Aastha Jain, New Delhi V. ITO Ward 34(2), New Delhi

ITA 1352/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9405 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 18-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: MAYANK JAIN
• Keywords: Share purchase agreement; Question of law; Accommodation entries; Bogus
• Section: 68; 69C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 7939/DEL/2018 [ASSESSMENT YEAR: 2015-16] SANJAY JAIN, VS. ITO, WARD-34(2), BJ-114, WEST SHALIMAR BAGH, NEW DELHI DELHI 110 088 (PAN: ACUPJ7047C) [APPELLANT] [RESPONDENT] ITA NO. 7940/DEL/2018 [ASSESSMENT YEAR: 2015-16] GAURAV JAIN, VS. ITO, WARD-34(2), BJ-114, WEST SHALIMAR BAGH, NEW DELHI DELHI 110 088 (PAN: AGRPJ8072E) [APPELLANT] [RESPONDENT] ITA NO. 7941/DEL/2018 [ASSESSMENT YEAR: 2015-16] AJAY KUMAR JAIN (HUF) VS. ITO, WARD-34(2), BJ-114, WEST SHALIMAR BAGH, NEW DELHI DELHI 110 088 (PAN: AABHA7755D) [APPELLANT] [RESPONDENT] ITA NO. 7942/DEL/2018 [ASSESSMENT YEAR: 2015-16] SHWETA JAIN, VS. ITO, WARD-34(2), BJ-114, WEST SHALIMAR BAGH, NEW DELHI DELHI 110 088 (PAN: ACHPJ9436C) [APPELLANT] [RESPONDENT] ITA NO. 1352/DEL/2019 [ASSESSMENT YEAR: 2015-16] AASTHA JAIN, VS. ITO, WARD-34(2), BJ-114, WEST SHALIMAR BAGH, NEW DELHI DELHI 110 088 (PAN: ASGPB8574G) [APPELLANT] [RESPONDENT] 2 ASSESSEE BY: SH. MAYANK JAIN, ADV. REVENUE BY : SH. MANOJ KUMAR CHOPRA, SR. DR. ORDER THESE 05 APPEALS HAVE BEEN FILED BY THE DIFFERENT A SSESSEES AGAINST THE RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF IN COME TAX [APPEALS]- 12, NEW DELHI. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, HENCE, ALL THE 05 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER BY FIRST DEA LING WITH ITA NO. 7939/DEL/2018 (AY 2015-16) BY ONLY REPRODUCING THE GROUNDS THEREOF AND THE DECISION OF THE SAME WILL APPLY MUTATIS MUTANDIS TO OTHER ITA NOS. 7940-7942/DEL/2018 (AY 2015-16) & ITA NO. 1352 /DEL/2019 (AY 2015-16) FILED BY THE DIFFERENT ASSESSES. 2. THE GROUNDS RAISED IN ITA NO. 7939/DEL/2018 (AY 2015-16) SANJAY JAIN VS. ITO READ AS UNDER:- 1 THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS. 11,07,200/- MADE U/S. 68 OF THE I.T. ACT REJ ECTING THE CLAIM OF THE APPELLANT OF LONG TERM CAPITAL GAI N EXEMPT U/S. 10(38) OF THE ACT. 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDI TION OF RS. 55,360/- ON ACCOUNT OF ALLEGED COMMISSION PA ID BY THE APPELLANT FOR PROCURING THE ACCOMMODATION ENTRIES U/S. 69C OF THE ACT. 3. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT TH E ASSESSEE-APPELLANT HAS NOT BEEN NAMED ANY OF THE PERSONS REFERRED TO BY THE AO FOR INDULGING IN ACCOMMODATION ENTRIES AND THE EVIDENCES THEREFORE, CANNOT BE USED AGAINST THE ASSESSEE IN VIEW OF THE JUDGMENT IN THE CASE OF KISHINCHAND CHELLARAM VS. C IT BOMBAY CITY-II, 125 ITR 713 (SC). 4. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT TH E ADDITION COULD NOT HAVE BEEN IN THE HANDS OF THE APPELLANT AS THE TWIN CONDITIONS CONTEMPLATED UNDER SECTION 10(38) OF THE ACT STANDS SATISFIED IN THE FA CTS OF THE PRESENT CASE. 5. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT NO NE OF THE EVIDENCES COLLECTED BY THE AO WERE CONFRONTED TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT. 6. THAT THE ASSESSMENT PROCEEDINGS HAVING BEEN CONCLUDED WITHOUT ANY INDEPENDENT INVESTIGATION AND 3 COLLECTION OF EVIDENCES ARE BAD IN LAW AND NO ADDIT ION CAN BE MADE. 7. THAT THE AO FAILED TO APPRECIATE THAT THE CASE OF THE APPELLANT DOES NOT UNDER ANY CIRCUMSTANCES COM E WITHIN THE AMBIT OF SECTION 68 OF THE ACT. 8. THAT THE AO FAILED TO APPRECIATE THAT THE APPELLA NT HAD FURNISHED ALL THE NECESSARY EVIDENCES TO DISCHA RGE ITS BURDEN OF PROVING THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE INVESTMENT INCLUDING THE EVIDENC ES SUCH AS COPY OF BILL FOR PURCHASE OF EQUITY SHARES , COPY OF SHARE CERTIFICATES, COPY OF SHARE TRANSFER FORM IN FAVOUR OF ASSESSEE, COPY OF DEMATERILIZATION REQUES T FORM, COPY OF DEMAT ACCOUNT STATEMENTS, COPY OF BAN K STATEMENTS SHOWING SALE PROCEED RECEIVED FROM THE S ALE OF SHARES, COPY OF ACCOUNT WITH BROKER, COPY OF CON TRACT NOTES FOR SALE OF SHARES. ETC. 9. THAT NO ADDITION COULD HAVE BEEN MADE IN THE CASE OF THE APPELLANT AS THERE WAS NO EVIDENCE TO SUGGEST THAT THE CAPITAL GAIN WAS SOURCED BY CASH EMANATING FROM THE APPELLANT. 10. THAT THE ASSESSMENT ORDER RUNS CONTRARY TO THE RATIO OF SEVERAL JUDGMENTS PASSED BY THE HONBLE CO URTS INCLUDING THE JUDGEMENTS IN THE CAASES OF 9I) SHIKH A DHAWAN VS. ITO, ITA NO. 3035/DEL/2018, ITAT DELHI (I I) PCIT VS. PREM PAL GANDHI, P&H HIGH COURT, ITA NO. 95/2017 (III) MEENU GOEL VS. ITO, I?TA NO. 6235/DEL/2017 ITAT DELHI (IV) CIT-I, VS. MAHESHCHANDRA G. VAKIL (2013) 40 TAXMAN.COM 326; (V) CIT-I VS. HIMANI M. VAKIL (2013) 10 TAXMANN.COM 326 (GUJARAT); (VI) DCIT VS. SUNITA KHEMA, ITA NOS. 7814 TO 718/KOL/2011 11. THAT THE ASSESSEE APPELLANT RESERVES THE RIGHT TO AMEND, DELETE, ADD, SUBSTITUTE, MODIFY OR ALTER ANY ONE OR MORE OF THE GROUNDS OF APPEAL AT THE TIME OF HEA RING. 2. AT THE TIME OF HEARING, LD. SR. DR STATED THAT T HE ISSUE REGARDING THE SHARES OF M/S KAPPAC PHARMA LTD. HAS BEEN ADJUD ICATED AND DECIDED BY THE ITAT, DELHI BENCHES IN THE CASE OF UDIT KALR A VS. ITO DECIDED IN ITA NO. 6717/DEL/2017 ON 08.1.2019 IN FAVOUR OF THE REVENUE, WHEREIN THE SHARES OF KAPPAC PHARMA LTD. HAS BEEN DECLARED BOGUS AND M/S KAPPAC PHARMA HAS BEEN DELISTED BY THE STOCK EXCHAN GE. HE FURTHER STATED THAT THE ORDER OF THE ITAT, DELHI BENCHES IN THE CASE OF UDIT KALRA VS. ITO (SUPRA) HAS BEEN UPHELD BY THE HONBLE DELH I HIGH COURT IN ITA 4 NO. 220/2019 & CM NO. 10774/2019 VIDE ORDER DATED 0 8.3.2019. HE HAS ALSO FILED THE COPY OF THE ORDER DATED 8.3.2019 PAS SED BY THE HONBLE DELHI HIGH COURT AND REQUESTED THAT BY FOLLOWING TH E AFORESAID PRECEDENTS THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 3. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE ST ATED THAT THE ORDERS OF THE REVENUE AUTHORITIES ARE CONTRARY TO THE LAW AND FACTS OF THE FILE AND DESERVE TO BE CANCELLED. HE STATED THAT ASSESSEE HA S FILED ALL THE DOCUMENTARY EVIDENCES BEFORE THE REVENUE AUTHORITIE S, BUT THE SAME HAS NOT BEEN PROPERLY CONSIDERED AND DECIDED THE ISSUES IN DISPUTE AGAINST THE ASSESSEE. WHEN THE BENCH POINTED OUT THAT TH E ISSUES IN DISPUTE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE BY TH E ITAT , DELHI BENCH IN THE CASE OF UDIT KALRA VS. ITO DECIDED IN ITA NO . 6717/DEL/2017 ON 08.1.2019 WHICH ORDER HAS BEEN UPHELD BY THE HONBL E DELHI HIGH COURT IN ITA NO. 220/2019 & CM NO. 10774/2019 VIDE ORDER DATED 08.3.2019, LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTROVERT T HE QUERY RAISED BY THE BENCH. HE FILED THE WRITTEN SUBMISSIONS IN ALL THE APPEALS AND STATED THAT THE WRITTEN SYNOPSIS FILED ON BEHALF OF THE AS SESSEE IN ALL THE CASE MAY BE CONSIDERED AND DECIDED THE ISSUE IN DISPUTE ACCORDING TO LAW. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE OR DERS PASSED BY THE REVENUE AUTHORITIES INCLUDING THE ITAT ORDER DATED 8.1.2019 PASSED IN THE CASE OF UDIT KALRA VS. ITO DECIDED IN ITA NO. 6717/ DEL/2017 IN WHICH THE UNDERSIGNED WAS THE AUTHOR, WHICH WAS DECIDED IN FA VOUR OF THE REVENUE AND THE SAME HAS BEEN UPHELD BY THE HONBLE DELHI H IGH COURT IN THE CASE OF UDIT KALRA VS. ITO IN ITA NO. 220/2019 & CM NO. 10774/2019 VIDE ORDER DATED 08.3.2019. AFTER GOING THROUGH THE DOC UMENTARY EVIDENCES FILED BY BOTH THE PARTIES, I AM OF THE CONSIDERED VIEW THAT THE SHARES OF M/S KAPPAC PHARMA LTD. AS HELD BY THE ASSESSEE IN T HE PRESENT CASE, THE GENUINENESS OF THE SAME HAS ALREADY BEEN EXAMINED B Y THE ITAT DELHI BENCHES IN THE CASE OF UDIT KALRA (SUPRA) AND FIND THAT M/S KAPPAC PHARMA LTD. HAS BEEN DE-LISTED FROM THE STOCK EXCHA NGE AND IS SUSPICIOUS AND WAS DENIED THE EXEMPTION U/S. 10(38) OF THE I.T . ACT, 1961 BY TREATING THE ACCOMMODATION ENTRIES AS BOGUS. AS REGARDS THE OTHER 5 LEGAL ISSUES RAISED IN THE GROUNDS OF APPEAL, I AM OF THE CONSIDERED VIEW THAT HONBLE DELHI HIGH COURT IN THE CASE OF UDIT K ALRA VS. ITO (SUPRA) HAS NOT GIVEN WEIGHTAGE TO THESE LEGAL GROUNDS BECAUSE WHEN M/S KAPPAC PHARMA HAS ALREADY BEEN DECLARED AS BOGUS AND IT M ADE TO PROVIDE THE ACCOMMODATION ENTRIES IN WHICH THE PRESENT ASSESSEE IS A BENEFICIARY, THEN THE ASSESSEE IS NOT ENTITLED FOR GETTING BENEF IT IN SUCH TECHNICAL/LEGAL GROUNDS. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI DECIDED IN THE CASE OF UDIT KALRA VS. ITO (SUPRA) IS REPRODUCED AS UNDER:- 'THE ASSESSEE IS AGGRIEVED BY THE CONCURRENT FINDIN GS OF THE TAX AUTHORITIES - INCLUDING THE LOWER APPELLATE AUTHORITIES REJECTING ITS CLAIM FOR A LONG TERM CAP ITAL GAIN REPORTED BY IT, TO THE TUNE OF RS.13,33,956/- AND RS.14,34,501/- IN RESPECT OF 4,000 SHARES OF M/S KAPPAC PHARMA LTD. THE ASSESSEE HELD THOSE SHARES F OR APPROXIMATELY 19 MONTHS; THE ACQUISITION PRICE WAS RS.12/- PER SHARE WHEREAS THE MARKET PRICE OF THE SHARES AT THE TIME OF THEIR SALE, WAS RS.720/-. IT IS CONTENDED THAT THE ASSESSEE WAS NOT GRANTED FAIR OPPORTUNITY. MR. RAJESH MAHNA, LEARNED COUNSEL APPEARING FOR THE ASSESSEE RELIED UPON THE ORDERS O F THE CO-ORDINATE BENCH OF THE TRIBUNAL, IN RESPECT OF TH E SAME COMPANY I.E. M/S KAPPAC PHARMA LTD., AND POINTED OUT THAT THE TAX AUTHORITY'S APPROACH IN TH IS CASE WAS ENTIRELY ERRONEOUS AND INCONSISTENT. THE M AIN THRUST OF THE ASSESSEE'S ARGUMENT IS THAT HE WAS DE NIED THE RIGHT TO CROSS-EXAMINATION OF THE INDIVIDUALS W HOSE STATEMENTS LED TO THE INQUIRIES AND ULTIMATE DISALLOWANCE OF THE LONG TERM CAPITAL GAIN CLAIM IN THE RETURNS WHICH ARE THE SUBJECT MATTER OF THE PRESENT APPEAL. THIS COURT HAS CONSIDERED THE SUBMISSIONS O F THE PARTIES. ASIDE FROM THE FACT THAT THE FINDINGS IN T HIS CASE ARE ENTIRELY CONCURRENT - AO., CIT(A) AND THE I TAT HAVE ALL CONSISTENTLY RENDERED ADVERSE FINDINGS - W HAT IS INTRIGUING IS THAT THE COMPANY (MIS KAPPAC PHARMA L TD.) HAD MEAGRE RESOURCES AND IN FACT REPORTED CONSISTEN T LOSSES. IN THESE CIRCUMSTANCES, THE ASTRONOMICAL GR OWTH OF THE VALUE OF COMPANY'S SHARES NATURALLY EXCITED THE SUSPICIONS OF THE REVENUE. THE COMPANY WAS EVEN DIRECTED TO BE DELISTED FROM THE STOCK EXCHANGE. HA VING REGARD TO THESE CIRCUMSTANCES AND PRINCIPALLY ON TH E GROUND THAT THE FINDINGS ARE ENTIRELY OF FACT, THIS COURT IS 6 OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT APPEAL. THIS APPEAL IS ACCORDINGLY DISMISSED.' 4.1 I HAVE GONE THROUGH THE WRITTEN SUBMISSIONS FIL ED BY THE LD. COUNSEL FOR THE ASSESSEE IN ALL THE CASES ALONGWITH OTHER DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE AS WELL AS THE CASE LAWS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE IN HIS WRITTEN SUB MISSIONS. I AM OF THE VIEW THAT NO CONTRARY DECISION HAS BEEN GIVEN BY TH E LD. COUNSEL FOR THE ASSESSEE TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF UDIT KALRA VS. ITO (SURA) IN WHICH THE SHARES OF M/ S KAPPAC PHARMA HAS BEEN DECLARED BOGUS AND THE HONBLE HIGH COURT HAS PASSED A DETAILED ORDER, WHICH I HAVE REPRODUCED AS AFORESAID. THERE FORE, I HAVE NO OTHER OPTION EXCEPT TO RESPECTFULLY FOLLOW THE DECISION O F THE HONBLE DELHI HIGH COURT IN THE CASE OF UDIT KALRA VS. ITO (SUPRA), H ENCE, I RESPECTFULLY FOLLOW THE SAME BY UPHOLDING THE WELL REASONED ORD ER OF THE LD. CIT(A) AND DECIDE THE ISSUE IN DISPUTE AGAINST THE ASSESS EE BY DISMISSING THE APPEAL OF THE ASSESSEE. 5. FOLLOWING THE CONSISTENT VIEW AS TAKEN IN ITA NO . 7939/DEL/2018 AS AFORESAID, THE OTHER ITA NOS. 7940-7942/DEL/2018 (A Y 2015-16) & ITA NO. 1352/DEL/2019 (AY 2015-16) FILED BY THE DIFFERE NT ASSESSES ALSO STAND DISMISSED. 6. IN THE RESULT, ALL THE 05 APPEALS OF THE ASS ESSEE ARE DISMISSED. THE ORDER PRONOUNCED ON 09.01.2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED: 09-01-2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) ASST. REGISTRAR, 5. DR ITAT, NEW DELHI