SHANTIDEVI P. MEHTA,MUMBAI vs. ITO 16(2)(2), MUMBAI

The appellant is an individual who filed the return of income for the A.Y.2009-10 on 20.07.2009 declaring total income of Rs.2,37,570/- which was accepted u/s.143(1) r.w.s 147 of the Income Tax Act, 1961( in short “the Act”).Subsequently assessment was completed u/s 143(2) r.w.s 147 of the Act by the Assessing Officer on 23.01.2014 determining total income to the tune of Rs.14,04,465/-.

A search and seizure action u/s. 132 of the Act was carried out in the case of M/s. Mahasagar Securities Pvt. Ltd. and its related group of 34 odd companies (the prominent ones being M/s. Alliance Intermediaries & Network Pvt. Ltd., M/s. Mihir Agencies Pvt. Ltd., M/s. Goldstar Finvest Pvt. Ltd. etc. all run by one Mukesh Chokshi and his associates) by DDIT, Unit I(4), Mumbai based on which it was stated that M/s. Alliance Intermediaries and Network Pvt. Ltd. was engaged in providing bogus bills of transactions in shares and securities. The detailed verification and the Assessing Officer concluded that it was evident that transaction shown by the appellant was nothing but a colourable device using forged and fabricated bills for the purpose of evasion of tax and laundering of her unaccounted income and hence, she treated the sum of Rs.11,44,016/- being the sale price of 2500 shares of M/s. Selan Exploration Ltd., 6000 shares of M/s. Richa Knits Ltd. and 550 shares of M/s. Essar Oil Ltd., as unexplained income earned out of undisclosed sources. The appellant had also shown his income to the tune of Rs.11,44,016/- as being A.Y.2009-10 derived from speculation business. The assessee contended that this income was shown wrongly under the head ‘Income from Other Sources’ instead of ‘Income from Business’. The explanation was rejected and the Assessing Officer observed the said income is income from other sources along with addition to the tune of Rs.22,880/- being 2% commission on Rs.11,44,016/-.

We have heard the arguments advanced by the learned representative of the parties and perused the record carefully. The learned representative of the assessee argued that the Assessing Officer has accepted the purchase u/s.143(1) r.w.s 147 of the Act in the earlier year of 2008-09, therefore, in the said circumstances the sale is not required to be doubted. It is also argued that the opportunity to cross examine the Mukesh Chokshi has been granted to the assessee by the Assessing Officer. Therefore, addition is not required to be made in the interest of justice. Specifically in view of the law settled in Kishanchand Chellaram Vs. Commissioner of Income Tax [1980] 125 ITR 713 (SC). It is also argued that the purchase was an off market transaction, therefore, the confirmation taken from the National Stock Exchange is not liable to be relied upon hence the addition is wrong against law and facts. It is also specifically argued that the assessee filed all the evidence such as contract notes, bank statement, ledger account & Demat statement, therefore the said transaction is not required to be doubted. A.Y.2009-10

On the other hand, the learned departmental representative has strongly relied upon the finding of the learned CIT(A). In view of the argument advanced by the learned representative of the parties and perusing the record,it is not disputed that Assessing Officer has accepted the purchase u/s.143(1) r.w.s 147 of the Act relating to the A.Y.2008-09. Therefore, in the said circumstances the sale is not required to be doubted in view of the observations made in case of Dalpat Singh Chaudhary Vs. Asst. Commissioner of Income Tax [2012] 25 taxmann.com 153 (Jodh.)(Trib.). On appraisal of order of the Assessing Officer as well as learned CIT(A) nothing came in to notice that an opportunity to cross examination the Mukesh Chowksi was given to the assessee whose statement was relied upon for adding the alleged amount in question. The contention of the assessee is that the transaction of the shares was offline which cannot be doubted in view of the law settled in Mukesh R. Marolia Vs. ACIT (2006) 6 SOT 247, Mumbai Tribunal. No doubt that when it is specifically treated by the assessee then the transaction is also required to be viewed on the basis of the material available on record in connection with the off market transactions. No doubt assessee has also filed the contract notes, bank statement, ledger account & Demat statement etc. as evidence before us which is also liable to be considered before the addition of the income under challenge. In view of the above facts and circumstances we are of the view that the evidence adduced by the assessee is required to be considered before passing the order A.Y.2009-10 therefore the order passed by the learned CIT(A) on this point does not seem justifiable and hereby ordered to be set aside and this issue is hereby ordered to be restored to the file of Assessing Officer to decide the matter afresh by considering the evidence adduced before us as well as by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, the finding of the order of learned CIT(A) is set aside and file is hereby restored before the Assessing Officer to decide the matter afresh. In view of the above direction the issue no.4 is consequential. Hence, issue no.4 is also hereby ordered to be set aside and would follow the finding of adjudication on the point issue no.1 to 3 decided above.

Accordingly the appeal filed by the assessee is hereby allowed in part.