Income Tax Appellate Tribunal - Mumbai
Comet Investments P.Ltd, Mumbai vs Dcit 4(1), Mumbai on 11 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "C", MUMBAI
BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No.5253/Mum/2015 (Assessment Year- 2008-09)
M/s Comet Investments Pvt. Ltd. DCIT-4(1),
2nd Floor, Office No.3, Kothari Aayakar Bhavan, M.K. Road,
house, 5/7, Oak Lane, Above Mumbai-400020.
Vs.
Gokul Restaurant, Fort,
Mumbai-400023
PAN: AAACC2051Q
(Appellant) (Respondent)
Assessee by : Sh. Ajay R. Singh (AR)
Revenue by : Sh. Rajat Mittal (DR)
Date of hearing : 08.08.2017
Date of Pronouncement : 11.10.2017
Order Under Section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER:
1. This appeal by assessee under section 253 of the Income-tax Act (the Act) is directed against the order of ld. Commissioner of Income Tax (Appeals)-9 [CIT(A)], Mumbai dated 21.09.2015 for the Assessment Year (AY) 2008-
09. The assessee has raised the following grounds of appeal.
1. Reopening of Assessment is bad in law:
l. The Learned CIT(A) erred in upholding the reopening of assessment made u/s.147 of the Act without considering facts that it is based on the conjectures, surmises and assumptions and not on any tangible material, even if some information was received the AO failed to apply his independent mind to such material before reopening the completed assessment u/s. 143(3) dt 30/11/2010.ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd.
2. The learned CIT(A) failed to appreciate the fact, the A.O. had not furnished the copy of recorded reasons on the basis which case was reopened. Therefore, A.O. has failed to follow the due process of law. This fact was raised in the grounds of appeal before the ld. CIT(A).
2. Violation of Natural Justice:
3. The CIT (A) erred in upholding the asst order passed by the A.O. without providing a copy of the Statement of Mr. Mukesh Choksi on the basis of the same the assessment was reopened and further no opportunity was granted to the Assessee for cross examination, in spite of specific request was made by the Assessee before AO as well before CIT (A).
4. The CIT(A) erred in confirming the action of the A.O. in relying on the assessment of another assessee without providing copy of order, nor providing statement/ information/ opportunity for cross examination of the said alleged party. Hence the principle of natural justice is violated at time of assessment as well as before appellate authority.
III. Addition of Rs. 1,13,76,6361- as undisclosed income:
5. The learned CIT (A) erred in confirming the addition of Rs. 1,13,76,636/- as the transactions entered by the appellant were genuine and were duly supported by all the supporting evidence. Without appreciating that the details of bank Statements showing transaction, (Copy of contract notes, Form 10DB etc were furnished, thus the addition may be deleted.)
6. The learned CIT(A) erred in treating Rs.1,13,76,636/- as undisclosed income without bringing any evidence on record to support the alleged addition as undisclosed income. Hence, the addition may be deleted. IV. Addition of Rs. 5,68,832/- towards alleged commission paid.
7. The learned CIT(A) erred in confirming that the appellant had paid commission of 5% of 5,68,832/- for alleged purchase of engineered gains and making addition, without bringing any records or evidence, hence the addition is on assumption and conjectures, the same may be deleted.
8. The Assessee denies the penal interest levied u/s 234A, 234B and 234C.
2. Brief facts of the case are that the assessee-company is engaged in the business of Share, Share derivatives and Commodity derivatives, filed its 2 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. return of income for relevant AY on 30.09.2008 declaring total income at Rs. 1,84,03,500/-. The return was processed u/s 143(1) of the Act and was accepted on 30.10.2009. Again the case was selected for scrutiny, and assessment was completed on 30.11.2010 under section 143(3) determining the total income at Rs. 2,37,68,106/- under the normal provision and Rs. 3,14,79,620/- under the provisions of section 115JB of the Act. Subsequently, the assessment was re-opened under section 147 of the Act vide notice dated 26.03.2013. The assessee in response to the notice of re- opening contended that the original return of income may be treated as return of income in response to the notice. The assessment was re-opened on the ground that Director General of Income-tax (Investigation) as conducted search operation in case of Mahasagar Securities Pvt. Ltd. and its group cases on 25.11.2009. Mahasagar Securities Pvt. Ltd. was managed by Mukesh Choksi group. In the search operation, it was revealed that this group was involved in giving accommodation entries for Short Term Capital Gain and Long Term Capital Gain and speculation profit or loss. It was also revealed that the assessee has also availed accommodation entries from Mukesh Choksi group. The assessment was completed under section 143(3) original section 147 on 24.03.2014. The Assessing Officer while framing the assessment order made the addition of Rs. 1,13,76,636/- in the income of assessee as undisclosed income and addition of Rs. 5,68,382/- on account of commission @ 5% paid on the alleged accommodation entries. On appeal 3 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. before the ld. CIT(A), the re-opening as well as both the addition made by Assessing Officer were upheld. Thus, further aggrieved by the order of ld. CIT(A), the present appeal is filed before us.
3. We have heard the ld. Authorized Representative (AR) for the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. At the outset of hearing, the ld. AR of the assessee made the statement that he is not pressing ground no. 1 & 2. The ld. DR for the Revenue has no objection on the statement of ld. AR of the assessee. Thus, considering the contention of both the parties, ground no. 1 & 2 are dismissed.
4. Ground No. 3&4 relates to Violation of Natural Justice, Ground No.5 &6 relates to addition of Rs. 11,37,63,636/- on account of undisclosed income on account of bogus share transaction and Ground No.7 relates to addition on account of commission on such undisclosed income. All these issues are interconnected, thus, taken up together. The ld. AR of the assessee argued that during the assessment proceeding, the assessee has filed all the evidences in the form of documents to substantiate their contention. The assessee filed photocopies of bills issued by M/s Goldstar Finvest (P) Ltd., ledger account, confirmation and master summary of transaction from software of brokers etc. The Assessing Officer asked the assessee to furnish the document showing the movement of the goods in the assessee's premises stock-book and party wise sales and purchase. The assessee 4 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. provided all the necessary information whatsoever required by Assessing Officer. The Assessing Officer has made his mind to make the addition in the income of the assessee on account of alleged fake credit. The Assessing Officer simply provided on the assumption without transaction entered by the assessee was not genuine and without rebutting any evidence or the explanation and the evidence furnished by assessee. The Assessing Officer has recorded in his finding that assessee has not furnished the report under Form 10DB in support of Security Transaction Tax without appreciating the fact that the assessee has furnished the Form 10DB along with submission dated 13.02.2013. The Assessing Officer made the addition of Rs.1,13,76,636/- without any basis. The Assessing Officer failed to provide the statement of Mukesh Choksi on the basis of the assessment was re- opened and the entire addition is based. No opportunity of cross- examination was given despite specific requisite to the assessee, no copy of the Ledger relied by Assessing Officer was provided to the assessee. The Assessing Officer failed to consider the submission, explanation and various documents furnished by the assessee. The ld. CIT(A) confirmed the action of Assessing Officer without appreciating the contention of the assessee. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon'ble Supreme Court in case of ITO vs. M. Pirai Choodi (2011) 334 ITR 262 (SC). The assessee further relied upon the various decisions, copy of which is filed in the form of Paper Book. 5 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd.
Sr. Particulars Pg.
No. No.
1. SLP rejected dt 27/1/2014 against Hon'ble Bombay High 1-5 Court Judgement CIT vs. Mukesh R. Marolia ITA No. th 456 of 2007, dated 7 Sept. 2011.
2. Mukesh R Marolia vis. ACIT (2006) 6 SOT 247(Mum) 6-17
3. Hon'ble Bombay High Court Judgement CIT vs. Sharda 18 Credit P. Ltd. ITA No. 3090 of 2009, dated 12th Sept.
201l.
4. Dy. CIT vs. Sharda Credit P. Ltd. IT AT order dated 19-23 9/2/2009
5. Hon. Bombay High Court Order dt 5/1/2012 ITA NO 24 (L): 1739 of2010 in case of Shri Ravindra Kumar Toshniwal.
6. Shri Ravindra Kumar Toshniwal. ITAT order dt 24/2/2010 25-31
7. Mayur Shah Mumbai ITAT ITA No. 2390/M/2013 order 32-36 dt 10/7/2013
8. ITO vs. Rasila N. Gada & others Mumbai ITAT order 37-47 dated 8-8-2012.
9. CIT v/s. Harakchand Gada , Bombay High court dated 48-50 16th March 2015
10. CIT v/s. Kesar Gada, Bombay High court dated 21st 51-54 March 2015
11. CIT v/s. Kasturben Gada Bombay High court dated 21st 55-58 March 2015
12. Arvind Asmal Mehta v/s ITO, Mumbai ITAT, ITA No- 59-67 2799/M/2015, order dt 29/02/2016
13. Shri Kamlesh Mundra v/s ITO, Mumbai, ITA No : 68-79 6248/M/2012, order dt 04/03/2016
14. Sudhanshu S Pandhare v/s ITO dt 05/10/2016 80-85
15. Sunil Prakash v/s ACIT, dt: 08/03/2017 86-92
16. Smt. Sunita Jain vis ITO, , Ahd ITAT, ITA No-501 & 502/ 93-102 Ahd/2016, order dt 09/03/2017
5. The ld. AR of the assessee made more emphasis on the decision of Co-
ordinate Bench of Tribunal in Sunil Prakash vs. ACIT (Sl. No.15 of above) and would argue that on the similar fact, the Tribunal has granted relief. On the other hand, the ld. DR for the Revenue supported the order of authorities below. It was argued that Director General of Income-tax (Investigation) made the full-fledged investigation during the search conduced at the 6 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. premises of Mukesh Choksi group. In the search, it was unearthed that Mukesh Choksi group was involved in providing accommodation entries. The Tribunal in a number of cases has assessed the income of Mukesh Choksi as a commission agent for providing accommodation entries. It was further argued that though the assessee was given full opportunities by the lower authorities before passing the assessment order and order on appeal by ld. CIT(A). The ld. DR for the Revenue filed a copy of decision of Tribunal in Shri Jayesh K. Samat vs. DCIT in ITA No. 1000 to 1003/Mum/2013 and ITA No. 924 & 928/Mum/2015 showing that the Tribunal has assessed the income of Shri Jayesh K. Samat and Mukesh Choksi as an accommodation entries provider.
6. We have considered the rival submission of the parties and have gone through the orders of authorities below in re-assessment proceeding observed that in the search operation in case of Mahasagar Securities Pvt. Ltd., it was revealed that the assessee has availed accommodation entries from Mukesh Choksi group. The assessee was asked to produce the detailed of Commodity derivatives, party wise details of loss, Security Transaction Tax certificate, master summary of transaction and details of any other transaction carried out with Mukesh Choksi. The assessee in response to the queries of AO submitted his reply dated 13.02.2014 and submitted the details of cumulative share trading report for loss incurred from derivatives operation of Rs. 1,81,74,248/- for Assessment Year 2008-09. The assessee 7 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. further furnished the detailed of transaction and contended that all the transactions were genuine. The assessee further contended that they have paid the Security Transaction Tax of Rs. 52,44,967/- and eligible for rebate under section 88E of the Act. The contention of the assessee was not accepted by the AO holding that during the course of search from the seized computer data, list of beneficiary was taken and the assessee is reported to one of the beneficiary and the assessee has availed final accommodation entries of Rs. 1,13,76,363/-. The Assessing Officer, thus, made the addition of Rs. 1,13,76,636/- and further added commission payment @ 5% on such unexplained money. The ld. CIT(A) confirmed the action of Assessing Officer holding that transaction made with Alliance Intermediary and Network Pvt. Ltd. (group concerned of Mukesh Choksi) were found to be bogus by the Investigation Wing of the Income-tax Department and that the assessee has not been able to furnish report under section 10DB in support of Security Transaction Tax. The addition on commission payment was also sustained holding that there cannot be any doubt that assessee can get any entry from any other business entity without any payment of commission of money.
7. We have seen that neither the Assessing Officer nor the ld. CIT(A) made any comment on the various documentary evidences furnished by assessee. The assessee vide his letter dated 01.09.2010 furnished the Ledger Account of transaction charges and the detailed of Security Transaction Tax paid 8 ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd. along with the Ledger copies to Form 10DB (copy of which available on page no. 41 & 42 of the Paper Book). The assessee furnished the Ledger Account derivative trading ledger (page No. 42 of Paper Book). We have further seen that no independent investigation was carried out by AO before making addition in the income of assessee. The assessee vide its letter dated 11.09.2013 (Page 53 & 54 of Paper Book) that assessee has not made any transaction with Mahasagar Securities Pvt. Ltd. and that all transaction were made through M/s Goldstar Finvest (P) Ltd.
8. In our view, the Assessing Officer has passed the assessment order without giving any finding on the submission and documentary evidences furnished by assessee. The Assessing Officer has relied upon the statement of Mukesh Choksi. No opportunity of cross-examination was provided to the assessee nor was the copy of statement given to assessee on which the Assessing Officer relied. Considering the decision of Hon'ble Apex Court in case of ITO vs. M. Pirai Choodi (supra), we deem it appropriate to restore the ground no. 5,6 &7 to the file of Assessing Officer to decide the same afresh in accordance with law. Needless to say the assessing officer shall grant sufficient opportunity of hearing to the assessee before passing the order afresh. The Assessing Officer is also directed to consider the documentary evidences furnished by the assessee and further to provide all the material which may be used against the assessee. Hence, the Ground No. 5 to 7 of the appeal is allowed for statistical purpose.
9ITA No.5253/M/2015- M/s Comet Investments Pvt. Ltd.
9. Ground No. 8 relates to interest under section 234A, 234B and 234C , which is consequential in nature and needs no adjudication.
10. In the result, appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 11th day of October 2017.
Sd/- Sd/-
(P.K. BANSAL) (PAWAN SINGH)
VICE-PRESIDENT JUDICIAL MEMBER
Mumbai; Dated 11/10/2017
S.K.PS
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT BY ORDER,
5. DR, ITAT, Mumbai
6. Guard file. (Asstt.Registrar)
स या पत त //True Copy/ ITAT, Mumbai
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