Sanjay Jain, Kolkata V. DCIT, C ircle- 36, Kolkata, Kolkata

ITA 1192/KOL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70472 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 20-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-06-2010
• Court: TRIBUNAL
• Department Lawyers: R PRASAD
• Assessee Lawyers: S P CHOUDHURY
• Keywords: Unexplained cash credit; Source of fund
• Section: 143(3); 68

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND . . . . ' '' ''# '#'# '#, $% ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI ABRAHAM P. GEORGE, AM] & & & & / I.T.A NO. 11 9 2/KOL/2010 '( )* '( )* '( )* '( )*/ // / ASSESSMENT YEAR: 200 7 -0 8 SANJAY JAIN VS. DEPUTY COMMISSIONER OF INCOME -TAX, (PAN: ACWPJ3841N) CIRCLE-36, KOLKATA (,- /APPELLANT ) (./,-/ RESPONDENT ) DATE OF HEARING: 29.11.2013 DATE OF PRONOUNCEMENT: 30.12.2013 FOR THE APPELLANT: S/SHRI S.P. CHOUDHURY & SOUMITRA CHOUDHURY FOR THE RESPONDENT: SHRI R. PRASAD, SR. DR $0 / ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO. 304/CIT(A)-XX/CIR36/09-10/KOL DATED 18.03.2010. AS SESSMENT WAS FRAMED BY DCIT, CIRCLE- 36, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 30.12. 2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF STT PAID U/S. 88E OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. FOR THAT ON THE FACTS OF THE CASE, THE LD. CIT( A) WAS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF CLAIM OF STT U/S. 88E OF THE I. T. ACT AT RS.13,52,160/-, BY MISINTERPRETATION OF LAW AS WELL AS FACT OF THE CAS E, SO HIS FINDING IS ERRONEOUS, PERVERSE AND ILLEGAL. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THIS GROUND. LD. SR. DR HAS NOT OBJECT ED TO THE WITHDRAWAL OF THIS GROUND. SINCE THE ASSESSEE IS NOT INTERESTED IN PROSECUTING GROUN D NO. 2, WE PERMIT THE WITHDRAWAL AND THE SAME IS DISMISSED BEING WITHDRAWN. 4. COMING TO SECOND ISSUE OF ADDITION OF RS.21,55,9 50/- ON ACCOUNT OF SALE PROCEEDS OF SHARES AS UNEXPLAINED BY THE AO AND FURTHER A SUM O F RS.10,61,834/- BEING PREVIOUS YEARS ADVANCES REALISED ADDED AS UNEXPLAINED CREDITS AND CONFIRMED BY CIT(A), THEREBY AGGREGATE 2 ITA NO. 1192/K/2010 SHRI SANJAY JAIN, AY:2007-08 ADDITION U/S. 68 OF THE ACT AT RS.32,17,784/-. AGG RIEVED AGAINST THE ORDER OF CIT(A), ASSESSEE RAISED FOLLOWING GROUND NOS. 3, 4 AND 5: 3. FOR THAT ON THE FACTS, THE LD. C.I.T.(A) WAS WR ONG IN SUSTAINING THE ADDITION OF SALE PROCEEDS OF OPENING BALANCE SHARES RS.21,55,950/- A ND PREVOUS YEARS ADVANCE REALIZED RS.10,61,834.44 AGGREGATING RS.32,17,784/- U/S. 68 OF THE 1.T. ACT, IN SPITE OF DETAILS IF THE CASH BOOK WAS FURNISHED IN ASSESSMENT WHICH ARE THE PRIMARY ENTRIES AND A GOOD PIECE OF EVIDENCE BUT ALL OTHER ENTRIES IN THE CASH BOOK HAS ACCEPTED, SO THE FINDING IN APPELLATE ORDER IS ARBITRARY, VINDICTIVE AND MALA-F IDE. 4. FOR THAT THE SHARES AND ADVANCE TO M/S. DHINGRA & ASSOCIATES BENG ACCEPTED IN RECORD AS OPENING BALANCE SO ITS REA1IZATION BY SA LE OF SHARES AND REALIZATION ADVANCE CANNOT BE DISPUTED BY REJECTING A PART OF THE AUDI TED BOOKS OF ACCOUNTS AND ACCEPTING THE OTHER PARTS, WHICH IS AGAINST THE NORMS LAW AS DECI DED BY APEX COURT. 5. FOR THAT THE ENTRIES IN CASH BOOK ARE PRIMARY EN TRIES BEING A GOOD PIECE OF EVIDENCE, THEREFORE, THE CASH RECEIPTS CANNOT BE TREATED AS I NCOME U/S. 68 OF THE I.T. ACT, UNLESS THE CASH BOOK IS REJECTED IN ASSESSMENT AS THERE CANNOT BE DIFFERENTIAL TREATMENT ON THE SAME SALE OF EVIDENCE, SO THE ACTION OF THE A.O. IS MALA FIDE AND ILLEGA1. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS HA VING SOURCES OF INCOME LIKE SALARY, DIVIDEND, INTEREST AND ALSO TRADING FROM SHARES. T HE ASSESSEE FURNISHED COMPLETE BOOKS OF ACCOUNT ALONG WITH OTHER DETAILS INCLUDING CASH FLO W STATEMENTS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HA S CASH RECEIPT OF RS.10,61,834/- FROM M/S. M. L. DHINGRA & ASSOCIATES ON ACCOUNT OF OLD OUTSTA NDING BALANCE AND ALSO CASH RECEIPT OF AN AMOUNT OF RS.21,55,950/- FROM M. L. DHINGRA & ASSOC IATES ON ACCOUNT OF SALE OF 2700 SHARES OF MASTEK FOR A SUM OF RS.4,99,500/-, 500 SHARE OF NIIT AT RS.9,21,250/- AND 5000 SHARES OF VIVEMED LABS AT RS.7,35,200/-. THE AO MADE ADDITIO N OF A SUM OF RS.32,17,784/- VIDE ITS ASSESSMENT ORDER PAGE 3 BY OBSERVING AS UNDER: IT IS FURTHER FOUND THAT ASSESSEE HAS SHOWN CASH R ECEIPT FROM M. L. DHINGRA & ASSOCIATES FOR RS.10,61,834.44 AND FROM SALE OF SHA RES AMOUNTING TO RS.21,55,950/-. IN COURSE OF HEARING A/R OF THE ASSESSEE AS WEL AS THE ASSESSEE WAS REQUESTED TO PRODUCE THE DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM RE GARDING RECEIPT OF ABOVE CASH BUT NO DOCUMENTARY EVIDENCE HAS BEEN FILED. NEITHER ANY O NE FROM M/S. M. L. DHINGRA & ASSOCIATES WAS PRODUCED NOR ANY CONFIRMATION FILED. NO REQUEST TO ISSUE SUMMON MADE. ON VERIFICATION OF CASH BOOK PRODUCED DURING THE CO URSE OF HEARING IT IS FOUND THAT THE FOLLOWING ENTRIES ARE FOUND TO HAVE BEEN MADE ON DI FFERENT DATES FOR RECEIPT OF CASH. S. NO. DATE OF ENTRY IN CASH BOOK AMOUNT 1. 6/4/2006 4,99,500/- 2. 18/4/2006 85,000/- 3. 25/5/2006 95,400/- 4. 26/6/2006 84,640/- 5. 27/7/2006 95,460/- 6. 26/8/2007 84,000/- 7. 30/9/2006 83,400/- 8. 31/10/2006 84,600/- 9. 15.11.2006 94,600/- 10. 16/12/2006 84,600/- 3 ITA NO. 1192/K/2010 SHRI SANJAY JAIN, AY:2007-08 11. 17/01/2007 84,900/- 12. 25/01/2007 9,21,250/- 13. 05/02/2007 7,35,200/- 14. 18/02/2007 94,300/- 15. 28/03/2007 90,934/- TOTAL : 32,17,784/- THE ASSESSEES EXPLANATION REGARDING SOURCE OF RECE IPT OF THESE CASH AMOUNTING TO RS.32,17,784/- IS WITHOUT ANY DOCUMENTARY EVIDENCE. SO IT IS NOT ACCEPTABLE. IN VIEW OF THE ABOVE, THE SUM OF RS.32,17,784/- SO CREDITED IN HIS ACCOUNT IS CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THE PR EVIOUS YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 U/S. 68 OF THE I. T. ACT,19 61. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO SIMPLY CONFIRMED THE ADDITION BY STATING THAT EVEN BEFORE HIM NO EVIDENCE WAS FILED. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE CLAIMED TO HAVE DEPOSITED A SUM OF RS.10,61,834/- IN ITS CASH FLOW AND HIS BANK ACCOUNT I.E. AXIS BANK, MADHYA MARG B RANCH AND ORIENTAL BANK OF COMMERCE, CHANDIGARH. THE ASSESSEE CLAIMED THAT THIS SUM OF RS.10,61,834/- IS THE OPENING BALANCE OUTSTANDING WITH M/S. M. L. DHINGRA & ASSOCIATES AN D THIS WAS DISCLOSED IN THE BALANCE SHEET FOR AY 2006-07. LD. COUNSEL FOR THE ASSESSEE BEFOR E US PRODUCED THE COMPLETE BALANCE SHEET, WHICH WAS AVAILABLE BEFORE THE AO ALSO. THE ASSESS EE CLAIMED THAT THIS ENTRY CAN BE VERIFIED FROM THE BALANCE SHEET OF ASSESSEE FOR AY 2006-07. THE ASSESSEE BEFORE US ALSO FILED COPY OF THIS BALANCE SHEET FOR AY 2006-07 IN ASSESSEES PAP ER BOOK AT PAGES 30 TO 32. THE RELEVANT ENTRY IS DISCLOSED AS OPENING BALANCE IN THE NAME O F M/S. M. L. DHINGRA & ASSOCIATES AT RS.10,61,834/- AT PAGE 32. IT MEANS THAT THIS IS A N OLD RECOVERY FROM A DEBTOR. THIS BALANCE SHEET IS VERY MUCH AVAILABLE WITH THE AO OF THE ASS ESSEE FOR AY 2006-07. ONCE THIS IS THE POSITION, THIS BEING AN OLD CREDIT, WHICH IS RECOVE RED DURING THE RELEVANT ASSESSMENT YEAR CANNOT BE ADDED IN THE RELEVANT ASSESSMENT YEAR 2007-08. IN CASE, THESE ARE UNEXPLAINED, THIS CAN ONLY BE ADDED IN AY 2006-07, IF LAW PERMITS. FOR THIS, THE AO HAS TO VERIFY THE FACTUAL POSITION AND TO ACT ACCORDING TO LAW. 7. IN RESPECT TO THE ADDITION OF SALE PROCEEDS OF S HARES OF RS.21,55,950/-, THE ASSESSEE CONTENDED THAT THIS CAN BE VERIFIED FROM STOCK SUMM ARY AS PER BOOKS OF ACCOUNT OF THE ASSESSEE. THE SHARES OF MASTEK 2700 IN NOS. FOR THE VALUE OF RS.6,88,199/- AS ON 01.04.2006 WERE SOLD FOR A SUM OF RS.4,99,500/-. FURTHER, SHARES OF NII T 5000 IN NOS. VALUED AS ON 01.04.2006 AT RS. 9,20,375/- WERE SOLD AT RS.9,21,250/-. FURTHER, TH E SHARES OF VIVIMED LABS 5000 IN NOS. VALUED 4 ITA NO. 1192/K/2010 SHRI SANJAY JAIN, AY:2007-08 AS ON 01.04.2006 AT RS.10,12,500/- WERE SOLD FOR A SUM OF RS.7,35,200/-. IT MEANS THAT THE TOTAL CASH RECEIPT ON ACCOUNT OF SALE OF SHARES IS AT RS. 21,55,950/- AND THIS IS FROM M/S. M. L. DHINGRA & ASSOCIATES, A SHARE BROKER. THE ASSESSEE S COUNSEL BEFORE US PRODUCED COPY OF BALANCE SHEET AS ON 31.03.2005 AND 31.03.2006 WHERE IN INVESTMENT IN SHARES AT RS.30,16,198/- AS ON 31.03.2005 AND RS.28,89,510/- AS ON 31.03.200 6 IS CLEARLY DISCLOSED AND COMPLETE SUMMARY OF SHARES IS ENCLOSED IN SCHEDULE 2 OF INVE STMENT IN SHARES. IT MEANS THAT THE ASSESSEE IS HOLDING THESE SHARES AND THE CASH RECEIPT IS ON ACCOUNT OF SALE OF THESE SHARES. THE AO WAS PROVIDED WITH THE NAME AND ADDRESS OF M/S. M. L. DH INGRA & ASSOCIATES, A SHARE BROKER, WHO HAS SOLD THESE SHARES ON BEHALF OF ASSESSEE AND AO NEVER TRIED TO EXAMINE THE SAME. ONCE THE ASSESSEE HAS DISCHARGED HIS PRIMARY ONUS OF PRODUCI NG THE DETAILS I.E. SALE OF SHARES THROUGH M/S. M. L. DHINGRA & ASSOCIATES AND RECEIPT BY WAY OF CASH, IT IS FOR REVENUE TO PROVE OTHERWISE. ONCE THIS IS THE FACTUAL POSITION, THE A DDITION CANNOT BE SUSTAINED. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THIS CASH RE CEIPT IS ON ACCOUNT OF SALE OF SHARES AND THE SAME CANNOT BE ADDED U/S. 68 OF THE ACT AS UNEXPLAI NED CASH CREDITS PARTICULARLY WHEN THE ASSESSEE HAS PROVED THE SALE OF SHARES. ACCORDINGL Y, THIS ADDITION IS DELETED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH DEC., 2013. SD/- SD/- . . . . ' '' ''# '#'# '# , $% , (ABRAHAM P. GEORGE) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH DECEMBER, 2013 12 '3' 4 JD.(SR.P.S.) $0 5 . 6$ )7- COPY OF THE ORDER FORWARDED TO: 1 . ,- / APPELLANT SHRI SANJAY JAIN, 23A, N. S. ROAD, 5 TH FLOOR, ROOM NO. 11, KOLKATA-700 001. 2 ./,- / RESPONDENT DCIT, CIRCLE-36, KOLKATA. 3 . 0' ( )/ THE CIT(A), KOLKATA 4. 5. 0' / CIT KOLKATA <= .' / DR, KOLKATA BENCHES, KOLKATA / ./ TRUE COPY, $0'>/ BY ORDER, ' /ASSTT. REGISTRAR .