BEFORE THE

HONBLE COMMISSIONER OF INCOME TAX (APPEALS) XVI, AHMEDABAD

Reg:-

Jubedaben Alihusain Jazakallah, (Deceased)

Legal hair Alihusain Fidahusain Jazakallah

10/03/B, Ashiyana Appartments, Near Vishvakunj Char Rasta,

Paldi,
Ahmedabad- 380 007
ABIPJ6157E
A.Y.2008-09

The appellant is an Individual and derive income Short Term Capital gain
income from sale of securities etc., and income from other sources. Return of
income was e-filed on 21.08.2008 declaring total income of Rs.3,07,150/-.
The same is processed u/s.143(1) of the Act. Subsequently, the proceedings
u/s.147 of the I.T.Act was initiated as the reasons recorded for the same and
notice u/s.148 of the Act was issued calling return for A.Y.2008-09. The notice
u/s.143(3) along with notice u/s. 142 (1) of the Act calling certain details
issued and served. The assessment order was passed u/s. 143(3) r.w.s. 147
of the Act on 21.02.2014 determining total income at Rs.3,19,810/- by
addition on account of deemed income of Rs.1,64,200/- as under:
1 Rs. 12655/- added as deemed income toward the value of the unexplained
investment.
2 Rs. 151535/- added as deemed income which shown as short term capital
gain and offered to tax as such.
The A.O. has treated the purchase of shares of Rs. 12655/- through the Alliance
Intermediates Pvt.Ltd as deemed income .The appellant has purchased the shares
of Zen Shaving through the broker company of Alliance Intermediateries and
Network Pvt.Ltd in cash. The Ld.A.O. has received the information that there was

a search & seizure action u/s.132 of the Act carried out in the case of M/s.
Mahasagar Securities Pvt. Ltd., and the same also covered its group
companies which were controlled by Shri Mukesh M. Chokshi, at Mumbai. Shri

Chokshi himself admitted that all this group companies were providing entry
for taking profit or loss by showing purchase or sale of the shares and
securities to various parties across the India on which he charged certain
commission from the beneficiary parties. It is alleged that the name of the
appellant among others who are involved in taking entry from the group
companies belong to Shri Mukesh Chokshi during the F.Y.2007-08 and
purchased shares of Zen Shaving Ltd., through Alliance Intermediateries &
Network Pvt. Ltd., the broker company which was controlled by Shri Mukesh
Chokshi. Therefore, the Ld. AO has initiated the proceedings u/s.147 of the
Act after recording of reasons thereof and issued notice u/s.148 of the Act
calling return for A.Y.2008-09 and finalized the assessment u/s143(3)
r.w.s.147 of the Act. Considering the deemed income of Rs.12655/- being
cash purchase of shares of Zen Shaving on 12/04/2007 through Alliance
Intermediateries & Network Pvt. Ltd. at the rate of Rs.1.58 per share.
The appellant has purchased 8000 shares of Zen Saving on 12/04/2007 through
Alliance Intermediates & Network Pvt. Ltd at the rate of 1.58. The payment for the
same was made in cash (12665/-) on 16/04/2007. Subsequently, this shares have
been sold on 29/05/2008 through Alliance Intermediates & Network Pvt. Ltd at the
rate of 71.75 and the profit earned Rs. 5,59, 668/- after deduction of commission.
The said profit has been shown in our income tax return for A.Y.2009-10.

The appellant has furnished the detail submission to Ld A.O. as under.

I had made transaction of purchase of shares of Zen Saving Co at the prevailing
market rate on that date through Alliance Intermediates and Net Works Pvt. Ltd.
Zerox copy of bills were submitted before. The contract note were issued by Alliance
Intermediates and Net Works Pvt. Ltd., who is a member of Bombay Stock Exchange
for the purpose of assisting in, entering in to or performing any contract in securities
and also assisting, regulating and controlling the business of buying, selling and
dealing in securities and all the above transactions were made through BSE Stock
Exchange and through my Dmat a/c. The transactions were made by me by A/c.
payee cheque.
Notice issued by you is not as per provisions of sub section (1) of section 151 of the
I.T.Act. Moreover, in the statement of Mukesh M. Chokshi, there is no mention of PAN
No. of me on which you rely upon and hence there is no escapement of income by

me during the year under consideration. The above proceedings are initiated on the
surmises and presumptions and for the purpose of rowing inquiry. There is no live
link of information as relied upon by you. Hence I request you to please drop the
reassessment proceedings started by you.
Shri Mukesh Chokshi has issued a general statement and therefore a general
statement given by Mukesh M. Chokshi cannot be applied in each and every case.
I request you to please give me opportunity to cross examination of
Mukesh Chokshi.
Without prejudicial to the above and in support of your appellants claim, the
reliance is placed as under: in the Income Tax Appeallate Tribunal SMC,
Bench Mumbai in the case of Shri Anantrai B. Shah, B-501, v. I.T.O., 21(1)(1),
Mumbai, -

The relevant para of the judgment is reproduced as under:

3. On information from DDIT(Inv) Unit-1(v), Mumbai, a search and seizure was undertaken under
Section 132 in the case of M/s Mahasagar Securities Pvt. Limited and its group companies including Gold
Star Finvest Pvt. Limited. The statement of Shri Mukesh Chokshi, Director of M/s Mahasagar Securities
Pvt. Limited was recorded during the search, wherein Mr. Mukesh Chokshi had explained in detail that
the modus operation of the accommodation entries racket being run by him by floating some 34
companies and admitted to be in business of providing the bogus accommodation entries. On the basis of
the details obtained during the search by the investigation wing, it was noted that the assessee also had
made sales and purchases of shares of M/s Buniyad Chemicals Limited through M/s Gold Star Finvest
Private Limited, which had provided the accommodation entries. These companies were flouted by Mr.
Mukesh Chokshi only. Since the assessee has purchased 6000 shares of Buniyad Chemicals Limited on
10-5-2001 and on 14-5-2001 through M/s Goldstar Finvest Pvt. Ltd., therefore, notice under Section 148
was issued to the assessee to verify the genuineness of the transaction.
7. After considering the submission and perusing the material on record, I found that the assessee has
discharged his onus by filing complete details ie. purchase of shares, share certificate, Demat account,
confirmation from Buniyad Chemicals Limited of whose shares were purchased. Consideration was paid
through account payee cheque, therefore, there is no material against the assessee from which it can be
said that the transaction entered by the assessee was not genuine. It is further noticed that in case of
Kataria Ketan Ishwarlal (supra), the additions were made on the basis of statement of Shri Mukesh
Chokshi. The Tribunal by noting that Mr. Chokshi has issued a general statement and it cannot be
applied in each and every case, there was no direct evidence against that assessee. Accordingly, the
amount of addition made in that case was deleted by the Tribunal. Here facts are similar. Neither
the statement of Mukesh Chokshi was provided to the assessee nor there was any cross examination
of Mukesh Chokshi, whereas contrary to that the assessee has filed all the details required for
providing for purchase of shares were genuine. It is not a case of the department, whatever the
consideration was paid by the assessee through cheque for purchasing of shares have come back to the
assessee under the garb of bogus purchases as there is no evidence against the assessee. Keeping in mind
all Anantrai B Shah, Mumbai vs Assessee on 14 December, 2012 these facts and circumstances of the
case, I hold that the addition made and sustained on account of purchase of shares only on the basis
of statement of Mukesh Chokshi, was not justified. Therefore, the same is deleted.

However, the Ld. AO has not accepted the above contention and the
assessment u/s.143(3)r.w.s.147 of the Act has been made on 21/02/2014
determining total income of Rs.319810/- The penalty proceedings u/s.271(1)(
c) of the I.T.Act also initiated separately for the addition made.

Reassessment merely on the basis of investigation wing held to be not valid.

Notice issued after the expiry of four years from the end of the relevant assessment year by
the assessing officer merely acting mechanically on the information supplied by the
Investigation wing about the accommodation entries provided by the assessee to certain
entities without applying his own mind was led to be not justified.(A.Y.2004-05, 2006-07)

CIT v. Kamdhenu Steel & Alloys Ltd. (2012) 248 CTR 33 (Delhi)(High Court)
4. Reason to believe:

The Apex Court in the case of Calcutta Discount Co. Ltd. (1961) 41 ITR 191
(SC) analysed the Phrase "reason to believe" and observed that "It is for him to decide
what inferences of facts can be reasonably drawn and what legal inferences have ultimately
to be drawn.

It is not for somebody else to tell the assessing authority what inferences, whether of facts
or law, should be drawn.

4.1 The power to reopen an assessment is conditional on the formation of a reason to

believe that income chargeable to tax has escaped assessment. The power is not akin to a
review. The existence of tangible material is necessary to ensure against an arbitrary
exercise of power.

Being aggrieved with the deemed income assessed to the extent of

Rs.164200/- and passed order u/s.143 (3) r.w.s.147 of the Act, this appeal is
made to get relief in respect of the adverse action taken by the Ld. AO.

Jubedaben Alihusain Jazakallah,

Place: AHMEDABAD
Dated : 02/04/2015

A.R.