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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAMIT KOCHAR
2 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 आदेश ORDER अिमत शु�ला, �या. स.: PER AMIT SHUKLA, JM: The aforesaid appeals have been filed by the assessee and Cross Objections by the assessee against separate impugned order of even date 05.03.2012 passed by CIT(A)-29, Mumbai, for the quantum of assessment passed u/s 143(3) r.w.s.147 for the assessment year 2004-05. Since the issues involved in the aforesaid appeals are common arising out of identical set of facts therefore, same were heard together and are being disposed off by way of this consolidated order.
2. First of all, we will take-up appeal of the revenue and Cross Objection of the assessee in the case of Shri Hasmukh J Shah. In the revenue’s appeal, following grounds have been raised:-
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the transaction of purchase and sale of shares of M/s N.E. Electronics by the assessee through M/s Mahasagar Securities Pvt Ltd and M/s Goldstar Finvest Pvt Ltd to be genuine transaction and directing AO to treat the resultant gain of Rs. 12,65,745/- as LTCG instead of income from undisclosed sources u/s 68 of the Act, treating the same as dubious transaction based on the fact that the ITAT, Mumbai in has quantified the income of M/s Goldstar Finvest Pvt Ltd for AY 2002-03 at 0.15% of the total turnover treating it as an entry provider.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the income of Rs. 12,65,745/0 to be assessable under the head Capital Gain whereas the same was assessable as income from undisclosed sources u/s 68 of the I.T. Act.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in considering the deduction u/s 54EC is allowable”.
3 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 3. Whereas, in the Cross Objection and in the pleading before us, the assessee has challenged the validity of reopening u/s 147 on the ground that:- Firstly, the earlier assessment of the assessee was completed after detail scrutiny u/s 143(3) and there being no tangible material coming on record, the reopening of such an assessment u/s 147 amounts to “change of opinion”; Secondly, the reopening has been done after the expiry of 4 years from the end of the relevant assessment year; therefore, such a reopening is barred by limitation within the terms of Proviso to section 147.
Since the issues raised in Cross Objections are purely jurisdictional and legal ground which goes to the very root of the validity of the proceedings, therefore, same are being taken-up first.
The brief facts qua the validity of reopening of the case u/s 147 are that, assessee has filed his return of income u/s 139(1) on 29.10.2004, declaring total income of Rs. 7,97,250/-. Such return of income was duly accompanied with the computation of total income, statement and details regarding Long-term-capital-gain on sale of shares; statement of short-term-capital-gain; and proof of investment in bonds out of LTCG for claiming exemption u/s 54EC. The said return was duly processed u/s 143(1). Later on, the said return of income was selected for scrutiny vide notice u/s 143(2) and after detailed scrutiny, assessment was completed u/s 143(3) vide order dated 05.12.2005. Thereafter, after the expiry of 4 years from the end of the relevant assessment year, a notice u/s 148 dated 30th March, 2010 was issued for reopening the said assessment. The “reasons recorded” by the AO for reopening the case read as under: -
4 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 1. Information has been received from DDIT (Inv) Unit I(4), Mumbai vide letter dated 07.03.2011 that a search & seizure action u/s 132 of the I.T. Act was undertaken in the case of M/s Mahasagar Securities Pvt. Ltd. by DDIT (Inv) Unit I(4), Mumbai on 25.11.2009 on the basis FlU information regarding suspicious transactions taking place in the bank accounts of this company and its related companies. The Director of these companies were (i) Shri Mukesh M Chokshi and (ii) Shri Jayesh K Sampat
During the course of search, it was revealed that M/s Mahasagar unties Pvt. Ltd. and its related 34 group companies (one of the prominent ones ng M/s Goldstar Finvest Pvt. Ltd.) were engaged in fraudulent billing activities and in the business of providing bogus speculation profit/loss, short term / long term capital gain/loss, share application money, commodities profit/loss on commodity trading and said activities were going on for many years. M/s Mahasagar Securities was engaged in the business of issuing bogus bills for which Shri Mukesh Chokshi, director of this company floated various companies, prominent among them is M/s Goldstar Finvest Securities Pvt. Ltd. Shri Hasmukh J Shah ( PAN AAHPS 8085 N) is one of the beneficiaries appearing in the list Forwarded by the DDIT (Inv), Unit (4), Mumbai who has reported to have obtained bogus entries worth Rs.12,95,345/- through M/s Goldstar Finvest Securities Pvt. Ltd. These alleged transactions of purchase and sale of shares have been taken place during F.Y. 2003-04 relevant for A.Y. 2004-05.
In the statement recorded of Shri Mukesh Chokshi, the director of the company, M/s Goldstar Finvest Pvt. Ltd., he has clearly admitted that M/s Goldstar Finvest Pvt. Ltd. was engaged in the business of providing accommodation entries in nature of bogus long term capital gains. This fact is also strengthened by the fact M/s Goldstar Finvest Pvt. Ltd. itself in the appeal proceedings for the A.Y.2002-03 admitted before the I.T.A.T., Mumbai that it is an entry provider. The I.T.A.T. vide its order dated 28.03.2008 in & 5000/Mum/2005 for the A.Y. 2002-03 in the case of M/s Goldstar Finvest Pvt. Ltd. has accepted this claim and declared the company as an entry provider and ordered that its income should be computed @ 0.15% of total entries provided by this company. It is also pertinent to note here that M/s Goldstar Finvest Pvt. Ltd. has been filing its return of income since A.Y. 2002-03 till date by declaring its business as an entry provider and has been computing its income @0.15% of total amount of entries provided.
4. In the light of the above facts, it is evident that the transactions shown by the assessee with M/s Goldstar Finvest Pvt Ltd are nothing but colourable devices using forged and fabricated bills/ contract notes for the purpose of evasion of income-tax and laundering of his unaccounted income by showing the amount received by him through M/s Goldstar Finvest Pvt ltd as capital gain. Hence an amount of Rs. 12,95,345/- represent the undisclosed income of Shri Hasmukh J Shah for the AY 2004-05 which has escaped assessment”.
Thereafter, the AO completed the assessment at an income of Rs.20,14,890/- after treating the amount received on sale of shares which was claimed as Long-term-capital-gain, as income
5 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 from other sources along with the commission paid for obtaining the alleged fictitious LTCG @ 0.15%. Accordingly, addition of Rs. 12,74,743/- and Rs.1,898 was made as income from other sources vide order dated 21.12.2011.
Before us, the Ld. Counsel for the assessee submitted that, along with the return of income and computation of income, assessee had filed a detailed statement of Long-term-capital-gain on sale of shares of “N.E. Electronics Ltd.”, which were purchased on 18.04.2001 for Rs. 29,600/- and were sold in the month of June, 2003, i.e., after a gap of more than 2 years for sums aggregating Rs.12,95,345/-. After such a disclosure in the return of income, the AO during the course of scrutiny assessment proceedings had required the assessee to furnish the entire details of capital gain on sale of shares both long-term and short-term. In response, the assessee had furnished the copies of Balance-sheet for the assessment years 2002-03, 2003-04 & 2004-05 along with details both purchases and sales on which long-term-capital-gain and short-term-capital-gain has arisen. The assessee submitted that he had duly shown the purchase of shares in the Balance sheet as on 31st March, 2002 filed along with the return of income for AY 2002-2003. Along with that, the assessee had also filed a copy of contract notes, bills for purchase, letters from the assessee written to the company viz. N.E. Electronics Ltd for transfer of shares in assessee’s name and letter from the said company showing the transfer of the shares in the name of the assessee. Further, the assessee had filed Dematerialization Form etc. to show that shares were credited in the Demat account and also filed entire details of sale contract and the sale bills along with the bank statement to prove the genuineness of the transactions. All these details were filed before the AO during the course of original assessment proceedings which have also been enclosed from pages
6 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 2 to 45 of the paper book. After considering these information and details, the AO accepted the LTCG by sale of shares and granted the exemption u/s 54EC. Thus, there was a specific enquiry and examination by the AO with regard to the LTCG only after detail scrutiny, the assessee’s claim was accepted.
Now, after having made such a disclosure by the assessee and assessment having being completed by the AO in the aforesaid manner, the case has been reopened u/s 147 on the ground that, during the course of search and seizure action in the case of M/s Mahasagar Securities Pvt. Ltd and director of this company, Shri Mukesh Chokshi, it came to the limelight that one of his company M/s Goldstar Finvest Pvt Ltd was engaged in providing the accommodation entries by way of bogus long-term-capital-gain and since assessee had transaction with M/s Goldstar Finvest Pvt. Ltd, therefore, all the transactions shares routed through this company is nothing but a colourable device and bogus. After obtaining of the copy of the ‘reasons recorded’, the assessee gave specific objections/submission before the AO vide letter dated 18th November 2011 stating that, there is no failure on the part of the assessee to disclose all material facts relating to the capital gain transactions, therefore, reopening of the assessment beyond the period of 4 years cannot be done. Once the entire purchase and sales have been examined and duly disclosed in the earlier years and accepted by the Department, the same cannot be held that the assessee has failed to disclose fully and truly all material facts necessary for the assessment and further it amounts to ‘change of opinion’, which is not permissible in law. However, the AO has rejected assessee’s objection and held that such an objection is not maintainable in view of the decision of the Hon’ble Supreme Court in the case of M/s Raymond Woolen Ltd., reported in 326 ITR 236 and in the case of Gujarat High Court decision in the case of 7 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 Chunnilal Patel, reported in 236 ITR 832. Ld. Counsel further submitted that even during the course of search in the case of Mukesh Chokshi Group, there is no specific mention about the assessee that the transaction undertaken by the assessee with M/s Goldstar Finvest Pvt Ltd is sham or accommodation entry. It was a general finding/observation that these companies were also engaged in providing bogus entry but that does not mean that assessee was also specifically involved in such kind of bogus transaction. Thus, the “reasons” as recorded by the AO cannot remotely suggest that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Once there is no failure on part of the assessee, then the assessee’s case cannot be reopened beyond the period of 4 years as prescribed in Proviso to section 147. In support, catenas of decisions were also relied upon by the Ld. Counsel. Alternatively, he submitted that, on merits this issue stands squarely covered by the series of decisions of the Tribunal on similar kind of transactions in other cases with the group entities of Mukesh Chokshi, the compilation of which has been filed separately in paper book Part-II.
On the other hand, Ld. CIT DR, submitted that the details which were filed by the assessee during the course of the assessment proceedings pertained to long-term-capital-gain in respect of sale of shares, which were accepted as such because, AO was only examining the claim of section 54EC. The AO did not have any idea about the modus operandi about the Mukesh Chokshi Group providing such kind of accommodation entry through his companies like Goldstar Finvest Pvt Ltd. The entire modus operandi and sham transaction was unearthed only during the course of search and seizure action in the case of Mukesh Chokshi and his associated companies. It was in the course of 8 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 search and seizure action, it was found that assessee was also one of the beneficiary party, which has under taken bogus share transaction with the companies floated by Mukesh Chokshi. Even in the case of Goldstar Finvest Pvt Ltd, the Tribunal has held that, this company has earned commission income from providing accommodation entry. This entire information is sufficient to entertain the ‘reason to believe’ that, the transaction is not only bogus but assessee’s claim is also bogus and, therefore, there is a escapement of income. This itself goes to show that there is failure on the part of the assessee to disclose fully and truly all material facts, because the facts that were disclosed by the assessee have been subsequently found to be false.
We have heard the rival submissions on the legal issue of reopening and have also gone through the relevant material placed on record. In order to adjudicate the validity of reopening in terms of proviso to section 147, first of all, we have to examine the background of the disclosure made by the assessee in its original return of income and the manner in which assessment u/s 143(3) was completed. In the return of income filed u/s 139(1) on 29.10.2004, the assessee had shown the working of long-term- capital-gain and exemption u/s 54EC in the following manner: DETAILS OF LONG TERM CAPITAL GAINS ON SALE OF SHARES N E Electronics Ltd. Purchase on 18.04.2001 FOR 29,600.00 SOLD ON 09.06.2003 5,67,025.00 27.06.2003 7,28,320.00 12,93,345.00 TOTAL LONG TERM CAPITAL GAINS 12,65,745.00 LONG TERM CAPITAL GAINS 12,65,745.00
LESS: EXEMPTION U/S 54EC : INVESTMENTS IN 1 RURAL ELECTRICIATION CORPN 5,00,000/- 2 NATIONAL HOUSING BANK 4,00,000/- 3 SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA 4,00,000/- 13,00,000/- NET TAXABLE LONG TERM - CAPITAL GAINS NIL -
9 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 The said return of income was selected for scrutiny and during the course of the assessment proceedings, the assessee was required to file copy of his capital account and Balance sheets for the AYs 2002-03, 2003-04 & 2004-05. Further, the assessee was also required to furnish the details of capital gain on sale of shares long-term & short-term. In the Balance sheet as on 31st March, 2002, the assessee has shown investment in shares of N.E. Electronics Pvt. Ltd at Rs. 29,600/- which is the subject matter of entire dispute. In support of the said investment made in shares, the assessee had also filed a copy of Contract Notes dated 18.04.2001 and also the copy of purchase bills dated 24.04.2001 issued by the stock broker, M/s Goldstar Finvest Pvt. Ltd along with the receipts for the payment received towards purchase of shares. Immediately thereafter, the assessee had written a letter to the company N.E. Electronics Pvt. Ltd to transfer these shares in the name of the assessee and also furnished the details of shares scripts along with the distinctive numbers, number of shares and folio number. In response, N.E. Electronics Pvt. Ltd vide letter and intimation dated 30.05.2011 to the assessee informed that, the shares bought by the assessee of this company have been transferred in the name of the assessee. Thus, way back in April and May 2001, the assessee had shown purchases and also got the shares transferred in his own name from the company, that is, this entire disclosure was reflected in the Balance sheet and in the return of income filed for the assessment year 2002-03. After the disclosure of such purchase of shares, the assessee got these shares dematerialised in Indian Overseas Bank on 14.01.2003. These shares were purchased in the month of April 2001 and were sold in the month of June, 2003. The sales of these shares have been made through Demat account and the payments have been received through cheques. In support of the sale transaction,
10 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 contract note, bill issued by the Broker, M/s Mahasagar Securities Pvt. Ltd along with the bank statements and Demat statement was filed. All these details were filed during the course of the original assessment proceedings itself, which are running for more than 40 pages. After filing the said details by the assessee before the AO, in response to various queries raised, the AO accepted the transaction of long-term-capital-gain and also the claim of exemption u/s 54EC vide order dated 05.12.2005.
After completing the assessment and the disclosure made by the assessee, in the aforesaid manner, the assessment has been sought to be reopened by issuance of notice dated 30.03.2010 u/s 148, which is much beyond the period of 4 years from the end of the relevant assessment year. Now, in this background we have to see, whether the reopening of the assessment is hit by the limitation provided under Proviso to section 147. The condition precedent for reopening the assessment which has been completed u/s143(3) or u/s 147 after the expiry of 4 years from the end of the relevant assessment year in terms of Proviso are that:- Firstly, income chargeable to tax must have escaped assessment by reason of the failure on the part of the assessee to make a return u/s 139(1) or in response to notice issued u/s 142(1) or section 148; Secondly, there should be failure on the part of the assessee to disclose fully & truly all material facts necessary for the assessment for that assessment year. Until and unless these two conditions are fulfilled, there is a complete embargo under the statute to reopen the case u/s 147 in such cases. In other words, there is specific time limit provided for acquiring the jurisdiction for reopening the case under the proviso to section 147 and such time limit is subject to fulfillment of twin conditions as above. Since in this case, the first condition, that is, assessee’s failure to file the return u/s 139(1) is not applicable,
11 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 hence, we have to see whether the second condition under which the embargo of time limit of 4 years can be lifted or not. From the perusal of the ‘reasons recorded’, it is seen that:-
(i) Information has been received from DDIT (Inv.-IV) Unit 1(4), Mumbai vide letter dated 07.03.2001 informing that a search and seizure action u/s 132(1) has been undertaken in the case of Mahasagar Securities Pvt Ltd, wherein it was found that the said company and its related 34 Group Companies were engaged in fraudulent billing activities and in the business of providing bogus speculation profit / loss, short- term / long-term capital gain / loss etc. Shri Mukesh Chokshi and Director of the said company had floated these companies which included M/s Goldstar Finvest Pvt Ltd & M/s Mahasagar Securities Pvt Ltd. The assessee was also one of the beneficiaries as it has transacted with these companies and his name appears in the list forwarded by Investigation Wing informing that, assessee too have obtained bogus entries worth Rs. 12,95,345/- through M/s Goldstar Finvest Pvt Ltd & M/s Mahasagar Securities Pvt Ltd.; (ii) In the statement recorded of Shri Mukesh Chokshi, he has clearly admitted that M/s Goldstar Finvest Pvt Ltd was engaged in the business of providing accommodation entries in the nature of bogus long-term-capital-gain. This fact is also strengthen by the fact that in the case of the company it has been admitted uptil the stage of the ITAT that it has been providing accommodation entry and its income was computed on commission income charged @ 0.15% of the total entries provided.;
12 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 (iii) On the basis of these facts and information, the AO observed that transaction shown by the assessee with M/s Goldstar Finvest Pvt Ltd are nothing but a colourable device, who have issued fabricated bills / contract notes for the purpose of evasion of income-tax and laundering of his unaccounted income. Hence, he records that amount of Rs. 12,95,345/- represents the ‘undisclosed income’ of the assessee which has escaped assessment.
From the analysis of the reasons recorded, it is evident that there is no specific information that the shares of N.E. Electronics Company purchased through M/s Goldstar Finvest Pvt Ltd. In April 2001 and sold through M/s Mahasagar Securities Pvt Ltd in June 2003 was a bogus transaction or was an accommodation entry. If the AO has received certain information from investigation wing then, it was incumbent upon him to apply his mind and peruse the assessee’s assessment record to see, whether the transactions undertaken by the assessee is also sham transaction or was only a accommodation entry taken from these companies of Mukesh Chokshi and there is any failure on the part of the assessee to disclose all material facts relating to such transaction.. More so, in this case the assessment sought to be reopened was beyond the period of 4 years. The ‘reason to believe’ entertained by the AO in such cases should be such that, whether there is any failure on the part of the assessee to disclose truly or full all material facts because that is a point of jurisdiction which AO has to acquire to reopen the competed assessment u/s 143(3). The information received from the Investigation wing was that assessee had also transacted with the said companies, i.e., it was also one of the beneficiary appearing in the list forwarded by the DDI(IT). There is no specific mention that, whether the particular transaction undertaken by the assessee of N.E. Electronics Pvt Ltd
13 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 was a bogus transaction. From the perusal of the statement recorded of Shri Mukesh Chokshi it is evident that there is no mention or whisper about the assessee has taken accommodation entry to the assessee. The other most important fact here is that, the AO has not uttered a word about failure on the part of the assessee for disclosing the true and correct material facts. Such ascribing of failure of the assessee in the “reasons recorded” itself is mandatory, because from the reasons alone, it can be gathered whether there was any failure on the part of the assessee or not so as to acquire jurisdiction for reopening the case beyond the period of 4 years. There is not an iota of allegation of failure on the part of the assessee to disclose material facts. Such an assignment is mandatory as held by various High Courts including that of jurisdictional High Court in case of Tata Business Support Services Ltd. Vs. DCIT 232 Taxman 702, Idea Cellular Ltd vs DCIT, 301 ITR 407.
Even otherwise also, as stated in detail in the foregoing paragraphs, the assessee’s purchase of the shares were not only conclusively disclosed in much earlier assessment years but also the entire material facts relating to purchase and sale have been disclosed which have been subjected to the scrutiny also. If there is no specific information or material that such a disclosure was wrong or false, the AO cannot acquire jurisdiction for reopening the case beyond the period of 4 years in terms of Proviso to section 147. The duty of the assessee is limited to disclose truly and fully all material facts and it is for the AO to draw legal and factual inference for the purpose of assessing the income of the assessee. Thus, if there is no specific and relevant information qua the transaction, the failure cannot be ascribed to the assessee simply on general information that, some of the parties were engaged in the fraudulent practices and since assessee had undertaken
14 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 transaction with them then same should also be inferred as “fraudulent”. Thus, without there being any failure on the part of the assessee, the reopening of the assessment u/s 147 beyond a period of 4 years is not permissible in the present case, as the assessee had completely disclosed all these material facts which has also been subjected to the scrutiny. Thus, the reasons recorded by the AO do not clothe the AO to acquire jurisdiction for reopening the case u/s 147 beyond the period of 4 years from the end of the relevant assessment year and hence such a reopening is bad in law and deserves to be quashed. Accordingly, we quash the impugned assessment order passed u/s 147 r.w.s. 143(3). Accordingly, the Cross Objection raised by the assessee is allowed.
In view of these finding, the Departmental appeal which is purely on merit is accordingly dismissed as infructuous.
In the result, appeal of the revenue stands dismissed and Cross Objection of the assessee stands allowed.
Now, we will take-up Revenue’s appeal in the case of Mrs. Saryubala H Shah and Cross objection of the assessee.
In this case also, Cross objection raised by the assessee is on account of challenging the validity of reopening u/s 147 whereas in the revenue’s appeal the grounds have been raised on merits of the addition which has been deleted by the CIT(A). In this case also it has been admitted by the both the parties that the facts are exactly similar and, therefore, all the arguments will apply mutatis mutandis in this year also.
In the case of the present assessee also, the return u/s 139(1) was filed on 28.10.2004. In the said return of income, the 15 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 assessee had shown long-term-capital-gain on the sale of shares of N E Electronics Pvt Ltd which was purchased on 19.04.2001 for Rs. 27,750/- and sold on 09.06.2003 and 27.06.2003 for Rs. 12,13,520/-. The resultant long-term-capital-gain of Rs. 11,86,250/- was invested in bonds specified u/s 54EC. In this case also, exactly similar disclosure was made along with the return of income and before the AO during the course of the revenue assessment proceedings. Such an assessment completed u/s 143(3) after scrutinizing the details of purchase of shares, transfer of shares in the name of the assessee and then sale of share through Demat account, the cases has been reopened u/s 148 vide notice dated 28.03.2011 i.e. much beyond the period of 4 years from the end of the relevant assessment year. Here in this case also, the exactly similar reasons have been recorded which are as under:-
Information has been received from DDIT(Inv) Unit I(4), Mumbai vide letter dated 07.03.2011 that a search & seizure action u/s 132 of the I.T. Act was undertaken in the case of M/s Mahasagar Securities Pvt. Ltd. by DDIT (Inv) Unit I(4), Mumbai on 25.11.2009 on the basis FlU information regarding suspicious transactions taking place in the bank accounts of this company and its related companies. The Director of these companies were (i) Shri Mukesh M Chokshi and (ii) Shri Jayesh K Sampat 2. During the course of search, it was revealed that M/s Mahasagar unties Pvt. Ltd. and its related 34 group companies (one of the prominent ones ng M/s Goldstar Finvest Pvt. Ltd.) were engaged in fraudulent billing activities and :he business of providing bogus speculation profit/loss, short term / long term capital gain/loss, share application money, commodities profit/loss on commodity trading and said activities were going on for many years. M/s Mahasagar Securities was engaged in the business of issuing bogus bills for which Shri Mukesh Chokshi, director of :is company floated various companies, prominent among them is M/s Goldstar Finvest Securities Pvt. Ltd. Smt. Saryu H Shah is one of the beneficiaries appearing in the list Forwarded by the DDIT (Inv), Unit (4), Mumbai who has reported to have obtained bogus entries worth Rs.12,14,000/- through M/s Goldstar Finvest Securities Pvt. Ltd. These alleged transactions of purchase and sale of shares have been taken place during A.Y. 2003-04 relevant for A.Y. 2004-05. 3. In the statement recorded of Shri Mukesh Chokshi, the director of the company, M/s Goldstar Finvest Pvt. Ltd., he has clearly admitted that M/s Goldstar Finvest Pvt. Ltd. was engaged in the business of providing accommodation entries in nature of bogus long term capital gains. This fact is also strengthened by the fact M/s Goldstar Finvest Pvt. Ltd. itself in the 16 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 appeal proceedings for the A.Y.2002-03 admitted before the I.T.A.T., Mumbai that it is an entry provider. The I.T.A.T. vide its order dated 28.03.2008 in ITA No.4625/Mum/2005 & 5000/Mum/2005 for the A.Y. 2002-03 in the case of M/s Goldstar Finvest Pvt. Ltd. has accepted this claim and declared the company as an entry provider and ordered that its income should be computed @ 0.15% of total entries provided by this company. It is also pertinent to note here that M/s Goldstar Finvest Pvt. Ltd. has been filing its return of income since A.Y. 2002-03 till date by declaring its business as an entry provider and has been computing its income @0.15% of total amount of entries provided.
4. It is seen that the above named person has not filed her return of income for the A.Y. 2004-05 though it was obligatory on her part to file her return of income as per the provisions of section 139(1) of the I.T. Act. It is, therefore, evident that the transactions entered into by the assessee with M/s Goldstar Finvest Pvt. Ltd. are nothing but colourable devices using forged and fabricated bills / contract notes for the purpose of evasion of income-tax and Laundering of her unaccounted income. Hence an amount of Rs. 12,14,000/- represent the undisclosed income of Smt. Saryu H Shah for the AY 2004-05 which has escaped assessment.
Since the entire facts and reasons are same, therefore, our finding given in the aforesaid appeal of Shri Hasmukh J Shah will apply mutatis mutandis and, therefore, in view of our finding given therein, that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, therefore, the reopening of the assessment u/s 147 beyond a period of 4 years is not permissible will apply in the present case also, as the assessee had completely disclosed all these material facts which has also been subjected to the scrutiny. Thus, the reasons recorded by the AO do not clothe the AO to acquire jurisdiction for reopening the case u/s 147 and hence such a reopening is bad in law and deserves to be quashed. Accordingly, we quash the impugned assessment order passed u/s 147 r.w.s. 143(3). Accordingly, the Cross Objection raised by the assessee is allowed.
In view of these finding, the Departmental appeal which is purely on merit is accordingly dismissed as infructuous.
17 Hasmukh J Shah CO No. 132/Mum/2013 Mrs. Saryubala H Shah CO No. 133/Mum/2013 19. In the result, appeal of the revenue stands dismissed and Cross Objection of the assessee stands allowed.
To sum-up: Assessee’s CO in case of Hasmukh J Shah stands allowed and revenue’s appeal stands dismissed and Cross Objection in case of Mrs. Sarubala H Shah stands allowed and revenue’s appeal stands dismissed. Order pronounced in the open court on 10th November, 2015.