MANOJ GOPAL GUPTA,MUMBAI vs. ITO 25(3)(1), MUMBAI
What did the Tribunal hold?
The Tribunal noted that the Assessing Officer and CIT(A) did not discuss all the documentary evidence filed by the assessee to prove the genuineness of the share transaction. Therefore, the matter was restored to the Assessing Officer for fresh consideration.
What were the facts?
The assessee claimed Long Term Capital Gain (LTCG) on the sale of shares. The assessment was re-opened based on information that the assessee availed accommodation entries from a group involved in fraudulent billing. The Assessing Officer treated the sale consideration as unexplained cash credit.
What were the issues?
Whether the sale proceeds of shares could be treated as unexplained cash credit instead of LTCG, and whether the reopening of assessment was valid.
Which sections of the Income-tax Act were involved?
Section 147,Section 68,Section 10(38),Section 234B,Section 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BENCH “G”, MUMBAI
Before: SHRI R. C. SHARMA & SHRI PAWAN SINGH
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Assessee by : Shri Kiran S. Mehta (AR) Revenue by : Miss Mahua Sarkar (DR) Date of hearing : 26.09.2016 Date of Pronouncement : 28.09.2016 O R D E R PER PAWAN SINGH, JM: 1. These two appeal u/s. 253 of the Income-tax Act are directed by the two assessee against the order(s) of CIT(A)-35, Mumbai dated 10.01.2014 for Assessment Year (AY) 2005-06. In both the appeals common grounds of appeal are raised, facts of the cases are also similar, thus both the appeals were clubbed, heard together and are being decided by common order for the sake of bravity.
Brief facts of the case are that the assessee filed return of income for relevant AY on 31.08.2015 declaring total income of Rs. 1,63,750/. In the return of income the assessee claimed Long Term Capital Gain (LTCG) of Rs. 2,57,419/- on the sale of 3,000/- share of Talent Info way Ltd. The case of assessee was re-opened u/s 147 of the Act. The re-opening of the assessment in case of assessee was that in his case specific information was received from DDIT (Investigation), Unit-4, Mumbai vide letter dated 07.03.2011 that during the search action u/s 132 of the Act in case of Mahasagar Securities Pvt. Ltd. and other group concern on 25.11.2009, who were engaged in the fraudulent billing activity and providing accommodation entries. It was also revealed that Mukesh Choksey was the master mind of the whole affairs, who had admitted to have indulged in bogus accommodation entries. On the perusal of record of search the name of assessee was also revealed that assessee has availed bogus bill from one of his concern during the relevant AY in the name of Talent Infoway Ltd. In this way, on the basis of specific information, the case of assessee was re-opened by issuing notice u/s 148 dated 25.03.2011. During the re-assessment proceeding, the entire sale consideration of share transaction amounting to Rs. 2,61,189/- was treated as unexplained cash credit and added u/s 68 of the Act in the income of assessee in assessment order dated 143(3) r.w.s 147 of the Act. The assessee filed an appeal before the CIT(A) but without any success. Thus, the present appeal is filed before us raising following grounds of appeal: “1. The learned CIT(A) erred in confirming the assessment as unexplained cash credit u/s 68, the sales proceeds of Rs. 2,62,189/- (in respect of long term capital gain of Rs. 2,57,419/- claimed exempt u/s 10(38)).
2. The learned CIT (A) erred in not accepting the claim of the Appellant that the aforesaid capital gain was in the nature of long term capital gain arising from sale of a listed security and was entitled to exemption u/s 10(38).
3. Without prejudice to the above, it is submitted that the learned CIT (A) erred in not accepting the Appellant's contention that in any event, the impugned capital gain could be assessed only as "capital gain" and that too as "long term capital gain" and that there was no basis at all to assess the same as "unexplained cash credit".
4. The learned CIT(A) gravely erred in confirming the assessment of Rs. 4,770/- being the cost price of the above shares incurred in AY: 2004-05, as income from unexplained cash credit for the year in reference, more so, as this was not a receipt by the appellant and in any case it did not relate to the year in reference.
5. The learned CIT(A) erred in not holding that that the impugned assessment order was bad in law in as much as it was made pursuant to a notice of reassessment u/s 147/148 which itself was bad-in-law and for was otherwise not tenable.
The learned CIT(A) erred in confirming levy of interest of Rs. 68,613/- u/s 234B & c.
We have heard the Authorised Representative (AR) of assessee and the ld Departmental Representative (DR) for Revenue and perused the orders of authorities below. The Ld. AR of the assessee argued that re-opening of assessment in the case of assessee was made on the basis of statement of Mukesh Choksi. The copy of statement of Mukesh Choksi was supplied to the assessee during the re-opening assessment proceeding. The name of assessee is nowhere appeared in the entire statement of Mukesh Choksi. There was no incriminating evidence against the assessee to show that the assessee has availed accommodation entry. Assessee provided all documentary evidence for transaction of share and assessee proved that the transaction of LTCG declared by assessee in the return of income was genuine. The AO has not accepted the contention of the assessee. It was further argued that Ld. CIT(A) also not considered the genuinenity of the transaction despite the fact that all purchase bills were given along with the documents relating to dematerialization of share. On the other hand, the ld. DR for Revenue argued that the assessee availed the accommodation entry from the group concerned of Mukesh Choksi who were engaged in fraudulent billing activities and were only providing bogus entries. The assessee failed to prove or bring any evidence on record to establish that transactions were carried through recognized stock exchange. No sufficient document was filed before the AO. The assessee failed to discharge his onus to prove that transaction was genuine before the revenue authority.
We have considered the rival contentions of the parties and perused the material available on record. We have seen that during the re-opening assessment proceeding, the AO asked the assessee to furnish details of share transaction along with all relevant copies of broker’s bill, proof of payment for purchase of share along with Fund Flow Statement. The assessee furnished reply of the show cause vide reply dated 10.11.2011 and simply furnished the copy of Contracts Notes of share transactions. After considering the contention of the assessee, the AO conclude that assessee failed to discharge his onus to prove the share transaction and furnished a proof regarding payment of purchases and added the entire sale consideration of share trading as unexplained cash credit. Ld. CIT(A) has not given any different finding and sustained the addition.
The assessee has placed on record Contracts Note of share transaction from Mahasagar Securities Pvt. Ltd. along with copy of Saving Bank Passbook of Central Bank of India and Malad Sahkari Bank Ltd., confirmation of account by Mahasagar Securities Pvt. Ltd., copy of share certificate of Talent Infoway Ltd. along with entry of transfer mentioned overleaf to prove the genuinenity of the transaction. We have noticed that all these documents were not discussed by AO or by Ld. CIT(A) in their order. Hence, we deem it appropriate to restore this grounds of appeal
to the file of AO to consider all the documents filed before us and the ld CIT(A) and give fresh finding in accordance with law. Thus, Ground No. 1 to 4 are allowed for statistical purpose.
6. Ground No.5 is with regard to that Ld. CIT (A) erred in sustaining the order of reopening of assessment u/s 147/148 of the Act was not bad-in- law. The Ld. AR of the assessee nothing against this ground and hence this ground is deemed to be not pressed and the same is dismissed.
7. Ground No.5 is with regard to levy of interest u/s 234B & 234C of the Act. As per our consideration, this ground is consequential in nature and needs no adjudication as we have already restored the above on quantum assessment to the file of AO. ITA No. 2245/Mum/2014
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