DILIPKUMAR SOHANLAL MAHESHWARI,AHMEDABAD vs. THE ACIT, CIRCLE-1(1)(2), AHMEDABAD

The Learned Assessing Officer has passed the order on reasons that were never communicated to the Assessee. The reasons mentioned in the Order of Assessment and Final Show Cause Notice are divergent and distinct. Thus order is passed in violation of rules of natural justice.

The case of scrutiny was selected under CASS (Computer Aided Scrutiny System). The reasons for selection of scrutiny is not subject matter of addition. Thus the order passed making additions other than reasons stated for selection of scrutiny, is void.”

The assessee filed return of income on 23-09-2017 declaring total income at Rs. 74,89,690/-. The case was selected for complete scrutiny and notice u/s. 143(2) of the Income Tax Act dated 22-09-2018 was issued and served upon the assessee. The statutory notices were issued to the assessee. The assessee filed submissions. The assessee company is engaged in the business of trading of Mukhwas in the name of proprietorship concern of M/s. Maruti Agencies during the year under consideration. The Assessing Officer observed that the assessee has shown long term capital gains and claimed exemptions u/s. 10(35) of the Act of Rs. 2,87,47,934/- for the year under consideration. The assessee reported that the assessee has sold the equity of Moneytech Finlease Ltd. through Karvy Stock Broker during the year under consideration at Rs. 2,87,47,934/. The assessee purchased directly from the company, Moneytech Finlease Ltd. equity share of 75000 @ Rs. 10 each on 07-11- 2014. The Assessing Officer observed that the assessee did not purchase equity shares to demat account and has not furnished the details of purchase through demat account. After issuing show cause notice, the assessee filed the details of purchase and sale of the particular scrip. The Assessing Officer observed that the financial report of the Moneytech Finlease Ltd. for the year 2012 shows that the promoter had only 83,328/- equity shares and the assessee bought 75000 shares of the company and face value of the company Rs. 10 each. Even when there was no Dilipkumar Sohanlal Maheshwari, A.Y. 2017-18 certainty when the same will be placed on the market. The shares of Moneytech Finlease Ltd. were listed in MCX, Stock Exchange of India in the month of April, 2016 and not w.e.f. 8th June, 2015. The assessee’s name was not there in the proposed allottee as per the 32nd Annual Report. Thus, the claim of the assessee was not accepted and the Assessing Officer held the said transaction as off market trade done by the assessee. The Assessing Officer therefore made addition of Rs. 2,87,47,934/- u/s. 68 of the Income Tax Act as unexplained cash credit.

The assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The ld. A.R. submitted that the assessee has preferential allotment of equity shares directly from company on 16-11-2014 whereby the assessee has made payment of Rs. 7,50,000/- towards subscription of preferential allotment of 75000 shares of Rs. 10 each. The ld. A.R. submitted that the assessee has submitted the bank statement to that extent before the Assessing Officer showing that the payment was made and the said company, Moneytech Finlease Ltd. has given acknowledgement slip dated 07-11-2014 which is at page 175 of the paper book. The ld. A.R. also pointed out the intimation of allotment of shares dated 16-11-2014 issued by the said company in the name of the assessee which is at page 176 of the paper book. The assessee has also given the consolidated account statement thereby describing the demat account issued by Shah Investor’s Home Ltd. The A.R. further submitted that the assessee has received preferential allotment of shares and therefore once the assessee has established that the assessee has purchased it through genuine sources from the company Dilipkumar Sohanlal Maheshwari, A.Y. 2017-18 itself. The same should have not been doubted by the Assessing Officer. The Assessing Officer also pointed the resolution passed by the board of directors of Moneytech Finlease Ltd. meeting held on 15tH Nov, 2014 where at serial no 186 is the assessee’s name. The ld. A.R. submitted that the assessee has rightly sold the shares through BSE and has also paid securities transaction tax. The assessee has also filed the payment statement from April, 2015 and to 2017 which was not at all taken into account by the Assessing Officer as well as by the CIT(A). The ld. A.R. has given the details of shares sold at the recognized stock exchange which are as follows:

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has given acknowledgement slip of the purchase of equity shares dated 07-11-2014 and also that of intimation of allotment of shares dated 16-11-2014 thereby categorically mentioning the DP Id and the Client ID. The statement for period of 01-04-2015 to 30-04-2015 shows Moneytech Finlease Ltd. and the number of shares 75000 categorically mentioning that it was not listed scrip, the same is reflected on page 178 of the paper book. In fact, the very next column categorically mentions ISIN suspended as listing/trading approval awaited. The notes of the said consolidated account statement categorically mentions that if the parties have not done any transaction in any of their demat account then those will be receiving NSL/CDSL withholding details on half early basis where the price or NAV is not available the last traded available price or NAV has been taken into account and for un-listed securities face value has been considered. Thus, the statement also mentions that it was a suspended scrip. The assessee has produced the contract- cum-bill of Bombay Stock Exchange but that was related to the security scrip of Amsoms Apparels Ltd. and not that of Moneytech Finlease Ltd. though the assessee is claiming that the assessee is dealing various scrips. While coming to the price Dilipkumar Sohanlal Maheshwari, A.Y. 2017-18 of Moneytech Finlease Ltd. the contract note-cum-bill of Karvy Stock Broking Ltd. is only mentioning selling of the said scrip/preferential shares but the purchase was doubtful in nature. Therefore, merely selling through stock exchange cannot suffice that the transaction was genuine. Thus, the Assessing Officer as well as CIT(A) made addition and confirmation of the said addition. There is no need to interfere with the findings of the CIT(A).

Thus, the appeal of the assessee is dismissed.