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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY
Aforesaid appeal has been filed by the assessee challenging the order dated 28th December 2017, passed by the learned Commissioner (Appeals)–34, Mumbai, for the assessment year 2007–08.
Grounds no.1 and 2 are not pressed, hence, dismissed.
In ground no.3, the assessee has challenged addition of ` 1,54,968, as income from business as against claim of short term capital gain.
2 Shri Prasant V. Gadiyar 4. Brief facts are, the assessee an individual filed its return of income for the impugned assessment year on 18th July 2007, declaring total income of ` 4,46,379. Initially, the return of income filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 (for short “the Act”). Subsequently, on the basis of information received as a result of search and seizure operation conducted in case of Mahasagar Securities Pvt. Ltd. on 25th November 2009, revealing that the assessee is a beneficiary of accommodation entries provided by Mahasagar Securities Pvt. Ltd. and M/s. Alliance Intermediaries and Network Pvt. Ltd., re–opened the assessment under section 147 of the Act. During the assessment proceedings, the Assessing Officer noticed that the assessee has shown long term capital gain of ` 1,54,968 towards sale of shares for a consideration of ` 22,44,439. However, as per the AIR information available on record, the share transaction carried out through Alliance Intermediaries and Network Pvt. Ltd. was found to be non–genuine. Accordingly, the Assessing Officer issued a show cause notice to the assessee to explain why the long term capital gain of ` 10,79,077, claimed by the assessee as exempt under section 10(38) of the Act should not be treated as unexplained cash credit. Though, the assessee objected to the proposed addition, however, the Assessing Officer rejecting the objections of the assessee treated the amount of ` 10,79,077 as unexplained cash credit under section 68 of the Act and added to the income of the assessee. Being aggrieved of 3 Shri Prasant V. Gadiyar such addition, the assessee preferred appeal before the first appellate authority.
The learned Commissioner (Appeals) after considering the submissions of the assessee found that the AIR information pertained to assessment year 2007–08 and such information related only to purchase of shares, therefore, he deleted the addition of ` 10,79,077, made by the Assessing Officer on account of sale of shares on the basis of very same AIR information. However, as regards assessee’s claim of long term capital gain of ` 1,54,968, the learned Commissioner (Appeals) held that the share transaction which resulted in such capital gain is not genuine. Accordingly, he directed the Assessing Officer to add the said amount under section 68 of the Act.
The learned Authorised Representative submitted that though the assessee is not disputed the quantum of addition, however, it should be assessed as short term capital gain.
The learned Departmental Representative relied upon the observations of the learned Commissioner (Appeals).
I have considered rival submissions and perused materials on record. Undisputedly, the share transaction which resulted in the so called capital gain of ` 1,54,968 was carried out through M/s. Alliance Intermediaries and Network Pvt. Ltd., which is identified as one of the 4 Shri Prasant V. Gadiyar group company of Mukesh Choksi Group. As a result of information found during the search and seizure operation conducted in case of Mukesh Choksi and its group companies, it was found that they were providing accommodation entries through various persons / entities without any actual share transaction. Therefore, assessee’s claim that the share transactions are genuine is unacceptable. Moreover, from the discussions of the learned Commissioner (Appeals) it s patent and obvious that the so called share transaction resulting in gain of ` 1,54,968, was without any monetary consideration as neither the assessee paid any amount to the broker nor it received any amount from the broker on sale of shares. Therefore, assessee’s claim on short term capital gain is a cooked–up story without any basis. Therefore, we do not find any reason to interfere with the decision of the learned Commissioner (Appeals). Ground raised is dismissed.
Ground no.4, is against initiation of proceedings under section 271(1)(c) of the Act.
The issue raised in this ground being pre–mature at this stage does not require adjudication.
In ground no.5, assessee has challenged levy of interest under various provisions.
5 Shri Prasant V. Gadiyar 12. Levy of interest under section 234A, 234B and 234C of the Act being mandatory and consequential, the Assessing Officer has to levy interest in accordance with statutory mandate. Suffice to say, interest chargeable under section 234C of the Act should be on the basis of income returned by the assessee.
Ground no.6, being general in nature not required to be adjudicated.
In the result, assessee’s appeal is dismissed. Order pronounced in the open Court on 19.09.2018