ITO 17(1)(2), MUMBAI vs. MADAN S. KOTHARI, MUMBAI

BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. (Assessment Year:2005-06) ITO -17(1)(2), Mumbai-400012 Appellant Vs. Shri Madan S. Kothari, 242/243, Kalpataru Habitant, Near ITC Hotel, Parel, Mumbai-400012 Respondent PAN: AADPK9616K अपीलाथ� की ओर से /By Appellant : Shri Shivaji B. Ghode, D.R. ��यथ� क� ओर से/By Respondent : Shri Rahul K. Hakani, A.R. सुनवाई क� तारीख/Date of Hearing : 04.08.2016 घोषणा क� तारीख/Date of Pronouncement : 12.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-29, Mumbai, dated 31.01.2013 for A.Y. 2009-10 on following grounds: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the share transactions of Rs.43,29,235/- as genuine & directing AO to treat the income there from as LTCG instead of income from undisclosed sources under section 68 of A.Y. 05-06 [ITO vs. Shri Madan S Kothari] Page 2 the Act by holding transactions relating to M/s. Mahasagar Security Pvt. Ltd. (now known as Alag Securities Pvt. Ltd. and its related companies including M/s. Alliance Intermediateries and Network Pvt. Ltd. as not colorable devices though Mr. Mukesh Choksi has given his statement to that effect before the DDIT (Inv), during the search action u/s.132 of the Act.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the various judicial decisions including ACIT Vs. Rameshchandra R. Parel reported in 89 ITD 203 (Ahd) wherein it is held that where there was coercion or threat and statement was clear and unambiguous, the same is binding on the assessee even if it was subsequently retracted.

3. On the fact and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering the deduction u/s.54F is allowable.” 2. In assessment proceedings, Assessing Officer has examined the transactions done by assessee leading to capital gain. Assessee had purchased 50,000 shares of Optimatic Textile. Shares have been purchased on 27.01.2003 and 31.03.2003 for a consideration of Rs.3,65,000/-. They have been sold in the period between 10.02.2005 to 31.03.2005 for a total consideration of Rs.43,29,234.86. Assessing Officer asked the assessee to explain as to why the entire amount of consideration received of Rs.48,58,660.36 on sale of shares of M/s. Optimatic Textile should not be disallowed and added back to the total income of assessee in view of material facts found and revealed during course of search operation at the business premises of Shri Mukesh Chokshi and his associates Shri Jayesh Sampat. Assessee raised various contentions A.Y. 05-06 [ITO vs. Shri Madan S Kothari] Page 3 before concerned Assessing Officer who rejected the appeal. Matter was carried before the First Appellate Authority, wherein again various contentions were raised on behalf of assessee and having considered the same, concerned CIT(A) has allowed the appeal of assessee.

2.1 Same has been opposed on behalf of Revenue inter alia submitted that CIT(A) erred in treating the share transactions of Rs.48,29,235/- as genuine, so, order of CIT(A) be set aside and that of Assessing Officer be restored. Ld. Authorized Representative supported the order of CIT(A).

2.2 After going through rival submissions and material on record, we find that shares were in demat form and payments were made by cheque. Transactions were carried out through Interconnected Exchange of India Ltd. which is a recognized Stock Exchange and STT was also collected by Stock Exchange on this transaction. Assessee has disclosed purchases of shares in earlier two years returns. Once purchases have not been doubted the subsequent sales of shares should not be doubted. All transactions of purchases and sales were through cheque and same were deposited in bank. During remand report proceedings, Assessing Officer recorded the statement of Shri Mukesh chokshi. In his statement, Mukesh Chokshi confirmed the transactions of assessee as genuine. It was also informed that all these transactions were through 0.1% brokerage from assessee. Regarding statement given to the DDI Unit I(4), Mumbai, he confirmed that it was a general statement and it did not apply to the case of assessee. A.Y. 05-06 [ITO vs. Shri Madan S Kothari] Page 4 Therefore, even in remand report, Assessing Officer had not given any adverse finding. ITAT, Mumbai in various cases deleted such additions. In view of these facts and circumstances and specially in the light of decision of ITAT Mumbai Bench on the point of addition made by Assessing Officer of Rs.43,29,235/- u/s.68 of the Act was rightly deleted by CIT(A) and he rightly directed that same has been taxed as capital gain of assessee. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

Pronounced in the open Court on this the 12th day of August, 2016.