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Order u/s.254(1)of the Income-tax Act,1961(Act) अनुसार PER Rajendra A.M.- लेखा सद�य सद�य राजे�� राजे�� केकेकेके अनुसार लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order,dated 19.06.2014,of CIT(A)-32,Mumbai the assessee has filed appeal for the year under consideration.The effective ground of appeal is about imposition of penalty for concealing the particulars of income.
Brief Facts: 2.A search and seizure action under section 132 of the act was undertaken in the case of Mahasagar Securities Private Limited and its group companies,including Gold Star Finvest Private Ltd.,on 25/11/2009.Statement of Mukesh Choksi,director of Mahasagar Securities Private Ltd. were recorded,wherein he had explain in details the orders of trendy of accommodation entries given by him and his group companies. Further inquiries by the investigation wing confirmed that many of the sub broking companies floated by Mukesh Choksi actually did not carry out the transaction through the main brokers for home they were claiming to be sub broker’s, that all the bills raised by them were illegal and unauthorised. It was found that assessee had made sales and purchase of shares through Goldstar Finvest private limited which was also one of the companies which had provided the accommodation entry, that the assessee had sold 14,200 shares of Buniyad chemicals four Rs. 13.13 lakhs. The AO held that the assessee had furnished inaccurate particulars of income for the year under consideration and levied a penalty of Rs. invoking the provisions of section 271(1)(c)of the Act.In the appellate proceedings, the First Appellate Authorirty(FAA)confirmed the penalty order passed by the AO.
3.During the course of hearing before us,the Authorised Representative(AR)stated that the Tribunal had,while deciding the quantum appeal,deleted the addition made by the AO and confirmed by the FAA,that penalty proceedings should be dropped.The Departmental Representative (DR) left the issue to the decision of the bench.
4.We have heard the rival submission and perused the material before us.We find that while deleting the addition,(ITA/7859/M/2011/dtd.19.11.2009)the Tribunal had held as under:
5569Jatin “4. We have heard the rival contentions and have also gone through the record. The Ld. AR at the outset has stated that the case of the assessee is covered by a series of Tribunal decisions in various cases wherein on similar statement of Shri Mukesh Chokshi, the cases were reopened and additions were made. In all these cases, the Tribunal has decided the issue of long term capital gain in favour of the assessee as the said statement of Shri Mukesh Chokshi was a general statement and could not be corroborated by any material evidence. He has relied upon the following decisions in this respect: “1. Kataria Ketan Ishwarlal Vs. ITO – decided on 30.04.2010.
ACIT Vs. Shri Ravindrakumar Toshniwal – ITA No.5302/M/2008 decided on 24.02.2010 3. ITO Vs. Truptic Shah – ITA No.1442/M/2010 decided on 29.04.2011 4. Smt. Manjulaben L. Shah Vs. ITO – ITA No.3112/M/2014 decided on 31.10.2014”
We find that the facts of the above stated cases were all most identical to that of the assessee. In the case of “Kataria Ketan Ishwarlal Vs. ITO” (supra), the transactions were carried out through the same broker i.e. M/s Gold Star Finvest Pvt. Ltd. The Tribunal allowed the appeal of the assessee observing as under: “6.1 We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. From the copy of the share certificate, Demat account, share transfer form filed in the Paper Book, we find the assessee has purchased 9500 shares of Kushal Software Ltd. from M/s. Handful Investors Pvt. Ltd. We find the Assessing Officer treated the sale of such shares by the assessee through M/s. Gold Star Finvest Pvt. Ltd. as bogus on the ground that Mr. Choksi and his broking company were engaged in giving false share transaction bills. However, from the copy of the statement of Mr. Choksi, a copy of which is filed in the Paper Book, we find Mr. Choksi has not specifically mentioned the name of the assessee for obtaining benefit on sale of such bogus shares. The learned DR also could not point out from the statement of Shri Choksi that he has taken the name of the assessee for obtaining any benefit on issue of such bogus bills. Considering the totality of the facts of the case and considering the fact that the assessee had purchased the shares which were duly transferred to the Demat account, and, in absence of any allegation against the assessee by Mr. Choksi it cannot be said that the sale of the shares is bogus. In this view of the matter, we hold that the sale transaction entered into by the assessee is genuine transaction. Since the Assessing Officer has not disputed regarding the purchase of house property and since the assessee fulfils the conditions for treating the profit on sale of such shares as long term capital gain and fulfilled the conditions for allowability of deduction u/s. 54F, therefore, we set aside the order of the CIT(A) and direct the Assessing Officer to allow the claim of the assessee. This ground by the assessee is accordingly allowed. 7. In the result, the appeal filed by the assessee is partly allowed.”
Further in the case of “ACIT Vs. Shri Ravindrakumar Toshniwal” (supra), the share profit was earned from the sale of shares of “M/s Buniyad Chemicals Ltd” i.e. the same entity as in the case of the assessee. The Tribunal has allowed the claim of the assessee observing as under: ““11. Having heard both the parties and having considered their rival contentions, we find that the AO has treated the said transactions as bogus transactions on the ground that a) The sale transactions were not on the floor of the ASEL but were off market transactions; b) The address of the M/s Buniyad Chemical Ltd. and M/s Talent Infoway Ltd. was the same and the contact person for M/s Buniyad Chemical Ltd. on the floor of ASEL was Shri Mukesh Chokshi. c) Mr. Mukesh Chokshi had stated that the sale proceeds have been paid to the assessee through the funds provided by the assessee. 12. As regards point (a) above, we find that the issue is covered by the decision of the Tribunal in the case of Mukesh R. Marolia wherein it has been held that off market transaction is not a unlawful activity and there is no relevance in seeking details of share transaction from stock exchange when the sale was not on stock exchange and relying upon it for making addition.
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As regards points (b) & (c) above, we find that the assessee has filed relevant documentary evidence before the AO but the AO has failed to consider the same. The CIT[A] in his order has considered the said evidene and has come to the conclusion that the share transactions are genuine. However, as held by the Tribunal in the case of Rajinidevi A. Chowdhary [cited supra], which is on similar set of facts, the AO could have verified from the Registrar of companies as to whether the shares have been transferred and the names of the shareholders in whose names shares have been transferred. The decision of the Tribunal in the case of Rajinidevi A. Chowdhary has also been upheld by the jurisdictional High Court as taken note of by this Tribunal in the case of Shri Pinakin L. Shah [cited supra], to which one of us i.e. the Judicial Member, is a party. In these facts and circumstances of the case, we do not see any reason to interfere with the order of the CIT[A] and the same is upheld. 14 In the result, revenue's appeal is dismissed.”
The facts of the case in hand being identical and there being no direct or material evidence against the assessee to hold that the share transactions were not genuine, we respectfully following the above decisions of the Tribunal, hold that additions made by the AO u/s 68 are not warranted and are accordingly deleted. Since we have set-aside the findings of the lower authorities that the transactions in question were not genuine, hence the consequential additions made by the AO u/s 69 observing that the assessee might have paid commission for the bogus transactions have no legs to stand. The same are also accordingly ordered to be deleted.
In the result the appeal of the assessee is allowed.”
Considering the above, we are of the opinion that that penalty proceedings would not survive – especially when the additions made have been deleted by the Tribunal. Effective ground of appeal is decided in favour of the assessee.