Sh. Ram Saran Mittal, Agra V. Dy. C.I.T.-1, Agra

CO 27/AGR/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5027 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Assessment record
• Section: 14A; 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH : AGRA BEFORE SHRI R.K. GUPTA, J. M. AND SHRI P.K. BANSAL, A.M. PAN NO. ABLPM281M I.T.A.NO . 50/AGR/2010 A. Y. 2003-04 DY. CIT, SHRI RAM SARAN MITTAL, CIRCLE 1 VS. 62-B, NEHRU NAGAR, AGRA AGRA APPELLANT RESPONDENT C.O.27/AGR/2010 (ARISING OUT OF I.T.A.NO. 50/AGR/2010 ) A. Y. 2003-04 SHRI RAM SARAN MITTAL, DY. CIT, 62-B, NEHRU NAGAR, VS. CIRCLE 1 AGRA AGRA CROSS OBJECTOR RESPONDENT PAN NO. ABFPM3793G I.T.A.NO . 34/AGR/2010 A. Y. 2003-04 DY. CIT, SHRI MUKESH MITTAL, CIRCLE 1 VS. 62-B, NEHRU NAGAR, AGRA AGRA APPELLANT RESPONDENT C.O.18/AGR/2010 (ARISING OUT OF I.T.A.NO. 34/AGR/2010 ) A. Y. : 2003-04 - 2 - 2 SHRI MUKESH MITTAL, DY. CIT, 62-B, NEHRU NAGAR, VS. CIRCLE 1 AGRA AGRA CROSS OBJECTOR RESPONDENT PAN NO. AAUPM 8355L I.T.A.NO . 33/AGR/2010 A. Y. 2001-02 DY. CIT, SHRI SANJEEV MITTAL, CIRCLE 1 VS. 62-B, NEHRU NAGAR, AGRA AGRA APPELLANT RESPONDENT C.O.19/AGR/2010 (ARISING OUT OF I.T.A.NO. 33/AGR/2010 ) A. Y. : 2001-02 SHRI SANJEEV MITTAL, DY. CIT, 62-B, NEHRU NAGAR, VS. CIRCLE 1 AGRA AGRA CROSS OBJECTOR RESPONDENT PAN NO. AAUPM 8355L I.T.A.NO . 35/AGR/2010 A. Y. 2003-04 DY. CIT, SHRI SANJEEV MITTAL, CIRCLE 1 VS. 62-B, NEHRU NAGAR, AGRA AGRA APPELLANT RESPONDENT - 3 - 3 DEPARTMENT BY : SHRI VINOD KUMAR, SR. DR RESPONDENT BY : SHRI SAHIB P.SATSANGEE, C. A. O R D E R PER BENCH THESE FOUR APPEALS AND THREE CROSS OBJECTIONS BY T HE ASSESSEE RELATING TO ASSESSMENT YEAR 2001-02 AND 2003-04. 2. APPEAL IN I.T.A.NO. 33/AGR/201 AND C.O.NO. 19/AGR/2 010 RELATE TO ASSESSMENT YEAR 2001-02 AND REMAINING APP EALS OF THE DEPARTMENT AND CROSS OBJECTIONS BY THE ASSESSEE REL ATING TO ASSESSMENT YEAR 2003-04. SIMILAR ISSUES ARE INVOLVED IN THE A PPEALS OF THE DEPARTMENT AS WELL AS IN CROSS OBJECTIONS OF THE A SSESSEE. THEREFORE, THEY ARE DISPOSED OF TOGETHER. 3. WE SHALL FIRST TAKE UP THE APPEAL IN I.T.A.NO. 50/A GR/2010 AND CROSS OBJECTION NO.27/AGR/2010 RELATING TO ASSESSME NT YEAR 2003-04. 4. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDITIO N OF RS. 11,25,000/- MADE ON ACCOUNT OF LONG TERM CAPITAL GA IN ON SALE OF SHARES. 5. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF SHAR ES OF SUMA FINANCE AND INVESTMENT LIMITED. THE ASSESSING OFFICER CARRI ED OUT ENQUIRIES WITH - 4 - 4 BROKER M/S. AGARWAL & CO.AND M/S. S.J.CAPITAL LIMIT ED. HOWEVER, NOTICE WAS SENT TO THE BROKER RETURNED UNSERVED WITH THE P OSTAL REMARK NO SUCH PERSON WAS AVAILABLE ON THE GIVEN. THE ASSESSEE WA S CONFRONTED WITH THESE FACTS AND REQUIRED TO FURNISH THE EVIDENCE IN SUPPORT OF THE SALE OF SHARES AND LONG TERM CAPITAL GAINS CLAIMED IN RESPE CT THEREOF. THE ASSESSING OFFICER HELD THAT THOUGH THE ASSESSEE HAD FURNISHED INFORMATION REGARDING PURCHASE AND SALE OF SHARES, MOST OF THE INFORMATION FURNISHED BY THE ASSESSEE IS VAGUE AND ILLUSIVE. AS PER INFOR MATION GIVEN BY THE ASSESSEE, THE SHARES WERE PURCHASED IN CASH THROUGH BROKERS M/S. AGARWAL & COMPANY AND SOLD TO M/S. S.J.CAPITAL LIMI TED. BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE SHARES WERE SOLD TO M/S. S.J.CAPITAL LIMITED, TO WHOM THE DELIVERY OF SHARES WAS GIVEN THROUGH DEMAT ACCOUNT AND THE SALE PROCEEDS WERE RECEIVED F ROM S.J.CAPITAL LIMITED, THROUGH CHEQUE. THE ASSESSING OFFICER ISSU ED SUMMONS UNDER SECTION 131 TO M/S. S.J. CAPITAL LIMITED. HOWEVER, THEY WERE RETURNED UNSERVED. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 131 TO THE DEPOSITORY PARTICIPANT M/S.A.G.SHARES & SECURITIES LIMITED ON 17.1.2005, WITH WHICH THE ASSESSEE HOLDS HIS DEMAT ACCOUNT. SHRI AJAY AGARWAL, DIRECTOR OF M/S. A.G. SHARES & SECURITIES LIMITED FILED A WRITTEN REPLY ON 21.1.2005 SUBMITTING THAT TRANSACT ION STATEMENT OF THE ASSESSEE HAVING CLIENT I.D. NO.10009374. THE ASSESS ING OFFICER OBSERVED THAT THE SAID STATEMENT DID NOT REFLECT ANY TRANSAC TION IN THE SHARES OF M/S. - 5 - 5 SUMA FINANCE AND INVESTMENT LIMITED. COPY OF LETTER RECEIVED FROM M/S. A. G. SHARES & SECURITIES LIMITED WAS PROVIDED TO T HE ASSESSEE FOR HIS COMMENTS. FURTHER CORRESPONDENCE WITH M/S. A.G.SHAR ES & SECURITIES LIMITED AND REPLY RECEIVED WERE INCORPORATED BY THE ASSESSING OFFICER IN HIS ORDER. THEREAFTER, THE ASSESSEE WAS PROVIDED AN OPPORTUNITY TO EXPLAIN THE GENUINENESS OF THE CLAIM OF LONG TERM CAPITAL G AIN. THE ASSESSING OFFICER THEREAFTER STATED IN HIS ORDER THAT THE ASS ESSEE HAS REITERATED HIS CONTENTION RAISED EARLIER THAT SHARES WERE PURCHASE D IN EARLIER YEARS AND EARLIER YEARS BALANCES HAD BEEN ACCEPTED BY THE DEP ARTMENT. DURING THE YEAR UNDER CONSIDERATION, THE SHARES HAD BEEN TRANS FERRED THROUGH DEMAT ACCOUNT AND PAYMENT HAD BEEN RECEIVED THROUGH ACCOU NT PAYEE CHEQUE. THEREFORE, THERE IS NO REASON TO HOLD THE SHARE TRA NSACTION AS BOGUS. RELIANCE WAS ALSO PLACED ON VARIOUS CASE LAWS. HOWE VER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY FILED BEFO RE HIM BY OBSERVING THAT THERE IS NO SHARE TRANSACTION, IN FACT, AS THE DEPO SITORY WITH WHOM THE ASSESSEE HAD DEMAT ACCOUNT HAD DENIED HAVING TRANSF ERRED THE SHARES OF M/S. SUMA FINANCE INVESTMENT LIMITED. ACCORDINGLY, HE TREATED THE SALE CONSIDERATION AS INCOME OF THE ASSESSEE UNDER SECTI ON 68 AND FURTHER MADE AN ADDITION OF RS. 16,875/- BEING COMMISSION @ 1.5 % OF THE SALE PROCEEDS OF SHARES AMOUNTING TO RS. 11.25 LAKHS DEE MED TO BE UNDISCLOSED COMMISSION PAID FOR OBTAINING SUCH ACCO MMODATION ENTRY. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). DE TAILED SUBMISSIONS - 6 - 6 WERE FILED. THE CONTENTION RAISED BEFORE THE ASSESS ING OFFICER WERE REITERATED. RELIANCE WAS PLACED ON VARIOUS CASE LAW S, MENTIONED IN THE ORDER OF CIT(A) AT PAGES 12 & 13. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT(A) GAV E HIS FINDING, WHICH ARE RECORDED IN PARA 4.7 AT PAGE 14 & 15 OF HIS ORD ER AS UNDER :- 4.7 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE RECORDS AND MY OBSERVATIONS ARE AS UNDER :- APPARENTLY, THE IMPUGNED SHARES OF SUMA FINANCE & INVESTMENT LIMITED WERE PURCHASED BY THE APPELLANT IN THE PRECEDING FINANCIAL YEAR AND ACCORDINGLY REFLECTED IN THE BALANCE SHEET. THERE IS NO COGENT MATERIAL OR EVIDENCE ON RECORD TO SHOW THAT M/S. SU MA FINANCE & INVESTMENT LIMITED, NAME CHANGED TO MODERATE CREDIT CORPN. LTD., IS A NON-EXISTENT COMPANY. THE PURCHASE OF THE SHARES OF M/S. SUMA FINANCE & INVESTMENT LIMITED BY THE APPELLANT HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER WITH ANY EVIDENCE TO THE CONTRARY. FROM THE DOCUMENTS GATHERED BY THE ASSESSING OFFICER AND FURNISHED BY THE APPELLANT IT IS EVIDEN T THAT THE IMPUGNED SHARES WERE TRANSFERRED FROM THE - 7 - 7 APPELLANTS DEMAT ACCOUNT WITH DP A. G. SHARES & SECURITIES LIMITED TO THE ACCOUNT OF M/S. S.J. CAPI TAL LIMITED WITH DP M/S. LEO FINANCIAL SERVICES LIMITED . THE APPELLANT HAS APPARENTLY RECEIVED THE SALE CONSIDERATION FROM M/S. S.J. CAPITAL LIMITED BEING THE IMPUGNED RECEIPTS AGGREGATING TO RS. 11,25,000/-. THERE IS NO COGENT MATERIAL OR EVIDENCE ON RECORD T O SHOW THAT M/S. S.J. CAPITAL LIMITED IS NON-EXISTENT OR BOGUS. IN RESPONSE TO REQUISITION DATED 19.1.209 ISSUED BY THIS OFFICE UNDER SECTION 133(6) OF THE ACT, LEO FINANCIAL SERVICES LIMITED HAS CONFIRMED THE IMPUGNED TRANSACTION OF TRANSFER OF SHARES FROM THE APPELLANTS DEMAT ACCOUNT IN A.G.SHARES & SECURITI ES LIMITED TO THE ACCOUNT OF S.J. CAPITAL LIMITED WITH IT I.E. LEO FINANCIAL SERVICES LIMITED. 4.8 IN VIEW OF THE FOREGOING, THE ADDITION OF RS. 11,25,000/- AS UNEXPLAINED CASH CREDIT IS NOT SUSTA INABLE AND HENCE DELETED. 6. NOW THE DEPARTMENT IS IN APPEAL AGAINST THIS ORDER OF LD. CIT(A). - 8 - 8 7. THE LD. SR. DR STRONGLY PLACED RELIANCE ON THE ORDE R OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 8. THE CONTENTION RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED HERE BEFORE THE TRIBUNAL. 9. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDING OF THE LD. CIT(A). THE FINDING OF THE LD. CIT(A) HAVE BEEN REPRODUCED SOMEWHERE AB OVE IN THIS ORDER. THE LD. CIT(A) HAS ASCERTAINED THAT SHARE OF SUMA F INANCE AND INVESTMENT LIMITED WAS PURCHASED BY THE ASSESSEE IN THE PRECEDING FINANCIAL YEAR, WHICH WERE REFLECTED IN THE BALANCE SHEET, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE PRECEDING YEAR. IT WAS ALSO NOTED BY THE LD. CIT(A) THAT PURCHASE OF SHARES OF M/S. SUMA FINANCE AND INVESTMENT LIMITED HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER WITH ANY EVIDENCE TO THE CONTRARY. ONCE PURCHASE HA S BEEN ACCEPTED, THEN DOUBT IN SALE WAS NOT JUSTIFIED. THE LD. CIT(A) HAS ALSO ASCERTAINED THAT IT IS EVIDENT THAT THE IMPUGNED SALES WERE TRANSFERRED FROM THE ASSESSEES DEMAT ACCOUNT WITH DP-A.G. SHARES AND SECURITIES LI MITED TO THE ACCOUNT OF M/S. S.J. CAPITAL LIMITED WITH D.P.- M/S . LEO FINANCIAL SERVICES LIMITED. IT WAS ALSO ASCERTAINED BY THE LD . CIT(A) THAT THERE IS NO MATERIAL OR EVIDENCE ON RECORD TO SHOW THAT M/S. S.J.CAPITAL LIMITED IS NON-EXISTENT OR BOGUS. THE LD. CIT(A) HAS FURTHER A SCERTAINED BY ISSUING - 9 - 9 NOTICE UNDER SECTION 133(6) OF M/S. LEO FINANCIAL S ERVICES LIMITED, WHO HAS CONFIRMED THE IMPUGNED TRANSACTION OF TRANSFER OF SHARES FROM ASSESSEES DEMAT ACCOUNT IN A. G. SHARES AND SECURI TIES LIMITED TO THE ACCOUNT OF M/S. S.J. CAPITAL LIMITED. THIS FACTUAL FINDING GIVEN BY THE LD. CIT(A) REMAINED UNCONTROVERTED AS DEPARTMENT HAS N OT BROUGHT ANY MATERIAL OR EVIDENCE ON RECORD TO ESTABLISH THE ABO VE FINDING OF THE LD. CIT(A) OTHERWISE. IN VIEW OF THE THESE FACTS AND CI RCUMSTANCES AND IN VIEW OF UNCONTROVERTED FINDING OF THE LD. CIT(A), W E CONFIRM HIS ORDER. 10. THE CROSS OBJECTION FILED BY THE ASSESSEE WAS WITHD RAWN BY HIS COUNSEL DURING THE APPELLATE PROCEEDINGS. THEREFORE , THE SAME IS DISMISSED AS WITHDRAWN. 11. THE DEPARTMENTS APPEAL AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE REJECTED. 12. NOW, WE WILL TAKE UP APPEAL IN I.T.A.NO. 33/AGR/200 1 AND CROSS OBJECTION NO. 19/AGR/2010 RELATING TO ASSESSM ENT YEAR 2001-02. 13. THE DEPARTMENT IS OBJECTING TO THE DELETION OF ADD ITION RS. 6,99,400/-. 14. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THERE IS AN OUTSTANDING BALANC E OF RS.6,99,400/- ON ACCOUNT OF SALE OF SHARES IN THE PRECEDING YEAR. TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT SHOWN THE INCOME ON ACCOUNT OF SALE OF SHARES DURING THE YEAR UNDER CONSIDERATION. ACCORDI NGLY, THE ASSESSEE WAS - 10 - 10 REQUIRED TO EXPLAIN AS TO WHY OUTSTANDING AMOUNT SH OWN SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE. IT WAS EXPLAINED THAT THE ASSESSEE HAD SOLD SHARES IN EARLIER YEARS AND THE CAPITAL GAIN H AS BEEN SHOWN IN EARLIER YEARS. THE AMOUNT ON ACCOUNT OF SALE OF SHARES IS R ECEIVABLE. THEREFORE, THE SAME HAS BEEN SHOWN OUTSTANDING. THE ASSESSING OFFICER WAS NOT SATISFIED. ACCORDINGLY, HE TREATED THE OUTSTANDING AMOUNT AS INCOME OF THE ASSESSEE OF THE YEAR AND ADDED TO THE INCOME OF THE ASSESSEE. DETAILED SUBMISSIONS WERE FILED BEFORE THE LD. CIT(A). THE L D. CIT(A) AFTER EXAMINING THE DETAILS AND REMAND REPORT FROM THE AS SESSING OFFICER, FOUND THAT THE OUTSTANDING AMOUNT CANNOT BE TREATED INCOME OF THE ASSESSEE OF THE YEAR UNDER CONSIDERATION. THE ASSES SING OFFICER NOTICED THAT THE IMPUGNED INCOME BY WAY OF LONG TERM CAPITA L GAINS PERTAINS TO ASSESSMENT YEAR 2000-01 AND THE SAME HAS BEEN DISCL OSED IN THAT YEAR. THEREFORE, ADVERSE INFERENCE DRAWN BY THE ASSESSING OFFICER DURING THE YEAR UNDER CONSIDERATION WAS NOT JUSTIFIED. THE LD. CIT(A) FURTHER NOTED THAT IF ANY ADVERSE INFERENCE COULD HAVE BEEN DRAWN THAT COULD HAVE BEEN DRAWN IN ASSESSMENT YEAR 2000-01 AND NOT IN THE YEA R UNDER CONSIDERATION. ACCORDINGLY, HE DELETED THE ADDITION . NOW, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 15. THE LD. SR. DR STRONGLY PLACED RELIANCE ON THE ORDE R OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). - 11 - 11 16. AFTER CONSIDERING THE ORDER OF THE ASSESSING OFFICE R AS WELL AS OF LD. CIT(A), WE FIND NO INFIRMITY IN THE FINDING OF THE LD. CIT(A). FINDING OF THE LD. CIT(A) HAVE BEEN RECORDED IN PAR A 3.4 TO 3.6 PAGE 9 & 10 OF HIS ORDER ARE AS UNDER :- 3.4 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE ASSESSMENT RECORDS AND THE MATERIAL PROVIDED BY THE WING AND FIND THAT THERE IS NO MATERIAL/EVIDENCE TO SHOW THAT THE COMPANIES WHOSE SHARES WERE PURCHASED BY THE AP PELLANT ARE BOGUS/NON-EXISTENT. THEIR SHARE PRICES WERE RIGGED BY THE APPELLANT OR OTHERS, THERE WERE UNEXPLAINED CASH DEPOSITS IN THE ACCOUNT S OF/MANAGED BY THE BROKERS WHICH WAS SO ESTABLISHED BY ENQUIRIES BY THE WING OR BY THE WING OR BY THE CONC ERNED ASSESSING OFFICERS, THE APPELLANT HAD NOT PURCHASED AND SOLD THE SHARES , THE BROKERS M/S. AGGARWAL & CO. AND M /S. FRIENDS P ORTFOLIO (P) LTD. HAVE ADMITTED TO RIGGING SHARE PRICES AND PROVIDING SHARE PURCHASE AND SALE ENTRIES TO THE APPELLANT. 3.5 IT IS FURTHER SEEN THAT THE IMPUGNED DEPOSITS IN TH E BANK ACCOUNT OF THE APPELLANT REPRESENT REALIZATION OF DUES FROM THE BROKERS AGAINST SALE OF SHARES MADE B Y - 12 - 12 THE APPELLANT IN THE ASSESSMENT YEAR 200-01. IN SUPPORT THEREOF, THE APPELLANT HAS FURNISHED BEFORE THE ASSESSING OFFICER, THE BALANCE SHEET AS ON 31.3.200 0. THE APPELLANTS CLAIM IS ALSO SUBSTANTIATED BY THE FACT THAT THE APPELLANTS RETURN FOR THIS YEAR DOES NOT REFLECT LONG TERM CAPITAL GAINS ON SALE OF SHARES THROUGH M /S. AGGARWAL & CO. AND FRIENDS PORTFOLIO. THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER WITH ANY EVIDENCE TO THE CONTRARY. CONSEQUENTLY, SI NCE THE IMPUGNED INCOME BY WAY OF LONG TERM CAPITAL GAINS PERTAINS TO ASSESSMENT YEAR 200-01 AND IS STA TED TO HAVE BEEN DISCLOSED IN THAT YEAR, THE ADVERSE INFERENCE, IF ANY, WOULD ARISE IN THAT YEAR AND NOT IN THE YEAR UNDER CONSIDERATION WHEREIN A PART OF THE SALE PROCEEDS I.E. RS. 3,00,000/- HAS APPARENTLY BEEN REALIZED OUT OF THE DUES OF RS. 5,73,793/- RECEIVAB LE FROM M/S. FRIENDS PORTFOLIO PVT. LTD., DELHI, AS ON 31.3.200 AND RS. 4,00,000/- OUT OF OUTSTANDING DUE S OF RS. 4,96,850/- FROM M/S. AGGARWAL & CO., DELHI, AS ON 31.03.2000. 3.6 IN VIEW OF THE FOREGOING, THE ADDITION OF RS. 6,99,400/- IS NOT TENABLE AND HENCE DELETED. - 13 - 13 17. THESE FINDINGS REMAINED UNCONTROVERTED. THEREFORE , IN VIEW OF THE REASONING GIVEN BY THE LD. CIT(A), WE CONFIRM H IS ORDER. 18. IN CROSS OBJECTION, THE ASSESSEE HAS SUPPORTED THE ORDER OF THE LD. CIT(A), THEREFORE, DOES NOT REQUIRE SEPARATE AD JUDICATION UPON. 19. THE APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJEC TION OF THE ASSESSEE ARE REJECTED. 20. NOW, WE TAKE UP THE APPEAL IN I.T.A.NO. 35/AGR/10 F OR THE ASSESSMENT YEAR 2003-04. 21. THE DEPARTMENT IS OBJECTING THE DELETION OF ADDITI ON OF RS. 11,25,000/- ON ACCOUNT OF LONG TERM CAPITAL GAIN AN D ADDITION OF RS. 16,875/- MADE BY THE ASSESSING OFFICER ON ACCOUNT O F COMMISSION IN RESPECT OF ACCOMMODATION ENTRY ON ACCOUNT OF SHARE TRANSACTIONS. 22. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN CASE OF RAM SARAN MITTAL. THE APPEAL IN THE CASE OF RAM SAR AN MITTAL IN I.T.A.NO. 50/AGR/2010 HAVE ALREADY BEEN DISPOSED OF ABOVE BY WHICH WE HAVE CONFIRMED THE ORDER OF THE LD. CIT(A). SINCE T HE FACTS ARE IDENTICAL AS THEY RELATE TO PURCHASES AND SALE OF SHARES. IN THIS CASE ALSO, THE ASSESSEE HAS SHOWN PURCHASES OF SHARES OF M/S. SUMA FINANCE AND INVESTMENT LIMITED AND HAD BEEN SOLD TO M/S. S.J. C APITAL LIMITED. THE ASSESSING OFFICER DOUBTED THESE TRANSACTIONS AND HE LD THAT THE IMPUGNED LONG TERM CAPITAL GAIN SHOWN BY THE ASSESSEE IS NOT HING BUT ACCOMMODATION ENTRY AND THE SAME WAS ADDED TO THE I NCOME OF THE - 14 - 14 ASSESSEE. THE COMMISSION PAID ON ACCOUNT OF ACCOMMO DATION ENTRY WAS ALSO ADDED AT RS. 16,875/-. THE LD. CIT(A) AFTER AS CERTAINING THE FACTUAL POSITION FOUND THAT THE SHARES TRANSACTIONS ARE GEN UINE. ACCORDINGLY, HE DELETED THE ADDITION. AS STATED ABOVE, THE FACTS AR E IDENTICAL WITH THE CASE OF SHRI RAM SARAN MITTAL, THEREFORE, ON THE SAME RE ASONING, WE CONFIRM THE DELETION MADE BY THE LD. CIT(A) IN THIS CASE AL SO. 23. THE APPEAL OF THE DEPARTMENT IS DISMISSED. 24. NOW, WE SHALL TAKE UP THE APPEAL IN I.T.A.NO. 34/AG RT/2010 AND CROSS OBJECTION NO.18/AGR/2010 FOR ASSESSMENT Y EAR 2003-04. 25. THE DEPARTMENT IS OBJECTING TO DELETION OF ADDITION OF RS. 11,25,000/- ON ACCOUNT OF LONG TERM CAPITAL GAIN AN D DELETING THE ADDITION OF RS. 4,23,055/- MADE ON ACCOUNT OF DIFFERENCE OF LOWER RATE OF INTEREST CHARGED BY THE ASSESSEE ON HIS ADVANCES AND PAYING HIGHER RATE OF INTEREST. 26. FIRST ISSUE INVOLVED IN THE APPEAL OF THE DEPARTMEN T IS IDENTICAL TO THE ISSUE INVOLVED IN CASE OF SHRI RAM SARAN MIT TAL AND IN THE CASE OF SHRI SANJEEV MITTAL. IN THIS CASE ALSO, THE SHARES OF M/S SUMA FINANCE AND INVESTMENT LIMITED HAD BEEN SHOWN AS PURCHASES AND SALE TO M/S. S.J. CAPITAL LIMITED. 27. WE HAVE ALREADY DECIDED THE APPEAL IN CASE OF SHRI RAM SARAN MITTAL AND SHRI SANJEEV MITTAL AND WE HAVE CONFIRME D THE ORDER OF THE LD. CIT(A) IN THOSE CASES. FACTS ARE IDENTICAL AND, THE REFORE, ON THE SAME - 15 - 15 REASONING, THIS ORDER OF THE LD. CIT(A) IS ALSO CON FIRMED. ACCORDINGLY, GROUND NO.1 IS FAILS. 28. SECOND GROUND RELATES TO DELETING THE DISALLOWANCE OF RS. 4,68,720/- OUT OF INTEREST PAID ON THE BORROWED FUN DS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE COMPANY CONTINUES TO CARRY ON THE FINANCE BUSINESS IN HIS OWN NAME, SINCE LAST MANY YEARS, BESIDES BEING A PARTNER IN A FIRM M/S. ATUL ENGG. LIMITED AND M/S. ATUL GENERATOR AND PIPE COMPANY. T HE ASSESSING OFFICER NOTICED THAT DURING THE YEAR UNDER CONSIDER ATION, THE ASSESSEE HAS ALSO EARNED LONG TERM CAPITAL GAIN ON TRANSFER OF C APITAL ASSETS ALONGWITH INTEREST OF INVESTMENT. THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD PAID INTEREST ON BORROWED CAPITAL AND HAVE EARN ED INTEREST FROM VARIOUS SUCH PARTIES TO WHOM BORROWED FUNDS HAD BEE N UTILIZED BY GIVING ON LOWER RATE OF INTEREST. THEREFORE, THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 4,68,720/- CLAIMED UNDER THE HEAD INCOM E FROM BUSINESS WITH THE OBSERVATION THAT THE INCOME SHOWN FROM FIN ANCE BUSINESS IS IN THE FORM OF INTEREST INCOME AND SUCH INTEREST NOT E VEN COMMENSURATE TO THE INTEREST PAID BY THE ASSESSEE ON LOAN TAKEN. TH EREFORE, THE CLAIM OF INTEREST PAID BY THE ASSESSEE AGAINST THE INTEREST RECEIVED BY THE ASSESSEE WAS NOT ACCEPTED. IT WAS SUBMITTED BEFORE THE LD. C IT(A) THAT WHILE MAKING THE DISALLOWANCE, THE ASSESSING OFFICER HAS COMPLETELY IGNORED THAT THE ASSESSEE IS A PARTNER IN M/S. ATUL ENGG. U DYOG AND M/S. ATUL - 16 - 16 GENERATORS, BESIDES FINANCE BUSINESS. THE ASSESSEE IN THE RETURN HAD FILED SEPARATE PROFIT AND LOSS ACCOUNT OF FINANCE BUSINES S. THE ASSESSING OFFICER HAS IGNORED THAT THE INTEREST HAD BEEN PAID ON THE BORROWING, WHICH HAVE BEEN INVESTED IN PARTNERSHIP FIRM AS STA TED ABOVE. THE ASSESSEE HAS INVESTED THE BORROWED FUNDS IN THE PAR TNERSHIP BUSINESS, WHEREIN HE HAS EARNED REMUNERATION AND SHARE OF PRO FIT. DETAILS OF PROFIT EARNED AND REMUNERATION WERE FILED. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO IGNORED THE SUBMISSION O F THE ASSESSEE THAT THE ASSESSEE IS ENGAGED IN FINANCE BUSINESS SINCE LAST DECADE AND THE AMOUNT ON WHICH THE INTEREST PAID WAS OLD BALANCES. DETAIL S OF OLD BALANCES AND DETAILS OF LOAN TAKEN BY THE ASSESSEE IN LAST SO MA NY YEARS WAS ALSO FILED. IT WAS ALSO STATED THAT INTEREST PAID AND RECEIVED @ 12 %, WHICH IS ALSO APPARENT FROM THE DETAILS SUBMITTED BEFORE THE ASSE SSING OFFICER, B Y LETTER DATED 28.1.2005 AND 17.8.2005. 29. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT(A) FOUND THAT THE ASSESSING OFF ICER HAS MIS- UNDERSTOOD THE FACTS OF THE CASE AND, THEREFORE, DI SALLOWANCE MADE BY THE ASSESSING OFFICER AT RS. 4,68,720/- WAS NOT JUSTIFI ED. HOWEVER, THE LD. CIT(A) ON EXAMINATION THAT THE ASSESSEE HAS SHOWN O N ASSETS SIDE AT RS. 3,80,626/- AS INVESTMENT. THEREFORE, IN HIS VIEW, T HE PROVISIONS OF SECTION 14A WHICH ARE APPLICABLE IN RESPECT OF THIS DEPOSIT AND DISALLOWANCE OF RS. 45,675/- WAS MADE. - 17 - 17 30. ACCORDINGLY, THE GROUND OF THE ASSESSEE WAS ALLOWED IN PART. 31. THE LD. SR. DR STRONGLY PLACED RELIANCE ON THE ORDE R OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 32. REGARDING DISALLOWANCE UNDER SECTION 14A, WHICH IS CHALLENGED BY THE ASSESSEE BY WAY OF FILING CROSS O BJECTION, IT WAS STATED THAT, IN FACT, THIS IS NOT INVESTMENT BUT IT IS OUT STANDING BALANCE ON ACCOUNT OF SALE OF SHARES. THE LD. CIT(A) HAS TAKEN WRONGLY THIS AMOUNT OF RS. 3,80,626/- AS INVESTMENT, BUT, IN FACT, IT IS AN OU TSTANDING AMOUNT. THEREFORE, THE PROVISIONS OF SECTION 14A ARE NOT AP PLICABLE ON THIS AMOUNT. 33. AFTER CONSIDERING THE ORDER OF ASSESSING OFFICER AN D THE LD. CIT(A), WE FIND THAT THERE IS NO SUBSTANCE IN THE G ROUND OF THE DEPARTMENT . HOWEVER, THE ASSESSEE DESERVES TO SUCC EED IN HIS GROUND FILED THROUGH CROSS OBJECTION. IT IS NOTICED THAT T HERE ARE BUSINESS CONCERNS, WHERE THE ASSESSEE IS A PARTNER AND BORRO WED FUND BY THE ASSESSEE HAS BEEN INVESTED IN THE PARTNERSHIP FIRM FOR BUSINESS EXPEDIENCY. REMUNERATION AS WELL AS SHARE OF PROFIT HAS BEEN EARNED BY THE ASSESSEE, WHICH IS MORE THAN THE AMOUNT OF INTE REST PAID BY THE ASSESSEE. THEREFORE, THE DISALLOWANCE OF INTEREST W AS NOT JUSTIFIED. IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE IS PAYING I NTEREST @ 12 % AND ALSO EARNING INTEREST @ 12 %, THEREFORE, THERE IS NO, QU ESTION OF DISALLOWING OF - 18 - 18 INTEREST. ACCORDINGLY, WE CONFIRM THE FINDING OF TH E LD. CIT(A) TO THIS EXTENT. 34. REGARDING DISALLOWANCE OF INTEREST UNDER SECTION 14 A, IT IS FOUND THAT DUE TO OVER-SIGHT THE LD. CIT(A) HAS STA TED THAT THE AMOUNT OF RS. 3,80,628/- AS INVESTMENT WHEREAS IT IS OUTSTAND ING. ON OUTSTANDING AMOUNT, THE PROVISION OF SECTION 14A ARE NOT APPLIC ABLE. ACCORDINGLY, WE DELETE THE ADDITION OF RS. 45,675/- DIRECTED TO BE MADE BY THE LD. CIT(A). 35. GROUND NOS. 1 & 2 IN CROSS OBJECTION ARE IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND GROUND NOS. 3 & 4 RELATE TO D ISALLOWANCE OF INTEREST U/S 14A, WHICH WE HAVE DISPOSED OF AS ABOVE. 36. IN THE RESULT, THE APPEALS OF THE DEPARTMENT AS WEL L AS CROSS OBJECTIONS OF THE ASSESSEES IN THE CASES OF SHRI RA M SARAN AND SHRI SANJEEV MITTAL ARE DISMISSED. IN THE CASE OF SHRI M UKESH MITTAL, THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED IN PART. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2010. SD/- SD/- ( P.K. BANSAL ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AGRA DATED : 17 TH SEPTEMBER,2010. CPU* 13149 - 19 - 19 COPY FORWARDED TO :- THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) CONCERNED. THE D.R, ITAT AGRA. GUARD FILE BY ORDER, AR, I.T.A.T., AGRA.