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Income Tax Appellate Tribunal, “B BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, VP & SHRI S RIFAUR RAHMAN, AM
आयकर अपीऱीय अधिकरण “B” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “B BENCH, MUMBAI श्री भहावीय स िंह, उऩाध्मक्ष एविं श्री ए रयफ़ौय यहभान, रेखा दस्म के भक्ष । BEFORE SHRI MAHAVIR SINGH, VP AND SHRI S RIFAUR RAHMAN, AM आमकय अऩीर िं./ (ननधाायण वर्ा / Assessment Years 2009-10) The Income Tax Officer Shri Bhavarlal B. Jain, Ward 17(1)(2), Mumbai 102 Jolly Bhavan No.1, New फनाभ/ Marine Line, Opp. SNDT College, Vs. Mumbai-400 020 (अऩीराथी / Appellant) (प्रत्मथी/ Respondent) स्थामी रेखा िं./PAN No. ABFPJ3338J अऩीराथी की ओय े/ Appellant by : Shri Jaykumar Menon, CIT DR प्रत्मथी की ओय े/ Respondent by : Shri Hiro Rai, AR ुनवाई की तायीख / Date of hearing: 08.12.2020 घोर्णा की तायीख / Date of pronouncement: 05.03.2021 आदेश / O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of Revenue is arising out of the order of the Commissioner of Income Tax (Appeals)]- 28, Mumbai, [in short CIT(A)], in dated 19.07.2018. The assessments was framed by the Income Tax Officer
The only issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by Assessing Officer under section 69 of the Act amounting to ₹3.35 crores. For this Revenue has raised the following grounds: - “1. Whether on the facts and circumstances of the case and in law, the CIT(A) was right in deleting the addition made u/s.69 of the IT Act amounting to Rs.3,35,00,000/-?
2. Whether on the facts and circumstances of the case and in law, the CIT(A) was right in deciding the case when the verification of the facts are still in process?
3. On the facts and circumstances of the case and in law, the CIT(A) is justified in deleting the additions, in view of the Hon'ble Apex Court decision in the case of Kapoorchand Shirmal (1981) 131 ITR 452 (SC) that it is the duty of the appellate authority to correct the errors in the order of the authorities below and remit the matter for reconsideration unless prohibited by law?”
Brief facts are that the assessee is engaged in the business of share trading and derives income from long term and short term
The CIT(A) denied this alleged transaction stating that he has only bank account in HDFC and Indian Overseas bank but did not have any bank account in State Bank of Patiala. Before CIT(A), it was explained that someone else’s cheques are fraudulently credited in the closed ledger account mentioned with the assessee’s broker. It was also explained that alleged MOU referred showing agreement of assessee with one Mahendra Shah, who allegedly transacting in that broker account is totally denied. It was explained that there is no signature of the assessee on that document. The CIT(A) also noted the complaint filed by the assessee against share broker Emkay Global Financial Services Ltd. with BSE, NSE, SEBI and stated the facts on oath in affidavit also in the copy of demat account of the assessee, it is clearly mentioned that the alleged transactions of the deposit of ₹3.35 crores in the ledger account of assessee mentioned with Emkay Global Financial Services Ltd. from the alleged bank account of Sate Bank of Patiala does not pertain to the assessee and hence, he deleted the addition. Aggrieved, Revenue came in appeal before Tribunal.
We are in receipt of your letter dated June 18,2008 addressed to Mr. Lokesh Agarwal. At the outset we wish to inform you that your KYC is already processed by our KYC team and trading code MJ096 is allotted to you. However, as desired by you through your aforesaid letter we are terminating you code, opened in your name.
It means that on the very day, the account was closed. Further, as per RTI information, the require details of cheque issued from State Bank of Patiala was already submitted before the Assessing Officer by State Bank of Patiala under the information provided under section 133(6) of the Act and the relevant details are as under:-
Instruction Date of Amount Applicant Applicant Applicant Beneficiary Payable Present issue Name Address Account No Name Branch Status of Account MDD/AD 21.06.2008 50,00 Anand 131/3, 65009840641 Emkay SBP- Closed on 203935 lac Corporation Kabutar Share and Mumbai 03/07/2010 Khana, Stock (Service Chokha Brokers Ltd. Branch) Bazar, Instruction Date of Amount Applicant Applicant Applicant Beneficiary Payable issue Name Address Account No Name Branch “I Bhavarlal Babulal Jain, aged 65 years, PAN Card No.1BFPJ3338J, have to state on oath as under: - 1) I do not have any type of Account in Sate Bank of Patiala since birth date of 02.12.1952 till today.
2) I also state that cheque / DD’s Nos.: i) 23.06.2008. 203993 ₹5000000/- ii) 23.06.2008. 203995 ₹5000000/- iii) 23.06.2008. 203996 ₹5000000/- iv) 27.06.2008. 204097 ₹5000000/- v) 27.06.2008. 204098. ₹5000000/- vi) 27.06.2008. 204099. ₹4000000/- vii) 11.08.2008. 204825. ₹4500000/- ₹33500000 issued from state Bank of Patiala Ahmedabad are not mine and have also not deposited the above cheques/ DD’s in any of my bank Accounts.
3) I also state that, the above cheque’s DD’s, have been deposited in the Account of Emkay Global Financial 4) I also have to state that, I have not given any cheque’s or Shares to Emkay Global Financial Services Ltd. till today.
5) I also have to state that, I have also not received any shares or cheques/ DDs from Emkay Global Financial Services Ltd. till today.
Whatever stated herein above is true and correct to the best of my knowledge and belief.”
It is also noted that the assessee has filed a complaint with Bombay Stock Exchange in respect of unauthorized trade in assessee’s account which was already closed. From the reply of advocate Dinesh Tiwari of Bombay Stock Exchange categorically stated that all the trades in the assessee’s account were operated by some shah family and also the outstanding liability of ₹8.06 crores in the said account was taken over by one Mr. Mahesh C Shah. Also, in the letter from the broker to the BSE, it has been confirmed that payments in assessee’s account has been received from Mr. Mahesh C Shah. Even, as per the Memorandum Of Understanding (MOU), which is signed between MK Shares and Stock brokers Ltd. and also Mahesh C Shah and his family, the outstanding liability of the assessee has been taken by Mr. Mahesh C Shah and this MOU is never signed by the assessee. It is also submitted that police complaint was filed against the said broker for unauthorized trade carried out towards assessee’s account and i) Assessee had transactions with two brokers in regular course viz. Nirmal Bang and Arihant Capital. The third account with Emkay Share was opened on 17.06.2018, requested closure in writing on 18.06.2018, received intimation about closure in writing on 19.06.2018. ii) AO based his assessment on AIR information inspite of-flat denial by assessee. iii) No evidence of alleged telephonic instruction with AO/broker 'not' to close alleged account. 11 a letter could be sent for closure it could have been sent for non-closure. Broker is self-contradicting himself as brought out well by assessee by sending a letter on 19.06.2008 and also reiterating oral instruction allegedly communicated to him before opening of market on 19.06.2008. iv) Transactions in said broker account took place from moneys transferred from S.B. of Patiala. Assessee holds no account therein. RTI response from State Bank of Patiala (supra) confirms other parties issuing cheques which are not proved in any manner to connect to assessee. v) Broker has been fined Rs. 75,000/- for violation of BSE/SEBI norms/regulation. vi) All trading in said account is by some Shah Family, fronted by some Mahesh C. Shah (untraceable). vii) Complaint with BSE filed by assessee. viii) Complaint with NSE filed by assessee.
From the above analysis and uncontroverted facts, we are of the view that the Assessing Officer could not understand the fraudulent transaction carried out by one Shri Mahendra Shah and made addition