Sri Deo Kumar Saraf, Kolkata V. ACIT, Circle-49, Kolkata, Kolkata

ITA 1551/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9448 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 31-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-07-2016
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: S K TULSIYAN
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Wrong claim
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 1551/KOL/2016 ASSESSMENT YEAR : 2 010-11 SHRI DEO KUMAR SARAF . -VS.- A.C.I.T. CIRCL E-49,, KOLKATA- KOLKATA [PAN : ALCPS 1036 P] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.K.TULSIYAN, ADVOCATE FOR THE RESPONDENT : SHRI.G.MALLIKARJUNA, CIT (DR) DATE OF HEARING : 30.01.2017. DATE OF PRONOUNCEMENT : 08.02.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 30.05.2016 OF CIT(A)-15, KOLKATA RELATING TO A.Y.2010-11. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS FOLLOWS :- 1) THAT THE ORDERS PASSED BY THE LD. LOWER AUTHORI TIES TO THE EXTENT THEY ARE PREJUDICIAL TO THE INTERESTS OF THE APPELLANT ARE ARBITRARY, ER RONEOUS, WITHOUT PROPER REASONS, INVALID AND BAD IN LAW. 2) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. C.LT.(A) GROSSLY ERRED IN HAVING ALLEGED SUBMISSION OF FORGED DEMAT ACCOUN T DURING APPELLATE PROCEEDING ON THE GROUND THAT THE LTCG CLAIMED BY THE ASSESSEE ON THE BASIS OF DEMAT A/C. MAINTAINED WITH UBI WAS NOT RELATING TO THE RELEVANT FINANCIAL YEAR IN SPITE OF THE FACT THAT LTCG WAS CLAIMED ON THE BASIS OF DEMAT A/CS. MAINTAINED WITH AXIS BANK & MORGAN STANLEY INDIA, THE DETAILS OF WHICH WERE PROVIDED DURING THE APPEL LATE PROCEEDING ON 12/3/2016. 3) THAT, FURTHER, THE LD. C.I.T.(A) MISGUIDED HIMSE LF IN TAKING CONTRADICTORY STAND WHILE ALLEGING FORGED DEMAT ALC. FURNISHED BY THE ASSESSE E, INASMUCH AS HE HIMSELF HAS STATED THAT THE UBI DEMAT A/C. WAS NOT RELATED TO THE YEAR UNDER CONSIDERATION AND CONVENIENTLY IGNORING THE FACT OF FILING DEMAT A/CS. MAINTAINED WITH AXIS BANK AND MORGAN STANLEY INDIA, WHICH SUBSTANTIATED THE CLAIM OF THE ASSESSE E. 2 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 2 4) THAT, AS THE VERY BASIS OF DENIAL OF CLAIM OF LT CG OF RS.5,96,27,092/- IS BASED ON UNSUBSTANTIATED ALLEGATION OF FORGED DEMAT A/C., TH E CONSEQUENTIAL TREATMENT OF THE SAID LTCG AS SPECULATION PROFIT IS ARBITRARY, ERRONEOUS, UNCALLED FOR AND BAD IN LAW. 5) THAT, WITHOUT ANY PREJUDICE TO THE ABOVE, THE LD . C.I.T.(A) FELL IN ERROR IN NOT AT ALL CONSIDERING THE DETAILS OF LTCG CLAIMED, AS NOTED I N THE APPELLATE ORDER ITSELF, AND HENCE DENIAL OF LTCG OF RS.5,96,27,092/- ON MERE SUSPICIO N OF FORGED DOCUMENT WITHOUT CONSIDERING THE EVIDENCES ALREADY PRODUCED BEFORE H IM IS NOT ONLY ARBITRARY, UNCALLED FOR BUT ALSO CAPRICIOUS AND BAD IN LAW. 6) THAT AS THE ORDER OF LD. CIT(APPEALS) ON THE ABO VE ISSUES SUFFERS FROM ILLEGALITY AND IS DEVOID OF ANY MERIT, THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 7) THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND! OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 3. THE ASSESSEE IS AN INDIVIDUAL. IN THE RETURN OF INCOME FILED FOR A.Y.2010-11, THE ASSESSEE CLAIMED THAT HE DERIVED LONG TERM CAPITAL GAIN OF RS.5,96,27,092/- WHICH IS NOT CHARGEABLE TO TAX BECAUSE THE TRANSACTION OF SALE S UFFERED SECURITIES TRANSACTION TAX(STT). THE AO CALLED UPON THE ASSESEE TO FURNISH THE DETAILS OF LONG TERM CAPITAL GAIN ALONG WITH SUPPORTING DOCUMENTS. ACCORDING TO THE AO THE ASSESSEE FAILED TO FILE THE EVIDENCE TO SHOW THAT IT HAD DERIVED LONG TERM CAPITAL GAIN. BEFORE THE AO THE ASSESSEE HAD PRODUCED CONTRACT NOTES, DETAILS OF TH E PURCHASE AND SALE OF SHARES WHICH RESULTED IN THE LONG TERM CAPITAL GAIN. ACCORDING T O THE AO THE ASSESSEE FAILED TO FURNISH THE DEMAT ACCOUNT IN WHICH THE SHARES WERE HELD. THE AO THEREFORE HELD THAT THE ASSESSEE FAILED TO PROVE HIS CLAIM OF HAVING DE RIVED LONG TERM CAPITAL GAIN AND THE INCOME OF RS.5,26,27,092/- WAS TREATED AS SPECULATI ON PROFIT CHARGEABLE TO TAX. 4. AGGRIEVED BY THE ACTION OF THE AO THE ASSESEE F ILED APPEAL BEFORE CIT(A). CIT(A) HELD AS FOLLOWS :- DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE SUBMITTED THE COPY OF DEMAT ACCOUNT IN UNITED BANK OF INDIA (BO ID NO. 13051300 00076791) FOR F.Y. 2008-09 AND F.Y. 2009-10 TO PROVE THE DATE OF PURCHASE AND SAL E OF SHARES AND THE 'QUANTITY OF SHARES PURCHASED AND SOLD TO PROVE HIS CLAIM OF LTCG OF RS . 5,96,27,092/-. HE ALSO SUBMITTED THE PRINT OUT OF MONEYCONTROL.COM SITE TO PROVE THE RATE OF PURCHASE AND SALE OF THE SHARES. 3 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 3 COPY OF ALL THESE DOCUMENTS SUBMITTED BY THE ASSESS EE ARE ATTACHED TO THIS ORDER. COPY OF THE LETTER RECEIVED FROM THE BANK STATING THAT THE DEMAT ACCOUNT WAS OPENED ON 13/04/2010 IS ALSO ATTACHED. THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT T HE ASSESSEE WAS GIVEN A NUMBER OF OPPORTUNITIES TO SUBMIT THE DEMAT ACCOUNT TO SUBSTA NTIATE HIS CLAIM OF LTCG, THE SAME WAS NEVER PRODUCED BEFORE THE AD. ACCORDINGLY, THE AD HAD GIVEN A CATEGORICAL FINDING ON PAGE-4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE ADMITTED THAT HE DID NOT HAVE ANY DEMAT ACCOUNT. IT WAS SURPRISING TO SEE THE COPY OF DEMAT ACCOUNT IN UNITED BANK OF INDIA (BO ID 1305130000076791) SUBMITTED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS. LETTER DATED 25/05/2016 WAS ISSUED BY THE UNDERSIGN ED U/S. 133(6) OF THE I.T.ACT. TO THE UNITED BANK OF INDIA, REQUESTING THEM TO SEND THE C OPY OF' DEMAT ACCOUNT OF THE ASSESSEE FOR THE PERIOD 01/04/2008 TO 31/03/2011. THE REPLY OF THE BANK AUTHORITIES WAS RECEIVED ON 30.05.2016 IN WHICH THEY CONFIRMED THAT THIS DEM AT ACCOUNT OF THE ASSESSEE WAS OPENED ON 13/04/2010. THEY ALSO SUBMITTED THE COPY OF ACCOUNT OF THE ASSESSEE FOR THE PERIOD 13/04/2010 TO 31/03/2011. THUS, IT IS CLEAR FROM ABOVE THAT THE ASSESSEE WAS NOT HAVING ANY DEMAT ACCOUNT DURING THE PERIOD 01/04/20 08 TO 31/03/2010 IN UNITED BANK OF INDIA AS CLAIMED BY HIM DURING THE APPELLATE PROCEE DINGS. HENCE, THE ASSESSEE HAS SUBMITTED FORGED DOCUMENTS BEFORE THE UNDERSIGNED T O CLAIM ILLEGAL BENEFIT OF THE LTCG. SINCE, THERE WAS NO PURCHASE AND SALE OF SHARES AS CLAIMED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE LTCG, IT IS HELD THAT THE ASSESSEE HAD MADE A WRONG CLAIM OF LTCG IN THE RETURN OF INCOME. HENCE, THE ADDITION OF RS. 5, 96,27,092/- MADE BY THE AO IS CONFIRMED. THUS, GROUNDS NO. 1 & 3 RAISED BY THE AS SESSEE ARE DISMISSED. 5. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. IT CAN BE SEEN FROM THE ORDER OF THE CIT(A) T HAT THE CIT(A) HAS PROCEEDED ON THE BASIS THAT THE SUBMITTED THE COPY OF DEMAT ACCOUNT IN UNITED BANK OF INDIA (BO ID NO. 1305130000076791) FOR F.Y. 2008-09. IT IS THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US THAT NO SUCH DEMAT ACCOUNT WAS MAINTAINED BY THE ASSESSEE FOR THE PREVIOUS YEAR RELEVANT TO AY 2010-11 AND THAT FOR THE RELEVANT PE RIOD THE ASSESSEE MAINTAINED A DEMAND ACCOUNT WITH AXIS BANK AND THAT THE DEMAT STATEMENT OF THE ASSESSEE WITH THE SAID BANK WAS FILED BEFORE CIT(A). HIS SUBMISSION WAS THAT THE S UBSEQUENT ENQUIRY STATED TO HAVE BEEN MADE BY THE CIT(A) ARE ALL IRRELEVANT BECAUSE THE ASSESS EE HAD NO DEMAT ACCOUNT WITH UNITED BANK OF INDIA FOR THE PREVIOUS YEAR RELEVANT TO AY 2010- 11. 4 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 4 7. THE LD. COUNSEL FOR THE ASSESSEE FILED BEFORE US AN APPLICATION PRAYING FOR ADMISSION OF THE FOLLOWING ADDITIONAL GROUNDS :- '8. THE LD. CIT(A) PURPOSELY ENCLOSED WITH THE ORDE R OF THE APPEAL, THE ALLEGED DEMAT ACCOUNT SUBMITTED BY THE APPELLANT BEFORE HIM WHEN NO SUCH ACCOUNT WAS SUBMITTED BY THE APPELLANT IN COURSE OF APPEAL BEFORE CIT(A). ' '9. THE ID. CIT(A) FAILED TO FOLLOW THE PRINCIPLE O F NATURAL JUSTICE IN UTILIZING THE COPY OF THE DEMAT ACCOUNT OBTAINED ULS 133(6) OF THE INCOME TAX ACT, 1961 FOR HOLDING AGAINST THE APPELLANT THAT HE HAD NO DEMAT ACCOUNT PRIOR TO 13/04/2010' '10. IN LIGHT OF THE FACT THAT THE LD. CIT(A) HAS I GNORED THE PRINCIPLE OF NATURAL JUSTICE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE FOR FRESH ADJUDICATION. 8. IT IS THE STAND OF THE ASSESSEE IN THE APPLICA TION FOR ADMISSION OF THE ADDITIONAL GROUND THAT THE CIT(A) USED INFORMATION OBTAINED BY HIM U/S 133(6) OF THE INCOME TAX ACT, 1961 (ACT) WITHOUT AFFORDING ANY OPPORTUNITY O F BEING HEARD TO THE ASSESSEE AND CONFRONTING THE ASSESSEE WITH INFORMATION THAT WAS SO OBTAINED BY THE AO. 9. WE HAVE CONSIDERED THE PLEA OF THE ASSESSEE AND ARE OF THE VIEW THAT THE ADDITIONAL GROUNDS OF APPEAL ARISES FOR CONSIDERATION FROM THE ORDER OF CIT(A) AND IS THEREFORE ADMITTED FOR ADJUDICATION. 10. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO FI LED AN APPLICATION UNDER RULE 29 OF THE INCOME TAX (AT) RULES 1963 (ITAT RULES) PRAYING FOR ADMISSION OF CERTAIN ADDITIONAL EVIDENCE WHICH ARE PLACED AT PAGES 127 TO 130 OF TH E ASSESSEES PAPER BOOK. ON PERUSAL OF PAGES 127 TO 130 OF THE ASSESSEES PAPER BOOK, W E FIND THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED IS NOTHING BUT AN AFFIDAVIT OF T HE ASSESSEE IN WHICH HE HAS ALLEGED THAT HIS DEMAT ACCOUNT WAS NEVER MAINTAINED WITH UNITED BANK OF INDIA AND THE CLAIM OF THE CIT(A) IN THE IMPUGNED ORDER THAT THE ASSESSEE MAIN TAINED A DEMAT ACCOUNT WITH UBI IS CONTRARY TO THE MATERIAL AVAILABLE ON RECORD. IT HAS BEEN MENTIONED IN THE AFFIDAVIT THAT DURING THE RELEVANT A.Y.2010-11 NO DEMAT ACCOUNT OF THE ASSESSEE WAS MAINTAINED WITH UBI. WE ARE OF THE VIEW THAT THE AFFIDAVIT CANNOT B E REGARDED AS AN ADDITIONAL EVIDENCE 5 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 5 BUT NEVERTHELESS THE CONTENTS OF THE AFFIDAVIT WILL BE TAKEN INTO CONSIDERATION BY THE TRIBUNAL IN ARRIVING AT ITS CONCLUSIONS. 11. WE HAVE HEARD THE SUBMISSIONS OF THE LD. C OUNSEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESEE BROUGHT TO OUR NOTICE THAT THE ASSESSEE MAINTAINED A DEMAT ACCOUNT DURING THE RELEVANT PREVIOUS YEAR WIT H AXIS BANK AND THE SAME HAD BEEN FILED BY THE ASSESSEE BEFORE CIT(A) ALONG WITH A LE TTER DATED 12.03.2016. A COPY OF THE LETTER DATED 12.03.2016 FILED BY THE ASSESSEE BEFOR E CIT(A) HAS BEEN FILED BEFORE US. IN THE SAID LETTER THE ASSESSEE HAD GIVEN AS ANNEXURE THE COMPLETE DETAILS OF THE SHARES PURCHASED AND SOLD WHICH GAVE RISE TO LONG TERM CAP ITAL GAIN. COPY OF THE DEMAT ACCOUNT CONTAINING 13 PAGES HAS ALSO BEEN FILED ALO NG WITH THE LETTER. IN FACT AFTER THE RECEIPT OF THE ORDER OF CIT(A) THE ASSESSEE HAD BY ITS LETTER DATED 03.06.2016, FILED IN THE OFFICE OF CIT(A) ON 09.06.2016, HAS CLEARLY BRO UGHT OUT THESE FACTS AND ASKED FOR THE RECTIFICATION OF THE APPARENT ERRORS IN THE IMPUGNE D ORDER OF CIT(A). THE LD. COUNSEL FOR THE ASSESSEE THEREFORE PRAYED THAT THE IMPUGNED ORDER SHOULD BE SET ASIDE AND THE ISSUE RAISED BY THE ASSESSEE BEFORE CIT(A) SHOULD B E DIRECTED TO BE DECIDED AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSE E AND AFTER CONSIDERING ALL RELEVANT MATERIAL EVIDENCE. THE LD.DR COULD NOT CONTROVERT T HE PLEA PUT FORTH BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, W E ARE OF THE VIEW THAT THE IMPUGNED ORDER OF CIT(A) HAS TO BE SET ASIDE AND THE ISSUE R AISED BY THE ASSESSEE BEFORE CIT(A) SHOULD BE DIRECTED TO BE DECIDED BY CIT(A) AFRESH A FTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS CLEAR FROM A READING O F THE ORDER OF THE CIT(A) THAT HE HAS PROCEEDED ON AN ERRONEOUS ASSUMPTION THAT THE ASSES SEE MAINTAINED A DEMAT ACCOUNT WITH UBI DURING THE RELEVANT PREVIOUS YEAR WHEREAS THE CLAIM OF THE ASSESSEE WAS THAT THE DEMAT ACCOUNT WAS WITH AXIS BANK LTD. SECONDLY THE CIT(A) USED INFORMATION OBTAINED BY HIM IN EXERCISE OF HIS POWERS U/S 133(6 ) OF THE ACT WITHOUT CONFRONTING THE 6 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 6 SAME TO THE ASSESSEE AND WITHOUT AFFORDING THE ASSE SSEE AN OPPORTUNITY OF EXPLAINING HIS CASE ON THE INFORMATION SO OBTAINED BY CIT(A). FOR THE ABOVE REASONS WE SET ASIDE THE ORDER OF CIT(A) AND REMAND THE ISSUE RAISED BY THE ASSESSEE BEFORE CIT(A) AS WELL AS BEFORE THE TRIBUNAL FOR FRESH CONSIDERATION IN ACCO RDANCE WITH LAW AFTER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD AND CONFRONTING MATERIAL COLLECTED BY MAKING INDEPENDENT ENQUIRY, IF ANY. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 08.02.2017. SD/- SD/- [DR.ARJUN LAL SAINI] [ N.V.VASUDE VAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.02.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI DEO KUMAR SARAF, ANANDALOK, DK-73, SALT LAKE CITY, KOLKATA-700091. 2. A.C.I.T. , CIRCLE-49, KOLKATA. 3. CIT(A)-15, KOLKATA. 4. CIT-17, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 7 ITA NO.1551/KOL/2016 SRI DEO KUMAR SARAF A.YR..2010-11 7