Digvijay Commerce Pvt. Ltd., Kolkata V. DCIT, Circle - 8, Kolkata, Kolkata

ITA 1420/KOL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4881 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 20-10-2011
• Court: TRIBUNAL
• Department Lawyers: A K
• Assessee Lawyers: S M SURANA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO.1420/KOL/2011 ASSESSMENT YEAR: 2006-07 DIGVIJAY COMMERCE PVT. LTD. VS. DEPUTY COMMISSI ONER OF INCOME-TAX, (PAN: AABCD4679E) CIRCLE-8, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 29.04.2016 DATE OF PRONOUNCEMENT: 04.05.2016 FOR THE APPELLANT: SHRI S. M. SURANA, AR FOR THE RESPONDENT: SHRI A. K. PANDE, JCIT, SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-VIII, KOLKATA VIDE APPEAL NO. 333/CIT(A)-VIII/KOL/08-09 DATED 15.09.2011. ASSESSM ENT WAS FRAMED BY DCIT, CIRCLE-8, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 26.12. 2008. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS A GAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY AO OF LOSS INCURRED FROM TRANS ACTIONS OF SHARES OF SARANG VINIYOG LTD. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE PURCH ASED 17000 SHARES OF SARANG VINIYOG LTD. FOR A SUM OF RS.44,14,426/- ON 28.09.2000. THESE S HARES WERE SOLD BY ASSESSEE ON 17.11.2005 FOR A SUM OF RS.7,96,130/- THEREBY THE ASSESSEE CLA IMED SHORT TERM CAPITAL LOSS OF RS.36,18,313/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO EXPLAIN THE LOSS AND ALSO FILED CONTRACT NOTES FOR PURCHASE AND SALE OF SHARES. THE AO AFTER GOING THROUGH THE CONTRACT NOTES AND OTHER DETAILS FILED BY ASSESSEE, MADE ENQUIRY THROUGH CALCUTTA STOCK EXCHANGE AND NOTED THAT THE ASSESSEE HAS MADE PURCH ASES THROUGH SUBH STOCK BROKING PVT. LTD. AND M/S. DEEPAK KUMAR JHUNJHUNWALA & CO. THESE SHAR ES AND THE PAYMENTS ARE MADE AS UNDER: DATE NO. OF SHARES NATURE OF TRANSACTION BROKER FOR TRANSACTION IN COL.3 NAME OF COUNTER PAR TY AS PER CSE 04.07.05 9000 PURCHASE SUBH STOCK BROKING (P) LTD. S. JHUNJHUNWALA & CO. 17.08.05 8000 PURCHASE -DO- -DO- 18.11.05 17000 SALE DEEPAK JHUNJHUNWALA & CO. ASHOK KR. KALYAN ACCORDING TO AO, THE CALCUTTA STOCK EXCHANGE REPORT ED THAT SHRI S. JHUNJHUNWALA & CO., A BROKER WAS SUSPENDED BY SEBI FOR PRICE RIGGING AND PRICE MANIPULATING AND ALSO THE SCRIP OF SARANG VINIYOG LTD. WAS SUSPENDED FOR TRADING BY SE BI FROM 05.12.2005. ACCORDINGLY, THE AO 2 ITA NO.1420/KOL/2011 DIGVIJAY COMMERCE PVT. LTD., AYS 2006-07 DISALLOWED THE LOSS ARISING OUT OF THE TRANSACTION OF SARANG VINIYOG LTD. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED T HE ACTION OF AO. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS DISCLOSED PROFIT FROM THE SALE OF SCRIP OF SARANG VINIYOG LTD. FOR FY 2005-06 AND 2004-05 AT RS.16,630/- AND RS.21,605 /- RESPECTIVELY. THE ASSESSEE PRODUCED COPIES OF ENTIRE CONTRACT NOTES AND ALSO PRODUCED B ANK STATEMENTS PROVIDING COMPLETE DETAILS OF TRANSACTIONS AS WELL AS PAYMENTS. THE ASSESSEE ALSO FILED COPIES OF DEMAT STATEMENTS AND DELIVERY INSTRUCTIONS ISSUED BY IT TO THE BROKERS. WE FIND THAT THE AO HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACTION OR PAYMENTS MADE BUT DOUBTED THE TRANSACTION ONLY ON THE BASIS THAT THE BROKER SHRI S. JHUNJHUNWALA AND THE SCRIP OF S. VINIYOG LTD. WAS SUBJECT MATTER OF RIGGING VIDE LETTER REF. DATED 02.12.2005. WE FIND THAT THE ASSESSEE HAD MADE PURCHASE VIDE 04.07.2005 AND 17.08.2005 AND THESE WERE SOLD ON 18 .11.2005 BEFORE THE SEBIS ACTION. IT IS ALSO TO BE NOTED THAT A QUERY WAS RAISED FROM THE B ENCH TO LD. SR. DR, WHETHER THIS PARTICULAR TRANSACTION IS UNDER SCANNER OR NOT. LD. SR. DR CO ULD NOT REPLY AND STATED THAT THIS PARTICULAR TRANSACTION IS NOT SUBJECT MATTER BUT THE COMPANY A ND THE BROKER IS SUSPENDED FROM 05.12.2005. WE FIND THAT THESE TRANSACTIONS PERTAINED TO THE EA RLIER PERIOD AND NOT THIS PERIOD AND MOREOVER, THIS PARTICULAR TRANSACTION IS NOT UNDER THE SCANNE R OF SEBI AND REVENUE IS FAILED TO BRING ANYTHING AGAINST THE ASSESSEE, WHICH PROVES THAT TH E TRANSACTION IS NOT BOGUS OR MANIPULATED. IN SUCH CIRCUMSTANCES, WE ALLOW THE CLAIM OF ASSESSEE AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO OF UNDISCLOSED INCOME AMOUNTING TO RS.67 LACS BEING SHARE APPLICATION MONEY. 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE TOOK US TO ASSESSMENT ORDER PARA 3.1.1 RELEVANT CHART WHICH READS AS UNDER: SL. NO. NAME OF APPLICANT AMOUNT (RS.) DATE OF CREDIT OF CHEQUE IN ASSESSEES BANK BANK ADDRESS OF APPLICANT I) CONSOLIDATED MERCANTILE (P) LTD. (ACCOUNT NO. 957) 4,00,000 06.02.2006 ORIENTAL BANK OF COMMERCE, STRAND ROAD BRANCH, KOLKATA. II) RAJNATH COMMERCIAL PVT. LTD. (ACCOUNT NO.27990) 5,00,000 17.03.2005 ORIENTAL BANK OF COMMERCE, STRAND ROAD BRANCH, KOLKATA 3 ITA NO.1420/KOL/2011 DIGVIJAY COMMERCE PVT. LTD., AYS 2006-07 III) RAJNATH COMMERCIAL PVT. LTD. (ACCOUNT NO.27990) 5,00,000 17.03.2005 ORIENTAL BANK OF COMMERCE, STRAND ROAD BRANCH, KOLKATA IV) VIKASH VINIYOG PVT. LTD. (ACCOUNT NO. 28820) 3,00,000 21.04.2005 ORIENTAL BANK OF COMMERCE, STRAND ROAD BRANCH, KOLKATA V) VIKASH VINIYOG PVT. LTD. (ACCOUNT NO. 28820) TOTAL : 10,00,000 27,00,000 18.03.2005 ORIENTAL BANK OF COMMERCE, STRAND ROAD BRANCH, KOLKATA HE ALSO TOOK US TO PARA 3.2.1 OF THE ASSESSMENT ORD ER RELEVANT CHART WHICH READS AS UNDER: SL. NO. NAME OF APPLICANT AMOUNT (RS.) DATE OF CREDIT OF CHEQUE IN ASSESSEES BANK BANK ADDRESS OF APPLICANT I) MEGASIN ENGG. PVT. LTD. (ACCOUNT NO.6003) 5,00,000 09.03.2006 FEDERAL BANK LTD., R. N. MUKHERJEE ROAD BRANCH, KOLKATA. II) ALORA DEALCOM PVT. LTD. (ACCOUNT NO. 6093) 5,00,000 08.03.2006 -DO- III) SIMANDHARA COMMODITIES PVT. LTD. (ACCOUNT NO.5985) 5,00,000 16.03.2005 -DO- IV) OMJI PROMOTERS PVT. LTD. (ACCOUNT NO. 28820) 10,00,000 27.03.2006 -DO- V) S.K. FINTEX PVT. LTD. (ACCOUNT NO. 6473) 5,00,000 24.03.2006 -DO- VI) ASLCON MERCHANDISE PVT. LTD. (ACCOUNT NO.6429) 5,00,000 20.02.2006 -DO- VII) ASLCON MERCHANDISE PVT. LTD. (ACCOUNT NO.6429) TOTAL 5,00,000 40,00,000 08.02.2006 -DO- LD. COUNSEL FOR THE ASSESSEE TOOK US TO ITEM NO. 2 OF FIRST CHART ITEM NOS, 2, 3 AND 5 AND ITEM NO. 3 OF SECOND CHART I.E. SHARE APPLICATION MONEY OF R AJNATH COMMERCIAL PVT. LTD. AMOUNTING TO RS. 5 LACS RECEIVED ON 17.03.2005, RAJNATH COMMERCIAL P VT. LTD. RS.5 LACS ON 17.03.2005 AND VIKASH VINIYOG PVT. LTD. AMOUNTING TO RS. 10 LAC RE CEIVED ON 18.03.2005 AND ALSO SIMANDHARA COMMODITIES PVT. LTD. AMOUNTING TO RS. 5 LACS RECE IVED ON 16.03.2005. LD. COUNSEL FOR THE ASSESSEE STATED THAT OUT OF RS. 67 LACS SHARE APPL ICATION MONEY IN RESPECT TO THESE FOUR ENTRIES THE SHARE APPLICATION MONEY TO THE TUNE OF RS.25 LA CS PERTAINS TO FY 2004-05 RELEVANT TO AY 20065-06 AND NOT RELEVANT TO THIS AY 2006-07. ACCO RDINGLY, LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS SHOULD BE OUTRIGHTLY DELETED. IN RESPECT TO OTHER SHARE APPLICATION MONEY OF RS.42 LACS, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE COMPLE TE INFORMATION IN RESPECT TO THIS SHARE APPLICATION MONEY I.E. SHARE APPLICANTS, THEIR BANK ACCOUNT, THEIR INCOME TAX PARTICULARS, THEIR SOURCES ETC. ALL ARE FILED BEFORE THE AO AND NOW BE FORE US IN ASSESSEES PAPER BOOK. LD. COUNSEL FOR THE ASSESSEE TOOK US TO THE PAPER BOOK AND STAT ED THAT ALL THESE DETAILS ARE FILED BEFORE THE AO 4 ITA NO.1420/KOL/2011 DIGVIJAY COMMERCE PVT. LTD., AYS 2006-07 BUT NEITHER AO NOR CIT(A) HAS GONE INTO THESE DETAI LS. HENCE, HE REQUESTED THE BENCH TO GO THROUGH THESE DETAILS AND DELETE THE ADDITIONS. ON THE OTHER HAND, LD. SR. DR FAIRLY STATED THAT IN CASE THESE DETAILS ARE FILED BEFORE THE AO, THE ISS UE CAN BE REMITTED BACK TO HIS FILE FOR FRESH ADJUDICATION ACCORDING TO LAW. HE ALSO STATED THAT THE ASSESSEE AND AO SHOULD BE GIVEN FREE HAND TO ADJUDICATE THE ISSUE ACCORDING TO LAW. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN RESPECT TO THE FOUR ENTRIES RELATING TO SHARE APPLICATION MONEY TO THE EXTENT OF RS.25 LACS PERTAINED TO AY 2005-06 AND NOT TO TH E RELEVANT AY 2006-07 AS ADDED BY THE AO. ACCORDINGLY, TO THE EXTENT OF THIS AMOUNT, WE DELET E THE ADDITION. IN RESPECT TO THE ADDITION OF RS. 42 LACS SHARE APPLICATION MONEY AS NOTED IN THE ABOVE CHART AND GOING THROUGH THE PAPER BOOK, WE FIND THAT ALL THE DETAILS I.E. THE IDENTIT Y OF THE SHARE APPLICANTS, THE PERMANENT ACCOUNT NO. AND INCOME TAX PARTICULARS AND BANK ACCOUNTS WH ERE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH SHARE APPLICANTS IS ENCLOSED BUT THESE HAVE NO T BEEN GONE INTO BY THE AO OR CIT(A). HENCE, WE REMIT THIS ISSUE BACK TO THE FILE OF AO F OR FRESH ADJUDICATION IN TERMS OF THE PROVISIONS OF THE ACT. ACCORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN OPEN COURT ON 04.05.2016 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 4 TH MAY, 2016 JD. (SR. P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DIGVIJAY COMMERCE PVT. LTD. 4, HO CHI M INH SARANI, 2E/1, KBR COMPLEX, 2 ND FLOOR, KOLKATA-700 071. 2. RESPONDENT- DCIT, CIRCLE-8, KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .