DCIT,Cent Cir-34, Kolkata, Kolkata V. DEEPAK KUMAR MAHESWARI, Kolkata

ITA 1183/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54682 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 19-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR
• Assessee Lawyers: S M SURANA
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

, , , , , ,, , IN THE INCOME-TAX APPELLATE TRIBUNAL, B BENCH : KOLKATA [ ( (( ( ) )) ) , , , , , , , , . .. .!' !'!' !'. .. . , , , , #$ #$ #$ #$ ] ]] ] [BEFORE SRI MAHAVIR SINGH, JM & SRI C. D. RAO, A M] ITA NO. 1183/KOL/2009 : ASSESSMENT YEAR : 2003-04 DY. COMMISSIONER OF INCOME TAX -VS.- DEEPAK KUMAR MAHESWARI CIRCLE-34, KOLKATA. [PAN : AGJPM 6476 F] [ &' &' &' &' /APPELLANT ] ]] ] [ ()&' ()&' ()&' ()&'/ // / RESPONDENT ] ] ] ] &' &' &' &' / FOR THE APPELLANT : SHRI S. K. MALAKAR ()&' ()&' ()&' ()&' / FOR THE RESPONDENT : SHRI S. M. SURANA +,- . '$ +,- . '$ +,- . '$ +,- . '$ /DATE OF HEARING : 09.11.2011 /0 . '$ /0 . '$ /0 . '$ /0 . '$ /DATE OF PRONOUNCEMENT : 18/11/2011 #1 /ORDER , ,, , PER MAHAVIR SINGH, J. M. THIS APPEAL FILED BY REVENUE, IS EMANATING OUT OF O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA, IN APPEAL NO.51/CIT(A)-XX/CI RCLE-34/2007-08 DATED 08.05.2009. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-34, KOLKATA U /S. 143(3) OF THE I. T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2003- 04 VIDE HIS ORDER DATED 27.03.2006. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST ORDER OF CIT(A) IN DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF LO NG TERM CAPITAL GAIN ON SALE OF SHARES DECLARED BY ASSESSEE BY TREATING THE SAME AS UNDISC LOSED INCOME. THE REVENUE HAS RAISED THE FOLLOWING GROUND:- THE LD. CIT(A)-XX, KOLKATA HAS ERRED ON FACT AND I N LAW FOR DELETING THE ADDITION OF RS.33,72,700/- IN THE HEAD OF CONCEALED INCOME AND DIRECTED TO TREAT THE LONG TERM CAPITAL GAIN ON SALE OF SHARES AMOUNTING TO RS.32,36,573/- AS SHOWN BY THE ASSESSEE IN THE RETU RN OF INCOME. [ITA NO. 1183KOL/2009 DEEPAK KR. MAHESWARI ASSESSMENT YEAR 2003-04 ] 2 3. BRIEF FACTS ARE THAT ASSESSING OFFICER NOTED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THAT ASSESSEE HAS DECLARED LONG TERM CAPITAL GAIN O F RS.32,36,573/- ON SALE OF 33000 SHARES OF JAYKAYDEE LIMITED. THE ASSESSEE IN ITS COMPUTATION OF INCOME WORKED OUT THE CAPITAL GAIN AS UNDER:- SALE CONSIDERATION RECEIVED : RS. 33,76,095/- (SOLD IN MAY/JUNE,2002) PURCHASE COST : (PURCHASED ON 11.4.01) : RS. 1,3 2,968/- INDEXED COST RS .1,39,523/- LONG TERM CAPITAL GAIN RS. 32,36,573/- EXEMPTION U/S. 54EC RS. 32,30,000/- TAXABLE CAPITAL GAIN RS. 6,573/- ASSESSING OFFICER AFTER GOING THROUGH PHOTO COPIES OF REPORTS APPEARING IN FINANCIAL NEWSPAPER ON 01.12.2005, TREATED THIS LONG TERM CAP ITAL GAIN AS UNDISCLOSED INCOME INVESTED BY ASSESSEE. THE RELEVANT EXTRACT OF NEWSPAPER REPO RT AS IT IS REPRODUCED BY THE ASSESSING OFFICER AS WELL AS BY CIT(A) READS AS UNDER:- SEBI CARRIED OUT INVESTIGATION IN THE MATTER OF NA GESHWAR INVESTMENT LTD., ADINATH BIO-LABS LTD., GLOBE STOCK & SECURITI ES LTD., GOENKA BUSINESS & FIANANCE LTD., AND CORONET INDUSTRIES LT D. WHERE IT FOUND CERTAIN IRREGULARITIES. SEBI SAID, IT IS EVIDENT FR OM THE FINDINGS OF THE PRELIMINARY INVESTIGATION, THAT THE FIVE COMPANIES, ALL OF WHICH ARE LISTED IN CSE, THAT THESE 12 BROKERS HAVE FOLLOWED A COMMO N MODUS OPERANDI OF ARTIFICIALLY INFLATING THE PRICE AND CREATING FALLS VOLUMES IN THE STOCK OF THESE FIVE COMPANIES THROUGH CONTINUOUS SELF DEALS EXECUTED ON THE SAME TERMINAL AND CROSS DEALS AMONGST THEMSELVES, THEREB Y NOT ONLY ENRICHING THEMSELVES BUT ALSO AIDING AND ABETTING THE PROCESS OF LEGITIMIZING THE GAINS. ASSESSING OFFICER ALSO NOTED THAT HE HAS SENT WARD INSPECTOR TO SHARE MARKET AND THE INSPECTOR HAS REPORTED THAT SOME OF THE COMPANIES ARE CREATED ON PAPER ARE PROVIDING EVIDENCE OF CAPITAL GAINS. BUT BEFORE US, NO SUCH REPORT WAS PRODUCED B Y LD. CIT(DR) DESPITE QUERIES FROM THE BENCH. [ITA NO. 1183KOL/2009 DEEPAK KR. MAHESWARI ASSESSMENT YEAR 2003-04 ] 3 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO DELETED THE ADDITION BY RELYING ON VARIOUS DECISIONS OF KOLKATA TRIBUNAL AN D GOING THROUGH THE FACTS THAT THE LONG TERM CAPITAL GAIN SHOWN BY ASSESSEE IS GENUINE AND THAT ASSESSING OFFICER HAS MADE THE ADDITION PURELY ON PRESUMPTION WITHOUT BRINGING ANY ADVERSE MATERIAL AGAINST ASSESSEE. IT WAS CONTENDED THAT THE PURCHASE AND SALE TRANSACTIONS O F SHARES WERE ENTERED THROUGH RECOGNIZED STOCK BROKER AND WERE SETTLED THROUGH ACCOUNT PAYEE CHEQUES AND ARE DULY RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ALSO CONTENDED THAT GENUIN ENESS OF THE TRANSACTIONS WAS ALSO CONFIRMED BY THE SHARE BROKER BEFORE THE ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS. IT WAS ALSO CONTENDED THAT THERE IS NO UNDISCLOSED INCOME OF RS.33,72,700/- AS ALLEGED BY ASSESSING OFFICER, IN FACT PURCHASE AND SALE TRANSACTIONS OF SHARES PURSUANT TO WHICH ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN HAVE ENT ERED THROUGH RECOGNIZED STOCK BROKER AND HAS BEEN SETTLED THROUGH ACCOUNT PAYEE CHEQUES AND ARE DULY RECORDED IN THE BOOKS OF ASSESSEE. THE ADDITION OF RS.33,72,700/- ON ACCOUNT OF UNDISC LOSED INCOME IS WITHOUT ANY BASIS, BAD IN LAW AND NEED TO BE DELETED. WITHOUT PREJUDICE TO AB OVE, HE POINTED OUT THE NAME OF JAKAYDEE LIMITED, THE SHARE IN WHICH THE ASSESSEE HAS EARNED LONG TERM CAPITAL GAIN IS NOT INCLUDED IN PRESS REPORT QUOTED BY THE ASSESSING OFFICER. IN VIEW OF THIS FACT, LD. CIT(A) DELETED THE ADDITI ON BY FOLLOWING PARA 4.5 OF HIS APPELLATE ORDER, THE SAME IS REPRODUCED BELOW :- IN VIEW OF THE ABOVE FACTS, THE MATERIAL AND EVID ENCES ON RECORD AND THE DECISIONS OF THE JURISDICTIONAL ITAT, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE LONG TERM CAPITAL GAIN SHOWN BY THE APPELLANT IS NOT GENUINE. THE ADDITION OF RS .33,72,747/- MADE BY THE ASSESSING OFFICER IS DELETED. THE ASSESSING OFF ICER IS DIRECTED TO TREAT THE GAIN ON SALE OF SHARES, AMOUNTING TO RS.32,36,5 73/-, AS SHOWN BY THE APPELLANT IN HIS RETURN OF INCOME, AS LONG TERM CAP ITAL GAIN. GROUNDS NO.2 & 3 ARE ALLOWED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER HAS MADE ADDITION ON THE SO CALLED INSPECTORS REPORT, WHICH IS NEVER PRODUCED BEFORE US NOR BEFORE CIT(A). EVEN AS SESSING OFFICER HAS NOT REFERRED THE CONTENTS OF INSPECTORS REPORT EXCEPT BY SAYING ON THE BASIS OF CONJECTURE AND SURMISES THAT THESE COMPANIES ARE JUST PAPER CONCERNS ENABLING IN TERESTED PARTIES TO CREATE EVIDENCES OF [ITA NO. 1183KOL/2009 DEEPAK KR. MAHESWARI ASSESSMENT YEAR 2003-04 ] 4 CAPITAL GAINS. THE ENTIRE PREMISE OF THE ORDER OF A SSESSING OFFICER WAS BASED ON INSPECTORS REPORT WHICH IS BASED ON REPORT APPEARING IN FINANC IAL NEWSPAPER ON 01.12.2005 AND THAT ALSO WITHOUT ANY NAME OF ANY BROKER. WE FIND THAT ASSESS EE HAS SUBMITTED COMPLETE DETAILS I.E. DETAILS OF PURCHASE OF SALE OF SHARES ENTERED THROU GH REGISTERED BROKER AND PAYMENTS ALSO ARE MADE THROUGH ACCOUNT PAYEE CHEQUES AND DULY RECORDE D IN THE BOOKS OF ACCOUNTS. IT IS ALSO A FACT THAT EVEN IN NEWSPAPERS REPORT, AS POINTED OU T BY ASSESSING OFFICER, THE NAME OF THE COMPANY M/S. JAYKAYDEE LIMITED IS NOT APPEARING IN THE REPORT OF NEWSPAPER THROUGH WHICH ASSESSEE IS EARNING LONG TERM CAPITAL GAINS. IN VIE W OF ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT REVENUE COULD NOT MAKE OUT A CASE BY ANY STRETCH OF IMAGINATION THAT THIS CAN BE UNDISCLOSED INCOME. WE CONFIRM THE FINDINGS OF C IT(A) DELETING THE ADDITION IN VIEW OF ABOVE REASONING. ACCORDINGLY, APPEAL OF THE REVENU E IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 18/11/2011 SD/- SD/- [ . .. .!' !'!' !'. .. . , , , , #$ #$ #$ #$ ] [ , ] [ C. D. RAO ] [ MAHAVIR SI NGH ] ACCOUNTANT MEMBER JUDICIAL MEM BER DATED : 18TH NOVEMBER, 2011. COPY FORWARDED TO THE - 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE-34, 18, RABI NDRA SARANI, PODDAR COURT, 3 RD FLOOR, KOLKATA-700 001. 2. DEEPAK KUMAR MAHESWARI, 40/4, STRAND ROAD, K OLKATA-700 001. 3. CIT(A)- (4) CIT- 4. D.R., I.T.A.T., KOLKATA. [TRUE COPY] BY ORDER ASSISTANT REGISTRAR (KKC) I.T.A.T., KOLKATA.