Smt. Shikha Khandelwal, New Delhi V. ITO, New Delhi

CO 234/DEL/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3865 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K TIWARI
• Assessee Lawyers: PIYUSH KR KAMAL
• Keywords: Gift
• Section: 143(3); 54F; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 3513/DEL/2014 ASSESSMENT YEAR: 2008-09 ITO, WARD 33(4), VS. SMT. SHIKHA KHANDELWAL ROOM NO. 1603, H-37-B, PUSA ROAD, DR. S.P. MUKHERJEE CIVIC NEW DELHI 110 005 CENTRE, JL NEHRU MARG, NEW DELHI - 110 002 (PAN: AFBPK0139A) (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO. 234/DEL/2017 (IN ITA NO. 3513/DEL/2014) ASSESSMENT YEAR: 2008-09 SMT. SHIKHA KHANDEWWAL, VS. ITO, WARD 33(4), H-37-B, PUSA ROAD, NEW DELHI NEW DELHI 110 005 (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. K. TIWARI, SR. DR. ASSESSEE BY : SH. GAUTAM JAIN, ADV. & SH. PIYUSH KR. KAMAL, ADV. ORDER PER H.S. SIDHU, JM THE DEPARTMENT HAS FILED THIS APPEAL AND ASSESSEE HAS FILED THE CROSS OBJECTION WHICH ARE EMANATED FROM THE IMPUGNED ORDER DATED 11.03.2014 OF THE LD. CIT(A)-X XVI, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2008-09. SIN CE THE ISSUES INVOLVED IN THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION ARE IDENTICAL, HENCE, THE SAME AR E BEING 2 CONSOLIDATED WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY FIRST DEALING WITH REVENUES APPEAL . 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER:- 1. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 99,20,000/- WITHOUT APPRECIATING THAT THE ASSESSEE RECEIVED THE SHARES AS GIFT FROM HER HUSBAND WITHIN 5 DAYS OF ACQUIRING THE SHARES BY HIM AND ASSESSEE FURTHER SOLD THE SHARES WITHIN 5 MONTHS OF ACQUISITION OF SHARES WHICH INFERS TO THE FACT THAT THIS FREQUENT TRANSFER OF SHARES IS NOTHING BUT A COLOURABLE DEVICE ADOPTED BY ASSESSEE TO BRING HER BLACK MONEY IN BOOKS. 2. THE CIT(A) HAS ERRED BY DELETING ALL THE ADDITION OF RS. 99,20,000/- WITHOUT APPRECIATING THE FACT THAT FREQUENT TRANSFER OF SHARES IS NOTHING BUT AN ARRANGEMENT TO EVADE THE TAX WHICH VEHEMENTLY CALLS FOR MENSE REA ON THE PART OF ASSESSEE. 3. THE GROUNDS RAISED IN THE ASSESSES CROSS OBJECT ION READ AS UNDER:- 1. THAT LD. CIT(A) WHILE DELETING THE ADDITION U/S. 68 OF THE ACT HAS EXCEEDED IN HIS JURISDICTION TO HOLD THAT INCOME DERIVED FROM TRANSFER OF SUCH 3 SHARES HAS TO BE ASSESSED IN VIEW OF THE PROVISIONS OF SECTION 64(1)(IV) OF THE ACT. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT THE FINDINGS OF THE LD. CIT(A) HAS TO BE CONFINED TO DELETING THE ADDITION U/S. 68 OF THE ACT AND FURTHER FINDINGS ABOUT ASSESSABILITY OF THE AFORESAID SUM ARE WITHOUT JURISDICTION. REVENUES APPEAL 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE F ILED HER RETURN OF INCOME DECLARING INCOME OF RS. 1,21,741/- . THE CASE OF THE ASSESSEE WAS PICKED UP UNDER SCRUTINY. THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS (LTCG) ON THE SAL E OF 2950 SHARES OF M/S ANIL STEELS PVT. LTD. THE ASSESSEE GO T THE SHARES M/S ANIL STEELS PVT. LTD. THROUGH GIFT FROM HER HU SBAND ON 22.11.2007, 20.11.2007; WHICH, LATER ON, IN THE LAS T FORTNIGHT OF MARCH 2008, WERE SOLD FOR RS.99,20,000/- AS DETA ILED IN PARA 5 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE ACT BY PURCHASING A PLOT AGAINST THE LTCG DERIVED ON TRANSFER OF SHARES OF M/S ANIL STEELS PV T. LTD. THE AO, BY ADDING 'SHARE CAPITAL' AND 'RESERVE & SURPLU S WORKED OUT THE 'NET WORTH' OF M/S ANIL STEELS PVT. LTD. AN D 'INTRINSIC VALUE' OF EACH SHARE OF M/S ANIL STEELS PVT. LTD. A T RS. 1,64,52,744/- AND RS. 103.12 RESPECTIVELY. ON THE BASIS OF THE 4 NET WORTH OF M/S ANIL STEELS PVT. LTD. AND 'INTRI NSIC VALUE' OF EACH SHARE OF M/S ANIL STEELS PVT. LTD., THE AO DOU BTED THE SALE PRICE OF SHARES OF M/S ANIL STEELS PVT. LTD. @ RS. 3,000/- TO 4,000/- BY THE ASSESSEE. FURTHER, THE AO, OBSERVED THAT THE ASSESSEE HAS EN-CASHED THE CHEQUES OF M/S CHINU PRE SS & PRAKASHAN PVT. LTD. ON 01.10.2008 THOUGH THE SHARES WHICH HAVE BEEN TRANSFERRED ON 31.03.2008, QUESTIONED THE GENUINENESS OF SHARES TRANSFER. THE AO ALSO HELD TH AT THE PARTIES; 7 COMPANIES, WHOM SHARES HAVE BEEN SOLD WE RE NOT HAVING INCOME TO EXPLAIN THE PURCHASES OF SHARES BY THEM; HOWEVER, SHE DID NOT INVESTIGATE THE GENUINENESS OF SHARES TRANSFER TO 7 COMPANIES DUE TO PAUCITY OF TIME. IN VIEW OF THESE FACTS, THE AO CONCLUDED THAT THE ASSESSEE HAS ADOPT ED SHARE TRANSFER OF M/S ANIL STEELS PVT. LTD. AS A COLOURAB LE DEVICE TO LAUNDER HER BLACK MONEY IN THE GARB OF LTCG AND THU S SHE TAXED THE ENTIRE SALE CONSIDERATION OF RS.99,20,000 /- OF SHARE TRANSFER OF M/S ANIL STEELS PVT. LTD. ULS 68 AND CO MPLETED THE ASSESSMENT AT RS. 1,00,41,740/- U/S. 143(3) OF THE I.T. ACT, 1961 VIDE ORDER DATED 27.12.2010. AGAINST THE ASSE SSMENT ORDER DATED 27.12.2010, ASSESSEE APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 11.3.201 4 HAS DELETED THE ADDITION IN DISPUTE AND ALLOWED THE APP EAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS FILED THE CROSS OBJECTION. 5 7. LD. SR. DR RELIED UPON THE ORDER OF THE AO AND R EITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. TO SUPPORT THE ORDER OF THE ASSESSING OFFICER, HE RELIED UPON THE FOLLOWING CASE LAWS:- - SANJAY BIMALCHAND JAIN L/H SHANTIDEVI BIMALCHAND JAIN VS. PCIT (ITA NO. 18/2017) HONBE BOMBAY HIGH COURT (NAGPRU BENCH). - CHANDAN GUPTA VS. CIT (2015) 54 TAXMANN.COM 10 (P&H) (2015) 229 TAXMAN 173. - BALBIR CHAND MAINI VS. CIT (2011) 12 TAXMANN.COM 10 (P&H) (2011) 201 TAXMAN 94 (P&H) (MAG.) (2012) 340 ITR 161 (P&H) (2012) 247 CTR 468 (P&H). - USHA CHANDRESH SHAH VS. ITO (2014) TIOL 1459-ITAT - MUM. - RATNAKAR M PUJARI VS. ITO 2016 TIOL 1746-ITAT-MUM . 8. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE REL IED UPON THE ORDER OF THE LD. CIT(A) AND ALSO RELIED UPON TH E JURISDICTIONAL HIGH COURT DECISION DATED 18.01.2017 PASSED IN ITA NOS. 43/2016 & 44/2016 IN THE CASE OF PR. CIT V S. JATIN INVESTMENT PVT. LTD. AND STATED THAT THE ISSUE IN D ISPUTE IS SQUARELY COVERED BY THE AFORESAID DECISION OF THE J URISDICTIONAL HIGH COURT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE IMPUGNED ORDER. THE ISSUE INVOLVED I S THAT WHETHER OR NOT THE SALE CONSIDERATION OF RS. 99,20, 000/- 6 RECEIVED ON TRANSFER OF SHARES IS INCOME ASSESSABLE U/S. 68 OF THE ACT. WE FIND THAT IN THIS CASE THE ASSESSEE HA S DISCHARGED THE ONUS OF PROVING IDENTITY OF THE PARTIES WHOM TH E SHARES WERE SOLD. HOWEVER, DURING THE REMAND PROCEEDINGS, THE PURCHASE OF SHARES HAVE BEEN CONFIRMED BY ALL THE S EVEN PARTIES. THE ENTIRE SALE CONSIDERATION HAS BEEN OF FERED AS GROSS INCOME AND THEREAFTER DEDUCTION U/S. 54F OF T HE ACT HAS BEEN CLAIMED. THUS, WE ARE OF THE CONSIDERED VIEW THAT TAXING SALE CONSIDERATION ONCE U/S. 45 AND AGAIN U/S. 68 AMOUNTS TO DOUBLE TAXATION. THEREFORE, IN VIEW OF SUCH FACTS AND CIRCUMSTANCES, THE ADDITION U/S. 68 IS NOT CALLED F OR AS SUCH BECAUSE IT IS A CASE WHERE ONE ASSET GETS REPLACED BY ANOTHER ASSET AND NOT OF CASH CREDIT. HERE, THE AO HAS NOT DOUBTED THE POSSESSION OF SHARES BY THE ASSESSEE THROUGH THE GI FT AS STATED BY THE ASSESSEE. THE AO HAS RAISED THE ISSUE OF TAX ABILITY OF INCOME U/S. 64 AS EVIDENT FROM THE IMPUGNED ORDER. HOWEVER, SHE HAS NOT CONCLUDED THIS ISSUE. UNDOUBTEDLY, THE ASSESSEE RECEIVED SHARES THROUGH THE GIFT FROM HER HUSBAND A S DETAILED IN THE ASSESSMENT ORDER; THUS, THE INCOME DERIVED FROM TRANSFER OF SUCH SHARES HAS TO BE ASSESSED IN VIEW OF THE PROVISIONS OF SECTION 64(1)(IV) AND NOT 68, WHICH T HE LD. CIT(A) HAS DONE. THUS, THERE IN THE ASSESSEES CASE, THE I SSUES RELATING TO THE WORKING OF LTCG AND DEDUCTION U/S. 54F LOSES RELEVANCE, THEREFORE, LD. CIT(A) REFRAINED HIMSELF IN DECIDING THESE ISSUES. ACCORDINGLY, THE ADDITION OF RS. 99,2 0,000/- MADE 7 U/S. 68 OF THE ACT IN THE HANDS OF THE ASSESSEE WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE FIND ING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND REJECT THE G ROUNDS RAISED BY THE REVENUE. SINCE THE CASE LAWS CITED BY BOTH THE PARTIES ARE ON DISTINGUISHED FACTS, HENCE, THE SAME ARE NO T APPLICABLE. 10. IN THE RESULT, THE REVENUES APPEAL IS DISMISS ED. ASSESSEES CROSS OBJECTION 11. AS FAR AS ASSESSEES CROSS OBJECTION IS CONCERN ED, SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE AS AFOR ESAID ON THE MERIT OF THE CASE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND DISMISSED AS SUCH AND AC CORDINGLY, THE CROSS OBJECTION OF THE ASSESSEE ALSO STANDS DIS MISSED. 12. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED ON 04/06/2018. SD/- SD/- [N.K. BILLAIYA] [H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/06/2018 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR 8