Shri Ashish Jain, JODHPUR V. DCIT, JODHPUR

ITA 14/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70189 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: VINAY MEHTA
• Keywords: Earning of tax free income
• Section: 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 14/JODH/2013 (A.Y. 2008-09) SHRI ASHISH JAIN, VS. DCIT, CIRCLE 1, H-19, UMED VILLA, SHASTRI NAGAR, JODHPUR. JODHPUR. (APPELLANT) (RESPONDENT) PAN NO. ABFPJ6898P ASSESSEE BY : SHRI VINAY MEHTA DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 22/08/2013. DATE OF PRONOUNCEMENT : 26/08/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF LD. CIT (A), JODHPUR DATED 16/10/2012. THE FOLLOWING GROUNDS HA VE BEEN RAISED IN THIS APPEAL: 1. THE IMPUGNED ORDER IS BAD IN LAW AND FACTS, AND IS BARRED BY LIMITATION, THEREFORE, IT DESERVES TO BE QUASHED AN D CANCELLED BY ALLOWING THE APPEAL OF THE APPELLANT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING THE ORDER OF LD. AO AND SUSTAINING 2 THE ADDITION OF TRANSFER EXPENSES AGAINST INCOME OF STCG FROM SHARES OF RS. 5,43,877/-. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND IN FACT S IN MAKING AND SUSTAINING THE ADDITION OF RS. 2,50,000/- IN THE NA ME OF SHRI PEERA RAM, U/S 68 OF THE ACT, BEING A DEPOSIT TAKEN BY AP PELLANT. 4. THAT THE PETITIONER MAY KINDLY PERMITTED TO RAIS E ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEAR ING. 5. THE PETITIONER PRAYS FOR JUSTICE AND RELIEF. 2. THE GROUND NO.1 WAS NOT PRESSED. SO, IT IS DISMIS SED AS NOT PRESSED. GROUNDS NO. 4 & 5 ARE GENERAL IN NATURE, SO DO NOT REQUIRE ANY COMMENT ON OUR PART. VIDE GROUND NO.2, THE GRIEVANCE OF THE A SSESSEE RELATES TO SUSTENANCE OF ADDITION OF RS. 5,43,877/- PERTAINING TO TRANSFER EXPENSES AGAINST SHORT TERM CAPITAL GAIN FROM SHARES. 3. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT ASSE SSEE FILED E-RETURN OF INCOME ON 31/03/2009 DECLARING AN INCOME OF RS. 59, 95,310/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE IN HIS COMPUTATION OF TOT AL INCOME DEDUCTED AN AMOUNT OF RS. 5,43,877/- ON ACCOUNT OF TRANSFER EXP ENSES UNDER THE HEAD SHORT TERM CAPITAL GAIN. AO OBSERVED THAT THE ASSE SSEE COULD NOT GIVE THE JUSTIFICATION OF THOSE EXPENSES FOR CLAIMING THE SA ME AGAINST THE INCOME FROM SHORT TERM CAPITAL GAIN ONLY WHEREAS NO EXPENSES HA D BEEN CLAIMED AGAINST THE INCOME FROM LONG TERM CAPITAL GAIN ON SHARES I. E. EXEMPT INCOME. HE 3 FURTHER OBSERVED THAT THE SHORT TERM CAPITAL GAIN W ITHIN THE MEANING OF SECTION 111A OF THE I.T. ACT 1961 (HEREINAFTER REFE RRED TO AS ACT, FOR SHORT) IS TAXABLE AT THE RATE OF 10% FOR THE YEAR UNDER CO NSIDERATION AT CONCESSIONAL RATE AND NO OTHER EXPENSES ARE ALLOWABLE FROM IT. HE, THEREFORE, DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE AT RS. 5,43,87 7/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER TO LD . CIT(A) AND SUBMITTED THAT HE HAD CLAIMED RS. 5,43,877/- AS EXPENDITURE I NCURRED ON SHORT TERM CAPITAL GAIN AND FURNISHED THE DETAILS OF EXPENDITU RE, VOLUME OF TRANSACTION. IT WAS STATED THAT THE EXPENDITURE ON MARKETING REPORT FOLIO IS GENUINE AND ACTUALLY SPENT ON THOSE TRANSACTIONS. IT WAS FURTH ER STATED THAT THE FINDING OF AO THAT THE SHORT TERM CAPITAL GAIN IN THIS CASE IS TAXABLE AT CONCESSIONAL RATE AND NO OTHER EXPENSES WERE ALLOWABLE FROM IT, WAS N OT CORRECT. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSE E OBSERVED THAT ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF EXPEND ITURE INCURRED AGAINST THE SHORT TERM CAPITAL GAIN EITHER BEFORE THE AO OR BEF ORE HIM. SO, IN ABSENCE OF EVIDENCE, THE CLAIM REMAINED UNSUBSTANTIATED. THE LD. CIT(A) HELD THAT AO WAS JUSTIFIED IN DISALLOWING THE EXPENDITURE OF RS. 5,43,877/-. NOW, THE ASSESSEE IS IN APPEAL. 4 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESS EE VIDE LETTER DATED 30/10/2010 SUBMITTED THE DETAILS OF TRANSFER EXPENS ES. A REFERENCE WAS MADE TO PAGE 10 OF THE ASSESSEES PAPER BOOK, WHICH IS C OPY OF THE SAID LETTER. OUR ATTENTION WAS ALSO DRAWN AT PAGES 17 TO 30 OF THE A SSESSEES PAPER BOOK, WHICH ARE THE DETAILS OF THE IMPUGNED EXPENSES. IT WAS CONTENDED THAT NEITHER AO NOR LD. CIT(A) TOOK COGNIZANCE TO THE AF ORESAID DETAILS AND DISALLOWED THE EXPENSES INCURRED FOR EARNING THE SH ORT TERM CAPITAL GAIN INCOME, THEREFORE, THE EXPENDITURE WAS ALLOWABLE. RELIANCE WAS PLACED ON THE DECISION OF ITAT PUNE BENCH IN THE CASE OF DCIT, CIRCLE 11 (1) PUNE VS. KRA HOLDING AND TRADING PVT. LTD. (2012) 26 SOT 493 (PU NE) . IN HIS RIVAL SUBMISSIONS, LD. D.R. STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, LEARNED COUNSEL FOR THE ASSESSEE CLAIMED THAT DETAILS WERE GIVEN TO AO VIDE LETTER DATED 30/11/2010, COPY OF WHICH IS PLACED AT PAGE 9 & 10 OF THE ASSESSEES PAPER BOOK. IN THE SAID LETTER, AT PARA 4, IT IS M ENTIONED AS UNDER:- DETAILS OF TRANSFER EXPENSES (SHARE MANAGEMENT FE ES) RS. 5,43,841/- IS ENCLOSED WITH SUPPORTING VOUCHERS. ON THE CONTRARY, AO OBSERVED THAT ASSESSEE CLAIMED THESE EXPENSES AGAINST THE INCOME FROM SHORT TERM CAPITAL GAIN ONL Y AND NO EXPENSES HAD 5 BEEN CLAIMED AGAINST THE INCOME FROM LONG TERM CAPI TAL GAIN. IT, THEREFORE, APPEARS THAT ASSESSEE EITHER COULD NOT SATISFY THE AO OR LINK THE IMPUGNED EXPENSES WITH THE SHORT TERM CAPITAL GAIN AND NOT R ELATED TO LONG TERM CAPITAL GAIN. LEARNED CIT(A) ALSO OBSERVED THAT THE ASSESS EE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF EXPENDITURE INCURRED AGAINST THE SHORT TERM CAPITAL GAIN EITHER BEFORE AO OR BEFORE HIM. SINCE, THERE IS A CONTRADICTION IN THE CLAIM OF THE ASSESSEE AND THE OBSERVATIONS OF THE A UTHORITIES BELOW AND THE FACTS ARE NOT CLEAR. WE, THEREFORE, DEEM IT PROPER TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCOR DANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. AS REGARDS TO THIS OBSERVATION OF THE AO THAT THE SHOR T TERM CAPITAL GAIN INCOME IS ASSESSED AT LOWER RATE, NO EXPENSES CAN BE CLAIMED, WE ARE OF THE VIEW THAT THIS OBSERVATION IS NOT CORRECT AND DIRECT THE AO I F IT IS FOUND THAT THE EXPENSES WERE INCURRED TO EARN THE SHORT TERM CAPIT AL GAIN INCOME, THEN THESE ARE TO BE ALLOWED AFTER MAKING VERIFICATION. 6. THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO SUSTENA NCE OF ADDITION OF RS. 2,50,000/-. 7 . THE FACTS RELATING TO THIS ISSUE IN BRIEF ARE THA T AO OBSERVED THAT ASSESSEE HAD SHOWN A CREDITOR OF RS. 2,50,000/- IN THE NAME OF SHRI PEERA 6 RAM AND WAS ASKED TO PRODUCE THE ABOVE NAMED CREDIT OR FOR EXAMINATION, BUT THE ASSESSEE FAILED TO PRODUCE HIM FOR EXAMINATION AND ALSO FAILED TO PROVE HIS CREDITWORTHINESS. HE, THEREFORE, HELD THAT ASSESSE E FAILED TO DISCHARGE THE ONUS LAID ON HIM UNDER SECTION 68 OF THE ACT. ACCO RDINGLY, THE AMOUNT OF RS. 2,50,000/- WAS ADDED TO THE INCOME OF ASSESSEE. 8. THE ASSESSEE CARRIED THE MATTER TO LD. CIT(A) AND SUBMITTED THAT SHRI PEERA RAM IS A BROKER BETWEEN THE PARTIES FOR SALE OF AGRICULTURAL LAND OF ASSESSEES MOTHER, BROTHER AND BUYER AND THE DEPOSI T WAS RECEIVED THROUGH CHEQUE NO. 629155. LEARNED CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT DESPITE FILING OF AFFIDAVIT FROM CASH CREDITOR NEITHER THE ASSESSEE COULD PRODUCE THE CASH CREDITOR BEFORE THE AO TO ENABLE HIM TO PURSUE FURTHER INQUIRY NOR THIS CASH CREDITOR APPEA RED BEFORE THE AO DESPITE BEING ASKED TO PRODUCE WHICH CLEARLY ESTABLISH THAT THE AFFIDAVIT PRODUCED BY THE ASSESSEE WAS NOT RELIABLE TO ESTABLISH THE GENU INENESS OF THE CASH CREDIT APPEARING IN ASSESSEES BOOKS OF ACCOUNTS. LD. CIT (A) ALSO OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE CASH CREDITOR BEFORE HIM AND MERE FILING OF CONFIRMATION DOES NOT PROVE CASH CREDIT AS GENUINE. THE LD. CIT(A) HELD THAT AO WAS JUSTIFIED IN TREATING THE CASH CREDITS AS UN EXPLAINED MAKING ADDITION OF RS. 2,50,000/-. NOW, THE ASSESSEE IS IN APPEAL. 7 9 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT SH RI PEERA RAM HAD GIVEN CHEQUE NO. 629155 OF RS. 2,50,000/- ON 15/05/2007 T O THE ASSESSEE AS BOOKING AMOUNT FOR SALE OF AGRICULTURAL LAND BELONGING TO T HE BROTHER OF ASSESSEE-SHRI ATUL JAIN. IT WAS FURTHER STATED THAT SAID AGRICULT URAL LAND WAS SOLD VIDE REGISTERED SALE DEED DATED 04/10/2007. REFERENCE W AS MADE TO PAGE NOS. 85 TO 91 OF THE ASSESSEES PAPER BOOK, WHICH IS COPY O F THE SALE DEED. IT WAS STATED THAT SAID DOCUMENT WAS EXECUTED BY ASSESSEE AS POWER OF ATTORNEY HOLDER OF HIS BROTHER SHRI ATUL JAIN AND AT THE TIM E OF REGISTRATION, FULL SALE CONSIDERATION WAS RECEIVED BY SHRI ATUL JAIN. THER EFORE, THE INITIAL BOOKING AMOUNT RECEIVED BY THE ASSESSEE REMAINED LYING AS D EPOSIT OF SHRI PEERA RAM WITH THE ASSESSEE. IT WAS CONTENDED THAT THE TRANS ACTION WAS CARRIED THROUGH BANKING CHANNEL AND THAT THE AFFIDAVIT OF SHRI PEER A RAM, BANK STATEMENT OF THE ASSESSEE AND COPY OF ACCOUNT OF SHRI PEERA RAM WERE SUBMITTED BEFORE THE AO. IT WAS FURTHER CONTENDED THAT IN HIS AFFI DAVIT, SHRI PEERA RAM CONFIRMED THAT HE HAD GIVEN RS. 2,50,000/- TO THE A SSESSEE (POWER OF ATTORNEY HOLDER OF SHRI ATUL JAIN) AS ADVANCE ON 15/05/2007 THROUGH CHEQUE NO. 629155 FOR DEAL OF AGRICULTURAL LAND SITUATED AT VILLAGE B HAKRASANI (TAHSIL LUNI DISTRICT JODHPUR). IT WAS FURTHER STATED THAT ASSESSEE IN S PITE OF HIS BEST EFFORTS, COULD NOT PRODUCE THE DEPOSITOR BEFORE AO, BUT HIS NAME, ADDRESS AND AFFIDAVIT HAD 8 BEEN GIVEN AND IF THE AO HAD ANY REASON TO DOUBT TH IS BOOKING DEPOSIT AGAINST THE LAND, HE COULD HAVE ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT OR UNDER SECTION 131 OF THE ACT TO VERIFY THE GENUINENESS. BUT, AO DID NOT ISSUE ANY NOTICE TO THE DEPOSITOR AND CONCLUDED THAT THIS CAS H CREDIT WAS UNEXPLAINED AND ADDED UNDER SECTION 68 OF THE ACT. THE RELIANC E WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F KISHINCHAND CHELLARAM VS. CIT (1980) 19 CTR (SUPREME COURT) 360 : (1980) 125 ITR 713 . IT WAS CONTENDED THAT SHRI PEERA RAM HAD GIVEN AN AFFIDAVI T. HE IS HAVING PAN CARD AND DRIVING LICENCE, COPIES OF WHICH ARE PLACED AT PAGE NO. 92 & 93 OF THE ASSESSEES PAPER BOOK. IT WAS FURTHER CONTENDED TH AT NON-PRESENCE OF THE CREDITOR BEFORE THE AO SHOULD NOT HAVE A SOLE REASO N FOR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE JURISDICTIONAL OF HIGH COURT IN THE CASE OF CIT VS. BHAWANI OIL MILLS (P) LTD. (2011) 239 CTR 0445 (COPY OF WHICH, IS PLACED AT PAGES 67 TO 69 OF THE ASSESSEES PAPER BOOK). IN HIS RIVAL SUBMISSIONS, LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANCE CASE, IT APPEARS THAT ASSESSEE RECEIVED AN AMOUNT OF RS. 2,5 0,000/- THROUGH CHEQUE NO. 629155 AS AN ADVANCE MONEY FOR SALE OF AGRICULT URAL LAND AS POWER OF 9 ATTORNEY HOLDER OF HIS BROTHER-SHRI ATUL JAIN FROM BROKER SHRI PEERA RAM, WHO HAD GIVEN AN AFFIDAVIT, COPY OF WHICH IS PLACED AT PAGE NO. 15 OF THE ASSESSEES PAPER BOOK. IN THE SAID AFFIDAVIT SHRI PEERA RAM S TATED AS UNDER:- 1. I AM RESIDING AT DOHARA DHOL, BHINMAL. 2. I AM NO INCOME TAX PAYER AS MY INCOME IS BELOW T AXABLE. 3. MY SOURCE OF INCOME IS FROM AGRICULTURE ACTIVITY . 4. I HAVE ENGAGED IN LIASIONING WORK BETWEEN ATUL J AIN S/O SHRI MADAN CHAND BOHTA, JODHPOUR AND ASHAPURNA BUILDCON LTD. IN CONNECTION WITH SALE OF AGRICULTURE LAND SITUATED A T VILLAGE BHAKRASANI (TEHSIL LUNI). 5. THAT, I HAVE GIVEN RS. 2,50,000/- TO SHRI ASHISH JAIN (POWER OF ATTORNEY HOLDER OF ATUL JAIN) AS ADVANCE ON DATED 1 5/05/2007 THROUGH CHEQUE NO. 629155 FOR ABOVE DEAL OF AGRICUL TURE LAND SITUATED AT VILLAGE BHAKRASANI (TEHSIL LUNI, DISTRI CT JODHPUR). 6. AFTER ABOVE DEAL COMPLETED THE SAID AMOUNT REMAI NED KEPT AS ADVANCE AGAINST PURCHASE OF OTHER PIECE OF LAND IN SAME KHASRA WITH ANOTHER PARTY. THE NEXT DEAL COULD NOT BE MAT ERIALIZED AND THE SAID AMOUNT IS STILL DUE. IN THE PRESENT CASE, COPY OF THE SALE DEED OF AGRI CULTURAL LAND IS PLACED AT PAGE NOS. 86-91 OF THE ASSESSEES SECOND PAPER B OOK. IN THE SAID SALE DEED, SHRI PEERA RAM HAS SIGNED AS WITNESS AS EVIDENT FRO M PAGE 91 OF THE ASSESSEES PAPER BOOK, WHICH IS THE LAST PAGE OF THE SALE DEED DATED 04/10/2007 FOR AN AMOUNT OF RS. 37,50,000/- RELATING TO THE LAND SITU ATED AT BHAKRASANI (TEHSIL LUNI DISTRICT JODHPUR). WE, THEREFORE, ARE OF THE VIEW THAT SHRI PEERA RAM WAS A GENUINE PERSON, WHO ACTED AS A BROKER FOR THE SALE OF LAND BELONGINGS TO THE BROTHER OF THE ASSESSEE-SHRI ATUL JAIN. SINCE, THE ASSESSEE WAS THE POWER OF ATTORNEY HOLDER OF SHRI ATUL JAIN, HE RECEIVED A N ADVANCE OF RS. 2,50,000/- 10 FROM THE BROKER VIDE CHEQUE NO. 629155 DATED 15/05/ 2007, THE SAID TRANSACTION WAS CONFIRMED BY BROKER SHRI PEERA RAM VIDE AFFIDAVIT ATTESTED BY THE NOTARY, JODHPUR ON 20/12/2010. THE SAID AMOUNT WAS DEPOSITED BY THE ASSESSEE IN HIS BANK ACCOUNT ON 15/05/2007, WHICH I S EVIDENT FROM PAGE 16 OF THE ASSESSEES PAPER BOOK. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY LD. CIT(A) WAS NOT JUSTIFI ED. ACCORDINGLY, THE SAME IS DELETED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSE. (ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2013). (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH AUGUST, 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.