Income Tax Appellate Tribunal - Mumbai
Neville Noshir Shroff, Mumbai vs Acit - 16(1), Mumbai on 19 August, 2019
आयकर अपीलीय अधिकरण "B" न्यायपीठ मब
ुं ई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL " B" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री श्री एम बालगणेश, लेखा दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JM AND SRI M BALAGANESH, AM
आयकर अपील सुं . / ITA No. 5253/Mum/2016
( यिर्ाा र ण वर्ा / Assessment Years 2009-10)
Neville Noshir Shroff The Asst. Commissioner of
First floor, Eddie House, Peddar Income Tax, Circle 16(1), Room
Vs.
Road, Opp: Mahalaxmi Mandir, No. 203, Matru Mandir,
Mumbai-400 026 Mumbai-400 007
(अपीलार्थी / Appellant) .. (प्रत्यर्थी/ Respondent)
स्र्थायी ले खा सुं . / PAN No. AAIPS0079B
अपीलार्थी की ओर े / Appellant by : Ms. Dinkle Hariya, AR
प्रत्यर्थी की ओर े / Respondent by : Ms. N Hemalatha, DR
ुिवाई की तारीख / Date of hearing: 19.08.2019
घोर्णा की तारीख / Date of pronouncement : 19.08.2019
आदे श / O R D E R
महावीर ससुंह, न्याययक सदस्य/
PER MAHAVIR SINGH, JM:
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-30, Mumbai, [in short CIT(A)], in ITA No. CIT(A)-30/19(2)/295/14-15 dated 07.07.2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-16(1), Mumbai (in short ACIT/ITO/ AO) for the A.Y. 2009-10 vide order dated 2 ITA No . 5 2 53 / Mu m /2 0 16 27.06.2014, under section 143(3) r.w.s 147 of the Income-tax Act, 1961 (hereinafter 'the Act').
2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in reopening the assessment. The assessee has raised the jurisdictional issue by raising the following grounds: -
"2.1. The ld. CIT(A) erred in confirming the action of the AO in reopening the assessment.
2.2 it is submitted that in the facts and the circumstances of the case, and in law, the reassessment was bad in law."
3. The assessee also raised the issue on merits as regards to income earned from share transactions. For this assessee has raised the following grounds: -
"3.1 On merits also, the Ld. CIT(A) erred in confirming the action of the AO in making addition of ₹ 2,43,854/-, to the income of the Appellant, as alleged income earned from the share transactions.
3.2 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.
3.3 Without prejudice to the above, in the alternative, assuming - but not admitting - that some addition was called for, the computation of 3 ITA No . 5 2 53 / Mu m /2 0 16 the same is not in accordance with the law, is arbitrary and excessive.."
4. Briefly stated facts are that the original assessment for AY 2009-10 was completed by the AO under section 143(3) of the Act vide order dated 02.11.2013. Subsequently, the AO noticed during the course of assessment proceedings for 2010-11 that the assessee has entered into share transactions under Portfolio Management Services (PMS) with Share Khan Limited and assessee has earned profit of ₹ 2,43,853/-. According to AO, the assessee has not disclosed this information or this profit in the return of income and for this he recorded the following reasons: -
"In this case assessment under section 143(3) of the Act for AY 2009-10 was completed on 02.11.2011 determining income at ₹ 5537710/-. During the course of assessment proceedings for AY 2010-11 it was noticed that the assessee has entered into share transactions under PMS with sharekhan Ltd. The assessee was asked to file the transaction statement of share transactions with M/s ShareKhan Ltd, for the entire period. For the transaction statement it was noticed seen that there was a profit of ₹ 243853.74 during FY 2008-09 corresponding to AY 2009-10. But the assessee has not offered the same for taxation in his return of income filed for AY 2009-10.4
ITA No . 5 2 53 / Mu m /2 0 16 On considering the above facts, I have a reason to believe that income chargeable to tax, as indicted above, to the tune of Rs. 243854/- (rounded off) has escaped assessment for AY 2009-10 within the meaning of provision of section 147 of the act, 1961. Therefore, I am satisfied that the assessee has failed to disclose fully and truly all the material facts in his return of income. A notice under section 148 read with section 147 is, therefore, issued to reassess such income and also any other income chargeable to tax which has escaped assessment, which comes to my notice subsequently during the course of proceedings for re-assessment for AY 2009-10.
Notice Under section 148 of the IT Act is issued."
5. The notice under section 148 was issued on 29.03.2014 and assessee vide letter dated 02.04.2014 requested that the return of income filed originally on 29.09.2009 may be treated as return filed in response to notice under section 148 of the Act. The assessee requested for supply copy of reasons recorded, which was received by assessee vide letter dated 07.04.2014 and assessee filed objections against reopening of assessment vide letter dated 25.04.2014, which were disposed off vide letter dated 06.06.2014. The assessee before AO during the course of assessment proceedings submitted that there are huge losses in regard to transactions carried out with ShareKhan Limited and in case such loss which set off against the alleged income in the 5 ITA No . 5 2 53 / Mu m /2 0 16 reasons recorded amounting to ₹ 2,43,854/-, the resultant figure will be loss but the AO has not accepted and made addition of income from shares transactions carried out through Sharekhan Ltd. amounting to ₹ 2,43,854/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, now assessee is in appeal before Tribunal.
6. We have gone through the facts and circumstances of the case in entirety and noted that the assessee now before us field affidavit by one Shri Nitin B Desai, which is enclosed in assessee's paper book and the relevant context of the affidavit stating the facts is as under: -
I, Mr. Nitin Bhalchandra Desai aged 57 Son of Mr. Bhalchandra Desai of, Indian inhabitant presently residing at Flat No. 6, Suyash Co-op. Housing society, Sarswat Colony, Jogeshwari (E), Mumbai-400 057 do solemnly state as follows:
I say that I have been doing the business of manufacturing Toilet Soaps in the name and style of M/s Super Soaps (Goa) P. Ltd., Bicholim, North Goa. I was purchasing soap Noddles form M/s Super Services as manufactured by M/s Hindustan Unilever Ltd.
I say that I contracted Mr. Neville Shroff proprietor of M/s Super Services at his office at Apeejay House, 130 Bombay Samachar Marg, Mumbai-400 023 during the month of November 2007 along with Mr. M. Fayaz of M/s Sharekhan 6 ITA No . 5 2 53 / Mu m /2 0 16 Ltd. During the visit I convinced him to open share trading account with Sharekhan. Since I was carrying a blank application form of Sharekhan Ltd. with me I took his signatures on the same and two cheques from M/s super services. This includes the application fee which was paid by cheque No. 940749 dated 14.11.2007 for ₹ 1,000.00 drawn on Corporation Bank for ₹ 5,00,000.00 in favour of Sharekhan Ltd. All cheques were in favour of Sharekhan Ltd. and thus a trading account in the name of M/s Super services was promptly opened.
Thereafter I handed over another cheque bearing No. 940969 dated 23.01.2008 for ₹ 3,00,000/-.00 also in favour of sharekhan Ltd.
I say that I have been operating his account since the beginning in which I have been buying and selling certain scripts. Unfortunately since the markets were very volatile and not in our favour post 2007, I have not been able to generate/ deliver the desired results as this period was start of the Global recession when giant company's such as Leman Brothers turned bankrupt. I say that I have not given any details to Mr. Neville Shroff about the transactions which I have done in his account, nor did he have the secure code number to view the account on line. Mr. Neville Shroff has no 7 ITA No . 5 2 53 / Mu m /2 0 16 knowledge of the trading activities in his account since no details including broker code number was given to him by me. Mr. Neville Shorff was never in receipt of any money or documents either from me or from M/s Sharekhan Ltd.
I say that Mr. Neville Shroff has telephoned me endless number of times for documents and information concerning his money. He had and still does depute his company staff Mr. Sachin Chirlekar and Mr. Percy Damania at my residence/ place of work over a dozen of times. I have promised them/ him many times that I would give the details of the account but have failed to do so. Hence, he has no knowledge of the same.
I say that Mr. Neville Shroff has made every effort in his powers to retrieve the information from me but did not have any leads and thus has been unsuccessful in doing so.
I say that the carelessness and laxity on my part has lead to Mr. Neville Shroff being completely n the dark and absolutely oblivious in regard to the share transaction in his account. I have misused his trust in me for which I am very sorry. This is due to the fact that I have been working full time and are completely preoccupied with court cases pertaining to my 8 ITA No . 5 2 53 / Mu m /2 0 16 company and personal assets. These court cases are yet pending for judgement in the Honourable High Court of Mumbai.
I say that I have until date not given him any details pertaining to his account whereby he is yet unaware of the transactions conducted by me in M/s Super Services trading account with Sharekhan Ltd.
I say that Mr. Neville Shroff of M/s. Super services has never done any online transactions in the said Sharekhan account as he has no access to the same.
I say that Sharekhan Ltd. has not ever handed over a physical cheque or any form of direct payment to M/s Super Services or its proprietor in connection with the said trading account.
I say that I take full responsibility for my actions including penalties, interest thereon and am making this affidavit of my own free will with full knowledge of what it entails."
7. We noted that none of the authorities below have examined the veracities of this affidavit and even the details are not examined. Hence, in the interest of justice we remitting this issue back to the file of the Assessing Officer. It is not the case of the assessee that the details were disclosed or examined by the Assessing Officer during the original assessment proceeding, so that the reassessment can held as valid.
9ITA No . 5 2 53 / Mu m /2 0 16 Hence, we confirm the reopening but on merits, the matter is restored back to the file of the Assessing Officer.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 19.08.2019.
Sd/- Sd/-
(एम बालगणेश / M BALAGANESH) (महावीर स ह
िं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मुिंबई, ददिािंक/ Mumbai, Dated: 19.08.2019 सदीप सरकार, व.यिजी सधिव / Sudip Sarkar, Sr.PS आदे श की प्रयिसलपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयुक्त(अपील) / The CIT(A)
4. आयकर आयुक्त / CIT
5. ववभागीय प्रयतयिधर्, आयकर अपीलीय अधर्करण, मुिंबई / DR, ITAT, Mumbai
6. गार्ा फाईल / Guard file.
आदे शािसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai