IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC" Bench, Mumbai
Before Shri D. Manmohan, Vice President
ITA No. 7462/Mum/2014
(Assessment Year: 2007-08)
Income Tax Officer-33(2)(4) Smt. Neeta Ashok Shah
Room No. 101, 1st Floor B-602/601, Harmony Apts
Vs.
C-11, Prathakshakar Bhavan A.C. Road, Near Damodar Wadi
BKC, Bandra (E), Mumbai - 051 Kandivali (E), Mumbai 400101
PAN - ARKPS1661E
Appellant Respondent
Appellant by: Shri K. Ravikiran
Respondent by: None
Date of Hearing: 07.10.2015
Date of Pronouncement: 12.10.2015
ORDER
Per D. Manmohan, V.P.
This appeal by the Revenue is directed against the order passed
by CIT(A) 35, Mumbai and it pertains to A.Y. 2007-08.
2. Following grounds were urged before the Tribunal: -
"(i) On the facts and in the circumstances of the case and in
law, whether the Ld. CIT(A) was correct in ignoring the
findings of the AO in the assessment order that the
assessee did not prove that the transactions in shares
were entered through a recognized stock exchange and
ruling in favour of the assessee despite the fact that the
assessee never produced the demat account before the
AO during the assessment proceedings.
(ii) On the facts and in the circumstances of the case and in
law, the Ld.CIT(A) erred in admitting additional evidence
of the assessee i.e Demat Alc without giving the AO an
opportunity in violation of Rule 46A of the Income Tax
Rules. No Transaction ID of the demat strips were given
to the AO. As such the AO could not verify the
corresponding payments through ECS vis a vis the
Transaction ID".
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Smt. Neeta Ashok Shah
(iii) Whether the Ld.CIT(A)s after taking cognizance of the
fact that Mukesh Chokshi has on the date of Search &
(subsequently also) stated that his statement that all the
transactions carried out by his various companies are
bogus and he only provides accommodation bills. Without
prejudice, the Ld.CIT(A)s could have remanded the
matter to AO to allow the Assessee to cross examine
Mukesh Chokshi and called for further Remand.
(iv) Whether the Ld.CIT(A)s after taking cognizance of the
fact in page 5 of his order that the sub-broker Alliance
Intermediaries & Network Private Limited admitted during
its own assessment that it was in the business of
accommodation entry, was right in holding that the
purchase of the shares by the assessee through this sub-
broker was genuine. The Ld.CIT(A)s failed to remand the
matter to the AO for cross examination of the assessee.
(v) Whether the Ld.CIT(A)s after observing that the AO erred
in confirmation from BSE instead of NSE, was right in
accepting claim of assessee without asking the O to
obtain confirmation from NSE regarding transactions
made through the sub-broker Alliance Intermediaries &
Network Private Ltd. & Joinder Capital Services Ltd.
whereas in the instant case, the assessee was informed of
the reasons for reopening the case.
(vi) Whether the Ld.CIT(A)s was correct in ignoring the fact
that the assessee never requested for cross-examination
before the AO during the assessment proceedings and
holding that that AO did not provide the opportunity to
cross-examine.
(vii) Whether the Ld.CIT(A)s after relying on the decisions of
the Hon'ble Mumbai Tribunal in the case of ACIT Vs. Utara
S.Shorawalla and others in IT No.55606/5507/Mum12009
CO No. 107/Mum/2010 order 25.5.201 1 for A.Y 2001-02
and 2002-03 was correct in not directing the AO to cross-
examine and furnish the remand report.
(viii) The appellant prays that the order of the Ld. CIT(A) on
the above grounds of unexplained Cash Credit of
Rs.2,50,843/- and unexplained cash credit of Rs.13,140/-
be set aside and that of the Assessing Officer be
restored."
3. None appeared on behalf of the assessee. I have heard the
learned D.R. and carefully perused the record.
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Smt. Neeta Ashok Shah
4. Facts necessary for disposal of the appeal are stated in brief.
For the year under consideration assessee declared total income of
`1,06,682/- on 20.03.2009 which includes long term capital gain of
`13,140/-, which is claimed as exempt. Information was received by
the AO, during the course of statement given by Shri Mukesh Chokshi
on 16.01.2013, that he had provided accommodation entries to
several people including the assessee herein. Therefore the
assessment was reopened by issuing notice under section 148 of the
Act and a notice under section 142(1) was issued along with a
questionnaire calling upon the assessee to furnish details of purchase
of shares and details of D-MAT Accounts, proof of payment made on
purchase, etc. Upon going through the information the AO had
concluded that assessee had taken bogus/accommodation entries and
the entire transaction is nothing but accommodation entries from
M/s. Alliance Intermediaries & Network Pvt. Ltd. He therefore added a
sum of `2,50,843/- as unexplained cash credit.
5. Aggrieved, assessee preferred an appeal before the CIT(A)
wherein it was contended that the statement of Shri Mukesh Chokshi
is general and assessee's name was not specifically mentioned and no
cross information has been provided. It was also contended that the
shares have been credited in D-MAT Account of the assessee. The
payment towards purchase of shares has been made by account
payee cheque. Shares have been sold through a reputed stock
broker. He has also furnished the entire evidence in respect of
purchase and sale of shares.
6. Having regard to the submissions made before the first Appellate
Authority the learned CIT(A) perused the record and noticed that
during the year only 200 shares of MMTC was purchased whereas the
shares of IFCI and Jai Corporation were sold during the present year.
She further observed that mere statement of third party would not be
sufficient to doubt a transaction and the assessee should have been
4 ITA No. 7462/Mum/2014
Smt. Neeta Ashok Shah
given an opportunity to confront the person by way of cross
examination whereas, in the instant case the assessee, has not been
given an opportunity. Reliance was placed upon the decision of the
ITAT Mumbai Bench in the case of ACIT vs. Utara S. Shorawalla in ITA
No. 5506/5507/Mum/2009 dated 25.05.2011 wherein the Tribunal
observed that Shri Mukesh Chokshi`s report cannot be the sole basis
for making an addition. The learned CIT(A) further observed that in
the statement of Shri Mukesh Chokshi there is no reference to the
assessee as such. In fact the assessee produced brokers note; the
transaction has been entered into D-MAT account and the AO has not
found any reason to doubt the same. Under the circumstances the
addition made by the AO was set aside by the learned CIT(A).
7. Aggrieved Revenue is in appeal before the Tribunal. The case of
the learned D.R. is that the CIT(A) could have remanded the matter
to the AO to allow the assessee to cross examine Shri Mukesh
Chokshi or called for further report rather than setting aside the
disallowance and also contended that the assessee never produced
the D-MAT account before the AO during the assessment
proceedings. It was also submitted that the learned CIT(A) erred in
admitting additional evidence, i.e. D-MAT Account, without giving the
AO an opportunity, in violation of Rule 46A of the Income Tax Act.
8. The appeal was posted for hearing on 02.09.2015 by sending
notice to the assessee by RPAD. Since the Bench did not function on
that day, the case was adjourned to 07.10.2015 by announcing the
date through notice board. However, none appeared on behalf of the
assessee. In fact no material was filed by the assessee to show that
copy of D-MAT account, etc. were filed before the AO. Since the plea
of the Revenue is that no opportunity was given to the AO while
admitting additional evidence, in the interest of substantial justice, I
am of the view that the matter deserves to be set aside to the file of
the CIT(A) who is to reconsider the matter in accordance with law
5 ITA No. 7462/Mum/2014
Smt. Neeta Ashok Shah
after giving the AO the requisite opportunity of being heard in
consonance with Rule 46A of the Income Tax Rules. With these
observations the appeal filed by the Revenue is treated a allowed for
statistical purposes.
Order pronounced in the open court on 12th October, 2015.
Sd/-
(D. Manmohan)
Vice President
Mumbai, Dated: 12th October, 2015
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 35, Mumbai
4. The CIT 25, Mumbai City
5. The DR, "SMC" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
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