MUKESH S. PAREKH (HUF),MUMBAI vs. ITO 22(1)(3), MUMBAI

आदेश / O R D E R

2.1. On the other hand, the ld. DR, Shri Sumit Kumar, strongly defended the addition made by the ld. Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeal) by explaining the factual matrix.

2.2. I have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee HUF declared income of Rs.10,86,580/-. The assessee was framed u/s 143(3) of the Act determining the income at Rs.37,67,210/- on 14/12/2007. While framing the assessment, the addition in respect of long term capital gain, which was claimed as exempt u/s 10(38) of the Act, was made. The shares of Bolton Properties Ltd. were claimed to be purchased through one shri Shiv Narayan Rathi, member of Calcutta Stock Exchange. The sale was also claimed to be made through Prakash Nahata and Co. again a member of Calcutta Stock Exchange Association. The claim of the assessee u/s 10(38) of the Act was rejected as the transactions were treated as unexplained cash credit. Penalty of Rs.13 lakh was imposed upon the assessee as the assessee concealed its income/furnished inaccurate particulars of such income. It is noted that the information provided in the return was found to be incorrect/inaccurate.

2.3. It is also noted that originally the assessee claimed that the sale transactions took place on 28/09/2004 and 06/10/2004, through a broker M/s Prakash Nahata & Company. Relevant enquiries were made by the Assessing Officer and it was found that these shares were actually purchased in the month of April 2003 without making any payments. The stand of the assessee was that the cost of purchases was met out of profit earned on sale of shares of M/s Satyam Computers. The impugned shares claimed to be acquired in April 2003 were actually credited in the demat account of the assessee almost after 15 months. The sale consideration on 3000 shares, claimed to be sold on 06/10/2004, was received by the assessee on 18/01/2005 after a gap of 3.5 months. The sale and purchase was never took place through Calcutta Stock Exchange and the member code, shown in the contract note does not belong to the claimed broker. This factual matrix was confirmed by Calcutta Stock Exchange. On the basis of these facts, the ld. Assessing Officer concluded that the shares transactions are not genuine but a sham transaction, consequently, addition was made as unexplained cash credit.

2.4. During appellate proceedings, the assessee claimed that the transaction had not taken place on 28/09/2004 and 06/10/2004, as claimed earlier, but on 29/09/2004. Vide letter dated 10/10/2008, the assessee was informed that Calcutta Stock Exchange has intimated that on 29/09/2004 M/s Prakash Nahata & Company (business code 274) did not execute any transaction in the script of Bolton Properties Ltd. either in physical or demat form in the online trading system of the exchange. In reply to this information, the assessee took another stand that these transactions were off market transaction. The assessee could not produce any concrete material, therefore, the addition was sustained. It is noted that the assessee paid entire tax demand arose from the assessment. It is also noted that no security transaction tax was paid by the assessee on the claimed transactions. This fact was evident from contract note in Form No.A numbered 15 dated 28/09/2004 of M/s Prakash Nahata & Company. This broker note was for Rs.11,53,290/- covering 3000 shares out of 7000 shares. It is noted that the assessee had been changing its stand, firstly by claiming that the trasactions were carried out through recognized stock exchange and when this fact was denied by Calcutta Stock Exchange and pointed out to the assessee, a U-turn was taken by claiming that it was a off market transaction. This approach of the assessee, in my view, cannot be said to be justified. It is noted that the assessee deliberately concealed its income/furnished inaccurate particulars of such income, therefore, section 271(1)(c) of the Act is clearly attracted. The assessee was very well aware about the factual matrix while filing the return and claiming exemption under long term capital gain (LTCG). This claim of the assessee is actually false. Even the explanation adduced by the assessed is not substantiated with corroborative material either before the Assessing Officer or before the Ld. Commissioner of Income Tax (Appeal). As mentioned earlier, the assessee deliberately avoided to represent its case before this Tribunal. The explanation of the assessee before the Assessing Officer as well as before the First Appellate Authority is not bonafide, thus, the benefit of the decision from Hon'ble Apex Court in Reliance Petro Products Ltd. (322 ITR 158) (SC) cannot be extended to the assessee, because that benefit is extended to the bona fide assessee. In the light of the foregoing discussion, no plausible explanation before the authorities below, avoidance of appearance before this Tribunal, the penalty imposed upon the assessee is confirmed.

Finally, the appeal of the assessee is dismissed.

This order was pronounced in the open in the presence of ld. DR at the conclusion of the hearing on 07/09/2016.