LEELA G. . LALWANI,MUMBAI vs. ITO WD 23(2)(4), MUMBAI

आदेश / O R D E R

Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [AY] 2003-04 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-11 [CIT(A)], Mumbai, Appeal No.CIT(A)-11/Cir.23/10-11/11-12/397 dated 23/07/2012 by raising following grounds of appeal:-

Leela G. Lalwani Assessment Year-2003-04 2. On the facts and in the circumstances and in law, the assessment order passed u/s. 143(3) r.w.s. 147 of the I.T. Act is invalid and bad in law. 3. On the facts and in the circumstances of the case and in law, the Learned C.I.T(A) erred in dismissing the grounds of appeal pertaining to sale of shares by holding that all the transactions are bogus and also the long terms capital gain shown in the return is bogus.

4. On the facts and in the circumstances of the case and in law, the Learned C.I.T (A) erred in confirming the action of the A.O. and simultaneously directing him to collect details of transactions in the name of the appellant from the records seized from the broker Shri Mukesh Chokshi and his associates available in the office of DTGIT(Inv.) or the A.O. of Shri Mukesh Chokshi and his associate concerns and tax only such amount as he would determine to be the payment received by the appellant from Shri Mukesh Chokshi and his associate concerns, u/s 68 of the I.T.Act.

5. On the facts and in the circumstances of the case and in law, the learned C.I.T.(A) erred in not dealing with the claim of 54EC of the Act Since Ground Numbers 1 & 2, which challenges the reopening on legal grounds, has not been pressed for before us by Ld. Authorized Representative for Assessee [AR], Shri Rajesh Athavale, the same stand dismissed in limine. 2.1 The assessment for impugned AY was framed by Ld. Income Tax Officer- 23(2)(4), Mumbai u/s 143(3) read with section 147 of the Income Tax Act,1961 on 13/12/2010 wherein the income of the assessee has been assessed at Rs.13.19 Lacs after certain additions as against returned income Rs.1.43 Lacs filed by the assessee on 16/09/2003. The only issue under dispute is nature of capital gains transactions carried out by the assessee during the impugned AY. 2.2 The assessee was subjected to reassessment proceedings for impugned AY pursuant to receipt of certain information from DDIT, Mumbai based on the search & seizure action u/s 132 on Mahasagar Securities Private Ltd. and its various group concerns numbering more than 34, all run Leela G. Lalwani Assessment Year-2003-04 by Mukesh Chokshi wherein it was found that the aforesaid group was engaged in fraudulent billing activities and business of providing bogus speculation profit without carrying out any genuine business. It was also revealed that none of the companies run BY Mukesh Chokshi had a valid license to act as a broker and to trade on any stock exchange as on date or during the period when the alleged transactions were carried out for the beneficiaries. It was further noted that the assessee stood beneficiary of such bogus profit from one of the group concern namely Goldstar Finvest Private Limited. Consequently notice u/s 148 dated 30/03/2010 was issued to the assessee which was followed by statutory notices u/s 143(2) & 142(1). During the impugned AY the assessee had reflected income under the head Business Income, Capital Gains and Income from other sources. 2.3 It was noted that the capital gains entries were transferred to the beneficiaries as off-market sale and these transfers were made a few days before and not before one year of the date of sale as shown by the beneficiaries. Further, all the transactions carried out by the aforesaid entity was found to be illegal under the provisions of the Securities Contract Regulation Act, 1956. The modus operandi adopted by the aforesaid entities was also noted which has been extracted in the quantum assessment order. 2.4 To verify the genuineness of the transactions reflected in assessee’s contract notes, information u/s 133(6) was called from SEBI vide letter dated 06/10/2010, the reply of which revealed that no such trades were Leela G. Lalwani Assessment Year-2003-04 carried out for the combination of member and client code during the period from 01/04/2001 to 31/03/2005. The same was confronted to the assessee who defended the transaction carries out by him. Finally, not convinced, these transactions aggregating to Rs.11.76 Lacs were treated as bogus and added to the income of the assessee as cash credit u/s 68. 3.1 Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 23/07/2012 wherein the assessee sought copies of the adverse material and opportunity of cross examination of Mukesh Chokshi. Accordingly, the matter was remanded back wherein the statement of Mukesh Chokshi was recorded on oath on 20/04/2012 and the assessee was also provided the opportunity to cross examine him. The Ld. CIT(A) after considering the remand report, the objections of the assessee against the same and statement of Mukesh Chokshi recorded u/s 131 on 11/12/2009 by DDIT (Investigation) was not convinced with the stand of the assessee. The relevant portion of the statement has been extracted at para 3.5 of the impugned order. The Ld. CIT(A) further noted that the nature of business of Mukesh Chokshi & his associated concerns has been accepted to be merely entry providers in nature by the Tribunal and the income of these concerns have been estimated at 0.15%. Finally, not convinced, the assessee’s appeal got dismissed. However, Ld. AO was directed to tax only such amount u/s 68 as actually been received by the assessee from the aforesaid entity. Aggrieved, the assessee is in further appeal before us.

Leela G. Lalwani Assessment Year-2003-04 3.2 The Ld. Auhtorized Representative for assessee [AR], Shri Rajesh Athavale contested the additions as sustained by lower authorities by pointing out the discrepancies in the statement given by Mukesh Chokshi. Reliance has been placed on many judicial pronouncements. Per Contra, Ld. Departmental Representative [DR], Rajesh Kumar Yadav, at the outset, drew our attention to the fact that the issue stood squarely covered against the assessee by the decision of this Tribunal rendered in the case of other relative of the assessee under identical factual matrix. The copy of the same has been placed before us. The Ld. AR, defended his stand by distinguishing the facts, however, he could not controvert the contentions as raised by Ld. DR.

Leela G. Lalwani Assessment Year-2003-04 5. Although Ld. AR has placed reliance on number of judicial pronouncements, we find that the impugned issued, under identical factual matrix, has already been dealt by this Tribunal in the case of assessee’s relative titled as Disha N.Lalwani Vs. ITO [ITA No. 6398/Mum/2012 dated 22/03/2017], the relevant portion of which is extracted below:- 3.1. In the light of the aforesaid statement and the facts if analyzed, the factual matrix oozing out is that it is an admitted position that Shri Mukesh Chokshi was engaged in providing bogus accommodation entries such as long term capital gains, wherein, the assessee is one of the beneficiaries. It is evidently clear that off-market transactions were carried out by the assessee in collusion with Shri Mukesh Chokshi. The transactions were given the colour of genuine transaction but fact remains that only paper work was done in lieu of cash and there was no actual gain/transaction. It is also noted that identically in the case of Mukesh Chokshi/associates/firms of Mukesh Chokshi, there are various orders like M/s Goldstar Finvest Pvt. Ltd. and 5000/Mum/2005 order dated 28/03/2008, Richmond Securities Pvt. Ltd. (subsequently known as Mhanagar Securities Pvt. Ltd. and now known as Alag Securities Pvt. Ltd.) ITA No.4624/Mum/2005 and M/s Alpha Chemie Trade Agencies Pvt. Ltd. (ITA No.4999/Mum/2005) for Assessment Year 2002-03 along with the case of M/s Mihir Agencies Pvt. Ltd. (ITA No.4912/Mum/2005) order dated 30/05/2008. All these orders and the fact clearly indicates that Shri Mukesh Chokshi was actually not doing any business of share transaction/stock broking but was merely providing accommodation entries of share transaction showing the bogus long term capital gain, etc. and was used to get commission income at the rate of 0.15% of the total transaction. The assessee is also one of the beneficiaries of such camouflage. Thus, when the total transaction is illusory/bogus. Our view find supports from the ratio laid down by the Indore Bench of the Tribunal in the case of M/s Agarwal Cole Corporation (63 DTR 201; 135 ITD 270)(Indore Bench of the Tribunal), wherein, one of us (Judicial Member) is signatory to the order. The ratio laid down in the case of CIT vs Nova Promoters and Finlease Pvt. Ltd. (2012) 324 ITR 0169 (Del.) supports our view. It is also noted that the Hon'ble Delhi High Court while coming to a particular disapproved the decision taken in CIT vs Oasis Hospitalities Pvt. Ltd. (2011) 333 ITR 119 and also considered the decision in DIT vs Bharat Diamond Bourse (2003) 259 ITR 280 (SC) and Lovely Exports Pvt. Ltd. (2008) 299 ITR 268 (SC). The relevant finding from the aforesaid order dated 15/02/2012 (Nova Promotors and Finlease Pvt. Ltd.) is reproduced hereunder:- ……