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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND SRI RAMIT KOCHAR, AM (A.Y:2003-04) Ambereen Kabir Dharmsey, Flat Vs. The Income Tax Officer, No.60, Colombia St. DomnicRoad, Ward-19(3)(1), Parimal Bandra West, Mumbai 400 050 Chambers, Parel, PAN:AABPD0647D Mumbai 400 012 .. Appellant Respondent Appellant by .. Shri Keshav B. Bhujle, AR Respondent by .. Sri A. Ramachandran, Sr. DR .. Date of hearing 17-10-2016 Date of pronouncement .. 02 -11- 2016 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of the CIT (A)-30, Mumbai in appeal No. CIT(A)-30/ITO-19(3)(1)/IT-182/10-11 dated 02-05-2012. Assessment was framed by the ITO, Ward 19(3)(1), Mumbai for the assessment year 2003-04 vide his order dated 22-12-2010 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of the assessee is against the order of the CIT (A) confirming the addition made by the AO of long term capital gains claimed by the assessee on account of sale of shares of M/s Buniyad Chemicals P Ltd. amounting to Rs.4,77,432/- as undisclosed cash credit u/s 68 of the Act and consequent disallowance of claim of deduction.
Briefly stated facts are that the assessee claimed to have long term capital gains on sale of shares of Buniyad Chemicals P Ltd. for a sum of Rs.4,77,432/-. According to the assessee, she has sold the shares on 18-11-2002 and these shares were purchased for an amount of Rs.3,550/- on 04-11-2001 after claiming indexation on the cost and long term capital was declared at Rs.4,73,707/- and also claimed exemption u/s 54F of the Act in respect of investment in residential house. The AO after going through the statement of Shri Mukesh Chokshi, whose premises were searched by the Income Tax Department and found that Shri Mukesh Chokshi was involved in providing accommodation entries through sale of shares through Goldstar Finvest P Ltd. Accordingly, the AO disallowed the claim of long term capital gain of the assessee and added the same as unexplained cash credit. Aggrieved, the assessee preferred appeal before the CIT (A) who also confirmed the action of the AO vide Para 5.2 and 5.3 by observing as under:-
5.2 I have carefully gone through the Assessment Order and the submission made on behalf of the appellant. At the outset, it may be stated that Shri Mukesh Chokshi in his statements given before DDIT (Inv.) Unit- 4(1), Mumbai that during the course of search that the list of beneficiaries found in his business premises from the computer systems are indeed the person or entities, who have availed of accommodation bills to purport sale or purchase of equity shares shown to have been transacted through the accounts of M/s. Goldstar Finvest P Ltd. The list of such beneficiaries includes the name of Smt. Ambereen K. Dharamsey, the appellant. Further, the A O had made enquiries with National Stock Exchange (NSE) by issue of a notice u/s. 133(6) of the I T Act. The NSE vide its letter dated 16.12.2010 stated as under:- “Please note that based on the PAN provided in your letter, no matching records are found to have been uploaded by the trading members to the Exchange for Smt. Ambereenn K. Dharamsey (PAN – AABPD0647D) for the capital market segment. 5.3. From the above, the logical conclusion that emerges on careful analysis of the above facts is that the assessee was also a beneficiary to the accommodation entries given by the companies headed by Shri Mukesh Chokshi. Therefore, the sale value of Rs.4, 77, 432/- indicated by the appellant in the statement of computation of Long Term Capital Gain on account of sale of shares of Buniyad Chemicals is nothing but the income from her undisclosed sources in respect of which an attempt was made by the appellant to declare the same as Long Term Capital Gain for the sale of shares of Buniyad Chemicals. In view of the above discussion, I find that the A. O. is quite justified in treating the sum of Rs.4, 77, 432/- as unexplained cash credit of the appellant u/s 68 of the I. T. Act. Therefore, the addition so made by the A. O. is accordingly confirmed. Further, the denial of claim for exemption made u/s 54 of the I. T. Act is also upheld since it is held by the A. O. and confirmed by the undersigned that the appellant has not earned L.T.C.G. which is a pre-condition for the maintainability of claim u/s 54 of the I. T. Act. Therefore, the denial of exemption u/s 54 is also confirmed. The grounds of appeal are dismissed.
Aggrieved, the assessee came in second appeal before the Tribunal.
Before us, the learned Counsel for the assessee filed the following submissions and details:-
“ 3.1 An addition of Rs.4,77,432/- has been made as unexplained cash credit u/s. 68 of the Act. The undisputed facts are that the said amount of Rs.4,77,432/- is the amount received by the Appellant from the recognized share brokers as the proceeds on sale of shares held by the Appellant. Shares were held for around 18 months and in demat form for around 8 months and the sales were effected on lone. The Appellant received the sale consideration by cheque from the broker. Thus the nature of the transaction and the nature of the receipt is quite well established. Thus the receipt of Rs.4, 77, 432/-is a capital receipt assessable to tax under the head “capital gains”. Therefore, section 68 does not have any role to play in respect of this receipt. S. 68 applies to a receipt which is otherwise, not a income receipt. S. 68 deem a non-income receipt to be an income receipt if the conditions are satisfied. It does not apply to an income receipt which has been offered as income. Payer confirmed the transaction and payment of the amount. Capacity of the payer is not doubted. Therefore, s. 68 is not applicable in the instant case and accordingly the addition is illegal and unjust. The addition deserves to be deleted. 3.2 Purchase and sale of shares are genuine/not bogus In support of the genuineness of the purchase and sale of shares the Appellant had furnished the following evidence 1) Purchase of shares in April 2001: i) Brokers contract note ii) Brokers Bill for purchase iii) Brokers receipts for payment iv) Confirmation by company and transfer of shares in the name of assessee vide letter dated 25/05/2001. v) Company’s advise letter dated 06/03/2002 for dematerialization of shares. vi) Dematerialization of shares on 03/04/2002.The assessee held the shares in demat from April 2002 to November 2002, i. e. almost for 8 months. vii) Shares have been disclosed in the return of income for the A. Y. 2002-03. 2) Sale of shares in November, 2002: i) Sale of shares in demat form. Shares held in demat form for almost 8 months Brokers contract note for sale. iii) Brokers Bill for sale. iv) Receipt of sale proceeds by cheque. These evidences clearly establish the genuineness of the transactions of purchase and sale of shares. The Department has not brought any evidence to show that the transactions are not genuine. In Bedi & Co. Pvt. Ltd. Vs CIT 144 ITR 352 (Kar);confirmed by Supreme Court in CIT Vs. BEdi & Co. Pvt. Ltd.; 230 ITR 580 (SC) it is held that the burden of showing that the apparent state of affairs is not the real one was very heavy on the Department. In the instant case, mere statement of Mr. Mukesh Chokshi is not sufficient to meet this heavy burden. It may at the most be a case of suspicion and nothing more.”
We have heard the rival contentions and gone through the facts and circumstances of the case. Admitted facts are that the assessee had purchased shares of M/s Buniyad Chemicals P Ltd. on 11-04-2001 for an amount of Rs.3,550/- and the same are sold on 18-11-2002 for a consideration of Rs.4,77,432/-. The assessee declared long term capital gain, after claiming in taxation of the cost at Rs.4,73,707/- and further claim exemption 54F of the Act in respect of this capital gain as investment in residential house which was purchased for a sum of Rs. 7,66,291/-. The AO made addition of this capital gain as unexplained cash credit amounting to Rs. 4,77,432/- u/s 68 of the Act for the reason Shri Mukesh Chokshi admitted in his statement before DDIT (inv), unit – 1(4) Mumbai during the course of search and seizure operation carried on him. In the present case, an intimation was received from the DDIT (inv), unit – 1 (4) Mumbai, wherein it was stated that search and seizure operation carried out by the department on the group of companies and other entities managed and controlled by Shri Mukesh Chokshi and his associate Mr. Jayesh Sampat. During the course of search it was revealed that M/s Mahasagar Securities P Ltd. and its related group companies including M/s Alliance Intermediatories and Network P Ltd., M/s Mihir Agencies P Ltd., M/s Goldstar Finvest P Ltd., etc. are all run by Shri Mukesh Chokshi and others, who are provided indulging fraudulent billing activities and were engaged in the business of providing bogus speculation profit/loss, short-term/long-term capital gains/loss, commodities profit/loss on commodity trading, through MCX. In the present case, the AO as well as CIT (A) noted that the assessee has obtained these bills through Shri Mukesh Chokshi from one of its concern M/s Goldstar Finvest P Ltd. Now before us, only contention of the assessee, in view of the list of documents placed in Para 4 of this order vide its written submission i.e. the documents of sales and purchases, the assessee requested that in view of these documents assessee should be provided opportunity to cross examine Shri Mukesh Chokshi. In view of this plea of this assessee, learned Senior DR stated that issue can be remitted back to the file of the AO but to produce Shri Mukesh Chokshi will be the responsibility of the assessee or his correct whereabouts should be provided by the assessee.
We have gone through the facts in entirety and plea of both the sides. We are of the view that these documents should be taken into consideration vis-à-vis the examination of Shri Mukesh Chokshi and if any adverse inference is to be drawn by Revenue, Shri Mukesh Chokshi should be examined afresh in the case of the assessee and assessee should be present at that time and he should be allowed cross examination of Shri Mukesh Chokshi. The AO will decide afterword. The assessee will provide complete details of whereabouts of Shri Mukesh Chokshi and in case Shri Mukesh Chokshi did not turned up, the AO will act according to the provisions of the Act. In term of the above we restored this issue to the file of the AO and the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. 7. Order pronounced in the open court on 02 -11-2016.