THE ACIT 14(3), MUMBAI v. M/S. RAVINDRAKUMAR TOSHNIWAL, MUMBAI

ITA 5302/MUM/2008 | 2005-2006
Pronouncement Date: 24-02-2010 | Result: Dismissed

Appeal Details

RSA Number 530219914 RSA 2008
Assessee PAN AAAOT1909P
Bench Mumbai
Appeal Number ITA 5302/MUM/2008
Duration Of Justice 1 year(s) 6 month(s) 3 day(s)
Appellant THE ACIT 14(3), MUMBAI
Respondent M/S. RAVINDRAKUMAR TOSHNIWAL, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 24-02-2010
Date Of Final Hearing 17-02-2010
Next Hearing Date 17-02-2010
Assessment Year 2005-2006
Appeal Filed On 21-08-2008
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L.GEHLOT AM & SMT. P.MADHAVI DEVI JM I.T.A.NO.5302/MUM/2008 - A.Y 2005-06 ASST. COMMISSIONER OF I.T. 14(3) MUMBAI SHRI RAVINDRAKUMAR TOSHNIWAL GOPAL BHAVAN 5 TH FLOOR 199 PRINCESS STREET MUMBAI 400 002. PAN NO.AAAOT 1909 P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI G. GURSWAMI DR ASSESSEE BY : SHRI TARUN GHIA. O R D E R PER P.MADHAVI DEVI JM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST CIT (A)S ORDER DATED 24/06/2008. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THIS APPEAL IS AGAINST THE ORDER OF THE CIT[A] IN DELETING THE ADDITION OF RS .89 59 383/- MADE BY THE AO AS INCOME FROM OTHER SOURCES IN RESPECT OF L ONG TERM CAPITAL GAINS SHOWN BY THE ASSESSEE ON THE SALE OF SHARES O F M/S BUNIYAD CHEMICAL LTD. AND M/S TALENT INFOWAY LTD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.32 87 897/-. DURING THE ASSESSMENT PROCEEDINGS U/S.143[3] AO OB SERVED THAT THE ASSESSEE HAS CREDITED RS.91 19 608/- AS SHARE PROFI T IN HIS CAPITAL ACCOUNT FROM THE SALE OF SHARES OF M/S BUNIYAD CHEM ICAL LTD. AND M/S TALENT INFOWAY LTD. AND CLAIMED LONG TERM CAPITAL GAIN ON THE SALE 2 PROCEEDS. TO VERIFY THE GENUINENESS OF THE TRANSACT ION NOTICES U/S.133(6) OF THE ACT WERE SENT TO THE SHARE BROKER S THROUGH WHOM ASSESSEE HAD CARRIED ON THE SAID TRANSACTIONS. HE O BSERVED THAT THE ASSESSEE HAD SOLD SHARES OF M/S BUNIYAD CHEMICAL LT D. AND M/S TALENT INFOWAY LTD. THROUGH SHARE BROKERS M/S ALLIANCE IN TERMEDIARIES & NETWORK PVT. LTD. AND M/S MAHASAGAR SECURITIES PVT. LTD. BOTH OF WHOM ARE LOCATED AT THE SAME ADDRESS. IN REPLY TO T HE NOTICES SENT U/S.133[6] OF THE ACT THE SHARE BROKERS VIDE LETTE R DATED 16-10-07 STATED THAT THE SHARES ARE SOLD BY THEM ON BEHALF O F SHRI RAVINDRAKUMAR TOSHNIWAL THROUGH STOCK EXCHANGE IN T HE MARKET AND IT IS DIFFICULT TO SUBMIT THE DETAILS OF THE BUYER AS THEY ARE NOT AVAILABLE WITH THEM. THE RELEVANT DAILY QUOTATIONS OF AHMEDAB AD STOCK EXCHANGE WERE ENCLOSED. TO VERIFY THE GENUINENESS O F THE SAID TRANSACTION AO ISSUED NOTICE U/S.133(6) TO THE AHM EDABAD STOCK EXCHANGE LTD. (ASEL) AND IN RESPONSE TO THE SAME ( ASEL) VIDE LETTER DATED 16-11-07 REPLIED THAT THERE IS NO TRANSACTION REPORTED AT ASEL IN THE SCRIP M/S BUNIYAD CHEMICAL LTD. AND M/S TALENT INFOWAY LTD. DURING THE PERIOD FROM APRIL 1 2004 TO MARCH 31 2 005. THUS AO CAME TO THE CONCLUSION THAT THE BROKERS M/S ALLIANC E INTERMEDIARIES & NETWORK PVT. LTD. AND M/S MAHASAGAR SECURITIES PVT. LTD. HAVE GIVEN FALSE INFORMATION ABOUT THE SALE OF SHARES OF M/S B UNIYAD CHEMICAL LTD. AND M/S TALENT INFOWAY LTD. THEREFORE SUMMONS U/S. 131 WERE ISSUED TO THE DIRECTORS OF BOTH THE COMPANIES. IN RESPONSE THERETO SHRI MUKESH M. CHOKSHI DIRECTOR OF THE ABOVE TWO COMPAN IES ATTENDED ON 3 23-11-07 AND HIS STATEMENT UNDER OATH WAS RECORDED U/S.131 OF THE ACT. IN THE SAID STATEMENT THE DIRECTOR STATED THAT THE SHARES OF M/S BUNIYAD CHEMICAL LTD. AND M/S TALENT INFOWAY LTD. ON BEHALF OF SHRI RAVINDRAKUMAR TOSHNIWAL WERE LISTED ON THE FLOOR O F ASEL AND THEY WERE OFF MARKET TRANSACTIONS. 4. AS REGARDS THE PAYMENT OF SALE PROCEEDS THROUGH SHRI RAVINDRAKUMAR TOSHNIWAL HE STATED THAT THEY HAVE BEEN MADE THROUGH AKOLA URBAN CO-OPERATIVE BANK LTD. OUT OF T HE FUNDS PROVIDED BY SHRI RAVINDRAKUMAR TOSHNIWAL. AO ALSO ASKED MR. MUKESH CHOKSHI ABOUT THE BUSINESS TRANSACTIONS OF M/S BUNIYAD CHEM ICAL LTD. AND M/S TALENT INFOWAY LTD. TO WHICH HE REPLIED THAT HE WA S NOT AWARE OF THE BUSINESS TRANSACTIONS AND WAS NOT RELATED TO THE SA ID COMPANIES. 5. AFTER CONSIDERING THE SAID STATEMENT OF SHRI MUK ESH CHOKSHI AO OBSERVED THAT THE LETTER RECEIVED FROM ASEL INDICAT ED THAT THE CONTACT PERSON OF M/S BUNIYAD CHEMICAL LTD. WAS SHRI MUKESH M. CHOKSHI AND FOR M/S TALENT INFOWAY LTD. THE CONTACT PERSON WAS SHRI RAM P. MANKAD. HE THEREFORE CAME TO THE CONCLUSION THAT SHRI MUKESH M. CHOKSHI IN REALITY WAS A PERSON OPERATING BOGUS/SHE IL COMPANIES AND THE CONTACT TELEPHONE NUMBERS OF M/S BUNIYAD CHEMIC AL LTD. AND M/S TALENT INFOWAY LTD. IS THAT OF M/S ALLIANCE INTERM EDIARIES & NETWORK PVT. LTD. AND M/S MAHASAGAR SECURITIES PVT. LTD. A ND IT IS ALSO THE ADDRESS OF SHRI MUKESH CHOKSHI AND M/S BUNIYAD CHEM ICAL LTD. AO ALSO SUMMONED THE ASSESSEE U/S.131 OF THE ACT AND R ECORDED HIS STATEMENT ON OATH ON 30-11-07 IN WHICH THE ASSESSEE STATED THAT THE 4 TRANSACTIONS OF SALE WERE CONCLUDED ON HIS INSTRUCT IONS BY THE BROKERS. THEREAFTER AO CAME TO THE CONCLUSION THAT THE ENTI RE TRANSACTIONS I.E. THE PURCHASE AND SALE OF SHARES ARE PART OF ACCOMMO DATION ENTRY OF SALE BY THE ASSESSEE AND THROUGH THE GUISE OF CAPIT AL GAINS IT IS THE UNACCOUNTED MONEY OF THE ASSESSEE WHICH HAS BEEN CO NVERTED INTO ACCOUNTED MONEY. ACCORDINGLY HE ADDED THE ENTIRE S ALE CONSIDERATION OF RS.89 59 383/- TO THE TOTAL INCOME OF THE ASSESS EE AS INCOME FROM OTHER SOURCES AND TAXED THE SAME ACCORDINGLY. 6. AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] STATING THAT IT HAS PRODUCED CONTACT NOTES BILLS COPIES O F CHEQUES COPIES OF BANK STATEMENTS COPIES OF ACCOUNT WITH THE SHARE B ROKERS DULY CONFIRMED BY THE SHARE BROKERS CONFIRMATION LETTER S FROM CONCERNED BANKS AND COPIES OF DEMAT ACCOUNTS BEFORE THE AO B UT THE AO HAS NOT REFERRED TO OR CONSIDERED ANY OF THESE DOCUMENTS DU RING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO SUBMITTED THAT THE STATEMENT GIVEN BY SHRI MUKESH CHOKSHI THAT THE PAY MENTS HAVE BEEN MADE THROUGH AKOLA URBAN CO-OPERATIVE BANK LTD. OUT OF THE FUNDS PROVIDED BY THE APPELLANT WAS ALSO INCORRECT AS THE STATEMENT WAS WITHOUT UNDERSTANDING THE IMPLICATIONS. THE ASSESSE E STATED THAT THERE IS NO SUPPORTING EVIDENCE TO SHOW THAT THE FUNDS WE RE PROVIDED BY THE ASSESSEE THROUGH THE BROKER BEFORE ISSUING THE CHEQ UES AGAINST THE SALE PROCEEDS. 7. AS REGARDS THE VALIDITY OF THE OFF MARKET SHARE TRANSACTIONS ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE T RIBUNAL IN THE CASE 5 OF MUKESH R. MAROLIA VS. ADDL. CIT REPORTED IN (200 6) 6 SOT 247 (MUM). THE ASSESSEE ALSO CHALLENGED THE FINDING OF THE AO ON TAKING ADVERSE INFERENCE AGAINST HIM ON THE BASIS OF MATER IAL RELIED UPON BY HIM FROM SURVEY ACTION TAKEN U/S.133 UPON THE PREMI SES OF THE DIRECTOR SHRI MUKESH CHOKSHI WITHOUT PROVIDING AN O PPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. IT WAS SUBMITTED THAT T HE AO CANNOT RELY UPON THE STATEMENT OF A DIRECTOR IN PART AND REJECT THE OTHER PART. 8. THE CIT[A] AFTER CONSIDERING THE DOCUMENTARY EV IDENCE ON RECORD FILED BY THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE DECISION OF THE TRIBUNAL IN THE CASE OF MUKESH R. M AROLIA [CITED SUPRA] CAME TO THE CONCLUSION THAT THE SALE TRANSACTIONS O F THE ASSESSEE CANNOT BE HELD TO BE BOGUS AS HELD BY THE AO. HE AC CORDINGLY DELETED THE ADDITION MADE BY THE AO. AGGRIEVED BY THE RELI EF GIVEN BY THE CIT[A] THE REVENUE IS IN APPEAL BEFORE US. 9. THE LD. DR STRONGLY RELIED UPON THE FINDINGS OF THE AO AND DREW OUR PARTICULAR ATTENTION TO THE STATEMENT OF SHRI M UKESH CHOKSHI U/S.133(6) OF THE ACT REPRODUCED IN THE ASSESSMENT ORDER. 10. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUPPORTED THE ORDER OF THE CIT[A] AND PLACED BEFORE US THE C OPIES OF THE FOLLOWING DECISIONS OF THE TRIBUNAL IN SUPPORT OF H IS CONTENTIONS: I. MUKESH R. MAROLIA VS. ADDL.CIT 6 SOT 247 [MUM] II. ORDER OF D BENCH OF THE TRIBUNAL IN THE CASE OF MRS. RAJINIDEVI A. CHOWDHARY VS. ITO IN I.T.A.NO.6455/ M/07 DATED 30-4-2008. 6 III. ORDER OF C BENCH OF THE TRIBUNAL IN THE CASE OF DY. CIT VS. SHRI PINAKIN L. SHAH IN I.T.A.NOS.3030 & 3453/M/08 DATED 14/7/09. 11. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THEIR RIVAL CONTENTIONS WE FIND THAT THE AO HAS TREATED THE SA ID TRANSACTIONS AS BOGUS TRANSACTIONS ON THE GROUND THAT- A) THE SALE TRANSACTIONS WERE NOT ON THE FLOOR OF T HE 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 F OR M/S BUNIYAD CHEMICAL LTD. ON THE FLOOR OF ASEL WAS SHRI MUKESH CHOKSHI. C) MR. MUKESH CHOKSHI HAD STATED THAT THE SALE PROC EEDS HAVE BEEN PAID TO THE ASSESSEE THROUGH THE FUNDS PROVIDED BY THE ASSESSEE . 12. AS REGARDS POINT (A) ABOVE WE FIND THAT THE IS SUE 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 T RANSACTION FROM STOCK EXCHANGE WHEN THE SALE WAS NOT ON STOCK EXCHANGE AN D RELYING UPON IT FOR MAKING ADDITION. 13. AS REGARDS POINTS (B) & (C) ABOVE WE FIND THAT THE ASSESSEE HAS FILED RELEVANT DOCUMENTARY EVIDENCE BEFORE THE AO B UT THE AO HAS FAILED TO CONSIDER THE SAME. THE CIT[A] IN HIS ORD ER HAS CONSIDERED THE SAID EVIDENCE AND HAS COME TO THE CONCLUSION TH AT THE SHARE TRANSACTIONS ARE GENUINE. HOWEVER AS HELD BY THE T RIBUNAL IN THE CASE 7 OF RAJINIDEVI A. CHOWDHARY [CITED SUPRA] WHICH IS ON SIMILAR SET OF FACTS THE AO COULD HAVE VERIFIED FROM THE REGISTRA R OF COMPANIES AS TO WHETHER THE SHARES HAVE BEEN TRANSFERRED AND THE NA MES OF THE SHAREHOLDERS IN WHOSE NAMES SHARES HAVE BEEN TRANSF ERRED. THE DECISION OF THE TRIBUNAL IN THE CASE OF RAJINIDEVI A. CHOWDHAR Y HAS ALSO BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT AS TAK EN 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 THES E 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 REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF FEBRUARY 2010. SD/- SD/- (A.L.GEHLOT) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI:24 TH FEBRUARY 2010. P/-* 8