RAMESH DE vs. HI PATEL,MUMBAI

The appeal of the assessee is directed against the order dated 24.08.2017 passed by Ld CIT(A)-25, Mumbai and it relates to the assessment year 2008-09. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the assessment of capital gain arising on sale of shares as income of the assessee from undisclosed sources.

The Ld A.R submitted that the assessee has purchased and sold shares through the companies belonging to Shri Mukesh Choksi. The assessee declared long term capital gain of Rs.1,17,644/- on sale of shares of Cable Corporation and claimed the same as exempt. The assessee also earned short term capital gains on sale of shares of C & C Corporation and Crompton Greaves Ltd to the tune of Rs.1,01,668/-. The AO received information that the Mukesh Choksi and his group of companies were providing only accommodation entries without actual purchase and sale of shares. This fact appears to have been so stated by Shri Mukesh Choksi in the statement taken from him during the course of search conducted in his hands. Accordingly, the AO reopened the assessment of the year under consideration by issuing notice u/s 148 of the Act. The assessing officer completed the assessment by assessing the sale consideration of shares Cable Corporation and short term capital gains aggregating to Rs.2,25,462/- as income from undisclosed sources. The Ld CIT(A) also confirmed the same.

The Ld A.R submitted that the assessing officer has placed reliance on the information received from the investigation wing. He submitted that the purchase and sale of shares made by the assessee is duly supported by proper evidences. Further the payments have been made/received through banking channels. Accordingly he submitted that the AO was not justified in rejecting those evidences. He submitted that the AO has made the addition by placing reliance on the statement so given by Shri Mukesh Choksi, when the evidences available with the assessee is contrary to the statement so made. Accordingly he submitted that the assessee may be provided with an opportunity to cross examine Shri Mukesh Choksi or any other person who have deposed that these transactions were mere accommodation entries.

I heard Ld D.R and perused the record. I find merit in the contentions of the assessee. I am of the view that the AO, in the interest of natural justice, should have provided opportunity to cross examine Shri Mukesh Choksi or any other person who has deposed that the transactions carried out by their group was mere accommodation entries, since it is not clear as to whether the transactions of the assessee are also covered by the statement so made. Accordingly, I set aside the order passed by Ld CIT(A) and restore all the issues to the file of the AO for examining them afresh after providing opportunity of cross examination to the assessee.