Income Tax Appellate Tribunal - Mumbai
Uttara R. Shorewala, Mumbai vs Assessee on 29 March, 2006
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES, 'F', MUMBAI
BEFORE SHRI R V EASWAR, PRESIDENT AND
SHRI R K PANDA, ACCOUNTANT MEMBER
I T A Nos: 5506/Mum/2009 and 5507/Mum/2009
(Assessment Years: 2001-02 and 2002-03)
Assistant Commissioner of Income Tax ... Appellant
(OSD) - 1, Central Range 7, Mumbai
Vs
Mrs Uttara S Shorewala, Mumbai ... Respondent
(PAN: AAGPS9751C)
Cross Objection Nos: 107/Mum/2010 and 108/Mum/2010
(Arising out of I T A Nos: 5506/Mum/2009 and 5507/Mum/2009)
(Assessment Years: 2001-02 and 2002-03)
Mrs Uttara S Shorewala, Mumbai ... Cross Objector
Vs
Assistant Commissioner of Income Tax ... Respondent
(OSD) - 1, Central Range 7, Mumbai
Assessee by: Mr Shashi Tulsiyan
Revenue by: Mr A P Singh
ORDER
R V EASWAR, PRESIDENT:
The appeals are by the revenue and the cross objections are by the assessee. They all pertain to the assessment years 2001-02 and 2002-03. Since they were all heard together, they are disposed of by a common order.2 ITA No: 5506/Mum/2009
ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
2. We shall first state the facts in brief. The assessee is an individual deriving income by way of salary and from other sources. In respect of the assessment year 2001-02, the original assessment was completed under section 143(3) read with section 147 of the Income Tax Act, 1961, on 29.03.2006, determining the total income at `14,75,980/- as against the returned income of `5,79,060/-. In this reassessment, the Assessing Officer took the view that the assessee had created and claimed a bogus loss of `12,88,237/- on account of purchase and sale of mutual funds and has purchased bogus short term capital gain of `6,63,093/- on account of purchase and sale of shares from M/s Richmond Securities Pvt. Ltd. and M/s Alembic Securities Pvt. Ltd. After recording reasons under section 148, he reopened the assessment and in the reassessment order dated 29.03.2006 disallowed the loss of `12,88,237/- claimed on account of sale of mutual funds and treated the short term capital gain of `6,63,093/- as unexplained expenditure within the meaning of section 69C of the Act. He also rejected the assessee's claim for set off of the loss of `5,58,230/-.
3. Aggrieved by the reassessment order passed as above, the assessee filed an appeal before the CIT(A), who disposed of the appeal by order dated 26.06.2007. In this order he deleted the addition of `6,63,093/- made under section 69C of the Act, ignoring the claim that it represented short term capital gains. The department did not file any appeal to the Tribunal against the order of the CIT(A). The CIT(A) also deleted the disallowance of 3 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 `12,88,237/- and even against this decision the department did not file any appeal to the Tribunal. The CIT(A) also allowed the short term capital loss of `5,58,230/- to be set off against the capital gains as a consequence of his decision that the amount of `6,63,093/- actually represented short term capital gains on the sale of shares. A copy of the order of the CIT(A) has been filed at pages 261 to 272 of the paper book. It may be added that in coming to the above decisions the CIT(A) followed several authorities. In particular, in deciding that the amount of `6,63,093/- really represented short term capital gains on sale of shares and was available for adjustment of the short term capital loss of `5,58,230/-, he followed the ratio of the order of the Mumbai Bench of the Tribunal in the case of Mukesh R Marolia vs. Additional CIT in ITA No: 1201,Mum/2005 (assessment year 2001-02) dated 15.12.2005.
4. We may briefly notice at this juncture the facts relating to the assessment year 2002-03. In respect of this year, the original assessment was completed on 29.03.2006 under section 143(3) read with section 147 of the Act, determining the total income at `15,14,830/- as against the returned income of `3,03,530/-. The reassessment proceedings were initiated after recording reasons under section 148 of the Act, to the effect that the assessee had purchased bogus bills for share transactions in the amount of `12,51,937/- from M/s Goldstar Finvest Pvt. Ltd. and M/s Richmond Securities Pvt. Ltd. Against the reassessment order made as above, the assessee filed an appeal to the CIT(A), who by order 4 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 dated 26.06.2007, deleted the addition of `12,51,937/- and directed the Assessing Officer to accept the aforesaid amount as short term capital gain on sale of shares and not as unexplained expenditure. Against the decision of the CIT(A), no appeal was filed by the revenue to the Tribunal. A copy of the order of the CIT(A) for the assessment year 2002-03 is placed at pages 273 to 279 of the paper book. A perusal thereof shows that the CIT(A) has followed the ratio of the decision of the Tribunal in the case of Mukesh R Marolia (supra) in coming to the conclusion that the amount represented short term capital gains on sale of shares and cannot be added as unexplained expenditure of the assessee.
5. In the meantime search and seizure proceedings under section 132 of the Act were taken against the assessee as part of the group of six cases on 28.06.2006. The basis of the search was that there was information in the possession of the department that these six parties were booking profits by making bogus claims of capital gains on purchase and sale of shares of penny stock companies, of which a company by name Bolton Properties Ltd. was one. Consequent to the search, assessments were made on the assessee on 11.12.2008 under section 143(3) read with section 153A for both the assessment years. The present appeals arise out of these assessment orders. In respect of the assessment year 2001-02, the Assessing Officer computed the total income at `14,07,356/- in the following manner: -
5 ITA No: 5506/Mum/2009ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
Amount Amount
(Rs.) (Rs.)
Income determined as per original order u/s. 1475980
143(3) r.w.s. 147 dated 29.03.2006
Less: Relief given by CIT(A) vide his
order dated 26.06.2007: -
1. Addition u/s. 69C in respect of STCG 663093
shown on sale of shares.
2. Loss on Byaj Badla Transactions 50320
3. Expenses related to service charges 14588
& legal fees
4. Expenses debited to P & L A/c. 3707 731717
744263
Add: As discussed above: -
1. Addition u/s. 69C in respect of STCG
shown on sale of shares [Para 11] 663093
Total Income: - 1407356
Rounded off: - 1407360
Similarly, the total income for the assessment year 2002-03 was computed at `15,14,827/- as follows: -
Amount Amount
(Rs.) (Rs.)
Income from Salary -
(as per statement of total income) 24500
Income from Other Sources -
(as per statement of total income) 247390
Add: As discussed above
STCG - treated as unexplained 1251937
expenditure u/s. 69C (as discussed in
the order
Gross Total Income: - 1523927
Less: Deduction under Chapter VI-A :
Under Section 80L 9000
Total Income: - 1514827
Rounded off: - 1514830
6 ITA No: 5506/Mum/2009
ITA No: 5507/Mum/2009
CO No: 107/Mum/2010
CO No: 108/Mum/2010
6. So far as the assessment year 2001-02 is concerned, the addition of `6,63,093/- made as unexplained expenditure within the meaning of section 69C for the same reasons given by the Assessing Officer in the reassessment order dated 29.03.2006. In addition thereto the Assessing Officer recorded a statement from Shri Mukesh Choksi, the Director of M/s Goldstar Finvest Pvt. Ltd. and M/s Richmond Securities Pvt. Ltd. on oath. This statement is referred to in paragraph 9 of the assessment order, which has given rise to the present proceedings. In this statement, the substance is that Shri Mukesh Choksi has mentioned the names of four share broking concerns who were stated to be engaged in issuing share adjustment entries and to fulfill the said object, amounts were received either in cash or through cheque from entry seekers in favour of the following companies: -
(1) M/s Alpha Chemie Trade Agency (P) Ltd.;
(2) M/s Mihir Agencies (P) Ltd.;
(3) M/s Talent Infoway (P) Ltd.; and
(4) Mukesh Choksi, Individual.
Shri Mukesh Choksi further stated that the amounts received from the entry seeking parties were deposited in the bank account of the above four entities. He also explained the modus operandi adopted by which entries were given for commission of 0.15%. He admitted that the purchase and sale of shares shown through the share broking companies were only accommodating entries. To a question as to whether the contract notes for purchase and sales of shares issued in favour of the assessee during the period relevant 7 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 to the assessment year 2001-02 were genuine, Shri Mukesh Choksi answered that the contract notes were issued only as accommodation entries and no shares were given delivery or taken delivery. He also stated that the cheques issued were simply differential cheques and were issued on the receipt of equivalent funds from the entry seekers.
7. In the course of the assessment proceedings, in addition to the aforesaid statement, Shri Mukesh Choksi also filed an affidavit dated 04/05.12.2008. It should be mentioned here that in the course of the earlier reassessment proceedings he had filed an affidavit on 27.02.2006 confirming the genuineness of the transactions with the assessee herein. By the affidavit dated 04/05.12.2008 filed the present proceedings, the earlier affidavit filed on 27.02.2006 was withdrawn by Shri Mukesh Choksi. The affidavit filed in the present proceedings is referred to at paragraph 10 of the assessment order. In this affidavit he reiterated what he stated in the statement recorded on oath from him. Thus the statement recorded by the Assessing Officer and the affidavit formed the basis of the addition of `6,63,093/-.
8. For the assessment year 2002-03 also the Assessing Officer relied on the reasons given by the Assessing Officer in the earlier reassessment proceedings and in addition also relied on the statement recorded from Shri Mukesh Choksi as well as the affidavit confirming the statement filed in the course of the present proceedings.
8 ITA No: 5506/Mum/2009ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
9. The assessee filed appeals for both the years before the CIT(A) and they were disposed of by a common order passed by him on 16.07.2009. Before the CIT(A) the assessee also challenged the validity of the assessments completed under section 143(3) read with section 153A of the Act. The challenge to the validity of these assessments was based on two points: -
(a) there was no new evidence found in the course of the search on the assessee and therefore the assessment is not valid; and
(b) the additions / disallowances made in the present proceedings have already been adjudicated upon by the CIT(A) by his order dated 26.06.2007, by which he has deleted the additions / disallowances and since the order of the CIT(A) has been accepted by the revenue, the same additions or disallowances cannot be made the subject matter of the present proceedings.
These contentions were rejected by the CIT(A). According to him, discovery or detection of evidence during the search is not a mandatory requirement for initiating action under section 153A of the Act. Further, section 153A starts with a non obstante clause which stipulates that proceedings can be initiated under the section notwithstanding anything contained in section 147 and in this view of the matter the assessee's contention that the assessment having 9 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 already been made under section 147 the present proceedings are invalid is totally misplaced. For these reasons the assessee's objection to the validity of the assessments for both the years was rejected.
10. So far as the merits are concerned, for the assessment year 2001-02, the CIT(A) held that the addition of `6,63,093/- was deleted by the CIT(A) vide order dated 26.06.2007 by following the order of the Tribunal in the case of Mukesh R Marolia (supra) and that against the decision of the CIT(A) no appeal was filed by the income tax department before the Tribunal. The CIT(A) further noted that the earlier CIT(A) has rightly placed reliance on the order of the Tribunal cited above. He further noted that the only change from the facts before the earlier CIT(A) is the subsequent statement given by Shri Mukesh Choksi before the Assessing Officer in the present proceedings and confirmed by his affidavit dated 04/05.12.2008. After noticing the fresh fact, the CIT(A) observed that the parties mentioned in the statement of Shri Mukesh Choksi in answer to Question No:3 are not the parties with whom the assessee had any dealings. The CIT(A) noted that even according to Shri Mukesh Choksi there were three companies and Mukesh Choksi himself as individual who were receiving cash / cheques from the entry seekers. However, no cash or cheque was found to have been paid by the assessee to any of the three companies or to Shri Mukesh Choksi as individual. According to the CIT(A), if this is the factual position, it would indicate that the assessee was not 10 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 one of the entry seekers and this in turn also brings to light the inconsistency in the statement of Shri Mukesh Choksi. He held that the Assessing Officer cannot make any addition in the assessee's hands despite the assessee not having made any payment to the entities mentioned by Shri Mukesh Choksi, whose statement is being relied upon by him. The CIT(A) also noted that Shri Mukesh Choksi has been vacillating right through and has given different versions at different stages of the proceedings and therefore his evidence was unreliable. In this connection the CIT(A) noted that Shri Mukesh Choksi had earlier supported the revenue's case but had gone back on the same and confirmed the transactions with the assessee, but again in the course of the present proceedings has given a statement and an affidavit in support of the department's stand. According to the CIT(A) he is an unreliable witness and in support of this conclusion he relied on the judgment of the Calcutta High Court in CIT vs. Eastern Commercial Enterprises (1994) 210 ITR 103 (Cal), in which the High Court observed that "a man indulging in double speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful".
11. In the aforesaid view of the matter the CIT(A) deleted the addition of `6,63,093/-. Consequently, the short term capital loss of `5,58,230/- was also directed to be set off against the short term capital gains of `6,63,093/-.
11 ITA No: 5506/Mum/2009ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
12. With regard to the assessment year 2002-03, the CIT(A), for the same reasons, deleted the addition of `12,51,937/- added under section 69C of the Act and confirmed the assessee's claim that the said amount actually represented short term capital gains.
13. The assessee has come in cross objection for both the years challenging the decision of the CIT(A) that the assessments made under section 153A read with section 143(3) are valid. The cross objections are delayed by 19 days. An affidavit has been filed along with an application for condonation of the delay. It is stated therein that since the CIT(A) had decided the appeals in favour of the assessee by deleting the additions, the assessee bona fide believed that she need not file any appeal to the Tribunal. However, when discussions regarding regular tax matters took place with the assessee's authorized representative, the assessee brought the orders of the CIT(A) to his notice. Thereupon, the authorized representative advised the assessee to file cross objections against the decision of the CIT(A) upholding the validity of the assessments. The assessee immediately hastened to file the cross objections before the Tribunal and in the process there occurred a delay of 19 days. It is stated that the delay is not willful and should be condoned.
14. On a careful consideration of the prayer, we are satisfied that the delay was not willful and the assessee was prevented by sufficient cause in filing the cross objections in time. We accordingly condone the delay and admit the cross objections. 12 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
15. The argument of the learned counsel for the assessee is that : -
(a) there is no incriminating material found during the search on the assessee on the basis of which the additions under section 69C of the Act could have been made and therefore the assessments were invalid; and
(b) in any case the assessments are invalid because there was no undisclosed income which could be brought to assessment, and the additions made under section 69C cannot be considered as undisclosed income because those very additions had been made in the reassessment orders dated 29.03.2006, which additions were deleted by the CIT(A), whose decision was accepted by the revenue and in these circumstances it cannot be said that the additions represented undisclosed income of the assessee.
16. We are in agreement with the contention (b). It can possibly be argued, as was held by the CIT(A), that even where there is a search it is not necessary that some incriminating material should 13 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 have been found in the course of the search justifying the additions of undisclosed income because section 153A is so broadly worded that the assessments made there-under are not confined to undisclosed income or income to be added on the basis of any incriminating evidence gathered during the search. Even if such an extreme contention is acceptable, we do not see how finality of issues can be ignored and additions made in the earlier proceedings for the same assessment years which were deleted in appeal can be revived and added over again in the assessment made under section 153A of the Act. We do not think that the scheme of the Act permits matters that have become final between the assessee and the income tax authorities to be reopened and re- agitated except by a process known to law. It is a well settled proposition under the Income Tax law that an assessment once made is final unless it is disturbed under the authority of law. In the cases before us the very same additions that are the subject matter of appeal before us were made in the earlier reassessments. Those additions were deleted by the CIT(A) by orders dated 26.06.2007. The orders of the CIT(A) were not challenged by the revenue by filing appeals before the Tribunal. Thus the orders of the CIT(A) became final between the parties. Even assuming that section 153A is vast and sweeping and the only condition therein is that there should be a search on the assessee, it would be against all cannons of justice and public policy to construe the section as giving authority to the Assessing Officer to disturb the finality of 14 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 matters and make additions which have been held to be not justified. The revenue ought to have kept the matter alive by filing appeals to the Tribunal. As between the parties the orders of the CIT(A) deleting the additions have become final and have to be respected. It is a matter of no consequence that Shri Mukesh Choksi gave a further statement and affidavit during the present proceedings. It is a question of jurisdiction of the Assessing Officer to even attempt to examine matters which have already attained finality. In any case, the evidence of Shri Mukesh Choksi in the course of the present proceedings is nothing but a reiteration of what he stated in the course of the earlier reassessment proceedings. His evidence does not carry matters further in favour of the department.
17. Finality of assessments or judicial orders passed in appeal is sacrosanct and has been so recognized by the Courts. The judicial committee of the Privy Council in CIT vs. Khemchand Ramdas (1938) 6 ITR 414 (PC) held that after a final assessment is made, the Income Tax Officer cannot go on making fresh computations and issuing fresh notices of demand to the end of all time and it can be reopened only in the circumstances detailed in sections 34 and 35 of the 1922 Act and within the time limited by those sections. The Privy Council again in CIT vs. Tribune Trust, Lahore (1948) 16 ITR 214 (PC) reaffirmed the position and held that assessments once made would be valid and effective until they were set aside in the manner prescribed by the Act and if they are not so set aside, 15 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 they are final. These decisions were approvingly cited by the Supreme Court in CIT vs. Rao Thakur Narayan Singh (1965) 56 ITR 234 (SC). In this case a decision of the Tribunal was sought to be circumvented by the Income Tax Officer by initiating proceedings for reopening the assessment despite the finding of the Tribunal. Commenting on the action of the Assessing Officer the Supreme Court held that since the finding of the Tribunal is binding on the Income Tax Officer, he cannot reopen the assessment and initiate proceedings all over again and that it could not have been the intention of the Legislature to enable the Income Tax Officer to reopen final decisions made against the revenue in respect of questions that directly arose for decision in earlier proceedings. It was observed that "if that was not the legal position, we would be placing an unrestricted power of review in the hands of an Income Tax Officer to go behind the findings given by a hierarchy of Tribunals and even those of the High Court and the Supreme Court with his changing moods".
18. Applying the above principles, we do not in the present case think that the intention of section 153A is to disturb matters that have reached finality between the parties. It is true that the provisions of the section apply notwithstanding anything contained in section 147 and section 148. But that only conveys the limited idea that once a search takes place, it is open to the Assessing Officer to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the 16 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 previous year in which the search was conducted and in exercising such power, the Assessing Officer is not bound to take recourse to section 147 or section 148 of the Act. But that is only for the purpose of initiating proceedings for assessment under section 153A of the Act. It does not mean, in our humble opinion, that matters that have already been decided between the parties and had reached finality can be disturbed and brought back to assessment. If such a power is given to the Assessing Officer, he could even nullify decisions of the High Courts and the Supreme Court, a power which would be wholly inconsistent with the law of the land. Section 153A cannot be construed in such a manner.
19. For the above reasons we are of the view that contention (b) of the assessee is well founded and the Assessing Officer has no jurisdiction to include the same additions, which were deleted by the CIT(A) earlier and whose orders have become final, in the assessments made under section 153A of the Act.
20. The cross objections are thus allowed.
21. In the view we have taken, it is not necessary to discuss the merits of the additions canvassed in the appeals by the department. However, since the matter was argued before us even on merits, we consider it proper to decide the department's appeals on merits. The only evidence relied upon by the Assessing Officer in the assessment orders is the statement and affidavit of Shri Mukesh Choksi taken in the course of the present proceedings. This evidence only reiterates what Shri Mukesh Choksi stated in the 17 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 course of the original assessment proceedings, as can be seen from paragraph 5.1 of the reassessment orders passed on 29.03.2006, which has been reproduced in paragraph 7.1 of the assessment order for the assessment year 2001-02. In paragraph 5.1 of the reassessment orders passed earlier, the Assessing Officer has referred to the search and seizure operation on Shri Mukesh Choksi, who was the Director of the broker companies. In the course of the earlier reassessment proceedings the assessee was confronted with the statement of Shri Mukesh Choksi. The assessee asked for cross examination of Shri Mukesh Choksi. Before the request could be considered, the assessee filed an affidavit from Shri Mukesh Choksi in his capacity as Managing Director of M/s Richmond Securities Pvt. Ltd., stating that during the year under consideration the company had done dealings on behalf of the assessee and the transactions were duly recorded in the books of the company. The Assessing Officer rejected the affidavit on the ground that it did not certify that the transactions in question were effected through recognized Stock Exchanges. He therefore sent notices to the National Stock Exchange of India Limited calling for the details of the transactions entered into by the assessee through M/s Richmond Securities Pvt. Ltd. and M/s Alembic Securities Pvt. Ltd. NSE replied that M/s Alembic Securities Pvt. Ltd. was a declared defaulter with effect from 16.06.1999. When this was brought to the notice of the assessee, the assessee submitted that she should be allowed to cross examine the broker 18 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 and also stated that the broker had also filed an affidavit confirming the transactions with the assessee. The assessee's stand was rejected by the Assessing Officer in the course of the earlier reassessment proceedings on the ground that since the affidavit from the broker was obtained by the assessee herself; there was no need to allow cross examination. As regards M/s Richmond Securities Pvt. Ltd., NSE was given the relevant details of the contract note / broker bills, etc. with a request to verify the same with their records and in response thereto NSE stated that the trade numbers mentioned in the contract notes were incomplete and not in conformity with NSE's system of maintaining the trade numbers. From this the Assessing Officer inferred that the contract notes contained bogus numbers. On these facts the Assessing Officer in the course of the earlier reassessment proceedings held that the assessee had declared bogus purchase and sale of shares and shown bogus capital gains in order to introduce her own unaccounted income into the books.
22. All the above facts are seen mentioned in paragraph 7.1 of the impugned assessment order and strong reliance has been placed thereon in addition to the statement recorded from Shri Mukesh Choksi in the course of the present proceedings and the affidavit filed by him on 04/05.12.2008.
23. The assessee has placed strong reliance on the order of the ITAT in the case of Smt Varunadevi Shorewala vs. ITO, in ITA No:1611/Mum/2007 (assessment year 2001-02), dated 07.05.2009; 19 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 ITO vs. Mr Sandeep R Shorewala, HUF, in ITA Nos:5722 & 5723/Mum/2007 (assessment years 2001-02 & 2002-03), dated 26.02.2009; and Mukesh R Marolia (supra). These three orders have been filed at pages 183 to 210 of the assessee's paper book. We have already seen that in the case Mr Sandeep R Shorewala, HUF and Smt Varunadevi Shorewala the Tribunal has placed reliance on the order in the case of Mukesh R Marolia (supra) and deleted the addition. A perusal of paragraph 9 of the Tribunal's order dated 26.02.2009 in the case of Mr Sandeep R Shorewala, HUF (supra) shows that even in that case heavy reliance had been placed by the Assessing Officer on the statements given by Shri Mukesh Choksi during the search and seizure operations in his case. The Tribunal also noted that the Assessing Officer had made enquiries with the NSE by notices issued under section 133(6) for verifying the transactions shown by the assessee and based on the replies submitted by NSE, had come to a conclusion that the transactions were not verifiable. In paragraph 9 the Tribunal has also noted the assessee's contention that the share transactions could never be traced through NSE since they were all off market deals and such off market deals were not unlawful. The Tribunal has further noted the affidavit of Shri Mukesh Choksi, in which he confirmed the transactions carried out for the assessee in that case. The Tribunal further noted that the CIT(A) had relied on the findings of the Tribunal in the case of Mukesh R Marolia (supra) in which case one of the brokers involved was M/s Richmond Securities Pvt. 20 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 Ltd. After reproducing the relevant paragraphs in which the Tribunal had held in Mukesh R Marolia's case that off market transactions were not illegal and such transactions could not be traced through NSE and after noting the rival contentions the Tribunal held in the case of Mr Sandeep R Shorewala, HUF (supra) that the case of Mukesh R Marolia was factually of the same matrix except for the aspect relating to the affidavit given by Shri Mukesh Choksi and in this view of the matter it was held by the Tribunal that there was no basis for the addition.
24. In the present proceedings the only additional feature is that Shri Mukesh Choksi had given a statement on 27.11.2008 before the Assessing Officer and also confirmed it by an affidavit dated 04/05.12.2008. This aspect has been taken care of by the CIT(A) by relying on the judgment of the Calcutta High Court in the case of CIT vs. Eastern Commercial Enterprises (supra) in which the High Court observed that a man indulging in double speaking cannot be said to be a truthful man at any stage and no Court can decide on which occasion he was truthful. Apart from this, what we find is that the statement and the affidavit relied upon by the Assessing Officer in the present proceedings merely reiterate Shri Mukesh Choksi's earlier statement given in the course of the search operations in his case. They do not carry the case of the department much ahead. The earlier statement of Shri Mukesh Choksi has been the subject matter of scrutiny by the Tribunal in the case of Mr Sandeep R Shorewala, HUF (supra), which we have noted in the preceding 21 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010 paragraph. The decision of the Tribunal in the case of Mr Sandeep R Shorewala, HUF (supra) has been followed by the Tribunal in the case of Smt Varunadevi Shorewala (supra). Both these cases are connected to the assessee's case and the facts are also similar except that in the present case the further development is that there was a search on 28.06.2006 resulting in assessments made under section 153A read with section 143(3), in the course of which Shri Mukesh Choksi made a statement on 26.11.2008 and also submitted an affidavit on 04/05.12.2008 reiterating what he stated in the earlier search proceedings on him, which statement had been relied upon by the Assessing Officer in the course of the earlier reassessment proceedings. We have already noted that the earlier reassessment proceedings were taken in appeal by the assessee to the CIT(A), who by order dated 26.06.2007 deleted the additions and the department did not file any further appeal to the Tribunal. Having accepted the order of the CIT(A) dated 26.06.2007, the Assessing Officer was not justified in repeating the same addition in the present proceedings by merely seeking to rely on the statement of Shri Mukesh Choksi and his affidavit which are nothing but reiteration of the stand which he took in the earlier proceedings also.
25. For the above reasons we are of the view that even on merits the additions are not justified. We therefore confirm the orders of the CIT(A) for both the years even on merits. 22 ITA No: 5506/Mum/2009 ITA No: 5507/Mum/2009 CO No: 107/Mum/2010 CO No: 108/Mum/2010
26. In the result, the cross objections filed by the assessee are allowed and the appeals filed by the department are dismissed. No costs.
Order pronounced in the Open Court on 25th May 2011.
Sd/- Sd/-
(R K Panda) (R V Easwar)
Accountant Member President
Mumbai, Dated 25th May 2011
saldanha
copy to:
1. Mrs Uttara S Shorewala
59 / 67, Mirza Street
Ground Floor
Zaveri Bazar
Mumbai 400 003
2. ACIT (OSD) - 1, Central Range 7, Mumbai
3. CIT-Central II, Mumbai
4. CIT(A)-Central V, Mumbai
5. DR "F" Bench
TRUE COPY BY ORDER
ASSTT. REGISTRAR, ITAT, MUMBAI