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Smt.Manjulaben L Shah 212 Shreeji Chambers Opera House, Mumbai 400 004 Vs. The Income Tax Officer Ward 15(1)(4) Mumbai.
November, 04th 2014
                   ,  Û ` ',  
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                IN THE INCOME TAX APPELLATE TRIBUNAL
                      MUMBAI BENCHES "G", MUMBAI
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          Before Shri B.R.Baskaran, AM and Shri Amit Shukla, JM

              ITA No.3112/Mum/2014: Asst.Year 2005-2006

Smt.Manjulaben L Shah                   The Income Tax Officer
212 Shreeji Chambers                / Ward 15(1)(4)
Opera House, Mumbai ­ 400 004       Vs. Mumbai.
PAN : AAEPS3608J.
        ( /Appellant)                               (×/Respondent)

          /Appellant by : Shri S.C.Tiwari & Ms.Natasha Mangat
                 ×    /Respondent by : Shri R.N.D'Souza


   /                                         /
Date of Hearing : 16.10.2014              Date of Pronouncement : 31.10.2014

                                  / O R D E R


Per Amit Shukla (JM) :
       This appeal has been preferred by the assessee against the order
dated 28.03.2014 passed by the Commissioner of Income-tax (Appeals)-26,
Mumbai, in relation to the quantum proceedings u/s 143(3) read with section
148 read with section 254.

2.     By way of revised application, the assessee has raised following
revised as well as additional grounds:-

       "1. That on the facts and in the circumstances of the case of
       the appellant and in law learned CIT(Appeals) has erred in
       upholding the assessment of Rs.1,41,80,926/-, shown by the
       appellant as long-term capital gains, as her income under
       section 68 of the Act.
                                      2                   ITA No.3112/Mum/2014.
                                                          Smt.Manjulaben L.Shah.



      2.    That on the facts and in the circumstances of the case of
      the appellant and in law learned CIT(Appeals) has erred in
      brushing aside the evidence and material relied upon by the
      appellant in support of long-term capital gains shown by her.

      3.    That on the facts and in the circumstances of the case of
      the appellant and in law learned CIT(Appeals) has erred, in
      gross violation of the principles of natural justice, in relying
      upon the alleged statement of Shri. Mukesh Choksi dated
      11.12.2009 recorded by DDIT (Inv), Unit 1(4), Mumbai behind
      the back of the appellant without allowing the appellant
      opportunity to cross examine.

      4.    That on the facts and in the circumstances of the case of
      the appellant and in law learned CIT(Appeals) has erred in
      brushing aside the decision of ITAT as well as Hon'ble Bombay
      High Court in the case of the appellant's husband Mr.Pinakin
      Shah and Smt.Rajanidevi on almost identical facts.

      5.    That on the facts and in the circumstances of the case of
      the appellant and in law learned CIT(Appeals) has erred in
      upholding the assessment of gifts of Rs.20,00,000/- received
      by the appellant as the appellant's income from undisclosed
      sources.

      6.    That the order of the learned CIT(Appeals) being
      contrary to the facts of the case, evidence and material on
      record and law applicable thereto should be set aside,
      amended or modified in accordance with the grounds of appeal
      deduced above.

      7.    Each of the grounds of appeal enumerated above are
      independent of and without prejudice to one another."

3.    Besides this, the assessee has substituted the aforesaid ground no.3,
in the following manner:-
                                       3                   ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

      "3. That on the facts and in the circumstances of the case of
      the appellant and in law learned CIT(Appeals) has erred, in
      gross violation of the principles of natural justice, in relying
      upon the alleged statement of Shri. Mukesh Choksi dated
      11.12.2009 recorded by DDIT (Inv), Unit 1(4), Mumbai behind
      the back of the appellant without allowing the appellant
      opportunity to cross examine, which statement was
      subsequently retracted by Shri Mukesh Choksi."
4.    Thus, the assessee is mainly aggrieved by the addition of
Rs.1,41,80,926 received by the assessee as long term capital gain on sale of
shares which was taxed u/s 68 of the Income-tax Act, 1961, and secondly,
addition of Rs.20,00,000 received as gift by the assessee, added as income
from undisclosed sources u/s 68 of the Act.

5.    The impugned order has been passed in pursuance of order dated
05.04.2013, passed by the Tribunal in ITA Nos.2708/Mum/2011 and
2709/Mum/2011, whereby the Tribunal has set aside the matter to the file of
the CIT(A) for adjudicating the aforesaid issues afresh.

6.    Briefly stated the facts of the case are that the assessee is an
individual and a partner in M/s.Dhanera Metal Corporation. A survey u/s
133A was conducted on the business premises of M/s.Dhanera Metal
Corporation, wherein it was found that the assessee along with her family
members, Shri Pinakin L.Shah, Smt.Rinku Girish Shah and Smt.Nisha
Pinakin Shah were beneficiaries of accommodation entries of long term
capital gain given by Shri Mukesh Choksi, Director of M/s.Mahasagar
Securities Pvt. Ltd. The assessee had shown long term capital gain on sale
of shares for a sums aggregating Rs.1,41,80,926 for the assessment year
2005-2006. Besides that, the assessee has also received gift of
Rs.20,00,000 from Shri Mukesh Choksi and Shri Maniklal Chimanlal Choksi.
                                     4                     ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

The present assessment proceeding was initiated under section 148, on the
ground that evidences relating to long term capital gain was collected in the
case of Shri Pinakin L Shah, wherein the Assessing Officer had held that the
long term capital gain on sale of shares are nothing but accommodation
entries given by Shri Mukesh Choksi and also, similar gifts received from the
family of Mukesh Choski were also accommodation entries. Based on these
information in the case of Shri Pinakin L.Shah, the case of the assessee was
reopened u/s 148 by issuance of notice dated 03.04.2008.

7.    In response to the various notices, the assessee submitted that she
had purchased 1,45,000 shares of M/s.Talent Infoway Limited from
M/s.Mahasagar Securities Pvt. Ltd. These purchases were made in the
month of April 2003 at an average rate of Rs.1.40 per share. The assessee
had shown the purchase value of these shares at Rs.2,00,470. The sources
of said purchases were claimed through speculation profit earned by the
assessee in the financial year 2003-2004. In support of the purchases, the
assessee had filed copies of purchase bills, contract notes and statement of
account with the broker. Further, the said shares were transferred in the
name of the assessee by the company, M/s.Talent Infoway Limited. Copy of
transfer letters issued by the company were also filed. These shares were
later on demated in the Dmat account maintained with Axis Bank Limited.
The said shares were later on sold through M/s.Mahasagar Securities Pvt.
Ltd. between 1st October, 2004 and 6th December, 2004. The delivery of the
said shares was made through Oriental Bank of Commerce. The shares
were sold and the sums were credited to the bank account of the assessee.
The Assessing Officer noted that exactly on same facts, the Assessing
Officer in the case of Shri Pinakin L.Shah, has added the said long term
                                      5                     ITA No.3112/Mum/2014.
                                                            Smt.Manjulaben L.Shah.

capital gain u/s 68 after detailed reasoning. The observations and findings
given in the assessment order of Shri Pinakin L.Shah has been incorporated
by the learned Assessing Officer advertism and on similar reasoning, he has
made the addition of the amount shown under the head long term capital
gain, as income of the assessee u/s 68. Similarly, on account of the gifts of
Rs.10 lakh each, received from Shri Mukesh Choksi and Shri Maniklal
Choksi, the Assessing Officer held that similar gift from similar set of donors
had been confirmed in the case of Shri Pinakin L.Shah. The observation
made by the A.O. in the order of Shri Pinakin L.Shah has again been
incorporated for confirming the addition in the case of the assessee. The
sum and substance of the A.O's finding in Pinakin L.Shah was that, a
statement of Shri Mukesh Choksi, Director of M/s.Mahasagar Securities Pvt.
Ltd. was recorded on 07.08.2006 and 04.01.2007, wherein he has admitted
that he was involved in providing adjustment entries. The relevant portion of
the statement has also been incorporated in the assessment order of Pinakin
L. Shah. Based on this statement, an adverse view was taken in the case of
Shri Pinakin L.Shah. One important fact in the assessment proceeding of
Shri Pinakin L.Shah was that, the Assessing Officer had issued a notice u/s
133(6) to M/s.Mahasagar Securities Pvt. Ltd. and in response to which the
said broker- company had confirmed the transaction of sale of shares of
M/s.Talent Infoway Limited owned by Shri Pinakin L.Shah. The relevant
notice and the reply have been incorporated at page 8 and 9 of the
assessment order. Shri Mukesh Choksi was also subjected to cross-
examination on 26.12.2007 by the assessee in presence of the AO. During
the course of cross-examination, Shri Mukesh Choksi retracted his statement
made before the ADIT (Investigation) earlier and claimed that the
                                      6                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.




transactions with Shri Pinakin L.Shah and his family are genuine and the
statement given earlier before ADIT was without verification of correct facts
and records. The A.O., in that case, rejected the assessee's contention and
held that the retraction of Shri Mukesh Choksi at the time of cross-
examination is an afterthought and without any basis or proof because Shri
Mukesh Choksi could not give the details of the buyers of the shares, that is,
to whom the shares were sold by the assessee through his broking
company. Solely based on these grounds, the addition was made in the case
of Shri Pinakin L.Shah. Exactly on similar reasoning and without any other
independent finding the additions has been made in the case of the
assessee also.
8.    Aggrieved by the said assessment order, the assessee preferred on
appeal before the CIT(A). The learned CIT(A) vide order dated 27.01.2011
deleted the addition of Rs.1,41,80,926 and also addition of Rs.20,00,000.
The main ground for deletion of the addition by the learned CIT(A) was that,
in the case of other family members, especially in the case of Pinakin L.
Shah, who were also alleged to be beneficiaries of accommodation entries of
long term capital gain provided by Shri Mukesh Choksi through
M/s.Mahasagar Securities Pvt. Ltd., the Tribunal has deleted the said
addition and the order of the Tribunal has also been affirmed by the Hon'ble
Bombay High Court. Not only this, in other cases also, wherein addition was
made on the basis of statement given by Shri Mukesh Choksi before the
ADIT (Inv.), various Courts had deleted similar addition. The learned CIT(A)
has heavily relied upon the identical case of Shri Mukesh R.Marolia, wherein
similar alleged accommodation entries of long term capital gain was taken
from Shri Mukesh Choksi and in those cases additions have been deleted by
                                      7                     ITA No.3112/Mum/2014.
                                                            Smt.Manjulaben L.Shah.

the Tribunal and later on upheld by the High Court. He also referred to series
of decisions and other appellate orders of the CIT(A) in the case of Gada
family, who were subject matter of similar addition, on the basis of statement
given by Shri Mukesh Choksi. As regards the addition on account of gifts
also, the learned CIT(A) followed the order of the Tribunal in the case of Shri
Pinakin L.Shah.

9.    Against this order, the Department preferred appeal before the
Tribunal being ITA No.2708/Mum/2011. The Tribunal held that the CIT(A)
has not analyzed the facts of the case independently but instead, has
followed the decision of the Tribunal in the case of Shri Pinakin L.Shah,
which again was based on the decision of Shri Mukesh R.Marolia. The
relevant observation of the Tribunal for setting aside the matter has been
reproduced by the CIT(A) in the impugned order at page 2. The sum and
substance of the Tribunal order was, that the Ld.CIT(A) should decide the
case on the facts of the assessee's case rather than simply following the
other decisions.
10.   In the set aside proceedings, the learned CIT(A), first of all,
incorporated the relevant finding of the learned CIT(A) passed in the first
round and held that the same has been set aside by the Tribunal to be
decided afresh. Thereafter, he incorporated the statement of Shri Mukesh
Choksi, which were examined by the Investigation Wing, wherein he has
stated that he was engaged in providing accommodation entries to various
companies floated by him. The relevant question and answer has been
incorporated by the learned CIT(A) from pages 7 to 9 of the appellate order.
From the said statement, he observed that Shri Mukesh Choksi has admitted
that he is providing accommodation entries and all such transactions
                                       8                    ITA No.3112/Mum/2014.
                                                            Smt.Manjulaben L.Shah.

recorded in the books of account, are not genuine. In this case also, the
shares have been purchased at a lower rate and have been sold
subsequently through Shri Mukesh Choksi at a higher rate. The shares have
been demated after a long gap and immediately after demating, the shares
have been sold. He also distinguished the case of Shri Mukesh R.Marolia
and other orders of the Tribunal. Before the CIT(A), the assessee raised an
objection that such a statement of Shri Mukesh Choksi cannot be accepted
as the assessee was not given opportunity of cross-examination. This
contention of the assessee has been rejected by the CIT(A) on the ground
that the assessee could not produce any evidence that she has made any
claim before the A.O. for cross-examination of the witness. He further held
that Shri Mukesh Choksi has been providing accommodation entries to large
number of people including the assessee. Therefore, the argument of cross-
examination is mere technical and no prejudice is caused to the assessee in
the absence of cross-examination. Thereafter he has referred to series of
Supreme Court decisions and other High Court decisions, which have been
dealt by him from pages 12 to 22 of the appellate order and came to the
conclusion that the argument of cross-examination by the assessee is with
the sole objective of obstructing the process of law and it is merely dilatory.
The evidence available on record is adequate and sufficient to decide the
issue. Thus, he held that all the share transactions showing capital gain in
the return of income are bogus, and therefore, the addition made by the
Assessing Officer was upheld by him. Similarly, with regard to the addition on
account of gifts received from two persons for Rs.10 lakh each, he again
                                       9                    ITA No.3112/Mum/2014.
                                                            Smt.Manjulaben L.Shah.

gave the similar reason that, Shri Mukesh Choksi was engaged in the
business of accommodation entries, and therefore, such gifts too are bogus.

11.   Before us, the learned Counsel Shri S.C.Tiwari submitted that the
entire premise of the reopening the case in the case of the assessee was on
the basis of information received in the case of Shri Pinakin L.Shah. Even
the learned Assessing Officer had not given any independent finding, but has
simply incorporated the assessment order of Shri Pinakin L.Shah and has
made the similar addition in the case of the assessee. In the case of Shri
Pinakin L.Shah, the matter stands concluded not only from the stage of the
Tribunal, but also from the High Court. He further submitted that the sole
basis of the CIT(A) in the second round of the proceedings is the statement
on oath recorded by the Investigation Wing of Shri Mukesh Choksi, which is
evident from various observations made by him in the impugned order. Such
a statement cannot be adversely viewed in the case of the assessee, as no
cross-examination has been allowed by the Department to the assessee.
Without any cross-examination, the statement cannot be relied upon when all
the evidences relating to purchase and sale of shares along with the contract
note of the brokers, bills raised by the brokers, have been filed. In support of
his contention, he strongly relied upon the decision of the Hon'ble Supreme
Court in the case of Kishinchand Chellaram v. CIT reported in (1981) 125
ITR 713 (SC). He further submitted that, there have been series of Tribunal
decisions in various cases wherein on similar statement of Shri Mukesh
Choksi, the cases were reopened and additions were made. In all these
cases the Tribunal has decided the issue of long term capital gain in favour
of the assessee as the said statement of Shri Mukesh Choksi could not be
corroborated by any other material or evidence. He, thus, submitted that the
                                     10                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

decision of the Tribunal in the case of Shri Pinakin L.Shah and other such
decisions should be followed. In the case of Shri Mukesh R.Marolia, again
the similar broker was involved, wherein the Tribunal has given a detailed
reasoning, which has been affirmed by the High Court also. Thus, on similar
set of facts, which is permeating through in this case also, these decisions
should be followed.
12.   As regards the addition on account of gifts, Shri S.C. Tiwari submitted
that the genuineness and creditworthiness of the donors have been analyzed
in detail by the Tribunal in the case of Shri Pinakin L.Shah. Based on the
evidences furnished, the Tribunal has deleted the said addition made on
account of gift. In this case also the assessee has furnished the confirmation
letters from the donors, affidavits, their Income-tax particulars and also the
fact that gifts transaction have been reflected in the balance sheet and
income-tax returns of the donors. The donors were family friends, who were
in regular touch and had regular business with the assessee. Hence they
were not strangers. If the donors were family friends of Shri Pinakin L.Shah,
then the assessee being mother of Shri Pinakin L.Shah, then naturally, the
donors are also family friends of the assessee and not strangers. The
Tribunal has taken note of these facts and has deleted the said addition
which should also be followed here as no different finding has been given
either by the A.O. or by the CIT(A), are not even in the set aside
proceedings.
13.   On the other hand, the learned Departmental Representative strongly
relied upon the order of the CIT(A) and submitted that it is a case of Penry
Stock and the transactions have been under taken off market. The shares
have been purchased at a low price and within a gap of one year the price of
                                     11                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

the shares have jumped many fold, which is against any human probability.
This fact is corroborated by the submission of Shri Mukesh Choksi as
recorded by the Investigation Wing, which will go to show that the entire
transaction is mere paper transaction and that cannot be held to be genuine.
Thus, the decision of Shri Pinakin L.Shah should not be followed. Regarding
gift also, he strongly relied upon the order of the A.O. as well as CIT(A) and
submitted that it suffice that gift has been received from the same set of
persons who have accepted to the providing accommodation only. The gifts
are nothing but a bogus entry given by Shri Mukesh Choksi, which is evident
from the statement recorded by the Investigation Wing, wherein he has
categorically admitted that he was engaged in the business of giving
accommodation entries. Moreover, the gifts of such a huge amount without
any family relation and any occasion is unnatural. Thus, the same should be
confirmed.
14.   We have heard the rival submissions and perused the impugned order
and also the material placed on record. As stated above, this is the second
round of proceedings, in pursuance of order of the Tribunal dated
05.04.2013, wherein the matter has been set aside to the CIT(A) to decide
the issues afresh as the Tribunal found that the reliance placed by the
learned CIT(A) on the decision of Shri Pinakin L.Shah, which again was
based on the case of Shri Mukesh R.Marolia, cannot be followed blindly
without analyzing the facts of the present case. Now on such a mandate the
case of the Department and the facts has to be seen from the assessment
order, from where the impugned additions arise. From the perusal of the
assessment order, as noted above, it is amply evident that the Assessing
Officer has not given any independent finding, except for incorporating the
                                     12                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

observations and finding given in the case of Shri Pinakin L.Shah, a family
member of the assessee wherein similar additions have been made. The
very premise of reopening the case of the assessee and also the additions
made therein is that, the assessee's family were the beneficiaries of the
accommodation entries of long term capital gain given by Shri Mukesh
Choksi, Director of M/s.Mahasagar Securities Pvt. Ltd. Since the nature of
capital gain in the case of all the family members were arising out of same
set of shares of M/s.Talent Infoway Limited, which were sold through Shri
Mukesh Choksi therefore, the facts of the Pinakin L. Shah and the findings
given therein assume a great significance while analyzing the facts of the
assessee's case, as detailed inquiry and investigation was made during the
course of assessment proceedings of Shri Pinakin L.Shah, which has been
verbatim noted by the A.O. in the present assessment order.

15.   The undisputed facts relating to purchase of shares are that the
assessee had purchased 1,45,000 shares of M/s.Talent Infoway Limited in
the month of April 2003, falling in the financial year 2003-2004 relating to
assessment year 2004-2005. The purchases were supported by purchase
bills and contract notes of the broker. The said shares were also transferred
in the name of the assessee by M/s.Talent Infoway Limited in the month of
May 2003. The copy of transfer letters has also been issued by the company.
These shares were ultimately demated and sold at a higher rate. Since the
A.O. has held that the facts are similar to Shri Pinakin L.Shah, therefore, we
are analyzing the observations and finding given by the A.O. in the order of
Shri Pinakin L.Shah. In that case, the Assessing Officer had noted the similar
statement made by Shri Mukesh Choksi before the Investigation Wing, that
he was engaged in the business of providing accommodation entries through
                                     13                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

his various companies. Survey report of inquiries made by the ADIT with the
Ahmedabad Stock Exchange also revealed that M/s.Talent Infoway Limited
was listed with the Stock Exchange and the shares of the said company was
traded during the period 25.11.1999 to March 2004. At the time of sale of
shares, no such transaction had taken place, in the stock exchange. Further
the shares were traded in the Stock Exchange at Rs.49 per share, whereas
the assessee had sold the same at the rate of Rs.68 to 88 per share. On
behalf of the assessee, after giving the entire details and reply, it was also
pointed out that Shri Mukesh Choksi was produced before the A.O. on
26.12.2007 and during the course of his cross-examination, he has duly
confirmed the genuineness of the transaction and also the price at which
these shares have been purchased by him. Hence the rates at which the
shares have been sold are quite genuine. This fact given in the letter filed
before him has been noted by the A.O. at page 7 of the present assessment
order, which for the sake of ready reference is reproduced hereunder:-

      "On enquiry with Mahasagar Securities Pvt. Ltd. I have come to
      know that there were many buyers for the shares of this
      company even after our sell and that also at much higher price
      than ours. I hereby enclose the certificate from Mahasagar
      Securities Pvt. Ltd. in this regards. As per your instruction
      Shri.Mukesh Choksi, Director of Mahasagar Securities Pvt.
      Ltd., on 26/12/2007. During his cross examination he has
      confirmed the genuineness of the transaction & consequently
      the price at which these shares have been purchased by him.
      Hence the rate at which we have sold the shares are genuine,
      we also enclose an affidavit of Mr.Mukesh Choksi, Director,
      Mahasagar Securities Pvt. Ltd., confirming the genuineness of
      the transaction."
                                     14                    ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

      Affidavit of Shri Mukesh Choksi, confirming the genuineness of the
transaction have also been reproduced in the said page.

16.   The Assessing Officer had also issued notice u/s 133(6) to
M/s.Mahasagar Securities Pvt. Ltd. the contents of which has been
reproduced at page 8 of the assessment order. In response, M/s.Mahasagar
Securities Pvt. Ltd. has replied back to the A.O., which too has been
reproduced at page 9 of the assessment order, wherein, Mukesh Choksi has
given the entire details of transactions and also confirmed the genuineness
of the share transaction. The AO has also taken note of the fact that during
the course of cross examination of Shri Mukesh Choksi on 26.12.2007, he
has retracted from his earlier statement and has claimed that the transaction
with Shri Pinakin L.Shah and family are genuine and the earlier statement
was without verification of correct facts and records. The relevant
observation of the A.O. in this regard is reproduced hereunder:-
      "After giving through the reply of the M/s.Mahasagar
      Securities Ltd. Shri Pinakin Shah was given an opportunity
      to cross examine Shri Mukesh Choksi on 26/12/2007.
      During the cross examination Shri Mukesh Choksi
      retracted his statement made before the ADIT (Inv) V(3)
      and claimed that the transactions with Shri Pinakin Shah
      and Family are genuine and statement given before ADIT
      (Inv.) V(3) was without verification of correct facts and
      records."
      Thus, the Assessing Officer was of the view that retraction of Shri
Mukesh Choksi at the time of cross-examination is an afterthought and
without any basis of proof, therefore, he held that the earlier statement of
Shri Mukesh Choksi can only be considered. He further held that Shri
Mukesh Choksi could not lead to who was the real buyer of the shares later
                                     15                   ITA No.3112/Mum/2014.
                                                          Smt.Manjulaben L.Shah.

on. The buyers which were shown by the assessee could not be
substantiated by the assessee as no confirmations from the buyers were
filed. Based on these reasoning alone the addition on account of long term
capital gain was made.

17.   The assessee's case in the first appellate proceedings, apart from
relying upon the decision of Shri Pinakin L.Shah, was as under:-
      "xi. Your Honour, we are enclosing herewith the statement of
      Capital Gains and the details of the statement of Income and
      the acknowledgement filed by the Assessee. Your Honor shall
      appreciate that the assessee has mentioned that it has exempt
      income by way of Long Term Capital Gains arising after
      01/10/2004 and the Copy of the statement is enclosed along
      with this return of income. From this fact, Your Honor shall
      appreciate that the assessee has duly disclosed the fact as
      regards long term capital gains along with the return of income.
      As such the statement of the assessing officer that the
      assessee has not disclosed the fact as regards long term
      capital gains is not true and correct.

      xii. Further, Your Honour, we are enclosing herewith the
      Copies of all the long term bills. Your Honor shall appreciate
      that Securities Transaction Tax (STT) has been levied by the
      Broker. The said STT has been duly been paid by the
      Assessee to the Broker. As per the provisions of the act, if STT
      has been paid by the Assessee, any long term capital gains
      arising on transfer of securities is exempt from tax. The STT is
      a alternate tax to Capital Gains tax. Where STT has been duly
      been charged by the Broker to the Assessee and the said
      assessee has made the payment of the said STT, the
      conditions prescribed in the Act are duly fulfilled and the said
      Long Term Capital Gains is exempt from Tax as per the
      provisions of the said act.

      xiii. The Appellant has in the course of the Assessment
      Proceedings has submitted the co0mplete set of documents
                                    16                   ITA No.3112/Mum/2014.
                                                         Smt.Manjulaben L.Shah.

      relating to the said transaction which includes statement of
      Capital Gains, Copies of Contract cum Bills for Purchase and
      Sale of Shares, Proof of Dematting of the said shares,
      Statement of accounts in the books of the Brokers, Copies of
      letter issued by the Brokers in support of such transactions,
      confirmation of brokers, Copies of Bank statement of the
      Brokers confirming the payments, and all other documents.
      The Complete set of such documents as submitted to the
      Assessing Officer is also enclosed herewith for Your Honors
      ready reference.
      xiv. Your Honour shall appreciate that the Assessee has
      submitted all the required details in support of such
      transactions to the Assessing Officer in the course of the
      assessment proceedings. The Assessing Officer had sufficient
      time to verify and pursue the said documents, make enquiries
      as he may deem fit to and prepare the orders.
      xv. Your Honor shall appreciate that the assessing Officer
      has not made any enquiries and has not even verified the
      documents submitted by the Assessing Officer.
      xvi. Your Honor is requested to kindly consider the said
      decision of the ld.CIT(A), dt.ITAT and the ld.Mumbai High
      Court and is requested to delete the said addition."
      Such a submission of the assessee found favourable appreciation by
the Ld.CIT(A) to the assessee and the addition was deleted.

18.   Now in the set aside proceedings, the learned CIT(A) in the second
round without analyzing the facts which were there in the record and also
which was the mandate of the Tribunal order, has simply reproduced the
statement on oath of Shri Mukesh Choksi given before the Investigation
Wing earlier and held that, since he has admitted of providing
accommodation entries, therefore, any transaction carried out with him is
nothing but bogus transaction. Thereafter he has rejected the assessee's
plea for cross-examination in the present case on the ground that the
                                      17                   ITA No.3112/Mum/2014.
                                                           Smt.Manjulaben L.Shah.

objection has been raised for the sole purposes of obstructing the process of
law. We are unable to understand as to how the cross-examination of a
witness, who has given a statement behind the back of the assessee can be
solely relied upon, once the assessee has adduced all the relevant material
and evidences in her favour. If the sole basis of adverse view is the
statement of a third party which is being used against the assessee, then
the principles of natural justice demand that the same witness should be put
to cross-examination. This is more so, when all the transaction with the
broker is duly supported by documents in which he himself has confirmed the
transaction. It becomes all the more relevant because the said witness
himself has retracted his statement in the case of Shri Pinakin L.Shah and
has categorically admitted that the transactions with Shri Pinakin L.Shah and
the family members, (which also included the assessee) is genuine. On the
face of such a retraction, the entire premise of the conclusion drawn by the
learned CIT(A) gets effaced. It is quite trite law that evidences brought on
record by way of confession or statement which stands retracted, must be
substantially corroborated by other independent and cogent evidences which
would lent to credibility before the Court to rely on such contentions. Here in
this case the statement of Shri Mukesh Choksi stands retracted as he has
admitted that sale of shares in case of Pinakin L. Shah and his family
members are genuine and earlier statement was without verification of
records. All the evidences which were filed by the assessee in relation to
share transactions has neither been inquired upon nor has been rebutted by
some cogent material on record. The learned CIT(A) has merely relied upon
the statement of Shri Mukesh Choksi, given earlier. Even if we rely on such
a statement, which has been reproduced by the learned CIT(A) from
                                     18                   ITA No.3112/Mum/2014.
                                                          Smt.Manjulaben L.Shah.

pages 7 to 9 of the appellate order, then it can be seen that, nowhere the
name of the assessee has surfaced nor any reference is made to assessee
or her family, hence such a statement that he was engaged in providing
accommodation entries to all, cannot be taken at a face value, unless the
same is corroborated by a cogent material qua the assessee.

19.   Another important fact which is noticeable is that the purchases of
shares have been made in the earlier assessment year and such purchases
have not been doubted by the Department. Only the net sale proceeds,
which has been shown as long term capital gain, has been added, that is,
sales minus purchases. If the factum of purchases recorded in the balance
sheet of the earlier years is not disproved, then the sale of the same shares
in this year cannot be prima facie held to be bogus. The addition itself has
not been made on account of entire sale proceeds, but only on account of
net long term capital gain, which itself goes to show that the Department has
not carried out proper inquiry or has brought any material on record in the
case of the assessee to prove that the entire sale transaction of the
assessee is not genuine. The presumption, based on surmises, that how the
value of shares in one year has arisen many fold giving rise to exempt long
term capital gain, has to be based on concrete material and independent
enquiry. Here, in this case, Shri Mukesh Choksi, before the A.O., has given a
letter during the course of the assessment proceedings of Shri Pinakin
L.Shah that the transaction with the family of Shri Pinakin L.Shah are
genuine which necessarily implies assessee also. If we analyze the similarity
of the case of Shri Pinakin L.Shah and Smt.Manjulaben L.Shah (the
assessee), then we find that the facts relating to purchase and sale
transaction of shares and resultant long term capital gains are exactly
                                      19                    ITA No.3112/Mum/2014.
                                                            Smt.Manjulaben L.Shah.

identical, and therefore, there cannot be a different finding in the case of the
assessee to what has been given in Pinakin L. Shah, which stand confirmed
from the stage of Hon'ble High Court. Thus even on merits, as discussed
above, we do not find any reason to confirm the addition on account of long
term capital gain, which has been added as income of the assessee u/s 68,
and therefore, the same stands deleted. In the result the addition of
Rs.1,41,80,926/- is deleted.

20.   Now coming to the addition on account of gift, we find that the
Assessing Officer has made the addition primarily on the ground that the
proof of source and capacity of the donors have not been given, except gift
deeds. The assessee's case had been that it has not only given the
confirmation letters from the donors, but also their affidavits confirming the
transaction of giving of the gifts. Not only that, the donors have also given
their Income-tax particulars, copy of the balance sheet, wherein the gifts
have been shown and filed alongwith the income tax returns. Thus, the
prima facie onus of the assessee was discharged. It has also been submitted
that the donors were the family friends, who were in touch with the family and
had regular business deals. The A.O. has instead held that exactly similar
facts were there in the case of Shri Pinakin L.Shah also, and therefore,
based on the finding given therein, he has confirmed the addition. In the first
round up till the stage of CIT(A), the addition of gifts have been deleted. Now
the CIT(A), in pursuance of the ITAT order, decided the issue by merely
stating that Shri Mukesh Choksi and his associates were providing
accommodation entries, and therefore, this transaction is also not genuine
and the assessee was unable to establish the relationship with the donors to
show that there was love and affection. Hence the donors were merely entry
                                     20                   ITA No.3112/Mum/2014.
                                                          Smt.Manjulaben L.Shah.

providers. From the records, it is seen that the assessee and her family had
received gifts from Shri Mukesh Choksi and his family, the details of which
has been incorporated at page 23 of the impugned appellate order. The
assessee had received gifts of Rs.10 lakh from Shri Mukesh Choksi and
Rs.10 lakh from Shri Maniklal Chimanlal Choksi. In the case of Shri Pinakin
L.Shah, one of the donors were common, wherein the Tribunal has deleted
the said addition. This order of the Tribunal has now been affirmed by the
Hon'ble High Court also. In the case of Shri Pinakin L.Shah, the Tribunal
deleted the gift received from Shri Mukesh Choksi and his family, after
observing and holding as under:-

      "6.4 Be it as it may, the assessee, in this case has furnished
      confirmations letters from the donors, and has also filed
      affidavits from the donors, wherein they have admitted to have
      given the said gifts. The donors are all income-tax assessee
      and these gift transactions are reflected not only in their
      balance sheets but also in their income-tax returns. The
      submission of the assessee that all the donors were family
      friends and were in touch with the family and that they had
      regular business deals for many years prior to the date of gifts
      and also in the subsequent years to the date of gifts is not
      disputed by the revenue by way of any evidence or analysis of
      available information. The assessee submitted that the persons
      are not strangers to each other and do have long association.
      When the assessee produced confirmation letters, affidavits,
      income-tax details in support of his contention that he had
      received gifts, rejecting these evidences merely on the basis of
      preponderance of probabilities, in our considered opinion, is
      bad in law. The assessing officer, when he doubts the
      genuineness of the gifts, he should have conducted enquiries
      by way of summoning the donors and examining them on oath
      or verifying the antecedents of those people and by gather
      atleast some evidence against the transactions. The assessing
                                 21                    ITA No.3112/Mum/2014.
                                                       Smt.Manjulaben L.Shah.




officer rejected the entire evidence filed in just two lines, which
are extracted for ready reference:
      `Except for filing fresh evidence from the donors, the
      assessee has not proved creditworthiness of the donors
      nor filed copy of the income-tax return. The retraction of
      the assessee is without any substance of proof. In view
      of the above facts and circumstances, the gift received
      by the assessee is treated as unexplained credit u/s 68
      of the Act.'
When the permanent account number and income-tax details
are furnished to the assessing officer by way of confirmation
letters as well as affidavits, the AO observing that no details
have been furnished, in our considered opinion is not correct.
No attempt has been made to examine the balance sheet to
find out the creditworthiness. We also find that the assessing
officer had recorded the statement of only one of the donors
i.e. Shri Mukesh R.Chokshi and in reply to question (at page
178 of the paper book) Shri Chokshi stated on oath that he has
given Rs.5 lakhs out of love and affection to his business
customer and friend and that he would submit his balance
sheet to prove this. There is no evidence whatsoever found by
the revenue, which contradicts the evidence filed by the
assessee. Under these circumstances, in our considered
opinion, the addition by invoking the theory of preponderance
of probabilities is bad in law.
6.5 Coming to the case laws relied upon by the revenue, in
the case of CIT vs. P Mohana Kala 291 ITR 278 (SC), the
assessee in that case were receiving gifts from a stranger, who
was a common donor. Most of the cheques in that case were
drawn on a single bank and it was held unacceptable. The
Hon'ble Supreme Court held that, in cases where explanation
offered by the assessee about the nature and source of the
sums found credited in the books is not satisfactory then there
is prima facie evidence against the assessee. In this case,
there is no recording that the gifts in question are found
recorded in the books of the assessee as a credit. Basically the
gifts were received by Master Abhay P Shah by way of crossed
                                       22                    ITA No.3112/Mum/2014.
                                                             Smt.Manjulaben L.Shah.

      cheques from close business associates of Shri Pinakin Shah,
      who were also family friends and these were credited to his
      bank account. In the absence of books of account for the minor
      and an entry in those books of account no addition can be
      made as held by the Hon'ble Bombay High Court in the case of
      CIT v. Bhaichand V Gandhi 141 ITR 67 (Bom.).
      6.6. The gift not being from the strangers and as there is
      evidence filed which is not controverted the ratio of the
      decisions relied upon by the CIT(A) cannot be applied to the
      facts of this case. In fact to meet such a situation only section
      56(2)(v) was introduced in the Act by the Finance Act, 2005
      with effect from 01.04.2005 for gifts received after 01.09.2004.
      In this case all the gifts were received before 23.08.2004.
      Hence this section was not applied. In view of the above
      discussion, we are of the considered opinion that the addition
      u/s 68 has to be necessarily deleted. The appeal; of the
      assessee is allowed."
21.   Thus, we hold that so far as the issue of gift is concerned, the same is
arising out of similar set of facts, which were there in the case of Shri Pinakin
L.Shah, and hence the findings given therein, will apply mutatis mutandis in
the present case also. In that case the issue of gifts as incorporated above
was decided on the analysis of facts, and merits therefore, the same
reasoning will apply here also as there are similar set of donors. Further
without there being any proper reasoning by the learned CIT(A) and analysis
of the documents and affidavits furnished, we do not feel persuaded to take
contrary view and hold that the addition of gifts for sums aggregating Rs.20
lakh cannot be sustained. Here in this case, one very important fact is that,
after the assessee has filed all the relevant documents and evidences in
support of gifts, the department has neither carried out any enquiry nor has
rebutted the evidence with any material, except for relying on
unsubstantiated statement of Mukesh Choksi, which too was not specific on
                                        23                ITA No.3112/Mum/2014.
                                                          Smt.Manjulaben L.Shah.

gifts. Thus without any rebuttal by department, the primary onus which lied
upon the assessee stood discharged and the amount of gift cannot be added
u/s 68. Hence same is deleted.
22.      [         In the result, assessee's

appeal is allowed.

Order pronounced on this 31st day of October, 2014.
                                  




             Sd/-                                   Sd/-
         (B.R.Baskaran)                          (Amit Shukla)
         / ACCOUNTANT MEMBER                   Û  / JUDICIAL MEMBER


 Mumbai;  Dated : 31st October, 2014.
Devdas*


    /         Copy of the Order forwarded to :
1.  / The Appellant
2.    × / The Respondent.
3.     () / The CIT, Mumbai.
4.      / CIT(A)-26, Mumbai
5.     ,   ,  / DR,
      ITAT, Mumbai
6.    [  / Guard file.
                                                          / BY ORDER,
              ×  //True Copy//


                                             /
                                             /  (Dy./Asstt. Registrar)
                                        ,  / ITAT, Mumbai
                                        ,

 
 
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