TaxTMI 
TaxTMI 
2024 (7) TMI 956
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....e assessee has raised the following grounds of appeal in ITA No. 2010/Mum/2023 for AY 2014-15:- I. Legal Grounds: A. Re-opening by way of notice dated 07.03.2019 issued under section 148 of the Act is bad in law 1. The Ld. Commissioner of Income Tax (Appeals) 48, Mumbai [hereinafter referred to as 'CIT (A)'] erred in passing the order dated 11.04.2023 and upholding the validity of the notice dated 07.03.2019 issued under section 148 of the Act without appreciating the fact that there is no tangible material available on record to suggest that income chargeable to tax has escaped assessment. Therefore, in the absence of any reason to believe' that income chargeable to tax has escaped assessment, the order passed by the Ld. CIT (A) is unlawful, bad in law and the same may be quashed and set aside. 2. The Ld. CIT(A) is not justified in upholding the reopening by issuing the notice dated 07.03.2019 under section 148 of the Act without appreciating the fact that the reopening has been initiated by merely relying upon the information received from the Director of Income Tax (Inv.) Unit 6(2), Mumbai and the same amounts to borrowed satisfaction.....
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....34,930/- consisting of income under the head 'salary', income from house property and income from other sources. During the year under consideration, assessee claimed exempt long term capital gain u/s. 10(38) of the Act amounting to Rs. 5, 03, 98,853/-. This LTCG arisen out of sale and purchase of the shares of M/s. Risa International Ltd. There was a search carried out at the premises of Shri Naresh Manakchand Jain. 4. In this case, information has been received in the office of the DDIT (Inv.)-Unit 6(2), Mumbai from the office of the DGIT (Inv), Pune, which has been subsequently forwarded to this office in regard to the beneficiaries who have obtained bogus LTCG in the shares of M/s. Risa International Limited (hereinafter referred as RIL). M/s RIL was formerly known as M/s. Govindji Trikamdas Export Ltd having registered address at 604, Kushal Point, 4th Road, Ghatkopar (West), Mumbai. Search action u/s. 132 of the Income Tax Act was conducted on 20.10.2016 at the office premises of RIL, 1315, Tower B, Dalamal Towers, Free Press Journal Marg, Nariman Point, Mumbai. RIL made preferential allotment of 3,14,00,000 equity shares at price of Rs. 10/- per share and raised Rs. 31,40....
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.... search proceedings. (iv) The Assessing officer does not have jurisdiction to make additions/disallowances which are not based on any incriminating material found during the course of search proceedings. (v) In the case of completed/un-abetted assessments, where no incriminating material is found during the course of search, the assessment u/s. 153A/153C of the Act is to be made on originally assessed/returned income and no addition or disallowance can be made de hors the incriminating evidences recovered during the course of search. (vi) Any admission or confession needs corroboration with evidences. In order to make a genuine and legally sustainable addition on the basis of admission or confession during search action, it is necessary that some incriminating material must have been found to correlate the undisclosed income with such statement. (vii) Any statement recorded under section 132(4) cannot be considered as incriminating material found in the course of search as these are recorded to elicit more information/explanation of the search person on the incriminating documents/gold/jewellery found during search. 6.15. Conclusion in t....
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....lso filed the return of income in the relevant assessment year. There were nowhere found immediate deposit of cash before issuance of cheques. The loan was given by account payee cheques through normal banking channels. The interest was also paid and TDS was also deducted thereon. The identity, credit-worthiness and genuineness of the transaction were not seems in genuine. It is seen that the above said facts are as much as similar to the case of your appellant. Copy of the CIT (A) as well as Copy of ITAT order was attached in case of Mr. Ajit Jain whose was another director of your appellant." 2. The Jurisdictional Hon'ble Income Tax Appellate Tribunal (ITAT) Mumbai Bench "B" in our own case of Diwali Capital & Finance Pvt. Ltd. V. DCIT CC-2(3) ITAT No. 2091 & 3986/MUM/2017 (Α.Υ.: 2007-08 & 2008-09)] has held as under: "From the facts of the case that during the assessment proceedings, the assessee has submitted the following details: - During assessment proceedings the assessee had submitted copy of income tax return along with audit report of share applicants i.e. investing companies. Copy of form no.2 of Diwali Capital & Fin....
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....enuineness of the transaction. So far as credit worthiness is concerned the investing company is regularly assessed to income tax and they are disclosing substantial income. Even these transactions are disclosed in the audited accounts filed along with the return of income. 14. As the facts are identical to AY 2007-08 and the reason recorded by CIT (A) while deleting the addition in A.Y. 2007-08 are also exactly identical. In such circumstances, we have already confirmed the order of CIT (A) deleting the addition and hence, following the earlier years order as decided above, we delete the addition. The appeal of assessee is allowed. 3. The Jurisdictional Hon'ble Income Tax Appellate Tribunal (ITAT) Mumbai Bench "B" in case of our group concern Bluestock Investment Pvt. Ltd. V. DCIT CC-2(3) [ITAT No. 2090 & 3987/MUM/2017 (Α.Υ.: 2008-09 & 2007-08)] has held as under: - 10. We find that exactly identical issue has been dealt with by us in the group cases in the case of Diwali Capital & Finance Pvt. Ltd. vs. DCIT in ITA No. 2091/Mum/2018 for AY 2008-09 wherein, we have held as under. - "11. We have heard rival contentions and gone t....
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....ere cannot be any doubt about the genuineness of the transaction. So far as credit worthiness is concerned the investing company is regularly assessed to income tax and they are disclosing sub. 12. As the facts are identical to AY 2007-08 and the reason recorded by CIT (A) while deleting the addition in AY 2007-08 are also exactly identical. In such circumstances, we have already confirmed the order of CIT (A) deleting the addition and hence, following the earlier years order as decided above, we delete the addition. The appeal of assessee is allowed." 13. As the issue is covered in assessee's group case in the case of Diwali Capital & Finance Pvt. Ltd. (supra), the facts being identical, we delete the addition and allow this appeal of assessee. 6.16 Considering the totality of the facts and circumstances, I am of the considered view that the impugned addition cannot survive de hors the incriminating evidences as held in the above binding judicial decisions. Moreover, the issue is finally settled by Hon'ble Supreme Court in the recent judgment in the case of PCIT Vs Abhisar Buildwell P. Ltd. in Civil Appeal no. 6580 of 2021 dated 24.04.2023. Hence....
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....ening of assessment are, on the basis of the information received in the office of DDIT (Inv) Unit 6(2), Mumbai from the office of DOIT (Inv), Pune, which was forwarded to the Ld. AO, he was of the view that the Appellant was one of the beneficiaries who had obtained bogus long term capital gain on sale of shares of M/s. Risa International Limited ("RIL"). * M/s. RIL made preferential allotment of 3,14,00,000 equity shares at price of Rs. 10/- per share and raised Rs. 31,40,00,000/- as paid up capital of the company from 49 persons including the Appellant, Shri Antony Sequeira. * The Appellant made LTCG for A.Y. 2014-2015 of Rs. 5, 03, 98,853/- on sale of shares of RIL * During search action on RIL it was found that the company had declared turnover of Rs. 143.70 crores as on 31.03.2014 with a net profit of Rs. 3.67 crores without having any warehouse, sales office, only 2-3 employees etc. The company had shown stock in trade of Rs. 3.19 crores but no physical stock was found during the search. * As per findings of search action and statements recorded u/s. 132(4) of the Act, it was proved that RIL had made no sales and purchase and have just inf....
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.... States of the country. It is thereafter the concerned Assessing Officers have been informed to consider as to the bonafideness and genuineness of the claims of LTCG/LTCL of the respective assessee qua the findings which emanated during the investigation conducted on the individuals who dealt with the penny stocks. Therefore, the assessments have commenced by the Assessing Officers calling upon the assessee to explain the genuineness of the claim of LTCG/LTCL made by them. In all the assessment orders, substantial portion of the investigation report has been noted in full. A careful reading of the same would show that the assessee has not been named in the report. If such be the case, unless and until the assessee shows and proves that she/he was prejudiced on account of such report/statement mere mentioning that non-furnishing of the report or non-availability of the person for cross examination cannot vitiate the proceedings. The assessee has miserably failed to prove the test of prejudice or that the test of fair hearing has not been satisfied in their individual cases. In all the cases, the assessee have been issued notices under sections 143(2) and 142(1) of the Act they have ....
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....or entry operators and therefore, the test to be applied is the test of preponderance of probabilities to ascertain as to whether there has been violation of the provisions of the Income-tax Act. In such a circumstance, the conclusion has to be gathered from various circumstances like the volume from trade, period of persistence in trading in the particular scrip, particulars of buy and sell orders and the volume thereof and proximity of time between the two which are relevant factors. Therefore, the methodology adopted by the revenue cannot be faulted. 14. A holistic approach is required to be made and the test of preponderance of probabilities have to be applied and while doing so, the authorities below cannot lose sight of the fact that the shares of very little known companies with in-significant business and net worth had a steep rise in the share prices within the period of little over a year. The revenue was not privy to such peculiar trading activities as they appear to have been done through the various stock exchanges and it is only when the assessee made claim for a LTCG/STCL, the investigation commenced. As pointed out the investigation did not commence from the asse....