AJAY SHANKARLAL BANKDA HUF,MUMBAI V. ITO-41(4)(1), MUMBAI

ITA 4466/MUM/2023

AI Insights

The case involves an appeal by Ajay Shankarlal Bankda, HUF against the order of the National Faceless Appeal Centre, Delhi, which was based on the earlier order by the Income-tax Officer-31(1)(1), Mumbai. The primary contention was the legality of the re-opening of the assessment under section 147 read with section 143(3) of the Income-tax Act, 1961, and the subsequent addition of Rs. 90,01,433 as unexplained cash credit under section 68 of the Act. The assessee argued that the re-opening was without jurisdiction and that the sale proceeds of shares were legitimate, supported by adequate documentation including bank statements, broker's notes, and DEMAT account statements. The tribunal, after considering the submissions and evidence, sided with the assessee, referencing a similar case and the lack of adverse findings from SEBI regarding the scrip in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474473 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Other Referred Cases: Shyam R. Pawar, 229 Taxman 256 (Bom), Ajay Shankarlal Bankda vs. DCIT, Circle-16(2), Mumbai, ITA No. 2484/Mum/2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIRAM KRISHN KEDIA
• Assessee Lawyers: DHARAN GANDHI
• Keywords: Unexplained cash credit; Income from undisclosed sources; Capital Gains; Bogus
• Section: 147; 148; 143(3); 250; 68; 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER ITA No.4466/Mum/2023 (Assessment Year: 2014-15) Ajay Shankarlal Bankda, HUF 4301, B Wing DB Woods, Gokuldham Goregaon East, Mumbai-400 063 PAN: AABHA8720J vs ITO-41(4)(1), Mumbai Kautilya Bhavan, G Block BKC, Bandra Kurla Complex, Bandra East, Mumbai-400 051 APPLICANT RESPONDENT Assessee by : Shri Dharan Gandhi Respondent by : ShriRam Krishn Kedia (SR DR) Date of hearing : 18/12/2024 Date of pronouncement : 03/01/2025 O R D E R PER ANIKESH BANERJEE, JM: The instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre, Delhi (NFAC) [in brevity ‘Ld.CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2014-15, date of order 09/11/2023. The impugned order was emanated from the order of the Learned Income-tax Officer-31(1)(1), Mumbai, order passed under section 147 read with section 143(3) of the Act, date of order 28/12/2017. 2 ITA No.4466/Mum/2023 Ajay ShankarlalBankda, HUF 2. The assessee has taken the following grounds: - “1 On facts and in law, the learned Commissioner of Income Tax (Appeals) had failed to appreciate that the re-opening of the assessment by the issue of notice u/s. 148 without satisfying the jurisdictional conditions precedent to assuming jurisdiction u/s. 147 is without jurisdiction and bad-in-law and consequently, any assessment made on the basis of the notice which is bad-in-law, may kindly be annulled. 2 On facts and in law, the learned Commissioner of Income Tax (Appeals) had erred on confirming Rs. 90,01,433 being the sale proceeds of shares as unexplained cash credit under section 68 of the I.T. Act. Under the facts and circumstances of the matter, he ought not to have confirmed the said addition of Rs. 90,01,433. 3 The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble ITAT to decide this appeal according to law.” 2. We heard the rival submission and considered the documents available in the record. Considering the facts of the case, we find that the assessee purchased 1,00,000 equity shares of Alpha Graphics India Ltd (AGIL) amount to Rs.12,00,000/- on 22.06.2011. Copy of bank statement showing the payment made had already been submitted. The aforesaid shares where sub divided on 14.06.2012 to 2,00,000 shares. Out of the aforesaid shares, the assessee has sold 1,93,070 shares through share broker, M/s Motilal Oswal Securities Ltd. and received the payment in bank account. Broker's contracts note for sale of aforesaid shares was also submitted before revenue. The assessee is currently holding 6930 shares of AGIL. These shares were sold during the Financial Year 2013-14, full details of the sale alongwith the broker's notes in respect of the same had already been submitted vide letter dated 04.10.2017 before the 3 ITA No.4466/Mum/2023 Ajay ShankarlalBankda, HUF revenue. Copy of Demat Account showing in & out of the aforesaid shares and bank statement and broker's account showing the amount received from the aforesaid broker had already been submitted vide our letter dated 04.10.2017. The assessee requested for the statement of various persons recorded by the Directorate of Income-tax, Kolkata for our record and further explanation. The assessee submitted that nowhere in the statement of various persons recorded, the assessee's name existed. Further, the assessee submitted that if it was proposed to rely on the statement of any person, the assessee may be provided with an opportunity to cross-examine the concerned person.It has also been stated in the show cause notice that shares sold by the assessee are purchased by various entities which were owned by the entry/exit operators. In this connection, we submit that the sale of shares of aforesaid scrip was made through Bombay Stock Exchange through the assessee's registered broker. Copies of Broker's Contract Notes for sale were submitted. The assessee further submitted before the lower authority that the assessee is not privy to information as to who the buyer is, when the shares were sold. Any person can do transaction on the stock exchange and accordingly, the allegation that the sale of aforesaid shares of AGIL. were purchased by the operator or any connected family is not correct as explained above. In response to the show cause notice that letters u/s. 133(6) of the Act were issued to the purchaser parties of the aforesaid shares sold by the assessee and most of the persons are denied the relation with the assessee,the assessee submitted thatassessee has already explained that the assessee has sold the aforesaid shares through its regular broker in the BSE platform. As such, the assessee does not aware who is buyer of the aforesaid shares and accordingly, the persons to whom notices u/s.133(6) of the Act has been send and rightly 4 ITA No.4466/Mum/2023 Ajay ShankarlalBankda, HUF considered that they do not know the assessee. The assessee further submitted that in the stock market, there is no correlation arise and assessee was not involved any price rigging. 3. The Ld. DR vehemently argued in favor of the orders passed by the revenue authorities and relied upon the same. However, the Ld. DR was unable to cite any contrary judgment that would refute the submissions made by the Ld. AR. 4. After hearing the rival submissions and carefully considering the documents available on record, we note that the assessee earned LTCG related to the scrip AGIL through transactions conducted on the BSE. No adverse findings or comments have been issued by SEBI regarding this scrip, and the Ld. DR was unable to submit any such directions or allegations by SEBI related to the scrip in question. The Ld. AO did not reject any of these primary pieces of evidence. In this context, the Hon’ble Bombay High Court in Shyam R. Pawar, 229 Taxman 256 (Bom)held that when details of share transactions are substantiated by DEMAT account statements and contract notes, and the Assessing Officer fails to prove such transactions as bogus, the capital gains cannot be treated as unaccounted income under Section 68 of the Act. The Ld. AR respectfully relied on the order of the coordinate bench of ITAT, Mumbai, A-Bench in the case of Karta of the assessee in Ajay Shankarlal Bankda vs. DCIT, Circle-16(2), Mumbai, ITA No. 2484/Mum/2023, Date of Pronouncement 22/03/2024 where the assessee earned LTCG on same scrip AGIL after detailed observation the bench allowed the appeal of the assessee and directed the Assessing Officer to allow the exemption on LTCG. We find no evidence of any irregularities or price rigging concerning the scrip AGIL. We find 5 ITA No.4466/Mum/2023 Ajay ShankarlalBankda, HUF no basis to conclude that the assessee was involved in any price rigging or circulation of black money to generate LTCG. The evidence and documents submitted during the assessment proceedings were neither denied nor challenged in terms of their authenticity. Accordingly, we hold that the appeal order is flawed and perverse. The addition under Section 68 amounting to Rs. 90,01,433/-is hereby deleted. 8. In the result, the appeal of the assessee bearing ITA No.4466/Mum/2023 is allowed. Order pronounced in the open court on 03rd day of January 2025. Sd/- sd/- (B.R. BASKARAN) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,दिन ांक/Dated: 03/01/2025 Pavanan Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकरआयुक्त CIT 4. दवभ गीयप्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्डफ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "