Shri Darshan Shivlal Thakkar, Ahmedabad V. DCIT, Circle-5(2), Ahmedabad

ITA 1139/AHD/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5547 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 04-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1139/AHD/2018 (ASSESSMENT YEAR: 2013-14) SHRI DARSHAN SHIVLAL THAKKAR 15, BANSHIDHAR CO-OP. HOUSING SOCIETY, B/H, JAWAHARNAGAR, VASNA, AHMEDABAD V/S DCIT CIRCLE-5(2), (2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AEBPT 1751J APPELLANT BY : SHRI VARTIK CHOKSHI, AR RESPONDENT BY : SHRI SURENDRA KUMAR, CIT/DR ( )/ ORDER DATE OF HEARING : 10 -01-201 9 DATE OF PRONOUNCEMENT : 31-01-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. PR. CIT U/S. 263 DATED 21.03.2017 AND FOLLOWING GROUNDS HAV E BEEN TAKEN: ITA NO. 1139 /AHD/2018 . A.Y.2012-13 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. PR.CIT, AHMEDABAD-5 U/S. 263 OF THE INCOME-TAX ACT IS AB INITIO VOID BEING BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. PR.CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 23 RD FEBRUARY, 2016 PASSED BY THE DCIT, CIRCLE- 5(2), AHMEDABAD AND DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER. 3. THE APPELLANT CRAVES TO ADD, ALTER AMEND AND/OR WIT HDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURS E OF HEARING OF THE APPEAL. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE EARNED INCOME FROM BUSINESS OF FINANCE, HOUSE PROPERTY, SALARY AND OTH ER SOURCES. AND ASSESSEE CASE WAS SELECTED FOR SCRUTINY NOTICE U/S. 143(2) WAS IS SUED AND LD. A.O. MADE DETAILED ENQUIRY AND EACH AND EVERY ASPECT OF THE INCOME INC LUDING TRADING OF SHARE NAMELY NCL RESEARCH LTD. AMOUNTING TO RS. 1,68,34,500/-. THESE SHARES WERE PURCHASED BY THE ASSESSEE @ 91.05 IN THE MONTH OF MARCH, 2011 AND SOLD SHARES IN THE MONTH OF MARCH, 2013 @ 1,500 PER SHARE FOR A TOTAL CONSIDERATION OF RS. 1,67,96,339/- RESULTING INTO LONG TERM CAPITAL GAIN OF RS. 1,57,91,215/-. AT PARA NO. 4 OF LD. PR. CIT OBSERVED THAT NO INFORMATION IS AV AILABLE ON RECORD REGARDING DEMAT ACCOUNT OF THE ASSESSEE WHETHER THESE SHARES ARE REFLECTED IN THE BALANCE SHEET ETC. AND ALLEGED THAT ASSESSEE IN CONNIVANCE WITH THE BROKERS AND OTHER INDULGED INTO BOGUS TRANSACTIONS OF PURCHASE AND SA LE OF SHARES FOR THE PURPOSE OF LAUNDERING HIS UNDISCLOSED INCOME IN THE GARB OF LO NG TERM CAPITAL GAIN. AND HE FURTHER OBSERVED THAT NCL RESEARCH LTD. WAS A PENNY STOCK COMPANY AND THE ASSESSING OFFICER ACCEPTED THESE TRANSACTIONS WITHO UT ANY INQUIRIES OR VERIFICATION. AND FOLLOWING TRANSACTION OF SHARES OF NCL WERE TAK EN PLACE: IN RESPECT OF TRANSACTION REPORTED FROM SR. NO. 1 T O 10 OF TRANSACTION CODE 502, THE ASSESSEE SUBMITS THE FOLLOWING: ITA NO. 1139 /AHD/2018 . A.Y.2012-13 3 SR. NO. TRANSACTION AMOUNT TRANSACTION DATE REMARK 1 15,51,000 19/03/2013 THE SALE TRANSACTIONS ARE IN RESPECT OF SALE OF 4500 SHARES OF NCL RESEARCH. A STATEMENT GIVING THE DETAILED PARTICULARS OF PURCHASE, SALE AND LONG TERM CAPITAL GAIN OFFERED IN RESPECT OF SALE OF SHARES OF NCL RESEARCH IS ATTACHED HEREWITH VIDE ANNEXURE - 2 7,41,378 19/03/2013 3 38,72,500 19/03/2013 4 2,32,650 19/03/2013 10 3,87,750 19/03/2013 I. FURTHER A CONTRACT FOR PURCHASE OF SHARES OF NCL RESEARCH IS ATTACHED HEREWITH VIDE ANNEXURE - 2. LASTLY THE ASSESSEE SUBM IT HEREWITH CONTRACT NOTE FOR SALE TRANSACTION REPORTED FROM SR. NO. 1 TO 4 AND 10 VIDE ANNEXURE - 3. ITA NO. 1139 /AHD/2018 . A.Y.2012-13 4 WITH THIS THE ASSESSEE STATE THAT ALL SHARE SALE TRANSACTIONS WERE DULY CONSIDERED IN HIS RETURN OF INCOME AND ACCORDINGLY LEAVES NO SCOPE FOR ANY ADVERSE INFERENCE. 5 7,50,880 22/03/2013 THE SALE TRANSACTION IS IN RESPECT OF SALE OF 6500 SHARES OF NCL RESEARCH. A STATEMENT GIVING THE DETAILED PARTICULARS OF PURCHASE, SALE AND LONG TERM CAPITAL GAIN OFFERED IN RESPECT OF SALE OF SHARES OF NCL RESEARCH IS ATTACHED HEREWITH VIDE ANNEXURE - 6 2,66,000 22/03/2013 7 24,32,000 22/03//201 3 8 30,30,000 22/03/2013 9 30,30,000 22/03/013 1. FURTHER A CONTRACT FOR PURCHASE OF SHARES OF NCL RESEARCH IS ATTACHED HEREWITH VIDE ANNEXURE - 2. LASTLY THE ASSESSEE SUBMIT HEREWITH CONTRACT NOTE FOR SALE TRANSACTION REPORTED FROM SR. NO. 5 TO 9VIDE ANNEXURE - 4. WITH ITA NO. 1139 /AHD/2018 . A.Y.2012-13 5 THIS THE ASSESSEE STATE THAT ALL SHARE SALE TRANSACTIONS WERE DULY CONSIDERED IN HIS RETURN OF INCOME AND ACCORDINGLY LEAVES NO SCOPE FOR ANY ADVERSE INFERENCE. 3. AS WE CAN SEE, THE STT WAS PAID DURING THE YEAR UND ER CONSIDERATION AND SHARES WERE PURCHASED ON THE FLOOR OF THE MARKET I.E. BSE, PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL. CONTRACT NOTES WERE SHOWN TO THE LD. A.O. AND ON 28.10.2015, ASSESSEE SUBMITTED A REPLY OF INQUIRY R AISED BY THE A.O. WITH REGARD TO NCL RESEARCH SHARE AND ASSESSEE DULY REPLIED AND SA ME IS PART OF PAPER BOOK AT PAGE NO. 72. THEREAFTER LD. A.O. ENQUIRED ABOUT TH E EXEMPT INCOME DURING THE YEAR AND ASSESSEE ALSO FURNISHED DETAIL OF THE SAME . IT IS PERTINENT TO MENTION HERE THAT TRANSACTIONS OF THE SHARES BETWEEN THE BSE AND ASSESSEE THROUGH BROKER TOOK PLACE BETWEEN MARCH 2011 TO MARCH 2013. THEREAFTER FROM 7 TH JANUARY 2015 AS SURVEILLANCE MEASURE A SEBI PUT BAN ON THE TRANSA CTION OF THE NCL RESEARCH LTD. 4. ASSESSEES CONTENTION IS THAT HE HAS PURCHASED SHAR ES THROUGH BROKER VIA BSE AND SHARES WERE PART OF DEMAT ACCOUNT AND PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL AND HE IS MERELY AN INVESTOR. AND ASSESSEE HAS CITED ALSO AN ORDER OF KOLKATA TRIBUNAL IN THE CASE OF SMT. MINU GUPTA VS. ITO IN ITA NO. 731/KOL/2018 DATED 12.12.2018 WHEREIN SOLITARY ISSU E : THE SOLE ISSUE OF ASSESSEE'S APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.46,83,7907- MADE TO THE TOTAL IN COME OF THE ASSESSEE BY NOT ACCEPTING THE ASSESSEE'S CLAIM OF LONG TERM CAPITAL GAIN (LTC G) ON SALE OF SHARES OF M/S. NCL RESEARCH LTD. (IN SHORT 'NCL'). ITA NO. 1139 /AHD/2018 . A.Y.2012-13 6 5. ITAT DECIDED THE MATTER IN FAVOUR OF ASSESSEE HOLDI NG SINCE AO/LD. CIT(A) COULD NOT FIND ANY FAULT OR SPECIFIC ADVERSE MATERI ALS AGAINST THE ASSESSEE/BROKER/SCRIPTS OF M/S. NCL, THE ADDITION U /S. 68 CANNOT BE SUSTAINED. THE ADDITION BASED ON A COMMON/GENERAL REPORT OF DI T(INV.) AND THERE IS NOTHING IN THE REPORT SPECIFICALLY AGAINST THE ASSE SSEE, CANNOT BE THE BASIS FOR MAKING THE ADDITION OR DRAW ADVERSE INFERENCE AGAIN ST THE ASSESSEE. SO THE ACTION OF AO/LD. CIT(A) CANNOT BE SUSTAINED AND THEREFORE, THE CLAIM OF EXEMPT INCOME ON LTCG ON SALE OF SCRIPS OF M/S. NCL HAS TO BE ALL OWED, THEREFORE, THE ADDITION ON THIS ISSUE IS DIRECTED TO BE DELETED. 6. LD. COUNSEL ALSO CITED AN ORDER OF JURISDICTIONAL H IGH COURT IN THE MATTER OF CIT VS. ARVIND JEWELLERS 259 ITR 502. AND IN THE FOLLOW ING CASE MATTER HAS BEEN DECIDED IN FAVOUR OF ASSESSEE. ASSESSEE ALSO CITED A CASE OF CIT VS. ANIL KUMAR SHARMA 335 ITR 83 (DEL.): THERE IS A DISTINCTION BETWEEN LACK OF INQUIRY A ND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSE LF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. 7. ON THE OTHER HAND, LD.CIT/DR STATED THAT ASSESSEE HAS ABUSED THE SHARES OF NCL RESEARCH LTD. IN CONNIVANCE WITH OTHERS INCLUDING B ROKER ETC., TO SHOW BOGUS LTCG OF RS. 1,57,91,326/- AND IN THE GARB THEREOF, THE ASSESSEE HAS LAUNDERED ITS OWN UNDISCLOSED INCOME. 8. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD CAREFULLY. 9. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. AS WE CAN SEE, THAT LD. A.O. HAS MADE DETAILED AND COMPREHENSIVE E NQUIRY WITH REGARD TO NCL ITA NO. 1139 /AHD/2018 . A.Y.2012-13 7 RESEARCH LTD. SHARE, ASSESSEE HAS FILED CONTRACT N OTE AND SHARES WERE PURCHASED THROUGH BROKER VIA BSE, PAYMENTS HAVE BEEN MADE THR OUGH BANKING CHANNEL AND HELD FOR AROUND TWO YEARS IN THE DEMAT ACCOUNT OF T HE ASSESSEE AND LONG TERM CAPITAL GAIN WAS CLAIMED BY THE ASSESSEE. 10. WE CONSIDER THAT THE ASSESSEE COULD NOT APPEAR BEFO RE THE LD. PR. CIT, THEREFORE IN THE INTEREST OF JUSTICE, WE CONSIDER IT TO APPRO PRIATE THAT ONE MORE OPPORTUNITY OF HEARING SHOULD BE GRANTED TO THE ASSESSEE. 11. WE WOULD LIKE TO MAKE IT CLEAR THAT BEFORE PASSING ANY ORDER, LD. PR. CIT MAY ALSO BE CONSIDER THE ORDER PASSED BY THE KOLKATA ITAT IN ITA NO. 731/KOL/2018 IN THE CASE OF SMT. MINU GUPTA VS. ITO (KOLKATA). 12. IN THE LIGHT OF THE AFORESAID FACTS AND CIRCUMSTANC ES, WE RESTORE THIS CASE TO THE FILE OF PR.CIT FOR DECIDING DE NOVO AFTER EXAMINATION OF DETAILS TO BE SUBMITTED BY THE ASSESSEE AND AFTER AFFORDING ADEQUATE OPPORTUNITY O F BEING HEARD. 13. THUS, APPEAL FILED BY THE ASSESSEE IS ALLOWED SUBJE CT TO THE CONDITION MENTIONED THEREIN. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 31 - 01- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 31/01/2019 RAJESH COPY OF THE ORDER FORWARDED TO: -