S.T. Shankar & Sons (HUF), Bangalore V. DCIT, Bangalore

ITA 1070/BANG/2010

• Counselvise Citation: 107021114 RSA 2010
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GANESH RAO
• Assessee Lawyers: H N KHINCHA
• Keywords: Capital asset; Income from undisclosed sources
• Section: 234B

Judgement Text

ITA.1070/BANG/2010 PAG E - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A NO.1070/BANG/2010 (ASSESSMENT YEAR : 2005-06) M/S. S. T. SHANKAR & SONS (HUF), PROP : SUNITHA SAREES, 4/5, 14TH CROSS, R. T. STREET, BANGALORE 560 001 .. APPELLANT V. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1(3), BANGALORE .. RESPONDENT APPELLANT BY : SHRI. H. N. KHINCHA, CA RESPONDENT BY : SHRI. GANESH RAO, ADDL.CIT O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL FILED BY THE ASSESSEE, M/S. S. T . SHANKAR & SONS (HUF), BANGALORE, AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME-TAX(A)-VI, BANGALORE, DATED.13.07.2010, FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE BEFORE US HAS RAISED THREE GROUNDS. ONE OF THE GROUNDS IS REGARDING THE DETERMINATION OF THE NATUR E OF SURPLUS ITA.1070/BANG/2010 PAG E - 2 INCOME EARNED BY THE ASSESSEES ON SALE OF SHARES HE LD BY THEM, READS AS UNDER : 'IN ANY CASE AND WITHOUT PREJUDICE THE APPELLANT SU BMITS THAT THE ACTION OF THE LOWER AUTHORITIES IN NOT ACCEPTING TH E GAIN ON SALE OF SHARES AS GAIN ON SALE OF CAPITAL ASSETS (LONG T ERM) DESPITE THE OVERWHELMING EVIDENCE AND PROOF INCLUDING STATU TORY PROOF IS AGAINST LAW AND FACTS AND IS TO BE REJECTED. TH E CLAIM OF THE APPELLANT OF LONG TERM CAPITAL GAIN BEING RIGHT IN LAW AND ON FACTS IS TO BE ACCEPTED. THE ASSESSING OFFICER HAS IN ANY CASE, ERRED IN TR EATING THE SUM OF ` .28,44,375/- AS 'INCOME FROM OTHER SOURCES' WHICH H AS NO SUPPORT IN LAW; IS CONTRARY TO FACTS AND EVIDENC E AVAILABLE. SUCH A TREATMENT DESERVES TO BE REJECTED TOTALLY. THE LEARNED COMMISSIONER OF INCOME-TAX(A) INSTEAD OF QUASHING T HE ORDER ERRED IN CONFIRMING THE SAME. THE SEVERAL OBSERVATIONS MADE BY THE ASSESSING OFF ICER IN THE COURSE OF ASSESSMENT ORDER AND VARIOUS CONCLUSIONS DRAWN BY THE ASSESSING OFFICER ARE WITHOUT BASIS AND EVIDENC E AND ARE MADE/DRAWN ON SURMISES, PROBABILITIES AND CONJECTUR ES. SUCH OBSERVATIONS AND CONCLUSIONS BY A QUASI-JUDICIAL AU THORITY HAVE NO SUPPORT IN LAW AND DESERVE TO BE REJECTED IN TOT O. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE THE APPELLANT HAD RIGHTLY OFFERED THE SA LE ON GAIN OF SHARES AS LONG-TERM CAPITAL GAINS AND THE SAME SHOU LD HAVE BEEN ACCEPTED AS SUCH.' 3. THE BRIEF FACTS RELATING TO THIS GROUND ARE AS F OLLOWS. THE ASSESSEE HAS SOLD ITS SHARES IN THE PREVIOUS YEAR R ELEVANT TO THE ITA.1070/BANG/2010 PAG E - 3 ASSESSMENT YEAR UNDER APPEAL AND OFFERED THE SURPLU S AS LONG TERM CAPITAL GAINS FOR TAXATION. THE ASSESSING OFFICER HELD THE SALE OF SHARES AS BOGUS AND TREATED THE SURPLUS AS 'INCOME FROM OTHER SOURCES' AS AGAINST THE CLAIM OF LONG TERM CAPITAL GAINS BY THE ASSESSEE. THE ABOVE ACTION OF THE ASSESSING OFFICE R WAS CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(A), BY OBSERVING AS FOLLOWS : 'THE CIRCUMSTANTIAL EVIDENCE DISCUSSED BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER PROVES THAT THERE W AS NO ACTUAL PURCHASE AND SALE OF THE SHARES AS CLAIMED B Y THE APPELLANT BUT THE UNACCOUNTED INCOME OF ` .28,44,375/- WAS INTRODUCED AS LONG TERM CAPITAL GAIN BY OBTAINING T HE CHEQUE THROUGH ACCOMMODATION BY SHOWING THE SAME AS SALE PROCEEDS OF THE SHARES HELD. THEREFORE, THE A SSESSING OFFICER WAS RIGHT IN ASSESSING THE AMOUNT SHOWN AS SALE PROCEEDS FROM SALE OF THE SHARES AS INCOME FROM OTH ER SOURCES. ACCORDINGLY, THE ASSESSMENT OF INCOME OF ` .28,44,375/- UNDER THE HEAD 'INCOME FROM OTHER SOUR CES' IS UPHELD.' 4. TO ARRIVE AT THE ABOVE CONCLUSION, WE FIND THAT THE COMMISSIONER OF INCOME-TAX(A) HAS DEALT WITH THE MA TTER IN DEPTH BY RELYING ON THE DECISIONS OF VARIOUS HIGH COURTS AND THE HON'BLE SUPREME COURT. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NOS.513 TO 526/BANG/2010, ETC., DATED.23.03.2011, IN GROUP CAS ES INVOLVING THIRTY ITA.1070/BANG/2010 PAG E - 4 APPEALS OF MEHTA GROUP, CHAJER GROUP, TAINWALA GROU P, NAGORI GROUP, ETC., THE TRIBUNAL THEREIN AFTER DELIBERATING UPON THE ISSUE AT LENGTH, REMANDED THE MATTER BACK TO THE ASSESSING OFFICER W ITH A DIRECTION TO TREAT THE SURPLUS AS LONG-TERM CAPITAL GAINS. THE FACTS AND CIRCUMSTANCES BEING IDENTICAL IN THE PRESENT CASE A LSO, FOLLOWING THE ABOVE ORDER OF THE COORDINATE BENCH, WE REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO REDO THE ASSES SMENT AS PER THE ABOVE DIRECTION. ACCORDINGLY, THIS ISSUE IS DECIDE D IN FAVOUR OF THE ASSESSEE. 5. IN ANOTHER GROUND THE ASSESSEE HAS CHALLENGED TH E VALIDITY OF JURISDICTION U/S.153A OF THE ACT. SINCE THE MAIN GROUND IN THE APPEAL HAS BEEN DECIDED ON MERITS, BY FOLLOWING THE EARLIE R ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL WHILE DEALING WIT H GROUP CASES, IN ITA NOS.513 TO 526/BANG/2010, ETC., DATED.23.03.201 1, AS ALSO THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN I TA NOS.1118 TO 1127/BANG/2010, DATED.24.06.2011, IN THE GROUP CASE OF SMT. BHANI BAI AND OTHERS, FOR THE ASSESSMENT YEAR 2005-06, TH E ISSUE RELATING TO THE JURISDICTION DOES NOT SUSTAIN. THIS GROUND IS DISMISSED. 6. IN THE LAST GROUND RAISED, THE ASSESSEE DENIES I TS LIABILITY TO PAY INTEREST U/SS.234A, 234B AND 234C OF THE ACT. IT I S WELL KNOWN THAT ITA.1070/BANG/2010 PAG E - 5 THE LEVY OF INTEREST UNDER THESE SECTIONS IS A MATT ER OF CONSEQUENCE. HENCE, WE DIRECT THE ASSESSING OFFICER TO GIVE CONS EQUENTIAL RELIEF TO THE ASSESSMENT WHILE GIVING EFFECT TO OUR ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16TH DAY OF AUGUS T, 2011, AT BANGALORE. SD/- SD/- (SMT. P. MADHAVI DEVI) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT