in case of loan of accommodation entry, confirmation bank statement and annual accounts, return of income etc. loses its significance the moment it is shown to be an orchestrated arrangement of camouflage of the real transaction. Similarly, in case of ....
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....ontend that the transactions done were genuine. Unfortunately, the test of genuinity needs to be established otherwise, the assesses are lawfully bound to prove the huge LTCG claims to be genuine. In other words if there is information and data available of unreasonable rise in the price of the shares of these penny stock companies over a short period of time of little more than one year, the genuinity of such steep rise in the prices of shares needs to be established and the onus is on the assessee to do so as mandated in Section 68 of the Act. Thus, the assesses cannot be permitted to contend that the assessments were based on surmises and conjectures or presumptions or assumptions. The assessee does not and cannot dispute the fact that the shares of the companies which they have dealt with were insignificant in value prior to their trading. If such is the situation, the assessee has to establish that the price rise was genuine and consequently they are entitled to claim LTCG on their transaction. Until and unless the initial burden cast upon the assessee is discharged, the onus does not shift to the revenue to prove otherwise. It is incorrect to argue that the assesses have been....
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....is surprising to note that assessee wants a cross examination of Mr. Vipul Bhatt, accommodation entry provider. Assessee is not aware about the statement of Mr. Bhatt confessing everything, but in possession of his retraction affidavit completely. He appeared before LD AO also till that time assessee would never wanted to question him. Assessee never attempted to produce Shri Piyush Shah or Rukhsana. She never wanted to dispute the factum of loan taken as accommodation entries and trail of repayment of loan to bogus entities of Mr. Bhatt and simultaneous sale of shares by family members. 0101. Despite all the above stated facts, Proof of purchases and sales and its reliability is required to be tested. The assessee has made an application form for issue of equity shares of Santoshima lease finance and investments India Ltd by applying for 1,50,000 shares by paying a consideration of Rs. 30 lakhs on 27 September 2011 and 3,50,000 shares on 3 October 2011 by paying Rs. 70 lakhs. The assessee was allotted 5 lakh shares by allotment letter dated 31 January 2012 the physical share certificate number 440, 5 lakh shares were issued to the assessee on 31 January 2012. The shares were cr....
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....enquiry is concerned, when all the documents are proved to be a make-believe evidences for claiming the exemption under section 10 (38) of the act or section 68 of the Act, we do not find that any inquiry is required, despite everything coming out in the statement of Mr. Vipul Bhatt, Piyush Shah, Mohan Gurnani, and Priya Gurnani. If assessee wants to dispute them, it is for her to show that transaction is not non-genuine. 0105. SEBI order relied up on by the ld DR clearly speaks about the involvement of all 86 entities controlled by Mr. Bhatt that are held to be involved in price rigging of the shares of Sunrise Asian Limited. Therefore, there is no credence in the argument of the assessee that shares of that company are not rigged by Mr. Vipul Bhatt and assessee is not a beneficiary. Same persons are named in his statement also. 0106. Assessee has relied on many decisions of coordinate benches where addition on account of penny stock were deleted. Assessee also submitted many decisions where penny stock addition were deleted and Alleged accommodation entry provider is same i.e. Mr. Vipul Vidhur Bhatt and company is also same i.e. Sunrise Asian Limited. Indeed that is the fac....
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.... which was required, which would connect the present Assessee to the transactions and which are attributed to the Promoters/Directors of the two companies. The Tribunal referred to the entire material and found that the investigation stopped at a particular point and was not carried forward by the Revenue. "In this case the statement of Mr. Vipul Vidhur Bhatt specifically names the assessee family and order of SEBI on preferential allotment makes the case distinguishable on facts. In this case, search, itself resulted in to complete investigation and it is for the assessee to rebut evidences found from accommodation entry provider 0109. We find it relevant to rely on Para no 77 and 78 of decision of Swati Bajaj {supra}. In Para no 77 the Honourable high court held that ""77. While on the issue regarding the onus of proof, it would be beneficial to refer to the decisions which were relied on. In Durga Prasad More, the Hon'ble Supreme Court pointed out that on the question of onus that law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not and it depends on the facts and circumstances of each case. It was ....
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....ect of burden of proof, it was pointed out that in all cases in which a receipt is sought to be taxed as income, the burden lies on the department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act, lies upon the assessee. With regard to the effect of Section 68 of the Act, it was held that where any sum is found credited in the books of the assessee in previous year, the sum may be charged to Income Tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. It was further held that in such a case, the prima facie evidence against the assessee namely, the receipt of money and if he fails to rebut, the said evidence being unrebuted, can be used against him by holding that it was a receipt of an income nature. The Hon'ble Supreme Court proceeds to discuss the facts of the case where the dispute was whether the winnings of the assessee therein were from horse races. Pointing out as to how this matter has to be....
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....o the assessee to show the genuineness of the trade and unsecured loan with respect to the documents found as stated in the statement of various parties, exit entry providers details, Demat agencies and the cash trail found. It is also the duty of the assessee to produce before the AO of her chartered accountant (who statement is not retracted), Ms. Rukhsana who is stated to have been involved in transferring the cash for the long-term capital gain and conversion of loan entries, for further examination. It is also the duty of assessee to produce Mr. Vipul Bhatt before the ld AO to be examined specifically with respect to documents in annexure 1 to 17, his each of the reference in 90 questions referring to Moraj Group. The learned assessing officer on appraisal of all the details furnished by the assessee may carry out further enquiry with respect to the observation made above and decide the issue afresh considering the standard operating procedure of investigation of penny stock. The LD AO may also consider the inquiry pending before him from BSE etc. LD AO may carry out the inquiries with respect to exit providers looking at date and time stamp of trades executed and sources of t....