M/s. Acetylene Trexim Pvt. Ltd., Kolkata V. ACIT, CC - 3(4), Kolkata, Kolkata

CO 75/KOL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8419 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: R CHOUDHURY
• Keywords: Assessment record
• Section: 143(3); 153A; 133(6); 132

Judgement Text

I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.(SS)A. NO. 39/KOL/2018 ASSESSMENT YEAR: 2009-2010 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .............................APPELLANT CENTRAL CIRCLE-3(4), KOLKATA, AAYAKAR BHAWAN, 110, SHANTI PALLY, 5 TH FLOOR, KOLKATA-700 107 -VS.- M/S. ACETYLENE TREXIM PVT. LIMITED................. .................................RESPONDENT 14, NETAJI SUBHAS ROAD, 4 TH FLOOR, KOLKATA-700 001 [PAN: AACCA 4045 J] & C.O. NO. 75/KOL/2018 [ARISING OUT OF I.T.(SS)A. NO. 39/KOL/2018] ASSESSMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED................. .............................CROSS OBJECTOR 14, NETAJI SUBHAS ROAD, 4 TH FLOOR, KOLKATA-700 001 [PAN: AACCA 4045 J] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ..............................RESPONDENT CENTRAL CIRCLE-3(4), KOLKATA, AAYAKAR BHAWAN, 110, SHANTI PALLY, 5 TH FLOOR, KOLKATA-700 107 APPEARANCES BY: SHRI RADHEY SHYAM. CIT, D.R. , FOR THE DEPARTMENT SHRI R.CHOUDHURY, A.R., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JULY 09, 2019 DATE OF PRONOUNCING THE ORDER : JULY 17, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLKATA DA TED 16.02.2018 AND I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 2 OF 11 THE SAME IS BEING DISPOSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEING C.O. NO. 75/KOL/2018 . 2. THE ASSESSEE IN THE PRESENT CASE IS A NON-BANKIN G FINANCE COMPANY, WHICH FILED ITS RETURN OF INCOME FOR THE Y EAR UNDER CONSIDERATION REGULARLY ON 25.09.2009 DECLARING TOT AL INCOME OF RS.8,04,560/-. IN THE ASSESSMENT ORIGINALLY COMPLET ED UNDER SECTION 143(3) VIDE AN ORDER DATED 07.09.2011, THE TOTAL IN COME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.1,28, 40,560/- AFTER MAKING TWO ADDITIONS OF RS.1,05,36,000/- AND RS.15,00,000/ - ON ACCOUNT OF EXPENDITURE ON PURCHASE OF SHARES AND KEYMAN INSURA NCE RESPECTIVELY. AGAINST THE SAID ORDER PASSED BY THE ASSESSING OFFI CER UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS), WHO VIDE HIS APPELLATE ORDER DATED 06 .07.2012 DELETED BOTH THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OF EXPENDITURE ON PURCHASE OF SHARES AND KEYMAN INSURA NCE. AGAINST THE SAID ORDER OF THE LD. CIT(APPEALS), AN APPEAL WAS P REFERRED BY THE ASSESSEE BEFORE THE TRIBUNAL. MEANWHILE A SEARCH AN D SEIZURE ACTION WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE- COMPANY ON 18.09.2012, WHICH CONCLUDED ON 19.09.2012. PURSUANT TO THE SAID ACTION, NOTICE UNDER SECTION 153A WAS ISSUED BY THE ASSESSI NG OFFICER ON 27.11.2013, IN RESPONSE TO WHICH THE RETURN OF INCO ME WAS FILED BY THE ASSESSEE ON 28.01.2014 DECLARING THE SAME INCOME OF RS.8,04,560/- AS DECLARED IN THE RETURN OF INCOME ORIGINALLY FILED. THEREAFTER ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER UNDER SECTIO N 153A /143(3) OF THE ACT VIDE AN ORDER DATED 30.03.2015, WHEREIN HE REPEATED BOTH THE ADDITIONS MADE IN THE ORIGINAL ASSESSMENT COMPLETED UNDER SECTION 143(3) ON ACCOUNT OF DISALLOWANCE OF PURCHASE OF SH ARES AND KEYMAN INSURANCE ON THE GROUND THAT BOTH THESE ISSUES WERE PENDING IN APPEAL I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 3 OF 11 BEFORE THE ITAT AND IN ORDER TO MAINTAIN JUDICIAL C ONSISTENCY, BOTH THE ADDITIONS WERE REPEATED. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 153A/143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS). MEANWHILE THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE LD. CIT(APPEALS) DATED 06. 07.2012 CHALLENGING THE DELETION OF BOTH THE ADDITIONS MADE IN THE ORIG INAL ASSESSMENT CAME TO BE DISPOSED OF BY THE ITAT VIDE ITS ORDER DATED 03.08.2016 PASSED IN ITA NO. 1429/KOL/2012, WHEREBY THE ORDER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON BOTH THESE ISSUES WERE UP HELD BY THE TRIBUNAL. TAKING NOTE OF THE SAID DECISION OF THE TRIBUNAL, T HE LD. CIT(APPEALS) VIDE HIS APPELLATE ORDER DATED 16.02.2018 DELETED THE SA ID TWO ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETE D UNDER SECTION 153A/143(3) TO MAINTAIN JUDICIAL CONSISTENCY. AGGRI EVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THI S APPEAL BEFORE THE TRIBUNAL, WHILE THE ASSESSEE-COMPANY HAS ALSO FILED ITS CROSS OBJECTION. 4. GROUNDS RAISED BY THE REVENUE IN ITS APPEAL READ AS UNDER:- (1) THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACT S IN DELETING THE DISALLOWANCE OF RS.15,02,247/- ON ACCO UNT OF PAYMENT MADE FOR KEYMANS INSURANCE POLICY FOR THE DIRECTORS, WITHOUT APPRECIATING THE FACT THAT THE P ERSON FOR WHOM THE POLICY WAS TAKEN IS NOT A KEY PERSON O F THE COMPANY AND IS ONLY AN AUTHORIZED SIGNATORY. (2) THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,05,36,000/- INCUR RED IN RELATION TO PURCHASE OF SHARES WITHOUT APPRECIATING THE FACT THAT THE PURCHASE OF SHARES WERE NOT ON THE CO NTRACT DATE BEING 29.08.2008 AS ALLEGED BY THE ASSESSEE, A ND THE SALE CONSIDERATION WAS RECEIVED BY M/S. PUSKAR BANI JYA ONLY AS LATE AS ON 17.03.2009, AND THE SHARES WERE TRANSFERRED TO DE MAT ACCOUNT IMMEDIATELY THEREAFTE R ON 20.03.2009, AND THAT THE LOSS INCURRED THEREON IS N OT I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 4 OF 11 ADJUSTABLE WITH INCOME AS LAID DOWN IN THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MADDI VENKATAR AMAN & CO. PVT. LTD. REPORTED IN 229 ITR 534 (SC). 5. GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJE CTION READ AS UNDER:- (1) THAT ON THE FACT AND CIRCUMSTANCES IN THE CASE OF ASSESSEE FOR THE SAME ASSESSMENT YEAR SIMILAR ADDITIONS WAS MADE IN REGULAR ASSESSMENT U/S 143(3) ON 30/03/2015 BY ASSE SSING OFFICER 9(1) KOLKATA, WHICH WAS DELETED AND DECIDED IN FAVOUR OF ASSESSEE BY CIT(A)(VIII) KOLKATA, VIDE ORDER DAT ED 05/07/2012. 2. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE T HE APPEAL FILED BY THE ASSESSING OFFICER 9(1) KOLKATA, AGAINS T THE ORDER OF CIT(A)(VIII) BEFORE HON'BLE ITAT WAS HEARD AND DECI DED OF UNDER ITAT NO.1429/KO1/2012, DATED 03/08/2018. WHER EIN THE HON'BLE ITAT 'C' BENCH KOLKATA, AND UPHOLD THE ORDE R OF CIT(A)(VIII) AND DISMISSED THE REVENUE APPEAL AGAIN ST THE ORDER DATED 30.03.2015 U/S 143(3). 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF RS.15,02,247/- ON ACCOUNT OF KEY INSURANCE PREMI UM AND EXPENDITURE IN RELATION TO PURCHASE OF SHARES AMOUN TING TO RS.1,05,36,000/- ARE COVERED BY THE ORDER OF HON'BL E ITAT 'C' BENCH KOLKATA, AND UPHOLD THE ORDER OF LD.CIT(A) AN D GROUNDS RAISED FOR ADDITION MADE BY REVENUE WAS DISMISSED. 4. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE T HE ADDITION U/S 153A/143(3) MADE BY DCIT IS STATED ONLY TO MAIN TAIN CONSISTENCY IS BAD IN LAW AS WELL AS ON FACT OF THE CASE. 5. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE T HERE WAS NO PROCEEDING PENDING ON THE LAST-DAY OF AUTHORIZATION OF SEARCH AND ATTENDED FINALITY BEFORE THE DATE OF SEARCH NO INCRIMINATING MATERIAL OR ASSETS FOUND IN COURSE OF SEARCH AND THE ASSESSMENT ATTENDED FINALITY SHOULD NOT HAVE BE EN DISTURBED. A COMPLETED ASSESSMENT CAN BE INTERFERED BY ASSESSING OFFICER BY MAKING ASSESSMENT UNDER SECTIO N 153A ONLY ON THE BASIS OF INCRIMINATING MATERIAL UNEARTH ED DURING THE COURSE OF SEARCH OR NOT DISCLOSED AND HENCE ASS ESSMENT UNDER SECTION 153A IS BAD IN LAW. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT BOTH THE I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 5 OF 11 ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF EXPEND ITURE ON PURCHASE OF SHARES AND KEYMAN INSURANCE IN THE ORIGINAL ASSESSM ENT COMPLETED UNDER SECTION 143(3) FOR THE YEAR UNDER CONSIDERATION WER E SIMPLY REPEATED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U NDER SECTION 153A/143(3) VIDE AN ORDER DATED 30.03.2015 JUST TO MAINTAIN JUDICIAL CONSISTENCY SINCE THE ISSUES RELATING TO THE SAID A DDITIONS MADE IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 143(3 ) WERE PENDING BEFORE THE TRIBUNAL IN THE APPEAL FILED BY THE DEPA RTMENT. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 153A/143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) DISPUTING THE SAID TWO ADDITIONS AND BEFORE THE SAI D APPEAL COULD BE HEARD BY THE LD. CIT(APPEALS), THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE LD. CIT(APPEALS) DELETING THE SIMI LAR ADDITIONS MADE IN THE ASSESSMENT ORIGINALLY COMPLETED UNDER SECTION 1 43(3) CAME TO BE DISPOSED OF BY THE TRIBUNAL AND THE RELIEF ALLOWED BY THE LD. CIT(APPEALS) ON THESE TWO ISSUES WAS UPHELD BY THE TRIBUNAL VIDE ITS ORDER DATED 03.08.2016 PASSED IN ITA NO. 1429/KOL/2012 FOR THE FOLLOWING REASONS GIVEN IN PAGE NOS. 10 & 11 AS WELL AS ON PAGE NOS. 16 TO 19 OF THE IMPUGNED ORDER OF THE LD. CIT(APPEALS):- FROM PAGE NOS. 10 & 11 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. WE FIND THAT AO DISA LLOWED THE PAYMENT OF KIP PREMIUM ON THE GROUND THAT THE DIREC TORS OF ASSESSEE-COMPANY ARE NOT ACTIVELY ENGAGED IN THE DA Y-TO-DAY AFFAIRS. AT THIS JUNCTURE, WE WOULD LIKE TO REPRODU CE THE MEANING OF KIP AS PER EXPLANATION-1 TO SECTION 10(1 0D) OF THE ACT WHICH READS AS UNDER: - '[EXPLANATION 1] -FOR THE PURPOSES OF THIS CLAUSE, 'KEYMAN INSURANCE POLICY' MEANS A LIFE INSURANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST- MENTIONED PERSON OR IS OR WAS CONNECTED IN ANY MANNER WHATSOEVER WITH THE BUSINESS OF THE FIRST- MENTIONED PERSON [AND INCLUDES SUCH POLICY WHICH HAS BEEN ASSIGNED TO A PERSON, AT AN TIME DURING TH E TERM OF THE POLICY, WITH OR WITHOUT ANY CONSIDERATION];] I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 6 OF 11 ON A BARE READING, WE FIND THAT SAID SECTION REQUIR ES THE CONNECTION BETWEEN THE ASSESSEE AND PERSON TO BE CO VERED UNDER INSURANCE. IT IS NOT NECESSARY THAT HE SHOULD BE AWARE OF ALL THE AFFAIRS OF BUSINESS OF ASSESSEE. IN VIEW OF ABOVE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). WE UPHOLD ACCORDINGLY. GROUND RAISED BY REVENUE IS DISMISSED . FROM PAGE NOS. 16 TO19 6. WE HAVE HEARD RIVAL PARTIES AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. LD. DR FILED WRITTEN SUBMISSIO N WHICH IS PLACED ON RECORD. ON THE OTHER HAND, LD. AR SUBMITT ED PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 155 PAGES AND CITED CASE LAWS. 6.1. FROM THE FOREGOING DISCUSSION, WE FIND THAT AS SESSEE HAS PURCHASED SHARE OF THE GHCL ON 29.08.2008 BUT MADE THE PAYMENT FOR THE PURCHASE OF SHARE IN THE MONTH OF M ARCH'09 AND ALSO SHARES WERE TRANSFERRED TO THE DEMAT ACCOU NT OF ASSESSEE IN THE MONTH OF MARCH '09. THE VALUE OF SH ARE CAME DOWN DRASTICALLY ON THE BALANCE-SHEET DATE AS ON 31 .03.2009 AS A RESULT DUE TO DECLINE IN THE VALUE OF SHARES A LO SS OF RS.1,05,36,000/- WAS BOOKED IN ITS BOOKS OF ACCOUNT . WE FIND THAT AO TREATED THIS LOSS CLAIMED BY ASSESSEE AS IL LEGAL LOSS AND IT WAS CREATED WITH THE SOLE PURPOSE OF AVOIDING TH E TAX LIABILITY AGAINST THE INCOME FROM THE GENUINE SOURC E OF THE ASSESSEE'S BUSINESS, HOWEVER, LD. CIT(A) DELETED TH E ADDITION MADE BY AO. NOW THE QUESTION BEFORE US IS AS TO WHE THER THE LOSS ARISING AS A RESULT OF VALUATION OF CLOSING ST OCK OF SHARE IS GENUINE BUSINESS LOSS IN THE AFORESAID FACTS AND CI RCUMSTANCES, AT THE OUTSET, WE FIND THAT SHARES WERE PURCHASED O N 29,08,2008 FROM MPB AND ON THE DATE OF PURCHASE STO CK OF SHARE WAS VERY MUCH AVAILABLE IN THE DEMAT ACCOUNT OF MPB AS EVIDENCED IN THE DEMAT ACCOUNT OF MPB WHICH IS PLAC ED ON PAGE 45 OF THE PAPER BOOK, WE ALSO FIND THAT A NOTICE WA S ISSUED TO MPB U/S 133(6) OF THE ACT FOR CONFIRMING THE AFORES AID TRANSACTIONS IN ITS BOOKS OF ACCOUNT, WE FIND THAT MPB HAS DULY REFLECTED THE TRANSACTIONS WITH THE ASSESSEE IN ITS BOOKS OF ACCOUNT AND IN SUPPORT OF ITS CLAIM, THE BALANCE-SH EET ALONG WITH OTHER DOCUMENTS AND BANK E/C ARE PLACED ON PAG ES 42 TO 64 OF THE PAPER BOOK, WE FURTHER FIND THAT AFORESAI D SHARES WERE SOLD SUBSEQUENTLY IN THE FINANCIAL YEAR 2009-1 0 AND THE DETAILS OF THE SAME IS PLACED ON PAGES 68 TO 81 OF THE PAPER BOOK, WE ALSO FIND THAT IN THE SIMILAR FACTS, CO-OR DINATE BENCH DECIDED THE SAME ISSUE IN FAVOUR OF ASSESSEE IN ITA NO, 1595/KOL/2012 DATED 30-01-2015 IN THE CASE OF ITO V , KIRAN CONSORTIUM TRADE CP) LTD, THE RELEVANT EXTRACT IS R EPRODUCED BELOW:- I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 7 OF 11 '5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM T HE FACTS THAT THE ASSESSEE PURCHASED THESE SHARES FROM BEEJAY INVESTMENTS AND FINANCIAL CONSULTANTS P. LTD (IN SHORT BIFC) AND CONSEQUENTLY, THE SAID PARTY IS SUED THE SALE BILL TO ASSESSEE, COPY OF WHICH WAS FILED BEFORE THE ASSESSING OFFICER AND THE SAME IS NOT DISPUTED. THE ASSESSING OFFICER HAS RAISED THE ISSUE THAT BIFC DI D NOT HAVE THE ADEQUATE NUMBER OF SHARES IN THEIR STOCK A S ON THE DATE SALE. HOWEVER, THE FACTS ARE CONTRARY T O THE FINDINGS OF THE ASSESSING OFFICER, AS WOULD APP EAR FROM THE COPY OF ACCOUNT ENCLOSED HEREWITH, THAT TH E SAID BFIC HAD THE REQUIRED NUMBER OF SHARES IN THEI R STOCK AND IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICER, AN EXPLANATION WAS FILED VIDE LETTER DATED 30- 11- 2011 (COPY IS ENCLOSED IN ASSESSEE'S PAPER BOOK ). FURTHER, THE ASSESSING OFFICER ALSO MADE ENQUIRY UN DER SECTION 133(6) FROM THE SELLER BIFC, WHO ALSO REPLI ED AND ADMITTED THE FACTUM OF THE SALE OF SHARE. THEREFORE SIMPLY BECAUSE THE SHARES AMOUNT TRANSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE OR THAT THE PAYMENTS WERE MADE IN THE SUBSEQUENT YEAR, THE TRANSACTION CANNOT BE TAKEN TO BE NOT GENUINE. THE ASSESSING OFFICER NOTED THAT THE TRANSACTION IS BOG US AND FURTHER THE PURCHASE WAS INFLATED. HOWEVER, THE RE IS NO BASIS FOR THE SAME BUT IT IS ONLY THE PRESUMP TIONS OF THE ASSESSING OFFICER. MOREOVER, AS INFORMED DUR ING THE COURSE OF THIS APPEAL HEARING BEFORE US BY LEAR NED COUNSEL THAT AFTER COMPLETION OF THE ASSESSMENT OF THE ASSESSEE, SCRUTINY ASSESSMENT OF THE SELLER WAS TAK EN UP AND IN SUCH SCRUTINY ASSESSMENT, THE SALE OF THE HAVE BEEN TREATED TO BE GENUINE. THIS FACT WAS ALSO NOT EXAMINED BY THE ASSESSING OFFICER FROM THE ASSESSMENT RECORDS OF THE SELLER, AS THE PAN WAS GI VEN. WE ARE OF THE VIEW THAT IN CASE THE TRANSACTION HAV E BEEN TREATED AS GENUINE IN THE HANDS OF THE SELLER, THE SAME VERY TRANSACTION CANNOT BE NON-GENUINE IN THE HANDS OF THE PURCHASER. APART FROM THIS, LEARNED COUNSEL ALSO RELIED ON THE JUDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CH V. PRUDENT FINANCE (P.) LTD. (2014) 225 TAXMAN 0125 (GU)), WHEREIN EXACTLY IDENTICAL ISSUE WAS TAKEN UP AND TH E FACTS DISCUSSED BY HON'BLE HIGH COURT AS UNDER: - 'RESPONDENT OF TAX APPEAL NO. 1003/2013 AND OTHER CONNECTED APPEALS IS ONE PRUDENT FINANCE PVT. LTD. A COMPANY REGISTERED UNDER THE COMPANIES ACT. ONE NITIN B. PARIKH AND I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 8 OF 11 OTHER MEMBERS OF HIS FAMILY REFERRED TO AS NTTIN B. PARIKH GROUP OF ASSESSEE WHO HAD CONTROL OVER OTHERS, WAS SUBJECTED TO SEARCH ACTION UNDER SECTION 132 OF THE ACT. IT WAS FOUND THAT LARGE NUMBER OF SHARES WERE TRADED BETWEEN THE COMPANY AND THE SAID GROUP OF PERSONS AT OFF-MARKET TRANSACTIONS. SUCH OFF MARKET TRANSACTIONS WERE ENTERED BY THE COMPANY WITH OTHER UNRELATED ASSESSES ALSO. THE ASSESSING OFFICER CARRIED A BELIEF THAT SUCH TRANSACTIONS WERE NOT GENUINE, IN THE SENSE THAT THE SAME WOULD HAVE TAKEN PLACE WITH ANTERIOR DATES IN THE OPINION OF THE ASSESSING OFFICER, THIS WAS DONE TO CONTRIVE LOSS IN THE HANDS OF SOME OF THE ASSESSEE WHO IN TURN TRANSFERRING THE PROFITS IN THE HANDS OF OTHER ASSESSEES. THIS WAS DONE TO ENSURE THAT THE ASSESSEES WHO HAD SIZABLE PROFITS FROM SALE OF SHARES COULD CLAIM SUCH LOSSES AS SET OFF. THE ASSESSING OFFICER QUESTIONED THE ASSESSEE COMPANY IN DETAIL. THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT FORMED A BELIEF THAT FULL DETAILS WERE NOT MADE AVAILABLE WITH RESPECT TO SUCH TRANSACTIONS. THE SALES WERE NOT AT MARKET PRICE. THE AMOUNTS WERE NOT PAID, BUT ONLY ACCOUNT ENTRIES WERE MADE. THE SHARES WERE ALSO NOT TRANSFERRED IN THE NAME OF THE PURCHASERS. ON SUCH BASIS, THE ASSESSING OFFICER CONCLUDED THAT THE TRANSACTIONS WERE NOT GENUINE AND APPLYING THE RATIO OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF MCDOWELL CO. LTD V. COMMERCIAL TAX. OFFICER (1985) 154 ITR 148/22 TAXMAN 11, HELD THAT SUCH LOSS CANNOT BE ALLOWED. THE ASSESSING OFFICER OBSERVED THAT WHENEVER SALES WERE MADE TO OTHER ENTITIES, THEY WERE NOT FOLLOWED BY CHEQUE RECEIPTS. SIMILARLY WHEN PURCHASES WERE MADE FROM OTHER ENTITIES, THEY WERE ALSO NOT FOLLOWED BY CHEQUE PAYMENTS. HE CONCLUDED THAT THE ASSESSEE CARRIED OFF MARKET TRANSACTIONS BY SIMPLE PURCHASE BILLS OR SALES BILLS IGNORING MARKET RATES. THIS WAS DONE TO AVOID TAX. ' AND FINALLY HELD AS UNDER: '8. ADDITIONALLY, WE ALSO NOTE THAT NECESSARY ENTRI ES WERE MADE IN THE ACCOUNT BOOKS OF BOTH SIDES, I.E. PURCHASER AND SELLER AND DELIVERY RECEIPTS WERE ALSO PASSED DEMONSTRATING I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 9 OF 11 CONTEMPORANEOUS SALE AND PURCHASE OF THE SHARES. IT IS NOT EVEN THE EASE OF THE REVENUE THAT SUCH OFF MARKET TRANSA CTIONS WERE NOT PERMISSIBLE. WHEN WE FIND THAT OFF MARKET TRANS ACTIONS WERE PERMITTED IN LAW, THAT THERE WAS NO EVIDENCE T O SUGGEST THAT ARTIFICIALLY THEY WERE SOLD AT RATES LOWER THA N THE PREVAILING MARKET RATES AND WE FURTHER FIND THAT TH E ASSESSING OFFICER COULD NOT BRING ON RECORD ANY MATERIAL TO S HOW THAT THE TRANSACTIONS WERE SHOWN TO BE DELIBERATELY BACK-DAT ED, THE FINDINGS OF THE COMMISSIONER (APPEALS) AS WELL AS T HAT OF THE TRIBUNAL, IN OUR OPINION, CALL FOR NO INTERFERENCE. ' IN VIEW OF THE ABOVE FACTS AND IDENTICAL ISSUE TAKE N UP BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF PRUDENT F INANCE (P.) LTD., SUPRA, WE ARE OF THE VIEW THAT THE TRANSACTIO N TO UNRELATED PARTIES I.E. OFF MARKET TRANSACTION, THERE WAS NO E VIDENCE IN THE PRESENT CASE ALSO WHICH SUGGESTS THAT THE SHARES WE RE ARTIFICIALLY SOLD AT A LOWER RATE THAN THE PREVAILING MARKET RTE . EVEN THE ASSESSING OFFICE COULD NOT BRING ANYTHING ON RECORD , WHICH SUGGESTS THAT THE SELLING RATE WAS LOWER THAN THE M ARKET RATE. RESPECTFULLY FOLLOWING HON'B/E GUJARAT HIGH COURT, WE CONFIRM THE ORDER OF COMMISSIONER (APPEALS) AND THE ISSUE O F REVENUE'S APPEAL IS DISMISSED.' FURTHER WE ALSO RELYING ON THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. PRUDENT FINANCE CP) LTD . (2014) TAXMAN 125 WHERE THE HEAD NOTE AS UNDER:- 'BUSINESS LOSS - ALLOWABILITY GENUINENESS OF LOSS O N OFF MARKET TRANSACTIONS - ASSESSEE-COMPANY FOUND TO BE TREATED IN OFF MARKET SHARE TRANSACTIONS WITH ITS RELATED GROUP OF PERSONS AS WELL AS WITH UNRELATED GROUPS OF PERSONS. AO DISALLOWED LOSSES ON IMPUGNED TRANSACTIONS ON THE GROUND THAT TRANSACTIONS WERE N OT GENUINE AS ASSESSEE CARRIED OFF MARKET TRANSACTIONS BY SIMPLE PURCHASE BILLS OR SALES BILLS IGNORING MARKE T RATES. THIS WAS DONE TO AVOID TAX. MOREOVER NEITHER ANY AMOUNT WAS PAID NOR ANY SHARES WERE TRANSFERRED IN THE NAME OF PURCHASERS, ONLY ACCOUNT ENTRIES WER E MADE. HELD-:NECESSARY ENTRIES WERE MADE IN THE ACCOUNT BOOKS OF BOTH SIDES, I.E, PURCHASER AND SEL LER AND DELIVERY RECEIPTS WERE ALSO PASSED DEMONSTRATIN G CONTEMPORANEOUS SALE AND PURCHASE OF THE SHARES. IT WAS NOT EVEN THE CASE OF THE REVENUE THAT SUCH OFF MARKET TRANSACTIONS WERE NOT PERMISSIBLE. WHEN OFF MARKET TRANSACTIONS WERE PERMITTED IN LAW, AND THER E WAS NO EVIDENCE TO SUGGEST THAT ARTIFICIALLY THEY W ERE SOLD AT RATES LOWER THAN THE PREVAILING MARKET RATE S AND AO COULD NOT BRING ON RECORD ANY MATERIAL TO SHOW THAT THE TRANSACTIONS WERE NOT GENUINE, THE I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 10 OF 11 FINDINGS OF CIT(A) AS WELL AS TRIBUNAL THAT IMPUGNE D TRANSACTIONS WERE GENUINE, CALLED FOR NO INTERFEREN CE.' FROM THE ABOVE JUDGMENTS, WE FIND THAT THE TRANSACT IONS OF SALE- PURCHASE WAS DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE RESPECTIVE PARTIES, THE ALLEGATION BY THE ASSESSING OFFICER THAT THE OFF MARKET TRANSACTIONS CANNOT BE ACCEPTED UNDE R SCRA IS FACTUAL INCORRECT RELATING IN THE AFORESAID APPELLA TE ORDER. WE ALSO FIND THAT THE EXCEPTION HAS BEEN PROVIDED IN T HE SCRA ACT UNDER SECTION 14(2) OF THE SCRA ACT AS DISCUSSED AB OVE. ACCORDINGLY WE UPHOLD THE ORDER OF LD. CIT(A) AND G ROUND RAISED BY REVENUE IS DISMISSED. 7. KEEPING IN VIEW THE DECISION OF THE TRIBUNAL AS RENDERED ABOVE ON THE SIMILAR ISSUES, THE LD. CIT(APPEALS) DELETED TH E SIMILAR ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COM PLETED UNDER SECTION 153A/143(3) TO MAINTAIN JUDICIAL CONSISTENCY. AT TH E TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESS EE HAS CONTENDED THAT BOTH THE ISSUES INVOLVED IN THIS APPEAL OF THE REVE NUE ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE TRIBUNAL DATED 03.08.2016 PASSED IN ITA NO 1429/KOL/2012, WHEREIN THE SAME ADDITIONS MADE BY THE ASSESSING OFFICER WERE HELD T O BE NOT SUSTAINABLE BY THE TRIBUNAL BY PASSING A WELL DISCUSSED AND WEL L REASONED ORDER. THE LD. D.R. HAS ALSO NOT DISPUTED THIS POSITION. HE, H OWEVER, HAS CONTENDED THAT THE ASPECT OF COLOURABLE DEVICE ADOPTED BY THE ASSESSEE TO CLAIM THE EXPENDITURE ON PURCHASE OF SHARES WAS NOT LOOKED IN TO BY THE TRIBUNAL IN ITS ORDER DATED 03.08.2016. WE, HOWEVER, FIND THAT THIS WAS NOT THE CASE MADE OUT EVEN BY THE ASSESSING OFFICER IN THE ASSES SMENT COMPLETED PASSED UNDER SECTION 153A/143(3) AND BOTH THE ADDIT IONS WERE REPEATED BY HIM IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY KE EPING IN VIEW THAT THE ISSUE RELATING TO THE SAME ADDITIONS MADE IN THE RE GULAR ASSESSMENT WERE PENDING BEFORE THE TRIBUNAL VIDE AN APPEAL FILED BY THE DEPARTMENT. WE ALSO NOTE FROM THE ASSESSMENT ORDER PASSED BY THE A SSESSING OFFICER UNDER SECTION 153A/143(3) THAT BOTH THESE ADDITIONS WERE REPEATED BY THE ASSESSING OFFICER JUST TO MAINTAIN JUDICIAL CON SISTENCY AND THERE WAS I.T.(SS )A. NO 39/KOL/2018 ASSESS MENT YEAR: 2009-2010 & C.O . NO. 75/KOL/2018 [IN I T(SS)A NO. 39/KOL/2018] ASSES SMENT YEAR: 2009-2010 M/S. ACETYLENE TREXIM PVT. LIMITED PAGE 11 OF 11 NO INCRIMINATING MATERIAL FOUND DURING THE COURSE O F SEARCH TO SUPPORT AND SUBSTANTIATE THE SAME. WE, THEREFORE, FIND NO I NFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING BOT H THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE ON PURCHASE OF SHARES AND KEYMAN INSURANCE AND UPHOLDI NG THE SAME, WE DISMISS THIS APPEAL FILED BY THE REVENUE AND ALLOW THE CROSS OBJECTION FILED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED, WHILE THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17, 2019 . SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT (KZ ) KOLKATA, THE 17 TH DAY OF JULY, 2019 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3(4), KOLKATA, AAYAKAR BHAWAN, 110, SHANTI PALLY, 5 TH FLOOR, KOLKATA-700 107 (2) M/S. ACETYLENE TREXIM PVT. LIMITED. 14, NETAJI SUBHAS ROAD, 4 TH FLOOR, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLK ATA, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.