ITO 32(3)(1), MUMBAI vs. RAMCHAND M. RAIMALANI (HUF), MUMBAI

This is an appeal filed by the revenue against the order of CIT(A)- 44, Mumbai dated 26/05/2016 for A.Y.2007-08 in the matter of order passed u/s.143(3) r.w.s. 147 of the IT Act.

In this appeal, revenue is aggrieved for deleting the addition of Rs.35,77,016/- on account of sale of shares.

Rival contentions have been heard and record perused.

In the course of assessment u/s.143(3) r.w.s. 147, AO made addition on account of income from undisclosed source amounting to Rs.34,06,682/-. AO observed that as per the information received the assessee had purchased shares amounting to Rs.2,80,786/- and sold Shri Ramchand M. Raimalani (HUF)

By the impugned order, CIT(A) deleted the addition after observing as under:- 3.6 I have gone through the facts of the case and also the contentions of the appellant along with various judicial decision existing in cases related with Mukesh Choksi Group of cases. From a perusal of record, it is seen that similar addition was made by the AO in a related case namely Devidas M Raimalani for the A.Y 2007-08. Upon appeal the then CIT(A) vide her order dated 23.07.2014 had deleted the addition by making the following comments. "It is the fact that the appellant had made purchases through the broker Alliance Intermediators & Network Pvt Ltd. But it is also seen that the entire transactions have been carried out through bank account and properly demated and the AO has not found any infirmity in the brokers note. As already held in the case of Shri Mukesh R. Marolia by the Hon. ITAT, Mumbai, it cannot be held that transactions were sham. Looking into the facts of the case the contentions of the appellant are accepted and the appeal is allowed". It is clear from facts of the case that The appellant had submitted before the AO purchase & sales bills, copy of ledger A/C with Demat A/c, and Bank statement page. The Shares purchased and are received in demat A/c and delivery issued out of demat A/c for sale of shares. The payment for purchases of shares have been made by cheque and he had received cheque for sale of shares, which can be seen in Bank Statement. 3.7 On similar issue and facts, where additions were made on the basis of statements made by Shri Mukesh Chokshi, different tribunals have ruled in favour of assessee. Reference is made to order of ITAT Mumbai in the case of Jaffarali K. Rattansoy (2012)53 SOT 220 (Mum), order of ITAT Jaipur in the case of ITO v. Smt Meera Vaid (2015)154 ITD 128 (Jaipur) and order of ITAT Pune in the case of Smt Smita Patil v. ACIT (2014) 159 TTJ 182 (Pune). After considering the totality of facts and various judicial decision and also after considering my Ld. Predecessor's order in the related case I have come to a conclusion that addition of Rs.34,06,682/- and Shri Ramchand M. Raimalani (HUF)

It was argued by learned DR that AO has discussed in great detail the modus oparandi of Mukesh Choksi Group and also invited our attention to the statement made by him wherein he confessed that he is engaged in providing only accommodation entries.

On the other hand, learned AR contended that during the year under consideration, assessee has merely sold some shares and the income arising there from was offered under the head short terms capital gain amounting to Rs.5,70,964/-. As per learned AR assessee has not dealt with any other shares during the year under consideration. 8. I have considered rival contentions and carefully gone through the orders of the authorities below and find from record that AO has made addition on the basis of the findings of the scam, which was exposed by the Investigation Wing, Mumbai, in which bogus transactions of the shares and commodities were shown and the assessee was one of the beneficiary. Shri Mukesh Chokshi was the mentor and the main person in the said Group has admitted that he was engaged into providing accommodation bills through various concerns run by him. According to the statement given by Shri Mukesh C Choksi, the Group controller of Mahasagar Securities Pvt. Ltd, the assessee has obtained bogus accommodation entries in respect of purchase of Rs, 2,80,786/- and sale of shares of Rs. 34,06,682/- through Alliance Intermediaries 85 Network Shri Ramchand M. Raimalani (HUF)