TaxTMI 
TaxTMI 
2023 (11) TMI 939
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....mon issues on identical facts and circumstances; therefore, they argued it together taking lead year as assessment year 2015 - 16. Therefore, we dispose of all these seven appeals by this common order. 03. Assessee is an individual and is assessed to income tax showing income derived from salaries, house property, capital gain and other sources. Assessee has filed his return of income under section 139 (1) for all these years. Subsequently search and seizure action under section 132 of the Act was carried out on 4/2/2016 in-group case. Assessee is one of the person covered in those searches. During the course of search assessee's statement were recorded on 4/2/2016, 5/2/2016, 7/2/2016 under section 132 (4) of the act. Further, he was also examined during assessment proceedings also on 20/12/2018. 04. Assessee had filed an application before The Income Tax Settlement Commission [ITSC] on 28/12/2017, assessee wanted to revise the same as per application dated 10/1/2018, which was rejected, and accordingly settlement petition of the assessee stood dismissed as per order dated 11/1/2018. 05. Pursuant to such order of ITSC, notices under section 153A of the act were issued to t....
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.... from property. 09. For assessment year 2012 - 13 income from house property with respect to the same four properties owned by the assessee as well as one more property at big splash was computed and added to the total income of the assessee. Income from HOUSE property with respect to 5 properties was added at Rs. 429,223/- and total income was computed at Rs. 25,267,303/-. Thus, except the income from property the total income of the assessee was accepted as it is. 010. For assessment year 2014 - 15, return of income was filed on 6/1/2017 in response to notice and section 153A of the income tax act at Rs. 28,394,060/- for which notice under section 143 (2) was issued on 24/1/2017. During the year a) Assessee was found to be owner of five properties for which no income was offered; therefore, the learned assessing officer estimated an income of Rs. 504,475/- as its income under the head income from property. (1) property is 39/103 at FAM cooperative housing society, the income from property was estimated at Rs. 16,207/- at the rate of 5% of the total cost of property, (2) and (3) shop number 7, 10 was considered on the basis of the deemed rent offered by the assessee....
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....nd that the company does not have any substance of business as well as any reason for unusual rise in the share price, which is confirmed by the parties that they have rigged share price of that company with a view to give exit to many beneficiaries, the learned assessing officer treated the long-term capital gain as bogus and made an addition of Rs. 109,174,422/-. 011. For assessment year 2015 - 16, learned AO found that a) Assessee is owner of six properties for which assessee has not offered income from property. The assessee was found to be owner of [1] 501/601 Crosica plot for which the deemed rent as per property tax bill was estimated at Rs. 16,878, [2] for property at 39/103 navi Mumbai 5% of total cost of the property was deemed to be annual income estimated of Rs. 16,207, [3] for shop 7 Casa Blanca navi Mumbai deemed annual value was estimated at Rs. 91,636 based on the computation for assessment year 2016 - 17 where the deemed rent was taken at Rs. 108,000 offered by the assessee, [4] for shop No 10 in casa blanca navi Mumbai based on the income offered by the assessee the total income was determined at Rs. 91,636, [5] for Property at c-7 and c-8 Big Spalsh ,....
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.... Assessment year Returned income (in Rupees) Additions made under section 143 (3) read with section 153a for assessment orders dated 26/12/2018 (in rupees) Assessed income (in rupees) Income from house property (in Rupees) Disallowance of exemption under section 10 (38) of the act on account of allegedly bogus long-term capital gain (in Rupees) Undisclosed income (in Rupees) 2010 - 11 78,96,470 203,727 198,000 82,98,197 2011 - 12 87,34,940 215,107 89,50,047 2012 - 13 2,15,71,430 227,625 2,17,99,055 2013 - 14 2,48,38,080 429,223 2,52,67,303 2014 - 15 2,83,94,060 504,475 10,91,74,422 13,80,72,957 2015 - 16 2,44,38,590 562,807 31,40,85,020 33,54,86,417 2016 - 17 2,46,85,690 89,929 2,47,75,619 016. Against addition in assessment orders, assessee preferred an appeal before the learned CIT (A). The learned CIT - A on submissions made by the assessee, called for remand report from learned AO. Remand report was submitted on 3/10/2020, 2/....
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....eeding scope of section 153A with respect to concluded assessment years in absence of any incriminating material ii. additions as notional income from house property under section 22 of the income tax act in concluded assessment without any incriminating material and in case of abated assessment years and concluded assessment year making the addition without determining annual value in accordance with the law, not deduction maintenance charges, vacancy allowance and percent deduction under section 24 (1) of the act. iii. Denial Of exemption Under section 10 (38) of the act for assessment year 2013 - 14 of Rs. 109,174,422/- and Rs. 3,185,020/- for assessment year 2015 - 16 iv. changing jurisdiction under section 127 of the act without passing any order and also giving a copy of such order to the assessee v. passing of the order without issue of Notice U/s 143 (2) of the act by the new incumbent assessing officer i.e. deputy Commissioner of income tax 5 (2), Mumbai within the permitted time vi. levy of interest under section 234B of the act vii. Violation of the principles of natural justice. 019. Fact shows that search took pl....
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....e found during the course of search based on the balance sheet, which was not filed by the assessee before the learned assessing officer. It is held by him that there is incriminating evidence with respect to the income from house property; therefore, the annual value of such property is chargeable to tax in the hands of the assessee under section 22 of the income tax act by applying provision of section 153A of the Act. Accordingly, he upheld the applicability of provisions of section 153A of the act holding that there is incriminating material available with the Department unearthed during the course of search in the form of the balance sheet of the assessee where he is found to be owner of three properties, of which assessee has declared annual value of only one property and therefore with respect to income from house property, the learned AO has incriminating material available with him. Therefore, there is no infirmity in making the addition so far as incriminating material is concerned. 023. Before us, assessee has submitted [1] three paper books, [2] one compilation of various judicial precedents wherein 11 judicial precedents were relied upon and [3] 69-page fact sheet t....
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..... vi. He goes a step further and submits that even assessment year 2015 - 16 is also a concluded assessment year. He states that assessment year 2015 - 16 on filing of return by the assessee, intimation was issued under section 143 (1) of the act on 19/1/2016. As the search took place on 4/2/2016, the assessment was completed by virtue of issue of intimation dated 19/1/2016. vii. He therefore submitted that relying upon the decision of coordinate bench in case of Arihant universal reality Ltd 141 taxmann.com 249 and Agrawal entertainment Ltd 72 taxmann.com 340, assessment year 2015 - 16 is also a concluded assessment year. viii. Thus, the claim of the learned authorized representative is that all the assessment years up to assessment year 2015 - 16 are unabated assessment years, which could have been disturbed only on the basis of incriminating material found during the course of search. He extensively referred to page number 65 of the fact sheet wherein several judicial precedents are relied upon. ix. The assessee mainly relied on judicial precedents including of the honourable jurisdictional High Court in CIT versus continental warehouse Corpor....
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....n complete sync with evidences and statements. Therefore, there is huge incriminating material unearthed during search, which is further corroborated with the statements of all concerned persons, supports the case of revenue. c) He submits that LTCG exemption claim by assessee and his family in this company is to the tune of more than Rs 50- 60 Crs. It is not necessary that incriminating material should be found from the possession of the assessee always. He submits that in such a huge LTCG bogus claim, it is always found from the accomplices of the scheme. It is found in this case also. Only requirement is that it should be found from the search on the assessee. In this case, search was on assessee, which resulted in to consequential searches and material is found. It is in accordance with provision of section 153 A of the act. Therefore, claim of assessee about absence of incriminating material is false. d) He completely read the statement of assessee, Mr. Bhatt, Mr. Kalpesh, Mr. Piyush and also referred to several documents found from Mr. Bhatt, which clearly proves according to him that claim of long-term capital gain of the assessee, is false. He submits that....
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....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 have been made by the learned assessing officer. The only material referred by the learned AO is th....
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.... is valid. Accordingly, ground number 1 of the appeal of the assessee is dismissed." 029. Further for assessment year 2010 - 11 there is an addition of undisclosed income of Rs. 198,000 based on the paper found during the course of search, therefore for that assessment year itself the issue is squarely covered by the decision of the honourable Supreme Court that the learned assessing officer is empowered to make the addition based on the incriminating material as well as any other material/information available with him even in a concluded assessment year. 030. Therefore it is apparent that during the course of search for assessment year 2010 - 11 there is an incriminating material with respect to the undisclosed income of cash expenditure, balance sheet found during the course of search which was not disclosed by the assessee to the learned assessing officer from which it has been gathered that assessee is owner of the various properties, income from which is not disclosed under the head income from house property. For assessment year 2011 - 12 to 2014 - 15 identical facts are emerging where incriminating material in the form of balance sheet is found by the learned assessin....
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.... and other material available with the assessing officer. Even otherwise, independently the documents seized from the consequential search of Mr. Vipul Bhatt show 17 annexure which are mentioned in his 90 questions statement recorded by the revenue authority in case of search on the assessee that clearly proves that independently there are incriminating material found during the course of the same search. 033. Thus we hold that there is independent incriminating material for each of addition i.e. Income from house property, denial of claim of exemption u/s 10 (38) of the act on account of sale of penny stock and unaccounted income was unearthed during the course of search. Thus we do not find any infirmity in the order of the learned assessing officer in assuming jurisdiction under section 153A of the act for all those assessment years and making addition on account of income from house property, undisclosed income and disallowance of exemption under section 10 (38) of the act for all these assessment years so far as jurisdiction is concerned. 034. Of course, merits of each of the addition would be decided separately as per separate grounds raised. 035. With respect to the....
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....s Assessing Officer is not required to do anything further about such a return and, thus, said assessment cannot be reopened in exercise of power of section 153A." On careful reading of that decision, it is also evident that in that particular case after issue of intimation under section 143 (1) of the act, there was no issuance of notice under section 143 (2) for that assessment year and therefore it was taken as a concluded assessment. Even otherwise, in that decision, impugned assessment year was 2004-2005, date of search is 20/8/2009. Therefore, as such, assessment year 2004 - 05 was a concluded assessment. 038. The learned authorized representative's attention was drawn to the decision of the honourable Delhi High Court in case of Chintels India Ltd. V DCIT [2017] 84 taxmann.com 57 (Delhi)/[2017] 249 Taxman 630 (Delhi) wherein in paragraph number 21 it has been held that till the date of expiry of time limit for issuance of notice under section 143 (2) of the act, the assessment despite intimation under section 143 (1) issued to the assessee, the assessment does not stands concluded assessment and will abate. The learned authorized representative rests his case on the above....
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....pellant should not be construed as a validation of the procedure. He further submitted that the proceedings giving rise to the order passed under section 143 (3) should be declared invalid and bad in law and accordingly the said order deserves to be quashed and set-aside. He submits that no opportunity was given to the assessee to contest the transfer of jurisdiction and the honourable Bombay High Court has held that granting of a reasonable opportunity of being heard is a mandatory condition relying upon the decision of 25 taxmann.com 299 in case of Sahar Hospitality Ltd. 042. The learned departmental representative vehemently opposed the above submission of the assessee and stated that the order of the learned CIT - A in this case is absolutely clear. There is a transfer of case in the same city. The order passed under section 127 of the act is also available. If there is a transfer of case from one assessing officer to another assessing officer in the same city there is no requirement of giving any notice to the assessee or any opportunity of hearing. He submits that the decision in case of Sahar hospitality Ltd does not apply to the facts of the case as in that case the tran....
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....ceedings under section 143 (2) before the old assessing officer lapsed in any case on filing of settlement application and also on transfer of jurisdiction when there is new officer, necessary notice u/s 143 (2) should have been issued. He specifically referred to the decision of the Hotel blue moon 321 ITR 362 (Supreme Court), Virendra Dev Dixit 331 ITR 483, Pavan Gupta 318 ITR 322 and several other decisions. 045. The learned departmental representative vehemently submitted that notices issued under section 143 (2) of the act to the assessee which is recorded in the assessment order itself and not denied by the assessee. The claim of the assessee is that if there is a change in the person who was earlier occupying the post of deputy Commissioner of income tax Central Circle 5 (2) Mumbai and therefore the claim of the assessee that such new person should also issue a notice under section 143 (2) of the act. He submits that all the judgments relied upon by the assessee are with respect to the issue of notice under section 143 (2) in time and are not dealing with any issue that in case Mr. X assumes the charge at the same post in place of Mr. Y, both should have issued notice und....
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....rred to several judicial precedents. 048. The learned departmental representative vehemently stated that there is no requirement of giving an opportunity of hearing as the provisions of interest under section 234B of the income tax act is automatic and consequential. 049. We have carefully considered the contention of the learned authorized representative and state that the levy of interest under section 234B of the income tax act is chargeable in special assessment under section 153A of the act, as no judicial precedents are shown that in such proceedings, no interest is chargeable. Further, there is no provision in the income tax act to grant an opportunity of hearing before charging of interest under section 234B of the income tax act. It is not the case of the assessee that no interest can be charged under section 234B of the income tax act or no opportunity is given for hearing during assessment proceedings. Accordingly, ground number 6 of the appeal of the assessee is dismissed. 050. Ground number 7 of appeal is with respect to the determination of the total income. The argument of the assessee is that assessee was assessed at Rs. 335,486,417/- against the returned i....
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....tion available on record and after questioning the assessee and after giving a complete opportunity to the assessee to show the standard rent, claim of deduction. Each of the ground decided against the assessee has been after confronting the material available on record. With respect to the statement of Mr. Vipul Bhatt and other parties it was stated that all these are accomplices of the assessee. The assessee himself has produced the affidavit and the retraction statement of Mr. Vipul Bhatt and therefore the assessee was completely aware about what statement Mr. Vipul Bhatt has made. Otherwise how assessee could have submitted the affidavit and retraction statement. He submits that the statement of Mr. Piyush Rasiklal Shah has also been obtained by the learned assessing officer who is the chartered accountant of the assessee. The statement of Mr. Kalpesh Manharlal Jani is the person who is the director of sunrise Asian limited and who is known to the assessee because the assessee has traded in that script and earned a huge long-term capital gain. With respect to the claim of the assessee that an appraisal report copy should be given to the assessee, there is no provision in the la....
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....e house properties. The fact shows that assessee is an owner of six premises of which it is claimed that 2 premises were self occupied. The rest of the premises remained vacant. The claim of the assessee is those were held for sale and could not be let out during the year. It is also the claim that the assessee has paid regular municipal taxation and maintenance charges for the same and therefore there is no liability to pay any income tax on annual value of such property. The learned assessing officer without looking at the provisions of the law made an addition to the extent of Rs. 562,807 as annual value of the house properties. He further states that the learned AO has not granted deduction of vacancy allowance, as well as deduction of men shipping taxation and maintenance charges and also standard deduction under section 24 of 30% of the annual value. The arguments of the assessee are stated that page number 8-12 of fact sheet filed before us. The learned authorized representative reiterated the same arguments. 055. The learned departmental representative supported the order of the learned assessing officer and CIT - A. He submitted that the standard rent has not been deter....
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....annot exceed the lower of the municipal rateable value and standard rent, ii. in respect of the property, the fair rent value of an earlier year with 10% increase cannot be taken as annual value taxable of that property, iii. the assessee should be granted the deduction for municipal taxes and maintenance charges, iv. Assessee must be allowed deduction of standard deduction at the rate of 30% under section 24 (1). 030. We have carefully considered all the above claims of the assessee and adjudicate as under. i. On the first claim with respect to the standard rent or rateable value should be taken to arrive at the annual let out value of the property, the learned CIT - A has held that that appellant is owner of flat number 13 and flat number 14 of model House operating housing society, Sion, Mumbai. Assessee provided the working of the deemed rental income of the above 2 properties as per property tax levied by the Mumbai municipal Corporation which was not accepted by the AO. The learned assessing officer took 5% of the cost of acquisition of the property to determine standard rate. Undisputedly the Maharashtra rent control Act 1999 is applicable to the properties....
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....ion of the honourable High Court in case of Radha Devi Dalamia [4 taxman 183] [All] wherein the 7% of the investment was considered to be the fair and just return of income on such investment. The learned CIT - A also relied on the decision of the coordinate bench in case of [58 TTJ 27] wherein 8% return on such cost was also held to be the annual value of a property for taxation under the head income from house property. Therefore, we do not find any infirmity in the order of the learned lower authorities in assuming 5% of the cost of the investment as the annual value of the property which can be taxed under section 23 (1) of the act under the head income from house property. ii. With respect to the deduction of Municipal taxes, there is no requirement for reducing the income of the assessee where the learned assessing officer has estimated the percentage of the cost of the equity as rate of return on the investment. In fact, the deduction of municipal taxes is inbuilt in the taxability of 5% estimated by the learned assessing officer. iii. With respect to granting deduction of 30 % we find that such deduction is available u/s 24 (a) of the Act. This deduction i....
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....6 (Pg. 785 to 790 of PB). On amalgamation, the appellant was allotted 500000 equity shares of Sunrise Asian Ltd. The equity shares of said Sunrise Asian Ltd. were listed on the Recognized Stock Exchange and were regularly traded in the Stock Exchange since then. The assessee had also acquired 10,000 equity shares by way of gift from his daughter Ms. Priya Gurnani. The appellant had made payments on 04.10.2011, 10.10.2011 and 11.10.2011 aggregating to payment in full on application of shares itself. The payment by appellant was credited to the bank account of Santoshima Lease Finance Ltd. on 28.09.2011, on 04.10.2011, on 10.10.2011 and on 11.10.2011. Shares had been allotted to the appellant on 31.01.2012 by way of preferential allotment. (Pg. 323 of PB). The appellant continues to hold substantial shares of Santoshima Asian Limited till date. The appellant had purchased some shares in the year 2014 at a price of Rs. 500 per share which price was less than the average selling price. A scheme of Amalgamation had been entered into between Santoshima Trade links Limited. Conart Traders Limited being Transferor Co. and a listed company Sunrise Asian Limited. Transferee Co. and was appro....
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..... Details of Board Resolutions passed by appellant for issue of shares of Santoshima (Pg. 326 of PB) viii. Affidavit of Santoshima (Pg. 440 to 445 of PB) ix. -ITR-V and Assessment orders of Santoshima (Pg. 617 &799-80 of PB) x. COL, MOA, AOA and name, address of seller (Pg. 347 to 401 of PB) xi. Application of funds by appellant on sale of shares (Pg. 690 to 713 of PB) xii. Certificate of Incorporation of company to Santoshima. (Pg. 347 to 401 of PB) xiii. Return of Allotment. (Pg. 327 to 338 of PB) xiv. Contract notes at time of sale of share (Pg. 486 to 583 of PB) xv. Copy of Demat a/c. (Pg. 446 to 449 of PB) xvi. Brokers ledger A/c.. (Pg. 605 to 615 of PB) xvii. -Rate list of daily quotations (Pg. 471 to 485 of PB) xviii. Proof of brokerage and demat charges paid (Pg. 450 to 470 of PB) xix. Proofs of payment of STT. stamp duty, brokerage and other charges (Pg. 486 to 583 & 450 to 470 of PB) c) he further submitted that the learned assessing officer as well as the learned Commissioner of income tax (A) has accepted the above evidences and has not disputed the same ....
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....ng-term capital gain earned by the assessee and his family members is stage-managed orchestrated scheme of converting unaccounted money into exempt long-term capital gain under section 10 (38) of the act. b) He further submitted that price rigging by Mr. Vipul and his accomplices are proved By the order of securities and exchange board of India order. c) He submits that the name of the brokers who are working with Mr. Bhatt for this are also stated, all these brokers are also the brokers of the assessee. d) In the statement of Mr. Bhatt the names of exit providers are given, those exit providers are merely lenders, the shares sold by the assessee are purchased by them to be bogus. e) The whole scheme has been explained by Mr. Vipul but with respect to the assessee of repayment of loan by Moraj group converted into allegedly exempt long-term capital gain. Therefore, the claim of the assessee that it has been acquired out of its own money is devoid of any merit. f) He submits that even the Demat agencies stated by Mr. Bhatt are used by the assessee. Thus the broker who sold the shares, the Demat agencies, the exit providers are all stooge ....
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....ther referred to the table wherein there is a sudden spot in the volume of the share in patch - three - four - five and also in post investigation period. He also referred to the prices mentioned therein where it is clear that the price of that company was opened at Rs. 63 registered high of Rs. 615 and closed at Rs. 88.80. He submits that what else is the proof of the price rigging required. l) The learned assessing officer has not relied on merely the statement of Mr. Vipul but has also looked into the evidences, which are stated in the statement of Mr. Vipul. The assessee has not uttered a word about those evidences. m) Assessee has also not made any submission with respect to the chartered accountant involved in the whole transaction Mr. Piyush Shah who acted on behalf of the assessee with Mr. Vipul. n) In six years, the assessee has not shown earning of long-term capital gain on any of the shares. Therefore, the assessee cannot be said to be a regular trader. o) He further states that the decision in case of Swati Bajaj of honourable Calcutta High Court squarely covered the issue against the assessee so far as the issue of cross-examination ....
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....None of the family member of the assessee are aware about the whereabouts of the company, nature of business of the company in which they have invested, how did they come to know about this company, how did they come to know about the time of sale of this company, why did they put demat shares in a particular agency and it cannot be a coincidence that all of them are due to Mr. Vipul Bhatt we provided exit to 1079 beneficiaries by giving the bogus entry of long-term capital gain. y) He submits that the case of the assessee is squarely covered by the decision of the honourable Calcutta High Court in case of Mrs. Swati Bajaj. Therefore, he submitted that lower authorities are justified in making the addition of bogus long-term capital gain for both the years. 061. We have carefully considered the rival contention and perused the orders of the lower authorities. We find that identical issue has been dealt with by the coordinate bench in case of the daughter of the assessee Mrs. Priya Gurnani as per order dated 8/11/2023 wherein the whole issue has been dealt with as under:- "085. Ground number 2 of the appeal is with respect to the addition of Rs. 40 lakh....
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.... 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 of shares made in the books of accounts of the assessee and merely the sole reliance on the statement of third party as well as the report of investigation wing without making any further enquiry and issuing any summons and also without affording any opportunity of cross examination to the assessee of those parties who made the statement, the addition cannot be made under section 68 of the act. ix. He further stated that the learned assessing officer has failed to make an independent enquiry with registered brokers, bankers as well as the depositories and other parties mentioned. 087. With respect to the addition under section 68 of the income tax act the main submission of the assessee are as under:- i. The loan received by the assessee from sunrise Asian Ltd of Rs. 40 lakhs on 30/9/2013 is a ....
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....kata 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 its group of people. He referred to the statements of Mr. Vipul Bhatt, which has the complete linkage of the transactions of penny stock in case of assessee and her family members. c. He even otherwise submitted that even without the statement of Mr. Vipul Bhatt , Assessee has failed to discharge her onus of showing genuineness of the claim of exemption u/s 10 (38) of the Act. d. He submits that it is unheard of the persons in family earning Rs 37 crores and more as exempt gain u/s 10 (38) of the Act despite the fact that assessee's people are involved in obtaining such accommodation entry from a known accommodation entry providers, Assessee does not know anything about the share transactions. e. In this case, even exit providers are identified, operated by the same accommo....
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....rtain 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 83 connected entities were counterparties to the sale of shares by 1,059 entities/allottees at the artificially inflated or manipulated price, thereby violating rules. Of the 83 entities, instant proceeding initiated against four entities has been disposed of. Of the four entities, two have passed away and one has settled the case with SEBI under settlement mechanism. He submitted that these information are available on website of SEBI. Therefore, the whole case stated by the assessee is full of manipulations as assessee also traded during same period and is part of those 1059 entities.. Thus according to him there is no infirmity in the orders passed by lower authorities. 089. We have carefully considered the rival contentions and perused the orders of the lower authorities. First we d....
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....ally 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. He is the director in that company and all other directors are dummy directors. He further stated that initially preferential shares of this company were allotted to the bogus long-term capital gain beneficiaries. Thereafter, this company was amalgamated with sunrise Asian limited and the shareholders of this company were allotted the shares of sunrise Asian limited in the swap ratio of 1:1. He further states that after amalgamation, share price of sunrise Asian limited was artificially rigged up in the Bombay stock exchange and once the share price of the company reached at the desired level, the shares of the preferential allottees were sold through stock exchange with the help of bogus buyers (exit providers) which are also controlled by him. He further states that he has ....
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....sian 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 explained that Shri Piyush Rasiklal Shah explained scheme of bogus longterm capital gain accommodation entry to Sri Mohan Gurnani. Mr. Gurnani also wanted accommodation entry of short-term capital loss in the books of his companies and wanted entry of long-term capital gain in the personal file of his family members. In response to question number 43, explains that how the entry of short-term capital loss was given to Moraj group. In response to question number 44, he explained that how the bogus long-term unsecured loans of Rs. 50 crores were given to Moraj building concept private limited. In response to that question, he also gives the name of nine different companies, which were used by him for providing the above loan. In response to question number 48, it was asked to expl....
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....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 decide about the quantity and the rate for the sale of shares of the Gurnani group, it was explained that the quantity of shares to be sold and rate dependent on the RTGS received by him. He used to communicate the same to Mrs. Rukhsana [Accountant] in the office of Moraj group and she used to place order. Sometimes he himself used to place share sale orders on behalf of Gurnani group. In response to question number 53 about the authorization to place orders for the Gurnani group, he explains that entire scheme was finalized in consultation with Shri Piyush Rasiklal Shah for opening of Demat account of the individual family members with various share, the trading accounts were opened at Anand Rathi, DJS stock Brokers, F8 Finserve, JHP Securities, SMC Global. As h....
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....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 RTGS in various bank accounts, settlement of share sold on exchange and receipt of cash / RTGS from beneficiaries to give the color of genuineness to bogus long term capital gain to beneficiaries. 094. The statement of Shri Piyush Rasiklal Shah dated 6 February 2016 also categorically confirms the statement made by Mr. Vipul Bhatt. In answer to question number 15 - 36 clearly shows that Mr. Shah reiterates whatever Mr. Bhatt stated. In response to question number 29, he categorically says that he has arranged bogus long-term capital gain accommodation entries in the name of Mr. Mohan, Ms. Priya and Ms. Deepa through Mr. Bhatt in the shares of sunrise Asian limited. In response to question number 31, he also explained the entire modus operandi o....
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....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. The name of Ms Rukhsana (accountant) also appeared in the statement of assessee, which also referred to in the statement of Mr. Bhatt. Further in response to question number 6, a statement was recorded during the search and the post search proceedings, she has given that her statement was also recorded on 4/2/2016, 5/2016, 7/2/2016. The statements clearly indicated that those are in complete corroboration with the statement of Mr. Bhatt, Mr. Shah and Mr. Gurnani. 097. Further Mr. Vipul Bhatt was issued summons and examined on 20/12/2018 wherein a statement was recorded. He stated that he has filed his retraction statement on 2/9/2016 and letter dated 20/9/2017. He submitted that his statements given earlier on 4/2/2016 to 12/2 /20....
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....raction 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 allegedly bogus long-term capital gain, the details of sale, bank payments, trading at the stock exchange platform, payment of STT etc are merely make-believe arrangement of the documents as those are necessary ingredient to claim exemption. All other circumstances and facts a surrounding those documents shows whether the transaction is genuine or not. 099. Grievance of assessee about not giving an opportunity to cross examination of several parties, in the decision of Swati Bajaj, the honourable High Court has answered that as under :- "73. It is very rare and difficult to get direct information or evidence with regard to the prior meeting of minds of the persons involved in the manipulative act....
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....nd 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 called upon to prove the negative in fact, it is the assesses duty to establish that the rise of the price of shares within a short period of time was a genuine move that those penny stocks companies had credit worthiness and coupled with genuinity and identity. The assesses cannot be heard to say that their claim has to be examined only based upon the documents produced by them namely bank details, the purchase/sell documents, the details of the D-Mat Account etc. The assesses have lost sight of an important fact that when a claim is made for LTCG or STCL, the onus is on the assessee to prove that credit worthiness of the companies whose shares the assessee has dealt with, the genuineness of the price rise....
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....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 credited in the Demat account of the assessee with DJS stock and shares Ltd. 1 lakh shares were credited on 3/10/2013 in Demat account of Mr. Mohan Gurnani, which were immediately transferred. This was the Demat statement provided by the assessee at page number 528 of the paper book. It page number 619 - 631 the Demat account with the same broker of the assessee was stated. On 4/5/2013, the assessee received 5 lakh shares. On 2/9/2013 and 3/9/2013 cumulatively 20,000 shares were transferred. On 18/11/2013 shares were debited in the Demat account. The shares were transferred in the another Demat account of the assessee with SMC Global Limited. Immediately thereafter, assessee started selling shar....
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....he 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 fact. We have closely analyzed all those decisions where LD AO has made addition on the basis of statement of Mr. Vipul Vidhur Bhatt and company alleged rigged is Sunrise Asian Limited, but addition is deleted by ITAT. However, we find that in none of those decisions, statements of Mr. Vipul Bhatt, which is placed before us, is analyzed. In this statement of Mr. Bhatt , most off the questions out of 90 questions are with respect to Moraj Group transactions, including penny stock. It does not begin with the penny stock accommodation entries and does not end with it. It goes prior to that how for purchase of land services of Mr. Bhatt were utilized for financing la....
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.... 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 further held that in some cases, the onus may be heavy whereas in others, it may be nominal. In the said case the assessee was receiving some income which he stated that it is not his income but that of his wife. On facts, it was found that the assessee's wife is supposed to have had Rs. 2 lakhs neither deposited in bank, nor advanced to others but safely kept in a safe. The assessee was unable to show from what source she built up the amount and Rs. 2 lakhs before the year 1940 which was a big sum during the relevant time. The Tribunal disbelieved the story of the assessee and held it to prima facie be a fantastic story, a story....
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....ffered 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 examined, it was held that the matter has to be considered in the light of human probabilities and by applying the said test it was held that the assessee's claim therein about the amount being her winnings from horse races was not genuine." 0112. In present times, whopping gain earned by a wanderer who does not have any knowledge about the company earns Rs 10 Crores [in whole family Rs 37 Crores] is more surprising than winning in a horse race, Especially when the accommodation entry provider also says that, it is an arranged gain in the hands of family members of the assessee. 0113. An interes....
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....e 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 the fund of the exit providers tearing the layering where it is stated that in some of the case funds are out of RTGS made by assessee for repayment of loan. Ld AO is directed to make meaningful and relevant inquires in accordance with law. It is also made absolute that, it is for the assessee to show that transactions are genuine, but Needless to say, assessee must be confronted with all evidences and there should not be any violation of principles of natural justice in accordance with the law. Accordingly, ground number 2 and 4 of the appeal of the assessee are allowed for statisti....
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....essee could not provide any supporting documents that the amount is mentioned in the seized documents at page number 56 were pertaining to financial year 1998 - 1999. Therefore, the addition made by the learned assessing officer was sustained. He further held that the loose papers mentioned in the amounts are with narration, which was not reflected in regular books of accounts, which is an important piece of evidence. d) The learned authorized representative reiterated the submission before the learned and CIT - A. The learned departmental representative relied upon the orders of the lower authorities. e) We have carefully considered the rival contentions and perused the orders of the lower authorities. In this case, the page number 56 was found and seized during the course of search wherein certain noting is were found related to the amount and with narration is. The assessee could not correlate this information with the books of accounts of the assessee. Therefore, the lower authorities have paid the addition as undisclosed income of the assessee. Before us no further explanation was provided to choral eight that this information pertained to the different finan....
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....r assessment year 2015 - 16 which is been dismissed by us. For similar reasons we dismiss ground number one of the appeal. b) Ground number 2 of the appeal is with respect to the addition of Rs. 215,107/- as income from house property which is identical to ground number 2 of the appeal of the assessee for assessment year 2015 - 16 which has been partly allowed by us, accordingly we also allow ground number 2 of the appeal of the assessee with similar direction partly. c) Ground number 3 is with respect to the change of jurisdiction which is identical to ground number four of the appeal for assessment year 2015 - 16 which is been dismissed by us. For the similar reasons we also dismiss ground number 3 of the appeal. d) Ground number 4 of the appeal is identical to ground number five of the appeal for the assessment year 2015- 16 challenging the assessment order passed without the issue of notice under section 143 (2) of the act by the new incumbent. We have dismissed similar ground for assessment year 2015 - 16 and therefore this ground of appeal is also dismissed. e) Ground number 5 is with respect to the levy of interest under section 234A, 234B....