Case Law Details
ITO Vs Shri K. Ramakrishna Reddy (ITAT Hyderabad)
Ld. CIT(A) observed that on identical facts, the ITAT Hyderabad Bench in the case of Smt. Sarita Devi vs. ITO and Ms. Nikita Kumar vs. ITO (ITA No.1228 and 1229/Hyd/2016, dated 05.05.2017) allowed a similar contention of the other assessees, mainly on the ground that neither the statement of Mr. Mukhesh Choksi was provided to the assessee nor the cross-examination was allowed and it was not even placed on record. Considering the similarity of facts and circumstances and binding nature of decision of the ITAT, the action of the A.O. in treating the LTCG and STCG as income from other sources was held to be not warranted.
FULL TEXT OF THE ITAT JUDGMENT
1. This is an appeal filed at the instance of the Revenue and it pertains to Assessment Year 2007-2008. Following grounds were urged by the Revenue:
“1. Ld. CIT(A) erred in treating the income offered by the assessee under the head “income from capital gains” as against under the head “income from other sources” as assessed by the Assessing Officer treating the same as income from undisclosed sources.
2. The Ld. CIT(A) failed to appreciate the facts that the demat account of the assessee has not shown the transactions of the alleged purchases and no Security Transaction Tax was paid on these purchases. Further the broker / sub-broker, M/s. Alliance Intermediaries and Networks (P) Limited is not recognised by NSE leads to the conclusion that the income shown by the assessee under the guise of capital gains is nothing but income from undisclosed income.”
2. None appeared on behalf of the assessee.
3. We have heard the Learned Departmental Representative and carefully perused the record. According to the information received by the Assessing Officer, the assessee had taken accommodation bills on sale of shares whereby he has received benefit to the tune of Rs. 1.52 Crs and in the return filed he had shown Long Term Capital Gains of Rs. 25,17,768/- on sale of shares at Rs. 26,04,687/- and Short Term Capital Gains of Rs. 7,12,398/- on sale of shares of Rs. 68,39,340/-.
4. A.O. was of the opinion that capital gains declared by the assessee was bogus. In this regard, A.O. also observed that he received information from the office of Chief Commissioner of Income Tax, Mumbai that M/s. Alliance Intermediaries and Network Pvt Ltd., one of the group companies of Mr. Mukesh Choksi, and also other companies of this group have provided accommodation entries to various persons, including the assessee. Though the assessee has furnished purchase bills of shares, cash receipts for payment of share purchases, account copies of M/s. Alliance Intermediaries and Network Pvt Ltd, the A.O. noticed that the Intermediary i.e., M/s. Alliance Intermediaries and Network Pvt Ltd., was proved to have neither affiliated to Mumbai Stock Exchange nor affiliated to National Stock Exchange which clearly indicates that the transactions were never carried out.
5. On an appeal filed by the assessee, Ld. CIT(A) observed that on identical facts, the ITAT Hyderabad Bench in the case of Smt. Sarita Devi vs. ITO and Ms. Nikita Kumar vs. ITO (ITA No.1228 and 1229/Hyd/2016, dated 05.05.2017) allowed a similar contention of the other assessees, mainly on the ground that neither the statement of Mr. Mukhesh Choksi was provided to the assessee nor the cross-examination was allowed and it was not even placed on record. Considering the similarity of facts and circumstances and binding nature of decision of the ITAT, the action of the A.O. in treating the LTCG and STCG as income from other sources was held to be not warranted.
6. Aggrieved, Revenue is in appeal before the Tribunal.
7. As stated earlier, none appeared for the assessee and the notice could not be served through the Departmental Representative apart from the fact that no material whatsoever could be placed to highlight the factual matrix and to contradict the findings of the Ld. CIT(A). Apparently the Ld. CIT(A) followed the decision of the ITAT Hyderabad on the ground that the facts are identical and unless it is contradicted by the Revenue, the findings and conclusions cannot be questioned at this stage. Under these circumstances, we uphold the order of the Ld. CIT(A) with a liberty to the Revenue to file a suitable application for recalling of the order if the Revenue wishes to place any material on record to contradict the findings of the Ld. CIT(A). We may also state that the view taken herein is limited to the peculiar facts of this case and the Revenue is always at liberty to, in other cases, to challenge the alleged bogus purchases (based on the statement of Mr. Mukhesh Choksi). With these observations, the appeal filed by the Revenue is dismissed.
